Case Note & Summary
The dispute arose from a contract awarded by the State of Haryana to M/s. Shiv Shankar Construction Co. for road maintenance. The contract, valued at Rs.5,26,59,688/, was for a road expected to handle 3364 PCUs per day. However, due to traffic diversion from Palwal Aligarh Road, the actual traffic surged to 24418 PCUs per day, leading to claims for additional maintenance costs. The contractor invoked arbitration after disputes arose, and the Arbitrator awarded Rs.1,51,95,400/ for claims Nos.1 and 8. The State challenged this award, arguing it exceeded the claim and the scope of reference. The court found that while the Arbitrator's award was excessive and beyond the agreed terms, the award for the period up to January 2008 was justified due to increased maintenance costs from the traffic diversion. Ultimately, the court partially allowed the appeal, confirming the award up to January 2008 but quashing the amount awarded beyond that date, stating that the Arbitrator had no authority to rewrite the contract terms. The decision emphasized the need for adherence to the original contract terms while allowing for adjustments due to unforeseen circumstances.
Headnote
A) Arbitration - Excess of Claim - Award in Excess of Claim - Arbitration and Conciliation Act, 1996, Section 34 - The Arbitrator awarded an amount exceeding the claim made by the contractor, which was limited to Rs.1,03,50,263/ for claims Nos.1 and 8. The court held that the award was in excess of the claim and thus invalid to that extent (Paras 9.1-9.5). B) Arbitration - Scope of Reference - Exceeding Scope of Reference - Arbitration and Conciliation Act, 1996, Section 34 - The Arbitrator awarded compensation beyond the date of entering reference, which was not permissible. The court confirmed the award only up to January 2008, quashing the amount awarded beyond that date (Paras 9.5-10).
Issue of Consideration
Whether the Arbitrator exceeded the scope of reference and awarded an amount in excess of the claim made by the contractor.
Final Decision
The Supreme Court partially allowed the appeal, confirming the award for claims Nos.1 and 8 up to January 2008 but quashing the award for the period beyond that date, stating it was impermissible.
Law Points
- Arbitration
- Excess of Claim
- Scope of Reference
- Rewriting Contract Terms
