The court upheld the arbitral award barring the idling costs due to lack of proof, affirming the necessity for evidential support in claims made under arbitration.

ORDER :

N.ANAND VENKATESH, J.

The Corporation of Chennai has assailed the award dated 31.5.2012 passed by the Arbitral Tribunal.

2. Heard the learned Senior Counsel appearing on behalf of the petitioner and the learned counsel appearing for the first respondent.

3. The facts leading to filing of the above petition are as follows:

(i) The Corporation of Chennai, in order to provide better infrastructure facilities, planned to construct a flyover near Perambur Railway Station with the objective of easing traffic congestion. This flyover was supposed to be constructed over the existing subway. The work was awarded in favour of the first respondent after complying with all the formalities by issuing a letter of acceptance dated 05.1.1999. This was followed by an agreement dated 16.3.1999 executed between the parties.

(ii) The work was awarded at a contract price of Rs.10,69,43,275/- with the construction period of 18 months. It was also agreed between the parties that the contract was meant to be an item rate contract with a bill of quantity.

(iii) There were several hitches during the initial stage and as a result, a revised agreement for additional work was entered into on 18.7.2001 so as to enable the first respondent to execute the work at the increased value on the same terms and conditions stated in the original agreement.

(iv) Due to change in the political scenario, the entire work came to a grinding halt from August 2001 to October 2006 since a Commission of Inquiry was appointed. Later, an effort was made to resume the project and hence, a supplementary agreement dated 10.11.2006 was entered into by both parties. By virtue of this supplementary agreement, the cost was increased and a fresh timeline was also fixed for the completion of the contract.

(v) The first respondent was not able to commence and continue with the work due to various reasons and by letter dated 06.1.2007, the first respondent informed their decision to demobilise their resources from the site. Ultimately, on 11.1.2008, a termination letter was issued by the petitioner to the first respondent. Thereafter, the petitioner issued a fresh tender notice and proceeded to complete the work.

(vi) The first respondent made a claim for compensation from the petitioner and it was turned down by the petitioner. Hence, the dispute was referred to the Arbitral Tribunal. Before the Arbitral Tribunal, the first respondent made seven claims. In turn, the petitioner filed a statement of defence denying the claim made by the first respondent. The petitioner also made counter claims against the first respondent.

(vii) Ultimately, the Arbitral Tribunal, by a majority award of 2:1, awarded a nett amount of Rs.4,40,24,946/-, which included both pre- suit interest and pendente lite interest. The counter claims that were awarded in favour of the petitioner were adjusted from the claims awarded in favour of the first respondent. The Arbitral Tribunal ordered for future interest at the rate of 10% per annum if the amount was not settled within one month from the date of the award till the date of payment of the amount. Aggrieved by that, the Corporation of Chennai has filed this petition under Section 34 of the Arbitration and Conciliation Act, 1996 (for short, the Act).

4. The learned Senior Counsel appearing on behalf of the petitioner made the following submissions:

- The Arbitral Tribunal ignored the contractual precondition under Clauses 24 and 25 of the conditions of contract, which require reference of the dispute to an adjudicator. Since the first respondent did not invoke Clause 24, no dispute