Budhiraja Electricals vs Public Work Department (Govt. Of Nct Of … on 21 May, 2026

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    Delhi High Court

    Budhiraja Electricals vs Public Work Department (Govt. Of Nct Of … on 21 May, 2026

                              $~
                              *      IN THE HIGH COURT OF DELHI AT NEW DELHI
                              %                                        Judgment reserved on: 04.05.2026
                                                                    Judgment pronounced on: 21.05.2026
    
                              +      OMP (ENF.) (COMM.) 46/2018 & I.A. 4165/2018 (U/O XXI
                                     Rule 41(2)
    
                                     BUDHIRAJA ELECTRICALS                              .....Decree Holder
                                                             Through:        Ms. Kirti Mewar, Advocate
    
                                                             versus
    
                                     PUBLIC WORK DEPARTMENT (GOVT. OF NCT OF
                                     DELHI)                      .....Judgement Debtor
                                                Through: Mr. Dhananjaya Mishra, Mr.
                                                         Navneet Dogra and Mr.
                                                         Bhargav Verma, Advocates
    
                              +      O.M.P. (COMM) 207/2017 & I.A. 5261/2017 (Stay)
    
                                     PUBLIC WORK DEPARTMENT (GOVT. OF DELHI)
                                     THROUGH ITS OFFICE EXECUTIVE ENGINEER
                                     (ELECTRICAL)                  .....Petitioner
    
                                                             Through:        Mr. Dhananjaya Mishra, Mr.
                                                                             Navneet Dogra and Mr.
                                                                             Bhargav Verma, Advocates
    
                                                             versus
    
    
                                     BUDHIRAJA ELECTRICALS THROUGH ITS PARTNER
                                     MR. MOHINDER LAL BUDHIRAJA           .....Respondent
                                                  Through: Ms. Kirti Mewar, Advocate
    
    
    
    Signature Not Verified
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    By:HARVINDER KAUR         O.M.P. (ENF.) (COMM.) 46/2018 & connected matter                   Page 1 of 41
    BHATIA
    Signing Date:23.05.2026
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                                       CORAM:
                                      HON'BLE MR. JUSTICE HARISH VAIDYANATHAN
                                      SHANKAR
    
                                                             JUDGMENT
    

    HARISH VAIDYANATHAN SHANKAR, J.

    1. The Objection Petition, being O.M.P. (COMM.) 207/20171,
    has been instituted under Section 34 of the Arbitration and
    Conciliation Act, 19962, seeking setting aside of the Arbitral Award
    dated 26.10.2016, as revised on 07.01.20173, rendered by the learned
    Sole Arbitrator insofar as it pertains to Claim Nos. 3 and 6, along with
    the corresponding claims relating to interest.

    SPONSORED

    2. The Enforcement Petition, being O.M.P.(ENF.)(COMM.)
    46/20184, has been filed under Order XXI Rules 10 and 11 read with
    Section 151 of the Code of Civil Procedure, 1908 and Section 36 of
    the A&C Act, seeking enforcement of the aforesaid Impugned Arbitral
    Award.

    3. It is pertinent to note that both the aforesaid proceedings arise
    from the same Arbitral Award. While the Objection Petition calls into
    question the validity and sustainability of the Impugned Arbitral
    Award, the Enforcement Petition seeks its enforcement. In such
    circumstances, it is expedient that the challenge to the Arbitral Award
    under Section 34 of the A&C Act be considered prior to, and in
    conjunction with, the execution proceedings. This course is
    necessitated to obviate the possibility of inconsistent findings, avoid

    1
    Objection Petition
    2
    A&C Act
    3
    Arbitral Award
    4
    Enforcement Petition
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    multiplicity of proceedings, and ensure that the enforceability of the
    Arbitral Award is determined in a coherent and conclusive manner.

    4. For the sake of convenience, clarity, consistency, and ease of
    reference, this Court proposes to refer primarily to the facts and
    pleadings as set out in the Objection Petition while adjudicating the
    present matters.

    5. Needless to state, the findings and conclusions arrived at in the
    Objection Petition, insofar as they pertain to the validity and
    sustainability of the Impugned Arbitral Award, shall have a direct and
    determinative bearing on the Enforcement Petition, since the
    execution proceedings arise out of the very same Arbitral Award.
    Consequently, the conclusions reached in the Petition under Section
    34
    of the A&C Act shall, to the extent applicable, govern the
    execution proceedings.

    BRIEF FACTS:

    6. The present disputes arise out of a Tripartite Agreement
    executed between the Public Works Department, Government of NCT
    of Delhi, M/s Parnika Commercial & Estate Pvt. Ltd., being the main
    contractor, and M/s Budhiraja Electricals, being the electrical sub-

    contractor, in relation to the work pertaining to construction of EDP
    Cell-cum-Referral Clinic/Administrative Block-cum-OPD Block and
    Additional Basement Parking at G.B. Pant Hospital, New Delhi, under
    Composite Contract No. 98/EE(E)/PWD/ED-1/2005-06, subsequently
    re-allotted as No. 47/EE(E)/B-241/2007-08.

    7. The work was commenced from 11.01.2006 and the stipulated
    date of completion was 10.07.2008. It is not in dispute that the work

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    was ultimately completed on 30.11.2011 and the delay stood
    regularised by the Department without the levy of compensation.

    8. Disputes subsequently arose between the parties inter alia in
    relation to claims concerning escalation under Clause 10CC of the
    General Conditions of Contract5, compensation towards deployment
    of staff and watch and ward during the extended period, loss of
    turnover/profitability, withheld amounts and interest thereon.

    9. Upon invocation of arbitration, this Court, in proceedings under
    Section 11 of the A&C Act, appointed Shri Vinod Jain, District &
    Sessions Judge (Retd.), as the learned Sole Arbitrator to adjudicate the
    disputes between the parties.

    10. The learned Arbitrator rendered the Impugned Arbitral Award
    dated 26.10.2016, subsequently revised on 07.01.2017 under Section
    33
    of the A&C Act, whereby various claims of the Claimant were
    allowed.

    11. Aggrieved thereby, the Petitioner instituted the Objection
    Petition under Section 34 of the A&C Act, seeking the setting aside of
    the Impugned Arbitral Award, whereas the Award Holder instituted
    the Enforcement Petition seeking enforcement thereof.

    12. The challenge by the Petitioner before this Court is confined
    primarily to the findings returned by the learned Arbitrator in respect
    of Claim No. 3 relating to escalation under Clause 10CC of the GCC
    and Claim No. 6 concerning loss of turnover/profitability on account
    of prolongation of the contract, along with the corresponding claims
    relating to interest.

    5

    GCC
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    13. It is in the aforesaid backdrop that the present matters have
    come up for consideration before this Court.

    SUBMISSIONS BY THE PARTIES:

    14. Learned counsel appearing on behalf of the Petitioner would
    submit that the challenge to the Impugned Arbitral Award is, in
    substance, confined to the findings returned by the learned Arbitrator
    in respect of Claim Nos. 3 and 6, along with the corresponding claims
    relating to interest.

    15. It would be submitted that Claim No. 3 pertains to the grant of
    escalation under Clause 10CC of the GCC, which has been
    erroneously granted for the extended period of the contract. Claim No.
    6 relates to the award of compensation towards alleged loss of profits
    on account of the prolongation of the contract, which is assailed as
    being without evidentiary foundation.

    16. Learned counsel appearing on behalf of the Petitioner would
    contend that the Impugned Arbitral Award, insofar as it allows Claim
    No. 3 (Rs.38,96,175/- towards escalation) and Claim No. 6
    (Rs.16,23,195/- towards loss of profits), is liable to be set aside as
    being contrary to the public policy of India and suffering from patent
    illegality.

    17. It would be further contended that the findings returned by the
    learned Arbitrator are sans any cogent evidence, and the Impugned
    Arbitral Award, to that extent, is non-speaking and devoid of reasons,
    thereby falling foul of the mandate under Section 31(3) of the A&C
    Act. It would also be contended that an arbitral award which is based
    on no evidence or fails to disclose intelligible reasons would warrant
    interference under Section 34 of the A&C Act. In support of this

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    proposition, reliance would be placed on Associate Builders v. DDA6
    and Ssangyong Engineering & Construction Co. Ltd. v. National
    Highways Authority of India7
    .

    18. Learned counsel would further contend that the award of
    Rs.38,96,175/- under Claim No. 3 towards escalation under Clause
    10CC of the GCC is wholly untenable, inasmuch as the said clause is
    confined to the stipulated period of the contract and does not extend to
    the prolonged period. It would further be urged that the learned
    Arbitrator has erroneously invoked Section 73 of the Indian Contract
    Act, 1872 8 in the absence of any proof of actual loss or damage
    suffered by the Respondent. It would also be submitted that damages
    cannot be awarded on mere assumptions or equitable considerations,
    but must be founded upon clear evidence of loss. Reliance in this
    regard is placed on General Manager, Northern Railway v. Sarvesh
    Chopra9
    .

    19. Insofar as Claim No. 6 is concerned, learned counsel would
    contend that the award of Rs.16,23,195/- towards loss of profits is
    equally unsustainable, having been granted on a purely notional and
    formulaic basis. It would be submitted that the learned Arbitrator has
    mechanically applied a 15% benchmark (10% towards overheads and
    5% towards profit) on the value of the work, purportedly relying upon
    a Central Public Work Department 10 memorandum dated
    14.12.2007, without any evidence to demonstrate that the contractor
    had in fact suffered loss of profits or was prevented from undertaking
    other works. It would be contended by the learned counsel for the
    6
    (2015) 3 SCC 49
    7
    (2019) 15 SCC 131
    8
    ICA
    9
    (2002) 4 SCC 45
    10
    CPWD
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    Petitioner that loss of profit cannot be presumed and must be strictly
    proved. In this regard, reliance is placed on M/S Kailash Nath
    Associates v. Delhi Development Authority
    11 and Bharat Coking
    Coal Ltd. v. L.K. Ahuja12
    .

