Delhi High Court
B4S Solutions Private Limited vs Atc Telecom Infrastructre Pvt. Ltd on 3 August, 2026
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: 20.07.2026
Judgment pronounced on: 03.08.2026
+ O.M.P. (COMM) 521/2023, CAV 645/2023, I.A. 25503/2023,
I.A. 2144/2025, I.A. 19095/2025 & I.A. 21812/2025
B4S SOLUTIONS PRIVATE LIMITED .....Petitioner
Through: Mr. Ankit Jain, Sr. Adv with
Mr. Vivek Sharma, Mr. Mahesh
Chandra Tiwari, Mr. Rohit
Kumar, Advs. with Mr. Gagan
Kaushik and Mr. R.K. Sharma,
A.Rs.
versus
ATC TELECOM INFRASTRUCTRE PVT.
LTD .....Respondent
Through: Ms. Shweta Bharti, Ms. Sanjana
Sachdev, Ms. Nikita Sharma,
Advs.
CORAM:
HON'BLE MR. JUSTICE AVNEESH JHINGAN
JUDGMENT
1. This petition is filed under Section 34 of the Arbitration and
Conciliation Act, 1996 (for short „the Act‟) against the award dated
10.08.2023 (for brevity „the award‟).
BRIEF FACTS
2. The brief facts are that the petitioner, a private limited company
is engaged in providing security/surveillance services for mobile
towers. An agreement dated 18.04.2018 was executed with M/S Idea
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Cellular Infrastructure Services Limited (for short „ICISL‟) for
providing surveillance/security services at the designated mobile
tower sites in Maharashtra and Goa circle excluding Mumbai.
Pursuant to a Share Purchase Agreement dated 13.11.2017, ICISL
became a wholly owned subsidiary of ATC Infrastructure Services
Pvt. Ltd. (for short „AISPL‟) with effect from 26.07.2018. Vide
Addendum-2 dated 25.10.2018, the validity of agreement dated
18.04.2018 was extended upto 31.12.2018.
2.1 ATC Telecom Infrastructure Pvt. Ltd. (for short „the
respondent‟) and AISPL owned mobile towers across the country and
executed an Agreement for Services dated 18.02.2019 (for short
„service agreement‟) with the petitioner. The agreement provided for
services at the designated sites in Maharashtra (for short „sites‟) and
was effective from 01.01.2019 to 31.12.2020 but later was extended
up to 31.03.2021. The scope of work and monthly rate per site per
month were provided in Schedules I and II of the service agreement
respectively.
2.2 During the currency of the service agreement, the parties to the
lis entered into a Memorandum of Understanding dated 04.06.2019,
whereby the petitioner was to undertake optimization of the manpower
deployed. A MoU dated 01.08.2019 was also executed between the
petitioner and AISPL which was pari materia with the MoU dated
04.06.2019 (collectively referred to as the „MoUs‟). The respondent
paid Rs.60,000/- towards the full and final settlement for each
manpower transition.
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2.3 The invoices upto June, 2019 as per Schedule-II of the service
agreement were raised for 978 sites at the rate of Rs. 12152/- per site
per month. As pleaded by the petitioner, after the MoUs the format of
the invoices was changed by the respondent and it was to facilitate the
respondent in calculating the effect of the optimisation.
2.4 There was a dispute that payment from July 2019 onwards for
978 sites as per Schedule-II of the service agreement was not made. In
the alternative, payment on the basis of the revised minimum wages
was claimed. Clause 11 of the service agreement provided for dispute
resolution through arbitration. On failure to reach an amicable
settlement, the petitioner issued a notice dated 16.11.2021 under
Section 21 of the Act seeking appointment of the arbitrator.
