Waiver of contractual pre-arbitration steps upheld, while pre-reference interest was excluded and pendente lite interest sustained.

A contractual requirement that the Superintending Engineer first decide a dispute before arbitration was treated as a procedural precondition capable of waiver, not an absolute bar. Where the State delayed or frustrated that step, later agreed to appoint arbitrators, and did not persist with its objection, it could not rely on non-compliance to defeat arbitration. Interest for the pre-reference period was disallowed because it was unsupported by statute, contract, usage, or custom. Interest pendente lite, however, was upheld as permissible in appropriate cases, so the award stood substantially, with only pre-reference interest excluded.

---

---

Issues: (i) Whether failure or delay of the Superintending Engineer to give the contractual decision barred reference to arbitration under the clause requiring such decision before arbitration. (ii) Whether the arbitrator could be sustained in awarding interest for the pre-reference period and during pendency of the reference.

Issue (i): Whether failure or delay of the Superintending Engineer to give the contractual decision barred reference to arbitration under the clause requiring such decision before arbitration.

Analysis: The contractual stipulation requiring the Superintending Engineer's decision operated as a procedural precondition to arbitration, but it was not treated as an absolute and inflexible bar where the party bound to perform that step itself frustrated the process. The State delayed or diverted the decision-making process, later agreed to the appointment of arbitrators, and did not persist with its objections. In such circumstances, the procedural requirement was capable of waiver, and a party responsible for disabling compliance could not rely on the resulting non-compliance to defeat arbitration.

Conclusion: The bar based on non-compliance with the preliminary contractual step could not be sustained against the appellants.

Issue (ii): Whether the arbitrator could be sustained in awarding interest for the pre-reference period and during pendency of the reference.

Analysis: Interest for the period before the reference was not payable in the absence of statute, contract, usage, or custom, and that part of the award was rightly disallowed. By contrast, interest pendente lite was supportable in light of the later settled position that an arbitrator may award such interest in appropriate cases, and the award did not fail on that account.

Conclusion: The pre-reference interest was not sustainable, but the pendente lite interest was sustainable.

Final Conclusion: The awards were upheld substantially, with only the pre-reference interest excluded, and the impugned orders setting aside the awards were reversed.

Ratio Decidendi: A contractual procedural precondition to arbitration may be waived or deemed waived where the party entitled to insist on it disables or abandons compliance, and a non-speaking arbitral award is not invalid merely because it grants lump-sum relief, subject to the lawfulness of any interest awarded.

---