Delhi High Court
Delhi Tourism & Transportation vs M/S Gammon India Ltd on 21 April, 2026
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: 16.03.2026
Judgment pronounced on: 21.04.2026
+ O.M.P. (COMM) 531/2016
DELHI TOURISM & TRANSPORTATION DEVELOPMENT
CORPORATION .....Petitioner
Through: Mr. Prashanto Chandra Sen, Sr.
Adv. with Mr. Sriharsha
Peechara, Mr. Soumit Ganguli,
Ms. Rajlakshmi Singh, Ms.
Vanisha Mehta, Ms. Ravicha
Sharma, Ms. Shruti Agarwal &
Mr. Akash Sharma, Advs.
versus
M/S GAMMON INDIA LTD .....Respondent
Through: Mr. Ashish Dholakia, Sr Adv.
with Mr. Saurabh Suman Sinha,
Mr. Gautam Prabhakar, Mr.
Yash Bhatnagar & Ms. Ananya
Narain, Advs.
CORAM:
HON'BLE MR. JUSTICE HARISH VAIDYANATHAN
SHANKAR
JUDGMENT
HARISH VAIDYANATHAN SHANKAR, J.
1. The present Petition, filed under Section 34 of the Arbitration
and Conciliation Act, 19961, seeks to set aside the Majority
Arbitral Award dated 12.12.20132, passed in the Arbitral proceeding
undertaken by a three-member Arbitral Tribunal.
1
Act
2
Impugned Award
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 1 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
2. The said Arbitral Tribunal comprised of Er. Basab Majumdar,
learned presiding Arbitrator, along with Er. K.N. Agrawal and Er.
K.K. Varma, learned Arbitrators, in the Arbitral proceeding titled
“M/s Gammon India Limited and Delhi Tourism and Transport
Development Corporation”.
3. The Impugned Award has been rendered by a majority of the
Arbitral Tribunal comprising Sh. Er. Basab Majumdar and Sh.
Er. K.N. Agrawal3. The third member of the Arbitral Tribunal, Sh.
Er. K.K. Varma has rendered a separate dissenting opinion.
4. The controversy before the learned Arbitral Tribunal centred
primarily on the interpretation of contractual clauses governing the
parties, along with ancillary monetary claims, including claims for
interest, which were consequential to such interpretation.
BRIEF FACTS:
5. The Delhi Tourism and Transportation Development
Corporation [“DTTDC”]4, an Undertaking of the Government of the
National Capital Territory of Delhi, issued a Notice inviting Tender5
for the construction of bridge and its approaches, over the
Yamuna River downstream of existing Bridge at Wazirabad,
Delhi6.
6. M/s Gammon India Limited7, a civil construction company,
submitted its bid, in pursuance of the said NIT, on 10.03.2008.
3
Learned Majority Tribunal
4
Petitioner
5
NIT
6
Project
7
Respondent
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 2 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
7. The Respondent emerged as the successful bidder and was
accordingly issued an Acceptance Letter for the Tender vide Letter
No. DTTDC/23(202)/Engg./WB/2008/1887 dated 27.05.20088,
pursuant to which Agreement dated 19.06.2008, bearing No.
03/DTTDC/Engg./WB/2008-099, came to be executed between the
Petitioner and the Respondent.
8. The Contract comprised four volumes, including Conditions of
the Contract contained therein, particularly, Section D, Chapter 2 of
Volume 1 of the Tender Documents [“General Conditions of the
Contract”]10, which sets out the definitional framework. Definition
No. 1 categorically enumerates the various documents forming part of
the contract, inter alia, the documents forming part of the Tender and
the Acceptance Letter.
9. It is the case of the Petitioner that the said project was
structured into distinct components, and each component was further
divided into three milestones, each component having a fixed
stipulated date of completion, with overall completion of the project
being fixed at 42 months from the date of start.
10. The said timelines are reflected in Clause 5 of the GCC, read
along with Schedule „F‟ to the GCC, which prescribes milestone-
based completion periods for the various components of the project.
The three components of the project, as set out, are as follows:
I. Straight flyover along the outer ring road on the Western side.
a. Foundation-12 Months
b. Sub-Structure- 15 Months
8
Acceptance Letter
9
Contract
10
GCC
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 3 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
c. Super Structure- 24 Months
II. Flyover at Khajuri Khas intersection on the Eastern side.
a. Foundation-15 Months
b. Sub-Structure- 18 Months
c. Super Structure- 30 Months
III. Remaining Grade Separators.
a. Foundation – 24 Months
b. Sub-Structure – 27 Months
c. Super Structure – 42 Months
IV. Main Embankment. – The complete earthwork, including
subgrade, shall be completed within 24 months.
11. It is stated that the Petitioner engaged in discussions with the
Respondent with regard to the milestones as provided for in the
Contract and as stated hereinabove.
12. Pursuant to discussions, the Respondent vide a Letter dated
19.03.2008, assured the Petitioner that the milestones for each Super-
Structure as stated in Clause 5 of the GCC will be adhered to, whereas
the intermediate milestones of Foundation and Sub-Structure will be
modified.
13. The Contract also contains Clause 10CC, which provides for
escalation on account of an increase or decrease in prices of materials
and wages. The said clause stipulates that escalation is payable for
work executed during the “stipulated period of completion”, including
any justified extension thereof, subject to the condition that for work
executed during the extended period, the escalation would be
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 4 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
computed at the rates prevailing at the stipulated date of completion or
the actual period of execution, whichever is lower.
14. Disputes arose between the parties with respect to the
interpretation of the expression “stipulated period of completion”
under Clause 10CC, particularly as to whether the same was to be
construed with reference to the project as a whole or component-wise.
15. In order to adjudicate upon the said dispute, the Respondent
vide Legal Notice dated 21.02.2013 invoked the Arbitration Clause as
contained in Clause 25 of the GCC.
16. The Chief Engineer, DTTDC, by virtue of the powers conferred
on him under Clause 25 of the said Agreement, appointed the
aforementioned Arbitral Tribunal by Letter dated 04.04.2013, to
adjudicate the claims/disputes between the parties.
17. The primary claim before the learned Arbitral Tribunal was
Claim No. 1 of the Statement of Claims i.e., Escalation payment not
being paid as per Clause 10CC of the Agreement for the work done
during original contract period due to difference in interpretation of
Clause 10CC by DTTDC and GIL, while the other claims were
ancillary claims which hinged upon the determination of the claim No.
1 itself i.e., the pendente lite interest, future interest and the costs of
Arbitration.
18. The learned Arbitral Tribunal rendered a 2:1 award, with the
majority Award being in favour of the Respondent, and the dissenting
opinion being in favour of the Petitioner.
19. The Majority awarded the Respondent an amount of Rs.
1,22,80,984/- along with pendente lite interest @10% per annum,
calculated as simple interest, from 21.02.2013 till the date of the
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 5 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
award. In addition, the learned Arbitral Tribunal also awarded simple
interest @10% per annum from the date of award till the date of
payment in respect of the principal amount of the award, with the
provision that no future interest would be payable if the awarded
amounts are paid within three months after the date of award.
