Delhi District Court
Delhi Transport Corporation vs Belco Enterprises on 21 February, 2026
Digitally signed
by
DHARMENDER
DHARMENDER RANA
RANA Date:
2026.02.21
15:36:52
+0530
DLND010040492017
IN THE COURT OF DISTRICT JUDGE- 01,
NEW DELHI DISTRICT, PATIALA HOUSE COURTS,
NEW DELHI
Presided over by :- SH. DHARMENDER RANA (DHJS)
Arbitration No. 2240/17
Delhi Transport Corporation
I.P. Estate
New Delhi
......... Petitioner
Versus
1. M/s. Belco Enterpises
E-38, Industrial Area,
Sonepat, Haryana.
2. Shri S.P. Marwaha
I.A.S (Retd.)
Sole Arbitrator
R-68, Greater Kailash-I
New Delhi-110048 ........Respondents
Petition presented on : 02.03.2012
Arguments Concluded on : 11.02.2026
Judgment Pronounced on : 21.02.2026
Arbitration No. 2240/17 Page no. 1 of 14
Digitally signed
by
DHARMENDER
DHARMENDER RANA
RANA
Date:
2026.02.21
15:36:56 +0530
ORDER
1. By way of the instant order, I propose to dispose off a
petition moved under Section 34 of the Arbitration &
Conciliation Act (in short A & C Act) assailing the award dated
18.11.2011.
2. Briefly stated: A contract was awarded by DTC (petitioner
herein) to M/s Belco Enterpirses (respondent herein) for
fabrication and supply of 91 bus bodies on the chasis to be
supplied by DTC to Belco Enterprises. A written contract in this
regard was executed between the parties on 01.12.1998.
Subsequently, the number of 91 fabricated bus bodies was
reduced to 23.
Subsequently, a dispute arose between the parties with
respect to the outstanding payment and M/s Belco Enterprises
invoked arbitration clause and raised the following claims:-
1. Rs.11,88,000/- deducted by DTC from the bills of M/s
Belco Enterprises on the ground of delay in delivery of bus
bodies.
2. Rs.2,60,478/- deducted by DTC from the bills of M/s
Belco Enterprises on account of alleged defects and
deficiencies.
3. Rs.1,19,381/- deducted from the bills of M/s Belco
Enterprises on account of sample testing/ failure charges.
4. Rs.20,054/- deducted on account of defects/ deficiencies
observed during the warranty period.
5. Rs.1,71,907/- deducted by DTC from the bills on grounds
that M/s Belco Enterprises did not supply all loose itemsArbitration No. 2240/17 Page no. 2 of 14
Digitally signed
by
DHARMENDER
DHARMENDER RANA
RANA
Date:
2026.02.21
15:37:00 +0530as per specifications and all chassis items not used for
fabrication of bus bodies.
6. Rs.2,30,000/- being the amount spent by M/s Belco
Enterprises, as directed by DTC, after delivery of buses to
the satisfaction of DTC.
7. Interest @18% per annum on the aforesaid amounts from
due date till the date of payment.
8. Rs.2,00,000/- on account of cost of arbitration.”
3. Eventually, vide order dated 18.11.2011, Ld.
Arbitrator admitted afore-mentioned claim nos. 1, 2, 6 and partly
admitted claim no. 7 while rejecting claim nos. 3, 4, 5 and 8.
4. Aggrieved by the Award, DTC has now instituted the
present petition under Section 34 of A & C Act assailing the
impugned Award.