2.5 The respondent filed an application under Section 9 of the Act
before this Court seeking handing over the complete surveillance
operations of all the towers. The application was allowed on
29.11.2021 with a direction to the petitioner to hand over the
operations. On an application filed under Section 11(6) of the Act, this
Court appointed the sole arbitrator. The petitioner raised the following
claims:
S. No. Claim Amount (Rs.)
1. Amount due in respect of the 16,56,43,912/-
security/surveillance services provided
from 1.1.2019 to 31.3.2021 for various
mobile towers owned by the
Respondent in Maharashtra Circle
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2. Damages on account of loss of 5,00,00,000/-
reputation, goodwill and business
3. Amount towards interest on pendency 5,57,16,595/-
of invoices from January, 2019 to
March, 2021
4. Amount due towards GST To be
ascertained
5. Amount due towards differential in the 22,81,09,198/-
minimum wages of the manpower
provided during the currency of the
Agreement dated 18.02.2019 in
Maharashtra, Haryana, Delhi/NCR and
UP (West) circles
6. Amount due and owned by the 88,14,330/-
Respondent on account of Gratuity of
Manpower provided during the
currency of the Agreement dated
18.02.2019 in Maharashtra, Haryana,
Delhi/NCR and UP (West) circles
2.6 The arbitrator framed the following issues:
“1. Whether the number of sites for which security and
surveillance was provided by the Claimant was
progressively reduced to 90 by December, 2021, as is
alleged by the Respondent and if so from which date,
how many sites were reduced? OPR
2. To what amount if any the Claimant is entitled form
the Respondent for the security / surveillance services
rendered by it? OPC
3. To what amount, if any, the Claimant is entitled
towards interest on the pendency of invoices from
January, 2019 to March, 2021?
4. To what amount, if any, the Claimant is entitled as
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damages on account of the alleged loss of reputation,
goodwill and business? OPC
5. Whether the Claimant, in the event of an Award being
made in its favour is entitled to GST and if so to what
amount? OPC
6. In the alternative, to what amount if any, the Claimant
is entitled from the Respondent, towards differential in
the minimum wages and (ii) gratuity of the manpower
provided by it during the currency of the Agreement
dated 18.2.2019?”
2.7 Issue Nos. 1 and 6 were decided against the petitioner. Issue
Nos. 2 to 5 were dismissed in view of the findings recorded on Issue
Nos. 1 and 6. The petitioner was directed to pay the costs of
arbitration to the respondent, to be computed as per the bill of costs
filed. Hence, the present petition.
SUBMISSIONS OF THE PARTIES
3. Learned senior counsel for the petitioner submits that the
arbitrator erred in shifting the onus on the petitioner to prove that
services were rendered at 978 sites. The argument is that while
framing the issues, the onus was rightly placed on the respondent to
prove that the number of sites for providing security and surveillance
services were reduced to 90 by December, 2021. It is canvassed that
the arbitrator discarded the handing over and taking over forms
substantiating the handing over of 978 sites and erred in holding that
the petitioner had failed to prove that it rendered services at 978 sites.
3.1 The contention is that the arbitrator recorded contrary findings
in the award. On one hand, it is held that the payment to the petitioner
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was to be made on-site basis while in the same breath, the claim for
payment in accordance with Schedule II on-site basis was rejected.
The submission is that award is patently illegal, perverse and passed
by ignoring the relevant evidence. It is emphasised that the arbitrator
recorded an admission of the respondent that initially the services
were provided at 978 sites and there was no written intimation for
reduction in the number of sites, yet the claim was rejected.
3.2 The submission is that the raising of invoices for a lesser
number of sites was on the directions of the respondent and cannot be
construed as an admission by the petitioner that the number of sites
was reduced. The defence that the portal was not accepting invoices
without the approval of the respondent was ignored. Contention is that
after signing of the MoUs format of the invoices was changed by the
respondent to reflect the reduction in manpower and its financial
impact.
3.3 The learned counsel of the petitioner has not pressed the issue
of rejection of the alternative claim for payment on the basis of
revised minimum wages.
4. Per contra, the petitioner had set up a claim for payment on the
basis of the difference in revised minimum wages and gratuity of the
workmen as is evident from the statement of claim and the legal notice
served. The submission is that the petitioner failed to prove that the
payment was to be made on-site basis and for this reason a claim was
raised for the difference in revised minimum wages.
4.1 It is argued that it is not a case where payment for the services
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rendered at the sites depicted in the invoices was not made. It is
emphasised that the petitioner cannot seek payment for the sites where
no services were rendered. Section 58 of the Indian Evidence Act,
1872 (for short „the Evidence Act‟) is relied upon to contend that the
raising of the invoices tantamounts to an admission of having rendered
services only at the sites shown in the invoices. It is vehemently
contended that having entered into a new agreement on 30.04.2021
without insisting on the previous dues, the petitioner has waived the
right to raise the dispute regarding payment for sites not included in
invoices and is estopped from doing so.