20. The Petitioner, aggrieved by the said Majority award, i.e., the
Impugned Award, has preferred the present Petition to set aside the
Award on the grounds, inter alia, on the ground that the Award is
contrary to the terms of the Contract and suffers from patent illegality.
CONTENTIONS ON BEHALF OF THE PETITIONER:
21. Learned senior counsel appearing on behalf of the Petitioner
would, at the outset, submit that the Impugned Award is vitiated by
patent illegality and perversity, inasmuch as the learned Majority
Tribunal has adopted an interpretation of the contractual provisions
which is contrary to the express terms of the Contract, ignores the
contractual framework in its entirety, and leads to manifestly
unreasonable and unworkable consequences.
22. Learned senior counsel for the Petitioner would submit that the
Impugned Award, being rendered prior to the 2015 Amendment, is
liable to be tested within the contours of „public policy of India‟ as
expansively interpreted by judicial precedents.
Erroneous Interpretation of Clause 10CC
23. Learned senior counsel would submit that the present dispute
lies in a narrow compass and turns entirely upon the interpretation of
Clause 10CC of the GCC, specifically the expression “stipulated
period of completion”.
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 6 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
24. Learned senior counsel would submit that the learned majority
Tribunal has fundamentally erred in construing the said expression to
mean the overall project completion period of 42 months, instead of
interpreting it component-wise, as envisaged under the Contract.
25. Learned senior counsel would submit that the interpretation
adopted by the learned Majority Tribunal is not a plausible view, but
one that is contrary to the contractual scheme and settled principles of
contractual interpretation. It would be urged that Clause 10CC, when
read harmoniously with the other provisions of the Contract, admits of
only one reasonable interpretation, namely, that the “stipulated period
of completion” must be understood with reference to each component
of the project, and not the project as a whole.
Contractual Scheme envisages a Component-wise Structure
26. In order to substantiate the aforesaid interpretation of Clause
10CC, learned senior counsel for the Petitioner would draw the
attention of this Court to various Clauses of the Contract and the
Tender Documents to contend that the project was consciously
structured into distinct components, each operating independently, and
each envisaging a separate stipulated period of completion.
27. Learned senior counsel for the Petitioner would first draw the
attention of this Court to Schedule F to the GCC. It would be
contended that the Table, as set out in Clause 5 of Schedule F of the
GCC, clearly delineates the project into multiple components and
prescribes distinct timelines for completion of each component and its
sub-stages. The relevant portion of the said table is reproduced herein
under for ready reference:
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 7 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
Milestones
Foundation Sub-Structure Super Structure
Compone Time Amount Time Amount Time Amount
nts of Allow INR in Allow INR in Allow INR in
Work ed in Lakhs to ed in Lakhs to ed in Lakhs to
Month be with- Month be with- Month be with-
s held in s held in s held in
(from case of (from case of (from case of
date of non- date of non- date of non-
start) achievem start) achievem start) achievem
ent of ent of ent of
milestone milestone milestone
I. Straight 12 30.00 15 30.00 24 60.00
flyover
along outer
Ring Road
on the
western
side
II.Flyover 15 30.00 18 30.00 30 60.00
at Khajuri
Khas
Intersectio
n on the
Eastern
side
III.Remain 24 50.00 27 50.00 42 100.00
ing grade
separators
IV.Main Embankment The complete earth work
including subgrade shall be
completed within 24 months
otherwise Rs.200 lakhs will be
withheld.
28. Further, learned senior counsel for the Petitioner would draw
the attention of this Court to Clause 5 of the GCC, to be read with
Schedule F, which, according to him, clearly prescribes separate
milestones and distinct periods of completion. Learned senior counsel
would draw the attention of this Court to a specific portion of Clause 5Signature Not Verified
O.M.P. (COMM) 531/2016 Page 8 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
to contend that time was the essence of this Contract and that it was
not as a singular or indivisible timeline, but as a structured,
component-wise obligation. The relevant portion of Clause 5 is
reproduced herein under for ready reference:
“Clause 5
Time and Extension for delay
The time allowed for execution of the works as specified in the
Schedule „F‟ or the extended time in accordance with these
conditions shall be the essence of the Contract. The execution of
the works shall commence from such time period as mentioned in
Schedule „F‟ or from the date of handing over of the site,
whichever is later. If the Contractor commits default in
commencing the execution of the work as aforesaid, DTTDC shall,
without prejudice to any other right or remedy available in law, be
at liberty to forfeit the earnest money and performance guarantee
absolutely.
**** ”
29. Learned senior counsel for the Petitioner would then rely upon
Paragraph No. 4 of the Acceptance letter dated 27.05.2008 to
reinforce the contention that the Project was always intended to be
completed component-wise in terms of the corresponding period of
completion of each component. It would therefore be submitted that
component-wise execution was not only contractually envisaged but
also expressly communicated between the parties. Further, it would be
submitted that the Acceptance Letter is also stated to form part of the
Contract. The relevant portion of the Acceptance Letter, relied upon
by the Petitioner, is reproduced herein under:
” ***
4. Please note that the time allowed for carrying out the work as
entered in the tender is as under
(a). Twenty Four Months for the main straight flyover along outer
ring road on the western side
(b). Thirty months for flyover at Khajuri Khas intersection on the
Eastern side
(c). Forty Two Months for overall completion
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 9 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
Time period shall be reckoned from the 22 days after the date of
issue of this Letter.”
30. Learned senior counsel for the Petitioner would then draw the
attention of this Court to Clause 2 of the GCC, which provides for the
compensation to the Petitioner, in the event of delay in completion of
work as against the stipulated time period of completion. Learned
senior counsel would contend that Clause 2 specifically contemplates
delays in respect of “items or group of items for which a separate
period of completion has been specified”. Learned senior counsel
would therefore submit that compensation for delayed work was also
stipulated to be calculated component-wise, as per the respective
timelines provided in Schedule F.
31. Learned senior counsel for the Petitioner would next draw the
attention of this Court to Clause 2A of the GCC, which provides for
incentives for early completion. It would be submitted that Clause 2A
also recognises independent timelines for each component by granting
component-wise incentives. A component was to be considered to be
completed early, as per the clause, if the relevant component is ready
for traffic movement, before the stipulated timeline provided for
completion of the component as per Schedule F. Learned senior
counsel would contend that if early completion, and incentives
thereto, is assessed component-wise then its natural corollary is that
completion after the said time period of each component respectively
would be belated completion i.e., in extension period. The said clause
is reproduced herein under for ready reference:
“Clause 2A
Incentive for early completionSignature Not Verified
O.M.P. (COMM) 531/2016 Page 10 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
In case the contractor completes the work ahead of scheduled
completion time as indicated in Schedule „F‟, a bonus shall be
payable to the contractor as indicated below:
(a) Rs. one lakh fifty thousand per day for completing the main
straight flyover along the Outer Ring Road on the western side
earlier than 24 months from the date of start, subject to a
maximum of Rs. 150 lakh.
