Calcutta High Court
Itd-Itd Cem Joint Venture vs Kolkata Metro Rail Corporation Limited on 12 March, 2026
Author: Debangsu Basak
Bench: Debangsu Basak
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IN THE HIGH COURT AT CALCUTTA
CIVIL APPELLATE JURISDICTION
(COMMERCIAL DIVISION)
ORIGINAL SIDE
Present:
The Hon'ble Justice Debangsu Basak
And
The Hon'ble Justice Md. Shabbar Rashidi
APOT No. 298 of 2025
GA-COM/1/2025
GA-COM/2/2025
ITD-ITD CEM Joint Venture
Vs.
Kolkata Metro Rail Corporation Limited
For the appellant : Mr. Jishnu Saha, Sr. Adv.
Mr. Anal Kumar Ghosh, Adv.
Ms. Hashnuhana Chakraborty, Adv.
Ms. Neelina Chatterjee, Adv.
Ms. Ahana Bhattacharya, Adv.
For the respondent : Mr. Jishnu Chowdhury, Sr. Adv.
Ms. Sreya Basu Mallick, Adv.
Mr. Chayan Gupta, Adv.
Mr. Ankit Dey, Adv.
Mr. Atri Mandal, Adv.
Mr. Subhrojit Mookherjee, Adv.
Hearing concluded on : 12.02.2026
Judgment on : 12.03.2026
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Md. Shabbar Rashidi, J.:-
1. The instant appeal under Section 37 of Arbitration and
Conciliation Act, 1996 is in assailment of judgment and order dated
October 31, 2025 passed in AP-COM No. 381 of 2024.
2. By the impugned judgment and order, the learned Single
Judge allowed the challenge to the Arbitral Award at the behest of
respondent herein, under Section 34 of the Act of 1996, setting aside
the arbitral award dated August 6, 2023, impugned therein.
3. In course of hearing, the learned Senior Advocate for the
appellant submitted that the impugned order suffers from patent
illegality, perversity and is liable to be set aside. The learned Single
Judge erred in holding that the award of the Arbitral Tribunal was
perverse, contrary to evidence on record and patently against the
public policy. In fact, the learned Single Judge failed to appreciate the
evidence on record in its true perspective.
4. Learned Senior Advocate further argued that while deciding
the application under Section 34 of the Act of 1996, learned Single
Judge proceeded on erroneous and irrelevant considerations and
failed to exercise the jurisdiction vested in it. The learned Single Judge
did not apply the settled position of law on the subject with reference
to the jurisdiction under Section 34 of the Act. It was also contended
that the impugned judgment and order was passed merely on the
basis of submissions made on the part of the respondents herein
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whereas, the submissions advanced by the appellants herein were
completely ignored by the learned Single Judge. The learned Single
Judge came to an erroneous conclusion that the impugned award did
militate against Section 34 (2) (b), Explanation-I Sub-clause (ii) and
(iii) of the Arbitration and Conciliation Act, 1996.
5. Learned Senior Advocate further submitted that the learned
Single Judge erroneously held that a judge cannot impute his
personal knowledge into the adjudicatory process. Merely the
members having an experience in general civil engineering and one of
the members of the Arbitral Tribunal being an alumnus of IIT, Delhi
could not enjoy any special status as a member of the tribunal insofar
as the disputes involved in the arbitration was concerned. In support
of such contention, learned Senior Advocate relied upon (2012)1
Supreme Court Cases 594 (P.R. Shah Shares and Stock Brokers
Private Limited Vs. B.H.H. Securities Private Limited and Others).
6. Learned Senior Advocate for the appellants also submitted
that the learned Single Judge did not take into consideration the
settled position of law that construction of the contract by an Arbitral
Tribunal was not liable to be interfered with. It was also submitted
that the learned Single Judge failed to take into consideration that the
findings of Arbitral Tribunal on issues of facts could not have been
really apprised. The findings of an Arbitral Tribunal if based on
plausible view cannot be interfered with, unless the tribunal is found
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to have ignored the evidence on material facts. The learned Single
Judge was not justified in substituting its own views otherwise than
arrived at by the arbitral tribunal. The impugned award was based on
plausible reasoning and was in consonance with the settled
proposition of law and was not liable to be set aside in exercise of
jurisdiction under section 34 of the Act of 1996.
7. Learned Senior Advocate for the appellant further submitted
that the learned Single Judge failed to appreciate that the incident
occurred on August 31, 2019 and immediately thereafter the
appellants engaged expert agencies for analyzing the causes of such
incident whereas the respondents engaged IIT Madras for the said
purpose after about 900 days of the incident i.e. when the Tunnel
Boring Machine (TBM) which was stuck in the mud was retrieved after
cutting into pieces. The learned Single Judge was also not justified in
discarding the expert report on the ground that such reports were
prepared subsequent to the commencement of the arbitral proceeding,
after a considerable delay of the happening of the incident.