4.2 Sections 91 and 92 of the Evidence Act are relied upon in
support of the proposition that documentary evidence has precedence
over oral evidence. The submission is that the arbitrator rightly has not
relied upon the oral evidence stating that the surveillance services
were rendered at the sites beyond those reflected in the invoices. It is
argued that as per the MoU dated 04.06.2019, Rs.60,000/- per
manpower transition were paid by the respondent towards final
settlement and the reduction in manpower resulted in a reduction in
the number of sites. The argument is that the execution of the MoUs
was sufficient compliance of Clause 1.6 of the service agreement to
reduce the number of sites.
4.3 Learned counsel relies upon the decisions of the Supreme Court
in Kwality Manufacturing Corporation v. Central Warehousing
Corporation, (2009) 5 SCC 142, Navodaya Mass Entertainment Ltd.
v. J.M. Combines, (2015) 5 SCC 698 and Delhi Airport Metro
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Express (P) Ltd. v. DMRC, (2022) 1 SCC 131 to contend that under
Section 34 of the Act, there cannot be re-appreciation of evidence. The
decisions of the Supreme Court in Associate Builders v. DDA, (2015)
3 SCC 49 and Rashtriya Ispat Nigam Ltd. v. Dewan Chand Ram
Saran, (2012) 5 SCC 306 are relied upon to buttress the contention
that a plausible view taken by the arbitrator warrants no interference.
Ssangyong Engineering and Construction Co. Ltd. v. NHAI, (2019)
15 SCC 131, State of Chhattisgarh v. Sal Udyog (P) Ltd., (2022) 2
SCC 275 and Venture Global Engineering LLC v. Tech Mahindra
Ltd., (2018) 1 SCC 656 are cited for the proposition that an erroneous
application of law is not covered under patent illegality and the
remedy under Section 34 of the Act is not that of an appeal and the
merits cannot be re-examined.
5. In rebuttal, learned senior counsel for the petitioner submits that
no plea of estoppel or waiver was raised before the arbitrator.
Moreover, under Clause 15.3 of the service agreement the waiver
could only be in writing and has to be signed by an authorised
representative of the waiving party. It is submitted that the MoU dated
04.06.2019 did not reduce the number of sites.
6. Heard learned counsel for the parties at length and perused the
relevant record with their able assistance. No issue other than those
noted above was pressed.
RELEVANT CONTRACTUAL TERMS
7. Before proceeding further, it would be apposite to reproduce the
relevant clauses of the service agreement and the relevant portions of
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Schedules I and II thereof:
“1. SERVICES – Scope & Purpose:
1.1 In consideration of Service Provider agreeing to be
bound by the covenants herein and discharging the
obligations hereunder, ATC engages Service Provider to
provide Services as per specifications and scope per
Schedule 1 in such manner and on such terms and
conditions as are contained herein.
1.4 This Agreement shall mean and include the main
agreement and all the Schedules 1 to 6 appended hereto.
However, in the event of any conflict between the main
agreement and the schedules, the provisions of the main
8.
agreement shall prevail.
9.
1.6 ATC shall be entitled to change the Scope of Work
and/or the number of sites on which the Services are
required vide a written intimation, at any time during the
Term of this Agreement.
2. CONSIDERATION:
2.1 In consideration of the Services to be provided by
the Service Provider and performance of the terms and
conditions contained in this Agreement, ATC shall pay to
Service Provider all inclusive fees (unless otherwise
stated) as detailed in Schedule 2 hereunder written.
10.
3. TERM
This Agreement shall be deemed to have come into force
with effect from 1st January 2019 (the “Commencement
Date”) and it shall be valid for a period of 2 (two) years
(the “Contractual Period” or “Term”) upto 31st
December 2020 (the “End Date”). The parties may upon
mutual agreement, renew the Agreement for such further
term and on such terms and conditions, as the parties may
deem fit and agree, subject to earlier termination in terms
of Clause 10.
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15.3 Waiver
No waiver of any breach of any provision of this
Agreement shall constitute a waiver of any prior,
concurrent or subsequent breach of that provision or any
other provision of this Agreement. No waiver shall be
effective unless made in writing and signed by an
authorized representative of the waiving Party.
