The court clarified that payment for additional work must be recognized if verified, irrespective of lack of written order, reinforcing the limited grounds for setting aside arbitral awards under the Arbitration and Conciliation Act.

JUDGMENT :

Gautam Kumar Choudhary, J.

1. This appeal is preferred under Section 37 (1)(b) of the Arbitration and Conciliation Act, 1996 against the order dated 29.08.2009 passed under Section 34 of Arbitration and Conciliation Act, whereby and whereunder the arbitral award made by the sole arbitrator has been set aside.

2. Admitted fact leading to the present appeal can be summed up as under:

i. Appellant Company was awarded a contract for construction of minor bridge by the Executive Engineer, Road Construction Division, National Highway No. 2 (respondent no. 4) for a total value of Rs.28,86,371/- vide agreement dated 22.06.1992.

ii. Dispute is with regard to extra work done by the appellant for which a demand was raised for a sum of Rs.30,79,375/- with interest at the rate of 18% per annum on the said amount from 01.07.1999. The appellant invoked the arbitral clause and the matter was referred to the sole arbitrator. The sole arbitrator vide award dated 17.07.2007 awarded the claim for extra work to the tune of Rs.30,79,375/- with @ 8% interest with cost of arbitration of Rs.40,000/- and Rs.32,400/- as respondent’s share of arbitrator’s fees deposited by them.

iii. Respondent preferred Misc. Case No. 56 of 2007 under Section 34 of the Arbitration and Conciliation Act, 1996 in which the award was set aside on the ground that learned arbitrator overlooked the proviso of Clause 11 of the Agreement No. 02/F2/1992-93 dated 22.06.1992 wherein it had been clearly laid down that the contractor shall not be entitled to any payment for any additional work done unless he had received an order in writing from the In-charge for the additional work done.

3. It is argued by learned counsel for the appellant that the State is acting unfairly in the present case by denying the genuine admitted claim of the Appellant for the additional work done, taking shelter under a clause of the agreement. It has not been disputed at any stage that the additional work had not been done.

4. It is further argued that the Superintending Engineer after due examination and verification, forwarded the claim to the Chief Engineer for sanction of the fund to make payment to the claimant. However, the fund was not sanctioned nor any payment was made to the claimant.

5. The rate prescribed was of the year 1986 and the work was completed in the year 1998 i.e. after 12 years from the preparation of the chart of schedule rates, the cost was calculated at an escalated rate and approved by the officer of the Respondent. Annexure-2 is a copy of letter No. 547WE dated 01.07.1999 of the Executive Engineer, N.H No. 2, Dhanbad addressed to the Superintending Engineer enclosing a detailed chart mentioning the additional work with cost. This chart was prepared by the Junior Engineer, Section Gola-2. It also contains the comments and recommendation of the Sub-Divisional Officer, N.H. Division No. 1, Chas and the Executive Engineer, R.C.D.N.H Sub-Division-II, Dhanbad. This chart shows the total cost as Rs. 30,79,375.65. Annexure-3 is the copy of the letter of the Superintending Engineer bearing No. 760(A 90) dated 28.07.2002 addressed to the Chief Engineer recommending the extra costs recommended by the J.E. Asst. Engineer and the Executive Engineer for sanction and payment.

6. It is argued that where the arbitral award is for admitted additional work, the same is not amenable to interference under Section 34 of the 1996 Act.

7. Reliance is placed on the following authorities:

i. (2016) 4 SCC 119 wherein it has been held that absence of