Arbitrability of claims hinges on adherence to procedural agreements; claimants can seek interest despite contractual prohibitions, reflecting arbitral authority.

JUDGMENT:

Moushumi Bhattacharya, J.

1. The present Appeal has been filed challenging the order dated 22.10.2018 passed by the I Additional Chief Judge, City Civil Court, Secunderabad (‘Trial Court’), dismissing the petition filed by the appellants under section 34 of The Arbitration and Conciliation Act, 1996 (‘the 1996 Act’) for setting aside the Award dated 24.04.2013. The present Appeal has been filed under section 37 of the said Act.

2. The appellants before this Court were the respondents in the arbitration. The respondent No.1/Contractor in the Appeal was the Claimant in the arbitration. The learned Arbitrator is arrayed as the respondent No.2 in the present Appeal.

3. The respondent No.1/Contractor had raised six claims in the arbitration for the work done in accordance with the Agreement dated 09.03.1994, which was for conversion of Hubli – Londa Section from Meter Gauge to Board Gauge between Dharwad and Mugad Reach – II and execution of miscellaneous works between Dharwad and Mugad Stations. The six claims related, inter alia, to (i) difference in rates payable for excess quantities executed by the respondent No.1/Contractor beyond 25% of the agreed quantities along with additional items, (ii) payment for Earth work deducted towards subsidence allowance, (iii) reimbursement of charges and commission paid to the financiers on the amounts borrowed, (iv) reimbursement of expenditure incurred in continuing overheads and (v) establishments from 01.05.1995 to 31.03.1997 on account of delay in finalisation of bills, (vi) reimbursement of loss of business and profit thereon, interest @ 18% from 01.04.1997 to 01.09.2001 on the total claim amount along with yearly rests.

4. The learned Arbitrator, a retired Judge of this Court, held that the claims of the respondent No.1/Contractor were maintainable and deserved to be allowed. The Arbitrator allowed Claim Nos.1, 2, 4 and 6 in part awarding a total amount of Rs.86,22,337/- and interest @ 18% per annum for the pre-reference period, pendente lite, and from the date of Award to the date of payment.

5. The Trial Court dismissed the appellant’s petition by the impugned order dated 22.10.2018, inter alia, the ground that the Award had been passed after due consideration of the issues raised by the parties and there was no scope for interference in the reasons given by the Arbitrator. The appellant has filed the present Appeal challenging the impugned order dated 22.10.2018.

6. Learned Standing Counsel for the Central Government appearing for the appellants submits that the Trial Court should have set aside the Arbitral Award dated 24.04.2013 since the claims raised by the respondent No.1 were not arbitrable as per Clause 63 of The General Conditions of Contract, 1989 (‘GCC’) which covers the matters deemed as ‘Excepted matters’. Counsel submits that under Clause 63, all disputes and differences arising out of the Contract, regardless of the time at which the dispute was raised and even after termination of the Contract shall be referred by the Contractor to the Railways and the latter shall make and notify its decision within a reasonable period of time. The decision given by the Railways shall be final and binding on the Contractor. Counsel submits that Clause 63 mentions specific Clauses of the GCC covering the disputes raised by the Contractor. Consequentially, the learned Arbit