8. Learned Senior Advocate for the appellant further submitted
that the learned Single Judge erroneously accepted the report
prepared by IIT Madras regarding the analysis of the causes of the
incident in so far as the IIT Madras had no expertise and it engaged a
foreign expert Dr. G. J. Page. The said tunnel expert Dr. G. J. Page did
not did not furnish any report on his own. According to learned Senior
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Advocate for the appellant, the learned Single Judge did not take into
consideration that IIT Madras did not visit the TBM or the place of
incident and submitted its report solely based on the materials
supplied by the respondent including the photographs of the tail seal
brushes taken by Dr. Lee Blade. It was contended that learned Single
Judge did not appreciate that the Arbitral Tribunal considered the
entirety of the report prepared by IIT Madras and found the same to
be without basis or justification and was contrary to the observations
made in the report with regard to the poor quality of the photographs
on which the report proceeded. Since the findings of the Arbitral
Tribunal was based on meticulous consideration of all the reports filed
on behalf of the respondent, the learned Single Judge was not justified
in discarding such report which, in turn, was reappraisal of evidence
and was surely beyond the scope of Section 34 of the Act of 1996.
9. Learned Senior Advocate for the appellant further submitted
that the learned Single Judge was not justified in holding that there
was seizure in adequacy of greasing on the part of the appellants’
personnel who were engaged in operating the TBM. The learned Single
Judge did not appreciate the entire report given by Surbana Jurong
and relied upon a truncated portion of such report. It was also
contended that the learned Single Judge did not appreciate that the
appellants engaged experts to analyze the causes of the incident
immediately after the incident whereas the respondent approached IIT
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Madras for a report which was intended to be used in the arbitral
proceeding as a defense, much after the incident. The reports filed on
behalf of the appellant were unjustifiably discarded by learned Single
Judge. Learned Senior Advocate for the appellant also contended that
the learned Single Judge overlooked vital evidence to the detriment of
the appellants.
10. The learned Senior Advocate also argued that the learned
Single Judge was not justified in holding that the Arbitral Tribunal
misapplied the provisions of Section 18 of the Act of 1996. The learned
Single Judge erroneously held that the Arbitral Tribunal did not take
into consideration the report which exhibited that the incident
occurred due to erroneous handling of TBM both on account of
improper maneuverability and inadequate greasing of tail skin
brushes. Reappraisal of evidence was not within the jurisdiction of the
learned Single Judge within the realm of Section 34. The findings of
the Arbitral Tribunal were based on plausible reasoning which could
not have been interfered in the jurisdiction under Section 34 of the
Act of 1996. Similarly, learned Single Judge erred in holding that
rejection of reports was to be looked at on the parameters of validity in
law and rationality. Such findings were beyond the scope of challenge
under Section 34 of the Act of 1996.
11. It was further contended by learned Senior Advocate for the
appellant that the learned Single Judge wrongly held in the impugned
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judgment and order that the Arbitral Tribunal overlooked the terms
and conditions of the GCC and SCC entered into between the parties.
Referring to clause 4.23 of the GCC, learned Senior Advocate for the
appellant submitted that the learned Single Judge erroneously came
to a conclusion that the said provision of the GCC does not absorb the
burden of liability of the appellant contractor even in case of an
unforeseen physical condition. It was contended that the findings of
learned Single Judge in respect of the liability of the appellant borne
out of clause 4.23 of the GCC were self-contradictory. It was also
contended that the learned Single Judge took into consideration the
terms and conditions of the GCC to the effect that no acts or
omissions of the engineer shall relieve the contractor of its contractual
duties but at the same time overlooked the condition that the
contractor was under obligation to abide by the instructions of the
engineer in accordance with the contract.
12. The learned Senior Advocate for the appellant further
contended that the learned Single Judge erroneously set aside the
arbitral award on the ground that post of retrieval expert reports were
not considered by the tribunal and that contractual clauses more
specifically clause 4.23 were not considered by it. The arbitral award
was also set aside by the learned Single Judge on the ground that it
was based on the personal knowledge of London members of the
tribunal.
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13. The learned Senior Advocate for the appellant, in support of
his contentions, also relied upon the authority of (2019) 15 Supreme
Court Cases 131 (Ssangyong Engineering and Construction
Company Limited Vs. National Highways Suthority of India),
2025 SCC OnLine SC 2857 (Ramesh Kumar Jain Vs. Bharat
Aluminum Company Limited), (2025) 2 Supreme Court Cases 417
(OPG Power Generation Pvt. Ltd. Vs. Enexio Power Cooling
Solutions India Pvt. Ltd. And Another), 2026 SCC OnLine SCC 33
(Jan De Nul Dredging India Pvt. Ltd. Vs. Tuticorin Port Trust),
(2023) 9 Supreme Court Cases 825 (Konkan Railway Corporation
Limited Vs. Chenab Bridge Project Undertaking), 2024 SCC
OnLine SC 2632 (Punjab State Civil Supplies Corporation Limited
& Anr. Vs. Sanman Rice Mills & Ors.), (2009) 10 SCC 259 (Som
Datt Builders Ltd. v. State of Kerala) and (2019) 20 SCC 1 (Dyna
Technologies (P) Ltd. v. Crompton Greaves Ltd.).
