Bombay High Court
Oil And Natural Gas Corporation Ltd vs Newton Engineering And Chemicals … on 30 April, 2026
2026:BHC-OS:11282-DB
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
[ COMMERCIAL DIVISION ]
COMM. ARBITRATION APPEAL NO.1 OF 2026
IN
COMM. ARBITRATION PETITION NO.648 OF 2021
Oil and Natural Gas Corporation Ltd., ]
A company incorporated under the ]
Companies Act, 1956 ]
Having its registered office at : ]
Pandit Deen Dayal Upadhyay ]
Urja Bhavan, 5, Nelson Mandela Marg, ]
Vasant Kunj, New Delhi - 110 070 ]
And ]
at Uran Plant, Uran - 400 702, ] ..Appellant/
Maharashtra ] Org. Petitioner
Versus
Newton Engineering & Chemicals Ltd., ]
Being a Company incorporated under ]
the Companies Act, 1956 ]
Having its registered office at:864/B-4 ]
G.I.D.C., Makarpura, Baroda ] .. Respondent/
Gujarat - 490 010 ]Org. Respondent
Mr. Navroz Seervai, Senior Advocate, with Mr. Vishal Kanade,
Mr. Anagh Pradhan, Ms. Aneesha Munshi, Mr. Anand Iyer,
Ms. Palak Jain, Advocates, i/by Divya Shah Associates, for
the Appellant-Original Petitioner.
Mr. Mayur Khandeparkar with Mr. Bernardo Reis and
Mr. Pratik Dixit, i/by Dr. Prem Motiramani, Advocates for the
Respondent.
CORAM : SHREE CHANDRASHEKHAR, CJ &
GAUTAM A. ANKHAD, J.
Judgment is reserved on : 27th March 2026
Judgment is pronounced on : 30th April 2026
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PER, GAUTAM A. ANKHAD, J.
This appeal impugns the judgment dated 17 th October
2025 passed by the learned Single Judge, whereby the
appellant’s petition under section 34 of the Arbitration and
Conciliation Act, 1996 (“the Act”) came to be dismissed and
the Arbitral Award dated 26th August 2021, rendered
unanimously by a three-member Tribunal, was upheld.
2. The respondent herein – M/s. Newton Engineering &
Chemicals Limited was the original claimant before the
Arbitral Tribunal, whereas the appellant – Oil & Natural Gas
Corporation Limited (“ONGC”) was the original respondent
before the Tribunal.
3. The factual background in a nutshell is that the
appellant awarded to the respondent a turnkey contract for
modernization of the Effluent Treatment Plant (ETP) at its
Uran Plant. The respondent submitted its bid on 7 th July
2014, identifying M/s. UEM India Private Limited (“UEM”) as
its technical collaborator pursuant to a Technical
Collaboration Agreement dated 6th May 2014. The
respondent’s bid was accepted and a Letter of Award dated
11th May 2015 was issued, followed by execution of a contract
on 29th March 2016 between the appellant and the
respondent (“Contract”). The Contract expressly recorded that
it constituted the entire agreement between the parties and
provided for milestone-based payments along with furnishing
of a performance bank guarantee by the respondent. UEM
was not a party to the Contract.
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4. Disputes arose between the parties during the execution
of the project. The appellant alleged that the respondent had
made negligible progress and had failed to meet critical
milestones. By a show cause notice dated 9 th May 2017, the
appellant called upon the respondent to cure the defaults,
complete the specified activities and demonstrate
improvement in the execution of the project within thirty
days, failing which the Contract would be terminated. The
notice dated 9th May 2017 is reproduced as below:
“WITHOUT PREJUDICE
Oil and Natural Gas Corporation Ltd.
MR, Uran Plant, Uran – 400 702 (India).
MM Department – Dronagiri Bhavan,
Navi Mumbai – 400 702.
Tel.: 022-2723 4300 / 4302 4314
Fax : 022 – 27222811
No.MR/URAN/MM/L5TK/ETP/14/2013-14/UA5KC13001
Date : 9th May 2017
M/s. Newton Engineering and Chemicals Ltd.
Regional Office : 504, Meadows, Sahar Plaza Complex,
Chakala Metro Station, Andheri-Kurla Road,
Andheri (East), Mumbai – 400 059, Maharashtra.
Kind Attention : Shri N. Gopinath, Managing Director
Ref. :
1. Contract No.MR/URAN/MM/LSTK/ETP/14/2013-14/UA5KC13001
dated 11.05.2015
2. MOMs dated 28.02.2017, 07.03.2017, 14.03.2017, 21.03.2017,
04.04.2017
3. Letter no.MR/URN/ES/ETP/82/9(A) 2016-17/1159 dated 29.12.2016
4. MOM dated 10.01.2017
5. Letter no.MR/URN/ES/ETP/82/9(A)/2016-17/1253 dated 12.01.2017
6. Letter no.MR/URN/ES/ETP/82/9(A)/2016-17/1357 dated 31.01.2017
7. Letter no.MR/URN/ES/ETP/82/9(A)/2016-17/1357 dated 13.02.2017
8. Letter no.MR/URN/ES/ETP/82/9(A)/2016-17/1545 dated 10.03.2017
9. Letter no.PM/NECL/M-250/2017/011 dated 11.03.2017
10. Letter no.MR/URN/ES/ETP/82/9(A)/2016-17/1561 dated 15.03.2017
11. Letter no.MR/URN/ES/ETP/82/9(A)/2016-17/1561 dated 15.03.2017
Subject : Termination Notice under Clause 12.4 of the Contract
No.MR/URAN/MM/
LSTK/ETP/14/2013-14/UA5KC13001 dated 11.05.2015.
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1. WHEREAS, Oil and Natural Gas Corporation Ltd. (hereinafter
ONGC) entered into Contract No.MR/URAN
MM/LSTK/ETP/14/2013-14 UA5KC13001 dated 11.05.2015
with M/s. Newton Engineering and Chemicals Ltd. (hereinafter
M/s.NECL) for Modernisation of ETP Plant at ONGC Uran Plant.
2. AND WHEREAS, 23 out of total completion period of 32 months
have passed and the overall progress in the Project is abysmally
low at 2.01% against scheduled progress of 68.96%.
3. AND WHEREAS, M/s. NECL has failed to resolve their dispute
with their Technical Collaborator M/s. UEM India Pvt. Ltd.
(hereinafter UEM) who are responsible for Basic Design &
Engineering, Detail Engineering, Technical Collaboration
Assistance / Services, Critical Equipment Supplies and Expert
Supervision and which is considered as one of the reasons for
the delay.
4. AND WHEREAS, Execution Philosophy, Methodology and
constructability document, overall plot plan, equipment layout
etc. is a primary pre-requisite for execution of project which has
not been frozen till date by NECL despite several reminders from
ONGC/EIL.
5. AND WHEREAS, Procurement activities, Soil testing and other
construction activities are yet to be started.
6. AND WHEREAS, ONGC have, during various weekly review
meetings, expressed serious concern over slow progress of the
Project and advised NECL to work with meticulous planning,
mobilise full resources and sort out commercial issues with UEM
without any more delay. (please refer Letter
no.MR/URN/ES/ETP/82/9(A)/2016-17/1159 dated 29.12.2016
and MOMs weekly meetings dated 28.02.2017, 07.03.2017,
14.03.2017, 21.03.2017, 04.04.2017).
