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As per case facts, the Corporation of Chennai awarded a flyover construction contract. The project faced significant delays due to design changes, revised agreements, and a government inquiry, leading to
...the Corporation terminating the contract. The contractor sought compensation, and an Arbitral Tribunal awarded a substantial amount, adjusting counter claims. The Corporation appealed to the High Court under Section 34 of the Arbitration and Conciliation Act, arguing the award ignored contractual preconditions, misapplied contract clauses, and granted damages without proof for idle cost and loss of profit. The question arose whether the arbitral award suffered from perversity or patent illegality warranting interference. Finally, the High Court affirmed the Tribunal's decision on the inapplicability of the adjudicator clause and the method of valuing work upon termination. It upheld the award for loss of profit as a reasonable estimate. However, the High Court found the award for idle cost to be arbitrary and without proof, thus suffering from perversity and patent illegality. Consequently, the High Court partly allowed the petition, setting aside only the portion of the award pertaining to idle cost, while sustaining all other aspects.
Bench
Applied Acts & Sections
Section 31
–The Arbitration And Conciliation Act, 1996
Section 34
–The Arbitration And Conciliation Act, 1996
Legal Notes
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