Delhi District Court
National Rural Infrastructure … vs Deccan Consulting Engineers Pvt Ltd … on 16 April, 2026
IN THE COURT OF SH. PULASTYA PRAMACHALA
DISTRICT JUDGE, (COMMERCIAL COURT)-01,
PATIALA HOUSE COURT, NEW DELHI
INDEX
Sl. HEADINGS Page Nos.
No.
1. Memo of Parties 2
2. Description of case 2
3. Brief Facts of the case 3-4
4. Grounds of objection/challenge 4-12
5. Submissions of Parties 12-15
6. Appreciation of Arguments, Facts & Law 15-27
7. Decision 27
Digitally
signed by
PULASTYA
PULASTYA PRAMACHALA
PRAMACHALA Date:
2026.04.16
17:26:39
+0530
OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.1 of 27 Patiala House Court, New Delhi
OMP (COMM) No.204/2025
In the matter of: -
National Rural Infrastructure Development Agency
(Formerly National Rural Roads Development Agency)
Through Ms. Shalini Das, Joint Director-
Technical Division and Authorised Representative,
5th Floor, 15th NBCC Tower, Bhikaji Cama Place,
New Delhi-110066.
Mob. 9571563600.
... Petitioner
Versus
Deccan Consulting Engineers Pvt. Ltd.
Through its Director
N-31, 2nd Floor, Green Park Extension,
New Delhi-110016.
Mob. 9810533235.
Email: [email protected]
... Respondent
Date of Institution : 22.12.2025
Arguments heard on : 25.03.2026
Decided on : 16.04.2026
Decision : Petition is allowed.
JUDGMENT
DESCRIPTION OF THE CASE
1. Present petition under Section 34 of the Arbitration and
Conciliation Act, 1996, has been filed by petitioner challenging
the arbitral award dated 24.09.2025, as passed by ld. Sole
Arbitrator Ms. Vidhi Gupta at DIAC, in Case Ref. No.
DIAC.8096/03-24.
OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.2 of 27 Patiala House Court, New Delhi
BRIEF FACTS OF THE CASE
2. Briefly stated, the petitioner is an autonomous government body,
providing technical management and monitoring support to the
Government of India in the implementation of the Pradhan
Mantri Gram Sadak Yojan (PMGSY). Petitioner sought
expression of interest for consulting services to conduct a design
review of detailed project reports and cost estimates for
construction, up-gradation and improvement of rural roads, under
PMGSY.
3. On 18.06.2015, respondent submitted its expression of interest
and after due deliberation, on 28.04.2016 petitioner informed
respondent about its selection for DPR Project and invited them
to negotiate the terms of contract. Thereafter, various
communications took place between both the parties in respect of
requirement for reimbursement from 24.05.2016 up to
29.08.2016. Both parties entered into a contract on 14.10.2016.
The total value of contract was Rs.2,38,75,000/-. Appendix ‘C’ of
the contract provided the breakdown of the contract prices.
4. The term of the contract was over on 13.04.2017 and on
04.05.2017 petitioner granted extension to the respondent to
complete the contract work. In the meantime, several
installments of payment were released to the respondent.
Respondent submitted final report and thereafter, on the basis of
observations made by the petitioner, such report was revised. The
consolidated review report dated 07.12.2018 was accepted on
01.07.2020, however, a dispute remained there between the
parties in respect of balance amount to be paid to the respondent.
OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.3 of 27 Patiala House Court, New Delhi
5. Petitioner insisted for providing supporting documents/vouchers
for the purpose of reimbursement, but respondent was reluctant
to provide such document and claimed that it was part of
lumpsum amount to be paid under the contract. Respondent
issued a legal notice to the petitioner on 15.09.2020, thereby
seeking release of final payment. It was also stated therein that
said notice was to be treated as a notice of arbitration u/s. 21 of
the Act, in case of non-compliance by the petitioner. Thereafter,
respondent filed an application u/s. 11 of the Act, before Hon’ble
High Court of Delhi and in Arbitration Petition No. 681/2020
notice was issued to the petitioner.
6. In the meantime, on 04.07.2021 petitioner sent reply to notice
dated 15.09.2020. Afore-said Arbitration Petition was dismissed
for non-prosecution on 29.08.2022. However, subsequently a
restoration application was filed and matter was sent to
Mediation Centre for settlement talks. On 18.12.2023, restoration
application was allowed and afore-said Arbitration Petition was
also allowed to appoint Ms. Vidhi Gupta as the Sole Arbitrator to
adjudicate upon the dispute between the parties. The arbitration
accordingly was conducted under aegis of Delhi International
Arbitration Centre. Vide Award dated 24.09.2025, ld. Arbitrator
allowed the claim of the respondent for Rs.28,17,250/- along
with interest at the rate of 9% w.e.f. 05.03.2020 till the date of
hearing.
