Madras HC Upholds ₹2.04-Crore Balance Award To Contractor For Security-Wall Work Delayed By Phased Site Handover

The parties entered into a lump-sum contract on 9 April 2010 for construction works at Turkamatti, Belgaum.

The work was to be completed by 25 April 2011, but the completion period was extended several times.

The contractor alleged, among other things, that the site was handed over only in parts and was affected by encumbrances, causing delay and increased costs; he sought enhanced rates and other payments.

The arbitrator allowed a substantial part of the contractor’s claims, including enhanced rates for work executed after the original contract period, and determined that a further amount was payable after crediting prior payments.

The Union of India challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996, alleging, inter alia, that it contradicted the contract and was patently illegal.

Under Section 34 of the Arbitration and Conciliation Act, 1996, a court’s review of an arbitral award is confined to the statutory grounds for setting it aside and does not permit the court to reappraise the evidence as an appellate court.

Where the arbitrator has considered the contract and evidence and reached a plausible conclusion, the court may not interfere merely because another interpretation is possible.

An award may be set aside where it violates the fundamental policy of Indian law or suffers from patent illegality.

The Court treated the Union’s objections—including its challenge to the interpretation of Special Condition 31.1 and the findings on delay and enhanced rates—as disputes involving construction of the contract, the evidence concerning performance, and the parties’ conduct and communications.

It held that the arbitrator had considered those matters and reached plausible conclusions.

The objections therefore did not establish patent illegality or a violation of the fundamental policy of Indian law; accepting them would require the Court to reassess the merits as an appellate court, which Section 34 does not permit.

It made no order as to costs and closed the connected application.