2010 (8) TMI 1040 - SC - Indian Laws

Summary

Issues Involved:
1. Dismissal of objections u/s 34 of the Arbitration & Conciliation Act, 1996.
2. Entitlement to claim escalation on the Contract Work.
3. Interpretation of the Contract by the Engineers.
4. Role of the Dispute Resolution Board.
5. Findings of the Arbitral Tribunal.
6. Judicial interference in arbitration awards.

Summary:

1. Dismissal of objections u/s 34 of the Arbitration & Conciliation Act, 1996:
This Appeal challenges the decision of the learned Single Judge who dismissed the Appellants' objections u/s 34 of the Arbitration & Conciliation Act, 1996. The Appellants have consecutively lost at all four tiers preceding this Appeal.

2. Entitlement to claim escalation on the Contract Work:
The Engineers, SHELADIA-RITES [JV], were approached to decide if the Contractors/Respondents were entitled to claim escalation on the Contract Work. The Engineers decided that the Contractors were entitled to escalation even on BoQ items, quantifying the amount payable by the Appellants to ` 17,27,18,420/-.

3. Interpretation of the Contract by the Engineers:
The Engineers, empowered by Clause 5.2.1 of the Contract, interpreted the Contract to allow escalation on the entire work, including BoQ items. This interpretation was upheld by the Arbitral Tribunal and the learned Single Judge, emphasizing that the Engineers were not re-writing the contract but exercising a contractual power.

4. Role of the Dispute Resolution Board:
The Dispute Resolution Board was approached by the Respondents, not the Appellants, to challenge the quantification of escalation. The Appellants were satisfied with the Engineers' computation of ` 17,27,18,420/- until this stage.

5. Findings of the Arbitral Tribunal:
The Arbitral Tribunal upheld the Engineers' decision and allowed interest at the rate of 10% per annum. The Tribunal concluded that the Engineers' interpretation of the contract was correct, and the escalation was payable on all BoQ items. The learned Single Judge found the Appellants' objections frivolous and ordered them to pay actual costs with interest at 9% per annum if not paid within 45 days.

6. Judicial interference in arbitration awards:
The judgment emphasizes that judicial interference in arbitration awards is limited. Section 34 of the A&C Act does not contemplate errors on the face of the Award. The learned Single Judge found no infraction of public policy and no perversity in the Arbitral Tribunal's decision. The Appeal was dismissed with additional costs of ` 30,000/-.