5. Although a very detailed petition was filed on behalf
of DTC agitating numerous grounds, however, perhaps conscious
of the settled legal position, counsel for DTC (petitioner herein)
has opted to restrict the challenge to the Award on the following
two counts:-
1. Issue of limitation.
2. Award of interest.
6. Before adverting to the rival claims of the parties on
the above-mentioned two grounds of challenge, this Court deems
it appropriate to remind itself of the scope of powers U/s 34 of
the Arbitration Act. It has been held in Delhi Airport Metro
Arbitration No. 2240/17 Page no. 3 of 14
Digitally signed
by
DHARMENDER
DHARMENDER RANA
RANA Date:
2026.02.21
15:37:06
+0530Express Pvt. Ltd. Vs. Delhi Metro Rail Corporation Ltd. Civil
Appeal no. 5627 of 2021, Arising out of SLP (C) no. 4115 of
2019 decided on 09.09.2021 as under:
“…22. A cumulative reading of the UNCITRAL Model Law and
Rules, the legislative intent with which the 1996 Act is made, Section
5 and Section 34 of the 1996 Act would make it clear that judicial
interference with the arbitral awards is limited to the grounds in
Section 34. While deciding applications filed under Section 34 of the
Act, courts are mandated to strictly act in accordance with and within
the confines of Section 34, refraining from appreciation or re-
appreciation of matters of fact as well as law. (See: Uttarakhand Purv
Sainik Kalyan Nigam Limited. v. Northern Coal Field Limited. 1,
Bhaven Construction Through Authorised Signatory Premjibhai K.
Shah v. Executive Engineer Sardar Sarovar Narmada Nigam Ltd. and
Another2 and Rashtriya Ispat Nigam Limited v. Dewan Chand Ram
Saran3 ).
23. For a better understanding of the role ascribed to courts in
reviewing arbitral awards while considering applications filed
under Section 34 of the 1996 Act, it would be relevant to refer to a
judgment of this Court in Ssangyong Engineering and Construction
Company Limited v. National Highways Authority of India
(NHAI)4 wherein R.F. Nariman, J. has in clear terms delineated the
limited area for judicial interference, taking into account the
amendments brought about by the 2015 Amendment Act. The
relevant passages of the judgment in Ssangyong (supra) are noted
as under:-
“34. What is clear, therefore, is that the expression “public
policy of India”, whether contained in Section 34 or in
Section 48, would now mean the “fundamental policy of
Indian law” as explained in paras 18 and 27 of Associate
Builders [Associate Builders v. DDA, (2015) 3 SCC 49:
(2015) 2 SCC (Civ) 204] i.e. the fundamental policy of Indian
law would be relegated to “Renusagar” understanding of this
expression. This would necessarily mean that Western Geco
[ONGC v. Western Geco International Ltd., (2014) 9 SCC
263 : (2014) 5 SCC (Civ) 12] expansion has been done away
with. In short, Western Geco [ONGC v. Western Geco
International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ)
12] ,as explained in paras 28 and 29 of Associate Builders
[Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC1 (2020) 2 SCC 455
2 2021 SCC OnLine SC 8
3 (2012) 5 SCC 306
4 (2019) 15 SCC 131Arbitration No. 2240/17 Page no. 4 of 14
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by
DHARMENDER
DHARMENDER RANA
RANA
Date:
2026.02.21
15:37:10 +0530(Civ) 204] , would no longer obtain, as under the guise of
interfering with an award on the ground that the arbitrator has
not adopted a judicial approach, the Court’s intervention
would be on the merits of the award, which cannot be
permitted post amendment. However, insofar as principles of
natural justice are concerned, as contained in Sections 18 and
34(2) (a)(iii) of the 1996 Act, these continue to be grounds of
challenge of an award, as is contained in para 30 of Associate
Builders [Associate Builders v. DDA, (2015) 3 SCC 49 :
(2015) 2 SCC (Civ) 204] .
35. It is important to notice that the ground for interference
insofar as it concerns “interest of India” has since been
deleted, and therefore, no longer obtains. Equally, the ground
for interference on the basis that the award is in conflict with
justice or morality is now to be understood as a conflict with
the “most basic notions of morality or justice”. This again
would be in line with paras 36 to 39 of Associate Builders
[Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC
(Civ) 204] , as it is only such arbitral awards that shock the
conscience of the court that can be set aside on this ground.
36. Thus, it is clear that public policy of India is now
constricted to mean firstly, that a domestic award is contrary
to the fundamental policy of Indian law, as understood in
paras 18 and 27 of Associate Builders [Associate Builders v.
