2011 (10) TMI 741 - SC - Indian Laws

Arbitration award - Contract for earthwork in formation and miscellaneous works - HELD THAT - The whole exercise undertaken by the arbitrator in determining the rate for the work at Serial No. 3 of Schedule A was beyond his competence and authority. It was not open to the arbitrator to rewrite the terms of the contract and award the contractor a higher rate for the work for which rate was already fixed in the contract. The arbitrator having exceeded his authority and power, the High Court cannot be said to have committed any error in upsetting the award passed by the arbitrator with regard to Claim 4. We, thus, find that the High Court did not commit any error in upsetting the award of the arbitrator with regard to Claim 4 in the statement of claim. Mr Tandale did not assail the judgment of the High Court with regard to other claims upset by the High Court, namely, Claims 8 and 11. With regard to Claim 6, the High Court has already directed the respondents to calculate the amount under this head at the time of settling the final bill and also directed the respondents to pay interest @ 12% p.a on the due amount, if not paid. Obviously, in view of the directions given by the High Court in para 26 of its judgment, the respondents will have to calculate the amount as regards the contractor's Claim 6 at the time of settling the final bill. If the final bill has not been settled so far, we direct the respondents to settle the final bill expeditiously and, in any case, not later than eight weeks from the date of receipt of copy of this order. The respondents shall have to pay interest as directed by the High Court on the due amount, if not paid so far. Consequently, the appeal is dismissed with no order as to costs.

Summary

Issues involved: Appeal against the judgment of the Division Bench of the Andhra Pradesh High Court regarding an arbitration award.

Summary:
1. The appellant, a construction company, was awarded a contract for earthwork which was extended multiple times. The final bill was not passed by the respondents, leading to a dispute.
2. The contractor sought appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996. Justice Shri T.N.C Rangarajan was appointed as the arbitrator.
3. The arbitrator awarded a sum in favor of the contractor, which was challenged by the respondents under Section 34 of the 1996 Act. The petition was dismissed by the City Civil Court.
4. The respondents appealed the decision to the Andhra Pradesh High Court, which modified the award regarding certain claims.
5. The contractor challenged the High Court's decision mainly regarding Claim 4, arguing that the arbitrator's award was well-reasoned.
6. The High Court's judgment was justified by the respondents, leading to a detailed examination of the rates provided in the contract for earthwork.
7. The High Court set aside the arbitrator's award for Claim 4, stating that the arbitrator exceeded his authority by awarding a higher rate than specified in the contract.
8. The High Court's decision regarding other claims was not challenged by the contractor. The respondents were directed to calculate and settle the final bill promptly.

In conclusion, the appeal was dismissed with no order as to costs.