Delhi High Court
National Highways Authority Of India vs S & P Infrastructures Dev (Pvt) Ltd on 30 July, 2026
$~11
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ O.M.P. (COMM) 8/2017, I.A. 286/2017 & I.A. 5452/2021
NATIONAL HIGHWAYS AUTHORITY OF INDIA
.....Petitioner
Through: Mr. Amit Singh Chauhan, Mr.
Kuldeep Kasana and Mr.
Arindam Bhardwaj, Advocates.
versus
S & P INFRASTRUCTURES DEV (PVT) LTD
.....Respondent
Through: Mr. Raghvendra Upadhyay, Ms.
Kanika Singh, Ms. Radhika
Jindal and Ms. Purnima Jain,
Advocates.
CORAM:
HON'BLE MR. JUSTICE OM PRAKASH SHUKLA
JUDGMENT(ORAL)
% 30.07.2026
1. The present petition filed under Section 34 of the Arbitration and
Conciliation Act, 19961 seeks to interdict the arbitral award2 dated
13.07.2016 passed by the Arbitral Tribunal3 comprising of Shri J.C.
Shah, Presiding Arbitrator, Shri B.D. Joshi and Shri Ashok Wasson,
Co-arbitrators.
2. The brief facts of the present case would reveal that the
Petitioner, namely, National Highways Authority of India4 is a statutory
authority constituted under Section 3 of the National Highways
Authority of India Act, 1988, for the development, maintenance and
1
“Act”, hereinafter
2
Also referred to as “award” or “impugned award”
3
“Tribunal”, hereinafter
4
“NHAI”, hereinafter
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management of National Highways. The Central Government entrusted
NHAI with the work of short-term improvement and routine
maintenance of the Kanpur-Fatehpur section (km 457.377 to km
508.877) and Fatehpur-Thariyaon section (km 508.877 to km 571.197)
on NH-2 in the State of Uttar Pradesh5.
3. Accordingly, NHAI issued a Notice Inviting Tender (NIT) in
2012, wherein the Respondent emerged as the successful bidder quoting
Rs.11,19,76,925/-. Thus, a Letter of Acceptance came to be issued to
the Respondent on 06.12.2012 and in furtherance thereof, Contract
Agreement dated 09.01.2013 was executed between the parties. The
contract was an item-rate contract based on the bill of quantities. The
stipulated period for execution of the work was from 25.01.2013 to
24.01.2014.
4. Subsequently, a Supplementary Agreement dated 01.12.2014
was also executed between the parties relating to amendment of Clause
25 relating to arbitration. Pursuant thereto, due to certain disputes, the
Respondent requested NHAI for constitution of an Arbitral Tribunal.
The Tribunal came to be constituted and after exchanging pleadings and
arguments, the Tribunal rendered its award on 13.07.2016, which was
received by NHAI on 14.09.2016, whereby five claims of the
Respondent were allowed.
5. It emerges from the record that the Tribunal awarded, (i) Claim
No.1 relating to Loss of Profit; (ii) Claim No.3 relating to Finance
5
“work”, hereinafter
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Charges; (iii) Claim No.4 relating to Final Bill/EOT Bills; (iv) Claim
No.5 relating to Security Deposit and (v) Claim No.6 relating to RO &
HO Overheads. However, Claim No.2 relating to Claims for idling
charges and arbitration costs and Claim No.7 relating to cost of
Arbitration were rejected.
6. Aggrieved by the award, NHAI has filed the present petition
under Section 34 of the Act challenging the said award in respect of
Claim Nos. 1, 3, 4, 6 and the interest component.
7. The fulcrum of the arguments advanced by the learned Counsel
for the Petitioner is that there was absolutely no dispute regarding the
impugned claims during execution of the work in question or even
while submitting the final bill. Thus, according to him, the claims were
barred by the principles of waiver, acquiescence and estoppel.
