YASHWANT VARMA, J.

1.

The appellant / claimant assails the judgment and orders dated 12

December 2018 and 08 August 2019 passed by the learned Single

Judge on the Section 34 petition instituted by the respondent under the

Arbitration & Conciliation Act, 1996¹.

1 1996 Act

Digitally Signed

By:KAMLESH KUMAR

Signing Date:30.11.2023

13:15:27

Signature Not Verified

Page 2 of 25

2.

It would appear from the record that in terms of the judgment

which was rendered on 12 December 2018, the learned Single Judge

while partly allowing the Section 34 petition had reduced the rate of

interest awarded in favour of the appellant / claimant passed by the

Arbitral Tribunal² from 18% to 12% and further restricting the

application of interest from the date of accrual of cause of action,

namely, 08 March 2004 and providing it to commence from the date of

invocation of arbitration, namely, 06 July 2008.

3.

After the Section 34 petition had been finally disposed of on 12

December 2018, an application for modification came to be moved by

the respondent and which was accepted and disposed of in terms of the

order dated 08 August 2019. Dealing with the issues which appear to

arise on the appeal and on hearing learned counsel for respective

parties, we had, on 15 September 2023, passed the following order:

1. The instant appeal questions the judgment and order dated 08

August 2019 and 12 December 2018 passed by the learned Single

Judge on a petition preferred under Section 34 of the Arbitration and

Conciliation Act, 1996 [“the Act”].

2. As would be manifest from the record, the Section 34 petition

came to be disposed of on 12 December 2018 in the following

operative terms: -

“14. The stand that extension of time was not granted is not

correct. Thus as per Clause 10CC, escalation is liable to be

granted in any contract even during the extended period and

the contractor is entitled to escalation. Coming to the

question as to whether any evidence was lead on payments

made under Clause 10CC – it is the settled position that 10

CC prescribes a formula for calculation of escalation. It

stipulates the manner in which escalation is calculated.

Once the escalation is awarded, the manner of calculation is

done as per the said Clause itself. In any case, during the

2 AT

Digitally Signed

By:KAMLESH KUMAR

Signing Date:30.11.2023

13:15:27

Signature Not Verified

Page 3 of 25

period during which escalation was claimed, the work was

under progress. The fact that the work was continuing and

was also completed itself is proof of material, labour etc.,

being employed. Thus, the award of escalation under Clause

10CC is not liable to be interfered with.

15. Para 20 and 21 of Municipal Corporation of Delhi v.

Rakesh Brothers 2005(2) Arb. LR 257 (Delhi) are apt and

are set out herein below:

“20. Claim No.5 in sum of Rs.1.35 lacs was based on

Clause 10(CC) of the contract provided for escalation

as per formula provided therein. Clause 10(CC) has

been incorporated in the contract at Serial No. 26 of

the general conditions of the contract. Submission of

the MCD before the learned arbitrator was that

compensation under Clause 10(CC) had to be paid on

the basis of actual occurrence of the escalation with

return proof. Learned arbitrator has rejected the

same by bolding that this would defeat the mandatory

provision of the agreement.

21. Two Division Benches of this Court in the

decisions reported as 1998 (VII) AD (Delhi)

300=1999(1) Arb. LR 88(Del.) (DB) – DDA vs. U.

Kashyap and 2001 (II) AD (Delhi) 116 – DDA vs.

K.C. Goyal, have held that where a clause in a

contract provides a formula to give escalation, award

of escalation on the basis of actual increase in price

of material would be impermissible. Opposition

before the learned arbitrator to Claim No.5 is based

on a wrong notion of law and the learned arbitrator

has rightly held that escalation has to be as per

statutory formula. Decision of the learned arbitrator

is in complete harmony with decisions of this Court.

Learned arbitrato