DDA, (2015) 3 SCC 49: (2015) 2 SCC (Civ) 204], or
secondly, that such award is against basic notions of justice or
morality as understood in paras 36 to 39 of Associate Builders
[Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC
(Civ) 204]. Explanation 2 to Section 34(2)(b)(ii) and
Explanation 2 to Section 48(2)(b)(ii) was added by the
Amendment Act only so that Western Geco [ONGC v.
Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5
SCC (Civ) 12] , as understood in Associate Builders
[Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC
(Civ) 204] , and paras 28 and 29 in particular, is now done
away with.
37. Insofar as domestic awards made in India are concerned,
an additional ground is now available under sub-section (2-
A), added by the Amendment Act, 2015, to Section 34. Here,
there must be patent illegality appearing on the face of the
award, which refers to such illegality as goes to the root of the
matter but which does not amount to mere erroneous
application of the law. In short, what is not subsumed within
“the fundamental policy of Indian law”, namely, the
contravention of a statute not linked to public policy or public
interest, cannot be brought in by the backdoor when it comes
to setting aside an award on the ground of patent illegality.
38. Secondly, it is also made clear that reappreciation of
Arbitration No. 2240/17 Page no. 5 of 14
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by
DHARMENDER
DHARMENDER RANA
RANA Date:
2026.02.21
15:37:14
+0530evidence, which is what an appellate court is permitted to do,
cannot be permitted under the ground of patent illegality
appearing on the face of the award.
39. To elucidate, para 42.1 of Associate Builders [Associate
Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204]
, namely, a mere contravention of the substantive law of
India, by itself, is no longer a ground available to set aside an
arbitral award. Para 42.2 of Associate Builders [Associate
Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204]
, however, would remain, for if an arbitrator gives no reasons
for an award and contravenes Section 31(3) of the 1996 Act,
that would certainly amount to a patent illegality on the face
of the award.
40. The change made in Section 28(3) by the Amendment Act
really follows what is stated in paras 42.3 to 45 in Associate
Builders [Associate Builders v. DDA, (2015) 3 SCC 49 :
(2015) 2 SCC (Civ) 204] , namely, that the construction of the
terms of a contract is primarily for an arbitrator to decide,
unless the arbitrator construes the contract in a manner that no
fair-minded or reasonable person would; in short, that the
arbitrator’s view is not even a possible view to take. Also, if
the arbitrator wanders outside the contract and deals with
matters not allotted to him, he commits an error of
jurisdiction. This ground of challenge will now fall within the
new ground added under Section 34(2-A).
41. What is important to note is that a decision which is
perverse, as understood in paras 31 and 32 of Associate
Builders [Associate Builders v. DDA, (2015) 3 SCC 49 :
(2015) 2 SCC (Civ) 204] , while no longer being a ground for
challenge under “public policy of India”, would certainly
amount to a patent illegality appearing on the face of the
award. Thus, a finding based on no evidence at all or an
award which ignores vital evidence in arriving at its decision
would be perverse and liable to be set aside on the ground of
patent illegality. Additionally, a finding based on documents
taken behind the back of the parties by the arbitrator would
also qualify as a decision based on no evidence inasmuch as
such decision is not based on evidence led by the parties, and
therefore, would also have to be characterised as perverse.”…
25. Patent illegality should be illegality which goes to the root of
the matter. In other words, every error of law committed by the
Arbitral Tribunal would not fall within the expression ‘patent
illegality’. Likewise, erroneous application of law cannot be
categorised as patent illegality. In addition, contravention of law
not linked to public policy or public interest is beyond the scope of
the expression ‘patent illegality’. What is prohibited is for courts to
re-appreciate evidence to conclude that the award suffers from
Arbitration No. 2240/17 Page no. 6 of 14
Digitally signed
by
DHARMENDER
DHARMENDER RANA
RANA Date:
2026.02.21
15:37:19
+0530patent illegality appearing on the face of the award, as courts do
not sit in appeal against the arbitral award. The permissible
grounds for interference with a domestic award under Section
34(2-A) on the ground of patent illegality is when the arbitrator
takes a view which is not even a possible one, or interprets a clause
in the contract in such a manner which no fair-minded or
reasonable person would, or if the arbitrator commits an error of
jurisdiction by wandering outside the contract and dealing with
matters not allotted to them. An arbitral award stating no reasons
for its findings would make itself susceptible to challenge on this
account. The conclusions of the arbitrator which are based on no
evidence or have been arrived at by ignoring vital evidence are
perverse and can be set aside on the ground of patent illegality.
