STATE OF WEST BENGAL Vs. K BANERJEE

JUDGEMENT

(1.) The State challenges an arbitral award of November 3, 2011 on the ground that some of the heads of claim allowed in favour of the contractor engaged for the purpose of construction of a road are in violation of the terms of the contract and otherwise at variance with the substantive law of the country. The State fashions the challenge on the basis of the dictum in the judgment (Oil & Natural Gas Corporation Limited v. Saw Pipes Limited, 2003 5 SCC 705). Paragraphs 13, 15 and 73 of the report have been placed. At paragraph 13 of the report, the Court said that an arbitral award cannot be in derogation of the substantive law of the country; that it cannot be at variance with the terms of the contract and, it cannot be contrary to the usage in the trade. Paragraph 15 of the judgment cautioned, however, that for a Court to interfere with an award under section 34 of the Arbitration and Conciliation Act, 1996, the errors should be patent. Paragraph 73 of the judgment reiterated that an arbitral award had to be in keeping with the matrix contract covered by the arbitration agreement.

(2.) The respondent herein claimed under several heads. The arbitrator disallowed the claim under two of the ten principal heads and scaled clown the amounts claimed under the various others to ultimately award a principal sum of Rs. 23.01.026/- with interest at 12 per cent per annum from February 11, 2003 till April 15, 2004 and further interest at 10 per cent per annum from April 15, 2004 till the date of the award. The arbitrator also provided that if the awarded sum was not paid off within three months from the date of the award, the respondent herein would be entitled to further interest on the sum awarded in accordance with section 31(7)(b) of the 1996 Act.

(3.) Though the petition has challenged the award on every aspect, mercifully, counsel for the State has limited the challenge to the claims awarded under the first, fourth, fifth, eighth and ninth heads. The challenge to the extent of Rs. 4000/- under the fifth head of claim, for which a total amount of Rs. 35,150/- has been found due to the contractor by the arbitrator, has not been permitted to be urged since the value of the dispute is insignificant.