SCHEDULE 1
Scope of work (Services)
1. The Service Provider shall provide Surveillance
Services (Services) at the designated ATC Sites, based on
the information/request/requirements spelt out by ATC
Circle O&M.
SCHEDULE 2
Prices and Validity
1. In consideration of the services to be provided by
the Service Provider, ATC will pay the service provider
fees as mentioned in the table below:
Sr Basis Site Count Rate (INR) Per
No. Site Per Month
1 Surveillance 978 12152/-
Services
(Maharashtra)
2 Surveillance 27 42943/-
Services
(UPW)
3 Surveillance 57 10257/-
Services (HP)
4 Surveillance 3 39342/-
Services
(Haryana)
5 Surveillance 14 50781/-
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Services
(Delhi/NCR)
The said fee shall be exclusive of GST."
ISSUE FOR DETERMINATION
8. The issue is whether the petitioner is entitled to payment for
978 sites in terms of the service agreement or the payment is to be
restricted to the number of sites for which the invoices were raised?
ANALYSIS
9. The service agreement was for services to be provided in
various States but the present dispute pertains only to the Maharashtra
Circle. The arbitrator proceeded to decide Issue No. 6 relating to the
alternative claim at the first instance. Though the findings on Issue
No. 6 rejecting the alternative claim are not under challenge, but have
a bearing on the adjudication of Issue No. 1.
10. While rejecting the alternative claim for differential minimum
wages and gratuity of the employees, the arbitrator held that the
service agreement provided for payment of fixed monthly charges for
the sites and the obligation to comply with labour laws including the
liability arising from revision of minimum wages was of the
petitioner. It was also observed that none of the invoices was raised by
the petitioner on the basis of the minimum wages of the workers. The
relevant observations in the award are reproduced below:
“40. Thus, the Claimant has not pleaded any agreement
between the parties making the Respondent contractually
liable to pay the prescribed minimum wages to theSignature Not Verified
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workers. The Agreement Dated 18.2.2019 provides for
payment of fixed monthly charges to the Claimant for the
sites served by it and places the onus to comply with
labour laws etc. upon the Claimant. None of the invoices
was raised by the claimant on the basis of the minimum
wages of the workers. The amount of the invoices does
correspond to the computation based on the wages
mentioned in the 2nd Addendum, but not to the
computation based on the prevailing minimum wages.
Therefore, any attempt to prove that the Respondent, while
executing the Agreement Dated 18.2.2019 had agreed to
pay minimum wages of the workers to the Claimant is
liable to be rejected, the same being beyond the pleadings
and otherwise hit by Section 91 / 92 of the Evidence Act,
1872……”
(Emphasis supplied)
11. The factual background would be pertinent. There was an
agreement for providing surveillance and security services executed
on 18.04.2018 between the petitioner and ICISL. By share transfer
ICISL became a wholly owned subsidiary of AISPL. During the
merger and taking over proceedings, the workers of various contractor
including the petitioner raised an industrial dispute and vide order
dated 18.06.2018, Labour Commissioner (Central) Pune noted that
ICISL being the principal employer assured continuity of service of
the workmen and payment of gratuity. The service agreement was
executed between the petitioner, the respondent and AISPL.
Subsequently, AISPL w.e.f. 27.09.2019 merged into respondent
pursuant to a scheme of amalgamation sanctioned by the NCLT,
Mumbai.
12. The MoUs for optimisation of the manpower deployed were
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executed between the petitioner and the respondent on 04.06.2019 and
between the petitioner and AISPL on 01.08.2019. Another agreement
was executed between the parties on 23.06.2020 for providing
Operation and Maintenance Services (for short „O&M agreement‟).
After the completion of term of the agreement in question the parties
to the lis executed a fresh service agreement dated 30.04.2021. This
agreement came into effect on 01.04.2021 and thereunder the payment
was to be made on the basis of the personnel employed.
13. It would be apposite to note that the arbitrator recorded the
admission of the respondent that the number of sites for providing the
services was not reduced by way of written instruction to the
petitioner. The relevant portion is reproduced below:
“54…. Admittedly, the Respondent did not specifically
reduce the number of sites for which surveillance services
were to be provided, by way of written instructions to the
Claimant….”
