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2025 Supreme(Mad) 5202
IN THE HIGH COURT OF JUDICATURE AT MADRAS
N. ANAND VENKATESH, J.
M/s.Ramky Infrastructure Ltd. – Appellant
Versus
M/s.I.T.Expressway Limited – Respondent
O.P.No.189 of 2016
Decided On : 15-12-2025
For the Appellant : Mr.V.Kuberan For M/s.Rank Associates
For the Respondent: Mr.D.Balaraman And Mr.B.Lakshman Prasad
The court upheld the arbitral award, emphasizing that an arbitral tribunal's decision cannot be disturbed if it is a plausible interpretation of the contract without any evident illegality.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 34 - Challenge against arbitral award - Petitioner sought to set aside the award dated 25.7.2015 where the Arbitral Tribunal dismissed the claim petition - Court reiterated that it cannot interfere unless the award suffers from patent illegality. (Paras 3, 17)
(B) Contractual interpretation - Clauses relating to variation work assessed by the tribunal - Dispute over application of Clause 37.1 versus 37.2 regarding variation item rates was examined. The tribunal upheld the first respondent's rate determination after the petitioner failed to provide supporting documentation as required by the agreement. (Paras 4, 12, 15, 17)
Facts of the case:
The petitioner, a construction contractor, contended that delays and non-payments by the respondent led to its claim for Rs.3,57,12,398.29 Ps based on the variation work. The awarded amount fell significantly short of the claim, leading to the challenge of the arbitral decision.
Findings of Court:
The tribunal determined that the calculations for rates of variation items adhered to the contractual terms and noted that the petitioner’s non-compliance in submitting proper documentation negated their claim.
Issues: The primary issue was whether the tribunal correctly applied Clause 37.1 and Clause 37.2 of the agreement in assessing the variation rates.
Ratio Decidendi: The court held that as the tribunal found the rates fixed by the first respondent were consistent with the agreement's clauses and did not contravene any legal standards, it could not overturn the arbitral award as it represented a reasonable interpretation of the contractual terms.
Result: Original petition dismissed.
| Table of Content |
|---|
| 1. contractual obligations and scope of work. (Para 3) |
| 2. disputes regarding payment and contract terms. (Para 4 , 5) |
| 3. analysis of arbitration process and claims. (Para 6 , 7 , 8 , 9 , 10 , 11 , 12) |
| 4. adherence to clauses for rate determination. (Para 13 , 14 , 15 , 16) |
| 5. court's discretion on arbitral awards. (Para 17) |
| 6. final resolution of the petition. (Para 18) |
ORDER :
N. ANAND VENKATESH, J.
This is a petition filed by the petitioner under Section 34 of the Arbitration and Conciliation Act, 1996 seeking to set aside the award dated 25.7.2015 passed by the Arbitral Tribunal to the extent it dismissed the claim petition filed by the petitioner and to allow the claim petition.
2. Heard both.
3. The facts leading to filing of this petition are as follows:
(i) The first respondent awarded a work of construction and maintenance of service ducts on IT Corridor and improvement and maintenance of East Coast Road (ECR) Link Road to the petitioner through a letter of intent (LoI) dated 29.9.2005. The parties formally entered into an agreement on 12.10.2005. The agreement originally covered two components of work namely the construction and maintenance of service ducts on the IT Corridor for a length of 37,250 RMTs and the improvement and maintenance of the ECR Link Road to construct four laning ECR Link Road for 2.2 Kms connecting Old Mahabalipuram Road (OMR) and the ECR.
(ii) The duration of the contract was fixed as 7 months (221 days) and the intended commencement date was fixed as 12.10.2005 and the intended completion date was fixed as 12.5.2006. In so far as the first work was concerned, it was divided into three milestones. The first milestone (MS1) was from Madhya Kailash Temple to SRP Tools Km 0/0 - Km 3/050. The second milestone (MS2) was from Karapakkam Bridge to Siruseri Km 20/400 – Km 30/400. The third milestone (MS3) was from SRP Tools to Karapakkam Bridge Km 13/282 – Km 20/400.
(iii) Due to delay in the completion of works, the first extension was granted for three months upto 14.8.2006. There was a further delay in the completion of works and hence, the second extension of time was granted for two months upto 14.10.2006.
(iv) In view of the above delay, a separate agreement called as supplemental agreement dated 29.11.2006 was entered into and the work pertaining to the ECR Link Road was specifically excluded from the original contract. A fresh tender was called for by the first respondent and the petitioner submitted a fresh quote on 26.6.2007, based on which, a fresh agreement was entered into on 06.7.2007 for a total contract price of Rs.6,63,44,978/-. The ECR Link Road was supposed to be completed within six months from 03.7.2007. The scope of this work was construction of road and cross drainage, improvement of the existing road, formation of new road and maintenance works.
(v) Disputes arose during the execution of the contract primarily concerning delays that were attributed to the first respondent for the non payment of certified payments and unilateral finalization of rates for variation items not part of the original bill of quantities (BoQ). The petitioner complained of delays at various stages of execution of the work due to halt in the construction of box culverts and failure to provide necessary inputs like kerb drawings and distances for gantry works.
(vi) The petitioner submitted their interim payment certificates (IPCs) numbering 5. IPC - 1 and 2 were certified and a part payment was made to the petitioner after a significant delay. There was a delayed payment even in respect of IPC - 3. Subsequent payments were not released and the core dispute arose between the parties for payments to be made in respect of IPC - 5.
(vii) Even though the petitioner made a claim for Rs.3,57,12,398.29 Ps based on the report of the Variation Committee, what was paid was only Rs.77,98,388/-. According to the petitioner, the Variation Committee took a unilateral decision without affording an opportunity to the petitio