7. AND WHEREAS, ONGC vide a number of letters addressed the
issues to the MD of NECL on the matter but they failed to sort out
matter with their Technical Collaborator i.e. UEM and
Engineering remained an area of concern: Letter
no.MR/URNES/ETP/82/9(A) 2016-17/1159 dated 29.12.2016
was issued to NECL indicating that progress of project is
unsatisfactory.
8. AND WHEREAS, in order to expedite the project engineering work
a review meeting was held at EIL, Delhi office to review the
engineering documents of the project along with UEM based on
the request of NECL on 10.01.2017. However, no documents
were vetted by UEM.
9. AND WHEREAS, NECL was advised to submit catch up plan,
construction methodology & order copies of 3 nos. of Work Orders
placed to vendors vide letter no.MR/URN/ES/ETP/82/9(A)/
2016-17/1253 dated 12.01.2017 and NECL submitted an
incomplete catch up plan without indicating the activity-wise
plan.
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10. AND WHEREAS, ONGC advised NECL, vide letter
no.MR/URN/ES/ETP/82/9(A)/2016-17/1357 dated 31.01.2017
and dated 13.02.2017 to expedite the progress of the project.
11. AND WHEREAS, ONGC planned MRM on 23.02.2017 to discuss
various issues at the level of Plant Manager but the meeting had
to be called off as MD of NECL did not attend the meeting. This
shows very casual approach of NECL for the project.
12. AND WHEREAS, NECL vide letter no.MR/URN/ES/ETP/82/9(A)/
2016-17/1545 dated 10.03.2017 NECL were also advised for
compliance of following:
a) Documentary evidence to substantiate that issues with UEM,
Delhi have been resolved and there will not be any hurdle in
this project for the jobs to be performed by UEM.
b) Catch up plan duly endorsed by UEM to arrest further delay
in the project.
13. AND WHEREAS, in response to the above communication, NECL
vide letter no.PM/NECL/M-250/2017/011 dated 11.03.2017
claimed to have resolve their dispute with UEM through MOM
dated 10.03.2017 between NECL and UEM. However, there is no
evidence of the said MOM being followed in letter and spirit.
14. AND WHEREAS, ONGC again vide letter no.MR/URN/ES/ETP/
82/9(A)/2016-17/1561 dated 05.03.2017 advised NECL to take
actions on the issue raised vide letters dated 28.02.2017 and
10.03.2017 but the same was not responded by NECL.
15. AND WHEREAS, in the 4th MRM of the project was held on
24.03.2017 and the same was attended by Directors and other
personnel of NECL. During the meeting, following points were
discussed and NECL was advised to comply the same latest by
31.03.2017. This MRM was also not attended by MD, NECL.
15.1 Progress of the project is 2.01% against the schedule of
68.70% which is highly unsatisfactory. NECL is to improve
the performance.
15.2 Progress of Design & Engineering is 21.41% against the
schedule of 100%. Planning package yet to be submitted by
NECL for approval under Code-1.
15.3 The schedule of submission of documents for Surge Pond-B,
schedule of submission of PRs, schedule for revamping jobs
shall be submitted by NECL latest by 31.03.2017.
15.4 NECL yet to commence soil testing in Surge Pond-B.
15.5 NECL to commission one de-watering pump by 31.03.2017
15.6 NECL yet to submit site execution a philosophy,
methodology and constructability document to execute the
project.
15.7 NECL to submit most practical catch up plan for
Engineering, Procurement and Construction before
31.03.2017 along with dates for each activity, failing which
ONGC shall take appropriate action for termination of the
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contract under Clause 12.4 of the contract for
unsatisfactory performance.
15.8 NECL to submit letter from M/s. UEM indicating that all
technical and commercial issues as per agreement between
them have been sorted out and there shall not be any delay
hereafter for various activities of the project. The letter from
UEM shall have to be submitted by NECL to ONGC by
31.03.2017.
Due to non-compliance of the above issues by the cut-off
date of 31.03.2017, ONGC again issued letter on
31.03.2017 and 05.04.2017 to NECL to submit the
compliance of points raised in 4 th MRM. It may be noted that
NECL has not complied these till date.
16. AND WHEREAS, despite best effort of ONGC to expedite the
project, NECL has adopted the casual approach and thereby
failed to address any of the concern ONGC have raised which is
evident in failure of NECL to;
16.1 Make any noticeable progress in execution of the project.
16.2 Resolve the dispute with their technical collaborator M/s.
UEM.
16.3 Start the construction activities, and
16.4 Place purchase order for the project materials and
equipment.
17. AND WHEREAS, ONGC is compelled to issue this Notice of
Termination of the referred contract on account of unsatisfactory
performance of NECL as per provision of the Clause no.12.4 page
22 giving a period of 30 days from the date of issue of this Notice
for NECL to improve their performance and complete the activities
to the satisfaction of ONGC as below;
17.1 Commercial dispute with technical collaborator M/s. UEM,
Delhi to be resolved.
17.2 Execution, Philosophy, Methodology and Constructability
document, overall plot plan, equipment layouts etc. are to be
frozen.
17.3 Catch up plan to be submitted.
17.4 Engineering Documents as listed at Annexure-1, duly
reviewed by UEM to be submitted for approval by
ONGC/EIL.
17.5 Procurement Balance 60 out of 80 MR/PR’s as per
Annexure-2 to be submitted.
17.6 Site Works : Activities enlisted in Annexure-3 to be
completed.
18. AND WHEREAS, after expiry of 30 days’ Notice Period, if NECL
fails to complete the above mentioned activities and is unable to
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demonstrate improvement in execution of the project and their
ability to complete the project, the Contract shall stand
terminated thenceforth without any further notice and
consequences as per clauses 12.5 and 31.0 of the Contract shall
follow.
(R.B. Singh)
GM (MM)-I/c MM
Copy to : 1. M/s. Newton Engineering and Chemicals Ltd.
Registered Office : 864/B-4, GIDC, Markarpura,
Baroda – 390010. Gujarat, India.
Fax No.0265-2638564
2. GGM-PMU
3. GGM-HES
4. Office Copy.
(R.B. Singh)
GM (MM)-I/c MM”
5. The respondent by its reply dated 29th May 2017 denied
these allegations and inter alia attributed the delays to the
appellant’s inaction. It asserted that the project was delayed
due to lack of clarity and approvals in relation to sludge
disposal, which according to the respondent was the
foundational activity for execution of the project. It was
contended that the design and engineering activities were
interdependent on inputs such as soil testing and equipment
specifications, which in turn were contingent upon sludge
removal. The respondent further stated that it had mobilized
resources and undertaken preliminary activities, but its
progress was hindered due to delay in approvals and non-
payment of dues by the appellant. The respondent asserted
that the commercial issues with UEM had been resolved and
did not justify the appellant’s insistence on UEM’s
involvement in the Contract as demanded by the appellant.
The letter dated 29th May 2017 is reproduced as below:
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“Newton Engineering and Chemicals Ltd.
Regd. Office : 864/B-4, GIDC, Markarpura,
Baroda – 390010, Gujarat, India.
Phone No.:+91 265 6672661, 6672663
Fax : +91 265 6672662
Email: [email protected]
Website: www.newtonengg.com
PM/NECL/M-251/2017/016
Date : 29.05.2017
To,
The Project Coordinator,
Modernisation of ETP Uran,
Oil & Natural Gas Corporation Ltd.,
Mumbai Region, Uran Plant, Uran
Maharashtra, India.