14. It is undisputed that till June, 2019 the petitioner provided
services for 978 sites and the payment was made in accordance with
Schedule II of the service agreement. The case set up by the petitioner
that the fixed amount agreed under the agreement was to be paid and
could not be reduced, was rejected relying upon Clause 1.6 of the
service agreement. Under Clause 1.6 of the service agreement the
respondent could change the number of sites by a written intimation
and this admittedly was not done.
15. Clause 2.1 of the service agreement provides that payment to
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the service provider shall be of all inclusive fee detailed in Schedule
II. The number of sites in Schedule II are 978 and Rs.12,152/- per site
per month is to be paid. Under Clause 1.6 of the service agreement,
the number of sites can be reduced by the respondent by a written
intimation.
16. From a reading of Clause 1.6, 2.1 and Schedule II of the service
agreement, the only possible interpretation is that the petitioner was to
provide services for 978 sites in the State of Maharashtra and was to
be paid all inclusive amount of Rs.1,18,84,429/-, calculated at the rate
of Rs.12,152/- per site per month. The respondent under Clause 1.6 of
the service agreement could reduce the number of sites but only by a
written intimation to the petitioner. The invoking of Clause 1.6 of the
service agreement for reducing the number of sites would have altered
Schedule II vis-Ã -vis the number of sites thereby affecting the amount
payable.
17. The question that arises is whether the respondent reduced the
978 sites in the State of Maharashtra by invoking Clause 1.6 of the
service agreement?
18. It is an admitted fact that the sites were not reduced by the
respondent by written intimation to the petitioner. The case of the
respondent is that by execution of the MoUs for optimization of
deployed manpower the number of sites were reduced. From perusal
of the MoUs, it is evident that there is no mention of reduction of the
number of sites and it cannot be construed to be a written intimation to
the petitioner for reduction in the number of sites. The contention of
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learned counsel for the respondent that consequent to reduction in
manpower in compliance of terms of the MoUs, the petitioner was not
in a position to render services at 978 sites, is noted to be rejected. The
change in circumstance could have form the basis for invoking Clause
1.6 of the service agreement, which admittedly was not done.
19. The contention that the petitioner had not rendered services at
all 978 sites does not enhance the case of the respondent. It is
important to note that the power to reduce the number of sites vested
only with the respondent and there is no clause enabling the petitioner
to reduce the number of sites.
20. Another aspect is that the respondent neither initiated any
proceedings against the petitioner for not providing services at the
sites mentioned in Schedule II of the agreement nor terminated the
agreement for violation of its terms.
21. The argument of learned counsel for the respondent that full and
final payment of Rs.60,000/- was paid per resource removed, is of no
avail. The payment made was not for services rendered but for full and
final settlement with the employee removed and had no impact on the
consideration to be paid under the service agreement. The other aspect
is that the arbitrator held that payment to the petitioner was to be made
on-site basis and not for the manpower deployed and this is not
challenged by the respondent.
22. The respondent failed to prove reduction in the number of sites
and the arbitrator erred in shifting the onus on the petitioner to prove
that services were rendered at all 978 sites. The law is well settled that
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the party raising an assertion bears the burden of proving it and a
negative burden cannot be cast upon the opposite party. Reference in
this regard be made to the following decisions:
22.1 The Supreme Court in Bonatrans India (Pvt.) Ltd. v.
Bonatrans Employees Union, MANU/SC/0430/2026 held:
“7. Ei incumbit probation qui dicit, non qui negat translates
to ‘the burden of proof lies on the one who asserts, not on
the one who denies’. Section 104 of the Bharatiya Sakshya
Adhiniyam, 20237 (former Section 101 of the Indian
Evidence Act, 18728) embodies this principle by ordaining
on whom the burden of proof lies. Although the BSA, or
for that matter the Evidence Act, does not strictly apply to
adjudication under the MRTU & PULP Act, he who
asserts must prove is the cardinal rule of evidence which
admits of no exception and extends to all forms of
adjudication.”
