Case Note & Summary
The dispute arose from a construction contract dated 11.10.1983 between Oil & Natural Gas Corporation (ONGC) and M/s. Wig Brothers Builders & Engineers Pvt. Ltd. (respondent). Disputes emerged regarding the contract, leading to arbitration on 31.12.1986, where the arbitrator awarded a total of Rs.25,26,270/- to the respondent and rejected ONGC's counterclaims. ONGC challenged the award under sections 30 and 33 of the Arbitration Act, 1940, but the civil court dismissed the petition, affirming the award. The Uttarakhand High Court upheld this decision, reducing the pendente lite interest from 12% to 6%. ONGC appealed to the Supreme Court, which examined the grounds for challenging the award. The court noted that it would not reappreciate evidence but could intervene if there was an error apparent on the face of the award or misconduct by the arbitrator. The court focused on claim No.(1), which involved compensation for delays attributed to both parties. The arbitrator awarded Rs.9.5 lakhs, but the court found that the contract explicitly barred such claims for damages due to delays. Citing precedents, the court held that the arbitrator had acted beyond his jurisdiction by ignoring the contractual terms. Consequently, the Supreme Court partially allowed the appeal, setting aside the award related to claim No.(1) while upholding the rest of the award.
Headnote
A) Arbitration Law - Jurisdiction of Arbitrator - Exceeding Jurisdiction - Arbitration Act, 1940, Sections 30, 33 - The arbitrator exceeded his jurisdiction by awarding compensation for delays despite a clear contractual bar against such claims. The court held that the arbitrator must act within the bounds of the contract and cannot award amounts prohibited by its terms. Held that the award was beyond jurisdiction and required interference (Paras 6-7).
Issue of Consideration
Whether the arbitrator exceeded his jurisdiction by awarding compensation contrary to the contract terms.
Final Decision
The Supreme Court partially allowed the appeal, setting aside the award of Rs.9.5 lakhs under claim No.(1) and the interest thereon, while affirming the rest of the award.
Law Points
- Arbitration
- Jurisdiction
- Contractual Obligations
- Interest
- Award Enforcement
