Arbitration award set aside
The Supreme Court has quashed the judgment of the Delhi High Court and set aside the arbitration award in the appeal case, Union of India vs Varindera Constructions Ltd. After completing the project of building a residential complex in Haryana, the contractor claimed additional amount due to the escalation of wages during the construction. The government denied it pointing out that such escalation had specifically been kept out in the contract. The contractor invoked the arbitration clause and the award was in its favour. The government moved the High Court against the award but its petitions were dismissed, leading to the appeal. The Supreme Court allowed the appeal, agreeing with the government that the terms of the contract had excluded claims on account of statutory increase in wages of labour. The parties to a contract were free to settle the terms. In this case, the contractor entered the contract with open eyes. The judgement reiterated the judicial policy that courts would examine an arbitration award only under exceptional circumstances.
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