Arbitral Award – Delay in making arbitration reference

Judgment dated 22.8.2023 of the Supreme Court of India

Construction Contract –

On 23.7.1983, the Maharashtra Irrigation Department issued the work order for construction contract at the estimated cost of Rs.4,01,77,153/- within a period of 18 months in favour of the appellant.   However, several extensions were given on the understanding that the delay was not the fault of the contractor.

Disputes arose between the parties.  The Civil Court, on the application of the appellant and by the order dated 25.2.1997, appointed the arbitrator for resolving the dispute in respect of payment of additional and extra work done by the contractor.

By the Award dated 14.12.1997, the Arbitrator held the appellant entitled to Rs.1,50,07,000/- under various heads and interest.   The counter claim of the State was rejected.

The Award,   which was challenged under Sections 30 and 33 of the old Indian Arbitration Act, 1940, was set-aside by the Civil Court vide judgment dated 14.12.1997.

The High Court rejected the appeal of the appellant – contractor on the ground of delay.  Reliance was placed on Clause 58 that neither party is entitled to bring arbitration claim if arbitrator was not appointed before 30 days after defects liability period.

HELD that first claim was made to the Executive Engineer in 1988 and its rejection resulted in appeal to the SE who had not given his decision.  Even in 1993 after the claim was crystalized on issuance of the final bill on 14.12.1992, the decision was not given by the SE.   In this view, the claim for arbitration made in 1995 was within limitation. On the question of damages awarded by the Arbitrator, it was held that unless error of law is shown interference is not called for.   The concurrent judgments were set-aside.  The Civil Appeal was upheld.

M/s. S.D. Shinde Tr. Partner Vs. Govt of Maharashtra and others (Civil Appeal Nos.6107-6108 of 2017 with connected matter)