- (1.) Three broad heads have been urged by the petitioner in assailing the subject award under Section 34 of the Arbitration and Conciliation Act, 1996 on the ground of the award being opposed to public policy and it being beyond the terms of the matrix contract governed by the arbitration agreement. The petitioner says that a substantial part of the amount awarded to the contractor is on account of escalation which clause 17.1 of the general conditions governing the contract expressly prohibited. The petitioner contends that damages have been awarded on account of idle labour and equipment which clause 18 of the general conditions specifically excluded. The petitioner questions the finding that the petitioner wrongfully retained the machinery and equipment contractor and suggests that the petitioner was so entitled under Clause 4.4.3 of the general conditions which allowed the petitioner to. retain the machinery and equipment of the contractor till such time that the petitioner's claim against the contractor was satisfied. The contract related to the construction of residential quarters for employees of the petitioner. The contract was for a specified duration. As is usually the case in this country, the work was completed several months later. The contractor contended before the arbitral Tribunal that the entire delay was on account of the employer. The arbitral Tribunal found that there was a delay of about 20 months occasioned by reason of the default or laches on the part of the employer.
(2.) The contractor carried several heads of claim and the arbitral Tribunal awarded under ten of those. The petitioner does not complain of the amounts awarded under the first and second heads, but questions the basis of the arbitral Tribunal awarding the amounts under the remaining heads. The petitioner says that the claims awarded under the assailed heads cover the prohibited fields of idle labour, escalation costs and compensation on account of alleged wrongful retention of machinery and equipment by the petitioner. Clauses 4.4.3, 17.1 and 18 of the general conditions governing the contract have been placed by the petitioner. Clause 4.4.3 is quoted in the award. Clause 17.1 provides that the contractor would not be entitled to any escalation on account of increase in price of material and the like. The arbitrator's interpretation of these two clauses is that their operation was limited to the duration of the contract and they did not cover the period beyond the contemplated tenure. The arbitrator has referred to the expressions used in the relevant clause and other related clauses in the contract. Clause 18 of the general conditions has not been referred to in the award as, it appears, that while dealing with the claim in paragraph 15.2 of the statement of claim, the employer did not refer to the perceived impermissibility of any claim on account of idle labour by virtue of clause 18 of the general conditions.
(3.) As to the challenge on account of clause 4.4.3 of the general conditions, the arbitrator has taken a view that if there was any claim against the contractor, the employer could withhold the machine and implements of the contractor during the period covered by the expression "completion of work," The arbitrator reasoned that since it was the petitioner herein which was "solely responsible for the delay of twenty months in the execution of the work, Clause 4.4.3 GCC has no manner of application" and proceeded to award damages on account of loss of hire charges for machinery and shuttering material during the period that they were wrongfully retained by the employer. On the objection on account of escalation charges, the arbitral Tribunal interpreted the prohibition to cover the period of the contract as originally envisaged. The relevant clause provides that the contract price would remain firm "till the completion/delivery period and no claim of escalation" would be entertained on account of increased price or variation of foreign exchange or any other case. Since the arbitral Tribunal found that the agreed tenure of the contract was stretched on account of the default on the part of the employer, it stands to reason that the arbitral Tribunal held in favour of the contractor on such, count and found that clause 17.1 did not preclude the claim on account of escalation beyond the original contract period.;