The court emphasized that arbitral awards must respect contractual provisions, and judicial review is limited to ensuring awards are not irrational or contrary to public policy.

J U D G M E N T

PAMIDIGHANTAM SRI NARASIMHA, J.

1. Leave granted.

2. State of West Bengal, respondent herein, issued a notice inviting tenders on 08.09.2010, for the widening and strengthening of Egra Bajkul road under the Tamluk Highway Division in Purbo Medinipur District and accepted appellant’s offer, leading to grant of a Work Order for the project to be completed within 18 months from 23.12.2010. The project got delayed by about five months, but the work was completed by 09.11.2012.

3. The appellant raised a bill for Rs. 77,85,290 and that was in addition to seven other claims under different heads, owing to alleged delays on part of the Respondent. As the respondent denied any liability, the dispute was referred to Arbitration for resolution. 4. The Arbitrator gave his award on 30.01.2018, holding the respondents are liable to the tune of Rs.1,37,25,252, with interest. There were seven claims. Claim no. 1 related to loss of business, with respect to which Rs. 3,87,530 was awarded; claim no. 2 related to uneconomic utilization of plant and machinery, with respect to which Rs. 61,22,000 was awarded and claim no. 3 related to labour charges for uneconomical stoppage of work, with respect to which Rs.5,80,500 was awarded; claim no. 4 related to interest on delayed payment of running account bills and escalation bill for which the Arbitrator awarded Rs. 54,84,024; claim no. 5 related to escalation with respect to which Rs.11,51,198 was granted; and claim 6 related to interest on the sum awarded, with respect to which interest @12% p.a. was awarded from 12.04.2016 to 30.01.2018 and @ 9.25% p.a. post award interest till date of actual payment. Finally claim no.7 pertained to costs and the Arbitrator awarded 4 lakhs to the appellant, being the successful party.

4.1. The Respondents challenged the award under Section 34 of the Arbitration and Conciliation Act , 19961 and it was allowed in part by the District Judge setting aside claim no. 1 for loss of business, since the same had never been claimed by the appellant and was thus beyond the Arbitrator’s jurisdiction. Claim no. 2 for uneconomic utilization of plant and machinery was also set aside because the Arbitrator didn’t account for the loss of 135 days at the behest of the appellant while determining the alleged 200 days of ‘wasted machine’.

4.2. Aggrieved by the decision of the District Judge, the appellant filed an appeal under Section 37 of the Act against the order setting aside the award on claims 1 and 2. On the other hand, the Respondent filed a cross appeal seeking setting aside of the rest of the claims as well. By the order impugned before us, the Calcutta High Court exercising jurisdiction under Section 37 of the Act set aside claim no.1 as well as claim nos. 3 and 4, but restored the Award with respect to claim no.2. However, while retaining claim no. 5 as it is, the High Court slightly modified claim no. 6 relating to pre-reference interest. 1 Hereinafter referred to as the ‘Act’.

5. A comprehensive table of the claims and the decision in the Award, Section 34 and Section 37 jurisdiction is as follows –