(b) Rs. one lakh fifty thousand per day for completing the flyover
at Khajuri Khas intersection on the eastern side earlier than 30
months from the date of start, subject to a maximum of Rs. 150
lakh.
The bonus, if payable, in case of (a) and (b) above shall be
paid after completion of the respective flyover.
(c) Rs. two lakh per day for overall completion of the work earlier
than 42 months subject to a maximum of Rs. 500 lakhs.
The amount of bonus, if payable, in case of (c) above shall be
paid after completion of the work as mentioned above.
The completion for this clause shall mean that relevant portion of
work is ready for traffic movement.”
32. Learned senior counsel would thus submit that the contractual
framework unmistakably reflects a component-wise structure, and any
interpretation of Clause 10CC which ignores this framework renders
the Contract internally inconsistent.
Effect of the Interpretation Adopted by the learned Majority Tribunal
33. Learned senior counsel for the Petitioner would submit that
Clause 10CC provides for escalation only up to the stipulated period
of completion, and for work executed during the „justified‟ extended
period, such escalation is stated to be capped at the rates prevailing at
the stipulated date of completion or the actual period of execution,
whichever is lower. The relevant portion of Clause 10CC is
reproduced herein under for ready reference:
“10CC
Payment due to increase/decrease in prices/wages after receipt
of tender for worksSignature Not Verified
O.M.P. (COMM) 531/2016 Page 11 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
If the prices of materials (not being materials supplied or services
rendered at fixed prices by the department in accordance with
clause 10 and 34 thereof) and/or wages of labour required for
execution of the work increase, the contractor shall be compensated
for such increase as per provision detailed below and the amount of
the contract shall accordingly be varied, subject to the condition
that such compensation for escalation in prices and wages shall be
available only for the work done during the stipulated period of the
contract including the justified period extended under the
provisions of Clause 5 of the contract without any action under the
clause 2. However, for the work done during the justified period
extended as above, the compensation as detailed below will be
limited to prices/ wages prevailing at the time of stipulated date of
completion or as prevailing for the period under consideration,
which ever is less. No such compensation shall be P 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 of working out such escalation shall be the
last stipulated date of receipt of tender including extension, if any.
***** ”
34. Learned senior counsel for the Petitioner would contend that the
term „stipulated period of completion‟ must necessarily align with the
component-wise timelines prescribed under Schedule F and as
communicated between the parties in the Acceptance Letter. Any
interpretation treating the entire project as having only a single
completion date defeats the operation of Clause 10CC and results in
the distortion of the escalation mechanism.
35. Learned senior counsel would submit that the interpretation
adopted by the learned Majority Tribunal, therefore, effectively
nullifies the component-wise timelines and renders Clauses 2, 5 and
Schedule F otiose, which is impermissible in law, thereby rendering
the award „patently illegal‟.
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 12 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
Challenge to the Findings on Interpretation by the learned Majority
Tribunal
36. In the aforesaid backdrop, learned senior counsel for the
Petitioner would then proceed to draw the attention of this Court to
the findings and interpretations adopted by the learned Majority
Tribunal. It would be thus contended that the said findings,
particularly those relating to the interpretation of „stipulated period of
completion‟ and Clause 10CC and allied clauses, are contrary to the
express terms of the Contract, disregard the contractual scheme in its
entirety, and consequently suffer from patent illegality warranting
interference under Section 34 of the Act.
37. Learned senior counsel for the Petitioner would, in this regard,
contend that the findings recorded by the learned Majority Tribunal in
Paragraphs D to F of the Impugned Award as being legally untenable
and internally inconsistent. The said Paragraphs are reproduced herein
under for ready reference:
“D. The term ‘Contract’ as defined in clause 1 of Vol.1 of 4 of
contract agreement is that all documents forming the tender and
acceptance thereof taken together shall be deemed to form one
contract. By this definition, stipulated period of the contract can
only mean overall completion of 42 months and stipulated date of
completion is 17.12.2011 which is 42 months after the date of
commencement of 18.06.2008.
E. Secondly, this is a Lump Sum contract with a single Lump Sum
Tendered Value for whole of the contract. Contract does not
provide for separate tendered values for the components. Schedule
of Quantities given in the Annexure-I of the contract gives the
quantities for the contract as a whole and there is no break up for
the quantities of the components. The contract also provides for
stage payments as percentages of lump sum cost in Annexure-III
which is thus only applicable on the contract as a whole and not on
components. AT has noted that the Annexure-I contains only
quantities of main items and not all items of work represented by
the lump sum amount. Therefore, for making interim payments
within the stages set out in the billing schedule, clause 3.38 of theSignature Not Verified
O.M.P. (COMM) 531/2016 Page 13 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
Special Conditions of Contract provides that payments can be
made on the basis of work assessed by the Engineer-in-charge by
considering the quantum of total work involved as per Annexure-I
of Vol.4 of the tender documents and the quantum of work actually
executed at a particular point of time (within that stage) for such
items and a formula prescribed for such assessment is (Y/X)Z.
Where X is equal to value of total work involved as per main items
in a particular stage of billing schedule worked out by multiplying
the total quantity of main items with the rate quoted by the
contractor in Annexure 2 of Vol. 4 of the tender document for all
such main items in a particular stage of billing schedule. Y is equal
to value of work at a point of time as per main items of work
within a particular stage of billing schedule ie. quantity of main
items executed at a point of time multiplied by the rate as per
Annexure 2, for all such items in a particular stage of billing
schedule. Z is equal to amount payable as per billing schedule in a
particular stage of payment as given in Annexure-III.
F. Obviously, this contract provision for interim payments or
Running Account bill payments, as it is generally referred to, is
applicable to the contract as a whole and cannot be made
applicable for any component. Had it been the intention of the
contract to make interim payments component wise, then the
contract would have either provided for separate lump sum
tendered value for the two components apart from the lump sum
value for the work as a whole and would also have specified
separate schedule of quantities of the main items for the
components or separate percentages for stage payments for the
components. In absence of either of the above alternatives, it is
clear that the contract does not provide for any means to make
interim. payments for the components separately. In accordance
with the provisions of clause 10CC, the contractor shall be
compensated for any increase in prices of materials and/or wages
of labour required for execution of the work and the amount of the
contract shall be varied etc. As it is a lump sum contract with single
tendered value, amount of contract mentioned as above in the
clause may only mean the amount of the whole work and not the
amount of any component.”
38. Learned senior counsel, in the context of Paragraph D of the
Impugned Award, would submit that the learned Majority Tribunal
has erred in relying upon the definition of “Contract” to conclude that
the “stipulated period of completion”, and the only period for
completion, is 42 months for the entire project. It would be contended
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 14 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
that the said definition clause merely provides that all the documents
forming part of the tender and its acceptance shall be read together as
constituting one composite contract. Such a provision, it would be
urged, cannot be elevated to determine the substantive and operative
aspects of the Contract, particularly the interpretation of “stipulated
period of completion” under Clause 10CC.
