The main legal point established in the judgment is the importance of correctly interpreting contract provisions, particularly regarding deviation limits and determination of rates for excess quantities, and the court's authority to set aside arbitral awards based on misapplication of contract provisions.

Tarlok Singh Chauhan, J.

1. By medium of this petition under section 34 of the Arbitration and Conciliation Act, 1996 (for short the ‘Act’), the applicant has prayed for setting aside of the award made by the Arbitral Tribunal on 5.11.2011.

2. The facts are not in dispute. The parties entered into contract with respect to the execution of the work relating to strengthening of Chandigarh-Mandi-Manali road NH-21 in KM-105/0 to 127/0 (Sh. Strengthening of existing road pavement in Km.105/0 to 127/0) and a formal contract was duly executed between the parties on the standard form of contract adopted by the respondents for such works.

3. The disputes had arisen between the parties relating to the amounts claimed by the petitioner for execution of works beyond the agreed limits. The same were initially referred to the sole arbitration of the Superintending Engineer, Arbitration Circle, HPPWD, Solan, who heard the matter and made an award dated 21.6.2002. The award was challenged by the respondents before this Court by filing Arbitration Case No. 52 of 2002 and vide order dated 5.9.2005, the award was ordered to be set aside. The petitioner preferred an appeal being Arbitration Appeal No. 4 of 2005, but the same was also dismissed by this Court vide judgment dated 18.4.2009. Thereafter, the matter was referred to the sole arbitration of the Superintending Engineer, National Highway Circle, HPPWD, Shimla, who made the award on 5.11.2011.

4. Aggrieved by the aforesaid award, the petitioner has assailed the same on the ground that the learned Arbitrator has completely misconstrued and misapplied the provisions of the Contract entered into between the parties, especially the provisions of Clause 12-A thereof and thereby reached a wrong conclusion.

5. The respondents have filed reply to the petition wherein it has been averred that various clauses of the arbitration agreement, including the one contained in Clause 12-A have been correctly interpreted by the learned Arbitrator as the same was not to be read in isolation but was required to be read in conjunction alongwith the provisions of Clause 12-A of the agreement.

6. I have heard the learned counsel for the parties and have gone through the record of the case.

7. As the outcome of this petition hinges upon the interpretation to be given to Clauses 12 and 12-A of the agreement, it is necessary to reproduce the provisions in entirety and the same read as under:

Clause 12 – The Engineer-in-Charge shall have power to make any alterations in, omissions from additions to or substitutions for, the original specifications, drawings, designs and instructions, that may appear to him to be necessary during the progress of the work, and the contractor shall carry out the work in accordance with any instructions may be given to him in writing signed by the Engineer-in-charge and such alterations, omissions, additions or substitutions shall not invalidate the contract and any altered, additional or substituted work which the contractor may be directed to do in the manner above specified as part of the work shall be carried out by the contractor on the same conditions in all respect on which he agreed to do the main work. The time for the completion of the work shall be extended in the proportion that the altered, additional or substituted work bears to the original contract work, and the certificate of the Engineer-in- charge shall be conclusive as to such proportion. Over and above this, a further period to the extent of 25 per cent of the time so extended shall be allowed to the contractor. The rates for such additional, altered or substituted work under this clause shall be worked out in accordance with the following provisions in their respective order:-

(i) The rates for the additional or substituted work are specified in the contract for the work, the contractors is bound to carry out the additional altered or substituted work at the same rates as are specified in the contract for the work.

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