The court affirmed that an Arbitrator retains authority to grant damages despite contractual clauses seeming to prohibit such claims, provided the termination of the contract is deemed illegal.

JUDGMENT

(Prayer in both the appeals: Original Side Appeal filed under Clause 15 of the Letters Patent Act read with Order 36 Rule 1 of the Original Side Rules and Section 37(1)(b) of the Arbitration and Conciliation Act, 1996, against the common fair and decreetal order dated 01.07.2011 passed in O.P.No.813 and 812 of 2010 respectively on the file of this Court on its Original Side.)

Common Judgment

R. Subramanian, J.

1. Both these appeals are by the contractors who had entered into a contract with the railways for supply of 50 mm stone ballast. The appellant in OSA.No.388 of 2011 had entered into a contract with the railways on 25.05.2005. The period of contract was for 12 months ending on 24.05.2006. The appellant in OSA.No.43 of 2012 had entered into a contract for supply of 50,000 cubic meters of 50 mm stone ballast on 26.05.2005. The period of contract was for 11 months and it expired on 25.04.2006. It is an admitted case of the parties that both the appellants did not complete the entire supply within the contract period and the railways terminated the contract on 11.01.2007 for non-performance.

2. Contending that the termination is illegal and that the railways was responsible for the non-performance since it had not provided the yard and the required wagons for transporting the ballast from the yard to the various locations, the contractors sought for arbitration. Since the railways did not respond to the request for arbitration, the contractors had filed Original petitions in O.P.Nos.581 and 584 of 2006 under Section 11 of the Arbitration and Conciliation Act for appointment of an Arbitrator. This Court by an order dated 24.03.2007 appointed a retired Judge of this Court as the Arbitrator. The parties made various claims before the Arbitrator.

3. The crux of the claim of the contractors before the Arbitrator was that the delay in supplying the ballast was due to the failure on the part of the Railways to provide the yard and also the special BKH wagons that are required for transporting the ballast to various locations. The contractors also claimed that they had incurred expenditure in mobilising a massive establishment for the purposes of the contract by arranging the required machinery comprising of pay-loader, JCB earthmovers etc. and also they had entered into differnet arrangements with the quarry owners and crushers for procuring the required ballast. It was also their contention that apart from the failure on the part of the Railways the heavy monsoon that year also led to the delay in performance of the contract.

4. To sum it up the contentions of the contractors was that (i) there was delay on the part of the railways in providing the mandatory ground level certificate; (ii) there was delay on the part of the Railways in making available the required yard to store the ballast; (iii) there was delay on the part of the Railways in providing BKH Wagons (special type Wagons) to transport the ballast and (iv) heavy monsoon that occurred were the contributing factors for the delay and the delay did not occur due to the fault of the contractors. Therefore, it was the claim of the contractors that the railways was not justified in terminating the contract at the risk and costs of the contractors on 11.01.2007 and going for re-tender making the contractors liable for the loss, if any. While the appellant in OSA.No.388 of 2011 claimed a sum of Rs.1,61,31,634/- as damages, the appellant in OSA.No.43 of 2012 claimed a sum of R