Contractual bar on compensation and pre-award interest precludes Arbitral Tribunal from awarding damages or pendente lite interest.

The appellant was awarded a railway contract in 2004 for yard line work, scheduled for completion in six months.

The work was delayed for years due to the respondent's failure to provide P-Way materials; consequently, multiple extensions were granted without penalty under Clause 17A of the General Conditions of Contract (GCC).

The appellant eventually requested foreclosure due to unworkable rates, but the respondent did not pay the dues, leading to arbitration.

The Arbitral Tribunal awarded the appellant ₹22,44,464 across seven claims, including costs, prolongation expenses, interest, and loss of profit.

The District Judge, in a Section 34 petition, set aside Claim Nos. 1, 4, 5, 7, and 8 and reduced the post-award interest, prompting this Section 37 appeal.

1. Whether the Arbitral Tribunal can award costs of arbitration when the contract (Clause 64.6) expressly stipulates that parties shall bear their own costs.

2. Whether claims for idle labour, machinery, and prolongation (Claim No. 4) are sustainable in light of specific contractual bars under Clause 17A of the GCC and Clause 33 of Special Tender Conditions.

3. Whether the Tribunal has the power to award pre-award and pendente lite interest when Clause 16(3) and Clause 64(5) of the GCC expressly prohibit such interest.

4. Whether a contractor is entitled to "loss of profit" (Claim No. 7) upon determination of a contract where Clause 61(3) of the GCC bars such compensation.

The court primarily applied Section 31(7)(a) and Section 34 of the Arbitration and Conciliation Act, 1996, emphasizing that the Arbitrator is a "creature of the contract" and cannot act contrary to its express terms.

It relied on the Supreme Court's ruling in Union of India v. Larsen & Toubro Limited (2024), which establishes that if a contract prohibits pre-award/pendente lite interest, the Tribunal cannot award it even as "compensation".

The court further applied the principle from Garg Builders v. BHEL (2021) regarding the paramountcy of contractual bars on interest.

The court relied on Union of India v. Bright Power Projects (2015), reinforcing that arbitrators are bound by the "Excepted Matters" and restrictive clauses like Clause 16(2) of the GCC.

The High Court observed that the learned District Judge correctly identified that the Arbitrator ignored express contractual prohibitions.

Regarding Claim No. 1 (Costs), the court found that Clause 64.6 explicitly mandated that parties bear their own costs, making the award of ₹1,00,000 a patent illegality.

For Claim No. 4 (Prolongation expenses), the court held that while the respondent was at fault for the delay, Clauses 17A(ii) and (iii) of the GCC limited the appellant's remedy solely to an extension of time, specifically barring compensation for delays.

Clause 33 of the Special Tender Conditions prohibited claims for "idle labour/machinery," which the Tribunal failed to consider.

Regarding Interest (Claims 5 and 8), the court noted that Clauses 16(3) and 64(5) of the GCC created a total bar on interest for any period prior to the date of the award; thus, the Tribunal’s grant of pre-reference and pendente lite interest was contrary to Section 31(7)(a).

The "loss of profit" (Claim No. 7) was barred by Clause 61(3), which prohibits claims for anticipated profits upon contract determination.

The Court dismissed the appeal and upheld the District Judge’s order setting aside Claim Nos. 1, 4, 5, 7, and 8.