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[Cites 8, Cited by 0]

Madras High Court

Southern Railway vs M/S.Sri N.Jayachandran on 5 November, 2025

Author: N.Anand Venkatesh

Bench: N.Anand Venkatesh

                                                               1                       OP No. 918 of 2018




                                  IN THE HIGH COURT OF JUDICATURE AT MADRAS

                                           RESERVED ON : 30.10.2025

                                         PRONOUNCED ON : 05.11.2025

                                                         CORAM

                          THE HONOURABLE MR.JUSTICE N.ANAND VENKATESH

                                                 OP No. 919 of 2018



                1.Southern Railway
                Rep.by The Chief Engineer (South)
                Office of the Chief Administrative
                Office / Construction 183,
                E.V.R.Periyar High Road, Egmore,
                Chennai-600 008.

                2. The Deputy Chief Engineer
                Gauge Conversion Unit-I,
                Southern Railway, State Bank Road,
                                                                                       ..Petitioner(s)
                (MC Donalds Road), Tricchy-620 001.

                                                             .Vs.

                M/s.Sri N.Jayachandran
                M/s.Nilakantan and Son Pvt.Ltd.,
                No.2, First Floor, Gokul Towers, No.7,
                C.P.Ramasamy Road, Alwarpet,
                Chennai-600 018.
                                                                                       Respondent(s)




https://www.mhc.tn.gov.in/judis              ( Uploaded on: 05/11/2025 07:27:19 pm )
                                                                   2                       OP No. 918 of 2018



                PRAYER

                          Original Petition filed under Section 34 of the Arbitration and

                Conciliation Act, 1996, to set aside the arbitral award passed by the Learned

                Arbitrator herein dated 05.03.2018 made in relation to disputes arising out of

                Agreement No.168/CN/05 dated 03.06.2005 is concerned.



                                  For Petitioner(s):       Mr. P.T. Ramkumar


                                  For Respondent(s):       Mr. K.Harishankar



                                                             ORDER

This Original Petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996 (for brevity, herein after referred to as 'the Act') against the award dated 05.03.2018 passed by the Sole Arbitrator.

2.The Respondent is a construction Company involved in infrastructure projects. They were awarded a contract relating to the work of construction of Bridge No.42 at km 82/6-7(5 x 19.2m) PSC Box girder and strengthening of existing substructure between Kuttakkudi-Pukkaravari stations as part of https://www.mhc.tn.gov.in/judis ( Uploaded on: 05/11/2025 07:27:19 pm ) 3 OP No. 918 of 2018 Cuddalore, Vriddhachalam-Salem gauge conversion project vide Agreement No. 168/CN/05 dated 03.06.2006. The project was to be completed within a period of eight months. However, due to various reasons, it was extended from time to time and ultimately it ended in the termination of contract by the Petitioners on 29.1.2007.

3.The dispute was referred to the Sole Arbitrator and the Respondent made various claims pertaining to the payment of compensation, losses, claim for final bill, etc.

4.The substantiation made by the Respondent/Claimant, the defence that was raised by the Petitioner/Railways and the findings rendered by the Arbitral Tribunal are tabulated hereunder:

S. No. Description of Substantiation made by the Defence raised by Findings Claim Claimant the Respondent rendered in the Arbitral Award Claim 1 Loss of profit The Claimant claimed Rs. The Respondent The Tribunal due to defaults 22,48,034/- (15% of the denied the liability and held that the and breaches of unfinished work value) as loss stated that the Respondent’s contract by of profit and alleged that Claimant was the breaches Respondent Respondent’s defaults and defaulting contractor justified https://www.mhc.tn.gov.in/judis ( Uploaded on: 05/11/2025 07:27:19 pm ) 4 OP No. 918 of 2018 breaches obstructed smooth and not entitled for any compensation execution and completion of compensation. for loss of profit the project. and accepted the 15% rate as reasonable but recalculated the base value of work.Ultimately, the Tribunal awarded Rs.
                                                                                              19,20,975/-    to
                                                                                              the Claimant.