GROUNDS OF OBJECTION / CHALLENGE
7. Aggrieved by the arbitral award dated 24.09.2025, petitioner has
preferred the present objections under Section 34 of the
OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.4 of 27 Patiala House Court, New Delhi
Arbitration and Conciliation Act, 1996, inter alia, on the
following grounds: –
i. That the impugned award is ex-facie perverse and is liable to be
set aside, as the petitioner was unable to present its case before
ld. Sole Arbitrator. Vide order dated 30.01.2025, ld. Sole
Arbitrator had not taken petitioner’s SoD on the record, closed its
right to file SoD and struck off the petitioner’s defense on a
complete erroneous ground.
ii. That while striking off petitioner’s defence, ld. Sole Arbitrator
did not cite any precedent to support her finding, or note the
impact of such a drastic decision on petitioner’s substantive
ability to participate in the arbitral process. That ld. Sole
Arbitrator would have been well within her powers to take the
Petitioner’s SoD on record in the interest of justice. That ld. Sole
Arbitrator ignored the express provisions of Sections 18, 24 and
26 of the Act, which make it mandatory that parties in arbitration
ought to be treated equally and granted full opportunity to
present their case. That same goes against the fundamental
principles of fair hearing to be adopted by ld. Sole Arbitrator.
iii. That ld. Sole Arbitrator did not frame any separate issue for
determination, and treated respondent’ s claims as the issues for
determination, thereby making the whole arbitral procedure a
one-sided affair, with no effective opportunity provided to the
petitioner to participate in the proceedings, except to cross-
examine the respondent’s witness.
iv. That ld. Sole Arbitrator mechanically passed the impugned
Award without application of mind, as she failed to note that the
OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.5 of 27 Patiala House Court, New Delhi
petitioner never got an opportunity to fully present its case,
which is in conflict with basic principle of audi alteram partem as
part of the principles of natural justice enshrined in the
substantive laws of the land.
v. That ld. Sole Arbitrator failed to note that the petitioner was a
government body and it is bound with a formal and tiered
decision-making structure, and has to meet requirements such as
obtaining authorisations from multiple persons all the while
being restricted to a limited amount of resources at its disposal.
That for such reasons petitioner was unable to ensure that its SoD
was filed within the time limit prescribed under Section 23(4) of
the Act, thereby filing SoD after a mere delay of one month after
the prescribed period.
vi. That as a bonafide litigant petitioner had already filed SoD, when
ld. Sole Arbitrator did not take it on record on 25.10.2024, and
listed it for arguments on the issue “whether the Tribunal was
empowered to take the SoD on record beyond the statutory
limitation”. Thus, it was not the case of a party deliberately
delaying the proceedings or abusing the process.
vii. That the impugned Award suffers from patent illegality, as it has
been passed against the express terms of the Contract in
complete contravention of the mandate under Section 28(3) of
the Act. That ld. Sole Arbitrator erroneously held that the
payment scheme under the Contract contemplated that the entire
contract price i.e. Rs.2,38,75,000/- was to be paid to the
respondent in lump-sum installments according to the payment
Schedule in Clause 41.2 of SCC, despite acknowledging that this
OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.6 of 27 Patiala House Court, New Delhi
Contract price was a sum total of two amounts, i.e. a
remuneration amount of Rs.1,81 ,50,000/- and a reimbursable
amount of Rs.57,25,000/-, according to Appendix C of the
Contract. That ld. Sole Arbitrator ignored the fact that the idea of
reimbursable expenses was premised on actual expenditure, and
was never in the nature of a lump sum. That ld. Sole Arbitrator
ignored clause 38.1 of GCC, which provided that the contract
price breakdown was provided in Appendix C. That clause 38.1
of GCC read with Appendix C show that the fixed amount of the
contract price was contained in Fin-3 (breakdown of
remuneration), which even included the addition of 10% profits
and overheads, while Fin-4 included the reimbursable expenses
up to a ceiling of Rs.57,25,000/-, on actuals without any
profits/overheads. That if the contract was only to be restricted to
the payment schedule in clause 41.2 of SCC, then there was no
requirement of Appendix C at all or its mention in clause 38. l of
GCC. That by an artificial interpretation, ld. Sole Arbitrator has
rendered Appendix C nugatory, and as a result the Award suffers
from a patent illegality.
viii. That the impugned Award suffers from an error on the face of
record for ignoring the well-settled law that a contract must be
considered as a whole without reading it in parts in isolation
from others. That the contractual terms in the present case, when
read in their entirety, would indicate that although the contract
was for a fixed price to be paid in lumpsum installments, the
contract did not prohibit the payment of reimbursable expenses
on actuals upon submission of supporting documents. That ld.
