An arbitral award cannot be set aside under Section 34 if the arbitrator's interpretation of the contract is a plausible view, especially when the employer's own defaults cause delays, rendering exclusion clauses inapplicable and price escalation permissible.

(JUDGMENT)

01. This Petition under Section 34 of the J&K Arbitration and Conciliation Act, 1997 [“Arbitration Act”] seeks setting aside of the Award dated 14 June 2014 passed by the Sole Arbitrator, Shri Abdul Rashid Bhat-I (Retired District Judge). By the Award, a sum of ₹21,19,439/- was awarded in favour of the Respondent-Contractor, to be paid within two months from the date of the Award, failing which simple interest at the prevalent/ currentrate was directed to be paid to the Contractor.

Brief Background:

02. Jammu & Kashmir Lakes and Waterways Development Authority (LAWDA) floated NIT No. 11 of 2007 dated 20 September 2007 for construction of a sewer line in Sub-Zones CO1 to CO4 of Zone 1 (C) along the Nigeen fringe, from RD 1 to RD 1011 metres. The tenders were opened on 11 October 2007. The work was allotted to Contractor- Mohammad Amin Shah (the Respondent herein), vide Order No. LDA- 98/7864-67 dated 27 December 2007 for ₹90.05 lacs, against the advertised cost of ₹99.21 lacs. The allotment cost was inclusive of departmental materials, such as RCC Spun Pipes, Manhole Covers, C1 Steps, cement, iron and the like. A formal agreement incorporating the NIT conditions was executed on 22 May 2008. The Contractor was required to commence work within seven days of the allotment order and to complete it within sixcalendar months/ 180 days.

03. A dispute, thereafter, arose between the Contractor and the LAWDA on account of delayed supply of departmental materials, the resultant escalation of prices, stoppage of work and allied claims. That compelled the Contractor to move an application for appointment of anArbitrator and reference of the disputes to the Arbitral Tribunal.

Appointment of the Arbitrator and the rival stands:

04. The Contractor’s case, in substance, was that the allotment order was received by him only on 12 January 2008 by ordinary post; that the full indented quantity of departmental RCC Spun Pipes was not supplied in time, only 60 Pipes of 350 mm dia meter having been made available against an indent of 165, with some Pipes to be excavated from the debris at Habbak/ Nishat; that the work was executed only in two spells, namely, from 30 January 2008 to the end of March 2008 and from 16 October 2008 to the end of March 2009; that land-owners objected after March 2009; and that the Contractor suffered extra dewatering, idle labour and machinery, escalation, fire/ theft during the Amarnath agitation of August 2008, Watch and Ward, and blockage of deposits. The Contractor claimed completion of about 55% of the work, that is, 552 meters, andclaimed a total of ₹34,66,500/, besides 15% compensation.

05. LAWDA, on the other hand, maintained that the Contractor delayed the start by about 28 days; that he worked for more than seven months against the allotted period of six months; that he completed only about 42% of the work, of which he had received 40.39% payment; that the Contractor abandoned the balance work midway; and that the terms of the contract and the NIT, together with the absence of any escalation Clause,barred extra compensation.

06. It was on this factual foundation that Arbitration Application No. 15/2011 came to be filed by the Contractor. This Court, vide Order dated 08 July 2012, appointed Shri Abdul Rashid Bhat-I as the Sole Arbitrator and directed conclusion of the proceedings within three months. The Award was passed on 14 June 2014, for ₹21,19,439/- payable withintwo months, failing which simple interest at the current rate was awarded.

Issues framed by the Arbitrator:

07. The Award rests on oral and documentary evidence led by both sides. On the basis of pleadings, claims and counter claims, the followingissues were framed:

1. Whether the petitioner(contractor) has not executed the work as per the terms & conditions of contract and has left the work midway resulting in huge losses toLAWDA? (OPRs).

2. Whether the petitioner is entitled to claim compensation for the delay caused by the respond