                 Claim 2 Losses due to    The Claimant claimed Rs. The               Respondent The         Tribunal
                         Infructuous      41,26,200/- towards loss from denied      the    claim, held that the
                         Overheads        under-utilized       overheads, contending that the audited
                                          stating     that  Respondent’s Claimant     was     the accounts were a
                                          delays extended the contract defaulting party and reliable           basis
                                          from 8 to 24 months, causing not        entitled      to over theoretical
                                          financial loss due to prolonged compensation.            formulae.
                                          site    presence     and    idle                         Therefore,      it
                                          resources.                                               allowed
                                                                                                   compensation
                                                                                                   only for the 16-
                                                                                                   month extended
                                                                                                   period       and
                                                                                                   thereby rejected
                                                                                                   the     separate
                                                                                                   claim for profit
                                                                                                   and     awarded
                                                                                                   Rs. 14,43,438/-.

                 Claim 3 Damages due to The Claimant did not pursue -                                    Since          the
                         Non-availability this as an independent claim.                                  Claimant chose
                         of Part of the   The issues pertaining to the                                   not to make a
                         Site             non-availability of part of the                                distinct      and
                                          site were merged with other                                    separate claim
                                          claims, specifically those for                                 for      damages
                                          loss of infructuous overheads                                  due to the non-
                                          and     extended      use     of                               availability     of
                                          machinery and labour.                                          part of the site,
                                                                                                         the       Tribunal
                                                                                                         made no award
                                                                                                         under this claim.

                 Claim 4 Losses due to    The Claimant claimed Rs. The           Respondent The        Tribunal
                         Extended Use     49,46,467/- for losses from denied         liability, held that the
                         of Machinery,    extended     detention    of disputing          the Claimant     was




https://www.mhc.tn.gov.in/judis                  ( Uploaded on: 05/11/2025 07:27:19 pm )
                                                                      5                       OP No. 918 of 2018


                            Equipment,       machinery and equipment at machinery list                  and entitled          to
                            Materials and    site for 16 months due to asserted        that              the compensation
                            Infrastructure   delays      caused      by   the Claimant  was                at as the extended
                                             Respondent, which prevented default.                             retention
                                             their profitable use elsewhere.                                  resulted     from
                                                                                                              the
                                                                                                              Respondent’s
                                                                                                              breaches.
                                                                                                              However,
                                                                                                              considering
                                                                                                              partial fault on
                                                                                                              the Claimant’s
                                                                                                              part,    awarded
                                                                                                              50% of the claim
                                                                                                              amounting       to
                                                                                                              Rs. 24,73,234/-.

                 Claim 5 Losses due to       The      Claimant        claimed The        Respondent The         Tribunal
                         Extended Use        compensation for additional denied the claim and held that though
                         of Labour           costs incurred in maintaining stated         that    the such
labour at site beyond the Claimant was at fault compensation is contract period due to and failed to produce valid in principle, Respondent’s delay and mandatory labour the claim lacked asserted that labour records registers as proof of credible were held by the Department continued deployment. evidence and and thus not available for quantifiable production after a decade. proof and noted that labour could have been reduced during slow progress.
Therefore, the Tribunal rejected the claim in entirety.
Claim 6 Final Bill The Claimant claimed unpaid The Respondent The Tribunal dues under the final bill for denied the claim, held that the executed works not measured contending that the Respondent’s or settled, along with refund of Claimant failed to records were retention, security deposit, and attend final unreliable and bank guarantee commission - measurements and accepted the totalling Rs. 21,64,003/-, along was not entitled to Claimant’s with the return of Rs. payment due to version as 2,50,000/-(bank guarantee). contractual default. consistent and The Respondent credible.
                                                                              further objected to Awarded             Rs.
                                                                              refund the EMD and 21,64,003/- and




https://www.mhc.tn.gov.in/judis                     ( Uploaded on: 05/11/2025 07:27:19 pm )
                                                                    6                       OP No. 918 of 2018


                                                                                security deposits.        directed return
                                                                                                          of the Bank
                                                                                                          Guarantee (Rs.
                                                                                                          2,50,000/-),
                                                                                                          holding that the
                                                                                                          Claimant      was
                                                                                                          not at fault.

                 Claim 7 Damages for        The Claimant alleged that the The Respondent did The           Tribunal
                         Use of             Respondent       used      their not deny using the held that while
                         Claimant’s         machinery, infrastructure, and Claimant’s assets for the claim had
                         Machinery and launching trolley by handing completing               the merit            in
                         Infrastructure for them over to a new contractor remaining work.        principle,     the
                         Balance Work       after termination and sought                         Claimant failed
                         after              compensation equivalent to                           to quantify or
                         Termination        50% of the new contractor’s                          substantiate      it
                                            profit margin.                                       with evidence or
                                                                                                 documents.
                                                                                                 Since no reliable
                                                                                                 data          was
                                                                                                 provided,       no
                                                                                                 award         was
                                                                                                 granted under
                                                                                                 this claim.