Sole Arbitrator erroneously dismissed the petitioner’s contention
OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.7 of 27 Patiala House Court, New Delhi
of reading the contract as a whole stating that the contract itself
provided an answer to any inconsistency by way of order of
precedence in clause 1. That ld. Sole Arbitrator committed a
patent illegality by ignoring the express intention of the
petitioner, which was clearly evident from the negotiation
between the parties that primarily surrounded the terms regarding
the payments under the contract, and specifically on the issue of
reimbursable expenses. The condition of the petitioner was not
only explicitly agreed to by the respondent, vide letter dated
29.08.2016, but the entire correspondence between the parties
from January 2016 to August 2016 was also attached as a chapter
in the contract, thus forming a part of the contract. This ex-facie
demonstrated that the respondent was aware of the requirement
of furnishing necessary documents, in order to avail
reimbursement of expenses from the petitioner, despite which,
they did not comply with it.
ix. That ld. Sole Arbitrator erroneously ignored the inherent
distinction between remuneration and reimbursement, which are
well-known terms in the business transactions and cannot be
collapsed. That ld. Arbitrator erroneously relied upon the Clause
1 of the contract and blatantly ignored the subsequent sentence in
Clause 1 which stated that “Any reference to this Contract shall
include, where the context permits, a reference to its
Appendices.” That there existed no inconsistency between the
SCC and GCC and the Appendix C, inclusive of notes in Form
Fin-4, and both SCC and GCC had to be read together with
Appendix C. It is well-settled that not considering a crucial part
of the contract amounts to an infraction of a fundamental notion
OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.8 of 27 Patiala House Court, New Delhi
of justice and results in the impugned Award being in
contravention with the fundamental policy of Indian Law.
x. That ld. Sole Arbitrator ignored the real intent of the contract,
which merely stated that providing documentation and vouchers
regarding the expenses incurred was required for reimbursement,
which was a standard requirement. This was reaffirmed in a letter
dated 24.05.2016 from the side of petitioner to the respondent.
That ld. Sole Arbitrator selectively omitted relevant portions of
the contract while interpreting it, which constituted direct
contravention of basic notions of justice.
xi. That ld. Sole Arbitrator erroneously misinterpreted the contract
by finding that Clause 41 of the SCC and GCC was the only
provision that governed the mode and manner of payments to the
respondent and the condition of submission of proofs/vouchers
of reimbursable expenses was nowhere supported by the terms of
the contract and this was contrary to Clause I of the Contract.
xii. That ld. Sole Arbitrator unfairly disregarded the petitioner’s
demonstrated consistency in making payments to the respondent.
That petitioner had already released the first 5 stages of
payments, which amounted to 90% of the contract price, thereby
indicating a willingness to pay. That petitioner merely sought to
enforce the provisions of the contract that required respondent to
submit documents for reimbursable expenses in the interest of
accountability. That by holding the petitioner’s bonafide action of
paying the 90% of the contract price without seeking supporting
documents for reimbursable claims against the petitioner itself,
ld. Sole Arbitrator in fact penalized the petitioner for acting in
OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.9 of 27 Patiala House Court, New Delhi
good faith and adhering to the terms of the contract.
xiii. That ld. Sole Arbitrator, in an ex-facie incorrect exchanged
finding, stated that the correspondence exchanged between the
parties were pre-contract communications that could not have
any bearing on the interpretation of the contract provisions.
xiv. That ld. Sole Arbitrator failed to acknowledge that petitioner
being a government entity requires a certain minimum standard
of documentation and accountability, as it is dealing with public
money. That petitioner is well within its rights to ask for
documentation of expenses, as also provided in Clause 25 of the
Contract that directs the respondent to keep accurate and
systematic accounts and records in respect of the services
provided. That ld. Sole Arbitrator further ignored the express
stipulation in Clause 2(b) of the contract.
xv. That the impugned Award blatantly disregards letter dated
29.08.2016 where respondent explicitly stated that they were
willing to comply with the requirement of disclosure of
documents to receive reimbursable expenses. That ld. Sole
Arbitrator’s refusal to consider the communications exchanged
between the parties before the contract was executed on
14.10.2016, which essentially focused on this precise issue of
providing supporting documents for reimbursable claims, while
interpreting the contract.
xvi. That the impugned Award suffers from patent illegality for
awarding an interest of 9% per annum to the respondent from the
date of purported cause of action i.e. 05.03.2020 till the date of
payment. That ld. Sole Arbitrator incorrectly stated that the
OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.10 of 27 Patiala House Court, New Delhi
contract was silent on the aspect of interest on delayed final
payment, and SCC did not contain a rate of interest to be applied
under Clause 42.1, which is clearly erroneous. That ld. Sole
Arbitrator’s decision to award 9% interest per annum is perverse
and patently illegal, thereby warranting the interference of this
court.
xvii. That ld. Sole Arbitrator erroneously adopted a hyper technical
approach in terms of clause 42.1 of GCC, wherein it stated that
Clause 42. l was applicable only in the case of delayed payments
for lumpsum installments (Clause 42.2.2, GCC), and not for
delayed payments for the final payment (Clause 42.2.3, GCC). At
the same time, ld. Sole Arbitrator, while incorrectly holding that
SCC did not contain a rate of interest under Clause 42.1, ignored
the Clause 42.1 of SCC, which clearly stated “N.A.”, or ‘Not
Applicable’.
