Implied reimbursement for statutory wage escalation upheld, while an express no-interest clause barred pre-reference and pendente lite interest.

A contractual stipulation to pay not less than fair wages, read with later statutory wage revisions taking retrospective effect, supported an implied obligation to reimburse the contractor for increased wage costs during the subsistence of the agreement, so enhanced rates for that period were upheld. An express clause barring interest for delay in payment displaced the arbitrator's usual power to grant pre-reference and pendente lite interest on claims arising under the contract, so such interest was disallowed for the contractual-period claim. That bar did not apply in the same manner to work continued after termination at the administration's request, so interest on the post-termination claim was sustained, with post-award interest to run on the recalculated sum.

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Issues: (i) Whether, in the absence of an express escalation clause, the contractor was entitled to enhanced rates for the period during which the agreement remained in force in view of the stipulation to pay fair wages and the subsequent statutory wage revisions. (ii) Whether the arbitral award could sustain pre-reference and pendente lite interest in the face of a contractual clause barring payment of interest, and whether the same bar applied to the claim period after termination of the agreement.

Issue (i): Whether, in the absence of an express escalation clause, the contractor was entitled to enhanced rates for the period during which the agreement remained in force in view of the stipulation to pay fair wages and the subsequent statutory wage revisions.

Analysis: The contract required payment of not less than fair wages, and the fair wage rate was linked to the wage notifications prevailing at the time of tender. During the currency of the contract, the relevant wage rates were revised from time to time with retrospective effect. In such a situation, the tendered rate could not be treated as immutable where the contractor was compelled to pay enhanced statutory wages. The obligation to pay fair wages carried an implied understanding that the contractor would be reimbursed for the increase brought about by statutory revision.

Conclusion: The contractor was entitled to enhanced rates for the contractual period, and the award on that score was upheld.

Issue (ii): Whether the arbitral award could sustain pre-reference and pendente lite interest in the face of a contractual clause barring payment of interest, and whether the same bar applied to the claim period after termination of the agreement.

Analysis: An arbitrator may ordinarily award interest for pre-reference, pendente lite, and post-award periods, but such power yields to an express contractual prohibition. The clause in question barred payment of interest or damage for delay in payment for any reason whatsoever. That prohibition applied to the claim arising during the subsistence of the agreement, so pre-reference and pendente lite interest on that amount could not be granted. The second claim related to the period after termination of the agreement, when the work was continued at the request of the railway administration; the contractual bar did not operate in the same manner against that claim, and interest on that amount was permissible. Post-award interest was to run only on the recalculated amount, with exclusion of any period during which operation of the award remained stayed.

Conclusion: Pre-reference and pendente lite interest on the contractual-period claim was disallowed, but interest on the post-termination claim was sustained, and post-award interest was to follow on the recalculated sum.

Final Conclusion: The award was interfered with only to the extent of deleting interest on the claim arising during the subsistence of the agreement, while the rest of the monetary relief, including interest on the post-termination claim, remained operative.

Ratio Decidendi: Where a contract expressly prohibits interest for delay in payment, an arbitrator cannot award interest contrary to that prohibition on claims governed by the contract, but enhanced payment for work done may still follow from an implied obligation to reimburse statutory wage escalation.

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