Supreme Court Restores Contractor's Compensation for Delay, Recognizes Duress in "No Claim Certificate" Issuance.

The SC set aside the Division Bench's judgment and restored the Single Judge's order, recognizing the contractor's entitlement to compensation for delays caused by the respondent. The SC acknowledged that the "No Claim Certificate" was issued under duress, as the respondent withheld payments. The court emphasized limited judicial interference in arbitration awards, supporting the arbitrator's decision. The contractor was awarded costs of Rs. 10,000, and the appeals were allowed.

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Issues Involved:
1. Delay in the completion of the contract.
2. Claim for escalation charges.
3. Issuance of "No Claim Certificate" under duress.
4. Scope of judicial interference in arbitration awards.

Issue-wise Analysis:

1. Delay in the completion of the contract:
The respondent, a Government of India undertaking, floated tenders for constructing a compound wall and a bridge over a nala. The contractor's tenders were accepted, and formal agreements were signed on 12th October 1999, requiring completion within four months. The work was delayed due to factors attributable to the respondent, as highlighted in various letters by the contractor. Despite repeated requests for facilities and payments, the work was not completed on time.

2. Claim for escalation charges:
The contractor submitted a bill on 23rd June 1991, expecting compensation for the variation in contract terms. The respondent advised submitting a final bill, which was verified with objections. The contractor disputed the verification and reserved the right to seek arbitration. The respondent demanded a "No Claim Certificate" for releasing the balance payment. The contractor issued the certificate under duress but still did not receive the payment. The matter was referred to arbitration, and the arbitrators awarded certain amounts to the contractor. The Single Judge held that clauses 18 and 34 allowed for escalation charges due to the respondent's fault. However, the Division Bench set aside this order, stating that the clauses did not visualize any claim for escalation and prohibited extra amounts due to price fluctuation.

3. Issuance of "No Claim Certificate" under duress:
The contractor argued that the "No Claim Certificate" was issued under economic duress, as evidenced by the correspondence. The Division Bench found no evidence of duress. However, the Supreme Court, upon reviewing the letters, concluded that the contractor was indeed under duress, as the respondent withheld payments and insisted on the certificate. The contractor's repeated requests and the desperate tone in the letters supported this claim.

4. Scope of judicial interference in arbitration awards:
The Supreme Court emphasized that the scope for judicial interference in non-speaking arbitration awards is limited. The court should not sit as an appellate body over the arbitrator's decisions. The arbitrator's view, if permissible, should not be interfered with, even if a different view is possible. The court highlighted that unforeseen situations in commercial transactions might warrant compensation beyond the contract period, especially when delays are attributable to one party.

Conclusion:
The Supreme Court set aside the Division Bench's judgment, restoring the Single Judge's order. The court recognized the contractor's right to compensation due to delays caused by the respondent and acknowledged the duress under which the "No Claim Certificate" was issued. The contractor was awarded costs of Rs. 10,000, and the appeals were allowed.

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