Courts must limit interference with arbitral awards to evident legal flaws or lack of evidence, reinforcing the principle that arbitration decisions are final and binding.

JUDGMENT :

S.K. Panigrahi, J.

1. Since both Arbitration Appeals pertain to the same contract, award, and overlapping questions of law relating to the scope of judicial intervention under Sections 34 and 37 of the Arbitration and Conciliation Act, they are being disposed of together. The core dispute concerns selective modification of the arbitral award by the court below.

I. FACTUAL MATRIX OF THE CASE:

2. The contract for repair and reconstruction of cyclone-damaged roads from RD 0.000 km to 16.300 km (Dhunkapada-Kendubadi-Mandara- Nachunibadi) in Ganjam District was awarded to the contractor under World Bank-assisted Package No.RGJM-II. The agreement, valued at Rs.2,17,38,992/-, was executed on 03.12.2002.

3. The original completion period was 15 months, ending on 02.03.2004. Due to execution delays, including issues relating to site demarcation, borrow area identification, and water supply, the contractor sought extension until 31.12.2004. The extension was recommended up to 02.09.2004 but was not formally communicated.

4. The contract was retrospectively terminated with effect from 02.09.2004, communicated via letter dated 07.02.2005. The contractor contested the termination, alleging that final measurements were not taken in his presence and the 7th RA bill was wrongly treated as final, despite ongoing work beyond December 2004.

5. Arbitration was invoked pursuant to the contract, and this Court appointed a Sole Arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996. The contractor submitted 16 claim items, while the State filed a counter-claim of Rs.14,78,595/- for alleged overpayments and recoverable dues.

6. The Sole Arbitrator passed an award on 31.01.2010 in favour of the contractor, granting Rs.1,48,60,263/- under various heads. The award held the termination to be illegal, noted absence of a final bill compliant with the OPWD Code, and found that work continued post the purported termination. The Arbitrator partly allowed 11 claims and rejected the counter-claim.

7. The State filed a petition under Section 34 of the Arbitration and Conciliation Act before the District Judge, Ganjam, challenging the award on grounds including arbitrariness, excessive computation, and absence of contractual provisions for certain heads. By judgment dated 16.10.2015, the court upheld most of the award but reduced Claim No.1 and set aside Claims 4 and 6.

8. The contractor preferred an appeal under Section 37 challenging the partial setting aside of the award. The State also filed a cross-appeal. The certified copy of the judgment was received on 01.12.2015, and due to inter-departmental approvals and legal consultation, the appeal was filed on 29.02.2016, resulting in a 36 days delay, which was sought to be condoned as procedural.

II. SUBMISSIONS OF THE CONTRACTOR:

9. The Contractor contends that the learned District Judge acted in clear excess of jurisdiction by venturing into the merits of the disputes and re-evaluating evidence while setting aside claim items 4 and 6 of the award, an exercise impermissible under the narrow scope of Section 34 .

10. The Arbitrator had awarded Rs.41,05,445/- under Claim No.1 based on Ext. 16 and oral evidence. The reduction by the District Judge to Rs.38,65,619/- was not supported by any finding that the Arbitrator’s view was untenable. It amounted to an impermissible appellate reassessment.

11. The Arbitrator had allowed Rs.10,00,000/- for compensation towards borrow earth from private land. The State had not disputed either the need to borrow or the quantum (20,000 cum at Rs.50/cum), and failed to show that government land was provided. The District Judge overlooked these findings and reassessed sufficiency of evidence, which is outside Section 34 ’s scope.

12. Claim No. 6, amounting to Rs.29,43,821/-, was based on prolonged execution due to delays. The Arbitrator relied on Ext. 6 and Ext. 8, letters from the contractor indicating extended work and projected costs, which were never rebutt