xviii. That ld. Sole Arbitrator failed to note that the remaining 10% of
the payment due to the respondent was part of the reimbursable
claims in Fin-4 as part of the Appendix C, which has to be paid
on actuals, and on the submission of supporting documents. That
the respondent itself has not complied with the contractual terms
by refusing to provide the supporting documents, and then
cannot be paid interest on reimbursable claims to be paid on
actuals.
xix. That impugned Award is erroneous on the face of record for
awarding pre-reference interest from the date the cause of action
arose (w.e.f. 05.03.2020), despite the considerable delays on the
part of the respondent to initiate the arbitration proceedings,
OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.11 of 27 Patiala House Court, New Delhi
which has resulted in respondent benefiting from its own wrong.
xx. That ld. Sole Arbitrator awarded interest at the rate of 9% from
05.03.2020 onwards till the date of payment, which has
amounted to Rs.14,09,474/- resulting in the total claim amount
becoming Rs.42,26.724/- i.e. almost 1.5 times the amount due.
This is punitive, unconscionable and usurious in nature and
merits being setting aside.
xxi. That ld. Sole Arbitrator ignored the intent and actions of the
petitioner to pay the final payment of Rs.28,17,250/- to the
respondent in return for the corresponding vouchers and
supporting documents for the reimbursable claim of
Rs.57,25,000/-
Prayer has been made to set aside the impugned Award and to
award costs of the present petition to the petitioner.
SUBMISSIONS OF THE PARTIES
8. On behalf of petitioner, it was argued that vide order dated
30.01.2025, ld. Sole Arbitrator erroneously closed the petitioner’s
right to file a SoD and struck off its defence by relying on a
patently wrongful interpretation of Section 23(4) of the A&C
Act, which is not mandatory. It was further argued that ld.
Arbitral Tribunal gave wrong reasons and did not cite any case
laws. It was further argued that despite specific bar in contract,
interest was granted to the respondent by ld. Sole Arbitrator. It
was further argued that Clause 42 of GCC says that interest to be
paid as per Clause 42.1 of SCC, but Clause 42.1 of SCC did not
provide any interest. It was further argued that ld. Arbitral
Tribunal wrongly held that SCC was silent on interest part. It was
OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.12 of 27 Patiala House Court, New Delhi
further argued that Clause 42.1 of SCC says “NA” , which means
that interest was barred. It was further argued that S. 31(7) was
breached. It was further argued that pre-reference interest was
also awarded to the respondent, despite the fact that there was
delay on the part of respondent. It was further argued that there
was no plea taken in Statement of Claim regarding loss of
goodwill, still pre-reference interest was granted. Ld. counsel for
petitioner further argued that impugned Award was passed
against the terms and intention of the contract at least regarding
reimbursement.
9. In support of her contention, ld. counsel placed reliance upon
certain case laws, which are as under: –
i. Yashovardhan Sinha HUF v. Satyatej Vyapaar (P) Ltd., 2022
SCC OnLine Cal 2386.
ii. Yashovardhan Sinha HUF v. Satyatej Vyapaar (P) Ltd., 2024
SCC OnLine SC 902.
iii. Aneja Constructions (India) Ltd. v. Doosan Power Systems India
(P) Ltd., 2025 SCC OnLine Del 5325.
iv. Degremont Ltd. v. Yamuna Gases & Chemicals Limited, 2012
SCC OnLine Del 67.
v. Associate Builders v. Delhi Development Authority, (2015) 3
SCC 49.
vi. Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (2019) 15
SCC 131.
vii. Impex Corporation & Ors. V. Elenjikal Aquamarine Exports Ltd.,
(2007) SCC OnLine Ker 125.
OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.13 of 27 Patiala House Court, New Delhi
viii. Sepco Electric Power Construction Corporation v. GMR
Kamalanga Energy Limited, (2026) 2 SCC 542.
ix. DMRC Ltd. v. Delhi Airport Metro Express (P) Ltd., (2024) 6
SCC 357.
x. ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705.
xi. Hindustan Zinc Ltd. v. Friends Coal Carbonisation, (2006) 4
SCC 445.
xii. McDermott International Inc. v. Burn Standard Co. Ltd. & Ors.,
(2006) 11 SCC 181.
xiii. J.G. Engineers Pvt. Ltd. v. Union of India, (2011) 5 SCC 758.
xiv. OPG Power Generation Pvt. Ltd. v. Enexio Power Cooling
Solutions India Pvt. Ltd., (2025) 2 SCC 417.
xv. MMRDA v. Unity Infraproject Ltd., 2008 SCC OnLine Bom
190.
xvi. Technology Information Forecasting & Assessment Council
(TIFAC) v. Strategic Engineering (P) Ltd., (2025) SCC OnLine
Del 9486.
xvii. Gammon India Ltd. v. National Thermal Power Corporation Ltd.,
(2012) SCC OnLine Del 4656.
xviii. Associated Engineering Co. v. Government of Andhra Pradesh
and Anr., (1991) 4 SCC 93.
xix. ONGC Ltd. v. JSIW Infrastructure (P) Ltd., (2025) SCC OnLine
Del 3811.
xx. The Board of Trustees of Chennai Port Trust v. Chennai
Container Terminal Pvt. Ltd., (2014) 1 CTC 573.
OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.14 of 27 Patiala House Court, New Delhi
xxi. Union of India v. Larsen & Tubro Ltd. (L&T), (2026) INSC 203.
xxii. Tehri Hydro Development Corporation India Limited v. C.E.C.
Limited, (2023) SCC OnLine Del 2354.
xxiii. Vedanta Limited v. Shenzhen Shandong Nuclear Power
Construction Company Ltd., (2019) 11 SCC 465.
10. Per contra, ld. counsel for the respondent argued that there is no
bar against awarding interest in the Award as passed by ld. Sole
Arbitrator. It was further argued that para-21 of Award gives
finding regarding reasons for Award of interest. Ld. counsel
further argued that delay was not attributable to respondent as
Hon’ble High Court did not impose cost while restoring its
petition. It was further argued that no separate bill for
reimbursement was ever issued and estoppel was used against
petitioner. Bill had been raised for lumpsum contract amount. It
was further argued that these are matters of interpretation of
contract, which cannot be substituted u/s. 34 of the Act. Ld.
counsel further argued that as per Section 25 of the Act, ld.
Arbitral Tribunal could close the right for Statement of Defence.
APPRECIATION OF ARGUMENTS, FACTS & LAW
11. The general principles underlying S. 34 of the Act are that
Arbitrator is a Judge of the choice of the parties and his decision,
unless there is an error apparent on the face of the award which
makes it unsustainable, is not to be set aside even by the Court,
even if the Court of law could come to a different conclusion on
the same facts. The Court cannot reappraise the evidence and it is
not open to the Court to sit in appeal over the conclusion of the
Arbitrator. It is not open to the Court to set aside a finding of fact
OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.15 of 27 Patiala House Court, New Delhi
arrived at by the Arbitrator and only grounds on which the award
can be set aside are mentioned in the Arbitration Act. Where the
Arbitrator assigns cogent grounds and sufficient reasons and no
error of law or misconduct is cited, the award will not call for
interference by the Court in exercise of the power vested in it.
12. Hon’ble Supreme Court in the case of Associate Builders vs.
Delhi Development Authority, (2015) 3 SCC 49 held that the
interference with an arbitral award is permissible only when the
findings of the arbitrator are arbitrary, capricious or perverse or
when conscience of the Court is shocked or when illegality is not
trivial but goes to the root of the matter. It was held that once it is
found that the arbitrator’s approach is neither arbitrary nor
capricious, no interference is called for on facts. The arbitrator is
ultimately a master of the quantity and quality of evidence while
drawing the arbitral award. Patent illegality must go to the root
of the matter and cannot be of trivial nature.
13. Hon’ble Supreme Court in case of Ssangyong Engineering &
Construction Co. Ltd. vs. National Highways Authority of India,
2019 SCC OnLine SC 677 held that under Section 34 (2A) of the
Act, a decision which is perverse 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.
A finding based on the 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
characterized as perverse. It was held that a finding based on no
OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.16 of 27 Patiala House Court, New Delhi
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.
14. In the present case, petitioner has relied upon the judgment of
Yashovardhan Sinha (supra) to submit that provisions u/s. 23(4)
of Arbitration and Conciliation Act, are not mandatory and thus,
ld. Arbitrator gave wrong reasons in order dated 30.01.2025 so as
to refuse to take Statement of Defence on the record. Hon’ble
Calcutta High Court in the case of Yashovardhan Sinha (supra)
had clarified that Section 23(4) of the Act was not mandatory in
the sense that on the lapse of time frame the mandate of
Arbitrator had to stand automatically terminated. However, at the
same time, Hon’ble Calcutta High Court did not say that
Arbitrator does not have any discretion and right to close such
opportunity in accordance with Section 23(4) of the Act. In fact,
Hon’ble Calcutta High Court did refer to Section 25 of the Act,
which provides for consequences for default in adhering to time
line fixed under Section 23(1) of the Act. Section 25(b) of the
Act does provide discretion to the Arbitral Tribunal to treat the
right of respondent to file Statement of Defence as having been
forfeited, in case respondent fails to file the same in accordance
that Section 23(1) of the Act.
15. Vide order dated 30.01.2025, ld. Arbitrator had observed that in
view of Section 23(4) of the Act, she had no further discretion to
take on record the Statement of Defence, which was filed by
petitioner herein beyond the outer limit i.e. six months. Though
the part of the observations that ld. Arbitrator did not have
OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.17 of 27 Patiala House Court, New Delhi
further discretion to extend the time, may not be completely
consistent with the finding given by the court in the case of
Yashovardhan Sinha (Supra), still the decision to close the
opportunity of respondent, cannot be termed as illegal for simple
reason that even otherwise Arbitrator has such right and
discretion to close this opportunity as provided in Section 25 of
the Act. Moreover, after having participated in the remaining part
of arbitration proceedings without any challenge to afore-said
order dated 30.01.2025, petitioner cannot now seek to again set
the clock back, on the plea that respondent should have been
granted more extension of time. It is worth to mention here that
respondent was given time of four (4) weeks after receiving
Statement of Claim, in order to file the Statement of Defence.
