IMPORTANT POINT
The Court's decision emphasizes the limited scope of interference under Section 34 and 37 of the A&C Act, and the Arbitrator's authority to award interest and costs in the absence of an agreement between the parties.

JUDGMENT :

R. Sakthivel, J.

(Prayer : Civil Miscellaneous Appeal filed under Section 37(1) and (2) of the Arbitration and Conciliation Act, 1996, praying to set aside the judgment and decree dated 16.08.2022 made in Arb.O.P.No.248 of 2017 on the file of Principal District Court, Coimbatore confirming the award passed by the Arbitral Tribunal dated 10.06.2017.)

1. The appellants are the petitioners in Arbitration Original Petition No.248 of 2017 on the file of Principal District Court, Coimbatore (henceforth ‘Section 34 Court’) and respondents 2 and 5 respectively before the Arbitration Tribunal (henceforth ‘AT’).

2. For the sake of convenience, henceforth, the parties will be referred to as per their array before the AT i.e., ‘appellants’ and the ‘first respondent herein’ will be referred to as ‘respondents’ and ‘claimant’ respectively.

3. Feeling aggrieved with the order dated August 16th, 2022 passed by the Section 34 Court in Arb.O.P.No.248 of 2017 affirming the Award dated June 10th, 2017 passed by the AT, the respondents have preferred this Civil Miscellaneous Appeal under Section 37(1) and (2) of the Arbitration and Conciliation Act, 1996 (henceforth 'A&C Act'), praying to set aside the aforementioned order.

4. Case of the claimant

4.1. The respondents floated a Tender Notification for the work of Rehabilitation of Left Out Reaches in Parambikulam Main Canal from LS., 39.500 Km to 87.400 Km (Package No.08/IAMWARM/PALAR/WRO/PKM/NCB/06-07) under the Tamil Nadu Agriculture Modernization and Water Bodies Restoration and Management (IAMWARM) Project.

4.2. The claimant, an experienced contractor-mainly in Irrigation Projects, was the successful bidder in the said Tender by quoting a sum of Rs.8,78,87,027/-. On 15.03.2008, upon the claimant furnishing a bank guarantee of Rs.43,95,000/-, the respondents issued a letter to the claimant to proceed with the execution of the work and an agreement dated 15.03.2008 was executed between them in this regard. As per the agreement, the work was to be completed within 17 months, computation of which encompasses the water flow period too.

4.3. The work to be executed has been divided into four slices.

“Slice 1 relates to chainage 46.980 KM to 50.777 KM

Slice 2 relates to chainage 53.027 KM to 65.905 KM

Slice 3 relates to chainage 68.010 KM to72.887 KM

Slice 4 relates to chainage 78.834 KM to 87.400 KM”

The work includes, dismantling the existing Plain Cement Concrete (PCC); removal of dismantled portion of the old lining in Parambikulam Aliyar Basin along with silt and debris; preparing the sub-grade to line and level; and pouring ‘M 7.5 concrete’ over the prepared subgrade and finishing it, which also includes plastering.

5. Contentions of the claimant before the AT

5.1. The claimant started the work in the first week of May, 2008. Thereafter, the Chief Engineer/respondent inspected the site and altered the design in the vertical high cut reaches. The work could not be continued until the new design was finalized and this caused a delay. To compensate the delay, the claimant purchased paver machine for about 20 lakhs and other special equipments, however, the same could not be deployed due to the uneven levels of the side berms of the canal and the thick vegetation alongside. Nonetheless, the claimant managed to complete the work within the deadline originally stipulated by the agreement by employing additional labour and machinery. Thus, there was no negligence on the part of the claimant and hence, the recovery of liquidated damages to the tune of Rs.3,29,580/-, without considering the fact that the new design for high cut reaches was provided after a long delay, is unwarranted and illegal.

5.2. Cement concreting was done for lining the canal. It was essential to obtain a smooth surface there as per Item No.17 of Bill of Quantities. However, the same was not possible without plastering, owing to the thickness and specified cement content of the concrete. Therefore, plastering was done to obtain a smooth