Ref. : Contract No. MR/URAN/MM/LSTK/ETP/14/2013-14/
UA5KC 13001, dated 11.05.2015
Sub. : Compliance to letter no.MR/URN/ES/ETP/9(A)/2016-
17/1907 dated 08.05.2017.
Dear Sir,
With reference to the above mentioned letter received from your
good-self kindly find below the point wise clarification:
1. Regarding Project Progress / Design & Engineering / Disposal
of Sludge / Soil Testing / Placement of Orders
a. Project Progress:
We again iterate that the clarity on the sludge issue was
achieved only on 29th November 2016 only after which the
work was restarted in all the areas. It is a well-known fact
that restart of the work and reorganization of the resources
takes its own course. Since there was no clarity on the
sludge issue, the project’s progress was hampered due to
this and hence now comparing the scheduled progress with
the current progress is not at all justified.
b. Design & Engineering:
We again iterate that Design & Engineering is not an
independent activity and is based on inputs received from
the various sources. How can civil designs be started
without having soil report in hand. It was ONGC/EIL who
insisted that the soil report should be available from the
area. Inside the pond which could have been done only after
the removal of the sludge from the pond. No foundation
drawings can be started until the availability of the soil
report and equipment loading data which will be available
only after the placement of the orders. Many drawings are
interrelated and can be started only after the approval of
former drawing like GAD of tanks can be prepared only after
the approval of Tank Data Sheet. Hence your contention
M/s. NECL has placed a misleading fact is not correct.
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c. Disposal of Sludge:
It is a well established fact that we had mobilised the site in
August 2015 and started making the efforts for sludge
removal in the same month itself. Since the approval of
removal for the sludge was not given and the area of the
construction being on the sludge pond the project progress
was hampered. It is an established fact that ONGC had been
deposing the sludge without even categorizing it which is
primary requirement for the disposal of the Hazardous
waste. We having work experience in various other Oil and
Gas Companies like IOCL, HPCL always knew that this
sludge is fit for recycling and hence we had taken it as a
revenue item during the bidding of the project. This can be
seen from the cost difference between the L1 and L2 which is
almost 23 crores. No procedure for sludge disposal is given
in the bid document and in the contract document. ONGC
has always been referring to a pre-bid reply which is also
vague and not clear. Also M/s. ONGC had been forcing us to
adopt a method for sludge disposal which was against the
hazardous waste policy which we have been conveying from
the start. Also now when M/s. ONGC has taken out the
tender for the reprocessing of the sludge through the Bid
Invitation No.UA6517002 and hence it is established that the
procedure for sludge disposal proposed by us was correct
and all the delay caused due to delay in the resolution of the
sludge issue is not at all attributable to M/s. NECL.
d. Soil Testing:
From the letter it is agreed by you that we had carried the
soil testing near the surge pond and not in the area where
the sludge is kept. It was M/s. ONGC / M/s. EILs
recommendation to do the designing only after doing the soil
sampling from below the pond. It was only then we have re-
initiated for the soil testing from the bottom of the surge pond
from where the sludge has been removed. The documentary
evidence for the same is available and hence your contention
that M/s. NECL has placed a misleading fact is not correct.
e. Placement of Orders:
We again iterate that initially due to non-clarity on the
sludge issue and later due to ONGC not making payments
for the want of stamp and signature of the technical
collaborator, we had delayed the placement of the orders. As
on date, we have not received nay payment against the
placement of the orders and on the other hand we have
made payments to the vendors which is again putting us in
negative cash flows impacting the project work.
2. Resolution of Dispute with M/s. UEM:
We again iterate that due to delay in the clarity over the sludge
issue, we could not start the project work and due to this we
ended up only in extra overheads and cash crunch. We had
made a single payment of Rs.22,50,000/- after the Due to this,
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we could not honour the commercial commitments made to M/s.
UEM completely, still we kept on paying them whatever we
could and hence there was a commercial dispute between both
the agencies. M/s. UEM wished to get their payment for
technical collaboration completely without considering the
situation. In spite of delay in the project and billing merely
anything to ONGC, we have paid more than 80 lakh to
M/s. UEM till date and the proof of the same can be given to
M/s. ONGC. All the commercial issues have been resolved and
we have started submitting documents signed by M/s. UEM to
M/s. ONGC for approval. We are still firm on our statement that
there is no liability given to the technical collaborator in the
contract and M/s. NECL is held responsible for everything as
per the contract. The entire responsibility of execution of the job,
achieving the process parameters is responsibility of M/s.
NECL and we have never denied or step back from our
responsibility. However, in spite of this when it comes to
execution, M/s. ONGC has always not reviewed the documents
submitted by us, not made payments against the order placed
by us for the want of signature of M/s. UEM which gave them
full strength to dictate their terms and exploit us as they wish.
3. Submission of MR/PR and Review of MR/PR:
The MR/PR documents are vendor generated and it is vendor
who takes the responsibility of the performance of the
equipment. Hence, M/s. UEM will not sign the documents in
MR/PR except for Data Sheets which are reviewed from process
point of view. For TTPRO section since M/s. UEM will be
supplying all the equipments and will be responsible for the
warrantee and guarantee for the TTPRO section and hence for
all the equipments coming in TTPRO section, the PS documents
will be signed by M/s. UEM.
4. Mobilisation of Soil Testing Agency:
Kindly refer the mail dated 15 th April 2017 where we had
asked for the approval of Bore Hole location and confirmed that
the agency is ready and can mobilise the site by 19 th April
2017. We received the approval on 24 th April 2017 by which the
agency had deployed his rig to some other places after which
we had searched for new agency and hence it took time. The
documents for the gate pass approval for manpower of the new
agency has already been submitted to the office of your good
self.
5. Diesel Pump:
The diesel engine pump has been shifted to site on 15 th May
2017. We have also ordered an additional diesel pump which
will be delivered at site by 10th May 2017.
6. Submission of Specific Letter from M/s. UEM:
The commercial disputes have been resolved and M/s. UEM is
working on this project. M/s. ONGC has also cross-verified this
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submitted by M/s. NECL were really signed by them or not over
which they have replied in positive. We feel that forcing us to
get a particular letter from M/s. UEM is not justified.
7. Submission of Planning Package:
We again iterate that the MOM of the meeting may also be
pleased to refer to this meeting which was held for discussion
of comments on PFD, P&ID and DCI & MCI. Also planning
package is not engineering document and hence the technical
collaborator has no role to play in it. As confirmed earlier, there
are only comments on the DCI and MCI in the planning
package. Since there are several departments in EIL and we
are also not very clear with the comments, we requested you to
kindly arrange a joint meeting across the table with M/s. EIL
which was denied from your end. The reply given by your good
self on this issue is not in line with the actual facts and hence
we do not agree with the same. We confirm you that the issues
between us and UEM are resolved and we have expedited all
our resources for the completion of the project at the earliest.
We request your kind cooperation in taking this project forward.
Regards
Amit Datarkar
Project Manager”
6. Notwithstanding the reply, the appellant terminated the
Contract on 15th June 2017 with effect from 7th June 2017.
