Arbitrator reimbursement for fair-wage escalation upheld only where contract implied such liability; minimum-wage increases excluded.

An arbitrator may award reimbursement for increased fair wages where the contract, read as a whole, requires payment of fair wages and shows reimbursement by necessary implication; the award is valid to that extent. Reimbursement for higher minimum wages was not sustainable because that increase flowed from statutory compulsion, not from any express or implied contractual undertaking. The quantum of reimbursement for fair-wage escalation was not fully worked out and required limited recalculation on the existing record. The award was therefore sustained only in part, with remand confined to quantification of the amount payable for increased fair wages and interest modified to 9%.

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Issues: (i) Whether the arbitrators had jurisdiction to award reimbursement for increased wage liability arising from revision of wages under the contract. (ii) Whether the quantum of reimbursement fixed by the arbitrators was sustainable.

Issue (i): Whether the arbitrators had jurisdiction to award reimbursement for increased wage liability arising from revision of wages under the contract.

Analysis: The arbitration clause covered disputes arising out of or connected with the contract. The contract, read as a whole, did not exclude reimbursement for increased fair wages. The contractor was obliged to pay fair wages as notified or prescribed, and the contractual setting showed that the parties contemplated payment on that basis. However, the contract did not contain any express or implied agreement to reimburse increases attributable to minimum wages, which were paid because of statutory compulsion and not because of the contract.

Conclusion: The arbitrators had jurisdiction to award reimbursement for increase in fair wages, but not for increase in minimum wages.

Issue (ii): Whether the quantum of reimbursement fixed by the arbitrators was sustainable.

Analysis: The record showed that the contractor had produced wage details, vouchers, and supporting material, and the arbitrators had also received further evidence after remand. The basis rejected earlier by the District Judge could not, on that ground alone, justify discarding the second award in its entirety. Yet the amount reimbursable for increased fair wages had not been separately worked out, so the matter required fresh determination to that limited extent.

Conclusion: The quantum finding was not wholly sustainable, and the matter had to be sent back for limited recalculation of the amount payable only towards increased fair wages.

Final Conclusion: The award was upheld only to the extent it related to reimbursable increase in fair wages, the challenge based on total lack of jurisdiction failed in part, and the matter was remitted for limited recalculation of the amount due with interest modified to 9%.

Ratio Decidendi: Where a contract requires payment of fair wages and the contractual setting shows reimbursement by necessary implication, an arbitrator may award escalation for increased fair wages, but not for wage increases arising solely from statutory minimum-wage obligations; an award beyond that limit is jurisdictionally unsustainable.

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