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Synopsis

The Supreme Court has on May 7, 2024 said that if, after considering the material on record, the Arbitral Tribunal takes a particular view on the interpretation of the contract, the court under Section 34 of the Arbitration and Conciliation Act, 1996 does not sit in appeal over the findings of the arbitrator. 

A bench of Justices Abhay S Oka and Pankaj Mithal pointed out that the jurisdiction of the court under Section 34 is relatively narrow and the jurisdiction of the appellate court under Section 37 of the Arbitration Act is all the more circumscribed.

The bench upheld the validity of the order passed by the single as well as the division bench of the high court. The high court had examined the challenge to the award within four corners of limitation imposed by Sections 34, the court said.

"The view taken by the arbitral tribunal, the single judge and the division bench cannot be found fault with," the bench said, dismissing the appeal filed by the National Highway Authority of India.

The matter stemmed from a dispute out of an award of a contract by the appellant NHAI to M/s Hindustan Construction Company Ltd in 2004 for the construction of a road from km 158 to km 198, except a bridge on the river. The total cost of the project was Rs 4,46,99,12,839. 

The dispute related to particularly with regard to reimbursement of additional expenditure incurred due to an increase in the rates of royalty and associated sales tax on soil, sand and crushed stone aggregates and non-payment for executed work of embankment with soil/pond ash for the initial 150 mm depth stripped in accordance with the requirements of the contract, among others.

The Arbitral Tribunal granted an amount of Rs 2,69,91,248 as an additional cost to the respondent till December 31, 2008, along with interest and future interest of 12% per annum.

Two members of the Arbitral Tribunal consisting of three members held that the respondent was entitled to Rs 3,47,35,522 towards the formation of the embankment for an initial 150 mm, along with a price adjustment on the said amount in accordance with clause 70.3 of the contract, with interest and future interest at 12% per annum. The third member of the Arbitral Tribunal dissented and held that the respondent was not entitled to any amount under the said claim. 

The respondent was also granted Rs 3,77,74,427.39 along with interest and future interest at 12% per annum so far as reimbursement of additional costs incurred due to an increase in the forest transit fee rates.

After hearing the counsel for both the sides, the bench said, "The division bench was right in holding that the majority opinion of technical persons need not be subjected to a relook, especially when the single judge had also agreed with the view taken by the Arbitral Tribunal. We have also perused the findings of the majority in the Award. We find nothing perverse or illegal about it."