Reasoned arbitral awards and contractual proof of extra work: bare premium claims fail, but established entitlement may still be assessed.

A contract requiring reasons for arbitral awards above a specified threshold meant a bare award on extra-item claims could not stand, but the underlying claim was not to be rejected where the extra work was otherwise established and assessable on the contractual basis. The monthly-statement clause for DALDAL land work was a disclosure safeguard, not an absolute bar, so Claim No. 8 remained payable on evidence, again only at the proper premium rate. The reduction of interest to 12% per annum was upheld because no contractual basis supported the higher rate. The claimant therefore succeeded only in part, with the award modified on premium and the interest adjustment maintained.

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Issues: (i) Whether the arbitral award awarding extra-item claims at a premium of 93.12% could be sustained when the contract required reasons to be stated for awards of Rs. 1 lakh and above. (ii) Whether the claim for additional work in DALDAL land under Claim No. 8 could be rejected for non-compliance with the monthly statement requirement in the contract. (iii) Whether the reduction of interest to 12% per annum was justified.

Issue (i): Whether the arbitral award awarding extra-item claims at a premium of 93.12% could be sustained when the contract required reasons to be stated for awards of Rs. 1 lakh and above.

Analysis: The contract expressly required reasons to be recorded for awards above the stipulated amount. The award on the extra-item claims merely stated that the premium worked out to 93.12% and awarded it, without any supporting reasoning. The higher courts were correct in holding that the premium could not be justified merely by comparing estimated cost with the contract amount. At the same time, the claim itself was not to be rejected outright, because the extra work was not seriously disputed and the proper rate had to be determined on the contract basis.

Conclusion: The award at 93.12% was not sustainable, but the claimant remained entitled to the extra-item claims at the correct premium rate of 35.02%.

Issue (ii): Whether the claim for additional work in DALDAL land under Claim No. 8 could be rejected for non-compliance with the monthly statement requirement in the contract.

Analysis: The monthly return clause was intended to ensure timely disclosure of extra work and prevent stale or unsupported claims, but it was not an absolute bar in every case. The material showed that the marshy nature of the land, the extra work, and the use of extra material were established. A purely technical rejection would not be where the work was actually done and the entitlement could be adjudicated on evidence. However, the claim had to be computed only at the proper premium rate applicable under the contract.

Conclusion: The claim under Claim No. 8 could not be rejected outright and was payable, but only at the premium of 35.02%.

Issue (iii): Whether the reduction of interest to 12% per annum was justified.

Analysis: In the absence of any contractual stipulation supporting the higher rate, the interest awarded by the arbitrator was excessive. The appellate reduction to 12% per annum was appropriate and did not call for interference.

Conclusion: The reduction of interest to 12% per annum was upheld.

Final Conclusion: The claimant succeeded in part: the award was modified to allow the additional claims at the corrected premium rate, while the interest modification was maintained and the remaining reliefs were not disturbed.

Ratio Decidendi: Where a contract requires reasons for a substantial arbitral award, a cryptic award on extra-item claims cannot be sustained, but the underlying claim need not be rejected outright if the entitlement is otherwise established and can be assessed on the proper contractual basis.

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