                 Claim 8 Consultancy       The      Claimant       incurred The         Respondent The          Tribunal
                         Fees for          consultancy      expenses     for denied liability,that the held          that
                         Preparation of    preparing       the      bridge’s Claimant had no prior payment          was
                         Designs and       foundation and substructure sanction to engage a justified              since
                         Drawings for      designs, which were ultimately consultant.                  the Claimant’s
                         Foundation and    adopted and used by the                                     consultant’s
                         Substructure      Respondent for construction.                                drawings were
                                           They sought reimbursement of                                used             in
                                           Rs. 5,88,312/-, calculated at                               execution.
                                           3% of the total contract value.                             However,          it
                                                                                                       limited        the
                                                                                                       entitlement      to
                                                                                                       the foundation
                                                                                                       and
                                                                                                       substructure
                                                                                                       portion (40% of
                                                                                                       total work) and
                                                                                                       applied a 5%
                                                                                                       consultancy rate
                                                                                                       on that value.
                                                                                                       Accordingly, Rs.
                                                                                                       3,92,208/- was
                                                                                                       awarded




https://www.mhc.tn.gov.in/judis                   ( Uploaded on: 05/11/2025 07:27:19 pm )
                                                                   7                       OP No. 918 of 2018


                                                                                                         towards   the
                                                                                                         claim

                 Claim 9 Damages due to The Claimant claimed 18% The              Respondent The        Tribunal
                         Non-payment / interest   per    annum      as denied the claim and held             that
                         Delay on       damages for financial loss and relied on Clause 7.3 of compensation
                         Various Claims hardship caused by non- the agreement and for                    delayed
                                        payment of dues since 2007. GCC that explicitly payment              was
                                                                       barred payment of justified despite
                                                                       interest    on      any contractual bar
                                                                       amounts,      including and found 18%
                                                                       Earnest         Money as       excessive
                                                                       Deposits                and      awarded
                                                                                               7%         simple
                                                                                               interest     from
                                                                                               19.01.2007 till
                                                                                               actual payment.

                 Claim      Cost of       The        Claimant      sought As per law, the cost of The          Tribunal
                 10         Arbitration   reimbursement of the actual Arbitration is to be directed                that
cost of Arbitration proceedings, equally borne by both each party shall as they were compelled to parties. Since the bear its own initiate Arbitration due to the proceedings were costs of the Respondent’s actions. initiated by the Arbitration claimant, he is bound proceedings.
                                                                           by the prescribed rule Consequently,
                                                                           for sharing the cost.     no amount is
                                                                                                     payable         by
                                                                                                     either party to
                                                                                                     the other under
                                                                                                     this claim.




5.This Court has carefully considered the submissions made on either side and perused the materials available on record.
6.Before this Court proceeds to consider the grounds raised in this petition, this Court must bear in mind that the Arbitrator was a former CAO of https://www.mhc.tn.gov.in/judis ( Uploaded on: 05/11/2025 07:27:19 pm ) 8 OP No. 918 of 2018 Southern Railways (Chief for all Chief Engineers), Additional Member of Railway Board, Director of Chennai Metro and Advisor of Nagpur Metro and Cochin Metro. It is quite evident that the Arbitrator was a highly technically qualified person who understands the nature of the project involved in depth from top to bottom.
7.In the considered view of this Court, whenever the Court is called upon to exercise its jurisdiction under Section 34 of the Act, the Court must bestow its attention as to the qualification of the Arbitrator. This is more so, where it involves projects with technical specifications which is best understood by an Arbitrator who is technically qualified. Therefore, while dealing with an award passed by an Arbitrator with such technical qualification in a case involving a project governed by technical specification and time period, the Court should not sit on an appeal on the findings rendered touching upon areas hovering around those technical specifications and time period and the Court must only see if such findings are perverse and it suffers from patent illegality.

https://www.mhc.tn.gov.in/judis ( Uploaded on: 05/11/2025 07:27:19 pm ) 9 OP No. 918 of 2018

8.Keeping the above in mind, this Court will now go into the various grounds taken against the award passed by the Sole Arbitrator.

9.The submissions of the learned counsel for the Petitioners mainly focused on the award granted under the heads of loss of profit, losses due to infructuous overhead, losses due to extended use of machinery, equipment, material and infrastructure.