8. The learned Counsel, as far as grant of Claim No.1 relating to
loss of profit is concerned, has vehemently submitted that the Tribunal
could not have awarded any compensation for loss of profit, particularly
when the contract had been fully performed. According to him, the
contract was never terminated and there was no contention between the
parties relating to the performance of contract. Further, since the
contract was fully performed, there was no question of grant of any loss
of profit. In this regard, it is submitted that no correspondence has been
placed on record requesting additional work or complaining of
insufficient work fronts. Further, it is also averred that the Respondent
never sought any variation as per Clause 38 and hence, there was no
contractual or factual basis for any claim of loss of profit.
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9. Learned Counsel has taken this Court to the facts and figures of
the contract executed between the parties. It is evident from the record
that the Petitioner issued indents worth Rs.5.91 crores, but the
Respondent only executed work worth approximately Rs.3.18 crores,
which depicts that the Respondent was ill-equipped to carry out the
entire work. Further, it is argued that the Respondent produced no
evidence to demonstrate deployment of machinery or manpower at the
work site. It is thus averred that a dichotomy existed in awarding the
claims in favour of the Respondent since on one hand, the Tribunal
rejected Claim No. 2 relating to idling charges for want of evidence,
and on the other hand, it held that adequate machinery and manpower
had been deployed while allowing Claim No. 1. According to the
learned Counsel, the Tribunal overlooked the minutes of meeting6 of
the Evaluation Committee wherein it was recorded that the
Respondent’s quoted price was already 16% below the estimated
contract value, buttressing the fact that no profit could arise. It is argued
that further work could only be granted once the indent already given
stood completed, hence, the arbitral award is in breach of the
contractual mechanism governing work through indents.
10. As far as Claim No. 3 is concerned, the learned Counsel has
submitted that furnishing performance guarantees was an express
contractual obligation of the Respondent and hence, finance charges for
obtaining guarantees cannot be shifted to the Petitioner. The learned
Counsel has stoutly submitted that finance charges are built-in and form
6
“MoM”, hereinafter
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a part of overheads and cannot be separately recovered. According to
him, no evidence was furnished regarding blocked finances, margin
money or the expenditure actually incurred by the Respondent. Further,
in any case, the Respondent never raised this claim during execution or
in the final bill. It is also submitted that no independent findings were
rendered under this claim. Thus, the finding under Claim No. 3 is liable
to be set aside.
11. As far as Claim No.4 for the Final Bill and Extension of Time7
bills/letters along with interest is concerned, it is submitted that
payments were withheld because of poor contractual performance by
the Respondent and that numerous letters were also issued requiring
improvement in their performance. Further, a joint inspection revealed
substantial mortality of median plants, giving rise to the Petitioner’s
claim of Rs.23.13 lakh against the Respondent for the dried-up plants.
It is also pointed out that upon request of Respondent, a re-inspection
was also organised but Respondent did not participate in the same and
unfortunately, the Tribunal completely ignored this correspondence and
wrongly disallowed recoveries. According to the learned Counsel, the
Petitioner had already legally recovered the said amount due from the
Respondent, hence, there was no occasion for the Tribunal to have
allowed the said claim, as it was essentially in the nature of
counterclaim against the recoveries already made by the Petitioner.
With respect to interest awarded, it is submitted that since the
underlying claims are wrongly awarded, interest thereof does not arise
7
“EOT”, hereinafter
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and even otherwise, it is not tenable since interest is granted from dates
when the claim did not arise.
12. Similarly, in regard to Claim No. 6 for reimbursement of
underutilised Regional Office8 and Head Office9 overheads, the learned
Counsel has contended that the Respondent failed to prove mobilisation
or actual expenditure under the RO/HO heads and also that these
expenses are accounted for under the overhead charges. Further, no
evidence to this effect was produced, which was also observed by the
Tribunal, however, the Tribunal in the most illegal manner went ahead
in awarding this claim. It is also submitted that the standard objections
of the claim having been never been included in monthly statements or
the final bill, was also considered for the present claim.