The letter dated 15th June 2017 is reproduced as below:
“Oil & Natural Gas Corporation Ltd.,
MR, Uran Plant, Uran – 400702 (India).
MM Department-Dronagiri Bhavan,
Navi Mumbai – 400702
Tel.: 022-2723 4300 / 4302 4314
Fax: 022-27222811
No.MRJURAN/MM/LSTKJETP/14/2013-14/UASK
Date : 15th June 2017
M/s. Newton Engineering and Chemical Ltd.,
Regional Office : 504, Meadows, Sahar Plaza Complex,
Chakala Metro Station, Andheri-Kurla Road,
Andheri (E), Mumbai – 400059, Maharashtra.
Kind Attention : Shri N. Gopinath, Managing Director
Ref. : 1. Contract No. MRJURAN/MM/LSTK/ETP/14/
2013-14/UA5KC/13001 dated 11.05.2015.
2. Letter No.MR/URAN/MM/LSTK/ETP/14/
2013-14/UA5KC13001 dated 9th May 2017.
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Sub. : Intimation of termination of the Contract
No.MR/URAN/
MM/LSTK/ETP/14/2013-14/UA5KCd1a3t0e0d1
11.05.2015 under Clause 12.4.
1. WHEREAS, Oil & Natural Gas Corporation Ltd. (hereinafter ONGC)
entered into Contract No.MR/URAN/MMILSTK/ETP/14/2013-14/
U1A350KOC1 dated 11.05.2015 with M/s. Newton Engineering and
Chemicals Ltd. (hereinafter M/s. NECL) for modernization of ETP
Plant at ONGC Uran Plant.
2. AND WHEREAS, ONGC served Termination Notice to M/s. Newton
Engineering and Chemical Ltd. vide letter reference no.2 above where
M/s. Newton Engineering and Chemicals Ltd. was allowed 30 days’
Notice Period to complete activities listed therein and demonstrate
improvement in execution of the project and ability to complete the
project.
3. AND WHEREAS, notwithstanding this termination, M/s. Newton
Engineering and Chemicals Ltd. failed to complete the activities listed
in the letter reference no.2 above and failed to demonstrate
improvement in execution of the project and their ability to complete
the project. Therefore, the said Contract No.MR/URAN/MM/LSTK/
ETP/14/2013-14/UA5KdC 13001 dated 11.05.2015 got terminated
on 7th June 2017 in terms of the said Termination Notice dated 9 th
May 2017.
4. AND WHEREAS, notwithstanding this termination, M/s. Newton
Engineering and Chemicals Ltd. and ONGC are bound by the
provisions of the Contract No.MRJURANIMM/LSTK/ETP/14/2013-
14/UASKC10031 dated 11.05.2015 that reasonably requires some
action or forbearance after such termination as per clause 12.5 of the
Contract.
5. AND WHEREAS, ONGC shall initiate necessary action as
consequences of this termination as per clauses 12.5 and 31.0 of the
Contract or any other clause elsewhere in the said Contract.
(R.B. Singh)
GM (MM)-I/C MM
Copy to : M/s. Newton Engineering and Chemicals Ltd.
Registered Office : 864/B-4, GIDC, Makarpura,
Baroda – 390010, Gujarat, India
Fax No.0265-2638564
(R.B. Singh)
GM (MM)-I/C MM”
7. The respondent invoked arbitration and also filed
Arbitration Petition (Lodging) no.289 of 2017 under section 9
of the Act seeking to restrain the appellant from invoking the
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bank guarantees. As the respondent did not obtain any order
of injunction, the appellant encashed the bank guarantees.
All these disputes were referred to arbitration. Before the
Tribunal, the parties led voluminous documentary and oral
evidence. On the basis of the pleadings, a wide range of
issues, including questions relating to delay, the role of UEM,
the scope of work for sludge disposal, the validity of
termination and on several claims and counterclaims, were
framed. The same are extracted and quoted:
i. Whether the Respondent has performed its contractual
obligations under the subject Agreement/Contract dated
11th May, 2015?
ii. Whether the Respondent and/or the Claimant
committed breaches of the subject Agreement/Contract?
iii. Whether the disposal of the sludge was within the
Claimant’s scope of work under the subject Contract?
iv. Whether the Respondent’s insistence that the Claimant
dispose of the sludge only, and only at MWML, Taloja,
was as per subject Contract?
v. Whether the MWML Taloja was approved Agency for
disposal of sludge / scrap?
vi. Whether the Contract provides or holds UEM as
primarily responsible for overall execution of work?
vii. Whether Claimant’s offer in the subject Contract was
based on Consent dated 23.01.2013? If yes then
whether Claimant is bound by MPCB Consent dated
21.10.2014?
viii. Whether the Claimant was entitled to the scrap under
the subject Contract?
ix. Whether the termination of the subject
Agreement/Contract dated 29th March, 2017 was
correct and justified of was wrongful?
x. Whether the encashment of Performance Bank
Guarantee was wrongful and if so, the Claimant is
entitled to the refund of Rs.9,42,99,150/-?
xi. Whether the Claimant is entitled to Rs.60,00,000/- as
Commission charges/ expenses towards extension of
Bank Guarantee?
xii. Whether the Claimant is entitled to Rs.20,00,000/- for
loss due to mobilization and demobilization of site
infrastructure?
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xiii. Whether the Claimant is entitled to Rs.30,00,000/- for
expenses incurred towards Insurance Policies?
xiv. Whether the Claimant is entitled to Rs.35,00,000/- for
loss of tools, tackles and machineries?
xv. Whether the Claimant is entitled to the sum of
Rs.11,36,86,818/-for Work Done but not paid?
xvi. Whether the Claimant is entitled to Rs.2,75,00,000/- as
loss of revenue against sludge recycling?
xvii. Whether the Claimant is entitled to Rs.15,42,44,427/-
as loss of profit?
xviii. Whether the Claimant is entitled to Rs.11,08,18,621/-
for underutilization of overheads?
xix. Whether the Claimant is entitled to Rs.13,45,65,451/-
for underutilization of labour force?
xx. Whether the Claimant is entitled to Rs.7,12,40,534/- for
underutilization of machinery?
xxi. Whether the contract provides that property in the crude
oil mixed in the sludge was the property of the
Respondent?
xxii. Whether the Respondent was entitled to reprocess the
sludge through the 3rd Party Contractor and extract the
crude oil therefrom before sending it for disposal by
way of incineration?
xxiii. Whether due to the Claimant’s failure to execute the
subject Contract in accordance with the terms thereof,
the Respondent has suffered a loss and is titled to an
award for an aggregate amount of Rs.133.8 Crores
payable by the Claimant?
xxiv. Whether the Respondent is entitled to reimbursement of
an amount aggregating to Rs.1,00,66,732/- incurred by
the Respondent on maintenance of existing ETP, which
was the scope of work of the Claimant under the subject
Contract?
xxv. Whether the Respondent is entitled to the aggregate
amount of Rs.1,22,60,09,000/- being the escalated cost
of the ETP Modernization Project occurring due to the
inordinate delay in execution of the subject Contract by
the Claimant?
xxvi. Whether the Respondent is entitled to the aggregate
amount of Rs.1,12,00,000/- on account of having
incurred extra infructuous expenditure on manpower
under the subject Contract?
xxvii. Whether the Respondent is entitled to the sum of
Rs.5,00,00,000/- as compensation for the defamatory
and false imputations made by the Claimant against
the officers of the Respondent?
