The court upheld the arbitration award for refund of earnest money deposit and interest, ruling no illegality in the arbitrator's decisions based on the waiver of objections by the appellant.

ORDER :

ARINDAM SINHA, J.

1. Mr. Behera, learned advocate, Central Government Counsel led by Mr. Parhi, learned advocate and Assistant Solicitor General appear on behalf of appellants and submit, impugned is judgment dated 30^th August, 2018, whereby three points of challenge to award dated 28^th April, 2014 were rejected. He submits, the three points were challenge to the award on excepted matters, directing refund of Earnest Money Deposit (EMD) and grant of future interest.

2. He submits, there can be no dispute regarding award made on matters that were excepted by the contract. In awarding all those items of claim, the arbitrator transgressed terms of the contract and was therefore in violation of mandate in sub-section (3) in section 28, Arbitration and Conciliation Act, 1996. Since his client, employer had given extension of time to do the work without imposing penalty and respondent did not execute it, same resulted in closure of the contract. There could not have been award on claim for refund of EMD. He submits further, by clause 16 (3) of General Conditions of Contract (GCC) there was prohibition on claim of interest. The arbitrator having granted interest at 15% again went beyond terms of the contract and was in violation of aforesaid mandate by sub-section (3) of section 28. He submits, on these three counts the Court below erred in appreciating appellants9 case. In awarding those claims, there was patent illegality.

3. Mr. Jujharsingh, learned advocate appears on behalf of respondent. He supports reasoning given in impugned judgment. He draws attention to paragraph 6 in it to submit, the Court below found that by application dated 4^th March, 2013, made at stage of argument in the reference, appellant had taken the point of some matters had been excepted as excluded from arbitration. He relies on judgment of the Supreme Court in Narayan Prasad Lohia vs Nikunj Kumar Lohia , reported in AIR 2002 SC 1139 , paragraph 16. He submits, there was waiver.

4. Regarding award for refund of EMD he submits, original contract was worked out by his client. Deviations were required. Extension of time granted was for purpose of working out the deviation/extra works. The deviations could not be worked out. The contract was closed. He submits, refund of earnest money/security deposit was dealt with under issue no.6 in the reference. The arbitrator found as many as five supplementary agreements were executed containing deviations and extending the time. Delay in completion of work was not entirely attributable to his client. It was also found that claim for escalation was pending before the concerned authority, when there was decision to close the contract on imposing penalty as forfeiture of security deposit. On these facts the arbitrator found the imposition to be unjustified.

5. On grant of interest Mr. Jujharsingh submits, the arbitrator has the power under clause-(b) in sub-section (7) of section 31.

6. Matters excepted by the contract, as not covered by the arbitration agreement, would be a bar on adjudication in respect thereof, in the reference. It would mean that dispute on excepted matters have to be otherwise adjudicated, as may be by proceeding initiated in a civil Court. Section 4 provides for waiver. Clause-(b) says, a party, who knows that any requirement under the arbitration agreement has not been complied with and yet proceeds with the arbitration without stating his objection to such non-compliance without undue delay or, if a time limit provided for stating that objection, within that period of time, said party shall be deemed to have waived his right to so object. Appella