Arbitrator cannot award sums beyond the contract; excess compensation and escalation were treated as legally unsustainable.

An arbitrator cannot grant compensation or escalation contrary to the contract, and an award that exceeds the agreement is liable to be set aside for legal misconduct under the Arbitration Act, 1940. On Claim No. 3, the contract placed on the contractor the risk of obtaining landowners' consent and excluded the company's liability for claims arising from land use, so compensation for obstruction by local persons was beyond the agreement. On Claim No. 9, no escalation clause existed, and the award itself showed the contractor had accepted the wage increase without pressure, so the additional amount was unsupported by the contract and findings.

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Issues: (i) Whether the arbitrator's award on Claim No. 3 was beyond the scope of the contract and liable to be set aside for legal misconduct. (ii) Whether the award on Claim No. 9, relating to escalation, was contrary to the agreement and liable to be set aside under the Arbitration Act, 1940.

Issue (i): Whether the arbitrator's award on Claim No. 3 was beyond the scope of the contract and liable to be set aside for legal misconduct.

Analysis: The award disclosed the issues and findings, so it was open to scrutiny. The contract contained a tender condition making the contractor responsible for obtaining consent of landowners and excluding the company's liability for claims arising from such use of land. The arbitrator nevertheless awarded compensation for obstruction caused by local persons, though the contract did not impose that risk on the company.

Conclusion: The award on Claim No. 3 was beyond the scope of the agreement and could not be sustained.

Issue (ii): Whether the award on Claim No. 9, relating to escalation, was contrary to the agreement and liable to be set aside under the Arbitration Act, 1940.

Analysis: The agreement contained no escalation clause. The arbitrator himself found that the contractor was not pressurised to accept a wage hike and had acceded to the increase. In these circumstances, the additional amount awarded under escalation was not supported by the contract or by the findings recorded in the award.

Conclusion: The award on Claim No. 9 was contrary to the agreement and liable to be set aside.

Final Conclusion: The award suffered from legal misconduct and the appeal failed.

Ratio Decidendi: An arbitrator cannot award amounts contrary to the contract or beyond its terms, and where such excess appears from the award itself, it is liable to be set aside for legal misconduct under Section 30 of the Arbitration Act, 1940.

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