P. Radhakrishna Murthy v. NBCC Ltd.,
Citation; 2014 ALL SCR431,(2013) 3 SCC 747
Arbitration Act, 1940
Ss. 30, 33, 13 and 15 - Role and obligations of arbitrator while deciding disputes - Principles summarised - Duty to
decide disputes according to legal rights of parties - Award - Scope of interference with, by court - Reappreciation of
evidence by court once award has been made rule of court - Permissible, when award is erroneous in law and amounted
to misconduct by arbitrator - Arbitrator, held, cannot ignore law or misapply it, nor can he act arbitrarily, irrationally,
capriciously or independent of contract while passing award - He is not a conciliator - Arbitrator has to decide disputes
according to legal rights of parties and not according to what he may consider to be fair and reasonable - Also, it is the
duty and obligation of courts to maintain purity of standards and preserve full faith and credit as well as to inspire
confidence in the minds of litigants while adjudicating claims of parties under Arbitration Law
- In appeal against award,
High Court examined claims threadbare and set aside certain claims, and granted extra amounts with regard to certain
other claims - Contention that High Court could not have appreciated evidence to arrive at a conclusion different from
that of arbitrator - Tenability - Held, High Court rightly found fault with award since arbitrator neither examined claims
made by contractor with reference to evidence placed before him nor recorded a finding as to whether contractor in fact
had suffered losses as claimed by him - Hence held, High Court rightly interfered with award which is erroneous in law
and amounted to misconduct on part of arbitrator - Judgment of High Court, affirmed,
Contract and Specific Relief
Remedies/Relief
Damages - Extra expense/cost due to breach/Loss of profits - Claim for - Causality - Need to establish - Contractor's
claim for loss of profit due to delay in handing over of site causing idling of labour and machinery - Need to establish that
loss was caused by breach of the other party - Held, mere delay in handing over sites does not entitle contractor to claim
damages unless it is established that the same is consequence of breach committed by the other party - Arbitrator
awarded claim in favour of claimant (appellant contractor) towards loss of profits at 10% of contract value for delay in
handing over site, while at the same time allowing claim for damages by respondent for delay in completing work by
contractor - Legality - Held, arbitrator did not record reasons regarding delay in handing over of sites to contractor and
whether loss of profits was caused by breaches on part of respondent - Also, contractor did not claim 10% of loss of
profits under specific claims - Hence, held, High Court was right in holding that award of any sum toward loss of profits
could not be made,
Arbitration Act, 1940
S. 29 - Interest - Award of interest by arbitrator at commercial rates in absence of clause of agreement - Held, legally
valid - Reduction of rate of interest from 16.5% to 12% p.a. by High Court on basis of rate of interest paid by banks to its
customers on long-term deposits prevailing in 1988, held, also proper, (2013) 3 SCC 747-C
Citation; 2014 ALL SCR431,(2013) 3 SCC 747
Arbitration Act, 1940
Ss. 30, 33, 13 and 15 - Role and obligations of arbitrator while deciding disputes - Principles summarised - Duty to
decide disputes according to legal rights of parties - Award - Scope of interference with, by court - Reappreciation of
evidence by court once award has been made rule of court - Permissible, when award is erroneous in law and amounted
to misconduct by arbitrator - Arbitrator, held, cannot ignore law or misapply it, nor can he act arbitrarily, irrationally,
capriciously or independent of contract while passing award - He is not a conciliator - Arbitrator has to decide disputes
according to legal rights of parties and not according to what he may consider to be fair and reasonable - Also, it is the
duty and obligation of courts to maintain purity of standards and preserve full faith and credit as well as to inspire
confidence in the minds of litigants while adjudicating claims of parties under Arbitration Law
- In appeal against award,
High Court examined claims threadbare and set aside certain claims, and granted extra amounts with regard to certain
other claims - Contention that High Court could not have appreciated evidence to arrive at a conclusion different from
that of arbitrator - Tenability - Held, High Court rightly found fault with award since arbitrator neither examined claims
made by contractor with reference to evidence placed before him nor recorded a finding as to whether contractor in fact
had suffered losses as claimed by him - Hence held, High Court rightly interfered with award which is erroneous in law
and amounted to misconduct on part of arbitrator - Judgment of High Court, affirmed,
Contract and Specific Relief
Remedies/Relief
Damages - Extra expense/cost due to breach/Loss of profits - Claim for - Causality - Need to establish - Contractor's
claim for loss of profit due to delay in handing over of site causing idling of labour and machinery - Need to establish that
loss was caused by breach of the other party - Held, mere delay in handing over sites does not entitle contractor to claim
damages unless it is established that the same is consequence of breach committed by the other party - Arbitrator
awarded claim in favour of claimant (appellant contractor) towards loss of profits at 10% of contract value for delay in
handing over site, while at the same time allowing claim for damages by respondent for delay in completing work by
contractor - Legality - Held, arbitrator did not record reasons regarding delay in handing over of sites to contractor and
whether loss of profits was caused by breaches on part of respondent - Also, contractor did not claim 10% of loss of
profits under specific claims - Hence, held, High Court was right in holding that award of any sum toward loss of profits
could not be made,
Arbitration Act, 1940
S. 29 - Interest - Award of interest by arbitrator at commercial rates in absence of clause of agreement - Held, legally
valid - Reduction of rate of interest from 16.5% to 12% p.a. by High Court on basis of rate of interest paid by banks to its
customers on long-term deposits prevailing in 1988, held, also proper, (2013) 3 SCC 747-C
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