Toll concession entitlement and interest adjustment under a composite project, with limited remand on recoverable amounts

An arbitral award was assessed against the project documents, concession agreement and traffic data to determine whether the Bharatpur-Deeg stretch formed part of the integrated toll project. The contractor was treated as entitled to collect toll on that stretch, but compensation could not be enlarged beyond the reference before the tribunal and had to remain within the contractual and statutory limits supported by the record. The reduction of interest from 18% to 10% was upheld as consistent with the prevailing interest regime. The remaining dispute on the effect of non-execution of the second project phase and the amount recoverable for the Bharatpur-Deeg stretch was remitted for limited reconsideration.

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Issues: (i) Whether the contractor was entitled to collect toll from the Bharatpur-Deeg stretch as part of the composite project and whether compensation could be claimed for the alleged delay or failure in issuing and implementing the notification restricting traffic through Bharatpur town; (ii) Whether the reduction of interest from 18% to 10% was justified; (iii) Whether the matter required further consideration on the effect of non-execution of the second phase of the project and the amount, if any, recoverable for the Bharatpur-Deeg stretch.

Issue (i): Whether the contractor was entitled to collect toll from the Bharatpur-Deeg stretch as part of the composite project and whether compensation could be claimed for the alleged delay or failure in issuing and implementing the notification restricting traffic through Bharatpur town.

Analysis: The project documents, pre-bid clarification, concession agreement, and traffic data showed that the Bharatpur-Deeg section formed part of the integrated project and that users of that stretch were liable to pay toll. The claim for compensation based on non-issuance or delayed implementation of the notification could not be enlarged beyond the actual reference before the arbitral tribunal. The tribunal had proceeded on the basis of the issues framed in arbitration, and the courts below erred in travelling beyond the reference on matters not raised before the tribunal. At the same time, the tribunal could not sustain an award that ignored the compensatory character of toll and the contractual/statutory basis limiting recovery to the cost actually incurred.

Conclusion: The contractor was entitled to collect toll on the Bharatpur-Deeg stretch, but the award of compensation beyond the limited amount found to be supportable was not sustained.

Issue (ii): Whether the reduction of interest from 18% to 10% was justified.

Analysis: The rate of interest is governed by the statutory power to award interest at a rate not exceeding the current rate, and courts may vary the contractual rate having regard to prevailing banking realities and the circumstances of the case. The reduced rate was supported by the change in the interest regime and did not warrant interference.

Conclusion: The reduction of interest to 10% was upheld.

Issue (iii): Whether the matter required further consideration on the effect of non-execution of the second phase of the project and the amount, if any, recoverable for the Bharatpur-Deeg stretch.

Analysis: The record indicated that the second phase of work had not been executed, and the contractor could not claim a windfall profit without performing the corresponding contractual obligation. Since this aspect materially affected the true entitlement, complete justice required the arbitral tribunal to reconsider the limited questions of the amount recoverable for the Bharatpur-Deeg stretch and the contractual effect of non-execution of the second phase.

Conclusion: The matter was remitted to the arbitral tribunal for reconsideration of those limited questions.

Final Conclusion: The contractor obtained only limited monetary relief for delay in implementation, the interest reduction was sustained, and the remaining controversy was sent back for fresh consideration on specified aspects of entitlement.

Ratio Decidendi: An arbitral award cannot travel beyond the reference and contractual/statutory limits, while courts may adjust interest to the prevailing rate and remand limited issues for reconsideration where the record shows that the true entitlement depends on unresolved contractual performance.

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