Delhi HC: Arbitrator's refusal of price variation despite the contract's formula is patent illegality; award partly set aside
The question: Did the arbitrator act against the contract's own terms in rejecting price variation for the original contract period?
The Delhi High Court has set aside part of an arbitral award in a road-bridge contract with the New Okhla Industrial Development Authority (NOIDA), holding that the arbitrator's refusal of the contractor's price variation claim was patently illegal because it ignored what the contract itself provides. Justice Mini Pushkarna held that the contract allowed price variation both for the original period and for an extension caused by the contractor's own delay, and that the arbitrator had in effect rewritten the contract. The Court, however, upheld his finding that the delay was the contractor's fault. Dwarika Projects Ltd. won a tender for the construction of Bridge No. 2 on an irrigation drain between Sectors 78 and 49, Noida, under a contract of 7 December 2009 that required completion within twelve months. The work finished much later, and each side blamed the other. The sole arbitrator's award of 10 December 2018 awarded the contractor Rs 1,02,95,056 on Claims 1, 2 (in part) and 3, with interest and costs, but rejected Claims 4 to 10. The contractor's petition under Section 34 of the Arbitration and Conciliation Act, 1996 was finally confined to Claim 4, its claim of Rs 2,29,43,350 for price variation. The Court set the award aside to that extent and left the parties free to start fresh arbitration to work out the amount.