    20. Learned counsel would further contend that the grant of interest
    in the Arbitral Award by the learned Arbitrator is wholly
    consequential to the aforesaid claims and cannot be sustained
    independently. It would be submitted that once the principal amounts
    awarded under Claim Nos. 3 and 6 are liable to be set aside; the award
    of interest thereon in any manner would necessarily fall.

    21. It would thus be contended by the learned counsel for the
    Petitioner that the Impugned Arbitral Award, to the aforesaid extent, is
    liable to be set aside.

    22. Per contra, learned counsel appearing on behalf of the
    Respondent would oppose the contentions advanced on behalf of the
    Petitioner concerning the above-mentioned claims.

    23. Learned counsel for the Respondent would contend that the
    Impugned Arbitral Award does not warrant any interference under
    Section 34 of the A&C Act, inasmuch as the same is founded upon a
    proper, detailed and reasoned appreciation of the pleadings, evidence,
    and material placed on record.

    24. It would be submitted that the learned Arbitrator has, after duly
    considering the claims and upon a comprehensive evaluation of the
    oral and documentary evidence, including the cross-examination of
    witnesses, rendered a well-reasoned and speaking award which
    reflects due application of mind.

    11

    2015 (4) SCC 136
    12
    (2004) 5 SCC 109
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    25. It would further be contended that the present Petition is, in
    substance, an attempt by the Petitioner to seek a re-adjudication of the
    disputes on merits, which is impermissible within the limited scope of
    Section 34 of the A&C Act.

    26. Learned counsel for the Respondent would submit that the
    Impugned Arbitral Award is just, proper, and intelligible, and does not
    suffer from any perversity or patent illegality, particularly in view of
    the fact that the findings returned therein are, inter alia, based upon
    admissions made by the Petitioner’s witness during cross-
    examination.

    27. Learned counsel would further contend that the Petitioner has
    failed to establish any ground falling within the limited contours of
    interference under Section 34 of the A&C Act, including any
    demonstrable conflict with the public policy of India. It would be
    submitted that the scope of judicial interference with arbitral awards
    stands considerably circumscribed, and the Court cannot act as a court
    of appeal by re-appreciating evidence or substituting its own view for
    that of the learned Arbitrator.

    28. In support of the aforesaid submission, reliance would be
    placed by the learned counsel for the Respondent on Ssangyong
    Engineering
    (supra) contending that the expression “public policy of
    India” is confined to contravention of the fundamental policy of
    Indian law or the most basic notions of justice or morality, and that
    “patent illegality” must go to the root of the matter and does not
    include mere erroneous application of law. Further, re-appreciation of
    evidence is impermissible in proceedings under Section 34 of the

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    A&C Act. The said position, as per the Respondent, has been
    reiterated in Delhi Airport Metro Express (P). Ltd. v. DMRC13.

    29. Learned counsel would further contend that the findings
    recorded by the learned Arbitrator are squarely founded upon
    admissions made by the Petitioner in its pleadings as well as by its
    witness during cross-examination, and such admissions constitute the
    best form of evidence. In this regard, reliance would be placed on
    Delhi Transport Corporation v. Shyam Lal and Union of India v.
    Ibrahim Uddin14
    to contend that admissions, though not conclusive,
    are decisive unless successfully explained or withdrawn.

    30. It would be contended that the award towards escalation under
    Claim No. 3 and loss of profitability under Claim No. 6, along with
    the corresponding interest, has been rightly granted by the learned
    Arbitrator upon a categorical finding that the delay in completion of
    the work was not attributable to the Respondent. It would be
    submitted that the said finding stands duly supported by the admission
    of the Petitioner’s own witness. It would further be submitted that the
    said witness has also admitted that escalation under Clause 10CC of
    the GCC is not barred during the extended period where the delay is
    attributable to the Department.

    31. Learned counsel for the Respondent would also contend that
    the learned Arbitrator has correctly applied the provisions of Section
    73
    of the ICA, read with Clause 10CC of the GCC, while allowing the
    claim towards escalation, and such findings, being based on evidence
    and admissions, do not suffer from any perversity so as to warrant

    13
    (2022) 1 SCC 131
    14
    (2004) 8 SCC 88
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    interference. Reliance in this regard would be placed on Deconar
    Services Pvt. Ltd. v. NTPC Ltd.15
    .

    32. In conclusion, learned counsel for the Respondent would submit
    that the present Petition instituted under Section 34 of the A&C Act is
    nothing but an attempt to assail the correctness of the findings
    returned by the learned Arbitrator on merits, which is wholly
    impermissible in law. It would, therefore, be contended that the
    Petition is devoid of merit and is liable to be dismissed.

    ANALYSIS:

    33. This Court has heard the learned counsel appearing for the
    parties at length and, with their able assistance, has carefully perused
    the Impugned Arbitral Award and the other material placed on record.

    34. At the outset, it is apposite to note that this Court remains
    conscious of the limited scope of its jurisdiction while examining an
    objection petition under Section 34 of the A&C Act. There is a
    consistent and evolving line of precedents whereby the Hon’ble
    Supreme Court has authoritatively delineated and settled the contours
    of judicial intervention in such proceedings.

    35. In this regard, a three-Judge Bench of the Hon’ble Supreme
    Court, after an exhaustive consideration of a catena of earlier
    judgments, in OPG Power Generation (P) Ltd. v. Enexio Power
    Cooling Solutions (India) (P) Ltd.16
    , while dealing with the grounds
    of conflict with the public policy of India and patent illegality,
    grounds which have also been urged in the present Petitions, made
    certain pertinent observations, which are reproduced hereunder:

    15

    2009 SCC OnLine Del 4109
    16
    (2025) 2 SCC 417
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    “Relevant legal principles governing a challenge to an arbitral
    award

    30. Before we delve into the issue/sub-issues culled out above, it
    would be useful to have a look at the relevant legal principles
    governing a challenge to an arbitral award. Recourse to a court
    against an arbitral award may be made through an application for
    setting aside such award in accordance with sub-sections (2), (2-A)
    and (3) of Section 34 of the 1996 Act. Sub-section (2) of Section
    34
    has two clauses, (a) and (b). Clause (a) has five sub-clauses
    which are not relevant to the issues raised before us. Insofar as
    clause (b) is concerned, it has two sub-clauses, namely, (i) and (ii).

    Sub-clause (i) of clause (b) is not relevant to the controversy in
    hand. Sub-clause (ii) of clause (b) provides that if the Court finds
    that the arbitral award is in conflict with the public policy of India,
    it may set aside the award.

    Public policy

    31. “Public policy” is a concept not statutorily defined, though it
    has been used in statutes, rules, notification, etc. since long, and is
    also a part of common law. Section 23 of the Contract Act, 1872
    uses the expression by stating that the consideration or object of an
    agreement is lawful, unless, inter alia, opposed to public policy.
    That is, a contract which is opposed to public policy is void.

    *****

    35. In Renusagar Power Co. Ltd. v. General Electric Co., 1994
    Supp (1) SCC 644, a three-Judge Bench of this Court observed
    that the doctrine of public policy is somewhat open–textured and
    flexible. By citing earlier decisions, it was observed that there are
    two conflicting positions which are referred to as the “narrow
    view” and the “broad view”. According to the narrow view, courts
    cannot create new heads of public policy whereas the broad view
    countenances judicial law making in these areas. In the field of
    private international law, it was pointed out, courts refuse to apply
    a rule of foreign law or recognise a foreign judgment or a foreign
    arbitral award if it is found that the same is contrary to the public
    policy of the country in which it is sought to be invoked or
    enforced. However, it was clarified, a distinction is to be drawn
    while applying the rule of public policy between a matter governed
    by domestic law and a matter involving conflict of laws. It was
    observed that the application of the doctrine of public policy in the
    field of conflict of laws is more limited than that in the domestic
    law and the courts are slower to invoke public policy in cases
    involving a foreign element than when a purely municipal legal
    issue is involved. It was held that contravention of law alone will
    not attract the bar of public policy, and something more than
    contravention of law is required.

    *****

    37. What is clear from above is that for an award to be against
    public policy of India a mere infraction of the municipal laws of
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    India is not enough. There must be, inter alia, infraction of
    fundamental policy of Indian law including a law meant to serve
    public interest or public good.

    *****

    40. In ONGC Ltd. v. Western Geco International Ltd., (2014) 9
    SCC 263, paras 35, 38 & 39, which also related to the period prior
    to the 2015 Amendment of Section 34(2)(b)(ii), a three-Judge
    Bench of this Court, after considering the decision inONGC
    Ltd. v. Saw Pipes Ltd.
    , (2003) 5 SCC 705, without exhaustively
    enumerating the purport of the expression “fundamental policy of
    Indian law”, observed that it would include all such fundamental
    principles as providing a basis for administration of justice and
    enforcement of law in this country. The Court thereafter
    illustratively referred to three fundamental juristic principles,
    namely:

    (a) that in every determination that affects the rights of a
    citizen or leads to any civil consequences, the court or
    authority or quasi-judicial body must adopt a judicial
    approach, that is, it must act bona fide and deal with the
    subject in a fair, reasonable and objective manner and not
    actuated by any extraneous consideration;

    (b) that while determining the rights and obligations of
    parties the court or Tribunal or authority must act in
    accordance with the principles of natural justice and must
    apply its mind to the attendant facts and circumstances
    while taking a view one way or the other; and

    (c) that its decision must not be perverse or so irrational that
    no reasonable person would have arrived at the same.