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xxviii. Whether the Respondent is entitled to an amount of
Rs.2.69 Crores for infructuous expenditure incurred by
the Respondent on account of Project Managing
Consultancy costs under the subject Contract?
xxix. Whether the Respondent is entitled to an aggregate
amount of Rs.12,67,240/- incurred on wasteful
expenditure on engineering RA Bills Nos. I and 2 paid to
the Claimant under the subject Contract?
xxx. Whether the Respondent is entitled to the sum of
Rs.28,00,000.00/- being the value of scrap
appropriated by the Claimant under the subject contract
without fulfilling all the of the Claimant’s Obligations
under the subject contract?
xxxi. Whether the Respondent is entitled to interest of @ 24%
p.a. on the aggregate sum of Rs.133.8 Crores claimed in
the present Counter Claim?
xxxii. Whether the Claimant is entitled to interest @ 24% p.a.
on the amounts claimed by the Claimant?
xxxiii. What Award?
xxxiv. What Costs?
8. Upon a detailed consideration of the material on record,
the Tribunal unanimously held that the termination of the
contract by ONGC was wrongful. The Tribunal found that the
delay in execution was not attributable to the respondent and
that the appellant’s own conduct, particularly in relation to
sludge disposal and approvals had materially contributed to
the lack of progress. The Tribunal further held that the
contract did not mandate UEM’s approval or signature on all
engineering documents and that the respondent could not be
faulted on that basis. Consequently, the Tribunal partly
allowed the respondent’s claims and out of total claims for
Rs.111.04 crores, it awarded Rs.27.43 crores under various
heads, including refund of the performance bank guarantee,
value of work done, loss of revenue from sludge disposal, and
loss of profit. The Tribunal also awarded interest and costs to
the respondent and rejected all counterclaims of the
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appellant. In a nutshell, the following claims were awarded:
(i) Under Issue no.10, Rs.9,42,99,150/- was awarded to
the respondent towards refund of the performance
bank guarantee, as the Tribunal held that the
encashment thereof was unjustified in view of the
wrongful termination;
(ii) Under Issue no.15, Rs.1,06,91,238/- was awarded to
the respondent towards the value of work done and
payments made by it to UEM and other third-party
vendors;
(iii) Under Issue no.16, Rs.2 crores was awarded to the
respondent towards loss of revenue as the Tribunal
held that the appellant had unjustifiably insisted on
incineration and considering that the respondent
would have received from recycling of sludge;
(iv) Under Issue no.17, Rs.14,93,79,332/- was awarded to
the respondent towards the loss of profits consequent
upon wrongful termination of the Contract by the
appellant;
(v) Interest and costs were also awarded to the
respondent; and
(vi) All counterclaims of the appellant were rejected.
9. The appellant challenged the Award under section 34 of
the Act before the learned Single Judge contending inter alia
that the findings of the Tribunal were perverse, unsupported
by evidence and had internal contradictions in the Award. The
learned Single Judge, upon examining the Award within the
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limited scope of interference under section 34, rejected the
challenge and held that the view taken by the Tribunal was a
plausible one based on the material on record. Aggrieved
thereby, the appellant has preferred the present appeal under
section 37 of the Act.
Submissions of the appellant:
10. Mr. Navroz Seervai, learned senior counsel appearing for
the appellant submitted that the Tribunal has rendered
contradictory findings regarding the role of UEM. He
contended that while the Tribunal has acknowledged that the
respondent lacked the requisite technical expertise and UEM
was its Technical Collaborator, it has simultaneously held
that the Contract did not mandate UEM’s approval/ signature
on all drawings for continuation of the work. It was urged
that, but for UEM, the respondent would not have been
awarded the tender in the first place. He invited our attention
to paragraphs 107, 111, 124 and 163 of the Award and
submitted that the Tribunal recorded that it was incumbent
upon the respondent to satisfy the appellant regarding UEM’s
involvement and to demonstrate that the plans were duly
approved by UEM. However, in subsequent portions of the
Award, particularly paragraphs 163, 181 and 192, the
Tribunal has held that the Contract did not require any
involvement of UEM and the appellant could not insist on
UEM signing all the drawings. These mutually inconsistent
findings render the Award perverse. The learned senior
counsel further submitted that the issue of non-involvement
of UEM was repeatedly raised by the appellant in its
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correspondence, including the communications forming part
of the termination notice. It was submitted that the learned
Single Judge not only failed to consider these fundamental
inconsistencies at paragraph 71 of the impugned judgment
but travelled beyond the Award, rendering the impugned
judgment patently illegal under section 37 of the Act.
11. Mr. Seervai next contended that the Tribunal wrongly
held that the submission of basic engineering drawings by the
respondent constituted less than 5% of the Contract value
and that removal of the sludge was the major work. It was
urged that the submission of UEM-approved drawings
constituted a fundamental precondition for execution of the
project. The commercial weightage assigned to the drawings
cannot be determinative of its importance for the project. The
Tribunal as well as the learned Single Judge failed to
appreciate that without duly approved engineering drawings,
no further work on the ETP could have proceeded. Mr. Seervai
submitted that the respondent’s admission of its inability to
furnish UEM-approved drawings amounted to the breach of a
fundamental contractual obligation, justifying the termination
of the Contract. It was contended that despite the Tribunal
recording findings acknowledging the necessity of UEM’s
involvement, it failed to appreciate the legal consequences
thereof.
12. As regards Rs.1,06,91,238/- granted towards work done
and payments made to UEM and third-party vendors,
Mr. Seervai submitted that the Award is not supported by
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evidence and suffers from material discrepancies in the
vendors’ statements. He contended that the bank statements
relied upon by the respondent do not satisfy the requirements
of the Bankers’ Books Evidence Act, 1891 and the same could
not have been relied upon by the Tribunal. The learned senior
counsel also challenged the award of loss of profit amounting
to Rs.14,93,79,332/-, contending that the same is premised
on an erroneous finding of wrongful termination. He
submitted that both the Tribunal and the learned Single
Judge have wrongly concluded that disposal of sludge was a
primary or foundational activity for execution of the project.
According to him, such a conclusion is not borne out from the
contractual framework. It was submitted that the
quantification of loss of profit at 15% is arbitrary, without
proof of actual loss and based solely on the ipse dixit of the
respondent. Equally, the award of Rs.2 crores towards loss of
revenue from sludge disposal was assailed as being wholly
unsupported by record, without evidence and is vitiated by
patent illegality.
13. In support of these submissions, Mr. Seervai relied on
following judgments to contend that where an Award is
vitiated by internal contradictions or is unsupported by
evidence, the Court in exercise of jurisdiction under section
37 of the Act is empowered to set aside the Award or in the
alternative, remand the matter to the learned Single Judge for
reconsideration:
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(i) “Morgan Securities & Credits Pvt. Ltd. v.
