Case Note & Summary
The petitioner, New Consolidated Construction Co. Ltd., challenged an arbitral award dated 16th September 2013 under Section 34 of the Arbitration and Conciliation Act, 1996. The dispute arose from construction contracts for three buildings in a Special Economic Zone. Initially, the parties entered into a turnkey contract where the petitioner was to obtain materials and construct. Later, it was modified to a labour contract where the respondent supplied materials and the petitioner provided labour. The initial contract set permissible wastages. The arbitrator granted three claims to the respondent: excess consumption of material, defective work, and refund of excess amount paid. The petitioner argued that the award was contrary to the contract and perverse. The court examined each claim. For excess consumption, the court found that the arbitrator's finding was based on evidence and not perverse, as the contract allowed certain wastages and the respondent's calculations showed excess. For defective work, the court found that the arbitrator relied on a consultant's report that was not proved in evidence, and the respondent failed to provide independent evidence of defects; thus, the award on this claim was perverse and set aside. For refund of excess payment, the court upheld the award as it was based on the contract and evidence. The court partly allowed the petition, setting aside only the claim for defective work.
Headnote
A) Arbitration Law - Section 34 of Arbitration and Conciliation Act, 1996 - Challenge to Arbitral Award - Excess Consumption of Material - The court examined whether the arbitrator's finding that the petitioner exceeded the contractual wastage allowance was perverse. The contract provided for permissible wastages, and the arbitrator relied on the respondent's calculations showing excess consumption. The court held that the finding was based on evidence and not perverse, and thus not liable to be interfered with under Section 34. (Paras 4-10) B) Arbitration Law - Section 34 of Arbitration and Conciliation Act, 1996 - Challenge to Arbitral Award - Defective Work - The court considered the claim for defective work requiring rectification. The arbitrator awarded the claim based on a report from a consultant, but the court found that the report was not proved in evidence and the respondent failed to provide any independent evidence of defects. The court held that the award on this claim was perverse and set it aside. (Paras 11-15) C) Arbitration Law - Section 34 of Arbitration and Conciliation Act, 1996 - Challenge to Arbitral Award - Refund of Excess Amount Paid - The court examined the claim for refund of excess payment. The arbitrator found that the respondent had overpaid the petitioner based on the contract rates and quantities. The court held that this finding was based on the contract and evidence, and not perverse, and thus upheld the award. (Paras 16-18)
Issue of Consideration
Whether the arbitral award granting claims for excess consumption of material, defective work, and refund of excess amount paid is liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996 on grounds of being contrary to the contract, perverse, or against public policy.
Final Decision
The court partly allowed the petition. The award in respect of the claim for defective work was set aside. The award in respect of the claims for excess consumption of material and refund of excess amount paid was upheld.
Law Points
- Interpretation of contract
- Arbitral award
- Section 34 of Arbitration and Conciliation Act
- 1996
- Public policy
- Perversity
- Evidence
- Wastage allowance
- Labour contract
- Turn key contract
