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Issues: (i) Whether implementation of GST constituted a change in law and a force majeure event under the contract, justifying the respondent's claim for compensation; (ii) Whether the arbitral award could be interfered with under Section 34 of the Arbitration and Conciliation Act, 1996.
Issue (i): Whether implementation of GST constituted a change in law and a force majeure event under the contract, justifying the respondent's claim for compensation.
Analysis: The contract contained a force majeure clause covering any change in law having a material adverse effect on contractual obligations. The GST notification issued on 28-6-2017 brought the new tax regime into force from 1-7-2017 and was treated as a change in law. The respondent had promptly notified the petitioner about the fall in traffic and toll collections, and the petitioner's later circular of 16-3-2018 accepted GST implementation as a change in law for toll contractors, leaving the factual impact to be examined case by case. On the evidence, the reduced traffic and toll revenue were found to have materially affected performance under the contract.
Conclusion: The implementation of GST was held to amount to a change in law falling within the force majeure clause, and the respondent's claim was upheld.
Issue (ii): Whether the arbitral award could be interfered with under Section 34 of the Arbitration and Conciliation Act, 1996.
Analysis: The scope of interference under Section 34 is limited, and the Court does not sit in appeal over the arbitral award. Where the arbitrator's view is a plausible one on the material before it, and no jurisdictional or other ground warranting interference is shown, the award cannot be set aside merely because another view is possible. The arbitrator's findings on prior knowledge, contractual binding effect after the letter of acceptance, the circular, and the traffic data were all based on evidence and a permissible interpretation of the contract.
Conclusion: No ground for interference under Section 34 was made out, and the award was sustained.
Final Conclusion: The arbitral award was left undisturbed, and the petition challenging it was rejected as lacking merit.
Ratio Decidendi: In a Section 34 proceeding, an arbitral award will not be interfered with if the arbitrator has taken a plausible view on the contractual terms and evidence, and a subsequent governmental notification may be treated as a change in law and force majeure where it materially affects contractual performance.
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