10.The learned counsel for the Petitioners further questioned the award on the ground of granting pendente lite interest when there was a specific bar under Clause 64.5 of the General Conditions of Contract (hereinafter called as GCC). The learned counsel also relied upon Clauses 17A(ii) and 17A(iii) of the GCC which makes it clear that even if there is a delay on part of the Railways, it will not vitiate the contract and that the contractor cannot claim for any compensation on damages.

https://www.mhc.tn.gov.in/judis ( Uploaded on: 05/11/2025 07:27:19 pm ) 10 OP No. 918 of 2018

11.The learned counsel for the Petitioners also submitted that the Sole Arbitrator while granting compensation for loss of profit or loss due to extended use of machinery, equipment, materials etc., has not even assigned reasons as to how the damages/compensation was quantified and therefore the award is unintelligible.

12.The above submission made by learned counsel for the Petitioners cannot be sustained for the simple reason that the Sole Arbitrator had structured the award in such a manner that he first goes into the various documents filed on either side and deals with them in detail and thereafter he gives his reasoning and after undertaking that exercise, the Sole Arbitrator discusses each and every claim that was made by the Respondent and grant/reject the claim. Therefore, while dealing with such an award, this Court must bear in mind the judgement of the Apex Court in Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd reported in (2019) 20 SCC 1 and the relevant portions are extracted hereunder:

34. The mandate under Section 31(3) of the Arbitration Act is to have reasoning which is intelligible and adequate and, which can in appropriate cases be even implied by the courts from a fair reading of https://www.mhc.tn.gov.in/judis ( Uploaded on: 05/11/2025 07:27:19 pm ) 11 OP No. 918 of 2018 the award and documents referred to thereunder, if the need be. The aforesaid provision does not require an elaborate judgment to be passed by the arbitrators having regard to the speedy resolution of dispute.
35. When we consider the requirement of a reasoned order, three characteristics of a reasoned order can be fathomed. They are:
proper, intelligible and adequate. If the reasonings in the order are improper, they reveal a flaw in the decision-making process. If the challenge to an award is based on impropriety or perversity in the reasoning, then it can be challenged strictly on the grounds provided under Section 34 of the Arbitration Act. If the challenge to an award is based on the ground that the same is unintelligible, the same would be equivalent of providing no reasons at all. Coming to the last aspect concerning the challenge on adequacy of reasons, the Court while exercising jurisdiction under Section 34 has to adjudicate the validity of such an award based on the degree of particularity of reasoning required having regard to the nature of issues falling for consideration. The degree of particularity cannot be stated in a precise manner as the same would depend on the complexity of the issue. Even if the Court comes to a conclusion that there were gaps in the reasoning for the conclusions reached by the Tribunal, the Court needs to have regard to the documents submitted by the parties and the contentions raised before the Tribunal so that awards with inadequate reasons are not set aside in casual and cavalier manner. On the other hand, ordinarily unintelligible awards are to be set aside, subject to party autonomy to https://www.mhc.tn.gov.in/judis ( Uploaded on: 05/11/2025 07:27:19 pm ) 12 OP No. 918 of 2018 do away with the reasoned award. Therefore, the courts are required to be careful while distinguishing between inadequacy of reasons in an award and unintelligible awards.

13.This Court must also keep in mind the judgement of the OPG Power Generation (P) Ltd. v. Enexio Power Cooling Solutions (India) (P) Ltd., reported in (2025) 2 SCC 417 and the relevant portions are extracted hereunder:

80. We find ourselves in agreement with the view taken in Dyna Technologies [Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd., (2019) 20 SCC 1, paras 27-43] , as extracted above. Therefore, in our view, for the purposes of addressing an application to set aside an arbitral award on the ground of improper or inadequate reasons, or lack of reasons, awards can broadly be placed in three categories:
(1) where no reasons are recorded, or the reasons recorded are unintelligible;
(2) where reasons are improper, that is, they reveal a flaw in the decision-making process; and (3) where reasons appear inadequate.

81. Awards falling in Category (1) are vulnerable as they would be in conflict with the provisions of Section 31(3) of the 1996 Act. https://www.mhc.tn.gov.in/judis ( Uploaded on: 05/11/2025 07:27:19 pm ) 13 OP No. 918 of 2018 Therefore, such awards are liable to be set aside under Section 34, unless:

(a) the parties have agreed that no reasons are to be given, or
(b) the award is an arbitral award on agreed terms under Section 30.