22.2 The Supreme Court in Shriram Chits (India) Pvt. Ltd. earlier
known as Shriram Chits (K) Pvt. Ltd. v. Raghachand Associates,
2024 INSC 403 held:
“20……The onus of proving that the person falls within
the carve out must necessarily rest on the service provider
and not the complainant. This is in sync with the general
principle embodied in Section 101 and 102 of the Evidence
Act that „one who pleads must prove‟. Since it is always
the service provider who pleads that the service was
obtained for a commercial purpose, the onus of proving the
same would have to be borne by it. Further, it cannot be
forgotten that the Consumer Protection Act is a consumer-
friendly and beneficial legislation intended to address
grievances of consumers. Moreover, a negative burden
cannot be placed on the complainant to show that the
service available was not for a commercial purpose.”
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22.3 The Division Bench of this Court in Indian Oil Corpn. Ltd. v.
Standard Casting (P) Ltd., 2025 SCC OnLine Del 8393 held:
“37. It is a settled principle of law that a party claiming
damages must, at the very least, lay the foundational
pleading and provide some evidence to show the
occurrence of loss or the basis for claiming compensation.
IOCL has failed to discharge even this elementary
obligation. The absence of any such pleading or proof
renders its claim wholly speculative. The law does not
permit a party to seek damages as a matter of course or to
cast a negative burden on the opposite party to prove that
no loss was caused.
38. Unless the claimant first establishes a prima facie case
of loss, no question arises of calling upon the other side to
disprove it. Therefore, in the absence of even the minimal
factual foundation or supporting evidence, IOCL’s claim
for damages stands on untenable grounds, and the learned
District Court was fully justified in setting aside the
Arbitral Awards.”
(Emphasis supplied)
23. The raising of invoices from July, 2019 onwards for
progressively lesser sites was treated as an admission by the petitioner
that services were rendered only at those sites, albeit the same was
agitated by the petitioner. The reliance of the respondent upon Section
58 of the Evidence Act to contend that the invoices issued was an
admission of the petitioner that the services were rendered at such
sites only, has no merit. The payment to the petitioner was to be made
on a site basis and Schedule II of the service agreement specified 978
sites which admittedly were not reduced in terms of Clause 1.6 of the
service agreement. The invoices will not dispense with the obligation
of the respondent to prove reduction of sites in accordance with
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Clause 1.6 of the service agreement.
24. Sections 91 and 92 of the Evidence Act relied upon for the
proposition that documentary evidence prevails over oral evidence is
not applicable to the facts of the present case. The petitioner was not
required to adduce evidence to substantiate that it had provided
services at 978 sites, especially when the respondent had failed to
discharge the initial onus of proving that the number of sites were
reduced.
25. The reliance placed by learned counsel for the respondent on
Sections 58, 91 and 92 of the Evidence Act is of no help. It is settled
law that the rigours of the Evidence Act do not strictly apply to
arbitral proceedings. Even otherwise, this is not a case of admission
and the onus was not on the petitioner to prove that it had provided
services at 978 sites, rather the respondent had to discharge the onus
of proving that the number of sites were reduced.
26. The accounting method adopted by the petitioner and failure to
reflect the outstanding amount in books of account would not be fatal
to the claim raised. The claim is to be determined in terms of the
service agreement and not on the basis of the outstanding amount
reflected in the books of account.
27. The reliance on the O&M agreement to contend that there was
reduction in the manpower is of no avail. The agreement was for
operation and maintenance services and not for surveillance. The
scope of the agreement was to undertake preventive maintenance,
breakdown maintenance and fault management of the electrical
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infrastructure equipment listed therein and the payment was to be
made on the basis of per diesel generator set at the site.
28. There are contradiction in the impugned award. The arbitrator
held that the payment was to be made on-site basis and at the same
time observed that the petitioner was conveyed by the respondent vide
email dated 27.08.2019 that the payment would be made on the basis
of the manpower retained after optimisation of the resources in terms
of the MoUs.
29. The arbitrator took into account that the amount claimed by the
petitioner was increasing with every passing month yet the parties
executed the O&M agreement dated 23.06.2020 and a fresh service
agreement dated 30.04.2021, without the petitioner insisting upon
clearance of the outstanding dues. The conduct was taken into
consideration to hold that the petitioner had no grievance with the
payment received. The arbitrator had to go by the terms and
conditions agreed between the parties and cannot judge the business
prudence of the petitioner.
30. The argument of learned counsel for the respondent that the
petitioner had waived the right to raise the dispute and was estopped
from doing so was not pressed before the arbitrator.