14. On the other hand, learned Senior Advocate for the
respondent submitted that the Arbitral Tribunal accepted the pre-
retrieval reports. The post retrieval reports submitted on behalf of the
respondents as an evidence in the arbitral proceeding were not
considered and were brushed aside without assigning any reason.
Learned Senior Advocate for the respondent referred to clause 14.5
and clause 14.9 of the GCC. It was submitted by learned Senior
Advocate for the respondent that the impugned arbitral award
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suffered from manifest perversity and learned Single Judge was quite
justified in setting aside the impugned arbitral award. The learned
Senior Advocate for the respondent cited the authorities of 2024 SCC
OnLine SC 2632 (Punjab State Civil Supplies Corporation Limited
& Anr. Vs. Sanman Rice Mills & Ors.), (2024) 7 Supreme Court
Cases 219 (Bombay Slum Redevelopment Corporation Private
Limited Vs. Samir Narain Bhojwani) and an unreported decision of
this Court in AP (Com) No. 231 of 2024 (Damodar Valley
Corporation Vs. BLA Projects Private Limited).
15. Kolkata Metro Rail Corporation Ltd. issued a tender for design
and construction of underground section of Metro Railways from
Central Station to Subash Sarobar. The appellant ITD – ITD CEM joint
venture participated in such tender and was declared successful.
Following this, Metrorail and ITD entered into a contract for
underground tunnelling. Two tunnel boring machines (TBM) were
deployed by ITD for undertaking the contracted project; one TBM was
operating East – West and the other in the reverse direction. On
August 31, 2019 there was an incident of water ingress in the tunnels
where ITD was carrying on the project. Due to such incident, serious
damages to the properties above the surface where the tunnels were
running occurred leading to the claims being made by the victims of
such accident. Several litigations including public interest litigation
(PIL) were initiated and various directions were passed in such
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litigations by the Court. On the basis of such directions, an expert
body was constituted to analyze the causes of such incident in order
to fix the liability. Such body of experts submitted its report.
16. In view of the disputes arising between the parties with regard
to the liabilities for such accident, ITD initiated an arbitration
proceeding against Metro Railways. A three member Arbitral Tribunal
was constituted. Such arbitral tribunal, upon considering the
evidence produced by the rival parties, passed an award on August 6,
2023. Such award was challenged by Metro Railways under Section
34 of the Arbitration and Conciliation Act, 1996 by way of AP – COM
No. 381 of 2024 which resulted in the impugned judgment and order.
17. A perusal of the impugned judgment and order demonstrates
that the learned Single Judge while disposing of AP – COM No. 381 of
2024, observed the following:
“56. In Paragraph 121 of the impugned award, the AT
observed that it was there to judge the issues from the
“engineering point of view”. While admitting that engineering
is not a pure science but an applied science with a lot
depending on design constants and coefficients based on past
experience, the AT held that it is possible that after the
present incident also, some of the coefficients and constants
could stand modified like the additional modifications in
carrying out the work after the incident. The AT further
observed that those are preponderances of probabilities with
improvements to cover any further unforeseeable physical
condition. It admitted in Paragraph 121 of the award that
these improvements have no end and no one can be sure if
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these could have contributed to the safe passage of TBM-2
(the other TBM deployed from the reverse end) or were just
superfluous additional safeguards. However, thereafter it held
that none of the theories could put a definite blame on the
claimant’s conduct on the date of accident. While discarding
the IIT, Madras report, in sub-clause (ag) of Paragraph 112 of
the impugned award, the AT observed that since all the three
Arbitrators are civil engineers with more than 40 years of
experience and one of them has a post-graduate degree in
geo-technical engineering from IIT, Delhi, such “professional
knowledge” made them differ with the report as SPT values
can be misleading and in case of saturated silty soils, even
when the soil is weak, SPT values obtained can be quite high
and should not be relied upon in isolation unless corroborated
with other tests. It was suggested that internal erosion cannot
be ruled out.
57. The premise of the said consideration is entirely de hors
the fundamental policy of Indian Law. It is well-settled that a
Judge cannot impute his personal knowledge into the
adjudicatory process. The moment personal knowledge comes
in and replaces material evidence presented by the parties,
the objective consideration of the body of evidence,
irrespective of the biases and prejudices of the Judge (read
‘AT’ in the present context), are excluded.