82. Awards falling in Category (2) are amenable to a challenge on ground of impropriety or perversity, strictly in accordance with the grounds set out in Section 34 of the 1996 Act.

83. Awards falling in Category (3) require to be dealt with care. In a challenge to such award, before taking a decision the Court must take into consideration the nature of the issues arising between the parties in the arbitral proceedings and the degree of reasoning required to address them. The Court must thereafter carefully peruse the award, and the documents referred to therein. If reasons are intelligible and adequate on a fair reading of the award and, in appropriate cases, implicit in the documents referred to therein, the award is not to be set aside for inadequacy of reasons. However, if gaps are such that they render the reasoning in support of the award unintelligible, or lacking, the Court exercising power under Section 34 may set aside the award.

13.If the above yardstick fixed by the Apex Court is applied to the award passed by the Sole Arbitrator, this Court does not find the award to suffer from lack of reasons or the reasons recorded are unintelligible or the reasons are https://www.mhc.tn.gov.in/judis ( Uploaded on: 05/11/2025 07:27:19 pm ) 14 OP No. 918 of 2018 improper in view of the flaw in the decision-making process. What is mandated under Section 34(3) of the Act is that the award must contain reasoning which is intelligible, adequate and which is discernible from a fair reading of the award and the documents referred thereunder.

14.In so far as the issue regarding termination of contract is concerned, the Sole Arbitrator had first taken into consideration all the relevant clauses in the agreement and also in the GCC and taken note of the objections raised by the Southern Railways and the Sole Arbitrator first holds that those objections are relevant and it cannot be overlooked and brushed aside. While giving these findings, the Sole Arbitrator states that he had worked in Railways and had experience of managing the Railway projects for several years and appreciates the importance of these clauses. He also cautioned himself that these clauses are meant to prevent the contractors from coming up with unreasonable claims at every little opportunity when the delays are minor and manageable without any large-scale financial implications and are presumed to be taken into consideration while quoting for the tender.

https://www.mhc.tn.gov.in/judis ( Uploaded on: 05/11/2025 07:27:19 pm ) 15 OP No. 918 of 2018

15.The Sole Arbitrator after making all the above observations gets into the nitty-gritties of the various documents qua the clauses in the agreement and the GCC. Ultimately the Sole Arbitrator has reached a finding that the Claimant was putting adequate effort to speed up the work in the available sites but however, the Railways was found to have defaulted by causing long delays in not handing over the adequate sites at appropriate time and thus it is the Railways which has caused serious breach of contract.

16.The above findings rendered by the Sole Arbitrator are supported by reasons and it is intelligible and such findings have been rendered after appreciation of the evidence qua relevant clauses in the contract and GCC.

17.In so far as loss of profit and loss of profitability is concerned, I had an occasion to deal with these concepts in a recent judgement in OP No. 494 of 2018 dated 06.10.2025. After considering all the relevant judgements, this Court held that a contractor who is wrongfully prevented from completing a contract is entitled to damages for loss of profit calculated broadly and not requiring https://www.mhc.tn.gov.in/judis ( Uploaded on: 05/11/2025 07:27:19 pm ) 16 OP No. 918 of 2018 detailed proof. However, when it comes to loss of profitability from delays or lost opportunities/missed opportunities from other available contract, it requires specific evidence. In the former, applying Hudson’s formula or Eichleay’s formula or even an amount of reasonable guess work, is allowed. However, in the latter, for the purpose of assessing losses, the contractor has to necessarily prove with evidence the loss of profit and opportunities if suffered owing to the prolongation of the period of contract.

18.In so far as loss of profit is concerned, the Sole Arbitrator has granted 15% of the value of the unfinished goods based on the percentage claimed by the Petitioner/Railways in the counter claim. This is a very reasonable method adopted by the Sole Arbitrator while determining the compensation under the head of loss of profit.

19.The next issue pertains to losses due to infructuous overheads. The Sole Arbitrator first adopted the formula for computing the overheads and carried out a theoretical calculation. Thereafter, the Sole Arbitrator adverts to https://www.mhc.tn.gov.in/judis ( Uploaded on: 05/11/2025 07:27:19 pm ) 17 OP No. 918 of 2018 the audited accounts and balance sheets for the years submitted before the Income Tax Authorities and relies upon the same to arrive at a second method of computation and fixes the compensation under this head. The compensation fixed under this head is well thought out and reasoned and it does not suffer from any perversity.