The Statement of Claim was filed by respondent herein on
27.05.2024. There is no dispute in respect of the procedure and
time line agreed by both the parties, as recorded by ld. Arbitrator
in order dated 04.05.2024. Despite that, petitioner herein had not
filed Statement of Defence up to 24.09.2024, as per extension of
time granted by ld. Arbitrator time to time. This is very
unfortunate that petitioner itself had been sleeping over the
opportunities being granted/extended by ld. Arbitrator and
thereafter in the present proceeding argument has been presented
that petitioner was not given fair opportunity to place its defence
in the arbitration proceedings. In fact, the approach of petitioner
was apparent example of abuse of the process of law and abuse
of the lenient approach being taken by the Arbitrator. Such
argument of petitioner to claim that it was not given fair
opportunity, is completely misconceived and frivolous argument.
OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.18 of 27 Patiala House Court, New Delhi
No litigant is entitled for unlimited opportunities or opportunities
as per their sweet-will. Therefore, such argument has to be
rejected.
16. Another ground to challenge the Award in question is based on
the plea that ld. Arbitrator did not follow the procedure as per
Section 18, 24 or 26 of the Act. This is once again based on the
same factual plea that petitioner was not allowed extra time
beyond the given time period for the purpose of filing Statement
of Defence. The problem with such litigants is that when they are
bound to act as per some law and time frame given in the law,
they do not bother to act accordingly. After sleeping over their
opportunities, when the time is lapsed or opportunity is closed,
all of sudden they wake-up and start reminding laws to others
under the slogan of “principal of natural justice”. Lenient
approach is being sought as a matter of vested right and some
observations given by superior courts in a particular fact situation
is used as the matter of right, to flout the given time line in the
law or by law enforcing agency. Government agencies cannot be
an exception, as far as application of any law is concerned. In my
considered opinion, such plea is not to be encouraged even
otherwise, and within the strict narrow scope of inference u/s. 34
of the Act, there cannot be any scope of mercy hearing.
17. Another ground raised by petitioner is that Award has been
passed against the terms of the contract between the parties. This
ground is against the finding, wherein ld. Arbitrator treated the
contract for a lumpsum amount. In support of this plea, my
attention was taken to para-11 of the Award, wherein ld.
OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.19 of 27 Patiala House Court, New Delhi
Arbitrator had referred to several contract provisions. My
attention was further taken to Appendix ‘C’ and Fin. 4 (part of
the contract) providing for breakdown of remuneration and
reimbursable expenses. The more focus was on Fin.-4, which
provided for breakdown of reimbursable expenses. My attention
was further taken to letters dated 06.06.2016 and 24.05.2016,
which were sent to respondent by the petitioner. My attention
was also taken to letter dated 29.08.2016 as sent by respondent to
the petitioner. Accordingly, it was argued that ld. Arbitrator gave
finding that entire contract price was to be paid in lumpsum
installment as per payment schedule in clause 41.2 of SCC,
which was so held beyond the terms of the contract, as
interpreted and agreed by the parties in their communications
with each other. The judgments passed by superior courts in
respect of contract matters were relied upon to buttress the same
point that Arbitral Tribunal cannot go beyond the terms of the
contract or cannot substitute its own view with any provisions of
contract. It was further argued that clause 48.1 of GCC was
ignored by ld. Arbitrator, which mentions about Appendix ‘C’.
18. The relevant observations made by ld. Arbitrator are represented
hereunder: –
“13. From the above scheme contained in the GCC and SCC, it
becomes clear that the contract deals with the contract value as
a fixed amount. In line with this understanding, the Payment
Schedule in the SCC breaks up this fixed amount into
percentages of the contract value, payable to the contractor
upon completion of defined stages or milestones under the
contract. Therefore, the payment scheme under the contract
contemplates that the entire consideration, i.e., INR
2,38,75000, is to be paid to the contractor in lump-sumOMP (COMM.) No. 204/2025 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.20 of 27 Patiala House Court, New Delhi
instalments according to the Payment Schedule. It is important
to note here that clause 41.2 of the GCC is clear, inasmuch as it
specifies that the Payment Schedule in the SCC is to be
followed. Neither this clause, nor the Payment Schedule, makes
any reference to the subject of reimbursable expenses or Form
Fin-4.
