In the absence of a specific provision for price escalation in a contract, a claim for price escalation may not be admissible.

(Prayer: This original petition is preferred under Section 34 of the Arbitration and Conciliation Act, 1996 seeking to set aside the award dated 17.5.2010 passed by respondents 2 to 4 herein and thus render justice and this Hon’ble Court may be pleased to pass any such further orders as it may deem fit and proper.)

‘Supply and laying of clear Water Transmission Main of size 1875mm Dia mild steel (MS) pipes for a length of about 94km from Ongur river to Vandalur, supply and laying of clear water transmission main from Vandalur to Porur of size 1500 mm Dia M.S. pipes for a length of about 20km., supply and providing necessary appurtenances in the pipeline and also O&M of these installations for a period of 5 years’, is the description of the work which forms subject matter of the instant original petition and the same shall hereinafter be referred to as ‘said work’ for the sake of brevity, convenience and clarity.

2. ‘Original Petition’ shall hereinafter be referred to as ‘O.P’ for the sake of convenience and clarity. Instant O.P has been filed assailing an arbitral award dated 17.05.2010 (hereinafter ‘impugned award’ for the sake of brevity) made by a ‘Three member Arbitral Tribunal’ (‘AT’ for brevity).

3. Instant O.P has been filed under section 34 of ‘The Arbitration and Conciliation Act, 1996’ (hereinafter ‘A and C Act’ for brevity). In the scheme of A and C Act, Section 34 is slotted under Chapter VII captioned ‘RECOURSE AGAINST ARBITRAL AWARD’. A perusal of Section 34 also reveals that recourse to a Court against an arbitral award under section 34 of A and C Act may be made by an ‘application’. Also to be noted, caption to section 34 itself reads ‘APPLICATION FOR SETTING ASIDE ARBITRAL AWARD’. Be that as it may, a legal proceeding which is in the nature of recourse against an arbitral award, is being assigned the nomenclature ‘Original Petition’ in the Registry of this Court and therefore, instant proceedings are being referred to as ‘O.P’, for the sake of convenience and clarity.

4. Petitioner before this Court in the instant O.P is ‘Gammon India Limited’ and the same shall hereinafter be referred to as ‘GIL’ for brevity. First respondent in the instant O.P is ‘Chennai Metropolitan Water Supply and Sewerage Board’, which shall hereinafter be referred to as ‘CMWSSB’ for the sake of brevity. To be noted, respondents 2 to 4 in the instant O.P are three individuals, who constituted AT that made the impugned award, which, as mentioned supra, is a Three member Arbitral Tribunal.

5. It is not in dispute before me that CMWSSB issued notice inviting tenders for said work. This tender floated by CMWSSB inter-alia included ‘Invitation for Bids’ (‘IFB’ for brevity), ‘Instructions to Bidders’ (‘ITB’ for brevity), ‘Forms of Bid and Qualification Information’ (‘BQR’ for brevity), Conditions of Contract, Contract data, Forms of securities, Specifications, ‘Bill of Quantities’ (‘BOQ’ for brevity) and Drawings.

6. GIL submitted its bid, GIL was successful and a Letter of Acceptance dated 31.10.2002 signed by both parties, i.e., GIL and CMWSSB came to be executed followed by an agreement dated 15.11.2002. To be noted, in this agreement dated 15.11.2002, it was clearly set out that CMWSSB has accepted the bid of GIL for execution and completion of said work which includes remedying of defects therein all at a cost of Rs.335,68,88,700.00. In other words, value of said contract for said work is little over Rs.335.68 Crores.

7. There is no dispute or disagreement that said work was completed. There is no complaint about the quality or execution of said work. There is no complaint touching upon the time for completion/execution of said work, but the dispute is with regard to price escalation. It is the case of GIL that there was price escalation with regard to two products qua said work, i.e., (a) ‘Petroleum Oil and Lubricants’ (‘POL’ for brevity) and (b) Steel or in other words Steel component. GIL claimed Rs.516,492,898.00 with regard to st