    41. In Associate Builders v. DDA, (2015) 3 SCC 49, a two-Judge
    Bench of this Court, held that audi alteram partem principle is
    undoubtedly a fundamental juristic principle in Indian law and is
    enshrined in Sections 18 and 34(2)(a)(iii) of the 1996 Act. In
    addition to the earlier recognised principles forming fundamental
    policy of Indian law, it was held that disregarding:

    (a) orders of superior courts in India; and

    (b) the binding effect of the judgment of a superior court
    would also be regarded as being contrary to the
    fundamental policy of Indian law.

    Further, elaborating upon the third juristic principle (i.e. qua
    perversity), as laid down inONGC Ltd. v. Western Geco
    International Ltd.
    , (2014) 9 SCC 263, it was observed that where:

    (i) a finding is based on no evidence; or

    (ii) an Arbitral Tribunal takes into account something
    irrelevant to the decision which it arrives at; or

    (iii) ignores vital evidence in arriving at its decision, such
    decision would necessarily be perverse[Associate Builders
    case, (2015) 3 SCC 49, para 31].

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    To this a caveat was added by observing that when a court applies
    the “public policy test” to an arbitration award, it does not act as a
    court of appeal and, consequently, errors of fact cannot be
    corrected; and a possible view by the arbitrator on facts has
    necessarily to pass muster as the arbitrator is the ultimate master of
    the quantity and quality of evidence to be relied upon when he
    delivers his arbitral award. It was also observed that an award
    based on little evidence or on evidence which does not measure up
    in quality to a trained legal mind would not be held to be invalid on
    that score. Thus, once it is found that the arbitrator’s approach is
    not arbitrary or capricious, it is to be taken as the last word on facts.
    The 2015 Amendment in Sections 34 and 48

    42. The aforementioned judicial pronouncements were all prior to
    the 2015 Amendment. Notably, prior to the 2015 Amendment the
    expression “in contravention with the fundamental policy of Indian
    law” was not used by the legislature in either Section 34(2)(b)(ii) or
    Section 48(2)(b). The pre-amended Section 34(2)(b)(ii) and its
    Explanation read:

    *****

    44. By the 2015 Amendment, in place of the old Explanation to
    Section 34(2)(b)(ii), Explanations 1 and 2 were added to remove
    any doubt as to when an arbitral award is in conflict with the public
    policy of India.

    45. At this stage, it would be pertinent to note that we are dealing
    with a case where the application under Section 34 of the 1996 Act
    was filed after the 2015 Amendment, therefore the newly
    substituted/added Explanations would apply [SsangyongEngg. &
    Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131].

    46. The 2015 Amendment adds two Explanations to each of the
    two sections, namely, Section 34(2)(b)(ii) and Section 48(2)(b), in
    place of the earlier Explanation. The significance of the newly
    inserted Explanation 1 in both the sections is two-fold. First, it does
    away with the use of words : (a) “without prejudice to the
    generality of sub-clause (ii)” in the opening part of the pre-

    amended Explanation to Section 34(2)(b)(ii); and (b) “without
    prejudice to the generality of clause (b) of this section” in the
    opening part of the pre-amended Explanation to Section 48(2)(b);
    secondly, it limits the expanse of public policy of India to the three
    specified categories by using the words “only if”.
    Whereas, Explanation 2 lays down the standard for adjudging
    whether there is a contravention with the fundamental policy of
    Indian law by providing that a review on merits of the dispute shall
    not be done. This limits the scope of the enquiry on an application
    under either Section 34(2)(b)(ii) or Section 48(2)(b) of the 1996
    Act.

    47. The 2015 Amendment by inserting sub-section (2-A) in Section
    34
    , carves out an additional ground for annulment of an arbitral
    award arising out of arbitrations other than international
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    commercial arbitrations. Sub-section (2-A) provides that the Court
    may also set aside an award if that is vitiated by patent illegality
    appearing on the face of the award. This power of the Court is,
    however, circumscribed by the proviso, which states that an award
    shall not be set aside merely on the ground of an erroneous
    application of the law or by reappreciation of evidence.

    48.Explanation 1 to Section 34(2)(b)(ii), specifies that an arbitral
    award is in conflict with the public policy of India, only if:

    (i) the making of the award was induced or affected by
    fraud or corruption or was in violation of Section 75 or
    Section 81; or

    (ii) it is in contravention with the fundamental policy of
    Indian law; or

    (iii) it is in conflict with the most basic notions of morality
    or justice.

    49. In the instant case, there is no allegation that the making of the
    award was induced or affected by fraud or corruption, or was in
    violation of Section 75 or Section 81. Therefore, we shall confine
    our exercise in assessing as to whether the arbitral award is in
    contravention with the fundamental policy of Indian law, and/or
    whether it conflicts with the most basic notions of morality or
    justice. Additionally, in the light of the provisions of sub-section
    (2-A) of Section 34, we shall examine whether there is any patent
    illegality on the face of the award.

    50. Before undertaking the aforesaid exercise, it would be apposite
    to consider as to how the expressions:

    (a) “in contravention with the fundamental policy of
    Indian law”;

    (b) “in conflict with the most basic notions of morality or
    justice”; and

    (c) “patent illegality” have been construed.

    In contravention with the fundamental policy of Indian law

    51. As discussed above, till the 2015 Amendment the expression
    “in contravention with the fundamental policy of Indian law” was
    not found in the 1996 Act. Yet, in Renusagar Power Co.
    Ltd. v. General Electric Co.
    , 1994 Supp (1) SCC 644, in the
    context of enforcement of a foreign award, while construing the
    phrase “contrary to the public policy”, this Court held that for a
    foreign award to be contrary to public policy mere contravention of
    law would not be enough rather it should be contrary to:

    (a) the fundamental policy of Indian law; and/or

    (b) the interest of India; and/or

    (c) justice or morality.

    *****

    55. The legal position which emerges from the aforesaid discussion
    is that after “the 2015 Amendments” in Section 34(2)(b)(ii) and
    Section 48(2)(b) of the 1996 Act, the phrase “in conflict with the
    public policy of India” must be accorded a restricted meaning in
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    terms of Explanation 1. The expression “in contravention with the
    fundamental policy of Indian law” by use of the word
    “fundamental” before the phrase “policy of Indian law” makes the
    expression narrower in its application than the phrase “in
    contravention with the policy of Indian law”, which means mere
    contravention of law is not enough to make an award vulnerable.
    To bring the contravention within the fold of fundamental policy of
    Indian law, the award must contravene all or any of such
    fundamental principles that provide a basis for administration of
    justice and enforcement of law in this country.

    56. Without intending to exhaustively enumerate instances of such
    contravention, by way of illustration, it could be said that:

    (a) violation of the principles of natural justice;

    (b) disregarding orders of superior courts in India or the binding
    effect of the judgment of a superior court; and

    (c) violating law of India linked to public good or public interest,
    are considered contravention of the fundamental policy of
    Indian law.

    However, while assessing whether there has been a contravention
    of the fundamental policy of Indian law, the extent of judicial
    scrutiny must not exceed the limit as set out in Explanation 2 to
    Section 34(2)(b)(ii).

    *****
    Patent illegality

    65. Sub-section (2-A) of Section 34 of the 1996 Act, which was
    inserted by the 2015 Amendment, provides that an arbitral award
    not arising out of international commercial arbitrations, may also
    be set aside by the Court, if the Court finds that the award is visited
    by patent illegality appearing on the face of the award. The proviso
    to sub-section (2-A) states that an award shall not be set aside
    merely on the ground of an erroneous application of the law or by
    reappreciation of evidence.

    66. InONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705, while
    dealing with the phrase “public policy of India” as used in Section
    34
    , this Court took the view that the concept of public policy
    connotes some matter which concerns public good and public
    interest. If the award, on the face of it, patently violates statutory
    provisions, it cannot be said to be in public interest. Thus, an award
    could also be set aside if it is patently illegal. It was, however,
    clarified that illegality must go to the root of the matter and if the
    illegality is of trivial nature, it cannot be held that award is against
    public policy.

    67. In Associate Builders v. DDA, (2015) 3 SCC 49, this Court
    held that an award would be patently illegal, if it is contrary to:

    (a) substantive provisions of law of India;

    (b) provisions of the 1996 Act; and

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    (c) terms of the contract [See also three-Judge Bench
    decision of this Court in State of Chhattisgarh v. SAL
    Udyog (P) Ltd.
    , (2022) 2 SCC 275].

    The Court clarified that if an award is contrary to the substantive
    provisions of law of India, in effect, it is in contravention of
    Section 28(1)(a) of the 1996 Act. Similarly, violating terms of the
    contract, in effect, is in contravention of Section 28(3) of the 1996
    Act.

    68. In SsangyongEngg. & Construction Co. Ltd. v. NHAI, (2019)
    15 SCC 131 this Court specifically dealt with the 2015
    Amendment which inserted sub-section (2-A) in Section 34 of the
    1996 Act. It was held that “patent illegality appearing on the face
    of the award” refers to such illegality as goes to the root of matter,
    but which does not amount to mere erroneous application of law. It
    was also clarified that what is not subsumed within “the
    fundamental policy of Indian law”, namely, the contravention of a
    statute not linked to “public policy” or “public interest”, cannot be
    brought in by the backdoor when it comes to setting aside an award
    on the ground of patent illegality [ See SsangyongEngg.
    &
    Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131]. Further, it
    was observed, reappreciation of evidence is not permissible under
    this category of challenge to an arbitral award
    [See SsangyongEngg.
    & Construction Co. Ltd. v. NHAI, (2019)
    15 SCC 131].