58. Merely having experience in general civil engineering
and/or one of the AT members being an alumnus of the IIT,
Delhi did not confer any special status on the AT members
insofar as the dispute involved in this particular arbitration
proceeding is concerned. In their capacity as members of the
AT, which is a quasi-judicial body, the individual expertise of
the AT members cannot supplant tangible evidence produced
by the parties. It might very well be that the technical
qualifications of the AT members earned them a spot in the
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Tribunal in the first place, but once the members assumed the
role of Arbitrators, they were statutorily duty-bound to
undertake a quasi-judicial exercise and could not hold any
individual opinion or pre-conceived notion but were duty-
bound in law to adjudicate solely on the basis of the materials
produced by both parties and the terms of the contract
between them.
59. The moment the personal opinions, professional or
otherwise, of the Judge or Tribunal comes into play, one of the
fundamental policies of Indian Law is hit, being that one
cannot be the Judge in his own cause. The “cause”, in the
present case, is the opinion of the AT members as
professionals, the authenticity, relevance and worth of which
was decided by the AT members themselves while deciding
the contentious issues before them. Such approach on the part
of the AT was clearly against the fundamental policy of Indian
Law as well as contrary to basic principles of justice and
judicial morality, thereby bringing the award within the fold of
Section 34(2)(b)(ii), Explanation I, sub-clauses (ii) and (iii).”
18. In the impugned order, as it transpires, personal knowledge of
the members of the Arbitral Tribunal was imputed to discard an
evidence adduced on the part of respondent herein i.e. the report
submitted by IIT, Madras regarding the possible cause of the incident.
Professional knowledge of the members of the AT made them differ
with the report as SPT values could be misleading and in case of
saturated silty soils, even when the soil is weak, SPT values obtained
can be quite high and should not be relied upon in isolation unless
corroborated with other tests. It was suggested that internal erosion
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cannot be ruled out. Such opinion was expressed by the members of
AT which was solely based on their alleged personal expertise in the
field and was not at all based on any definite scientific reasoning.
Moreover, such reasoning ought to have been based on definite
imputation saying ‘should not be relied upon’ instead of ‘must not be
relied’. In such view of the facts, we are not in a position to say that
the findings arrived at by learned Single Judge was perverse or not
based on plausible reasoning.
19. The other objection that was raised by the respondent, in its
challenge under Section 34 of the Act of 1996 and accepted by the
learned Single Judge was that the parties were not treated equally.
The evidence in the form of reports submitted by the appellant herein
whereas that produced on behalf of the respondent was discarded
merely on the ground that such reports were prepared during the
continuance of arbitral proceeding prepared for the purpose of putting
up a defense. The learned Single Judge analyzed the issue in the
following terms:
“61. There is not an iota of pleading or proof assailing the
integrity, independence and expertise of the authors of the
reports produced by either party, nor did the AT come to any
such finding. The primary premise of discarding the expert
reports produced by the Metro Railways was that those were
prepared subsequent to the commencement of the arbitration
proceeding, much after the fateful incident, for the purpose of
preparing the defence of Metro Railways.
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62. However, none of the said premises are valid in law. The
obvious reason for the delay in issuance of the said reports,
about nine hundred days after the incident, was that the
experts who authored those waited for the retrieval of the
concerned TBM, which had to be cut into pieces over a long
period of time spanning almost three years and recovered
from underground, along with soil samples. Even in the report
authored by Subarna Jurong, which was relied on by ITD
itself, it was clearly stated that the actual cause of accident
could be ascertained only after the retrieval of the TBM, thus
lending justification to the waiting period for retrieval of the
TBM.”
20. The respondent Metro Railways came up with a definite case
that the TBM was operated unprofessionally and incorrectly, as well as
that there was severe inadequacy of greasing on the part of the ITD
personnel. Such allegations were elaborately discussed in the reports
submitted on behalf of the respondent and the experts came to
conclude that the huge quantity of grease consumed at the relevant
juncture, coupled with the erroneous alignment of rings laid by TBM
in its route of boring, which deviated about eighty-eight per cent from
the correct alignment as per the said reports, were sufficient proof that
the TBM was not being manoeuvred properly and there was excessive
wear and tear on the tail skin brushes aligning the TBM, which stood
between the unwarranted influx of soil, grout, etc. into the machine
from outside. A comparative study of the other TBM deployed at the
sight was produced as evidence by the respondent Metro Railway to
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establish that excessive requirement of grease and frequent change of
tail brushes indicated that the tail brushes were worn off much more
frequently than the normal. Such evidence, according to the
respondent, established that the particular TBM was not being
operated with due care as was required. The personnel of the
appellant overlooked and ignored the indications. Therefore, the
reports established that the appellant did not handle the TBM with
proper care and caution resulting in the mishap.