31. Be that as it may, the principles of waiver and estoppel cannot
be invoked merely on failure or omission to raise the issue. For
invoking estoppel there has to be a representation with the intention
that it be acted upon by the other party; the representation must be
relied upon and the other party should alter its position. Reference be
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made to the following decisions of the Supreme Court:-
31.1 In Kalpraj Dharamshi v. Kotak Investment Advisors Ltd.,
(2021) 10 SCC 401 it was held:
“121. It has been held, that a waiver cannot always and in
every case be inferred merely from the failure of the party
to take the objection. Waiver can be inferred, only if and
after it is shown that the party knew about the relevant
facts and was aware of his right to take the objection in
question. The waiver or acquiescence, like election,
presupposes, that the person to be bound is fully cognizant
of his rights, and that being so, he neglects to enforce
them, or chooses one benefit instead of another.
122. As such, for applying the principle of waiver, it will
have to be established, that though a party was aware about
the relevant facts and the right to take an objection, he has
neglected to take such an objection.
*** *** *** ***
127. Thus, for constituting acquiescence or waiver it must be
established, that though a party knows the material facts
and is conscious of his legal rights in a given matter, but
fails to assert its rights at the earliest possible opportunity,
it creates an effective bar of waiver against him. Whereas,
acquiescence would be a conduct where a party is sitting
by, when another is invading his rights. The acquiescence
must be such as to lead to the inference of a licence
sufficient to create a new right in the defendant. Waiver is
an intentional relinquishment of a right. It involves
conscious abandonment of an existing legal right,
advantage, benefit, claim or privilege. It is an agreement
not to assert a right. There can be no waiver unless the
person who is said to have waived, is fully informed as to
his rights and with full knowledge about the same, he
intentionally abandons them.”
31.2 In Chhaganlal Keshavlal Mehta v. Patel Narandas Haribhai,
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(1982) 1 SCC 223 it was held:
“23. To bring the case within the scope of estoppel as
defined in Section 115 of the Evidence Act : (1) there must
be a representation by a person or his authorised agent to
another in any form — a declaration, act or omission; (2)
the representation must have been of the existence of a fact
and not of promises de futuro or intention which might or
might not be enforceable in contract; (3) the representation
must have been meant to be relied upon; (4) there must
have been belief on the part of the other party in its truth;
(5) there must have been action on the faith of that
declaration, act or omission, that is to say, the declaration,
act or omission must have actually caused another to act
on the faith of it, and to alter his former position to his
prejudice or detriment; (6) the misrepresentation or
conduct or omission must have been the proximate cause
of leading the other party to act to his prejudice; (7) the
person claiming the benefit of an estoppel must show that
he was not aware of the true state of things. If he was
aware of the real state of affairs or had means of
knowledge, there can be no estoppel; (8) only the person to
whom representation was made or for whom it was
designed can avail himself of it. A person is entitled to
plead estoppel in his own individual character and not as a
representative of his assignee.”
(Emphasis supplied)
32. The existence of pre-requisites of estoppel were neither pleaded
nor proved.
33. Every failure to raise an objection or to assert right cannot lead
to an inference of waiver. It must be established that the petitioner was
aware of its right to object yet consciously chose not to raise the issue.
The party pleading waiver has to prove it but no evidence was
produced by the respondent in this regard.
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34. There is no quarrel with the propositions propounded, supported
by the case laws cited by learned counsel for the respondent that under
Section 34 of the Act there cannot be re-appreciation of evidence,
court cannot sit in appeal to correct every factual or legal error and a
plausible view cannot be interfered. However, it is trite law that an
award passed by ignoring the relevant clauses or beyond the terms and
conditions agreed between the parties suffers from patent illegality
and is a ground for interference under Section 34 of the Act.