    Perversity as a ground of challenge

    69. Perversity as a ground for setting aside an arbitral award was
    recognised in ONGC Ltd. v. Western Geco International Ltd.,
    (2014) 9 SCC 263. Therein it was observed that an arbitral decision
    must not be perverse or so irrational that no reasonable person
    would have arrived at the same. It was observed that if an award is
    perverse, it would be against the public policy of India.

    70. In Associate Builders v. DDA, (2015) 3 SCC 49 certain tests
    were laid down to determine whether a decision of an Arbitral
    Tribunal could be considered perverse. In this context, it was
    observed that where:

    (i) a finding is based on no evidence; or

    (ii) an Arbitral Tribunal takes into account something
    irrelevant to the decision which it arrives at; or

    (iii) ignores vital evidence in arriving at its decision, such
    decision would necessarily be perverse.

    However, by way of a note of caution, it was observed that when a
    court applies these tests it does not act as a court of appeal and,
    consequently, errors of fact cannot be corrected. Though, a possible
    view by the arbitrator on facts has necessarily to pass muster as the
    arbitrator is the ultimate master of the quantity and quality of
    evidence to be relied upon. It was also observed that an award
    based on little evidence or on evidence which does not measure up

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    in quality to a trained legal mind would not be held to be invalid on
    that score.

    71. In SsangyongEngg. & Construction Co. Ltd. v. NHAI, (2019)
    15 SCC 131, which dealt with the legal position post the 2015
    Amendment in Section 34 of the 1996 Act, it was observed that 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. It was
    pointed out that an award based on no evidence, or which ignores
    vital evidence, would be perverse and thus patently illegal. It was
    also observed that a finding based on documents taken behind the
    back of the parties by the arbitrator would also qualify as a decision
    based on no evidence inasmuch as such decision is not based on
    evidence led by the parties, and therefore, would also have to be
    characterised as perverse [ See SsangyongEngg.
    & Construction
    Co. Ltd. v. NHAI
    , (2019) 15 SCC 131].

    72. The tests laid down in Associate Builders v. DDA, (2015) 3
    SCC 49 to determine perversity were followed in SsangyongEngg.

    & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131 and later
    approved by a three-Judge Bench of this Court in Patel Engg.
    Ltd. v. North Eastern Electric Power Corpn. Ltd.
    , (2020) 7 SCC

    167.

    73. In a recent three-Judge Bench decision of this Court in DMRC
    Ltd. v. Delhi Airport Metro Express (P) Ltd., (2024) 6 SCC 357,
    the ground of patent illegality/perversity was delineated in the
    following terms: (SCC p. 376, para 39)
    “39. In essence, the ground of patent illegality is available
    for setting aside a domestic award, if the decision of the
    arbitrator is found to be perverse, or so irrational that no
    reasonable person would have arrived at it; or the
    construction of the contract is such that no fair or
    reasonable person would take; or, that the view of the
    arbitrator is not even a possible view. A finding based on
    no evidence at all or an award which ignores vital
    evidence in arriving at its decision would be perverse and
    liable to be set aside under the head of “patent illegality”.
    An award without reasons would suffer from patent
    illegality. The arbitrator commits a patent illegality by
    deciding a matter not within its jurisdiction or violating a
    fundamental principle of natural justice.”

    Scope of interference with an arbitral award

    74. The aforesaid judicial precedents make it clear that while
    exercising power under Section 34 of the 1996 Act the Court does
    not sit in appeal over the arbitral award. Interference with an
    arbitral award is only on limited grounds as set out in Section 34 of
    the 1996 Act. A possible view by the arbitrator on facts is to be
    respected as the arbitrator is the ultimate master of the quantity and
    quality of evidence to be relied upon. It is only when an arbitral
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    award could be categorised as perverse, that on an error of fact an
    arbitral award may be set aside. Further, a mere erroneous
    application of the law or wrong appreciation of evidence by itself is
    not a ground to set aside an award as is clear from the provisions of
    sub-section (2-A) of Section 34 of the 1996 Act.

    75. In Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd.,
    (2019) 20 SCC 1, paras 27-43, a three-Judge Bench of this Court
    held that courts need to be cognizant of the fact that arbitral awards
    are not to be interfered with in a casual and cavalier manner, unless
    the court concludes that the perversity of the award goes to the root
    of the matter and there is no possibility of an alternative
    interpretation that may sustain the arbitral award. It was observed
    that jurisdiction under Section 34 cannot be equated with the
    normal appellate jurisdiction. Rather, the approach ought to be to
    respect the finality of the arbitral award as well as party’s autonomy
    to get their dispute adjudicated by an alternative forum as provided
    under the law.

    *****
    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 interfere [See: SAIL v. Gupta Brother
    Steel Tubes Ltd.
    , (2009) 10 SCC 63; Pure Helium India (P)
    Ltd. v. ONGC, (2003) 8 SCC 593; McDermott International
    Inc. v. Burn Standard Co. Ltd.
    , (2006) 11 SCC 181; MMTC
    Ltd. v. Vedanta Ltd.
    , (2019) 4 SCC 163].
    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 [South
    East Asia Marine Engg. & Constructions Ltd. v. Oil India Ltd.
    ,
    (2020) 5 SCC 164].

    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 [BALCO v. Kaiser Aluminium Technical
    Services Inc., (2016) 4 SCC 126].

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    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 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 [Adani Power (Mundra)
    Ltd. v. Gujarat ERC, (2019) 19 SCC 9].

    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 [Nabha
    Power Ltd. v. Punjab SPCL, (2018) 11 SCC 508,
    followed in Adani Power case, (2019) 19 SCC 9].”

    (emphasis supplied)

    36. In view of the aforesaid settled principles governing the scope
    of jurisdiction under Section 34 of the A&C Act, this Court shall now
    proceed to examine the challenge raised by the Petitioners in respect
    of Claim No. 3 pertaining to escalation, Claim No. 6 relating to loss of
    profits, and the corresponding interest is awarded by the learned
    Arbitrator under the Impugned Arbitral Award.

    Claim No. 3 – Escalation under Clause 10CC of the GCC

    37. The first issue that arises for consideration pertains to the
    legality and sustainability of the award of Rs.38,96,175/- under Claim
    No. 3, which was adjudicated as Issue No. 2 in the Impugned Arbitral
    Award.

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    38. The controversy, in its essential formulation, concerns the
    reconciliation of the contractual regime governing escalation under
    Clause 10CC of the GCC with the Respondent’s attempt, as Claimant
    before the learned Arbitral Tribunal, to seek compensation under
    Section 73 of the ICA for the period beyond the stipulated date of
    completion.

    39. A bare reading of Clause 10CC of the GCC demonstrates that
    the said provision constitutes a complete and self-contained code
    governing escalation arising out of an increase or decrease in the
    prices of labour and material. The clause, by its express language,
    restricts the grant of escalation only to work executed during the
    stipulated period of the contract and unequivocally excludes any
    entitlement for work executed during the extended period.
    Significantly, the clause specifically stipulates that no escalation shall
    be payable for work executed during the extended contract period,
    even where extension of time has been granted without taking action
    under Clause 2. Clause 10CC, therefore, is not merely an enabling
    provision prescribing the methodology for the computation of
    escalation, but also a limiting provision defining the temporal
    boundaries within which such entitlement may be claimed. Clause
    10CC of the GCC is reproduced herein below for ready reference:

    “CLAUSE 10 CC – Payment due to Increase/Decrease in
    Prices/Wages after Receipt of tender for works: If the prices of
    materials (not being materials supplied or services rendered at
    fixed prices by the department in accordance with clause 10 & 34
    thereof) and/or wages of labour required for execution of the work
    increase, the contractor shall be compensated for such increase as
    per provisions detailed below and the amount of the contract shall
    accordingly be varied, subject to the condition that such
    compensation for escalation in prices shall be available only for the
    work done during the stipulated period of the contract. No
    escalation shall be paid for work executed in extended contract

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    period even if extension of time is granted without any action
    under clause 2 and also no such compensation shall be payable for
    a work for which the stipulated period of completion is equal to or
    less then the time as specified in Schedule F. Such compensation
    for escalation in the prices of materials and labour, when due, shall
    be worked out based on the following provisions:-

    i. The base date for working out such escalation shall be
    the last stipulated date of receipt of tenders including
    extension, if any.

    ii. The cost of work on which escalation will be payable
    shall be reckoned as below:

    a) Gross value of work done upto this quarter:

    b) Gross value of work done upto this last
    quarter:

    c) Gross value of work done since previous
    quarter:

    d) Full assessed value of secured advance
    fresh paid in this quarter:

    e) Full assessed value of secured advance
    recovered in this quarter:

    f) Full assessed value of secured advance for
    which escalation is payable in this quarter:

    g) Advance payment made during this quarter:

    h) Advance payment recovered during this
    quarter:

    i) Advance payment for which escalation is
    payable in this quarter:

    j) Extra items paid as per clause 12 based on
    prevailing market rates during this quarter:

    Then,
    M= C± F ± I – J
    N=0.85 M

    k) Less cost of material supplied by the
    department as per clause I 0 and recovered
    during the quarter

    l) Less cost of services rendered at fixed
    charges as per clause 34 and recovered during
    the quarter.”

