The compensation awarded in arbitration must directly arise out of the contract and should not be a result of indirect or remote loss caused due to breach.

Sunil Hali, J.

1. For providing fencing to certain installations at Nagrota, a Contract Agreement No. GE (P)-18/1922-93 was entered into with the claimant on 18th August, 1992. The date of completion of the said work was fixed as 26th February, 1993. The contract was completed in the year, 1997, for which claimant had sought release of payment. The Petitioners refuted the claim of the claimant indicating that certain works had yet to be completed. The dispute was raised by claimant in this behalf and the matter was sought to be referred to the Arbitrator by invoking condition 70 of IAFW-2249, forming part of the contract.

2. On a reference being made, the Chief Engineer, Udhampur Zone was appointed as Arbitrator, who entered into reference on 28-1-2006. After calling upon the parties and perusing the record, he passed the award in favour of the claimant. This award has been questioned by the present Petitioner in this Court under Section 34 of the Jammu and Kashmir Arbitration and Conciliation Act of 1997 (hereinafter referred to as the Act).

3. The pleas raised by the Petitioners in this petition are as under:

(a) That time barred claim was referred to the Arbitrator for arbitration.

(b) That while awarding compensation for loss of suffering due to blockage of payment, work done was beyond the terms of the contract and was not arbitral.

(c) That Arbitrator has not given reasoned award as recorded under condition 70 of the General conditions of the contract.

4. The Respondent in its objections has stated that the learned Arbitrator after analyzing every stipulation of the contract agreement has awarded the compensation to the claimant and each of the claim has been discussed on the touchstone of the various clauses of the Contract Agreement, which is clearly reflected in the proceedings concluded by the learned Arbitrator. Regarding the plea of limitation, it is stated that the contract in question was completed by the claimant in the year 1997, and the same was not finalized by the Union of India. Neither the completion certificate was issued, nor was any payment of the final bill made to the claimant. It is stated that the Arbitrator has passed reasoned award, which is clearly reflected by the award itself. While passing reasoned/speaking award, the Arbitrator has only indicated his thought process, which is requirement under law.

5. I have heard learned Counsel for the parties and perused the record.

6. The grounds for setting aside the arbitral award are contained under Section 34 of the Act. The said Section, in so far as relevant is being reproduced below:

34. Application for setting aside arbitral award.

(1) ....

(2) An arbitral award may be set aside by the Court only If--

(a) the party making the application furnishes proof that-

(i) a party was under some incapacity; or

(ii) the arbitration agreement is not valid under the law to which the parties have subject it or, failing any indication thereon, under the law for the time being in force; or

(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration or it contains decisions on matters beyond the scope of the submission to arbitration:

Provided that, if the decision on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or

(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or

(b) the Court finds that;

(i) the subject matter of the dispute is n