13. The learned Counsel, whilst concluding his arguments, has
contended that the award is contrary to the terms of the contract and the
Tribunal ignored material documentary evidence and as such the
findings are perverse and unsupported by evidence. Additionally, the
award seeks to rewrite the contractual bargain, which is impressible in
law. According to him, the award is patently illegal and contrary to
public policy warranting interference under Section 34 of the Act.
14. In support of his arguments, learned Counsel placed reliance on
Kanchan Udyog Ltd. v. United Spirits Ltd.10, C&P Haulage v.
Middleton11, the Board of Trustees of V.O. Chidambaranar Port Trust
8
“RO”, hereinafter
9
“HO”, hereinafter
10
(2017) 8 SCC 237, Para 28-30
11
(1983) 3 ALL ER 94 (Pg. 117)
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v. PSA Social Terminals Ltd. & Ors.12, Batliboi Environmental
Engineers Ltd. v. Hindustan Petroleum Coproration Ltd. & Anr13. and
Unibros v. All India Radio14.
15. Per contra, the learned Counsel for the Respondent has
supported the arbitral award and submits that the present petition has
been filed by the Petitioner in the nature of an appeal, which is not
within the scope of Section 34 of the Act, and hence, the petition
deserves to be dismissed at the outset. According to the learned
Counsel, the Award does not suffer from any patent illegality,
perversity and is not in conflict with the terms of the contract or public
policy of India.
16. According to the learned Counsel, the Petitioner essentially
seeks re-appreciation of evidence from this Court, which is untenable,
as held in a catena of judgments.
17. As far as the merits are concerned, the learned Counsel has
submitted that the Petitioner failed to make available work
corresponding to the tendered contract value of Rs.11.19 crores.
According to the learned Counsel, only partial work fronts were made
available and although machinery and manpower had been mobilised
for execution of the entire contract, however, the desired work could
not be achieved because of reasons directly attributable to the
Petitioner. Consequently, the Respondent suffered expected loss of
profit, which was rightly awarded by the Tribunal. It is also submitted
12
MANU/TN/3681/2017, Para 30-32
13
(2024) 2 SCC 375
14
2023 SCC OnLine SC 1366
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that the Petitioner did not undertake any action with respect to the
Respondent’s failure to execute the work, and instead released the
performance guarantee and security deposit as well.
18. It was also averred that the MoM of the Evaluation Committee
were not part of the contract and that the Respondent was not a party to
these minutes.
19. With respect to the claims awarded relating to finance charges,
the learned Counsel has submitted that the Respondent, while quoting
rates, had factored in finance charges for bank guarantees, working
capital and margin money for performance of the overall work and not
for the truncated work, which the Respondent was compelled to execute
because of the Petitioner. According to him, since the entire tendered
quantity was allegedly not made available, those finance costs remained
unrecovered and therefore, the Respondent sought reimbursement,
which was rightly allowed by the Tribunal.
20. Further, as regards the Final Bill/EOT Bills, it is submitted that
almost thirteen running bills were submitted during the original contract
period, out of which the 13th bill was unpaid by the Petitioner. Further,
six additional bills submitted during the extension period also remained
unpaid. Therefore, the Tribunal has rightly awarded the claim for
release of outstanding bill amounts along with interest. It is averred with
respect to the claim of RO & HO overheads that the Respondent
claimed reimbursement of RO and HO overheads at 1% and 2%
respectively as per trade practice, which was rightly allowed by the
Tribunal. Moreover, the claim was based on the allegation that the
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Petitioner failed to provide work for the entire contract value, resulting
in under-utilisation of resources and therefore the same was rightly
awarded in favour of the Respondent.
21. Having heard the learned Counsel for the parties and perused the
material on record, this Court is not inclined to allow the present
petition for the reasons to follow.