    (emphasis supplied)

    40. Significantly, the contractual position in this regard is not in
    dispute. It is also borne out from the record that the Respondent, in its
    Statement of Claim before the learned Arbitral Tribunal, expressly
    admitted that escalation under Clause 10CC of the GCC was
    admissible only up to the stipulated period of completion and that no
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    contractual entitlement survived beyond such period. It was further
    acknowledged that escalation amounts on labour and material
    components up to the stipulated completion period had already been
    released. The Respondent, therefore, consciously shifted the
    foundation of its claim and asserted that the present claim was, in
    substance, one for damages under Section 73 of the ICA, while merely
    adopting the formula under Clause 10CC as a convenient mechanism
    for quantification.

    41. It is in the backdrop of these pleadings that the findings
    returned by the learned Arbitrator are required to be examined. The
    relevant extracts concerning Claim No. 3 from the Impugned Arbitral
    Award read as follows:

    “Claim No.3:-

    Dispute formed due to non-payment against second and final
    escalation bill under Clause 10 cc-Rs38,96,175/-.

    11. It is pleaded by Claimant that this claim has arisen on account
    of prolongation of contract and the Claimant is claiming damages
    in the shape of labour and material escalation. As the Claimant was
    not responsible for delay, in completion of the work, so this claim
    is tenable for the work done beyond stipulated date of completion.

    His case is basically, for compensation for damages u/s 73 of
    Contract Act, 1873 i.e. on account of failure on the part of the
    Respondent to get the work completed within the stipulated period
    of 30 months i.e. by 10.7.2008 but prolonged the contract upto
    30.11.2011 i.e. with delay of 3 years 4 months and 20 days. The
    Claimant has adopted the rational procedure laid down under
    Clause 10 cc of the Agreement to calculate this amount and is so
    entitled for this Calculated amount of Rs 38,96,175/-.

    12. To contest this Claim, Respondent pleaded that as per Clause
    10 cc of General Contract Condition, no escalation is permissible
    for the work executed in the extended contract period, even if
    extension of time is granted, without any action under Clause 2
    thereof and therefore, this claim of the Claimant is not tenable.

    13. However, it is also pleaded by the Respondent that a sum of Rs.
    5,35,522/-was duly sanctioned, in terms of Clause 10 CC by the
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    Respondent vide its office order dated 30.9.2009 and this amount,
    has already been paid to the Claimant as escalation, upto the
    stipulated date of completion of the work.

    *****
    Issue No.2:

    This issue pertains to Claim No.3 of the Claimant, under which he
    is claiming escalation amount of Rs. 38,96,175/-, calculated as per
    provisions of Clause l 0 CC. As far as quantum of the Claim and its
    calculation is concerned, there is no dispute, regarding the
    correctness thereof. But the Respondent has resisted this Claim, by
    contending that Clause 10 cc of general conditions, does not allow
    this Claim. In this regard it is contended by Ld. Counsel of the
    Respondent that clause 10 cc do not permit escalation in the
    extended contract period, even if extension of time is granted
    without any action under Clause 2 of general contract condition.
    But it is also pleaded that a sum of Rs. 5,35,522/- was duly
    sanctioned and paid, under Clause 10 CC for escalation, up to the
    stipulated date of completion.

    54. On the other hand Ld. Counsel for the Claimant has contended
    that this Claim is not under Clause 10 cc but is also u/s 73 of the
    Contract Act, 1873, dealing with a situation of failure on the part of
    the Respondent to get the work completed within the stipulated
    period. It is also contended that when clause 10 cc is read with
    clause 2 of General Conditions, then it leads to the conclusion that
    payment of escalation amount, during the extended period is barred
    only when there is default on the part of the contractor even when
    no action was taken against the contractor by the department.

    55. On careful consideration of rival contentions of both the
    parties, no doubt is left that there is every merits in the case of the
    Claimant and there is no merit in the case of the Respondent. If
    there is any fault on the part of the contractor, in not completing
    the work within the stipulated time period, then action under
    Clause 2 can be taken against him by the department. But it is the
    sweet wish of the department, to take or not to take, action against
    defaulting contractor. If once clause 2 is applicable, for the fault on
    the part of the contractor, then Clause 10 cc bars the contractor to
    claim escalation for the work executed on the extended contract
    period.

    56. As above noted, there is nothing to prove or to presume any
    fault on the part of the Claimant, rather fault if any may be on the
    part of the Respondent. Even sole witness of the Respondent, who
    is responsible officer of the Respondent in Cross-examination has
    admitted that delay in the completion of work was not attributable
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    to the Claimant but it can be attributable to the Respondent.

    Therefore, it is cleared that Clause 10 cc does not help the
    Respondent.

    57. In this regard it is also pertaining to mention that, finding no
    fault on the part of the contractor, the Respondent has already
    released a sum of Rs. 5,35,522/as escalation of up-to the stipulated
    date of completion work. Had there been any fault on the part of
    the contractor, then perhaps even this amount would not have been
    released to the contractor by the department. Therefore, as per the
    provisions of Section 73 of the Contract Act, as well as, as per the
    provisions of Clause 10 cc read with Clause 2C of General
    Conditions, it is very clear that the Claimant is entitled for claimed,
    rightly calculated escalation amount of Rs 38,96,175/-

    58. Consequently, this issue is hereby decided in favour of the
    Claimant and against the Respondent, to the effect that Claimant is
    entitled for Second and final escalation amount of Rs.38,96, 175/-
    from the Respondent.

    59. Claim no. 4 of the Claimant, for refund of Rs 89123/- withheld
    by the Respondent on account of table of milestone drawn, was
    also set at naught by releasing it on 24.4.2015 during the pendency
    of these· proceedings and that is why the Claimant claimed no
    issue for this Claim.”

    42. A perusal of the aforesaid findings reveals that the learned
    Arbitrator has himself categorically recorded that Clause 10CC of the
    GCC does not permit escalation during the extended period of the
    contract. However, notwithstanding such express finding, the learned
    Arbitrator proceeded to award a sum of Rs.38,96,175/- towards
    escalation by invoking Section 73 of the ICA read with Clause 10CC
    of the GCC, primarily on the reasoning that the delay in execution was
    not attributable to the Respondent and could instead be attributed to
    the Petitioner.

    43. The reasoning adopted by the learned Arbitrator, when tested
    against the pleadings and the contractual framework governing the
    parties, discloses an inherent contradiction which renders the finding
    legally unsustainable. Once it stood accepted, both by the Respondent
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    in its Statement of Claim and by the learned Arbitrator in the Award
    itself, that Clause 10CC of the GCC ceased to apply beyond the
    stipulated period of completion, it became incumbent upon the learned
    Arbitrator to independently examine the claim strictly within the
    framework of Section 73 of the ICA. However, instead of undertaking
    such an exercise, the learned Arbitrator proceeded to apply the very
    formula contained in Clause 10CC of the GCC, despite
    simultaneously holding that the said clause was contractually
    inapplicable to the extended period.

    44. This approach, in the considered view of this Court, amounts to
    a clear departure from the contractual regime agreed between the
    parties. The Respondent’s case, as pleaded, was not that Clause 10CC
    of the GCC itself conferred any right to escalation beyond the
    stipulated period, but only that the said clause could be utilised as a
    notional basis for computation of damages. The learned Arbitrator,
    however, failed to examine whether the essential ingredients
    necessary for sustaining a claim under Section 73 of the ICA, namely,
    proof of actual loss and a demonstrable causal nexus between the
    alleged breach and the loss claimed, stood established on the basis of
    evidence led before the learned Tribunal. The Award is conspicuously
    silent with respect to any evidence demonstrating the actual increase
    in costs or substantiating the quantified figure of Rs.38,96,175/-.

    45. The learned Arbitrator has merely observed that there is no
    dispute regarding the correctness of the calculation, without disclosing
    the evidentiary basis on which such conclusion has been arrived at.
    There is no discussion of the documentary material relied upon by the
    Respondent, no scrutiny of the computation reflected in the exhibits

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    placed on record, and no analysis whatsoever of the actual financial
    loss allegedly suffered by the Respondent. The finding, therefore, rests
    not upon proof, but upon assumption, which is impermissible in law
    while adjudicating a claim for damages under Section 73 of the ICA.

    46. It is well settled that damages under Section 73 of the ICA
    cannot be awarded in the absence of proof of actual loss. Mere
    adoption of a contractual formula, particularly one which itself stands
    excluded by the terms of the contract for the relevant period, cannot
    substitute the requirement of evidence. By treating the formula under
    Clause 10CC of the GCC as a proxy for proof of damages, the learned
    Arbitrator has effectively dispensed with the fundamental burden
    resting upon the claimant to establish actual loss and its quantification.
    Such an approach renders the Award legally vulnerable.

    47. The legal position governing claims for damages and the
    necessity of proof of actual loss has been comprehensively explained
    by the Hon’ble Supreme Court in McDermott International Inc. v.
    Burn Standard Co. Ltd.17
    , wherein it was held as under:

    “100. While claiming damages, the amount therefor was not
    required to be quantified. Quantification of a claim is merely a
    matter of proof.

    *****
    Actual loss: Determination of

    108. A contention had been raised both before the learned arbitrator
    as also before us that MII could not prove the actual loss suffered
    by it as is required under the Indian law viz. Sections 55 and 73 of
    the Indian Contract Act as Mr D.J. Parson had no personal
    knowledge in regard to the quantum of actual loss suffered by MII.
    D.J. Parson indisputably at one point of time or the other was
    associated with MII. He applied the Emden Formula while
    calculating the amount of damages having regard to the books of
    accounts and other documents maintained by MII. The learned
    arbitrator did insist that sufferance of actual damages must be

    17
    (2006) 11 SCC 181
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    proved by bringing on record books of accounts and other relevant
    documents.