21. The learned Single Judge also held that there was in fact, no
delay in producing the report. Such report was prepared immediately
after the retrieval of the TBM. Moreover, the reason for discarding the
expert report by the Arbitral Tribunal was shown to be based on
unreliable photographic evidence. However, learned Single Judge
found the reports submitted by IIT, Madras and IIEST Shibpur to be
prepared on the basis of physical examination of recovered parts of the
TBM as well as its report together with the soil conditions. The learned
Single Judge also took note that even Dr. Lee Blade who had stated
that the photographic evidence was unreliable; himself was present at
the site of recovery of the TBM and did not rely solely on the
photographic evidence to form his opinion. The learned Single Judge
thus observed that,
“68. These aspects of the matter were not gone into by the AT
at all, which discarded the entire body of expert evidence filed
by Metro Railways at the stroke of a pen, holding that such
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reports were not independent reports, since they were
prepared subsequent to the commencement of the case for the
purpose of defending the case and also that those were
belated. As observed earlier, the delay in furnishing the
reports corresponded with the delay in retrieval of the TBM
and those were filed at the earliest thereafter. The TBM was
completely recovered only after commencement of the
arbitration proceeding, which was the reason for belated
submission of the post-retrieval reports.
69. The logic that the said post-retrieval reports were prepared
at the behest of the respondent/petitioner-Metro Railways for
preparing their defence equally applies to the reports
furnished by the claimant/ITD. It is quite obvious that both
parties filed reports in support of their respective cases for the
obvious reason that expert reports would be the best evidence
to resolve the dispute. However, the integrity, independence
and professional acumen of none of the experts/expert bodies
who/which authored the reports was even challenged, let
alone being tarnished by evidence. Thus, the said logic could
not have been a valid or rational ground for discarding the
post-retrieval reports filed by the Metro Railways altogether
while accepting the pre-retrieval reports produced by the
claimant/ITD.
70. It has be borne in mind that the reports were all authored
by experts in their field, which view was even reiterated by
the AT in different places of the award. However, the AT
proceeded to junk Metro Railways’ reports on frivolous
grounds while accepted those of the claimant/ITD, by
applying different parameters, hence depriving one of the
parties of level playing ground.”
71.Thus, the application of double standards attracts the
violation of Section 18 of the 1996 Act and tantamounts to
perversity, which, according to Associate Builders (supra)6,
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comes within the purview of “patent illegality” as introduced
under sub-section (2-A) of Section 34 of the 1996 Act by the
2015 Amendment, which is applicable to the present lis.”
22. In P.R. Shah, Shares & Stock Brokers (P) Ltd. (supra), the
Hon’ble Supreme Court noted that,
“22. The appellant contends that the Arbitral Tribunal had
used personal knowledge to decide the matter. Attention was
drawn to the following observation in the award by the
majority:
“Also, it is known fact which is known to the arbitrators
that as per the market practice such kind of
transactions of one broker takes place with another
broker either in their own name or in their firm’s name
or in the name of different entity which is also owned
by the member. Same way these transactions are done
by Respondent 2 (the appellant herein) in the name of
Respondent 1 (the second respondent herein).”
23. An Arbitral Tribunal cannot of course make use of its
personal knowledge of the facts of the dispute, which is not a
part of the record, to decide the dispute. But an Arbitral
Tribunal can certainly use its expert or technical knowledge or
the general knowledge about the particular trade in deciding a
matter. In fact, that is why in many arbitrations, persons with
technical knowledge, are appointed as they will be well-
versed with the practices and customs in the respective fields.
All that the arbitrators have referred to is the market practice.
That cannot be considered as using some personal knowledge
of facts of a transaction to decide a dispute.”
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23. In the case at hand, we have noted that the arbitral tribunal,
while deciding the issues, imputed its personal expertise in civil
engineering and concluded that the report submitted by IIT, Madras
may not be conclusive and it was dependent upon several other
factors. However, such findings were not based on any concrete
evidence rather, it was mere assumption based on the personal
knowledge and experience of the tribunal and the same was used to
discard positive evidence adduced by the respondent.
24. The learned Single Judge observed that the Arbitral Tribunal
discarded the report submitted on behalf of Metro Railways holding
that such reports were not independent reports, since they were
prepared subsequent to the commencement of the case for the
purpose of defending the case and also that those were belated. As
noted above, the delay in furnishing the reports corresponded with the
delay in retrieval of the TBM and those were filed at the earliest after
such retrieval. It also held that if the report submitted by the
respondent Metro Railways was liable to be cast-off on the ground of
delay then same logic applied to the report submitted on behalf of the
appellant ITD.
25. In that view of the facts, we are of the opinion that the finding
of learned Single Judge to the effect that the reports produced on
behalf of the respondent Metro Railway were unreasonably discarded,
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cannot be said to be perverse or beyond the scope of Section 34 of the
Act of 1996.
