STATE OF HARYANA versus M/S. SHIV SHANKAR CONSTRUCTION CO. & ANR.

Citation: [2021] 12 S.C.R. 294 · Decided: 14-12-2021 · Supreme Court of India · Bench: M.R. SHAH · Disposal: Case Partly allowed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2021] 12 S.C.R.
STATE OF HARYANA
v.
M/S. SHIV SHANKAR CONSTRUCTION CO. & ANR.
(Civil Appeal Nos.7379-7380 Of 2021)
DECEMBER 14, 2021
[M. R. SHAH AND B. V. NAGARATHNA, JJ.]
Arbitration and Conciliation Act, 1996: ss.34 and 37 –
Contract awarded for maintenance of road for Rs.5.26 crores –
The rate of maintenance of the road was accepted at Rs.1,000 per
km p.m. – Maintenance contract was valid up to 31.07.2010 –
Contract was meant for only 3364 PCUS per day – Dispute arose
when contractor was required to incur additional expenditure on
maintenance due to diversion of traffic from Palwal Aligarh Road
to the present road and heavy traffic of 24418 PCUS per day started
plying on the road which damaged the road – Contractor claimed
the amount towards additional expenditure for maintenance –
Arbitrator awarded Rs.1.51 crores taking loss at Rs.45,000 per km
per month (claim Nos.1 and 8) – Case on behalf of the State-appellant
was that in the statement of claim, the claimant claimed an amount
of Rs.1.03 crores under claim Nos. 1 and 8 and, therefore award
was in excess of amount claimed – Held: No substance in this
contention – The statement of claim submitted by contractor
specifically stated thatamount of Rs.1.03 crores was worked out up
to May, 2007 and details of expenditure beyond May,2007 will be
submitted during the course of hearing – Therefore,amount awarded
by the arbitrator cannot be said to be in excess of the claim – So far
as the submission on behalf of the appellant that the arbitrator
exceeded the scope of reference while awarding an amount beyond
19.05.2007-the date on which the High Court appointed the sole
arbitrator is concerned, same has no substance – Case of appellant
that Arbitrator ought to have restricted the claim either up to
06.03.2006-the date on which the contractor invoked the arbitration
clause or 23.04.2007, the date on which the High Court appointed
the sole arbitrator or at least up to 19.05.2007-the date on which
the arbitrator entered into reference cannot be accepted since the
award made by the arbitrator was till the traffic was diverted which
was up to January, 2008 – Therefore, the arbitrator was justified in
[2021] 12 S.C.R. 294
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awarding the amount beyond the said periods and till the additional
traffic was diverted – Third submission on behalf of the appellant
was that by awarding Rs.45,000 per km per month, the arbitrator
has rewritten the contract with respect to the amount payable than
what was specified in the contract – At the time when contract was
entered into the mutually agreed, the rate fixed was Rs.1,000 per
km per month and the estimated traffic was 3364 PCUS per day –
Cause of action arose subsequently due to diversion of traffic from
Palwal Aligarh Road and plying of more heavy vehicles due to which
the contractor was required to incur additional expenditure for
maintenance of the road – Therefore, the contractor was entitled to
the loss on account of the additional expenditure incurred for
maintenance of the road – By no stretch of imagination, it can be
said that there was rewriting the terms of the contract as submitted
on behalf ofthe appellant – However, arbitrator ought not to have
awarded an amount of Rs.45,000 per km p.m. beyond the time period
of additional traffic – Arbitrator has awarded the loss/amount at
Rs.45,000 per km per month up to 31.05.2010 i.e. till the end of the
contract which is wholly impermissible diversion of the additional
traffic ceasedto exist w.e.f. January, 2008 – Therefore, the arbitrator
ought not to have awarded any amount beyond the above time
periodbeyond January, 2008 – To that extent the award passed by
the arbitrator can be said to be perverse and to that extent the
present appeals are required to be allowed.
Partly allowing the appeals, the Court
HELD: 1.1 When the statement of claim submitted by the
contractor is seen, it is specifically stated by the claimant that
the amount of Rs.1,03,50,263/- has been worked out up to May,
2007 and the details of expenditure beyond May, 2007 will be
submitted during the course of hearing. It is specifically stated
that expenditure incurred up to May, 2007 works out to
Rs.1,03,50,263/-. Therefore, the amount awarded by the
Arbitrator cannot be said to be in excess of the claim.
[Para 9.1][302-B-C]
1.2 The Arbitrator has awarded the loss/amount at
Rs.45,000/- per km per month up to 31.05.2010 i.e. till the end of
the contract w

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