Arbitral award review under section 34 turns on plausible contract interpretation, contractual interest, and limited interference with facts.

An arbitral award will not be interfered with under section 34 where the challenge merely seeks reconsideration of settled law or factual quantification, and the award on compensation for subsequently imposed toll tax and service tax was upheld. Contractual compound interest, including for the post-award period, was sustained because the agreement expressly provided monthly compounding on unpaid sums. By contrast, an award granting extra payment for embankment work was set aside because the tribunal's reading of an unambiguous BOQ scheme was not a plausible interpretation of the contract and disregarded the contractual payment mechanism.

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Issues: (i) Whether the arbitral award allowing compensation for toll tax and service tax imposed by subsequent legislation called for interference under section 34 of the Arbitration and Conciliation Act, 1996; (ii) Whether the award of compound interest, including for the post-award period, was sustainable; (iii) Whether the award granting extra payment for embankment work under the disputed BOQ item was based on a plausible interpretation of the contract.

Issue (i): Whether the arbitral award allowing compensation for toll tax and service tax imposed by subsequent legislation called for interference under section 34 of the Arbitration and Conciliation Act, 1996.

Analysis: The claim was found to be covered by earlier binding decisions on the same subject. The challenge sought a re-examination of a settled question and also attempted to reopen quantification aspects that were factual in nature. No ground was made out for the Court to reassess the arbitral tribunal's factual appreciation or to depart from the existing coordinate Bench view.

Conclusion: The award on toll tax and service tax was upheld and the challenge failed.

Issue (ii): Whether the award of compound interest, including for the post-award period, was sustainable.

Analysis: The contract itself provided for interest compounded monthly at the stipulated rate on unpaid sums. Compound interest was thus supported by the agreement between the parties. The Court also noted that award of compound interest is permissible where there is a specific contractual or statutory basis, and no objection to this aspect had been pressed in the manner required for interference.

Conclusion: The award of compound interest was upheld and the challenge failed.

Issue (iii): Whether the award granting extra payment for embankment work under the disputed BOQ item was based on a plausible interpretation of the contract.

Analysis: The contract was read as providing one embankment item with two modes of execution, namely with soil alone or with soil and pond ash, each carrying a different rate. The Court held that the measurement methodology required separate consideration of the materials actually used and that the tribunal's majority view treated a clear contractual scheme as if the higher rate applied irrespective of the proportion of pond ash. That interpretation was held to be contrary to the contract, inconsistent with the parties' prior conduct, and beyond a mere plausible view. The award also could not override the engineer's role under the contractual mechanism for interim payment certificates.

Conclusion: The award granting extra payment for the embankment dispute was set aside in favour of the appellant.

Final Conclusion: The award was sustained on the tax and interest issues, but the embankment component was struck down, resulting in only partial relief to the appellant.

Ratio Decidendi: Interference under section 34 is warranted where an arbitral interpretation of an unambiguous contract is not a plausible view and borders on absurdity, but factual findings and contractually authorised interest provisions are not to be disturbed when supported by the record and the agreement.

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