In Brief
S.R. Ghosh was the successful bidder for a railway repair contract (tender dated 18.01.1996, accepted 10.05.1996). After acceptance but before formal agreement, the Central Government issued a notification (3.7.1996) significantly raising petroleum product prices, including bitumen required for the work. Ghosh claimed price escalation, but the railway refused, citing a contractual clause prohibiting claims for 'market rate fluctuations'. An arbitrator awarded escalation; the High Court set it aside, holding the arbitral tribunal lacked jurisdiction. The Supreme Court reversed, holding that contractual obligations crystallize at tender acceptance (not formal agreement), placing the price rise within the tribunal's jurisdiction. A statutory increase differs from market fluctuation and does not fall within Clause 16's exclusion. The tribunal's interpretation was reasonable and called for no interference.
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