Courts exercising jurisdiction under the Arbitration and Conciliation Act are precluded from re-evaluating evidence or substituting findings of fact. Judicial interference is restricted to cases of patent illegality or perversity, and majority arbitral decisions are valid despite minority dissent.

JUDGMENT :

(Order of the Court was made by P.Velmurugan J.)

The present Original Side Appeal has been filed challenging the order dated 14.08.2019 passed by the learned Single Judge in O.P.No.324 of 2009, whereby the petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 was partly allowed by setting aside the Award only in respect of Claim No.6 and confirming the Award in all other respects.

2. The Appellant Board invited tenders for construction of Permeate Conveyance Pipeline forming part of the Chennai Sewerage Renovation and Functional Improvement Project funded by the Overseas Economic Co-operation Fund of Japan. The scope of the contract consisted of supply and laying of pipelines of various diameters within the stipulated completion period. The first respondent submitted its tender, the same was accepted by the appellant and an agreement came to be entered into between the parties.

3. According to the first respondent/claimant, during execution of the work, the appellant made substantial post contractual changes in the alignment and scope of work resulting in drastic reduction in quantities originally contemplated under the agreement. It was further alleged that there was abnormal delay in handing over the site, issuance of revised drawings and approvals and that because of post contractual changes in alignment, the excavation depth substantially increased, resulting in additional work and expenditure.

4. The appellant Board disputed the claims contending that the contract was a lump sum contract and that under the terms of the agreement, the contractor was deemed to have inspected the site and understood the underground conditions. According to the appellant, no additional monetary claim could be made on account of underground obstructions or variation in site conditions.

5. In view of disputes arising between the parties, the matter was referred to arbitration in terms of the arbitration agreement. The claimant raised various claims including compensation towards reduction in scope of work, prolongation costs, additional excavation due to change in alignment, unpaid amounts and interest. The appellant resisted the claims and also raised counter claims. Upon consideration of the pleadings, oral and documentary evidence and the submissions made by both parties, the Arbitral Tribunal passed a majority Award allowing several claims in favour of the claimant and awarded compensation together with interest. One of the Arbitrators passed a separate minority Award granting substantially lesser amounts.

6. Aggrieved by the majority Award, the appellant Board filed O.P.No.324 of 2009 under Section 34 of the Arbitration and Conciliation Act, 1996.

7. The learned Single Judge, while considering the challenge to the Award, principally dealt with Claim Nos.5, 6 and 12. Insofar as Claim No.5 relating to compensation for reduction in scope of work is concerned, the learned Single Judge held that the Arbitral Tribunal, after considering the contractual clauses and evidence on record, found that the reduction in quantities was far beyond the permissible contractual variation and therefore could not be treated as a mere variation under the contract. The learned Single Judge further held that the interpretation placed by the Tribunal on the contractual provisions was based on the nature of the work and evidence available on record and therefore did not warrant interference under Section 34 of the Act.

8. Insofar as Claim No.6 relating to prolongation costs and loss of profit is concerned, the learned Single Judge held that there was no sufficient evidence regarding the actual loss allegedly sustained by the claimant and that the Tribunal had adopted the Hudson formula without adequate evidentiary basis. On the