Arbitrator's Awards Adjusted: Contractor's Claim Partially Upheld, Interest Modified; Employer's Counter-Claim Maintained.

The SC set aside the arbitrator's awards for the contractor's claims regarding delay in mobilization advance and compensation for idle machinery. The contractor's claims for payments and refunds totaling Rs. 1,34,24,407/- were upheld, with interest reduced to 9% per annum. The award for the employer's counter-claim regarding mobilization advance was upheld, including 18% interest. Rejections of other contractor claims and employer counter-claims were affirmed. Each party was directed to bear its own costs, and the employer was instructed to release the title deeds after adjustments.

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Issues Involved:
1. Delay in release of mobilization advance.
2. Claim for compensation due to idle machinery and loss of production.
3. Award of interest on various claims.
4. Claims for payment for work done and refund of amounts withheld.
5. Rejection of certain claims by the contractor.
6. Rejection of counter-claims by the employer.

Detailed Analysis:

Issue 1: Delay in Release of Mobilization Advance
The contractor claimed compensation for loss of profitability due to the late release of mobilization advance, arguing that the delay prevented the timely setup of a factory necessary for manufacturing pipes. The arbitrator awarded Rs. 33,06,500/- to the contractor, finding that the employer delayed the release of mobilization advance by 8.5 months. However, the Supreme Court found this award erroneous. The contract stipulated that mobilization advance be released in three installments against bank guarantees, and the contractor had also provided multiple bank guarantees over time. The Court held that the delay was on the contractor's part, not the employer's, and thus, the award for claim No. 1 was set aside.

Issue 2: Claim for Compensation Due to Idle Machinery and Loss of Production
The contractor claimed Rs. 12,072/- per day for idle machinery and loss of production due to the employer's failure to release the mortgaged plant. The arbitrator awarded this amount from the date of the award, reasoning that the mortgage should end once the employer's counter-claim for mobilization advance was satisfied. The Supreme Court found this reasoning flawed, noting that the mortgage would continue until the mobilization advance was repaid with interest. The award was deemed a legal misconduct and error apparent on the face of the award, leading to its setting aside.

Issue 3: Award of Interest on Various Claims
The arbitrator awarded pre-reference, pendente lite, and future interest at 18% per annum on the sums awarded. The Supreme Court upheld the arbitrator's jurisdiction to award interest but modified the rate to 9% per annum, considering it more appropriate under the Interest Act, 1978, and the Arbitration Act, 1940.

Issue 4: Claims for Payment for Work Done and Refund of Amounts Withheld
The contractor's claims for payment for work done and refund of amounts withheld (Claims 2 & 16, 3 & 15, 5 & 18, 6 & 17, 9 & 19, 11 & 20, 24, 27 & 28, 29, 30, 31, 32, 33, 35 with 25 & 34) were upheld by the arbitrator. The Supreme Court found no infirmity in these awards, noting that the arbitrator had examined the material and terms of the contract before making the awards.

Issue 5: Rejection of Certain Claims by the Contractor
The arbitrator rejected several claims (Claims 4, 7, 8, 10, 21, 14, 22, 23, 26, 38, 39, 40, 41 & 41A, 42 & 42A, and 43) of the contractor. The Supreme Court upheld these rejections, finding no ground for interference.

Issue 6: Rejection of Counter-Claims by the Employer
The arbitrator rejected the employer's counter-claims (1, 2, 4, and 5), except for counter-claim No. 3, which was for the refund of mobilization advance with interest. The Supreme Court upheld the rejection of these counter-claims, noting that the arbitrator had found the delays and breaches to be on the employer's part.

Final Judgment:
1. The award of Rs. 33,06,500/- for claim No. 1 and Rs. 12,072/- per day from 21.9.1994 for claim 37A were set aside.
2. The awards for claims 2 & 16, 3 & 15, 5 & 18, 6 & 17, 9 & 19, 11 & 20, 24, 27 & 28, 29, 30, 31, 32, 33, 35 (with 25 & 34) totaling Rs. 1,34,24,407/- were upheld.
3. Interest on Rs. 1,34,24,407/- was set at 9% per annum from 3.9.1990 till payment.
4. The award of Rs. 59,42,275/- for counter-claim No. 3 with 18% interest per annum was upheld.
5. The direction for adjustment of amounts due under counter-claim No. 3 against amounts due to the contractor was upheld, and the employer was directed to release the title deeds.
6. Rejection of claims 4, 7, 8, 10, 21, 14, 22, 23, 26, 38, 39, 40, 41 & 41A, 42 & 42A, and 43 of the contractor and counter-claims 1, 2, 4, and 5 of the employer were upheld.
7. Each party was to bear its own costs.

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