Samtel Display Systems Ltd.”1
(ii) “Mcdermott International Inc. v. Burn
Standard Ltd. & Ors.“2
Submissions of the respondent:
14. On the other hand, Mr. Mayur Khandeparkar, the
learned counsel appearing on behalf of the respondent
supported the findings recorded in the Award as well as the
judgment of the learned Single Judge. Mr. Khandeparkar
invited our attention to various portions of the Award and
submitted that the Tribunal has correctly held that the
termination of the Contract by the appellant was wrongful
and that the consequences thereof necessarily follow. He
contended that the issue relating to disposal of sludge was
fundamental to the progress of the project and has been
determined by the Tribunal as a question of fact on the basis
of the materials on record. The appellant delayed the
decision-making process in relation to sludge disposal, which
constituted a preliminary and essential activity and further
insisted on incineration of sludge, despite material indicating
that the sludge was capable of being recycled. The Tribunal
has rightly concluded that the appellant failed to grant timely
approvals and that the delay was attributable to the
appellant. It was submitted that the learned Single Judge has1
2023 SCC OnLine Del 8018
2
(2006) 11 SCC 181
3
2025 SCC OnLine Bom 541
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correctly held that a plausible view is taken by the Tribunal
and that this Court ought not to re-appreciate the evidence
which has been extensively considered by the Tribunal.
15. Mr. Khandeparkar further submitted that the monetary
claims awarded are duly supported by reasons and evidence,
including invoices, work orders and bank statements, all of
which have been considered by the Tribunal. He submitted
that it is well settled that in cases of wrongful termination,
loss of profit can be awarded on a reasonable basis and the
quantification adopted by the Tribunal at 15% cannot be said
to be arbitrary or contrary to law. The direction for refund of
the performance bank guarantee is a direct consequence of
the finding that the termination itself was wrongful. It was
contended that neither any ground of patent illegality or
perversity is made out before this Court, nor is there any
exceptional circumstance warranting interference or remand
of the matter to the learned Single Judge. In support of his
submissions, the learned counsel relied upon the following
judgments:
(i) “OPG Power Generation Private Limited v.
Enexio Power Cooling Solutions India Private
Limited & Anr.”4
(ii) “Ramesh Kumar Jain v. Bharat Aluminium
Company Limited (BALCO)”5
(iii) “M/s. A.T. Brij Paul Singh & Ors. v. State of
Gujarat“6
4
2024 SCC OnLine SC 2600
5
2025 SCC OnLine SC 2857
6
(1984) 4 SCC 59
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(iv) “Mohd. Salamatullah & Ors. v. Government of
Andhra Pradesh“7
(v) “Bombay Slum Redevelopment Corporation
Private Limited v. Samir Narain Bhojwani“8
Findings and reasons:
16. Having heard the learned counsel for the parties and
upon perusal of the record, we find no merit in the present
appeal. The appellant has failed to make out any case
warranting interference within the limited scope of
jurisdiction under section 37 of the Act against the
unanimous findings of the Tribunal. The legal position in this
regard after the Arbitration and Conciliation (Amendment)
Act, 2015 stands well settled by the judgments of the Hon’ble
Supreme Court in “OPG Power Generation, Ramesh Kumar
Jain” and “National Highways Authority of India v. Hindustan
Construction Co. Ltd”9. In “OPG Power Generation”, the Hon’ble
Supreme Court held as follows:
“80. We find ourselves in agreement with the view taken in Dyna
Technologies [Dyna Technologies (P) Ltd. v. Crompton
Greaves Ltd., (2019) 20 SCC 1, paras 27-43] , 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
7
(1977) 3 SCC 590
8
(2024) 7 SCC 218
9
(2024) 6 SCC 809
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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.
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
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.
167. Before closing discussion on the issue, it would be necessary
to address an alternative submission raised on behalf of the
appellants. It was argued that the learned Single Judge [OPG
Power Generation (P) Ltd. v. Enexio Power Cooling Solutions
India (P) Ltd., 2020 SCC OnLine Mad 27362] and the Division
Bench [Enexio Power Cooling Solutions India (P) Ltd. v. Gita
Power & Infrastructure (P) Ltd., 2021 SCC OnLine Mad 5035]
of the High Court, admittedly, were exercising jurisdiction
under Sections 34 and 37, respectively, of the 1996 Act. As,
while exercising jurisdiction under Section 34, the Court does
not sit in appeal over the award, it cannot substitute the
reasoning in the award with its own. Likewise, the appellate
court exercising power under Section 37 cannot have greater
power than what a court possesses under Section 34.
Consequently, it was argued, the appellate court (i.e. the
Division Bench of the High Court) exceeded its jurisdiction
while providing its own reasons to support the conclusion in
the award. It was also urged that in the absence of proper
reasons in the award, the only course available was to set
aside the award with liberty to the parties to undertake fresh
arbitration.
168. We have given due consideration to the above submission. In
our view, a distinction would have to be drawn between an
arbitral award where reasons are either
lacking/unintelligible or perverse and an arbitral award
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where reasons are there but appear inadequate or
insufficient [ See paras 79 to 83 of this judgment.] . In a case
where reasons appear insufficient or inadequate, if, on a
careful reading of the entire award, coupled with documents
recited/relied therein, the underlying reason, factual or legal,
that forms the basis of the award, is discernible/intelligible,
and the same exhibits no perversity, the Court need not set
aside the award while exercising powers under Section 34 or
Section 37 of the 1996 Act, rather it may explain the
existence of that underlying reason while dealing with a
challenge laid to the award. In doing so, the Court does not
supplant the reasons of the Arbitral Tribunal but only
explains it for a better and clearer understanding of the
award.”
17. It is now well settled that the narrow scope of
jurisdiction under section 37 of the Act does not permit re-
appreciation of evidence or substitution of the arbitrator’s
view merely because another view is possible. The evidence
and interpretation of contractual terms squarely falls within
the domain of the arbitrator. An arbitral award can be
interfered with only where it is vitiated by patent illegality
appearing on the face of the award or where the findings are
so perverse that they go to the root of the matter and are
incapable of being sustained on any reasonable
interpretation. Tested on the above principles, the core finding
of the Tribunal that the termination of the Contract by the
appellant was wrongful is a finding of fact. This finding of
wrongful termination by the appellant at Issue no.9 of the
Award is founded upon a detailed evaluation of
contemporaneous correspondence, contractual provisions and
the conduct of the parties. The Tribunal has specifically
examined the grounds cited in the termination notice, namely
(i) delay in execution by the respondent and (ii) internal
disputes of the respondent with UEM and the alleged non-
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involvement of UEM, and has rejected both on cogent and
well-reasoned grounds.
18. On the aspect of delay, the Tribunal has, upon detailed
consideration, held at paragraphs 198 to 226 of the Award
that the delay was attributable to the appellant. The Tribunal
assessed the performance in the context of delays caused by
the appellant itself, including its indecision regarding sludge
disposal and the appellant’s insistence on incineration despite
viable alternatives. Under the Contract, sludge was the
property of the bidder and removal/disposal of the sludge was
within respondent’s scope of work. The Tribunal has also
noted that the termination notice dated 15 th June 2017 does
not deal with any of the explanations furnished by the
respondent in its letter of 29 th May 2017. These findings of the
Tribunal are supported by the record before it and are not
amenable to reappreciation in our appellate jurisdiction.
19. The principal submission of the appellant is that the
Award is vitiated by internal contradictions, particularly in
relation to the role of UEM. In particular, our attention is
drawn to paragraphs 124 and 163 of the Award which read as
follows:
“124. It must be mentioned at this stage that the Contract does not
contain any provision for signature of UEM on all documents
and the Contract only makes the Claimant responsible for
execution. However the Respondent insisted on involvement
of UEM in the fields, where under the MOU, UEM had the
primary role. It may be that the Respondent were not
absolutely correct in insisting that UEM sign all documents
but the fact remains that Claimant had to satisfy Respondent
that UEM was involved and had approved what was
submitted.
