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Issues: (i) Whether a so-called partial award under the Arbitration and Conciliation Act, 1996 could be treated as a valid interim award and whether the subsequent additional award was maintainable. (ii) Whether the arbitral award on delay and disruption claims, including increased overheads, loss of profit and additional project management costs, was liable to be set aside for want of jurisdiction, patent illegality, or because the claim was outside the contract. (iii) Whether the awards on exchange loss and substitution/material-related claims exceeded the contract or the scope of reference. (iv) Whether the award of interest required interference.
Issue (i): Whether a so-called partial award under the Arbitration and Conciliation Act, 1996 could be treated as a valid interim award and whether the subsequent additional award was maintainable.
Analysis: The statutory scheme recognises an award to include an interim award, and an interim award may finally decide some issues even though other matters remain pending. The label used by the arbitrator is not decisive; what matters is whether the determination is final as to the matters it covers. The power to correct, interpret, or make an additional award for claims presented but omitted is also expressly contemplated. The challenge to the maintainability of the additional award failed on that footing.
Conclusion: The partial award was valid as an interim award, and the additional award was maintainable.
Issue (ii): Whether the arbitral award on delay and disruption claims, including increased overheads, loss of profit and additional project management costs, was liable to be set aside for want of jurisdiction, patent illegality, or because the claim was outside the contract.
Analysis: The contract contemplated time-linked performance, extension of time, and compensation for delay where time was not the essence. The Court held that the promisee was entitled to damages for loss occasioned by delay under the Contract Act and that the arbitral tribunal could assess such damages. The claim was not excluded merely because no invoice had been issued; a dispute can arise from correspondence and conduct. The tribunal also acted within its domain in applying the Emden Formula to quantify overhead and profit loss, since the Act does not prescribe a single method of computation. The award was not shown to be contrary to the contract or to the public policy standard governing interference.
Conclusion: The delay and disruption awards, including the use of the Emden Formula, were substantially upheld.
Issue (iii): Whether the awards on exchange loss and substitution/material-related claims exceeded the contract or the scope of reference.
Analysis: The exchange-rate clause was part of the bargain and could not be ignored merely because payment was delayed; however, its operation was confined by the contractual arrangement and the tribunal's view was sustained only to the extent the relevant claims fell within the agreed payment structure. In contrast, the substitution claim was found to go beyond the contractual allocation of risk because the relevant material-procurement understanding, together with ONGC's express stand, showed that the additional tonnage cost was not recoverable in full. To that extent, the award crossed the contractual boundary and required correction.
Conclusion: The award on exchange-related claims was not wholly disturbed, but the substitution-related enhancement was held impermissible to the stated extent.
Issue (iv): Whether the award of interest required interference.
Analysis: The tribunal had power to grant pre-award and post-award interest under the Act, subject to the contract and judicial review on narrow grounds. The Court, however, considered the overall circumstances and the long lapse of time, and moderated the interest component to bring it in line with justice between the parties.
Conclusion: The interest award was modified by reducing the rate.
Final Conclusion: The arbitral awards were upheld in substantial part, but the Court interfered to a limited extent by modifying the award on the substitution-related claim and reducing the interest component, leaving the rest of the tribunal's determinations intact.
Ratio Decidendi: An arbitral award may be interfered with under Section 34 only on narrow grounds such as patent illegality, conflict with public policy, or a clear excess of contractual authority, and an interim or partial award is valid if it finally decides the matters covered by it.
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