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Bombay HC Confirms Cost Overrun Claims in Arbitral Award of Interior Contract against Bank of India

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Dispute on Time Limit for Completing the Work Orders

Whether the time frame of three months or 22 months was the foundation of the controversy before the Arbitral Tribunal.

The claims of cost over-runs are related to whether there has been a time over-run and if so, to what extent.

On 30.3.2012, the BOI awarded work order for interior and furnishing works of the Corporate Office at BKC.  Clause 10 provided that the respondent would complete the work in 22 months.

The bid provided for time limit of three months for completion of the works.  The special instructions, however, provided for time frame of six months.   The agreement provided for 22 months.

The work actually started on 11.4.2012 and completed on 31.8.2014.

By the Arbitral Award dated 7.1.2019, the claims of the respondent were allowed.

Loss of Profit and Earning Capacity

Additional Financing Costs

Additional Costs attributable to materials and labour

Additional Costs towards Overheads

Pre-award interest at 9% and post-award interest at 12%

Costs of Rs.12 lakhs

Section 55 of the Contract Act does not automatically make time the essence in interior contracts unless expressly stated

Judgment dated 3.11.2025 of the High Court of Bombay in Commercial arbitration Petition No.594 of 2019 of Bank of India  Vs.  Vadan Interiors Private Limited

 

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