Contractor-attributable delay does not bar contractual price variation where the contract provides for it.

The parties entered into a contract for construction of a bridge, incorporating price-variation provisions in Clauses 50 and 51 of the Special Conditions of Contract (SCC).

The work was completed after the original completion period, and the contractor claimed price variation for both the original and extended periods.

The Sole Arbitrator rejected Claim No. 4, finding no entitlement during the original period and treating contractor-attributable delay as barring price variation during the extension.

The contractor challenged that rejection under Section 34 of the Arbitration and Conciliation Act, 1996; before the High Court, its challenge was confined to Claim No. 4.

1. Whether the Arbitrator’s rejection of price variation for the original contract period was contrary to Clause 50 of the SCC and therefore amenable to interference under Section 34

2. Whether contractor-attributable delay under Clause 7.5 of the SCC barred price variation for the extended period, or affected only the applicable indices and calculation

3. Whether the Arbitrator’s finding that the delay was attributable to the contractor required interference under Section 34

Under Section 34 of the Arbitration and Conciliation Act, 1996, a court does not sit in appeal over an arbitral award or reappreciate evidence; however, it may set aside an award for patent illegality, including where the arbitrator disregards the contract, ignores vital evidence, or adopts an interpretation that is not a possible view.

Section 28(3) requires the tribunal to take the contract’s terms into account.

Ssangyong Engineering and Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131, recognises that a perverse finding, including one based on no evidence or ignoring vital evidence, may constitute patent illegality.

OPG Power Generation Pvt. Ltd. v. Enexio Power Cooling Solutions India Pvt. Ltd., (2025) 2 SCC 417, and Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd., (2019) 20 SCC 1, affirm that a plausible contractual interpretation ordinarily cannot be disturbed.

Under Clauses 50 and 51 of the SCC, price variation is provided for by a formula; for contractor-attributable delay under Clause 7.5, Clause 51.2 limits the applicable indices, rather than excluding entitlement altogether.

The Arbitrator’s rejection of price variation for the original period relied on the statement that BOQ rates held good until completion but failed to give effect to Clause 50.1’s express exception for adjustments under the price-variation formula and the related adjustment provisions in Clauses 50.2 and 50.3.

The interpretation rendered those provisions inoperative and was not a possible reading of the contract.

For the extended period, the Arbitrator recognised that Clause 51.2 contemplated price adjustment where an extension was granted under Clause 7.5, but then treated contractor responsibility for delay as a complete bar.

Read together, Clauses 7.5 and 51.2 made responsibility for delay relevant to the indices used to calculate the adjustment, not to the existence of entitlement.

The Court nevertheless declined to disturb the Arbitrator’s factual finding that the contractor caused the delay: the finding was supported by the record, including correspondence concerning work progress, and was a plausible view.

It left the quantification of price variation to fresh arbitration proceedings, which either party could invoke.

The finding that delay was attributable to the contractor remained undisturbed.

The petition was partly allowed and disposed of accordingly.