In Brief
The Supreme Court upheld an arbitral award granting price escalation to a contractor (S.R. Ghosh) for a railway repair contract following a Central Government notification increasing petroleum product prices. The Court held that contractual obligations crystallized when the respondent accepted the tender offer on 10.05.1996, not when the formal agreement was executed on 16.09.1996. Since the government notification was issued after contract crystallization, the arbitral tribunal had jurisdiction to consider the escalation claim. The Court found that clause 16 (excluding market fluctuations) did not apply to statutory price increases mandated by government notification. It also rejected the argument that a compulsory 'No Claim Certificate' signed for payment barred the claim. The arbitral tribunal's interpretation of the contract was upheld as reasonable and justified.
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