Excepted-matters clauses and interest bars must be express before arbitration claims or interest awards can be excluded.

Strict compliance with an excepted-matters procedure is required before a contractual claim can be excluded from arbitration. Where the arbitrator records factual findings that measurement records were altered and the contractual procedure was not followed, the High Court cannot reclassify the claims as non-arbitrable absent perversity in those findings; the exclusion of the claims was therefore unsustainable. An arbitrator's power to award interest under the Arbitration Act, 1940 depends on the contract, the Interest Act, 1978 and settled principles, but a mere restriction on claims for interest or damages does not amount to an express bar on awarding interest on sums found due. The interest award was upheld and the High Court's interference was set aside.

---

---

Issues: (i) whether the claims treated by the High Court as excepted matters were in fact non-arbitrable; (ii) whether the contractual clauses barred the arbitrator from awarding interest.

Issue (i): whether the claims treated by the High Court as excepted matters were in fact non-arbitrable.

Analysis: The award recorded factual findings that the measurement records had been manipulated and altered, and that the procedure contemplated by the contract for treating claims as excepted matters had not been followed. Those findings were not shown to be perverse. In such a situation, the High Court could not disregard the arbitrator's factual determinations and reclassify the claims as non-arbitrable merely by invoking the excepted-matters clause. Strict compliance with the contractual procedure was necessary before a claim could be excluded from arbitration.

Conclusion: The claims were not proved to be excepted matters and the High Court was ? invalid? The High Court's view on non-arbitrability was set aside, in favour of the appellant.

Issue (ii): whether the contractual clauses barred the arbitrator from awarding interest.

Analysis: Under the Arbitration Act, 1940, the arbitrator's power to award interest depends on the contract, the Interest Act, 1978, and settled judicial principles. The clauses relied upon by the High Court merely restricted claims against the employer for interest or damages in specified situations; they did not expressly bar the arbitrator from granting interest on amounts found due. The authorities governing arbitration recognise that, unless there is a clear and express prohibition, interest may be awarded for the relevant periods, including pendente lite and post-award interest where justified. On a strict construction, the contract did not exclude that jurisdiction.

Conclusion: The arbitrator was competent to award interest, and the High Court erred in interfering with that part of the award, in favour of the appellant.

Final Conclusion: The award was restored in substance, the High Court's interference was unsustainable, and the appellant succeeded in the appeal.

Ratio Decidendi: An arbitrator's award on contractual claims and interest cannot be set aside on the basis of an excepted-matters clause or an alleged bar on interest unless the contract expressly and clearly excludes the claim and the factual findings supporting arbitrability are shown to be perverse.

---