20.That apart, it was submitted that the books of accounts contained the overall overheads and it was not confined only to the site overhead. It must be borne in mind that there is an office work that happens in the background and while dealing with the overhead, it must include both the site overhead as well as the office overhead. Hence, this Court finds that the compensation awarded by the Sole Arbitrator is reasonable and does not require interference of this Court.

21.The next issue pertains to losses due to extended use of machinery, equipment, materials and infrastructure.

https://www.mhc.tn.gov.in/judis ( Uploaded on: 05/11/2025 07:27:19 pm ) 18 OP No. 918 of 2018

22.While dealing with this issue, the Sole Arbitrator had first taken into account the fact that, the Southern Railways was not responding to any of the letters that was sent by the Claimant in order to remove the materials from the site. The Sole Arbitrator takes into account the extended use of the assets in the site and what has been ultimately awarded is only 50% of the amount arrived at. This is in view of the fact that the Sole Arbitrator finds that there were breaches committed on both sides and Railways were found to have committed most breaches.

23.It was attempted to be argued that such compensation claimed by the Claimant is virtually duplication of the claim that was already made under the head loss of infructuous overhead. This ground is not sustainable since it is an independent claim made by the Respondent and the Arbitrator had taken into consideration the additional hire charges paid by the Respondent and even though the Railways claim that they had given Letter of Acceptance to another contractor, that does not take away the eligibility of Respondent to claim losses https://www.mhc.tn.gov.in/judis ( Uploaded on: 05/11/2025 07:27:19 pm ) 19 OP No. 918 of 2018 under this head which has been substantiated through documents.

24.This Court finds that the compensation fixed under this head is reasonable and intelligible and it does not require interference of this Court.

25.The last issue that was strenuously contended on the side of the Southern Railways pertained to the interest that was granted under the head of damages due to non-payment/delay on various claims.

26.The learned counsel for the Petitioner/Southern Railways submitted that there was a specific bar under Clause 64.5 of the GCC which states that no interest is payable on whole or any part of the money for any period till the date on which the award is made. Whereas the Sole Arbitrator has disregarded this clause and awarded pendente lite interest at the rate of 7% per annum from 19.01.2007 until the date of actual payment.

27.The learned counsel for the Petitioners relied upon the judgement of the Division Bench in OSA No. 388 of 2011 and 43 of 2012 dated 20.10.2023 https://www.mhc.tn.gov.in/judis ( Uploaded on: 05/11/2025 07:27:19 pm ) 20 OP No. 918 of 2018 and the relevant portion relied upon is extracted hereunder:

37. He had sought to interpret the provisions of the contract differently to enable interference with the award. We do not think that such an action can be sustained by us. However, while adverting to the award of interest, we find that the Arbitrator has granted interest against the provisions of the contract. We have extracted Clause 64.5, it very clearly prohibits the Arbitrator from granting pendente lite interest. Therefore, we do not think that that portion of the award could be sustained.

28.Per contra, the learned counsel for the Respondent/Claimant relied upon various judgements to contend that what has been granted as compensation by the Arbitrator is only interest as damages and not stricto sensu pendente lite interest.

29.The Division Bench of this Court had an occasion to deal with this issue in CMA (MD) Nos. 864 & 865 of 2019 dated 23.04.2025. The relevant portion is extracted hereunder:

38.Granting of interest is well within the Public Policy Interest Act, 1975 allows the Courts to award interest as damages, and debts https://www.mhc.tn.gov.in/judis ( Uploaded on: 05/11/2025 07:27:19 pm ) 21 OP No. 918 of 2018 or in any proceedings in which as claim for interest in respect of any debt or damages if it thinks fit proper to the person making the claim at the rate not exceeding the correct rate of interest for the whole or any part of period stipulate in the claim.

30.On carefully going through the award, it is seen that the Sole Arbitrator had only granted damages by way of interest and it is not strictly a pendente lite interest as was attempted to be projected by the learned counsel for the Petitioners.