39. Learned senior counsel would further submit that the learned
Majority Tribunal has misconstrued the scope of the definition clause
by reading into it a limitation that the Contract admits of only a single
stipulated period of completion. It would be contended that the
expression “one contract” cannot be equated with “one period of
completion”, particularly when the Contract, read as a whole,
expressly contemplates component-wise execution with distinct
timelines.
40. While it is not disputed that the overall completion period of 42
months governs the outer limit of the project, learned senior counsel
would emphasise that the learned Majority Tribunal has erred in
treating the same as the sole and determinative benchmark for all
purposes, including the operation of Clause 10CC. Such an
interpretation, it would be submitted, disregards the component-wise
milestones and timelines expressly provided under the Contract, and
thereby renders those provisions otiose.
41. Learned senior counsel would then assail the findings returned
in Paragraphs E and F, contending that the learned Majority tribunal
has misplaced reliance on the fact that the Contract is a lump sum
contract. It would be submitted that the existence of a single lump sum
value of the tender does not negate the existence of component-wise
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 15 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
obligations, timelines, or consequences; the same has been established
by way of reading of the Clauses 2, 2A, 5 and Schedule F herein
before, and therefore the reasoning adopted erroneously conflates
valuation with execution structure.
42. Learned senior counsel would contend that the conclusions
drawn in Paragraphs E and F are untenable in law, unreasonable and
arbitrary, as it is general practice in issuing tenders that the tendered
value is provided for the projects as a whole, unaffected by the terms
of its implementation. Therefore, it would be submitted that the
absence of a separate valuation cannot be escalated to the implication
of the absence of component-wise completion.
Challenge to the Findings Based on Unpleaded Submissions
43. Further, learned senior counsel for the Petitioner would contend
that the findings recorded in Paragraphs G to J of the Impugned
Award are vitiated on account of reliance on submissions which were
not part of the Statement of Claims, as filed by the Respondent before
the learned Arbitral Tribunal. The Paragraphs G to J of the Impugned
Award are reproduced hereinunder for ready reference:
“G. Clause 10CC prescribes the formulae to work out the
compensation for escalation for various materials, labour etc. and
these formulae take into account the cost of work on which
escalation is payable. The cost of work done is again based on the
Gross Value of work done in every quarter and as shown in the
foregoing, gross value for the work as a whole can only be worked
out as per the contract provision and the contract does not afford
any method to work out gross value of the components separately.
It may thus be safely concluded that the contract does not indicate
any intention to work out the escalation amount for the components
separately and Clause 10CC provisions are only applicable for the
contract as a whole.
H. The Respondent’s arguments in this respect is that the Claimant
on its own submitted escalation statements for the period beyond
the stipulated date of completion of individual components inSignature Not Verified
O.M.P. (COMM) 531/2016 Page 16 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
which the Claimant worked out the gross value of each component
based on the quantities executed separately for each component.
Respondent also argued that 20 numbers of escalation statements
over 60 months from the date of start have been submitted by the
Claimant and paid by the Respondent and the same have been
accepted by both parties so far. The above statement of the
Respondent implies that the methodology for working out the gross
value of work of each components and escalation amount of each
component has been adopted by mutual consent and the amounts of
escalation have been correctly paid in accordance with the contract.
I. This position has been vehemently contradicted by the Claimant
who points out that from the very beginning till the period of Feb
2011, all bills of escalation were prepared on the overall gross
amount and paid by the Respondent without any objection. The bill
for the quarter March to May was also prepared on a similar basis
and submitted for payment in July 2011. But consequent to an
internal audit of the project conducted by AG (AUDIT) Delhi in
July 2011 in which they raised observations holding the method of
payment as improper on the ground that under clause 10CC
escalation was available differently fe the three components of
work with different time allowed for carrying out the work, the
Respondent Engineer-in-charge in a follow up meeting with the
Claimant asked for revision of all the escalation bills rained/paid
till that time considering different dates of completion for the three
components of work. The Claimant argued that they considered the
instructions as against the provision of clause 10CC but were
forced to prepare statements on the above lines from then onwards
under pressure of the Respondent and in the interest of cash Bow.
Claimant, however, sent written representation to the Executive
Engineer of Respondent by letter dated 21.09.2011.
J. We have no difficulty in accepting the above explanation of
Claimant as it is quite understandable that during progress of work
the Claimant could not risk delays in payment and had to prepare
hills in the manner acceptable to the Respondent. But the fact
remains that soon after on 21.09.2011 the Claimant had disputed
the application of clause 10CC provisions in the manner directed
by the Claimant which ultimately lead to the dispute to be
adjudicated by this AT. Thus we find that the escalation bills paid
on the basis of gross value of three separate components is neither
according to contract provisions nor by mutual consent.”
44. Learned senior counsel for the Petitioner, in context of the
aforestated findings, would contend that the learned Majority tribunal
has accepted the Respondent‟s case that escalation bills were revised
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 17 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
to component-wise escalation, after the Audit of Petitioner in July,
2011, under compulsion and commercial pressure during the
execution of the project. However, it would be contended that no such
foundational plea was taken in the Statement of Claim by the
Respondent.
45. Learned senior counsel would submit that the learned Majority
tribunal has thus proceeded to adjudicate upon a case not pleaded in
their Statement of Claim, thereby taking the Petitioner by surprise and
depriving it of an opportunity to effectively respond.
46. Learned senior counsel would therefore urge that the findings in
Paragraphs G to J constitute a clear violation of the principles of
natural justice, rendering the said findings perverse, affecting the root
of the matter and thus vulnerable under Section 34 of the Act.
The award falls within the Scope of „Patent Illegality‟
47. Learned senior counsel for the Petitioner would, in light of the
foregoing grounds and contentions, submit that the findings of the
learned Majority Tribunal are contrary to the material on record,
inasmuch as the Tribunal has ignored the contractual documents
which unequivocally demonstrate the component-wise structure of the
project, and therefore the Impugned Award squarely falls within the
scope of patent illegality and perversity which goes to the very root of
the matter, as the learned Majority Tribunal ignored the vital evidence
placed on record, and because it violates fundamental principles of
natural justice.
48. In this regard, reliance is placed by the learned senior counsel
on the Judgement of the Hon‟ble Supreme Court in Delhi Metro Rail
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 18 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
Corporation Limited vs. Delhi Airport Metro Express Private
Limited11, and specifically Paragraph No. 39 thereof. The same is
reproduced hereunder for ready reference:
“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 his jurisdiction or violating a
fundamental principle of natural justice.”