26. Another issue raised by the appellant that the learned Single
Judge, erroneously held that the Arbitral Tribunal turned the contract
on its head. The learned Single Judge noted various provisions of the
contract between the appellant ITD and the respondent Metro
Railways. The impugned judgment and order noted Clause 4.23 of the
GCC with regard to liability in unforeseen physical condition. Learned
Single Judge noted that no report in writing, in terms of such clause,
was brought on record by the appellant. It further noted that even if
such unforeseen physical condition had been reported by the
appellant, it would not have absolved its liability towards third party
risk. It also noted that as per Clause 4.9 of the GCC and Clause 5
(first paragraph) of the SCC, the Contractor was to carry out soil
investigation and it would be deemed that it was satisfied of the same,
before putting in the tender itself. The learned Single Judge noted that
in the present case, a GIR was prepared by Subarna Jurong on the
basis of Constell’s report, which was preceded by a soil investigation
at the instance of the Contractor through its agents. Thus, the
presumption was, as per the contract between the parties, the
Contractor was duly satisfied with the soil condition before entering
into the Contract.
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27. The impugned judgment and order also noted the relevant
clauses of the contract towards third party liability in the following
terms, that’s to say: –
“83. The next important condition of the contract between the
parties is encapsulated in Clause 3.4 of the GCC, in the third
paragraph of which it is provided that no acts/omission of the
Engineer (GC) shall relieve the Contractor of its contractual
duties, responsibilities, obligations and liabilities.
84. Clause 4.1 of the GCC, in its fourth and fifth paragraphs,
casts full responsibility and risk on the Contractor for the
adequacy, stability, safety of site operations, works,
irrespective of approval or consent of the Engineer (emphasis
supplied).
85. The second paragraph of Clause 4.1 of the GCC provides
that it is the Contractor which is to design, manufacture and
execute the work.
86. Thus, the very premise of the impugned award, to the
effect that Metro Railways did not prove that the GC’s
instructions were not followed by the Contractor, is an entirely
irrelevant and extraneous consideration for deciding the
present dispute.
87. It is clear from the above clauses that, irrespective of any
act or omission of the Engineer, the Contractor has the
contractual obligation to bear the liabilities for any damage
caused to third parties during the project, irrespective of
approval or consent of the Engineer. Since the dispute relates
to stability and safety of the site operations and the works,
the contract casts complete responsibility on the Contractor,
which is admittedly a known commercial entity specialized in
the field of work involved in the project-in-question and, thus,
obviously entered into the contract with its eyes open, taking
calculated commercial risks.
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88. The commercial nature of the transaction itself shows that
the Contractor took a commercial risk upon assessing and
taking into account the soil conditions and other aspects
involved and cannot now resile from such position.
89. On the other hand, the role of the GC (the Employer-
appointed Engineer) in the project is merely supervisory in
nature. Clause 3.2 of the GCC and Clause 2 of the SCC
provide that the GC is merely to watch and inspect the works.
Clause 15.3 of the GCC stipulates insurance in respect of
third-party damages. Clause 14.5 of the GCC is clear in that
the Contractor is liable for all risks other than the employer’s
risks, as enumerated in Clause 14.3 (which are not attracted
in the present case).”
28. After noting the aforesaid clauses of the contract, the learned
Single Judge observed that such provisions were completely
overlooked by the Arbitral Tribunal which rendered the arbitral award
patently perverse. The Arbitral Tribunal was obliged to give due
weightage to the terms of the contract and the trade usages prevalent
to the nature of the contract. However, the tribunal completely ignored
the terms of the contract and turned the entire liability upon the
respondent, Metro Railway against the explicit terms of the contract.
29. As discussed, the appellant failed to bring on record any
communication made by it in writing with regard to unforeseen
physical condition. Moreover, the clauses of the contract specifically
affixed any third party liability upon the contractor i.e. the appellant.
Nevertheless, by the arbitral award, the respondent was held
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responsible for the third party risk upon the respondent Metro
Railway, inspite of the specific clauses of the contract. There is
absolutely no reason assigned in the award for such shift of liability.
In such circumstances, we find no reason to hold that the findings of
learned Single Judge are perverse.
30. In Ssangyong Engineering & Construction Company
Limited (supra) Supreme Court noted that 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 on the ground
of patent illegality. Similarly, in Ramesh Kumar Jain (supra), the
Hon’ble Supreme Court observed that,
“35. Considering the aforesaid precedents, in our considered
view, the said terminology of ‘patent illegality’ indicates more
than one scenario such as the findings of the arbitrator must
shock the judicial conscience or the arbitrator took into
account matters he shouldn’t have, or he must have failed to
take into account vital matters, leading to an unjust result; or
the decision is so irrational that no fair or sensible person
would have arrived at it given the same facts. A classic
example for the same is when an award is based on “no
evidence” i.e., arbitrators cannot conjure figures or facts out of
thin air to arrive at his findings. If a crucial finding is
unsupported by any evidence or is a result of ignoring vital
evidence that was placed before the arbitrator, it may be a
ground the warrants interference. However, the said
parameter must be applied with caution by keeping in
mind that “no evidence” means truly no relevant
evidence, not scant or weak evidence. If there is some
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evidence, even a single witness’s testimony or a set of
documents, on which the arbitrator could rely upon or
has relied upon to arrive at his conclusions, the court
cannot regard the conclusion drawn by the arbitrator
as patently illegal merely because that evidence has
less probative value. This thin line is stood crossed only
when the arbitral tribunal’s conclusion cannot be
reconciled with any permissible view of the evidence.”
