Arbitral compensation and scope of reference upheld, but enhanced rates cannot continue after the factual basis ends.

An arbitral award was upheld where the final compensation exceeded an interim computation in the claim, because the statement of claim had reserved later details and the award was still within the pleaded dispute. The arbitrator also acted within the scope of reference by assessing continuing loss from diverted traffic and related additional expenditure. The award was not treated as rewriting the contract merely because compensation was granted at a higher rate than the original contractual rate, since that rate reflected the changed factual burden on the contractor. However, compensation at the enhanced rate could not continue after January 2008, when the diversion of additional traffic ceased, so the award was reduced for the later period.

---

---

Issues: (i) whether the arbitral award was in excess of the claim; (ii) whether the arbitrator exceeded the scope of reference; (iii) whether the award amounted to rewriting the contract by enhancing the contractual rate; and (iv) whether the award of compensation at the enhanced rate could stand beyond January 2008.

Issue (i): whether the arbitral award was in excess of the claim

Analysis: The statement of claim showed that the amount of Rs. 1,03,50,263 was worked out only up to May 2007 and that details for the later period would be furnished during the hearing. The enhanced amount awarded by the arbitrator was therefore not beyond the pleaded claim merely because the final figure exceeded the interim computation placed on record.

Conclusion: The award was not in excess of the claim.

Issue (ii): whether the arbitrator exceeded the scope of reference

Analysis: The claim arose from continuing additional expenditure caused by diversion of traffic, and the material showed that the impact of the diverted traffic continued beyond the dates pointed out by the appellant. The arbitrator was therefore competent to assess the loss for the relevant period connected with the dispute referred for adjudication.

Conclusion: The arbitrator did not exceed the scope of reference.

Issue (iii): whether the award amounted to rewriting the contract by enhancing the contractual rate

Analysis: The contractual rate of Rs. 1,000 per km per month was fixed on the basis of the original traffic intensity. After diversion of traffic, the road suffered substantially heavier usage and the contractor incurred additional expenditure for maintenance. In that factual setting, the award of compensation at a higher rate reflected adjudication of consequential loss and not a rewriting of the bargain.

Conclusion: The award did not rewrite the contract.

Issue (iv): whether the award of compensation at the enhanced rate could stand beyond January 2008

Analysis: The diversion of additional traffic ceased from January 2008. Compensation at the enhanced rate could be justified only so long as the additional traffic continued, and an award continuing that rate until the end of the contract was not supportable thereafter.

Conclusion: The award could not survive beyond January 2008.

Final Conclusion: The compensatory award was sustained for the period during which the additional traffic burden continued, but it was reduced for the subsequent period when that factual basis had ceased.

Ratio Decidendi: An arbitral award may reflect compensation beyond an interim computation in the claim and may assess loss arising from continuing reference-related facts, but it cannot sustain compensation for a period after the factual foundation for that loss has ceased.

---