49. Further, learned senior counsel for the Petitioner would place
reliance on the Judgement of the Hon‟ble Supreme Court in South
East Asia Marine Engineering and Constructions Limited
(SEAMEC Limited) vs. OIL India Limited12, to submit that the
Hon‟ble Supreme Court has interfered with the interpretation of an
Arbitral Tribunal where the interpretation of the Arbitral Tribunal was
considered to be too wide than what the contract stipulated it to be. In
this regard, reliance would be placed on Paragraph Nos. 28 to 30 of
the said Judgement, which are reproduced hereunder for ready
reference:
“28. In this context, the interpretation of Clause 23 of the contract
by the Arbitral Tribunal, to provide a wide interpretation cannot be
accepted, as the thumb rule of interpretation is that the document
forming a written contract should be read as a whole and so far as
possible as mutually explanatory. In the case at hand, this basic rule
was ignored by the Tribunal while interpreting the clause.
29. The contract was entered into between the parties in furtherance
of a tender issued by the respondent herein. After considering the11
(2024) 6 SCC 357
12
(2020) 5 SCC 164Signature Not Verified
O.M.P. (COMM) 531/2016 Page 19 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
tender bids, the appellant issued a letter of intent. In furtherance of
the letter of intent, the contract (Contract No. CCO/FC/0040/95)
was for drilling oil wells and auxiliary operations. It is important to
note that the contract price was payable to the “contractor” for full
and proper performance of its contractual obligations. Further,
Clauses 14.7 and 14.11 of the contract state that the rates, terms
and conditions were to be in force until the completion or
abandonment of the last well being drilled.
30. From the aforesaid discussion, it can be said that the contract
was based on a fixed rate. The party, before entering the tender
process, entered the contract after mitigating the risk of such an
increase. If the purpose of the tender was to limit the risks of price
variations, then the interpretation placed by the Arbitral Tribunal
cannot be said to be possible one, as it would completely defeat the
explicit wordings and purpose of the contract. There is no
gainsaying that there will be price fluctuations which a prudent
contractor would have taken into margin, while bidding in the
tender. Such price fluctuations cannot be brought under Clause 23
unless specific language points to the inclusion.”
50. Learned senior counsel would submit that in the pre-2015
Amendment regime, an award which was patently illegal, contrary to
the terms of the contract or based on no evidence, falls within the
ambit of „public policy of India‟ as elucidated in ONGC Ltd. v. Saw
Pipes Ltd.13and subsequent decisions.
51. Learned senior counsel appearing on behalf of the Petitioner,
while concluding his arguments, would submit that the Impugned
Award is liable to be set aside under Section 34 of the Act, as the
learned Majority Tribunal has failed to interpret the Contract in
accordance with its express terms, has adopted an implausible and
legally untenable view, and has rendered findings which are perverse
and contrary to the fundamental principles governing arbitral
adjudication.
13
(2003) 5 SCC 705
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 20 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
CONTENTIONS ON BEHALF OF THE RESPONDENT:
52. Learned senior counsel appearing on behalf of the Respondent
would, at the outset, submit that the present Petition proceeds on an
erroneous premise that the interpretation adopted by the learned
Majority Tribunal is impermissible in law. It would be contended that
the interpretation of Clause 10CC, as undertaken by the learned
Majority Tribunal, is a plausible and reasonable view, rooted in the
contractual framework and therefore does not warrant interference
under Section 34 of the Act.
Correct Interpretation of Clause 10CC
53. Learned senior counsel would submit that the dispute
essentially pertains to the interpretation of the expression “stipulated
period of completion” under Clause 10CC of the GCC. It would be
contended that the learned Majority Tribunal, upon a holistic reading
of the Contract, has correctly construed the said expression to mean
the overall completion period of the project of 42 months.
54. Learned senior counsel would urge that merely because an
alternative interpretation is possible, the same would not justify
interference with the Impugned Award. The limited and circumscribed
scope of judicial review under Section 34, as succinctly settled by a
plethora of judicial precedents, does not permit substitution of the
Court‟s interpretation in place of that adopted by the learned Majority
Tribunal, so long as the view taken is a plausible one.
55. Learned senior counsel would further contend that the burden
lies on the Petitioner to demonstrate that the interpretation adopted by
the learned Majority Tribunal is wholly unreasonable or perverse. The
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 21 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
interpretation advanced by the Petitioner, based on Clauses 2, 2A, 5,
Schedule F and Clause 10CC, at best represents an alternative view,
which by itself cannot form a ground for interference under Section 34
of the Act.
Plausible view of the Contractual Scheme taken by the learned
Majority Tribunal
56. Learned senior counsel for the Respondent would submit that
the reliance placed by the Petitioner on component-wise milestones
and timelines is misplaced. It would be contended that such provisions
are intended for the purposes of execution, monitoring, and
incentivization, and cannot be determinative of the interpretation of
Clause 10CC.
57. Learned senior counsel would contend that the Contract
consciously distinguishes between provisions governing execution
and those governing financial adjustments, while Clauses 2, 2A and
Schedule F operate in the domain of performance, milestones and
incentives, Clause 10CC operates independently as a price adjustment
mechanism. The mere existence of component-wise timelines does not
compel a similar interpretation for escalation, particularly in the
absence of any express provision to that effect.
58. It would be further submitted that the Contract is a lump sum
contract with a single tendered value and a unified structure. In such a
contractual framework, the expression “stipulated period of
completion” can reasonably be construed only with reference to the
project as a whole, and not component-wise.
59. Learned senior counsel would submit that the Petitioner‟s
attempt to read Clause 10CC in isolation, by merely importing a
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 22 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
component-wise interpretation from other clauses, is contrary to
settled principles of contractual interpretation, which require the
Contract to be read as a whole and each clause to be given its
contextual meaning.
60. Learned senior counsel would contend that the component-wise
timelines continue to operate for the purposes of execution and
incentives, whereas Clause 10CC operates independently in the
context of escalation. The two operate in distinct spheres and do not
overlap in the manner suggested by the Petitioner.
61. Learned senior counsel for the Respondent would submit that
the interpretation adopted by the learned Majority Tribunal does not
render any provision of the Contract otiose or redundant.
62. Learned senior counsel would urge that the interpretation
advanced by the Petitioner would, in fact, lead to inconsistency in the
application of the escalation clause and disturb the uniformity
intended under the Contract.
63. Learned senior counsel for the Respondent would further
submit that even assuming arguendo that the Contract was capable of
being interpreted in the manner canvassed by the Petitioner, namely,
that the “stipulated period of completion” was to operate component-
wise and not with reference to the project as a whole, the conduct of
the Petitioner during the subsistence of the Contract belies such an
interpretation.
64. Learned senior counsel would submit that it was only pursuant
to an internal audit conducted by the office of the AG (Audit), Delhi,
in July 2011, wherein an objection was raised regarding the method of
computation under Clause 10CC, that the Petitioner sought to alter its
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 23 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
position. Thereafter, the Petitioner directed revision of the escalation
bills by adopting a component-wise approach, thereby retrospectively
seeking to apply a different interpretation of the clause.
65. Learned senior counsel for the Respondent would therefore
contend that the conduct of the Petitioner demonstrates that the
Contract was not understood or operated in the manner now sought to
be canvassed. The subsequent shift in interpretation, it would be
urged, is clearly an afterthought, prompted by audit observations, and
cannot be permitted to unsettle the contractual understanding which
governed the parties during execution.
