Summary
The Supreme Court partly allowed a contractor’s appeals concerning an award under the Arbitration Act, 1940. The contract expressly required reasons, and the arbitrator’s unexplained adoption of a 93.12% premium was unsustainable. Instead of remitting the old dispute, the Court directed calculation of specified extra-work claims at the supported premium of 35.02%. Proven work in marshy soil was not rejected merely for failure to include it in monthly returns under the contractual procedure.
Issues
- Whether an unexplained premium award complied with the contractual requirement to give reasons.
- Whether extra work established in adjudication could be rejected solely for failure to submit monthly contractual returns, and what relief was appropriate.
Held
- Where the arbitration agreement expressly requires reasons, merely announcing the premium percentage does not comply. The difference between estimated and contractual cost alone did not justify the claimed 93.12% premium in the face of the applicable schedule and the agreed 35.02% rate. (¶¶ 9, 12, 13, 14)
- Ordinarily the unsupported award should have been set aside and remitted for fresh consideration. Given the age of this dispute and the material supporting a 35.02% premium, the Court instead directed calculation of the admissible amounts at that rate. (¶¶ 14, 15, 16, 20)
- The monthly-return clause was not a statutory limitation barring the claim in every circumstance. Here the arbitrator had considered contemporary material establishing marshy soil and extra work; rejection solely for procedural noncompliance was unjustified. Claim 8 nevertheless required recalculation at 35.02%, rather than the awarded 93.12%. (¶¶ 17, 18)
- No interference was warranted with rejection of claim 16 or reduction of interest to 12% in the absence of an agreed interest rate. (¶ 19)
Result
Appeals partly allowed with costs. Claim 1 as allowed by the High Court sustained; claims 2, 3, 8 and 12 allowed subject to calculation at a 35.02% premium, with 12% annual interest. Calculation and payment directed within six weeks, failing which the amount would carry 18% annual interest until payment. Registry directed to draw the decree/award accordingly; pending applications disposed of.