Contractual bar on productivity claims, reduced loss-of-profit damages, no double compensation, and post-decree interest granted.

An arbitral claim for compensation for loss of productivity was barred by Clause 59 of the A.P. Detailed Standard Specifications, which confined the remedy to reasonable extension of time, and by Section 55 of the Contract Act where delayed performance was accepted without reservation. Damages for loss of profit could be considered where breach prevented execution, but the award had to address the actual work obstructed and the evidence on site availability; the original amount was reduced for failure to do so. A further sum on the loss-of-profit award was impermissible as double compensation or damages on damages. Post-decree interest was also payable, and the omission to grant it was corrected.

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Issues: (i) whether the contractor's claim for compensation for loss of productivity was barred by the contract and the Contract Act; (ii) whether the award of damages for loss of profit on the entire balance work was sustainable; (iii) whether the further award of compensation on the amount awarded as loss of profit was permissible; and (iv) whether interest from the date of decree till payment was payable.

Issue (i): whether the contractor's claim for compensation for loss of productivity was barred by the contract and the Contract Act.

Analysis: Clause 59 of the A.P. Detailed Standard Specifications barred any claim for compensation on account of delays or hindrances to the work, leaving only the remedy of reasonable extension of time. The contractor had also accepted delayed performance without reserving any right to claim compensation, attracting the closing part of Section 55 of the Contract Act. The arbitrators had ignored the contractual exclusion and the statutory bar while allowing compensation for alleged non-utilisation of men and equipment.

Conclusion: The claim for loss of productivity was barred and was rightly liable to be disallowed.

Issue (ii): whether the award of damages for loss of profit on the entire balance work was sustainable.

Analysis: Damages for loss of profit can be awarded where breach of contract prevents execution of work, but the award must rest on findings answering the real controversy and on the evidence as to how much of the work was actually prevented by the employer's default. The arbitrators assumed, without adequately addressing the contractor's own progress on the portions already handed over, that the entire balance work was lost because the full site was not available. That assumption involved non-application of mind to crucial factual questions and amounted to legal misconduct. The Court, however, modified the quantum instead of remitting the matter, fixing a reduced amount on the material on record.

Conclusion: The award under this head was unsustainable in its original amount and was reduced to 50% of the sum awarded by the arbitrators.

Issue (iii): whether the further award of compensation on the amount awarded as loss of profit was permissible.

Analysis: Granting a further sum on the amount already awarded as loss of profit amounted either to damages on damages or to interest by way of damages, neither of which is permissible in law. The additional award had no legal foundation and duplicated compensation for the same underlying breach.

Conclusion: The additional compensation on the loss-of-profit amount was not permissible and was liable to be set aside.

Issue (iv): whether interest from the date of decree till payment was payable.

Analysis: The award allowed interest only up to the date of decree, and the Court had power under Section 29 of the Arbitration Act to direct post-decree interest on the principal sum adjudged. Since no such direction had been made, the omission was corrected in appeal and a post-decree rate was fixed.

Conclusion: Interest from the date of decree till payment was payable and the cross-objection was allowed to that extent.

Final Conclusion: The arbitral award was interfered with only to the extent necessary to remove the contractual and legal bars, reduce the loss-of-profit component, delete the impermissible additional compensation, and grant post-decree interest.

Ratio Decidendi: An arbitral award contrary to an express contractual bar or to the statutory scheme of the Contract Act is liable to be set aside or modified, and compensation cannot be duplicated by adding further damages or interest on the same head of loss.

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