66. Learned senior counsel would thus submit that the
contemporaneous conduct of the parties not only lends support to the
interpretation adopted by the learned Majority Tribunal, but, at the
very least, also establishes that multiple plausible interpretations were
possible, thereby preventing the Impugned Award from the limited
scope of interference under Section 34 of the Act.
Plausible Findings of the learned Majority Tribunal
67. Learned senior counsel for the Respondent would submit that
the findings recorded by the learned Majority Tribunal in Paragraphs
D to F of the Impugned Award are based on a correct and reasonable
appreciation of the contractual framework.
68. Learned senior counsel would contend that the learned Majority
Tribunal has rightly relied upon the definition of “Contract” to
conclude that all documents forming part of the tender constitute a
composite Agreement, and that the “stipulated period of completion”
must be understood in that unified context.
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 24 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
69. Learned senior counsel would further submit that the
conclusions drawn by the learned Majority Tribunal with respect to
the Lump sum nature of the Contract and the absence of any separate
mechanism for component-wise valuation or computation are rational
and borne out by the Contract itself.
70. Learned senior counsel would therefore contend that the said
findings, as assailed by the Petitioner, are neither arbitrary nor
perverse, but represent a plausible interpretation of the Contract.
Findings based on Allegedly Unpleaded Submissions
71. Learned senior counsel for the Respondent would strongly
refute the contention of the Petitioner that the findings recorded in
Paragraphs G to J are based on unpleaded submissions.
72. Learned senior counsel would contend that the issue relating to
the manner in which escalation bills were raised and subsequently
revised was very much part of the record before the learned Arbitral
Tribunal. The Respondent had specifically addressed this aspect in its
Re-joinder to the Statement of Defence.
73. Learned senior counsel would, in this regard, draw the attention
of this Court to Paragraph No. 2.16 of the said Re-joinder, wherein it
was clearly asserted that the revision of escalation bills into
component-wise format was undertaken under compulsion and
commercial pressure, particularly in light of the directions issued
following the Audit. The relevant portion of the Re-joinder is
reproduced herein under for ready reference:
“2.16 The Respondent’s contention that the escalation statement no.
9 for the period June’10- Aug’10 onwards were supposed to be
prepared after working out gross value of work done separately for
3 components of the work as per agreement provisions but M/sSignature Not Verified
O.M.P. (COMM) 531/2016 Page 25 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
Gammon India Limited could not do so, is entirely incorrect and
misrepresentation of facts. In fact the claimant has all along been
maintaining that contractually there will be only one gross value of
work done and no separate billing, component wise. The
Respondent also never instructed the claimant for submission of
separate bills for components of work until receipt of CAG report.
It was only after the Respondent received the CAG report in
July’2011 that they insisted upon the claimant to submit the
trifurcated bill for three components of work failing which, the
escalation bill would not be processed. This was an act of coercion
on the part of the Respondent which, in the interest of cash flow,
the claimant was compelled to submit trifurcation of the overall
interim bills for the ease of verification of measurement only and
not for the sake of working out escalation component wise. Thus,
the department used coercive measures to achieve their goal which
the contractor has never contractually admitted.”
74. Learned senior counsel for the Respondent would, in order to
substantiate that they were not in agreement with the way in which
escalation charges were stated to operate after July, 2011, contend that
the Respondent had, at the earliest opportunity, disputed the said
mode of computation, including by way of a letter dated 21.09.2011
addressed to the Superintending Engineer, thereby demonstrating that
such revision was neither voluntary nor reflective of the contractual
position and that the change in operation of Clause 10CC was not
justified and was contrary to the contract as entered into between the
parties.
75. Learned senior counsel would submit that these facts were part
of the pleadings and the evidentiary record, and the Petitioner was
fully aware of the same. It is therefore incorrect to contend that the
learned Majority Tribunal has relied upon a case not pleaded and thus
would submit that no violation of Principles of Natural Justice has
occurred, nor has any prejudice been caused to the Petitioner.
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 26 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
No Grounds for Interference under Section 34
76. Learned senior counsel for the Respondent, in light of the
foregoing submissions, would submit that the scope of interference
under Section 34 of the Act is very limited and circumscribed, and
when an Arbitral Tribunal takes a plausible view of a case before it,
interference under Section 34 of the Act would not be permissible by
the Courts. Learned senior counsel would contend that the present
Petition, being governed by the pre-2015 Amendment regime, must be
tested within the limited contours of “public policy of India” as
interpreted by various judicial precedents.
77. Learned senior counsel for the Respondent would then advert to
the reliance placed by the Petitioner on the decision in SEAMEC
Limited (supra), and would submit that the same is wholly
distinguishable on facts as well as the nature of the clause under
consideration therein.
78. Learned senior counsel would contend that the clause
interpreted in the said judgment was materially different from Clause
10CC in the present case. The clause therein contemplated escalation
“only in the event of a change in law or interpretation of existing
law”, and was thus in the nature of a force majeure or contingency
based provision as opposed to Clause 10CC of the present Contract,
which is a price variation clause which specifically provides for
escalation on account of fluctuations in market conditions, including
changes in prices of labour and materials. The scope, purpose and
operation of the two clauses are therefore fundamentally distinct.
79. Learned senior counsel would submit that the ratio in SEAMEC
Limited (supra) was rendered in the context of a clause which did not
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 27 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
contemplate general market-driven escalation, and therefore cannot be
applied to Clause 10CC of the present Contract, which expressly
provides for such variation. In these circumstances, it would be
submitted that the reliance placed by the Petitioner is misplaced and
does not advance their case.
80. Learned senior counsel for the Respondent would submit that
the findings returned by the learned majority Tribunal are based on a
plausible interpretation of the contractual provisions and appreciation
of material on record, and therefore do not warrant interference under
Section 34 of the Act.
81. In view of the aforesaid submissions, learned senior counsel for
the Respondent would, while concluding, submit that the present
Petition is devoid of merit and does not disclose any ground disclosing
patent illegality or perversity going to the root of the matter, so as to
warrant interference under Section 34 of the Act for being against the
“public policy of India”, and therefore would submit that the present
Petition be dismissed and the Impugned Award be upheld.
ANALYSIS:
82. This Court has heard the learned senior counsel for both parties
and, with their able assistance, perused the material available on
record.
83. The controversy, in essence, lies in a narrow compass. The
principal issue which arises for consideration is whether the
interpretation accorded by the learned Majority Tribunal to the
expression “stipulated period of completion” under Clause 10CC is so
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 28 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
implausible or unreasonable so as to warrant interference under
Section 34 of the Act.
Scope of Interference under Section 34
84. At the outset, this Court deems it apposite to underscore that it
remains acutely conscious that the jurisdiction exercised by this Court
under Section 34 of the Act is merely supervisory. The Court does not
sit in appeal over the findings returned by an arbitral tribunal, nor does
it undertake re-appreciation of evidence or re-interpretation of
contractual terms merely because an alternative view may be possible.
