• M/s MSK Projects (I) (JV) Ltd. v. State of Rajasthan, AIR 2011 SC 2979 (from Rajasthan) (HMJ P. SathaSivam & HMJ Dr. B.S. Chauhan)

Primary Law(s): Arbitration & Conciliation Act 1996, Section 16; Interest Act, Section 3

Brief Facts/Main Issue(s): MSK completed Bharatpur Bye-Pass project awarded to it by PWD, State of Rajasthan. Problem in collecting toll fee allegedly on account of delay in notification barring vehicles from using old route there by directing use of new route and curbing traffic loss. But state claimed such notification was not bound to be issued by the State in agreement between the parties.

1. Whether state had to issue notification barring vehicles through markets of Bharatpur City under agreement between parties and therefore, subject matter of arbitration?
2. Whether rate of interest could be reduced by Court despite contract providing for agreed rate of interest?
    

          Salient Findings:

1. Confirmed the legal proposition that special tribunals like arbitral tribunal and labour courts cannot travel beyond reference made to them. Powers cannot be exercised to materially enlarge the scope of reference to itself.
2. Section 3 of Interest Act empowers the Court to award interest at prevailing bank rates. Thus, impliedly Court has powers to vary interest agreed between the parties.
3. Toll fee can be levied only for period stipulated in the statute or until cost of project is recovered. Cannot be source of revenue for the State.