[Emphasis supplied]
31. As noted above, the Arbitral Tribunal not only overlooked the
terms of the contract but also ignored the evidence led by the
respondent, and that too, according to the learned Single Judge, with
a single stroke of pen without assigning any reason, would surely
invite the application of the principle of patent illegality.
32. OPG Power Generation (P) Ltd. (supra) noted that
“84. An Arbitral Tribunal must decide in accordance with the
terms of the contract. In a case where an Arbitral Tribunal
passes an award against the terms of the contract, the award
would be patently illegal. However, an Arbitral Tribunal has
jurisdiction to interpret a contract having regard to terms and
conditions of the contract, conduct of the parties including
correspondences exchanged, circumstances of the case and
pleadings of the parties. If the conclusion of the arbitrator is
based on a possible view of the matter, the Court should not
intefere. But where, on a full reading of the contract, the view
of the Arbitral Tribunal on the terms of a contract is not a
possible view, the award would be considered perverse and
as such amenable to interference.”
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33. We have noted hereinbefore that the contract between the
parties required the contractor to report in writing, any unforeseen
physical condition to the employer. No evidence of such report has
been brought on record. Moreover, inspite of such report, according to
the contract, the contractor accepted the liability of any third party
risk. Nevertheless, the Arbitral Tribunal went beyond the contract and
affixed such liability upon the employer i.e. the respondent Metro
Railway, apparently without any reason assigned in this regard which
rendered the award patently illegal and liable to be set aside.
34. In Jan De Nul Dredging Indian Pvt. Ltd. (supra) the Hon’ble
Supreme Court observed on the jurisdiction under Section 37 of the
Act of 1996 in the following terms: –
“36. The gist of the aforesaid decisions is that the jurisdiction
of the court under Section 37 of the Act is akin to the
jurisdiction of the court under Section 34 of the Act, and,
therefore, the scope of interference by the court in appeal
under Section 37 cannot go beyond the grounds on which
challenge can be made to the award under Section 34 of the
Act. Moreover, the courts exercising powers under Sections 34
and 37, do not act as a normal court, and therefore, ought not
to interfere with the arbitral award on a mere possibility of an
alternative view.”
35. Similar ratio was laid down in the case of Konkan Railway
Corpn. Ltd. (supra). The Hon’ble Supreme Court noted the principles
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regarding of scope of Section 34 and 37 of the Arbitration and
Conciliation Act in following terms: –
“18. At the outset, we may state that the jurisdiction of the
court under Section 37 of the Act, as clarified by this Court in
MMTC Ltd. v. Vedanta Ltd. is akin to the jurisdiction of the
court under Section 34 of the Act. Scope of interference by a
court in an appeal under Section 37 of the Act, in examining
an order, setting aside or refusing to set aside an award, is
restricted and subject to the same grounds as the challenge
under Section 34 of the Act.
19. Therefore, the scope of jurisdiction under Section 34 and
Section 37 of the Act is not akin to normal appellate
jurisdiction. It is well-settled that courts ought not to interfere
with the arbitral award in a casual and cavalier manner. The
mere possibility of an alternative view on facts or
interpretation of the contract does not entitle courts to reverse
the findings of the Arbitral Tribunal. In Dyna Technologies (P)
Ltd. v. Crompton Greaves Ltd. , this Court held : (Dyna
Technologies case [Dyna Technologies (P) Ltd. v. Crompton
Greaves Ltd., (2019) 20 SCC 1] , SCC p. 12, paras 24-25)“24. There is no dispute that Section 34 of the
Arbitration Act limits a challenge to an award only on
the grounds provided therein or as interpreted by
various courts. We need to be cognizant of the fact that
arbitral awards should not be interfered with in a
casual and cavalier manner, unless the court comes to a
conclusion that the perversity of the award goes to the
root of the matter without there being a possibility of
alternative interpretation which may sustain the arbitral
award. Section 34 is different in its approach and
cannot be equated with a normal appellate jurisdiction.
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The mandate under Section 34 is to respect the finality
of the arbitral award and the party autonomy to get
their dispute adjudicated by an alternative forum as
provided under the law. If the courts were to interfere
with the arbitral award in the usual course on factual
aspects, then the commercial wisdom behind opting for
alternate dispute resolution would stand frustrated.
25. Moreover, umpteen number of judgments of this
Court have categorically held that the courts should not
interfere with an award merely because an alternative
view on facts and interpretation of contract exists. The
courts need to be cautious and should defer to the view
taken by the Arbitral Tribunal even if the reasoning
provided in the award is implied unless such award
portrays perversity unpardonable under Section 34 of
the Arbitration Act.”
