Contractual rate, proof of loss, and pendente lite interest shape arbitral claims and judicial review of awards.

Extra-lead claims under a contract must be determined by the contractual rate and the agreed procedure for supplemental items; a court cannot revise an arbitral award on merits beyond the limited scope under the Arbitration Act. Claims for non-supply of food grains, short supply of cement, and accumulated materials require reliable proof of actual supply, procurement, usage, or contractual entitlement, and unsupported or delay-related claims are not sustainable. Where the agreement does not bar interest, an arbitrator may award pendente lite interest on amounts referred to arbitration.

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Issues: (i) Whether the award on Claim No. I for extra lead could be sustained and whether the court could substitute the contractual rate while interfering with the award; (ii) Whether Claims Nos. III, IV and VII for non-supply of food grains, short supply of cement and value of accumulated materials were sustainable in view of the contract and the evidence; (iii) Whether pendente lite interest could be granted on the amounts awarded.

Issue (i): Whether the award on Claim No. I for extra lead could be sustained and whether the court could substitute the contractual rate while interfering with the award.

Analysis: The claim for extra lead was not a claim for compensation on account of delay or hindrance within the meaning of Clause 59, but a claim for additional expenditure incurred because the contractor had to quarry from a farther source than the one contemplated by the agreement. The contractual procedure for supplemental items governed the rate payable, and the arbitral fixation of a higher rate without proper basis could not be accepted. The court also held that the civil court had no jurisdiction to alter the award on merits beyond the limited powers under the Arbitration Act, and therefore the modified rate adopted by the sub-court was not sustainable on the arbitration record.

Conclusion: The contractor was entitled to the claim for extra lead, but only at the contractual rate worked out under the agreement, and the award stood restored to that extent in favour of the Appellant.

Issue (ii): Whether Claims Nos. III, IV and VII for non-supply of food grains, short supply of cement and value of accumulated materials were sustainable in view of the contract and the evidence.

Analysis: As regards food grains, the contractual arrangement still made supply dependent on availability and the claim was for compensation on the footing of non-supply and alleged escalation, but there was no reliable material showing actual availability, actual purchase from the market, or actual supply to labourers, and the claim was therefore unsupported. As regards cement, although the agreement and correspondence indicated shortage, the contractor failed to produce the ledger, vouchers, bills or permission showing procurement from outside, and the award was based on an unsafe reconstruction of quantities from theoretical requirements. As regards accumulated materials, the claim rested on an unproved assurance, the materials were not shown to have been used in execution, and the claim was additionally hit by the contractual bar on compensation for delay-related heads.

Conclusion: Claims Nos. III, IV and VII were not sustainable and were rightly rejected against the Appellant.

Issue (iii): Whether pendente lite interest could be granted on the amounts awarded.

Analysis: Where the agreement does not prohibit interest and the dispute is referred to arbitration, the arbitrator has power to award interest pendente lite. The sub-court's deletion of interest for the pendente lite period was inconsistent with the governing law on arbitral interest.

Conclusion: Interest on the restored claim was payable and the award of interest was restored in favour of the Appellant.

Final Conclusion: The appeals succeeded only in part. The contractor's entitlement was confined to the extra-lead claim at the contractual rate with interest, while the remaining monetary claims were disallowed.

Ratio Decidendi: An arbitral award may be interfered with where the claim is contrary to the contract or unsupported by evidence, but where the agreement does not prohibit it, pendente lite interest may be awarded on a referred dispute.

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