The court upheld the arbitral award, affirming that arbitrators are the ultimate masters of evidence and that interference is only permissible in cases of arbitrariness or capriciousness.

JUDGMENT :

K.R.Shriram, C.J.

Appellant is unhappy with an order delivered on 14.06.2017 by learned Single Judge of this Court under Section 34 of the Arbitration and Conciliation Act, 1996 (the Act). By the said petition under Section 34 of the Act, appellant challenged the majority award dated 15.12.2007.

2. A tender was floated by appellant in October, 1997, inviting bids for construction of permeate conveyance pipeline. Respondent No.1 was the successful bidder and came to be appointed as contractor, pursuant to a contract dated 26.11.1998. The contract executed comprised of both Rupee as well as Japanese Yen component. Value of the contract in Indian rupees was INR 18,05,30,000/- while in Japanese Yen was fixed at JPY 51,90,42,904/-

3. The scope of work of the contract broadly obliged respondent No.1 to:

a) construct pumping station and emergency station at Koyambedu;

b) to supply and install electro mechanical and instrumentation equipment; and

c) to supply and lay down 1700m of ductile iron pipeline with all accessories of the requisite diameter.

4. Disputes arose between the parties as regards post-contractual changes brought about in the alignment of the pipeline, which respondent No.1 was obliged to lay down in terms of the contract.

5. The contract envisaged that only a part of the pipeline within the range of 10-15% would be laid underground and that a major part of the pipeline would have to be laid overground. It appears that due to post- contractual changes, not only the actual length of the pipeline which had to be laid got altered, but also the length of the pipeline which had to be laid underground also increased. In sum, while the actual length of the pipeline which had to be laid got changed from 17945m to 11887.2 m, the portion which had to be laid underground increased from 1759m to 5637m. In effect, the increase in that part of the pipeline which had to be laid below the road surface, in percentage terms increased from 10-15% to 47.42%.

6. Besides this, the main average depth of excavation evidently increased from 2.68m to 3.16m. In real terms, the increase was approximately 0.5m; while in percentage terms, the average depth of excavation increased by 18.65%. It is these post-contractual changes which made respondent No.1 to lodge its claim for recovery of monies under various heads.

7. As it appears from the majority award, respondent No.1 lodged 16 claims, which included claim for interest; while appellant lodged a counter- claim for the alleged delay committed by respondent No.1 in the execution of the contract. In the counter-claim, appellant claimed liquidated damages of 10% of the contract price.

8. As per the majority award, it contained 22 sub-heads under Claim- 1. Out of the 22 sub-heads, two sub-heads were rejected. Besides four other claims were also rejected.

9. In all, majority award directed payment of a sum of Rs.13,72,38,571/- to respondent No.1 with interest @12% per annum from 01.09.2003 till the date of payment. The award also provided that if the money as awarded was not paid within three months, respondent No.1 would be entitled to a further interest at the rate of 15% per annum till the date of actual payment of the amount so awarded. The parties were directed to bear their own costs.

10. Insofar as the minority award was concerned, the contractor was awarded Rs.1,54,57,574/- towards certain heads of claim. In addition, interest at the rate of 8% per annum for a period between August, 2003 and December, 2007 was also awarded and the interest is quantified at about Rs.54,61,676/-. The minority award also directed further interest at the rate of 6% per annum, if payment as ordered was not made on or before December, 2007. Even in the minority award, Board's counter-claim for liquidated damages has been rejected.

11. Appellant filed its Section 34 petition raising very broad grounds to assail the award. Appellant's challenge primarily was confined to claim Nos.2, 11 and 12. As regards Claim Nos.11 and