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Issues: (i) Whether the arbitrator lacked jurisdiction to award escalation or enhanced rates in the absence of an express escalation clause and whether that issue was barred by res judicata; (ii) Whether the interest awarded on the arbitral amount required reduction.
Issue (i): Whether the arbitrator lacked jurisdiction to award escalation or enhanced rates in the absence of an express escalation clause and whether that issue was barred by res judicata.
Analysis: The claim relating to compensation for extra expenditure caused by statutory wage revision had already been held to be arbitrable in earlier proceedings under the arbitration law, and the appellant had unsuccessfully challenged that finding up to this Court. The Court therefore held that the appellant could not re-agitate the same jurisdictional objection in the present proceedings. On merits also, the contract required payment of wages according to notified minimum wages, the contractor had faced a statutory wage hike during performance of the contract, and the correspondence and conduct of the parties showed acknowledgment that the increased burden required neutralization. The arbitrator's award was treated as a permissible exercise of jurisdiction and not as misconduct or a departure from the contract.
Conclusion: The objection to the award on the ground of absence of an escalation clause was rejected and the award on escalation was upheld in substance, in favour of the respondent.
Issue (ii): Whether the interest awarded on the arbitral amount required reduction.
Analysis: The Court considered the long lapse of time, the nature of the dispute, and the circumstances of the award. While accepting the principal entitlement, it found the rate of future and pendente lite interest granted by the arbitrator to be excessive and adjusted the rate to a uniform 9% per annum for the relevant period, with a higher rate only on default in payment of the balance within the time fixed.
Conclusion: The interest component was reduced, in favour of the appellant.
Final Conclusion: The award on escalation was sustained, but the interest terms were modified downward, and the appeals were allowed only to that limited extent.
Ratio Decidendi: Where a claim for compensation arising from statutory wage revision has already been held arbitrable, the same objection cannot be reopened in later proceedings, and an arbitrator does not misconduct himself by granting escalation where the evidence shows that the increased burden was within the scope of the dispute and the parties' conduct acknowledged the need for neutralization.
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