Arbitration and delay-related escalation: compensation for increased costs within the reference is not excess of jurisdiction.

Where an arbitration reference covers delay in performance and the contractual consequences of that delay, an arbitrator may award escalation or similar compensation for increased costs arising during the extended period. The award in this dispute granted only part of the contractor's claim after finding delay and escalation, and the claim was treated as arising from the contract itself. On that basis, the award was held not to exceed the reference and was not vulnerable to challenge under section 30 of the Arbitration Act, 1940 for misconduct or want of jurisdiction.

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Issues: Whether the arbitrator exceeded his jurisdiction in granting escalation-related relief and whether the award was liable to be set aside under section 30 of the Arbitration Act, 1940.

Analysis: The dispute referred to arbitration included responsibility for delay in completing the contract and the consequences flowing from that delay. The award granted only a part of the contractor's claim towards increased prices during the extended period after finding that there had been delay and escalation in costs. Escalation was treated as a normal incident of delay in performance of the contract, and the claim was held to arise out of the contract itself. In these circumstances, the award did not travel beyond the reference and could not be impeached as an act of misconduct or want of jurisdiction under section 30 of the Arbitration Act, 1940.

Conclusion: The objection to the award failed, and the award was upheld and directed to be made the rule of the court in favour of the appellant.

Ratio Decidendi: Where a reference encompasses delay in performance and its contractual consequences, an arbitrator may award escalation or similar compensation arising from that delay, and such a determination is not open to challenge under section 30 of the Arbitration Act, 1940 as excess of jurisdiction or misconduct.

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