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2017 (2) TMI 1546 - HC - Indian LawsGranting payment of revised rates to take care of escalated cost of work executed by the claimant and the work executed beyond the originally stipulated time - whether the quantification of the escalation costs/damages by the arbitrator is arbitrary and contrary to the evidence? - HELD THAT:- Waiting for handing over of site to construct the residential quarters, not putting up with the excavation of work to lay down the foundation for the office building also resulted in delay of completion of the work. Hence, the department cannot be accused for the delay caused. Allowing the claim of escalation of cost sans the satisfactory material evidence placed on record by the claimant is perverse and contrary to the public policy. No cogent evidence was placed before the Arbitrator to justify the claim for damages to the extent of 100%. Awarding of 70% on the balance work of Rs. 5.69 lakhs executed by the claimant beyond the original stipulated time by the Arbitrator is not supported by any material evidence. It is based only on the guess work. Though a stray observation was made by the Arbitrator that schedule of rates of PWD during the year 1992-94 was considered, no material was referred to arrive at a conclusion. The Arbitrator’s finding that the delay caused was only due to the default on the part of the Department in not complying with the terms and conditions of the work order cannot be countenanced. Quantification of damages is unreasonable. It would be a case of misconduct on the part of the Arbitrator amenable to Section 34 of the Act. The Arbitrator, after having held that there has been a short increase in prices of materials, the Department cannot compel the contractor to carry out the work on the same rates on which he had agreed to the same within the stipulated period, cannot evaluate the ‘short increase’ equal to that of tender amount. Escalation cannot be granted on assumptions and presumptions. Awarding escalation charges/damages of Rs. 14,68,239/- equal to tender amount is not fit to be sustained. If the entire award is satisfied, the respondents 1 and 2 would have to pay a huge sum of money by way of interest. Considering the totality of the circumstances of the case, interest awarded by the Arbitrator at 18% per annum is excessive, awarding of interest by the court below at 9% per annum on the 25% of tender amount i.e., Rs. 3,71,564/- determined towards the damages is justifiable. No infirmity or irregularity is found in the impugned Judgment and order. Appeal dismissed.
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