22. At the very outset, it is well-settled by plethora of judgments that
the scope of interference by this Court under Section 34 of the Act is
circumscribed. The Court exercising jurisdiction under Section 34 does
not sit in appeal over the findings of the Arbitral Tribunal and cannot
undertake a re-appreciation or re-evaluation of the evidence merely
because another view may be possible. The interference is warranted
only within the limited parameters prescribed under the statute.
Furthermore, interference is not warranted even if the award appears to
be unreasoned or non-speaking, unless one of the statutory grounds is
made out.
23. In Associate Builders v. Delhi Development Authority15, the
Supreme Court made the following observations:
“31. The third juristic principle is that a decision which is
perverse or so irrational that no reasonable person would have
arrived at the same is important and requires some degree of
explanation. It is settled law that where:
(i) a finding is based on no evidence, or
(ii) an Arbitral Tribunal takes into account something irrelevant to
the decision which it arrives at; or
(iii) ignores vital evidence in arriving at its decision, such decision
would necessarily be perverse.
15
(2015) 3 SCC 49
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***
33. It must clearly be understood that when a court is applying
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.
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. Thus 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 this score [ Very often an arbitrator is a lay
person not necessarily trained in law. Lord Mansfield, a famous
English Judge, once advised a high military officer in Jamaica who
needed to act as a Judge as follows:”General, you have a sound
head, and a good heart; take courage and you will do very well, in
your occupation, in a court of equity. My advice is, to make your
decrees as your head and your heart dictate, to hear both sides
patiently, to decide with firmness in the best manner you can; but be
careful not to assign your reasons, since your determination may be
substantially right, although your reasons may be very bad, or
essentially wrong”. It is very important to bear this in mind when
awards of lay arbitrators are challenged.] . Once it is found that the
arbitrators approach is not arbitrary or capricious, then he is the
last word on facts.
***
42.1. (a) A contravention of the substantive law of India would
result in the death knell of an arbitral award. This must be
understood in the sense that such illegality must go to the root of the
matter and cannot be of a trivial nature. This again is really a
contravention of Section 28(1)(a) of the Act…
42.2. (b) A contravention of the Arbitration Act itself would be
regarded as a patent illegality — for example if an arbitrator gives
no reasons for an award in contravention of Section 31(3) of the Act,
such award will be liable to be set aside.”
24. Further, in DMRC Ltd. v. Delhi Airport Metro Express (P)
Ltd.16, the Supreme Court made the following observations:
“34. The contours of the power of the competent court to set aside
an award under Section 34 has been explored in several decisions
of this Court. In addition to the grounds on which an arbitral award
can be assailed laid down in Section 34(2), there is another ground
for challenge against domestic awards, such as the award in the
present case. Under Section 34(2-A) of the Arbitration Act, a16
(2024) 6 SCC 357
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domestic award may be set aside if the Court finds that it is vitiated
by “patent illegality” appearing on the face of the award.
***
36. Patent illegality may also arise where the award is in breach
of the provisions of the arbitration statute, as when for instance the
award contains no reasons at all, so as to be described as
unreasoned.
37. A fundamental breach of the principles of natural justice will
result in a patent illegality, where for instance the arbitrator has let
in evidence behind the back of a party.
***
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.”
25. In Parsa Kente Collieries Limited v. Rajasthan Rajya Vidyut
Utpadan Nigam Ltd.17, it was held inter alia that construction of the
terms of a contract is primarily for the Arbitrator/Tribunal to decide,
unless an interpretation is adopted which no reasonable person could
arrive at. Moreover, it has been consistently held in a catena of
judgments of the Supreme Court that the Tribunal is the master of
evidence and the Section 34 Courts cannot reassess evidence or
substitute its own conclusions merely because another view is probable.