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163. Now let us see who was responsible for Contract work not
progressing. Facts are not in dispute and thus detailed facts
need not be set out. Brief facts, which clearly indicate what
happened, are sufficient. As set out above the Tender (Exhibit
C-174) was issued on 6th December 2013. At that time MPCB
Consent dated 23rd January 2013 was in force. Thereafter
the Consent to Operate dated 21st October 2014 was issued.
Even though Claimant had entered into Technical
Collaboration Agreement with UEM and got the Contract
because of this Agreement, at the Project Kick-off Meeting
dated 1st June 2015 the Claimant introduced M/s. R. P.
Engineers (RPE) as their Consultants. Most of the drawings
submitted by Claimant were not approved by Respondent on
the ground that UEM had not signed them. Claimant relies on
fact that UEM is not a party to the Contract and the Contract
does not provide for drawings to be signed by UEM. Claimant
is right in this respect. The Contract does not provide that
UEM should sign all drawings. UEM has no role in the
Contract. The Contract only makes Claimant liable and
responsible. But the fact that admittedly the Claimant only
got the contract because of Technical Collaboration with UEM
cannot be lost sight of……”
20. We are unable to accept the appellant’s contention that
while the Tribunal acknowledged the importance of UEM’s
involvement in the technical aspects of the matter, in
contradiction it held that the Contract did not mandate UEM-
approved drawings as a precondition for continuation of work.
We find that a holistic reading of the Award indicates that the
Tribunal has not rendered inconsistent findings, but has
instead drawn a distinction between (i) the contractual
arrangement inter se between the respondent and UEM, and
(ii) the contractual obligations inter se between the
respondent and the appellant. At paragraphs 163 and 181 of
the Award, the Tribunal has on appreciation of evidence
concluded that while UEM was the technical collaborator, the
Contract executed between the parties did not require UEM’s
approval as a condition precedent for performance. This
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finding is based on a detailed analysis and supported by
cogent reasons. Paragraph 181 of the Award read as follows:
“181.It has been very seriously submitted that Claimant failed in
its duty to furnish drawings. It was submitted that Claimant
were to furnish 399 drawings before removal of sludge. It
was submitted that Claimant supplied only 29 drawings
approved/signed by UEM. On the other hand on behalf of
Claimant it is submitted that all drawings required to be
submitted were submitted but that Respondent refused to
consider them as most of them were not signed by UEM. As
set out in paragraph 140 above nothing much turns on the
fact of UEM signing or not signing. This was only Basic
Drawings which admittedly constituted, at the highest, 5% of
the Contract. The major work had to start after removal of
sludge. We find that Claimant is right. Evidence shows that
they had submitted all required drawings. Respondent was
not accepting or reviewing them as they were not signed by
UEM. UEM is not a party to the contract. There is no provision
in the Contract which requires Claimant to get signature of
UEM on all drawings. Under the Contract only Claimant is
responsible for performance. If UEM had refused to perform
Respondent could not have forced UEM to perform. While we
understand Respondent wanting UEM to be involved
Respondent themselves are to blame for not having a proper
Contract. It must not be forgotten that the Contract has been
drafted by Respondent and Claimant had no say in any of its
provisions. At this stage it must be mentioned that the aspect
of failure of Claimant to submit drawings has been dealt with
in greater detail under issue No.9.”
21. The above conclusion is based on the express terms of
the Contract, which places the entire responsibility of
performance upon the respondent. There is a difference
between the expectations of the appellant and the obligations
of the respondent under the Contract. The reasons in the
Award do not exhibit any perversity. It is evident from
Recitals “B” and “C” of the Contract dated 29th March 2016
between the appellant and the respondent which record the
various documents that formed an integral part of the
Contract between the parties. It is expressly stated that the
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said Contract constitutes the entire agreement between the
parties and supersedes all communications, negotiations and
agreements made prior to the date of the said Contract.
Mr. Khandeparkar has rightly submitted that UEM is not a
party to the Contract between the appellant and the
respondent. Further as per Clause B.1.2.4(C), though UEM
was identified as a technical collaborator, the respondent was
primarily responsible for execution and completion of the
project. The evidence on record, including the admission of
the appellant’s witness Mr. Sushil Kumar Gupta in cross-
examination, supports the Tribunal’s finding that neither the
agreement dated 19th June 2014 nor the Contract required all
documents to be reviewed, signed or approved by UEM. The
Tribunal has concluded at paragraphs 198 to 200 and 219 to
226 that the Contract did not mandate any role for UEM in
the manner contended by the appellant. The Tribunal has
held that there is no denial that the appellant was aware that
prior to termination, the disputes between the respondent
and UEM had been resolved. The observations in the Award
that are relied upon by the appellant do not disclose any
contradiction. The learned Single Judge has considered the
Appellant’s submission at paragraph 71 of the impugned
judgment. We do not find any contradiction in the Award or
the findings of the learned Single Judge. In any case, we also
find that the Tribunal’s interpretation is a plausible view
arising from the contractual scheme and does not warrant
interference.
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22. The appellant’s contention that the Tribunal erred in
correlating the milestone payment for drawings at 5% with
their contractual significance is also without merit. As per the
Final Revised Planning Package dated 7 th January 2016, the
work breakdown structures in weightages was Engineering –
5%; Material Procurement – 55%; and Construction – 40%.
The Tribunal has examined the contractual framework in
detail which apportions the weightage across engineering,
procurement, and construction with the payments. While the
appellant contends that the approval by UEM was critical
irrespective of its monetary weightage, the Tribunal has taken
a plausible view that the contractual scheme did not support
the appellant’s position that submission of UEM-approved
drawings was an absolute precondition to further execution.
This interpretation is reasonable and does not warrant
interference. It is settled law that where two interpretations of
a contract are possible, the arbitrator’s view must prevail so
long as it is a reasonable one.
23. Mr. Seervai then contended that the Tribunal attached
undue significance to the issue of removal of sludge,
particularly when the show cause notice preceding
termination dated 9th May 2017 was confined to delays by the
respondent in submitting drawings. According to him, the
appellant had not raised the issue of sludge removal in the
show cause notice and the entire dispute pertained to non-
performance by the respondent. We are unable to accept this
submission. The respondent in its reply dated 29 th May 2017
to the show cause notice specifically identified the removal of
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sludge as a key hindrance to the performance of the contract
and attributed the delays in the project to the appellant.
Inexplicably, the appellant does not deal with this issue at all
in the termination notice dated 15 th June 2017. The issue was
thereafter pursued as a main issue by the respondent in its
Statement of Claim before the Tribunal, as recorded in
paragraphs 10 to 39 of the Award. The Tribunal has noted
that sludge removal was treated by the respondent as a
primary activity. The execution of civil, mechanical, piping,
electrical and instrumentation works, for which drawings
were required was contingent upon the handing over of an
unhindered site. In that context, the removal of sludge
assumed foundational importance. The Tribunal has taken
into account the extensive correspondence between the
parties on this issue and has considered it along with
contractual clauses in detail while dealing with Issue no. 2,
read with Issue nos. 3 and 22 of the Award. The appellant has
failed to demonstrate the factual findings in this regard are
perverse or which go to the root of the matter so as to set
aside the Award. In the exercise of our limited jurisdiction
under Section 37 of the Act, no interference with the
Tribunal’s factual conclusions is warranted.