15. Coming to Form Fin-4 as contained in Appendix C,
extracted above, it is seen that the form contains various heads
pertaining to types of reimbursable expenses such as air travel
cost, boarding and lodging, local vehicle hire, etc. The unit,
unit cost, and quantity for each such head is specified, with the
total cost for each head of expenses. The form then provides a
total of INR 57,25,000 as the complete amount of reimbursable
expenses under the contract. It is important to also note here
that Form Fin-4 is preceded by Form Fin-3, tilted “Breakdown
of Remuneration.” This form sets out the Key Experts involved
in the consultation project and provides the monthly and total
remuneration for each. The total remuneration under the
contract is specified to be INR 1,81,50,000. Form Fin-3 and
Form Fin-4 together constitute Appendix C. As per Clause 38.1
of the GCC seen above, Appendix C provides the contract price
breakdown.
16. Considering Form Fin-4 and Appendix C in its entirety, it
becomes clear that these forms are used to provide the details
of the breakdown of the various costs that constitute the total
contract price. This is evident from the fact that the sum of INR
1,81,50,000, which is the total remuneration under the contract,
and INR 57,25,000, which is the total reimbursable under the
contract, comes out to be INR 2,38,75000, that is, the total
contract price as per Clause 38.l of the SCC. Therefore, the
total amounts of remuneration and reimbursables are included
in the contract price. As the claimant rightly contends, both
Form Fin-3 and Fin-4 are used to show the break-up of the
costs involved, to arrive at the total contract price. Read with
the provisions of the GCC and the SCC discussed above, this
contract price is fixed, payable in accordance with the Payment
Schedule provided in the SCC.
18. In view of such ambiguity between Form Fin-4 and the
OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.21 of 27 Patiala House Court, New Delhi
provisions of the GCC and SCC, it becomes necessary to
advert to Clause 1 of the main contract to resolve the same,
extracted above. By virtue of this provision, in the event of any
ambiguity or inconsistency between the documents, the SCC
shall take precedence over the other contract provisions,
followed by the GCC, and then Appendix C. ………
19. It is important to note here that the Payment Schedule is not
qualified by any requirement from the claimant to claim
reimbursables either. Under the SCC, payments to the claimant
are nor subject to claims of reimbursable expenses and
submission of proofs thereof. The demand of the respondent
essentially seeks to make the release of the final payment
conditional upon submission of proofs/vouchers of
reimbursable expenses, contrary to the plain provisions of the
Payment Schedule. Requiring proofs/vouchers before releasing
the final payment to the claimant is not supported by the terms
of SCC or the GCC. Therefore, the respondent is not permitted
under the terms of the contract to impose such a condition
before making the final payment; and is bound to follow the
Payment Schedule as it is.
23. The above letters cannot come to the respondent’s aid at
this stage, firstly because correspondence exchanged between
the parties does not form part of the integral contract
documents by virtue of Clause 1 of the main contract, as also
discussed above. Secondly, the contract also contains an Entire
Agreement provision in clause 15 of the GCC, extracted above
for reference. As a consequence of the Entire Agreement
clause, any discussions or negotiations between the parties that
are not incorporated into the contract document cannot be used
to vary the express intention of the parties as recorded in the
contractual provisions. The letters relied upon by the
respondent arc pre-contract communications that cannot have
any bearing on the interpretation of the contract
provisions. …………..”
19. The underlined portion of the above-mentioned findings of ld.
Arbitrator, is clearly in ignorance or derogation to the terms and
conditions mentioned in Fin.4. There was categorical term laying
OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.22 of 27 Patiala House Court, New Delhi
down the requirement of furnishing vouchers etc. for
reimbursable items. Fin.4 is reproduced hereunder: –
“FIN – 4: BREAKDOWN OF REIMBURSABLE EXPENSES
B. REIMBURSABLE EXPENSESNo. Type of Reimbursement Expenses Unit Unit Cost Quantity (Total in INR)
1 Air Travel Cost Round 16000 80 12,80,000
Trips
2 Boarding & Lodging Expense Per day 6000 450 27,00,000
charges during 80 roundtrips @ 10
days/trip
3 Local Vehicle Hire Expenses Per day 2500 90 2,25,000
4 Establishment of Office at 2 Per 50000 12 6,00,000
locations for 6 months *See Note Below Month
5 Jr. Professionals/Support Staff-3 Months 30000 24 7,20,000
persons for 8 months
6 Documentation & Communication LS 200000 1 2,00,000
Costs
7 Sub Total of Reimbursable expenses 57,25,000
8 Total Reimbursable in INR 57,25,000Total in words: FIFTY SEVEN LAKHS TWENTY FIVE THOUSAND ONLY
1. Necessary documents in support of claims for reimbursable expenses would be
required to provide assurance that the expenditure being reimbursed is in
connection with the project work, assigned by NRRDA
2. Items indicated above shall be operated as per actual without any reference to
the quantities or unit costs. Indicated against each. Total amount of
reimbursable shall be limited to Rs. 57,25,000/-”
20. There was no overlapping or conflict between Fin 3 and Fin 4 as
such, because they dealt with different subjects. Fin 4 was
integral part of contract between the parties, and hence, same
could not have been ignored or made nugatory. The exchange of
communications between the parties, were not required to be
treated as part of contract, but same were to be looked into for
the purpose of looking into the stand taken by the parties and in
OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.23 of 27 Patiala House Court, New Delhi
order to appreciate the intentions of the parties. The
communications, do show that petitioner had been taking stand
that furnishing voucher/documents for reimbursable items, would
be required. The letter dated 06.06.2016 (paragraph-5), letter
dated 24.05.2016 (paragraph-5), as sent by petitioner to the
respondent, were categorical to mention that “the reimbursable
expenses should be reimbursed as per actual, based on
supporting documents. The firm should submit the actual
vouchers in order to provide necessary assurance to
NRRDA……” Letter dated 29.08.2016 as sent by respondent to
the petitioner mentioned that “we clarify that while performing
this assignment, the ceiling limit for reimbursable expenses
under Fin Form 4 shall remain at Rs. 5725000/- but individual
items between Sl No. 1 to 6 shall operate as per actuals …… ”
Thus, exchange of communications between the parties, did
show that there had been such requirement to furnish supporting
documents/vouchers within knowledge of respondent, to claim
reimbursable expenses. Both the parties had clear understanding
that these expenses were to be paid as per actual. The term
‘reimbursable’ and ‘actual’, signify without any ambiguity that
such payments had to be made as per actual expenses incurred.