17
AIR 2019 SC 2908
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26. Having traced the statutory contours within which an arbitral
award shall be tested and the guiding principles of interpretation of
contracts, this Court finds that the Petitioner is attempting to assail the
arbitral award by contesting the interpretation of the Tribunal on facts,
such as the finding that the MoM of the Evaluation Committee is not
part of the contract. In the same breath, this Court also finds that the
contract depicts in categorical and clear terms that the MoM were never
the part of the contract.
27. Furthermore, the Petitioner also seeks to challenge the finding
of the Tribunal that it did not provide work fronts to the Respondent.
This is challenged on the premise that there were no contemporaneous
letters or any other record during execution of the contract voicing
concerns about non-availability of work fronts. In my considered view,
this ground seeks to challenge the interpretation of evidence by the
Tribunal and calls for review of the case on merits. Such an enquiry
would necessitate re-evaluation of evidence, which is beyond the
permissible scope of jurisdiction under Section 34 of the Act.
28. As far as the contention of the Petitioner is concerned that the
Tribunal essentially re-wrote the contract by ignoring the MoM dated
06.11.2012, which according to them formed part of the contract and
that the Tribunal committed patent illegality and perversity, this Court
finds no merit in the said submission in view of the explicit finding of
the Tribunal that the MoM was not part of the contract and that the
MoM was not binding. In this regard, it is trite that Courts should
ordinarily refrain from substituting their interpretation for that of the
arbitrator. This Court is clear in its mind that the Petitioner cannot
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challenge the quality of the interpretation of evidence taken into
consideration for arriving at such a decision. In my considered view,
scope of interference would only arise in the miniscule window when
the Tribunal, upon considering the facts presented before it, fails to
draw an inference that ought to have been drawn or, conversely, draws
an inference that is manifestly untenable, resulting in a gross
miscarriage of justice.
29. Upon a perusal of the reasoning adopted in the award, this Court
is of the view that whether the MoM were a part of contract or not, the
Tribunal has already rendered a clear and reasonable finding in view of
the unambiguous stipulation in the contract as to what all
documents/instruments are included within tits ambit. It is glaringly
evident from a prima facie reading of the contract that the aforesaid
MoM are not included in the list delineating the documents forming part
of the contract. Therefore, the view taken by the Tribunal that the said
MoM were not binding on the parties is a plausible and reasonable
interpretation of the contractual terms, which does not warrant my
interference under Section 34 of the Act.
30. The contentions of the Petitioner that there were no
contemporaneous letters or records during execution of the contract
voicing concerns about the non-availability of work fronts and that the
Petitioner’s non-providing of work fronts is a baseless assertion, are of
no avail. This challenge is also based on the scope and manner in which
the evidence has been appreciated by the Tribunal. At the cost of
repetition, such an endeavour is well-within the competence of the
Tribunal.
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31. Further, the contention that the Tribunal had grossly erred in
accepting the said evidence without an affidavit under Section 65B of
the Indian Evidence Act, 187218 is difficult to accept. This is because
of two reasons. Firstly, Section 1 of the IEA stipulates that it is not
applicable to proceedings before the Arbitrator and Section 19 of the
Act mandates that an Arbitrator shall not be bound by the IEA.
Secondly, no such objection was taken on behalf of the Petitioners at
the appropriate stage, that is, before the Tribunal.
32. Having failed to raise the aforesaid objection before the
Tribunal, the Petitioner cannot be permitted to raise the same for the
first time in the present proceedings. The fact as to whether the adequate
evidence has been provided by the Respondent about non-availability
of work fronts along with the onus of proving availability of work fronts
is undoubtedly a factual determination, which cannot be undertaken by
this Court in the light of the precedents cited above.
33. It also emerges from the record that the work which was
provided to Respondent was satisfactorily completed, as is evident from
the Petitioner’s Office Note dated 12.09.2014 that the “contractor has
completed the work” and the release of performance bank guarantees.
The onus was on the Petitioner to provide evidence to support its
contention that the work fronts were duly provided but the Respondent
did not complete the same.