24. The appellant has assailed the award of
Rs.1,06,91,238/- under Issue no.15 towards payments made
to UEM and third-party vendors on the ground of
insufficiency of evidence. However, we find that the Tribunal
has considered documentary material including invoices,
work orders and bank statements which were on record and
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awarded only some of the vendors-related claims that were
proved by the respondent through its witness. The sufficiency
and adequacy of evidence falls squarely within the domain of
the Tribunal. The finding in the Award on this Issue cannot
be termed as based on “no evidence”. The technical objection
regarding the non-compliance with the Bankers’ Books
Evidence Act as argued by Mr. Seervai is misconceived, as the
Tribunal is not bound by strict rules of evidence. The
payments made by the respondent to third-party vendors are
supported with corresponding entries in its bank statements.
This has not been disputed by the appellant. Hence, the
Award does not warrant any interference on this ground.
25. Similarly, the appellant’s objection under Issue no.16 for
the award of Rs.2 crores towards loss of revenue from sludge
disposal is also untenable. The Tribunal has returned a
factual finding that the disposal and treatment of sludge
formed an integral part of the project and that the appellant’s
insistence on a particular mode of disposal contributed to the
delays and losses to the respondent. The loss has been
quantified on a quantity of 5000 MT and at a rate of
Rs.4,000/- per MT. This factual determination is based on
documents, surrounding circumstances and does not call for
any interference.
26. The appellant’s challenge to the award of loss of profit of
Rs.14,93,79,332/- under Issue no.17 is equally without
merit. Once the Tribunal found that there was wrongful
termination of the Contract, the grant of loss of profit is a
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recognized head of damages. The Tribunal has adopted a
percentage-based approach, supported by settled legal
principles, to place the respondent in the position it would
have occupied had the Contract been performed. The
quantification by its very nature is an exercise of estimation,
cannot be faulted unless it is shown to be arbitrary or without
reasons, which is not the case here. Based on the judgments
of the Hon’ble Supreme Court in “M/s. A.T. Brij Paul Singh &
Ors.” and “Mohd. Salamatullah”, the Tribunal has adopted a
percentage basis (15%) on the premise that the innocent party
should be put in the same position as if the contract had been
performed. The Tribunal has considered certain deductions
before awarding this claim and this quantification exercise
cannot be said to be arbitrary or without foundation. The
appellant has not demonstrated that the methodology
adopted is so unreasonable as to shock the conscience of the
section 34 Court or of this Court to warrant interference on
the ground of patent illegality. Equally, once the termination
has been held to be wrongful, as a direct consequence, the
respondent is entitled to the refund of amounts encashed by
invoking the performance bank guarantees. The reasons in
the Award are intelligible, adequate and no infirmity has been
demonstrated in this regard.
27. In the present case, we find that at paragraphs 65 to 79
of the impugned judgment, the learned Single Judge has
applied the correct test, namely, whether the view taken by
the Tribunal is a plausible one. The appellant has failed to
demonstrate any patent illegality apparent on the face of the
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Award. At paragraph 65 of “McDermott International Inc.” on
which Mr. Seervai relies upon, the Hon’ble Supreme Court
identifies key grounds on which the challenge to the award
can be considered, one of them being whether it suffers from
internal inconsistencies. The Hon’ble Supreme Court was
considering a challenge to the award, where claims were made
on account of delays, variations and additional work
delineated the scope of judicial interference with arbitral
awards under the Act. The Court clarified that mere errors in
appreciation of evidence, or even erroneous conclusions on
facts or law, do not by themselves furnish a ground for setting
aside an award unless such findings are perverse, based on
no evidence, or in conflict with the fundamental policy of
Indian law. Since, we find no internal inconsistency or
contradiction in the Award, the judgment in “McDermott
International Inc.” is of no assistance to the appellant.
28. We also find that the judgment of a learned Single Judge
of the Delhi High Court in “Morgan Securities” is of no
assistance to the appellant. The facts in “Morgan Securities”
were entirely different as the Court held that there was a
contradiction in the findings of the arbitrator while dealing
with claim nos.2 and 3. In that judgment, the Court noted
that while adjudicating claim no.2, the arbitrator had
expressly rejected the claimant’s valuation of the pledged
shares at Rs.21/- per share as on 26 th April 2007 and Rs.17/-
per share at the time of filing the statement of claim. However,
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claim no.3, without indicating the relevant date for such
valuation. It was in this context that the Delhi High Court
held that the award suffered from a contradiction and since it
travelled beyond the claimant’s pleaded case, set it aside
insofar as claim no.3 was concerned. No such inconsistency
or patent infirmity exists in the present case. Hence this
judgment is also of no assistance to the appellant.
29. The appellant’s reliance on “National Agricultural Co-
operative Marketing Federation of India Ltd. (NAFED)” is
equally misconceived. In “NAFED”, a co-ordinate Bench of this
Court held that the District Judge failed to specifically
consider various grounds raised in the Section 34 petition
and the written notes of arguments challenging the award.
The Court set aside the order passed by the District Judge
under Section 34 of the Act and directed that the same be
considered afresh in accordance with law. The relevant
portion reads as follows:
“10. It can thus be seen that the conclusion recorded by the
learned Arbitrator that the Tie Up Agreements were in the
nature of joint enterprise was the subject-matter of contest
before the learned Judge in the application filed under
section 34 of the Act of 1996. In paragraph 18, the learned
Judge has observed that he had gone through the written
note of arguments submitted by NAFED below Exhibit-31.
Perusal of the impugned judgment thereafter indicates that
this challenge as raised by NAFED as to the nature of the
Tie Up Agreements has not been dealt with at all. Except
for observing that the findings rendered by the learned
Arbitrator were by appreciating the evidence on record and
applying certain legal provisions, the learned Judge has
disposed of that challenge. The parties being at issue on
this aspect, it was necessary for the learned Judge to have
considered the rival contentions and expressed his opinion
so as to reflect its judicial consideration, albeit within the
scope permissible under section 34 of the Act of 1996. The
same has however not been done.”
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30. No such infirmity arises here as the learned Single
Judge has duly considered the submissions advanced by the
appellant and thereafter rightly rejected the challenge in its
entirety on the ground that the Tribunal has taken a plausible
view. We also find that no exceptional case for remand, as
contemplated in paragraph 29 of the judgment of the Hon’ble
Supreme Court in Bombay Slum Redevelopment Corporation,
has been made out by the appellant. The submissions of the
appellant, in substance, invites this Court to undertake a re-
appreciation of evidence and to substitute its own
interpretation of the Contract. Such an exercise is
impermissible within the limited jurisdiction under section 37
of the Act. For all the above reasons, Commercial
Arbitration Appeal no.1 of 2026 is dismissed. There shall
be no order as to costs.
[ GAUTAM A. ANKHAD, J. ] [ CHIEF JUSTICE ] BHARAT DASHARATH PANDIT Digitally signed by BHARAT DASHARATH PANDIT Date: 2026.04.30 21:04:42 +0530 35/35 CARBA-1-2026-Judgment.doc Dixit ::: Uploaded on - 30/04/2026 ::: Downloaded on - 01/05/2026 05:00:54 :::
