Case: Indian Rare Earths Ltd Vs. Unique Builders Ltd

The appellant being a government company, entered into a works contract with the respondent-company for structural steel and cladding work for 4 bulk warehouses. The work was to be completed within 18 months from the date of the award of the work order i.e. 14.12.1979. A contract was signed between the parties wherein there was a provision for arbitration in case of dispute that may arise between the parties. From perusal of general conditions of the contract, we found that there was a clause to the effect that any increase in statutory levies such as taxes and duties and statutory increase in steel prices shall be paid by the appellant. Before the work was completed, a dispute arose and ultimately, the same was referred to the Arbitration.The respondent-contractor made a claim of Rs.97,54,143.78 on different heads which have been noted by the High Court and the same is extractedOF CLAIM OF M/S UNIQUE BUILDERS LIMITED AGAINST INDIAN RARE EARTHS LIMITED FOR CONSTRUCTION OF OSCOM/S-3 STRUCTURAL STEEL AND CLADDING WORK IN BULKWAREHOUSES, BEFORE THE HONBLE ARBITRATOR JUSTICE B.K. RAY.1Escalation as per annexure and the same submitted to M/s Dastur & Co.Rs.22,13,368.38240% of the overheads as per enclosed statement (Annexure-2)Rs.2,00,672.483Encashment of bank guarantee (Letter at Annexure-3)Rs.2,50,000.004Loss due to complete damage of workshop and store shed made of steel column, trusses with A.C. Sheet-1,200 sq.ft. @ Rs.200/- per sq. ft.Rs.2,40,000.005Loss of Welding Machine, Drilling Machine, Jigs, Tools, Tackles, Electrodes, Store items (As per Annexure-5)Rs.1,30,000.006Legal expenses for fighting theRs. 75,000.00--------------------Rs.31,09,040.867Interest @ 18% from 11.8.82 to 31st December, 1992 (Annx.7)Rs.58,13,991.428Loss for extra liability for payment of Income Tax by not availing of the adjustment of loss of Rs.16,62,223.00 upto previous eight years from the account year starting from Accounting year 82-83, i.e. 50% of the above loss of Rs.16,62,223the respondent made a claim of Rs.97,54,143.78/- but the Arbitrator after hearing the parties and considering all objections raised by the appellant, passed an Award for Rs.19,55,368/- with pendente lite interest at the rate of 15% per annum from the date of institution of the suit till the date of the Award. The said Award was challenged by the appellant before the 1st Additional Civil Judge (Senior Division), Cuttack on various grounds by filing an application under section 30 of the Act being Misc. Case No.78 of 2000, for setting aside the said Award. The 1st Additional Civil Judge (Senior Division), Cuttack, dismissed the said application. Aggrieved by the same, the appellant preferred an appeal before the High Court. The High Court after considering the case of the appellant and the respondent and referring to the claims made by the respondent, finally upheld the Award passed by the learned

Court's reasoning:
As notice above, although the respondent claimed a sum of Rs.97,54,143.78/- but the Arbitrator only awarded a sum of Rs.19,55,368/- (Rupees nineteen lakh fifty five thousand three hundred and sixty eight only) with pendente lite interest at the rate of 15% per annum from the date of institution of the suit till the date of the Award. Admittedly, the Award is a non-speaking award. Hence, it is not permissible for the court to probe into the mental process of the learned Arbitrator especially when the Arbitrator rejected major portion of the claim made by the respondent.