    109. Sections 55 and 73 of the Indian Contract Act do not lay down
    the mode and manner as to how and in what manner the
    computation of damages or compensation has to be made. There is
    nothing in Indian law to show that any of the formulae adopted in
    other countries is prohibited in law or the same would be
    inconsistent with the law prevailing in India.

    110. As computation depends on circumstances and methods to
    compute damages, how the quantum thereof should be determined
    is a matter which would fall for the decision of the arbitrator. We,
    however, see no reason to interfere with that part of the award in
    view of the fact that the aforementioned formula evolved over the
    years, is accepted internationally and, therefore, cannot be said to
    be wholly contrary to the provisions of the Indian law.

    111. In State of U.P. v. Allied Constructions [(2003) 7 SCC 396]
    this Court held: (SCC p. 398, para 4)
    “4. Any award made by an arbitrator can be set aside only
    if one or the other term specified in Sections 30 and 33 of
    the Arbitration Act, 1940 is attracted. It is not a case
    where it can be said that the arbitrator has misconducted
    the proceedings. It was within his jurisdiction to interpret
    clause 47 of the agreement having regard to the fact-

    situation obtaining therein. It is submitted that an award
    made by an arbitrator may be wrong either on law or on
    fact and error of law on the face of it could not nullify an
    award. The award is a speaking one. The arbitrator has
    assigned sufficient and cogent reasons in support thereof.
    Interpretation of a contract, it is trite, is a matter for the
    arbitrator to determine (see Sudarsan Trading
    Co. v. Govt. of Kerala
    [(1989) 2 SCC 38]). Section 30 of
    the Arbitration Act, 1940 providing for setting aside an
    award is restrictive in its operation. Unless one or the
    other condition contained in Section 30 is satisfied, an
    award cannot be set aside. The arbitrator is a Judge chosen
    by the parties and his decision is final. The court is
    precluded from reappraising the evidence. Even in a case
    where the award contains reasons, the interference
    therewith would still be not available within the
    jurisdiction of the court unless, of course, the reasons are
    totally perverse or the judgment is based on a wrong
    proposition of law. An error apparent on the face of the
    records would not imply closer scrutiny of the merits of
    documents and materials on record.
    Once it is found that
    the view of the arbitrator is a plausible one, the court will
    refrain itself from interfering (see U.P. SEB v. Searsole
    Chemicals Ltd.
    [(2001) 3 SCC 397] and Ispat Engg. &

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    Foundry Works v. Steel Authority of India Ltd.
    [(2001) 6
    SCC 347]).”

    112. It is trite that the terms of the contract can be express or
    implied. The conduct of the parties would also be a relevant factor
    in the matter of construction of a contract. The construction of the
    contract agreement is within the jurisdiction of the arbitrators
    having regard to the wide nature, scope and ambit of the arbitration
    agreement and they cannot be said to have misdirected themselves
    in passing the award by taking into consideration the conduct of the
    parties. It is also trite that correspondences exchanged by the
    parties are required to be taken into consideration for the purpose
    of construction of a contract. Interpretation of a contract is a matter
    for the arbitrator to determine, even if it gives rise to determination
    of a question of law. (See Pure Helium India (P)
    Ltd. v. ONGC [(2003) 8 SCC 593] and D.D. Sharma v. Union of
    India [(2004) 5 SCC 325].)

    113. Once, thus, it is held that the arbitrator had the jurisdiction, no
    further question shall be raised and the court will not exercise its
    jurisdiction unless it is found that there exists any bar on the face of
    the award.

    114. The above principles have been reiterated in Chairman and
    MD, NTPC Ltd. v. Reshmi Constructions, Builders &
    Contractors
    [(2004) 2 SCC 663], Union of India v. Banwari Lal
    & Sons (P) Ltd.
    [(2004) 5 SCC 304], Continental Construction
    Ltd. v. State of U.P. [(2003) 8 SCC 4] and State of U.P. v. Allied
    Constructions
    [(2003) 7 SCC 396].

    115. A court of law or an arbitrator may insist on some proof of
    actual damages, and may not allow the parties to take recourse to
    one formula or the other. In a given case, the court of law or an
    arbitrator may even prefer one formula as against another. But,
    only because the learned arbitrator in the facts and circumstances of
    the case has allowed MII to prove its claim relying on or on the
    basis of Emden Formula, the same by itself, in our opinion, would
    not lead to the conclusion that it was in breach of Section 55 or
    Section 73 of the Indian Contract Act.”

    (emphasis supplied)

    48. Furthermore, the invocation of Clause 10CC of the GCC for the
    purpose of quantification, despite a categorical finding that the said
    clause does not govern the extended period, effectively results in a
    rewriting of the contractual bargain between the parties. An arbitral
    tribunal, while interpreting contractual provisions, remains bound by
    the express limitations incorporated therein and cannot, under the
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    guise of equitable considerations, extend contractual benefits beyond
    what the parties themselves contemplated. The Impugned Arbitral
    Award, in effect, grants escalation for a period expressly excluded
    under the contract and does so solely by relying upon a clause which
    even the Respondent had conceded to be inapplicable for such period.

    49. The reasoning adopted by the learned Arbitrator, therefore,
    suffers from a dual infirmity, namely, firstly, a failure to adhere to the
    contractual stipulation expressly governing escalation; and secondly, a
    failure to apply the settled legal principles governing the award of
    damages under Section 73 of the ICA. The Impugned Arbitral Award
    does not disclose any intelligible nexus between the pleadings, the
    evidence on record, and the conclusions ultimately reached. The
    Award, therefore, falls short of the requirement of a reasoned
    determination as mandated under Section 31(3) of the A&C Act.

    50. This Court is of the considered opinion that although the delay
    in execution of the work may have been attributable to the Petitioner,
    such circumstance by itself could not have empowered the learned
    Arbitrator to award escalation by way of compensation for the post-
    stipulated period of the contract, dehors the express contractual
    stipulations and the settled legal requirements governing proof and
    quantification of damages under Section 73 of the ICA.

    51. In view of the aforesaid discussion, this Court is of the
    considered opinion that the Award, insofar as it relates to Claim No. 3,
    cannot be sustained and is accordingly liable to be set aside.

    Claim No. 6 – Loss of Turnover/Profitability

    52. The next issue that arises for consideration pertains to the award
    of Rs.16,23,195/- under Claim No. 6 towards alleged loss of turnover

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    and profitability on account of prolongation of the contract, which
    came to be adjudicated as Issue No. 4 in the Impugned Arbitral
    Award.

    53. Before adverting to the merits of the controversy, this Court
    deems it appropriate to extract the relevant findings returned by the
    learned Arbitrator in relation to Claim No. 6. The relevant portion of
    the Impugned Arbitral Award reads as under:

    “Claim No. 6:-

    Dispute formed due to loss of turn over /profitability as a result of
    prolongation of contract…. Rs. 16,23,195/-

    21. It is pleaded by the Claimant that he had anticipated, quantum
    of his profit on the original set up of the tender, under which
    completion of work was 30 months, but it prolonged to 69.70
    months. Therefore, anticipated profit, has been divided into total
    period of completion, including the extended period. The delay
    was not attributable to him but to the Respondent, and so the
    Claimant is entitled for loss of profit, besides other consequential
    claim. For this, he has relied upon CPWD official memo dated
    14.12.2007, allowing contractors profit and overheads to the extent
    of 15%. Out of this 15%, 10% is overhead on cost of material and
    labour and remaining 5% is profit.

    22. Since cost of completed Electrical Work was Rs 2,48,38,485/-,
    so his 5% profit comes to Rs 12,41,924/-. It was for completing the
    work within 30 months since it prolonged to 39.21 months beyond
    stipulated period of 30 months, so his profit of Rs. 12,41,924/-

    stands divided into 69.21 months, so he is entitled for this
    calculated amount of Rs. 16,23,195/-.

    23. To resist this Claim of the Complainant, the Respondent
    pleaded that there is no clause in the contract against which this
    claim can be raised and also that prolongation did not prevent him
    for taking any new project.

    *****
    ISSUES NO. 4:

    This issue pertains to Claim No. 6 of the Claimant for Rs
    16,23,195/- for the loss of turnover/profitability.

    68. Undisputedly, date of start of work was 11.1.2006. Stipulated
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    date of completion of the work was 10.7.08 but the work was
    actually completed on 30.11.11. The delay was regularized by the
    Respondent vide its letter dated 4.7.15 (Ex CW 1/9). As already
    discussed and found delay was not due to any fault on the part of
    the Claimant nor on the part of the main contractor, but may be on
    the part of the Respondent, which is also so admitted by the sole
    witness of the Respondent. Initially time allowed for completion of
    work was 30 months which was integral part of the contract,
    naturally the Claimant would have anticipated his profits on the
    original set up of that time period, but it prolonged to 69.10
    months, therefore, the Claimant is certainly entitled for loss of his
    turnover/ profitability, due to prolongation of the contract. The
    claimant had also served his prior notice Ex CW 1/15 upon the
    Respondent for his this claim, which remained un-replied. The
    Claimant relying upon CPWD office memo no. DGW/MAN/150
    dated 14.12.2007, has rightly assessed his loss of turnover/
    profitability to the tune of 15%, which comes to Rs. 16,23,195/.

