STATE OF MEGHALAYA Vs. PATEL ENGINEERING PRIVATE LIMITED

JUDGEMENT

(1.) The appeal is directed against a judgment and order dated March 29, 2018 on a challenge to an arbitral award dated December 9, 2010 in proceedings under Sec. 34 of the Arbitration and Conciliation Act, 1996.

(2.) The contract between the parties pertained to the construction of a dam near Mawphlang. There is no dispute that the work has been completed. In course of the execution of the contract, the work actually executed deviated from what was contemplated under the contract in respect of some items of work. Several clauses in the detailed contract provided for the mechanism to deal with such a situation. The claims of the respondent contractor in this case were in respect of the negative deviation in the work relating to three items, in the sense that in each case a much higher quantum of work was contemplated than the contractor was actually required to execute.

(3.) Three principal grounds have been urged by the State to discredit the award rendered by a tribunal of three retired High Court judges. According to the State, the very acceptance of the claim on account of deviation is at variance with the contract. In other words, the appellants question the authority of the Arbitral Tribunal to travel beyond the bounds of the contract to prescribe a remedy that was not contemplated in the contract. The second count of attack is based on the amendment to Sec. 28 of the Contract Act, 1872. According to the appellants, the bid was submitted by the contractor in this case on August 6, 1996 and the acceptance of the bid was communicated to the contractor on August 20, 1996. On the rudimentary principle of offer and acceptance and the formation of the contract thereupon, the State contends that the substantive amendment of Sec. 28 of the Act of 1872 brought about on January 8, 1997 would not govern the contractual terms. While on this aspect, it may be noticed that the contract between the parties was executed on April 22, 1997, more than three months after the relevant amendment was incorporated in Sec. 28 of the Act of 1872. The final ground of challenge to the arbitral award is in it providing for pendente lite interest despite the relevant clause in the contract prohibiting the payment of interest on any account whatsoever.