31.Interest can be awarded in terms of an agreement or statutory provision and it can also be awarded by reason of usage or trade having the force of law or on equitable consideration. However, when it comes to award of interest by way of damages, such a claim is awarded only when money due and payable has been wrongfully withheld and there are equitable grounds for which written demand has been made by the Claimant. In ascertaining the rate of interest payable under this head, the Courts of law can take judicial notice of both inflation and also fall in bank rate of interest. https://www.mhc.tn.gov.in/judis ( Uploaded on: 05/11/2025 07:27:19 pm ) 22 OP No. 918 of 2018

32.In the case in hand, the Sole Arbitrator had taken into consideration the fact that the monies were due and payable to the Claimant from the year 2007 itself. The Claimant made repeated demands, which were not settled. Therefore, the Sole Arbitrator found justification by ordering damages by way of interest. While undertaking this exercise, the Sole Arbitrator placed reliance upon various earlier judgements and directed the damages to be paid by way of interest at the rate of 7% (without compounding) per annum from 19.01.2007.

33.This Court finds that the damages awarded by way of interest and the interest that has been fixed by the Sole Arbitrator is in accordance with law and a very reasonable interest rate has been fixed and therefore it does not requires the interference of this Court.

34.In so far as the compensation that has been granted under the other heads, it was purely based on appreciation of evidence and the same does not warrant interference of this Court.

https://www.mhc.tn.gov.in/judis ( Uploaded on: 05/11/2025 07:27:19 pm ) 23 OP No. 918 of 2018

35.In light of the above discussion, this Court finds that the award passed by the Sole Arbitrator does not suffer from any perversity or patent illegality and the award passed is supported by reasons which are intelligible and the amount awarded is also very reasonable. Accordingly, this Original Petition stands dismissed with cost of Rs.1,50,000/- payable by the Petitioners to the Respondent.

05.11.2025 Index:Yes/No Speaking/Non-speaking order Internet:Yes Neutral Citation:Yes/No KP .

https://www.mhc.tn.gov.in/judis ( Uploaded on: 05/11/2025 07:27:19 pm ) 24 OP No. 918 of 2018 https://www.mhc.tn.gov.in/judis ( Uploaded on: 05/11/2025 07:27:19 pm ) 25 OP No. 918 of 2018 N.ANAND VENKATESH J.

KP Pre Delivery order in OP No. 919 of 2018 05.11.2025 https://www.mhc.tn.gov.in/judis ( Uploaded on: 05/11/2025 07:27:19 pm ) 26 OP No. 918 of 2018 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 05.11.2025 CORAM THE HONOURABLE MR.JUSTICE N.ANAND VENKATESH OP No. 919 of 2018

1.Southern Railway Rep.by The Chief Engineer (South) Office of the Chief Administrative Office / Construction 183, E.V.R.Periyar High Road, Egmore, Chennai-600 008.

2. The Deputy Chief Engineer Gauge Conversion Unit-I, Southern Railway, State Bank Road, ..Petitioner(s) (MC Donalds Road), Tricchy-620 001.

.Vs. M/s.Sri N.Jayachandran M/s.Nilakantan and Son Pvt.Ltd., No.2, First Floor, Gokul Towers, No.7, C.P.Ramasamy Road, Alwarpet, Chennai-600 018.

Respondent(s) https://www.mhc.tn.gov.in/judis ( Uploaded on: 05/11/2025 07:27:19 pm ) 27 OP No. 918 of 2018 PRAYER Original Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996, to set aside the arbitral award passed by the Learned Arbitrator herein dated 05.03.2018 made in relation to disputes arising out of Agreement No.168/CN/05 dated 03.06.2005 is concerned.

                                  For Petitioner(s):       Mr. P.T. Ramkumar

                                  For Respondent(s):       Mr. K.Harishankar


                                                             ORDER

After pronouncing the orders in the above original petition, it is brought to the notice of the Court that the petitioners have deposited 50% of the award amount with interest and it is lying in the account of the petition. Hence, the respondent is permitted to withdraw the amount already deposited along with the accrued interest. The balance amount shall be paid to the respondent, since the petition has been been dismissed.

05.11.2025 Index:Yes/No Speaking/Non-speaking order Internet:Yes Neutral Citation:Yes/No ds/KP https://www.mhc.tn.gov.in/judis ( Uploaded on: 05/11/2025 07:27:19 pm ) 28 OP No. 918 of 2018 https://www.mhc.tn.gov.in/judis ( Uploaded on: 05/11/2025 07:27:19 pm ) 29 OP No. 918 of 2018 N.ANAND VENKATESH J.

KP OP No. 919 of 2018 05.11.2025 https://www.mhc.tn.gov.in/judis ( Uploaded on: 05/11/2025 07:27:19 pm )