    (5% profit+ 10% overhead on cost of material). lt was when costs
    of completed work was Rs. 2,48,38,485/- and when work was
    completed in prolonged period of 39.21 months, beyond stipulated
    period of 30 months. CPWD vide its said Memo dated 14.12.2007
    had enhanced the element of contractor’s profits and overheads
    from 10 to 15% w.e.f. l4.12.2007. Therefore, the Claimant has
    rightly calculated his this loss to the tune of Rs 16,23,195/-.

    69. I do not find any merit in the case of the Respondent to contest
    this case that prolongation of contract did not prevent the Claimant
    for taking any new project, as admittedly he remained with this
    work till its final completion.

    70. Resultantly, this issue is hereby decided in favour of the
    Claimant and against the Respondent to the effect that the Claimant
    is entitled to Rs. 16,23,195/- from the Respondent for loss of \
    turnover /profitability due to prolongation of the completion of the
    work.”

    54. A perusal of the aforesaid findings reveals that the reasoning of
    the learned Arbitrator proceeds substantially on the premise that since
    the contract period stood prolonged from 30 months to approximately
    69 months, and the delay was not attributable to the Respondent
    herein, the Respondent would be “certainly entitled” to compensation
    towards loss of turnover and profitability. Proceeding on such
    premise, the learned Arbitrator accepted the computation of
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    Rs.16,23,195/- by observing that the Respondent herein, relying upon
    CPWD Office Memorandum No. DGW/MAN/150 dated
    14.12.2007 18 , had “rightly assessed” such loss at 15%, comprising
    10% overheads and 5% profit.

    55. At the outset, it must be observed that the entire edifice of the
    aforesaid finding rests upon a broad presumption that prolongation of
    a contract, by itself, necessarily results in loss of profitability.
    However, the Impugned Arbitral Award does not disclose any
    discussion of evidence establishing that the Respondent herein had, in
    fact, suffered such loss, nor does it indicate any material
    demonstrating the actual financial impact occasioned by the delay.

    56. The learned Arbitrator has not adverted to any documentary
    evidence, books of accounts, balance sheets, profit and loss
    statements, or other financial material substantiating the alleged loss.
    There is no examination as to whether the Respondent’s resources
    remained idle during the extended period, whether any alternative
    contracts or business opportunities were foregone, or whether there
    was any actual diminution in profitability attributable to the
    prolongation of the contract. The conclusion that the Respondent
    herein was “certainly entitled” to such damages is, therefore, founded
    on abstraction and assumption rather than evidentiary analysis.

    57. More importantly, the adoption of the CPWD Office
    Memorandum as the sole basis for quantification is wholly misplaced.
    The said memorandum, at best, lays down a general normative
    guideline regarding the percentage of the contractor’s profit and
    overheads ordinarily factored into public works contracts. It does not,

    18
    CPWD Office Memorandum
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    by itself, establish that such profit was actually lost in a given factual
    scenario. The learned Arbitrator, however, has treated the said
    memorandum as determinative of the Respondent’s entitlement,
    without undertaking any independent inquiry into the actual loss
    allegedly suffered.

    58. The reasoning of the learned Arbitrator, therefore, suffers from
    a fundamental legal infirmity, namely, the substitution of a notional
    formula in place of proof of damages. It is trite that a claim for loss of
    profits is in the nature of damages under Sections 73 and 74 of the
    ICA and must necessarily be supported by cogent evidence
    establishing both the existence and quantum of such loss. Mere
    prolongation of the contract, even if attributable to the employer, does
    not automatically entitle a contractor to a fixed percentage of the
    contract value by way of damages.

    59. The principles governing the award of damages under Sections
    73
    and 74 of the ICA have been authoritatively expounded by the
    Hon’ble Supreme Court in Kailash Nath Associates (supra), wherein
    it was held that even where a sum is stipulated in the contract, such
    stipulation merely represents the upper limit of compensation and
    does not dispense with the requirement of proving actual loss where
    such proof is possible. The Hon’ble Supreme Court further clarified
    that it is only in cases where damages are inherently incapable of
    precise proof that a genuine pre-estimate may be relied upon. The
    relevant observations as rendered in the said judgement are
    reproduced hereinbelow:

    “43. On a conspectus of the above authorities, the law on
    compensation for breach of contract under Section 74 can be stated
    to be as follows:

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    43.1. Where a sum is named in a contract as a liquidated amount
    payable by way of damages, the party complaining of a breach can
    receive as reasonable compensation such liquidated amount only if
    it is a genuine pre-estimate of damages fixed by both parties and
    found to be such by the court. In other cases, where a sum is named
    in a contract as a liquidated amount payable by way of damages,
    only reasonable compensation can be awarded not exceeding the
    amount so stated. Similarly, in cases where the amount fixed is in
    the nature of penalty, only reasonable compensation can be
    awarded not exceeding the penalty so stated. In both cases, the
    liquidated amount or penalty is the upper limit beyond which the
    court cannot grant reasonable compensation.
    43.2. Reasonable compensation will be fixed on well-known
    principles that are applicable to the law of contract, which are to be
    found inter alia in Section 73 of the Contract Act.
    43.3. Since Section 74 awards reasonable compensation for
    damage or loss caused by a breach of contract, damage or loss
    caused is a sine qua non for the applicability of the section.
    43.4. The section applies whether a person is a plaintiff or a
    defendant in a suit.

    43.5. The sum spoken of may already be paid or be payable in
    future.

    43.6. The expression “whether or not actual damage or loss is
    proved to have been caused thereby” means that where it is
    possible to prove actual damage or loss, such proof is not dispensed
    with. It is only in cases where damage or loss is difficult or
    impossible to prove that the liquidated amount named in the
    contract, if a genuine pre-estimate of damage or loss, can be
    awarded.

    43.7. Section 74 will apply to cases of forfeiture of earnest money
    under a contract. Where, however, forfeiture takes place under the
    terms and conditions of a public auction before agreement is
    reached, Section 74 would have no application.”

    (emphasis supplied)

    60. In the present case, the claim towards loss of profits could not
    have been sustained in the absence of any evidentiary foundation.
    Mere reliance on a notional percentage or a generalized assumption of
    loss, without proof of actual financial detriment or any material
    demonstrating a reasonable pre-estimate of damages, falls foul of the
    settled principles governing the award of compensation under the

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    ICA. The Impugned Arbitral Award, therefore, insofar as it grants
    such damages without substantiation, becomes legally untenable.

    61. Moreover, there is, in the entire reasoning of the learned
    Arbitrator, no discussion whatsoever of evidence substantiating the
    quantified claim of Rs.16,23,195/-. The Impugned Arbitral Award
    merely records that the Respondent herein had “rightly assessed” its
    loss by applying a 15% formula, without disclosing how such
    assessment was borne out from the evidentiary material placed on
    record. The absence of any analytical discussion or evidentiary
    scrutiny renders the finding manifestly unsustainable.

    62. The Award, insofar as it relates to Claim No. 6, thus discloses a
    clear instance where damages have been granted solely on the basis of
    generalized assumptions and formulaic computation, without proof of
    actual loss. Such an approach is contrary to the mandate of Section
    31(3)
    of the A&C Act, which obligates an arbitral tribunal to furnish
    intelligible and reasoned findings supported by analysis of the
    material on record.

    63. The aforesaid position also finds direct support from the
    judgment of the Hon’ble Supreme Court in Unibros v. All India
    Radio19
    , wherein the Court categorically held that formulae such as
    Hudson’s Formula may aid in estimating claims towards loss of
    overheads and profitability, but cannot, by themselves, constitute
    proof of such loss. The Hon’ble Supreme Court in the said judgement
    clarified that a claimant seeking damages on account of loss of
    profitability must adduce credible and cogent evidence demonstrating
    the actual loss suffered as a consequence of prolongation of the

    19
    2023 SCC OnLine SC 1366
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    contract. The relevant observations made in that judgment are
    reproduced herein below:

    “16. To support a claim for loss of profit arising from a delayed
    contract or missed opportunities from other available contracts that
    the appellant could have earned elsewhere by taking up any, it
    becomes imperative for the claimant to substantiate the presence of
    a viable opportunity through compelling evidence. This evidence
    should convincingly demonstrate that had the contract been
    executed promptly, the contractor could have secured
    supplementary profits utilizing its existing resources elsewhere.

    17. One might ask, what would be the nature and quality of such
    evidence? In our opinion, it will be contingent upon the facts and
    circumstances of each case. However, it may generally include
    independent contemporaneous evidence such as other potential
    projects that the contractor had in the pipeline that could have been
    undertaken if not for the delays, the total number of tendering
    opportunities that the contractor received and declined owing to the
    prolongation of the contract, financial statements, or any clauses in
    the contract related to delays, extensions of time, and
    compensation for loss of profit. While this list is not exhaustive
    and may include any other piece of evidence that the court may
    find relevant, what is cut and dried is that in adjudging a claim
    towards loss of profits, the court may not make a guess in the dark;
    the credibility of the evidence, therefore, is the evidence of the
    credibility of such claim.

    18. Hudson’s formula, while attained acceptability and is well
    understood in trade, does not, however, apply in a vacuum.
    Hudson’s formula, as well as other methods used to calculate
    claims for loss of off-site overheads and profit, do not directly
    measure the contractor’s exact costs. Instead, they provide an
    estimate of the losses the contractor may have suffered. While
    these formulae are helpful when needed, they alone cannot prove
    the contractor’s loss of profit. They are useful in assessing losses,
    but only if the contractor has shown with evidence the loss of
    profits and opportunities it suffered owing to the prolongation.

