Arbitrator's award cannot be set aside when findings are plausible, evidence-based, and within contractual boundaries.

The Petitioner (Union of India) awarded a composite tender for civil and electrical works at Jawaharlal Nehru Stadium to the Respondent on 05.04.2008.

The project, stipulated for completion by 26.01.2009, was actually completed on 26.09.2009.

Disputes arose regarding payments for extra/deviated items, withheld amounts for alleged deficiencies, and claims for bonus/damages during the extended period.

Following the resignation of the first arbitrator, a Sole Arbitrator passed an Award on 16.07.2014, granting Rs. 80,05,774 along with interest to the contractor.

The Petitioner challenged this award under Section 34 of the Arbitration and Conciliation Act, 1996, alleging patent illegality and perversity.

1. Whether the Arbitrator exceeded jurisdiction or acted perversely in awarding rates for items executed beyond the deviation limit under Clause 12.3 of the Contract.

2. Whether the award of a bonus under Clause 2A was valid despite the work being completed in the extended period.

3. Whether the withholding of amounts for non-submission of drawings and environmental penalties was contractually justified.

4. Whether the grant of interest at 10% per annum was within the Arbitrator's statutory discretion.

The Court applied the limited scope of judicial interference under Section 34 of the Arbitration and Conciliation Act, 1996, as clarified in Associate Builders v. DDA and Delhi Airport Metro Express (P) Ltd. v. DMRC, emphasizing that courts cannot re-appreciate evidence or substitute their views for a plausible arbitral interpretation.

It invoked Section 73 of the Indian Contract Act, 1872 regarding compensation for loss caused by breach.

It invoked Section 31(7) of the Arbitration Act regarding the Arbitrator’s power to award interest.

The principle from M/s Paragon Construction (India) Pvt. Ltd. v. Union of India was applied to justify bonus payments where delays were attributable to the employer.

The Court found that the Arbitrator’s interpretation of Clause 12.3—that agreement rates apply if the Engineer-in-Charge fails to notify lower revised rates prior to execution beyond deviation limits—was a "plausible view" rooted in the contract.

Regarding the bonus (Claim 6.1), the Court upheld the finding that because delays (such as late structural drawings) were solely attributable to the Petitioner, the contractor was entitled to the incentive as if the work were completed ahead of time, minus the employer-caused delay.

The Court observed that deductions for "as-built drawings" and "environmental penalties" were illegal because the Petitioner failed to follow the contractually mandated procedure (e.g., getting an order from the SE-in-Charge or proving actual expenditure).

Under Section 73, the Court affirmed the award for overheads as the Arbitrator had logically pruned "inflated" claims to reflect actual reasonable losses during the 5-month delay.

The Court upheld the grant of Rs. 80,05,774 and the interest rate of 10% per annum, noting that the Petitioner cannot benefit from its own delays.

The findings of the Arbitrator on both facts and contractual interpretation were held to be final.