The legislative intent underlying Section 34 is to accord finality to the
arbitral adjudication, subject only to a narrow and circumscribed
scope of intervention. This limitation is not merely procedural but
goes to the very architecture of the arbitral regime.
85. The Impugned Award having been rendered on 12.12.2013, i.e.,
prior to coming into force of the Arbitration and Conciliation
(Amendment) Act, 2015, the challenge is required to be examined
within the pre-amendment framework. Under the said regime, the
expression “public policy of India” received an expanded
interpretation, inter alia, in ONGC Ltd. v. Saw Pipes Ltd. (supra) and
ONGC Ltd. v. Western Geco International Limited14, within which
the concept of “patent illegality” was subsumed.
86. Further, even within this expanded understanding, it is well
settled that the illegality must be of such a nature as to go to the root
of the matter and not be of a trivial or debatable nature. Mere
14
(2014) 9 SCC 263
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 29 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
erroneous application of law or the existence of an alternative
interpretation is wholly insufficient.
87. It must be borne in mind that the threshold for interference,
particularly in cases involving the interpretation of contractual
clauses, is deliberately set high. Contractual interpretation is not an
exact science but an exercise in discerning commercial intent. Where
two views are possible, the arbitral tribunal‟s view is not merely to be
preferred, but is, in fact, immune from judicial substitution. The Court
cannot don the robes of a second arbitrator and rewrite the bargain
between the parties under the guise of judicial review. To do so would
be to blur the well-settled distinction between appellate and
supervisory jurisdiction, an approach consistently deprecated by the
Hon‟ble Supreme Court. Therefore, judicial restraint in such matters is
not an option, but a mandate.
88. The jurisprudential position in this regard stands
comprehensively restated by the Hon‟ble Supreme Court in OPG
Power Generation (P) Ltd. v. Enexio Power Cooling Solutions
(India) (P) Ltd.15, wherein it has been reiterated that interference with
arbitral awards is permissible only where the award is vitiated by
fundamental infirmities such as conflict with the public policy of
India, perversity and patent illegality. The Court cautioned against
converting proceedings under Section 34 of the Act into a forum for
rehearing on merits. The pertinent observations, in this regard, are
reproduced hereunder:
15
(2025) 2 SCC 417
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 30 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
“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.
*****
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 31 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
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
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 in ONGC
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; orSignature Not Verified
O.M.P. (COMM) 531/2016 Page 32 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
(iii) ignores vital evidence in arriving at its decision, such decision
would necessarily be perverse[Associate Builders case, (2015)
3 SCC 49, para 31].
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
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 33 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
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
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.
*****
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 34 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
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
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. In ONGC 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.
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 35 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
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
(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
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 36 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
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
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
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 37 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
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
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. InDyna 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
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 38 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
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].
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)
89. A careful reading of the above-stated decision makes it
abundantly clear that while adjudicating an Objection Petition under
Section 34 of the Act, an Arbitral Award cannot be interfered with
mechanically since:
a. Mere erroneous application of the law is not sufficient;
b. Re-appreciation of evidence is impermissible; and,
c. Most importantly, a possible view taken by the arbitral tribunal
must be respected, even if another view is equally plausible.
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 39 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
Findings of the learned Majority Tribunal and their Nature
90. A perusal of the Impugned Award demonstrates that the learned
Majority Tribunal has duly considered all relevant material, facts, and
circumstances while adjudicating upon the claims and counter-claims
raised by the parties. Upon such examination, the learned Tribunal
arrived at the following conclusions, which, though not exhaustive,
reflect the core findings underpinning the Award:
a. The contract between the parties was in the nature of a
composite and indivisible agreement with a unified tendered
value, thereby indicating that the project was intended to be
executed as a whole and not as independent, severable
components;
b. The expression “stipulated period of completion” as employed
in Clause 10CC of the GCC was to be construed with reference
to the overall contractual period of 42 months, and not
component-wise, as sought to be contended by the Petitioner;
c. The conduct of the parties during the subsistence of the
contract, particularly the consistent computation and acceptance
of escalation on the basis of the overall completion period
without protest for a considerable duration, lends credence to
the interpretation adopted by the Respondent;
d. The contractual provisions, when read holistically, do not
support a fragmented or component-wise application of
escalation under Clause 10CC.
91. The aforesaid findings are neither conjectural nor based on
surmise, but are founded upon a structured appreciation of the
contractual framework and contemporaneous conduct of the parties.
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 40 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
The reasoning reflects a logical progression, wherein each conclusion
is anchored in either the text of the contract or the surrounding
circumstances. It is well settled that even if the reasoning of an arbitral
tribunal is capable of improvement, so long as the ultimate conclusion
is a plausible one, the award cannot be interfered with. The Court is
concerned not with the elegance of reasoning, but with the legitimacy
of the decision-making process.
Interpretation of Clause 10CC and „Stipulated Period of Completion‟
92. The dispute between the parties centres around the
interpretation of Clause 10CC of the General Conditions of Contract,
particularly the meaning to be ascribed to the expression “stipulated
period of completion”. The Petitioner has contended that the said
expression must be understood component-wise, whereas the
Respondent, whose contention has found favour with the learned
Majority Tribunal, has asserted that it refers to the overall completion
period of the project, i.e., 42 months.
93. A careful reading of the Impugned Award demonstrates that the
learned Majority Tribunal has not approached the issue in a
perfunctory or mechanical manner. On the contrary, the learned
Majority Tribunal has undertaken a comprehensive analysis of the
contractual framework, including the definition clauses, the nature of
the contract, the tender documents, and the interrelationship between
various provisions.
94. The learned Majority Tribunal has, inter alia, taken note of the
fact that the contract in question is a lump-sum contract with a unified
tendered value, and not one which contemplates separate valuation or
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 41 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
independent contractual existence of each component. This aspect, in
the view of the learned Majority Tribunal, was indicative of the
parties‟ intention to treat the project as a composite whole.
95. Significantly, the learned Majority Tribunal has also relied upon
the conduct of the parties during the subsistence of the contract. The
material on record indicates that, for a substantial period, escalation
payments under Clause 10CC were computed and accepted on the
basis of the overall completion period of 42 months, without any
demur from the Petitioner.
96. The relevance of the conduct of the parties as an aid to
contractual interpretation is well recognised. The manner in which
parties have themselves understood and implemented a contract often
provides a reliable indicator of their mutual intent. The learned
Majority Tribunal, therefore, cannot be faulted for placing reliance on
such conduct.
97. In fact, the conduct of the parties, as borne out from the record,
operates as a contemporaneous exposition of the contract itself. For a
considerable period, both parties proceeded on the basis that
escalation under Clause 10CC was to be computed with reference to
the overall completion period. Such a consistent and unambiguous
course of conduct cannot be brushed aside lightly. It would be
contrary to settled principles of contractual interpretation to permit a
party to approbate and reprobate, accepting a particular interpretation
when it suits its commercial interests and resiling from it when
circumstances change. The Petitioner, having acquiesced in such
interpretation for a substantial duration, cannot now be permitted to
resile therefrom to suit its shifting commercial convenience.
