1989 (3) TMI 392 - HC - Indian Laws

Arbitration Ruling Overturned: Jurisdiction Limits Exceeded, Refund Valid, Interest Award Challenged

State of Andhra Pradesh Versus M/s. Associated Engineering Enterprises, Hyderabad

The court found that the arbitrator exceeded jurisdiction in awarding compensation under claim No. 1 due to contractual limitations. However, the refund ... - Issues Involved:1. Validity and legality of the award concerning claims Nos. 1, 8, and 9.2. Arbitrator's power to award interest from the date of the award.3. Legitimacy of the compensation awarded under claim No. 1.4. Validity of the refund awarded under claim No. 8.Detailed Analysis:1. Validity and Legality of the Award Concerning Claims Nos. 1, 8, and 9:Claim No. 1:- The respondent claimed a total sum of Rs. 3,73,270.93 under claim No. 1, divided into sub-heads including compensation for delay in handing over the site, reimbursement for extra expenditure, and compensation for dismantling buildings.- The arbitrator awarded Rs. 2,81,800 under this claim without specifying amounts under each sub-head.- The court held that the arbitrator exceeded his jurisdiction in awarding this amount. The claim for compensation was barred by Clause 59 of the APDSS, which precludes claims for compensation on account of delays or hindrances caused by the department.- The court noted that the contractor did not terminate the contract due to delays but accepted extensions, thus precluding him from claiming compensation under Section 55 of the Contract Act unless he had given notice of his intention to claim compensation at the time of accepting the delayed performance.Claim No. 8:- The respondent claimed Rs. 72,645.42 for the refund of recovery made for excess steel consumed.- The arbitrator allowed the claim in full.- The court found that the arbitrator was competent to allow this claim. The agreement did not specifically state that steel used for bolts and frames should be treated as wastage, thus it was within the arbitrator's purview to decide this issue.Claim No. 9:- The arbitrator awarded interest at the rate of 15% per annum from the date of the award till the date of payment.- The court held that the arbitrator had no power to award interest for the period subsequent to the date of the award, as the reference to arbitration was governed by Chapter II of the Arbitration Act, which does not allow such interest.2. Arbitrator's Power to Award Interest from the Date of the Award:- The court cited the Supreme Court decision in Executive Engineer (Irrigation) Galimala v. Abnaduta Jena, holding that the arbitrator has no power to award interest for the period subsequent to the date of the award.- The award of interest was deemed incompetent and an error apparent on the face of the record.3. Legitimacy of the Compensation Awarded Under Claim No. 1:- The court extensively discussed Clause 59 of the APDSS, which bars claims for compensation on account of delays or hindrances caused by the department.- The court also referred to Section 55 of the Contract Act, emphasizing that the contractor did not give notice of his intention to claim compensation at the time of accepting the delayed performance.- The court concluded that the arbitrator exceeded his jurisdiction in awarding compensation under claim No. 1, as such a claim was barred by the terms of the contract.4. Validity of the Refund Awarded Under Claim No. 8:- The court found that the arbitrator was competent to allow the refund claim, as the agreement did not explicitly prohibit treating steel used for bolts and frames as wastage.- The arbitrator's decision was within the scope of the agreement, and thus, the award under claim No. 8 was upheld.Conclusion:- The Civil Miscellaneous Appeal and the Civil Revision Petition were allowed in part.- The award amount under claim No. 1 was deleted.- The arbitrator's award of interest from the date of the award till the date of decree was set aside.- The respondent-contractor was entitled to interest from the date of the decree at the rate of 15% per annum till realization.- No order as to costs was made.