Court upholds arbitral award, affirms contract dispute resolution process

The Court dismissed the petition challenging an arbitral award, finding that the respondent's actions complied with the dispute resolution procedure outlined in the contract. The Court held that the strict time limits in the contract clauses were not mandatory and did not prevent the contractor from seeking reference to the Dispute Review Expert after the specified period. Additionally, the Court affirmed the Arbitral Tribunal's authority to allow amendments to the claimed amount during arbitration proceedings, rejecting the petitioner's arguments. Ultimately, the Court upheld the arbitral award and the respondent's adherence to the dispute resolution process.

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Issues Involved:
1. Whether the respondent followed the procedure for dispute resolution as prescribed in clauses 24 and 25 of the General Conditions of Contract.
2. Whether the amendment of the amount claimed under Claim No. 4 before the arbitral tribunal was permissible without resorting to the procedure prescribed in clauses 24 and 25.

Summary:

Issue 1: Procedure for Dispute Resolution

This petition u/s 34 of the Arbitration and Conciliation Act challenges the arbitral award dated 14.07.2009. The Court limited its notice to whether the respondent followed the dispute resolution procedure in clauses 24 and 25 of the General Conditions of Contract. The petitioner argued that the respondent failed to refer the Engineer's decision to the Dispute Review Expert (DRE) within 14 days as required by clause 24.1. The respondent contended that the 14-day period is not mandatory and that they sought reference to the DRE within 14 days of the Engineer's second rejection. The Court held that clause 24.1 does not prescribe a strict limitation period and does not bar the contractor from seeking reference to the DRE after 14 days. The purpose of the 14-day period is to ensure contemporaneous reference, not to shut out the contractor's rights. The Court found no merit in the petitioner's objection based on clauses 24 and 25, noting that the arbitration agreement could be invoked without strictly following these clauses.

Issue 2: Amendment of Claim No. 4

The petitioner argued that the respondent should have followed the procedure in clauses 24 and 25 before amending the amount claimed under Claim No. 4. The respondent had reduced the claim amount twice before the arbitral tribunal awarded approximately Rs. 0.39 crores. The Court held that once a dispute is referred to arbitration, a change in the claimed amount does not constitute a new claim and does not require re-invocation of the procedure in clauses 24 and 25. The jurisdiction to deal with the claim rests with the Arbitral Tribunal, and neither the Engineer nor the DRE has authority over it once referred. The Court rejected the petitioner's submission, affirming the Arbitral Tribunal's power to allow amendments under the Act.

Conclusion:

The Court found no merit in the petition and dismissed it, upholding the arbitral award and the respondent's adherence to the dispute resolution procedure.

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