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 42 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
98. The contention of the Petitioner that the contract must
necessarily be interpreted component-wise is, at best, an alternative
construction. However, it cannot be said that the interpretation
adopted by the learned Majority Tribunal is one that no reasonable or
fair-minded person would adopt. The arbitral interpretation, thus,
clearly falls within the realm of a „possible view‟, thereby placing it
beyond the permissible scope of interference under Section 34 of the
Act.
99. It is also not possible to accept the submission that the
interpretation adopted by the learned Majority Tribunal renders other
contractual provisions otiose or redundant. A holistic reading of the
Award reveals that the learned Majority Tribunal has harmonised the
various clauses of the contract and has endeavoured to give effect to
the commercial intent underlying the agreement.
100. The submission that the interpretation adopted by the learned
Majority Tribunal renders certain clauses otiose is, upon closer
scrutiny, more apparent than real. A contract must be read as a whole,
and not in a manner that places one clause in antagonism with another.
The learned Majority Tribunal has adopted a harmonious construction,
ensuring that each provision operates within its designated field
without encroaching upon the other. The Petitioner‟s interpretation, on
the other hand, seeks to compartmentalise the contract in a manner
that fractures its composite character. Such an approach, far from
preserving contractual efficacy, would introduce artificial distinctions
not contemplated by the parties.
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 43 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
Allegation of Reliance on Unpleaded Grounds
101. Insofar as the submission of the Petitioner that the learned
Majority Tribunal has relied upon unpleaded grounds is concerned,
the material on record, including the rejoinder filed before the learned
Majority Tribunal, indicates that the issues relating to billing practices
and the circumstances surrounding the computation of escalation were
indeed placed before the learned Majority Tribunal. The findings
recorded by the learned Majority Tribunal, therefore, cannot be said to
have travelled beyond the pleadings. In any event, the interpretation
sought to be canvassed is, in any event, based upon the terms of the
contract itself, which was always available to the learned Arbitral
Tribunal and which had absolute liberty to interpret the same.
102. The reliance placed by the Petitioner on SEAMEC Limited
(supra) is misconceived. The said decision turned on a fundamentally
different contractual clause and a factual matrix where the arbitral
interpretation was found to be wholly divorced from the language of
the contract. The present case stands on an entirely different footing,
where the interpretation adopted by the learned Majority Tribunal is
firmly rooted in the contractual scheme.
103. The said decision cannot be read as laying down an absolute
proposition that every deviation from a literal interpretation would
render an award vulnerable under Section 34 of the Act.
Scope of Judicial Review vis-Ã -vis Arbitral Interpretation
104. It is trite that the arbitral tribunal is the chosen forum of the
parties, and its construction of the contract is entitled to a high degree
of deference. The moment the Court finds that the interpretation
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 44 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
adopted is a “possible view”, the inquiry must end there. The
temptation to substitute such an interpretation with what the Court
may perceive to be a “better view” must be resisted, for that would
strike at the very foundation of arbitral autonomy. The law does not
countenance a microscopic dissection of the award in search of error;
it mandates a broad, pragmatic and deferential approach.
105. Even assuming that the interpretation advanced by the
Petitioner is a possible one, that by itself would not furnish a ground
for interference under Section 34 of the Act. The jurisdiction of this
Court is not to choose between competing interpretations, but to
ensure that the interpretation adopted does not fall foul of the limited
grounds of challenge.
106. The interpretation adopted by the learned Majority Tribunal,
which treats the “stipulated period of completion” as referable to the
contract as a whole, ensures uniformity and coherence in the
application of the escalation formula. This Court finds no perversity in
such an approach.
107. Therefore, in the present case, the interpretation adopted by the
learned Majority Tribunal cannot, by any stretch of imagination, be
characterised as arbitrary, capricious, irrational, or perverse.
108. Where the interpretation of a contractual clause by an Arbitral
Tribunal constitutes a plausible view based on the contractual
framework and conduct of parties, such interpretation is immune from
interference under Section 34 of the Act. Even within the expanded
pre-amendment scope of „public policy of India‟, the Court cannot
substitute its own interpretation merely because an alternative view is
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 45 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
possible. Interference is warranted only where the arbitral view is
perverse or not even a possible view.
Whether the Impugned Award suffers from Patent Illegality?
109. Tested on the aforesaid principles, this Court is unable to hold
that the interpretation adopted by the learned Majority Tribunal falls
outside the realm of a possible view. The reasoning of the learned
Majority Tribunal reflects a coherent and plausible construction of the
contractual provisions, supported by the nature of the contract as well
as the conduct of the parties.
110. Insofar as the plea of “patent illegality” is concerned, even if
the same is construed within the framework of the pre-amendment
jurisprudence, the Petitioner has failed to demonstrate that the
Impugned Award suffers from any illegality which goes to the root of
the matter.
111. The findings returned by the learned Majority Tribunal are
based on a consideration of the contractual provisions, the material on
record, and the conduct of the parties. The decision-making process
does not disclose any infirmity of such magnitude as would justify
interference.
112. In effect, the challenge mounted by the Petitioner does not
demonstrate perversity in the Impugned Award, but merely
dissatisfaction with the interpretation adopted by the learned Majority
Tribunal.
113. Viewed holistically, the challenge mounted by the Petitioner is
nothing but a thinly veiled attempt to re-agitate the merits under the
guise of a Section 34 Petition. The submissions advanced seek a re-
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 46 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
evaluation of the contractual clauses, a re-assessment of the evidence,
and ultimately, a substitution of the arbitral view with that of this
Court.
114. Such an exercise lies clearly outside the permissible contours of
judicial interference. If such challenges were to be entertained, the
finality of arbitral awards would be rendered illusory, and the very
object of the Act would stand defeated. The arbitral process having
been consciously chosen by the parties, the finality attached to an
arbitral award cannot be lightly displaced.
115. Therefore, interference in such circumstances would amount to
substituting the arbitral conscience with judicial preference, an
exercise impermissible in law.
CONCLUSION:
116. In view of the foregoing discussions, this Court is of the
considered view that the Impugned Award does not suffer from
perversity, violation of the fundamental policy of Indian law, or suffer
from patently illegality.
117. The challenge mounted by the Petitioner is thus devoid of merit
and does not warrant interference. Accordingly, the present petition is
dismissed and thereby Impugned Award, dated 12.12.2013, is upheld.
118. The present Petition, along with pending Application(s), if any,
are disposed of in the aforementioned terms.
119. There shall be no order as to costs.
HARISH VAIDYANATHAN SHANKAR, J.
APRIL 21, 2026/ DJ
Signature Not Verified
O.M.P. (COMM) 531/2016 Page 47 of 47
Digitally Signed
By:NEERU
Signing Date:24.04.2026
10:39:51
[ad_1]
Source link