Also, consideration of documents which are not supplied to the
other party is a facet of perversity falling within the expression
‘patent illegality’…
7. Having examined the law, let us not deal with the rival
contentions.
FINAL ARGUMENTS
8. Final arguments have been advanced by Sh. Vibhor
Verdhan on behalf of the petitioner and Sh. Yash Prakash Yadav
on behalf of the respondent.
9. I have heard the rival submissions and carefully perused
the record.
10. Let us now deal with the grounds agitated by the
counsel for DTC in seriatim.
ISSUE OF LIMITATION
Arbitration No. 2240/17 Page no. 7 of 14
Digitally signed
by
DHARMENDER DHARMENDER
RANA RANA
Date: 2026.02.21
15:37:23 +0530
11. Counsel for the DTC has forcefully argued that as
per the terms of agreement, DTC (petitioner herein) was required
to make the payments against each bill, upon delivery of the
fabricated bus bodies by M/s Belco Enterprises. It is pointed out
that the last bill in the instant matter was raised on 28.02.2001
and payment against the said bill was made on 09.03.2001 and
even the security amount was released on 17.03.2001. It is
forcefully argued that the limitation period to claim any
outstanding payments shall come to an end on 16.03.2004 i.e.
within 03 years of release of security amount on 17.03.2001. It is
forcefully argued that Ld. Arbitrator has grossly erred by relying
upon the letter dated 01.06.2002 to deduce that the final
outstanding payment was notified vide letter dated 01.06.2002
(Ex. C-30) and the cause of action arose from 01.06.2002 and not
from the date of release of last payment i.e. 09.03.2001 or at best,
date of release of security amount i.e. 17.03.2001. It is submitted
that M/s Belco Enterprises (respondent herein) has invoked the
arbitration clause for the first time on 04.11.2004, which is way
beyond the statutory time limit and thus, the Ld. Arbitrator has
committed a patent illegality by admitting a time barred claim.
12. Perusal of the agreement between the parties would
reveal that Ld. Arbitrator has rightly concluded that impugned
contract between the parties was a composite contract for
fabrication of 23 bus bodies and the said agreement cannot be
construed as 23 independent and exclusive contract between the
parties. I have absolutely no reasons to disagree with the Ld.
Arbitration No. 2240/17 Page no. 8 of 14
Digitally signed
by
DHARMENDER
DHARMENDER RANA
RANA Date:
2026.02.21
15:37:28
+0530Arbitrator that cause of action in the instant matter shall not arise
unless and until M/s Belco Enterprises was intimated about the
preparation and finalization of the final bill and unless M/s Belco
Enterprises has knowledge about the deduction made by DTC,
M/s Belco Enterprises would not be in a position to raise any
dispute as it cannot be presumed to be aware of what claims have
been accepted and what claims have been rejected by DTC. Ld.
Arbitrator has rightly concluded that the last deduction was
notified by DTC (petitioner herein) to M/s Belco Enterprises
(respondent herein) on 01.06.2002 and the request for invoking
arbitration clause was made by M/s Belco Enterprises on
04.11.2004. Therefore, it cannot be argued that Ld. Arbitrator has
erred by admitting a time barred claim.