Following decisions of the Supreme Court are referred to:
34.1 In Delhi Metro Rail Corporation Ltd. V. Delhi Airport Metro
Express Pvt. Ltd., 2024 INSC 292 it was held:
“38. In Associate Builders vs. Delhi Development
Authority, a two-judge Bench of this Court held that
although the interpretation of a contract is exclusively
within the domain of the arbitrator, construction of a
contract in a manner that no fair-minded or reasonable
person would take, is impermissible. A patent illegality
arises where the arbitrator adopts a view which is not a
possible view. A view can be regarded as not even a
possible view where no reasonable body of persons could
possibly have taken it. This Court held with reference to
Sections 28(1)(a) and 28(3), that the arbitrator must take
into account the terms of the contract and the usages of
trade applicable to the transaction. The decision or award
should not be perverse or irrational. An award is rendered
perverse or irrational where the findings are (i) based on
no evidence; (ii) based on irrelevant material; or (iii)
ignores vital evidence. Patent illegality may also arise
where the award is in breach of the provisions of the
arbitration statute, as when for instance the award contains
no reasons at all, so as to be described as unreasoned. A
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result in a patent illegality, where for instance the
arbitrator has let in evidence behind the back of a party. In
the above decision, this Court observed:
“31. The third juristic principle is that a decision
which is perverse or so irrational that no
reasonable person would have arrived at the same
is important and requires some degree of
explanation. It is settled law 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.
…
42.2. (b) A contravention of the Arbitration Act
itself would be regarded as a patent illegality —
for example if an arbitrator gives no reasons for
an award in contravention of Section 31(3) of the
Act, such award will be liable to be set aside.”
(emphasis supplied)
*** *** *** ***
40. 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
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without reasons would suffer from patent illegality. The
arbitrator commits a patent illegality by deciding a matter
not within his jurisdiction or violating a fundamental
principle of natural justice.”
34.2 In Indian Oil Corpn. Ltd. v. Shree Ganesh Petroleum
Rajgurunagar, (2022) 4 SCC 463 it was held:
“43. An Arbitral Tribunal being a creature of contract, is
bound to act in terms of the contract under which it is
constituted. An award can be said to be patently illegal
where the Arbitral Tribunal has failed to act in terms of the
contract or has ignored the specific terms of a contract.
*** *** *** ***
45. The Court does not sit in appeal over the award made
by an Arbitral Tribunal. The Court does not ordinarily
interfere with interpretation made by the Arbitral Tribunal
of a contractual provision, unless such interpretation is
patently unreasonable or perverse. Where a contractual
provision is ambiguous or is capable of being interpreted
in more ways than one, the Court cannot interfere with the
arbitral award, only because the Court is of the opinion
that another possible interpretation would have been a
better one.”
34.3 In SAL Udyog (P) Ltd. (supra) it was held:
“26. ………. We are, therefore, of the view that failure on
the part of the learned sole arbitrator to decide in
accordance with the terms of the contract governing the
parties, would certainly attract the “patent illegality
ground”, as the said oversight amounts to gross
contravention of Section 28(3) of the 1996 Act, that
enjoins the Arbitral Tribunal to take into account the terms
of the contract while making an award. The said “patent
illegality” is not only apparent on the face of the award, it
goes to the very root of the matter and deserves
interference……”
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34.4 In Bharat Coking Coal Ltd. v. Annapurna Construction,
(2003) 8 SCC 154 it was held:
“22. There lies a clear distinction between an error within
the jurisdiction and error in excess of jurisdiction. Thus,
the role of the arbitrator is to arbitrate within the terms of
the contract. He has no power apart from what the parties
have given him under the contract. If he has travelled
beyond the contract, he would be acting without
jurisdiction, whereas if he has remained inside the
parameters of the contract, his award cannot be questioned
on the ground that it contains an error apparent on the face
of the record.”
(Emphasis Supplied)
Conclusion
35. In view of the above, it is concluded:-
i) The respondent failed to prove that the number of sites was
reduced in terms of Clause 1.6 of the service agreement and the
arbitrator erred in shifting the onus upon the petitioner to prove that
services were rendered at all 978 sites.
ii) The MoUs pertained to optimisation of manpower and were not
written intimations for reduction of sites under Clause 1.6 of the
service agreement.
iii) The reliance upon the e-mail dated 27.08.2019 to hold that the
petitioner was conveyed that payment would be based on manpower
deployed after optimisation of the resources in terms of MoUs is
contrary to the finding of arbitrator that payment was to be made on-
site basis
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iv) The pre-requisites for invoking estoppel and waiver were
neither pleaded nor proved moreover, these issues were not raised
before the arbitrator.
v) The impugned award travels beyond the terms of the service
agreement and is patently illegal.
36. The petition is allowed. The impugned award is set aside. All
pending applications are disposed of.
AVNEESH JHINGAN, J
AUGUST 3, 2026
Ch
Reportable:- Yes
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