It is matter of common sense that actual expenses can be shown
through relevant document/voucher only and hence, requirement
to furnish such supporting documents, was not there without any
purpose or logic. In that situation, findings given by ld. Arbitrator
was certainly in derogation of material contractual terms and
hence, the decision based on such findings has to be treated as
perverse.
OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.24 of 27 Patiala House Court, New Delhi
21. In the case of OPG Power Generation Private Limited v.
ENEXIO Power Cooling Solutions India Private Limited and
Anr., (2025) 2 SCC 417, while dealing with scope to interfere on
the basis of reasoning and interpretation of terms of contract,
Hon’ble Supreme Court observed as under: –
“80. We find ourselves in agreement with the view taken in
Dyna Technologes, 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. 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. (emphasis supplied)
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
OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.25 of 27 Patiala House Court, New Delhi
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.
Scope of interference with the interpretation/construction of
a contract accorded in an arbitral award
84. An Arbitral Tribunal must decide in accordance with
the terms of the contract. In a case where an Arbitral
Tribunal passes an award against the terms of the contract,
the award would be patently illegal. However, an arbitral
Tribunal has jurisdiction to interpret a contract having
regard to terms and conditions of the contract, conduct of
the parties including correspondences exchanged,
circumstances of the case and pleadings of the parties. If the
conclusion of the arbitrator is based on a possible view of
the matter, the Court should not intefere. But where, on a
full reading of the contract, the view of the Arbitral
Tribunal on the terms of a contract is not a possible view,
the award would be considered perverse and as such
amenable to interference. (emphasis supplied)
Whether unexpressed term can be read into a contract as an
implied condition
85. Ordinarily, terms of the contract are to be understood in
the way the parties wanted and intended them to be. In
agreements of arbitration, where party autonomy is the
grund norm, how the parties worked out the agreement, is
one of the indicators to decipher the intention, apart from
the plain or grammatical meaning of the expressions used.
86. However, reading an unexpressed term in an agreement
would be justified on the basis that such a term was always
and obviously intended by the parties thereto. An
unexpressed term can be implied if, and only if, the court
finds that the parties must have intended that term to form
part of their contract. It is not enough for the court to find
OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.26 of 27 Patiala House Court, New Delhi
that such a term would have been adopted by the parties as
reasonable men if it had been suggested to them. Rather, it
must have been a term that went without saying, a term
necessary to give business efficacy to the contract, a term
which, although tacit, forms part of the contract.
87. But before an implied condition, not expressly found in
the contract, is read into a contract, by invoking the
business efficacy doctrine, it must satisfy the following five
conditions:
(a) it must be reasonable and equitable;
(b) it must be necessary to give business efficacy to the
contract, that is, a term will not be implied if the contract is
effective without it;
(c) it must be obvious that “it goes without saying”;
(d) it must be capable of clear expression;
(e) it must not contradict any terms of the contract.”
22. In the present case, I do find that findings of ld. Arbitrator being
in derogation to explicit term of contract and contrary to
intentions of the parties as appearing from the communications,
fall in the category of perversity.
DECISION
23. In view of my foregoing discussions, observations and findings,
petition is allowed and award in question is set aside.
File be consigned to record room after due compliance.
Digitally signed by PULASTYA PULASTYA PRAMACHALA PRAMACHALA Date: 2026.04.16 17:26:45 +0530 Pronounced in the (PULASTYA PRAMACHALA) Open Court on this District Judge (Commercial Court)-01, 16th day of April, 2026 Patiala House Court,New Delhi OMP (COMM.) No. 204/2025 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.27 of 27 Patiala House Court, New Delhi
