Case Note & Summary
The State of Maharashtra, through the Chief Engineer (Special Projects), Public Works Department, and the Executive Engineer, filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging an arbitral award dated 29 March 2002. The dispute arose from a construction contract for the Bhiwandi-Wada Road and Palghar-Manor-Wada Road projects. The respondent, Bharat Constructions, was awarded the work on 1 November 1990, with a completion period of 30 calendar months from 1 December 1990. The work was delayed, and the petitioners granted extensions of time. Disputes arose regarding amounts due, leading to arbitration before a three-member tribunal. The majority arbitrators partly allowed the respondent's claims, including claim No.2 for compensation for losses due to delay. The dissenting arbitrator rejected claim No.2. The petitioners challenged only the majority award on claim No.2, arguing that the award was contrary to the contract terms, perverse, and against public policy. The court, after hearing arguments, held that the scope of interference under Section 34 is limited. The majority award was based on evidence and plausible reasoning; the court found no perversity or patent illegality. The petition was dismissed, upholding the majority award on claim No.2.
Headnote
A) Arbitration Law - Section 34 of Arbitration and Conciliation Act, 1996 - Scope of Interference - Challenge to majority award on claim for compensation for delay - Court held that the scope of interference under Section 34 is limited to grounds of patent illegality, perversity, or conflict with public policy; the court cannot re-appreciate evidence or substitute its own view. (Paras 5-10) B) Arbitration Law - Compensation for Delay - Construction Contract - Majority Award - The majority arbitrators allowed claim No.2 for compensation for losses incurred due to delay in completion of work, relying on evidence of prolongation and extra expenditure. The dissenting arbitrator rejected the claim. The court held that the majority view was plausible and not perverse, and thus not open to interference. (Paras 3-8) C) Arbitration Law - Public Policy - Perversity - The court held that a finding of fact by the arbitral tribunal, even if erroneous, does not amount to perversity unless it is based on no evidence or is so unreasonable that no reasonable person would arrive at it. The majority award did not suffer from such infirmity. (Paras 7-10)
Issue of Consideration
Whether the majority arbitral award granting compensation for losses due to delay in completion of work under claim No.2 is liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996, on grounds of being contrary to the terms of the contract, perverse, or in conflict with the public policy of India.
Final Decision
The petition is dismissed. The majority award on claim No.2 is upheld.
Law Points
- Section 34 of Arbitration and Conciliation Act
- 1996
- scope of interference with arbitral award
- compensation for delay in construction contract
- majority award vs dissenting award
- perversity
- public policy