36. The Hon’ble Supreme Court defined the latitude of Section 37
of the Act of 1996. It laid down that the scope of the intervention of
the Court in arbitral matters is virtually prohibited, if not absolutely
barred and that the interference is confined only to the extent
envisaged under Section 34 of the Act. The appellate power of Section
37 of the Act is limited within the domain of Section 34 of the Act. It is
exercisable only to find out if the Court, exercising power under
Section 34 of the Act, has acted within its limits as prescribed
thereunder or has exceeded or failed to exercise the power so
conferred. The Appellate Court has no authority of law to consider the
matter in dispute before the Arbitral Tribunal on merits so as to find
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out as to whether the decision of the Arbitral Tribunal is right or
wrong upon reappraisal of evidence as if it is sitting in an ordinary
Court of appeal. It is only where the Court exercising power under
Section 34 has failed to exercise its jurisdiction vested in it by Section
34 or has travelled beyond its jurisdiction that the Appellate Court can
step in and set aside the order passed under Section 34 of the Act. Its
power is more akin to that superintendence as is vested in Civil
Courts while exercising revisionary powers. The arbitral award is not
liable to be interfered unless a case for interference as set out in the
earlier part of the decision, is made out. It cannot be disturbed only
for the reason that instead of the view taken by the arbitral tribunal,
the other view which is also a possible view is a better view according
to the Appellate Court.
37. In the case at hand, the learned Single Judge was not
confronted with a situation that two views were possible and it altered
the view accepted by the arbitral tribunal. Rather, the learned Single
Judge found that the award was passed completely overlooking the
terms of the contract between the parties as well as upon discarding
the evidence produced by the respondent without assigning any
reason for such rejection. According to learned Single Judge, the
reasoning provided by the tribunal in arriving at the conclusion were
manifestly against the public policy as well as principles of natural
justice and were patently perverse. Nothing has been demonstrated
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that in passing the impugned judgment and order, the learned Single
Judge exceeded its jurisdiction vested in it under Section 34.
38. In Som Datt Builders Ltd. (supra) it was held that where the
arbitrator has referred to facts of the case and has noticed some
reasoning which in view of the arbitrator was sufficient to arrive at a
conclusion for granting relief, award cannot be stated to be
unreasoned. The arbitrator is not expected to write an elaborate
judgment and where the arbitrator has noticed contentions of the
counsel, it cannot be said that the arbitrator failed in stating reasons
for the award.
39. Similar views were laid down in Dyna Technologies (P) Ltd.
(supra) which noted that the mandate under Section 31(3) of the
Arbitration Act is to have reasoning which is intelligible and adequate
and, which can in appropriate cases be even implied by the courts
from a fair reading of the award and documents referred to
thereunder, if the need be. The aforesaid provision does not require an
elaborate judgment to be passed by the arbitrators having regard to
the speedy resolution of dispute.
40. In Bombay Slum Redevelopment Corpn. (P) Ltd. (supra), the
Hon’ble Supreme Court laid down that,
“26. The jurisdiction of the appellate court dealing with an
appeal under Section 37 against the judgment in a petition
under Section 34 is more constrained than the jurisdiction of
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the Court dealing with a petition under Section 34. It is the
duty of the appellate court to consider whether Section 34
Court has remained confined to the grounds of challenge that
are available in a petition under Section 34. The ultimate
function of the appellate court under Section 37 is to decide
whether the jurisdiction under Section 34 has been exercised
rightly or wrongly. While doing so, the appellate court can
exercise the same power and jurisdiction that Section 34 Court
possesses with the same constraints.”
41. Similarly in Damodar Valley Corporation (supra) it was
noted by this Court that while exercising powers under Section 37 of
the Act of 1996 we are required to find out whether the Court
exercising powers under Section 34 of the Act 1996 acted within its
limits as prescribed there under or exceeded or failed to exercise the
power so conferred.
42. In the instant case, however, the learned Single Judge
proceeded to set aside the arbitral award ostensibly on the ground
that the evidence produced by the respondent Metro Railway was
discarded without assigning any reason, merely on the ground that it
was a stale report prepared belated, after the initiation of the arbitral
proceeding. The delay in the retrieval of the parts of TBM was
absolutely not taken into consideration by the arbitral tribunal.
43. In the light of discussions made hereinbefore, we are of the
opinion that the learned Single Judge did not exceed its jurisdiction or
fail to exercise its jurisdiction vested in it under the provisions of
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Section 34 of the Act of 1996. Therefore, we find no reason to interfere
with the impugned judgment and order.
44. Consequently, the instant appeal being APOT No. 298 of 2025
is hereby dismissed however, without any order as to costs. With the
disposal of main case, connected applications, if any, shall also stand
disposed of accordingly.
45. Urgent photostat certified copy of this judgment, if applied
for, be supplied to the parties on priority basis upon compliance of all
formalities.
[MD. SHABBAR RASHIDI, J.]
46. I agree.
[DEBANGSU BASAK, J.]