13. Counsel for DTC (petitioner herein) has attempted to
argue that the letter dated 01.06.2002 pertains to some other
contract. It is pointed out that the said letter was for the fiscal
year 1997-1998 whereas, the impugned contract pertains to year
1998. It is also attempted to be argued that the said letter pertains
towards release of warranty period deposit whereas the security
amount in the instant matter was already released on 17.03.2001,
therefore, no bill on 29.05.2002 could have been raised towards
the release of warranty period deposit in the impugned
agreement, as the same was already released to M/s Belco
Enterprises on 17.03.2001 itself. It is submitted that M/s Belco
Enterprises (respondent herein) has mischievously not filed the
complete letter which would have brought the entire truth before
Arbitration No. 2240/17 Page no. 9 of 14
Digitally signed
by
DHARMENDER
DHARMENDER RANA
RANA
Date:
2026.02.21
15:37:44 +0530the Court. It is submitted that admittedly, the last delivery of
fabricated bus body went upto 1.03.2001 whereas the letter dated
01.06.2002 (Ex. C-30) makes a mention of Bill no. 122 dated
29.05.2002. It is argued that when the last payment was already
released on 09.03.2001 against the bill dated 28.02.2001, there
was no occasion for M/s Belco Enterprises to raise Bill no. 122
on 29.05.2002. It is submitted that Ld. Arbitrator has grossly
erred by relying upon the letter dated 01.06.2002 (Ex. C-30)
which evidently pertains to some other contract and not the
impugned contract.
14. The contentions of Ld. Counsel for DTC (petitioner
herein) sounds very persuasive at the first blush. However,
counsel for M/s Belco Enterprises (respondent herein) has rightly
pointed out that the said letter dated 01.06.2002 (Ex. C-30) was
not only admitted by DTC before the Ld. Arbitrator but was even
admitted before this Court. Though counsel for DTC has
attempted to argue that all that was admitted by DTC was the
issuance of said letter, but mere admission of issuance of said
letter would not disentitle DTC from arguing that letter dated
01.06.2002 pertains to some other contract.
15. However, in my considered opinion, upon admitting
the letter dated 01.06.2002, it was incumbent upon DTC to plead
and prove that the impugned letter pertained to some other
contract and not with respect to the contract in question. Having
failed to discharge its onus before Ld. Arbitrator, it is legally not
Arbitration No. 2240/17 Page no. 10 of 14
Digitally signed
by
DHARMENDER
DHARMENDER RANA
RANA
Date:
2026.02.21
15:37:49 +0530permissible for DTC to wriggle out of its admissions.
Admitting the contentions of DTC at this stage, would
tantamount to re-appreciation of evidence, which is legally not
permissible within the restricted scope of judicial interference by
this Court while dealing with a petition under Section 34 of A &
C Act.
16. Therefore, I am of the opinion that no fault can be
ascribed to the approach of Ld. Arbitrator in admitting the claim
of M/s Belco Enterprises by acting upon letter dated 01.06.2002.
This plea is found to be meritless and is accordingly rejected.
AWARD OF INTEREST
17. Relying upon clause no. 22 of the Agreement
between the parties, Ld. counsel for DTC (petitioner herein) has
forcefully argued that it was specifically agreed between the
parties that in case if payment was delayed by DTC for any
reason whatsoever, no interest was stipulated to be paid for delay
in payments. It is argued that Ld. Arbitrator has grossly erred by
awarding exorbitant interest @18% p.a. to M/s Belco Enterprises
(respondent herein) while allowing its claim.
18. Ld. Counsel for M/s Belco Enterprises (respondent
herein) on the other hand has forcefully argued that awarding of
interest by Ld. Arbitrator is perfectly justified and cannot be re-
evaluated in a petition under Section 34 of A & C Act. Ld.
Arbitration No. 2240/17 Page no. 11 of 14
Digitally signed
by
DHARMENDER
DHARMENDER RANA
RANA Date:
2026.02.21
15:37:54
+0530Counsel for M/s Belco Enterprises has relied upon the judgment
of Hon’ble Apex Court in the matter of M/s Larsen Air
Conditioning & Refrigeration Company Vs. Union of India &
ors, (2023) 15 Supreme Court Cases 472.
