The court affirmed that the scope of interference in arbitral awards is limited, emphasizing that awards can only be set aside on specific grounds, including patent illegality or violation of public policy.

JUDGMENT :

(P. SAM KOSHY, J.)

Heard Mr. S.Sudarshan Reddy, learned Advocate General appearing on behalf of the appellants and Mr. Srinivas Rao Bodduluri, learned counsel appearing on behalf of Mr. B.Adinarayana Rao, learned counsel for the respondent No.1 / Contractor.

2. The instant is an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (for brevity ‘the Act’ hereinafter). The challenge is to the order dated 15.03.2004 in O.P.No.2219 of 2000 passed by the II Addl. Chief Judge, City Civil Court, Hyderabad.

3. Vide the impugned order, the Trial Court had parly allowed the petition filed by the under Section 34 of the Act by allowing the claims raised by respondent No.1 / Contractor and at the same time rejected the counter claim raised by the appellant.

4. The brief facts which led to filing of the instant appeal are that the respondent No.1 is a contractor who was awarded the contract of construction of the Auditorium and Kalyana Mandapam, Azamabad, Hyderabad. An agreement in respect of the aforesaid work was entered into between the appellant and respondent No.1 on 22.11.1991. Initially, as per the terms and conditions of the agreement, the work was to be completed within eighteen (18) months. The site for the work was handed over to respondent No.1 on 24.01.2002 along with the work order for commencing the work in due course of time. Since the work could not be completed within the stipulated period upon, regular requests letters were moved by respondent No.1 to the appellant and the period for completion of the work got extended from time to time. In the process of completion of the said work, it was alleged by respondent No.1 that he had incurred certain extra costs towards the work done during the extra period of time. In order to claim the extra costs incurred, respondent No.1 raised a dispute vide letter dated 27.08.1997 as per the clause 73 of the agreement between the parties. Thereafter, the respondent No.1 approached the High Court under Section 11(6) of the Act vide Arbitration Application No.18 of 1997. The High Court after hearing the parties, appointed a retired Judge of the Supreme Court Justice K.Ramaswamy as the Arbitrator. The Arbitrator after hearing all the parties to the dispute passed an award on 28.10.2000 thereby allowing the claim of respondent No.1 insofar as claim Nos.1, 2, 3, 5, 6, 7, 11, 13, 14 and 15 are concerned. At the same time, the Arbitrator rejecting the claims raised by respondent No.1 so far as claim Nos.4, 8, 9, 10, 12, 16 and 17. Simultaneously, the Arbitrator also disallowed the counter claim raised by the appellant. In all, the Arbitrator awarded a total amount of Rs.58,78,000/-.

5. Subsequently, two O.Ps. were filed before the Trial Court i.e. O.P.No.2219 of 2000 under Section 34 of the Act challenging the award passed by the Arbitrator and O.P.No.29 of 2001 for making the award the rule of the Court.

6. The Trial Court after hearing the petition filed under Section 34 of the Act affirmed the award passed by the Arbitrator except for claim No.2 where the Arbitrator had awarded an amount of Rs.24,51,000/- which was reduced by the Trial Court to Rs.18,92,000/-.The Trial Court also found that the counter claim raised by the appellant was rightly rejected by the Arbitrator and affirmed the said finding which has led to filing of the instant appeal under Section 37 of the Act.

7. The learned Advocate General appearing on behalf of the appellants contended that the Arbitrator so also the Trial Court both have committed a serious error on fact as also an error in law while reaching to their conclusion. According to the learned Advocate General a plain perusal of the order under Section 34 petition so also the award passed by the Arbitrator would clearly give an indication of the fact that the appellant was not found to be in any manner responsible for any of the interest expenditure incurred by respondent No.1 / Contractor. It was also the contention of the learned Advocate Ge