IMPORTANT POINT
A clause restricting arbitration claims to 28 days is void under Section 28(b) of the Indian Contract Act, but the arbitral tribunal exceeded its jurisdiction by deciding disputes not referred to it.

J U D G M E N T C.R.

Easwaran S., J.

The appeal arises from the order of the District Court, Thiruvananthapuram dated 22.6.2010 in O.P(Arb.) No.238/2006 by which the award of the arbitral tribunal was set aside.

2. Facts of the case The appellant is a contractor who came out successful in competitive bidding for execution of the works (1) Kerala State Transport Project–RMC-01-periodic renewal of Thaikkad- Kottarakkara Road, (2) KSTP-RMC-03-periodic renewal of Thodupuzha-Kalur-Ounukal Road, (3) KSTP-RMC-08-periodic renewal of Kozhikkode-Mavoor Road and (4) KSTP-RMC-12 periodic renewal of Quilandy-Thamarassery Road.

3. In respect of Road Maintenance Contract-01 (RMC-01), notice of procedure was issued on 28.5.2002 and the original date of completion was on 27.5.2003. An amount of Rs.8,01,89,947/- was fixed and the same was revised to Rs.6,25,66,956.79. The 1 ^st extension period was approved with liquidated damages upto 31.7.2003 and the 2 ^nd extension of time was approved with liquidated damages upto 31.10.2003.

4. In respect of RMC-03, notice issued to proceed was given on 28.5.2002 and it was completed on 27.5.2003. The original contract amount was Rs.3,93,96,479/- and the revised contract rate was Rs.3,87,90,927.81 and the extension period was approved upto 31.7.2003 with liquidated damages and the 2 ^nd extension period was approved with damages upto 31.10.2003.

5. In respect of RMC-08, the date of issue of notice was on 17.04.2002 and the date of completion was fixed on 16.04.2003. The original contract amount was for Rs.5,12,54,980/-, which was not revised. The first period was extended upto 30.6.2003 with liquidated damages and the 2 ^nd extension was approved with liquidated damages upto 31.10.2003.

6. In respect of RMC-12, the date of issue of notice to proceed was on 17.4.2002 and the original date of completion was 16.4.2002. The contract amount was Rs.8,49,64,622/-. The 1 ^st extension was approved up to 30.6.2003 with liquidated damages. The 2 ^nd extension was approved with liquidated damages upto 31.12.2003.

7. There arose several disputes between the contractor and the State during implementation of the Contracts as referred to above. As per the terms and conditions of the contract, any dispute between the parties regarding the rate at which the contractor was entitled to be paid was required to be referred to the engineer. Once the engineer takes a decision on the matters referred to him, and if the parties are aggrieved with the same, the decision of the engineer has to be referred to the adjudicator within a period of 14 (fourteen) days of the notification of the engineer’s decision. The adjudicator, in turn, is required to give the decision in writing within 28 (twenty-eight) days from the date of receipt of the notification. It is further provided that if the decision of the adjudicator is not acceptable, then the party, who wishes to question the decision of the adjudicator, has to refer the same to the Arbitrator within a period of 28 (twenty-eight) days from the date of the decision, and if not, the decision of the adjudicator shall be final and binding.

8. The appellant sought reference to the adjudicator on four disputes, namely, (1) value of the work to be considered for calculating the adjustment of prices for bitumen and POL, (2) decisions for releasing the escalation during the extended periods, (3) price of bitumen to be considered for calculation of price adjustment of bitumen; and (4) release of interest payable at 12% per annum for the delay in releasing the eligible payments beyond 42 days from the date of submission of the monthly statement of the value of the work done. The adjudicator after hearing the parties, answered point Nos. (1) and (3) in favour of the appellant and (2) and (4) against him. None of the parties sought reference of the disputes to the arbitrator by invoki