19. Evidently, Ld. Arbitrator has awarded interest
@18% p.a. relying upon Sub-Section 7 of Section 31 of
Arbitration & Conciliation Act. The relevant statutory provision
is reproduced herein for ready reference:-
“Section 31(7) (a) :- Unless otherwise agreed by the
parties, where and in so far as an arbitral award is for
the payment of money, the arbitral tribunal may
include in the sum for which the award is made
interest, at such rate as it deems reasonable, on the
whole or any part of the money, for the whole or any
part of the period between the date on which the
cause of action arose and the date on which the award
is made.
(b) A sum directed to be paid by an arbitral award
shall, unless the award otherwise directs, carry
interest at the rate of two per cent higher than the
current rate of interest prevalent on the date of award,
from the date of award to the date of payment.
Explanation.–The expression “current rate of
interest” shall have the same meaning as assigned to
it under clause (b) of section 2 of the Interest Act,
1978 (14 of 1978).”
20. Perusal of Section 31 (7) of A & C Act reveals that
the award of interest is subject to the agreement between the
parties. The relevant payment clause in the agreement between
the parties is reproduced herein for ready reference:
Arbitration No. 2240/17 Page no. 12 of 14
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by
DHARMENDER
DHARMENDER RANA
RANA Date:
2026.02.21
15:37:59
+0530“22. On receipt of the vehicle in the General Workshop-I
of the Corporation, 97 ½ % payment shall be made
within the reasonable time after making necessary
recovery/ deduction in terms of Clause-17 & 18 on
account of any defects/ deficiencies, dimensions in
specification or late delivery of the buses. The balance 2
½ % deducted towards warranty period deposit, shall be
paid to him after 12 months from the date when each
vehicle covered by contract has been put into service
provided that the work is done in satisfactory condition
and that within the said period the contractor has sent full
account in detail, if all claims which he may have against
the DTC and that such claims, any counter claims and
demands made by the DTC have been satisfactorily
adjusted and that any damages, loss or injury caused by
the contractor to the property has been satisfactorily
made good and all costs, charges, expenses and demands
in respect thereof paid by him. Provided always that the
DTC may directly pay any sub-contractor or sub-
contractor for any work done or materials or apparatus
supplied by him or them in connection with the execution
of the work in the subject of this contract and may deduct
all sums so paid from and any money due or to become
due to the contractor. In case the payment is delayed by
the Corporation for any reason whatsoever, no interest
shall be paid for delay in arrangement of the payment.
However, if the body-builder furnishes further cash to the
extent of 2 ½ % of the bill towards warranty period
deposit, the corporation may release 100% payment
subject to the provisions above. ” (emphasis supplied)
21. Evidently, the parties have specifically agreed that
no interest shall be paid by DTC (petitioner herein) for delayed
Arbitration No. 2240/17 Page no. 13 of 14
Digitally signed
by
DHARMENDER
DHARMENDER RANA
RANA Date:
2026.02.21
15:38:03
+0530payments. Thus, I concur with Ld. Counsel for DTC (petitioner
herein) that no interest could have been awarded by Ld.
Arbitrator beyond the specific terms of agreement between the
parties. In view of the same, the observation of Ld. Arbitrator
with respect to payment of interest under Claim no. 7, could not
be sustained in the eyes of law. Reliance in this regard can be
placed upon Delhi Airport Metro Express (P) Ltd. vs. DMRC
(2022) 9 SCC 286.
22. Accordingly, the challenge to the impugned award
deserves to be partly allowed. It is hereby directed that the
findings of Ld. Arbitrator vide impugned Award dated
18.11.2011, shall remain intact except for payment of interest
under Claim no. 7. The Awards accordingly, stands modified. The
present petition accordingly stands partly allowed. Ordered
accordingly.
23. Arbitral Record be sent back to the concerned authority
alongwith copy of the instant order.
24. File be consigned to record room after necessary
compliance.
Pronounced in open Court
on 21.02.2026 (Dharmender Rana)
District Judge-01,
New Delhi District,
Patiala House Courts,
New Delhi
Arbitration No. 2240/17 Page no. 14 of 14
