Arbitration award review limits interference with compensation, interest and costs where breach findings are reasoned and not perverse.

A disputed question of breach and liability to levy compensation under a contract cannot be treated as a unilateral or excepted matter where the contractor contests the levy and the arbitrator records reasoned findings on delay, employer-caused hindrances, and coercion in obtaining an undertaking. Such findings are not to be interfered with under Section 34 absent perversity, jurisdictional error, or patent illegality. The arbitrator's award of interest and costs will also be sustained where it is supported by the contractual setting, evidence, and recorded reasons, and is not shown to be unreasonable. On these principles, the arbitral award was left undisturbed in material part.

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Issues: (i) Whether the arbitral finding that levy of compensation under clause 2 was illegal and that the delays were attributable to the petitioner warranted interference under Section 34 of the Arbitration and Conciliation Act, 1996; (ii) Whether the award of interest and costs called for interference.

Issue (i): Whether the arbitral finding that levy of compensation under clause 2 was illegal and that the delays were attributable to the petitioner warranted interference under Section 34 of the Arbitration and Conciliation Act, 1996.

Analysis: The award recorded that the work was completed after prolonged delay attributable to the petitioner, that extension of time had been granted for a substantial period without levy of compensation, and that the remaining levy was imposed despite the employer's own material indicating departmental hindrances. The dispute concerned the very entitlement to levy compensation, which is distinct from mere quantification. On the facts found by the arbitrator, the question of breach was not an excepted matter for unilateral determination by the employer, and the award also accepted that the contractor's undertaking had been obtained under duress and coercion. The court found no perversity or jurisdictional error in these findings.

Conclusion: The challenge to the award on compensation and delay failed, and the finding was upheld in favour of the respondent.

Issue (ii): Whether the award of interest and costs called for interference.

Analysis: The arbitrator had awarded interest at 12% per annum and costs after considering the contractual setting and the evidence. The court held that the rate of interest was not shown to be so unreasonable as to justify interference under Section 34, and the grant of costs was also supported by reasons recorded in the award.

Conclusion: No interference was called for with the award of interest and costs, and these parts of the award were sustained.

Final Conclusion: The objections to the arbitral award were rejected, and the award was left undisturbed in material part.

Ratio Decidendi: A contracting party cannot unilaterally adjudicate a disputed question of breach and levy compensation where the very liability is contested; such matters are arbitrable, and an award based on reasoned findings of fact will not be interfered with under Section 34 absent patent illegality or perversity.

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