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of <h1>Supreme Court: Engineer's Damages Decision Final. Non-Arbitrable Exception Matters Clarified. Refund Directive Issued.</h1> <h3>M/s. MITRA GUHA BUILDERS (INDIA) COMPANY Versus OIL AND NATURAL GAS CORPORATION LIMITED</h3> M/s. MITRA GUHA BUILDERS (INDIA) COMPANY Versus OIL AND NATURAL GAS CORPORATION LIMITED - TMI Issues Involved:1. Arbitrability of levy of pre-estimated liquidated damages and reasonable compensation by the Superintending Engineer.2. Whether the levy of liquidated damages under Clause 2 of the contract is final and an 'excepted matter' not falling within the jurisdiction of the Arbitrator.Detailed Analysis:1. Arbitrability of Levy of Liquidated Damages:The primary issue was whether the levy of pre-estimated liquidated damages by the Superintending Engineer under Clause 2 of the contract was arbitrable. The Arbitrator initially allowed the claimant's claims and disallowed the liquidated damages imposed by the respondent, ONGC, considering them as a penalty. The Arbitrator awarded significant amounts to the claimant in both arbitration cases. However, the High Court's Division Bench later set aside these findings, emphasizing that Clause 2 of the contract made the Superintending Engineer's decision on liquidated damages final and non-arbitrable. This was upheld by the Supreme Court, which noted that Clause 2 provided a complete mechanism for determining liability and compensation for delays, making the Superintending Engineer's decision final and binding, thus excluding it from arbitration.2. Finality and 'Excepted Matter' under Clause 2:The Division Bench of the High Court and subsequently the Supreme Court held that the decision of the Superintending Engineer regarding the levy of liquidated damages was final and constituted an 'excepted matter' under Clause 2, read with Clause 25 of the contract. This meant that such decisions were excluded from arbitration. The Supreme Court referred to the contractual terms which clearly indicated the parties' intention to exclude certain matters from arbitration, particularly those where the Superintending Engineer's decision was deemed final. The Court also referenced previous judgments, such as Vishwanath Sood v. Union of India, to support the view that the determination of compensation under such clauses is outside the purview of arbitration. The Supreme Court concluded that the Arbitrator had overstepped his jurisdiction by adjudicating on the liquidated damages, which were explicitly excluded from arbitration by the contract's terms.Conclusion:The Supreme Court dismissed the appeals, affirming the Division Bench's interpretation that the levy of liquidated damages by the Superintending Engineer under Clause 2 of the contract was final and not subject to arbitration. The Court ordered the appellant to refund the amount withheld by ONGC along with accrued interest, reflecting the finality of the Superintending Engineer's decision as per the contract.
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