    19. The law, as it should stand thus, is that for claims related to
    loss of profit, profitability or opportunities to succeed, one would
    be required to establish the following conditions : first, there was a
    delay in the completion of the contract; second, such delay is not
    attributable to the claimant; third, the claimant’s status as an
    established contractor, handling substantial projects; and fourth,
    credible evidence to substantiate the claim of loss of profitability.
    On perusal of the records, we are satisfied that the fourth condition,
    namely, the evidence to substantiate the claim of loss of
    profitability remains unfulfilled in the present case.”

    (emphasis supplied)

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    64. The judgment in Unibros (supra), therefore, unequivocally
    clarifies that a claim for loss of profitability cannot succeed merely
    upon establishing delay attributable to the employer. The claimant
    must additionally demonstrate, through credible evidence, that it had
    the capacity and opportunity to undertake other profitable ventures
    and that such opportunities were in fact lost on account of the
    prolongation of the contract.

    65. In the present case, although the first two conditions identified
    in Unibros (supra), namely, the existence of delay and absence of
    fault on the part of the Respondent herein, may prima facie stand
    satisfied, there is not even a semblance of consideration by the learned
    Arbitrator with respect to the third and fourth requirements. The
    Impugned Arbitral Award contains no discussion regarding the
    Respondent’s status as an established contractor handling multiple
    substantial projects, nor does it examine any evidence demonstrating
    actual loss of business opportunities or profitability during the
    extended period of the contract.

    66. In the considered opinion of this Court, the error committed by
    the learned Arbitrator is not merely one relating to the appreciation of
    evidence, but goes to the very root of the matter. A substantial
    monetary claim has been awarded in favour of the Respondent herein
    without any examination of the evidentiary foundation necessary to
    sustain such a claim in law. The Impugned Arbitral Award, therefore,
    becomes vulnerable to interference within the parameters of Section
    34
    of the A&C Act.

    67. Accordingly, this Court is of the considered view that the
    finding of the learned Arbitrator allowing Claim No. 6 towards loss of
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    turnover or profitability amounting to Rs.16,23,195/- cannot be
    sustained and is liable to be set aside.

    Interest Awarded in Relation to Claim Nos. 3 and 6

    68. Insofar as the award of interest by the learned Arbitrator is
    concerned, this Court finds that the grant of interest is not an
    independent or standalone determination, but is intrinsically ancillary
    and consequential to the principal claims awarded under the Impugned
    Arbitral Award.

    69. The Impugned Arbitral Award, as revised on 07.01.2017, while
    adjudicating Issue Nos. 6 and 7, computed interest components in
    respect of all claims allowed by the learned Arbitrator, including the
    amounts awarded under Claim No. 3 towards escalation and Claim
    No. 6 towards loss of turnover or profitability. The relevant findings
    of the learned Arbitrator read as under:

    “ISSUES NO. 6 & 7
    These issues pertain to claims No. 7 & 8 i.e. pendent lit and future
    interest.

    76. In view of the above finding on above issue no. 5, the Claimant
    is allowed interest @12% p.a. on the amounts due from the date of
    cause of action till the date of award and @18% p.a. from the date
    of award till the date of realization.

    77. Thus, under these issues, the claimant is further entitled for the
    following.

    a) Interest @12% p.a. on the amount of Rs. l,33,146.33 for the
    period from the date of cause of action till the date of award
    i.e. 28.11.2013 to 26.10.2016 which comes to Rs.46,575.71/-.

    b) Interest @12 p.a. on an amount of Rs. 20,948.71/- for the
    period from the date of cause of action till the date of award
    i.e. 29.07.2015 to 26.10.2016 which comes to Rs.3,140.58.

    c) Interest @12% p.a. on an amount of Rs. 30,003.92/- for the
    period from the date of cause of action till the date of award
    i.e. 25.05.2015 to 26.10.2016 which comes to Rs. 5,139.30.

    d) Interest @12% p.a. on final escalation bill of Rs.38,96,175/-

    for the period from the date of cause of action till the date of
    award i.e. 30.05.2011 to 26.10.2016 which comes to
    Rs.25,32,407.00/-

    Signature Not Verified
    Digitally Signed
    By:HARVINDER KAUR O.M.P. (ENF.) (COMM.) 46/2018 & connected matter Page 38 of 41
    BHATIA
    Signing Date:23.05.2026
    11:42:19

    e) Interest @ 12% p.a. on the amount of damages due to
    deployment of watch and ward staff of Rs. 1l,14,924/- for the
    period from the date of cause of action till the date of award
    i.e. 30.05.2011 to 26.10.2016 which comes to Rs.
    7,24,670.00/-

    f) Interest @12% p.a. on account of loss of turnover/profitability
    amounting to Rs. 16,23,195/- for the period from the date of
    cause of action till the date of award i.e. 30.05.2011 to
    26.10.2016 which comes to Rs. 10,55.0532.28
    TOTAL························· Rs.43,66,965.84 (Rounded to
    Rs.43,66,966/-)

    78. It is pertinent to mention here that under issue No.-5, the
    claimant is already found entitled for Rs. l,84,098.96 on account of
    interest up to the date of payments.

    Now, the total amount of interest up to the date of award comes to
    Rs.45,51.065/ (Rs.43,66,966/- + Rs. l,84,099/-).
    Therefore, these issues are hereby decided accordingly.”

    70. This Court has, in the preceding discussion, arrived at a
    categorical finding that the awards under Claim No. 3, amounting to
    Rs. 38,96,175/- towards escalation, and Claim No. 6, amounting to Rs.
    16,23,195/- towards loss of turnover or profitability, are unsustainable
    in law, being vitiated by absence of evidentiary foundation, disregard
    of express contractual stipulations, and lack of reasoned adjudication
    as mandated under Section 31(3) of the A&C Act.

    71. It necessarily follows, as a matter of legal consequence, that the
    award of interest on the aforesaid amounts, as reflected in Paragraph
    Nos. 77(d) and 77(f) of the Impugned Arbitral Award cannot survive
    independently. The grant of interest is merely consequential to the
    principal monetary claims and cannot stand once the substantive
    claims themselves have been set aside. In other words, once the
    substratum of the principal amount awarded in respect of Claim Nos.
    3 and 6 are found to be legally unsustainable; the superstructure of
    interest founded thereupon must also necessarily collapse.

    Signature Not Verified
    Digitally Signed
    By:HARVINDER KAUR O.M.P. (ENF.) (COMM.) 46/2018 & connected matter Page 39 of 41
    BHATIA
    Signing Date:23.05.2026
    11:42:19

    72. Accordingly, this Court is of the considered opinion that the
    award of interest, insofar as it pertains to Claim Nos. 3 and 6 are
    equally liable to be interfered with under Section 34 of the A&C Act.

    CONCLUSION:

    73. In view of the foregoing discussion, and for the reasons
    recorded hereinabove, this Court is of the considered opinion that the
    Arbitral Award dated 26.10.2016, as revised on 07.01.2017, rendered
    by the learned Arbitrator in respect of Claim No. 3 relating to
    escalation and Claim No. 6 relating to loss of turnover or profitability,
    along with the corresponding award of interest thereon, suffers from
    patent illegality apparent on the face of the record and is liable to be
    interfered with within the limited jurisdiction contemplated under
    Section 34 of the Arbitration and Conciliation Act, 1996.
    Consequently, the necessary legal consequences shall follow both in
    relation to the Objection Petition as well as the Enforcement Petition.

    I. O.M.P.(COMM.) 207/2017

    74. Accordingly, the Objection Petition being O.M.P. (COMM.)
    207/2017 is allowed. The Impugned Arbitral Award dated 26.10.2016,
    as revised on 07.01.2017, is set aside insofar as it relates to:

    (i) Claim No. 3 concerning escalation amounting to Rs.38,96,175/-;

    (ii) Claim No. 6 concerning loss of turnover or profitability
    amounting to Rs.16,23,195/-; and

    (iii) the corresponding award of interest thereon as reflected in
    Paragraph Nos. 77(d) and 77(f) of the Impugned Arbitral Award.

    75. The remaining portions of the Impugned Arbitral Award, not
    having been assailed before this Court, shall remain undisturbed and
    shall continue to operate in accordance with law.

    Signature Not Verified
    Digitally Signed
    By:HARVINDER KAUR O.M.P. (ENF.) (COMM.) 46/2018 & connected matter Page 40 of 41
    BHATIA
    Signing Date:23.05.2026
    11:42:19

    76. The Objection Petition, along with pending application(s), if
    any, stands disposed of in the aforesaid terms.

    77. No order as to costs

    II. O.M.P.(ENF.)(COMM.) 46/2018

    78. Insofar as the Enforcement Petition being
    O.M.P.(ENF.)(COMM.) 46/2018, filed by the Award Holder
    (Respondent in the Objection Petition), is concerned, this Court,
    having set aside the Impugned Arbitral Award to the extent it relates
    to Claim Nos. 3 and 6, along with the corresponding award of interest
    contained in Paragraph Nos. 77(d) and 77(f), the Award shall not
    remain enforceable to that extent.

    79. However, insofar as the remaining portions of the Award are
    concerned, the Enforcement Petition shall proceed in accordance with
    law and in terms of the surviving portions of the Award.

    80. The parties are directed to place on record their respective
    calculations, in light of the surviving portion of the Award, on the next
    date of hearing.

    81. List on 11.08.2026.

    HARISH VAIDYANATHAN SHANKAR, J.

    MAY 21, 2026/sm/kr/ma

    Signature Not Verified
    Digitally Signed
    By:HARVINDER KAUR O.M.P. (ENF.) (COMM.) 46/2018 & connected matter Page 41 of 41
    BHATIA
    Signing Date:23.05.2026
    11:42:19



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