34. With respect to the contention that the award is not in
consonance with Sections 54 and 73 of the IEA, the Petitioner failed to
18
“IEA”, hereinafter
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specifically mention or demonstrate as to how these provisions have not
been complied with by the Tribunal. In any case, this Court is conscious
of the fact that the Supreme Court has authoritatively clarified that a
mere erroneous application of law does not warrant any interference on
the ground of patent illegality. Paragraph 37 of the decision in
Ssangyong Engg. & Construction Co. Ltd. v. NHAI19, is relevant to
the present context, it is reproduced thus:
“37. Insofar as domestic awards made in India are concerned, an
additional ground is now available under sub-section (2-A), added by the
Amendment Act, 2015, to Section 34. Here, there must be patent illegality
appearing on the face of the award, which refers to such illegality as goes
to the root of the matter but which does not amount to mere erroneous
application of the law. In short, 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.”
(emphasis supplied)
35. In relation to Claim No.1 pertaining to loss of profit, the relevant
consideration is not merely the value of indents issued by the Petitioner,
but whether the Respondent was prevented from executing the balance
contractual work due to circumstances attributable to the Petitioner. The
Tribunal, after examining the material on record, returned the finding
that the Respondent completed the entire work made available to it
amounting to Rs.3,18,66,623.93/- and was prevented from completing
the balance work amounting to Rs.8,01,10,301/- due to non-handing
over by the Petitioner. Such a finding, even if open to another
interpretation, cannot be substituted by this Court unless it is shown to
19
{2019) 15 SCC 131
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be wholly perverse, unreasonable, unsupported by evidence or going to
the root of the matter.
36. Although, it has been contended by the Petitioner that it had
issued the indents amounting to Rs.5,91,68,860/- and the Respondent
could only complete the work amounting to Rs.3,18,66,923.93/-,
thereby, demonstrating the Respondent’s inability to complete the
indented work; therefore, is it submitted that no question of any loss of
profits arises for the balance work for which, admittedly, indents were
not issued. This contention proceeds on an erroneous premise.
According to this Court, the said assumption appears to be a wrong
understanding on the part of the Petitioner for the simple reason that it
is evident from the record that the contract was about Rs.11 crores and
the Respondent could execute work of around Rs. 3 crores. The non-
availability of work is also attributed to the Petitioner. Therefore, this
Court finds no anomaly in the grant of loss of profit to the Respondent
and hence, the conclusion arrived at by the Tribunal cannot be said to
suffer from any patent illegality or perversity. The Tribunal has
considered the relevant contractual provisions and the evidence placed
before it while awarding compensation towards loss of profit on the
unexecuted portion of the contract. This Court finds no apparent
infirmity in the reasoning adopted by the Tribunal, which appears to be
a plausible and reasonable view based on the material available on
record.
37. Further, it would be profitable to quote the reasoning arrived by
the Tribunal, which seems to be plausible and reasonable and forms the
basis for allowing the said claim. This reasoning demonstrates that the
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Tribunal applied its mind to the facts and circumstances of the case and
arrived at a conclusion which, at the very least, represents a possible
and legally permissible view. Consequently, not warranting
interference by this Court. The relevant excerpt is as under:
“65.16. With regard to the Respondent’s submission that the
Letter of Acceptance was de facto limited to Rs.6,96,19,750/-. AT
noticed from the facts on record that in response to the Notice
inviting Tender for the Project for specified Quantities referred in
the Bill of Quantities for whole works to be completed, the Claimant
submitted its Bid quoting rate for the Items referred in the Bill of
Quantities at the tendered amount of Rs. 11,19,76,925/-.
65.17. The Respondent vide letter dated 06.12.2012 communicated
to the Claimant acceptance of its tender at the tendered amount of
Rs.11,19,76,925/-. Accordingly, based on such tendered/Contract
amount, the Claimant was called upon to furnish Performance
Securities of Rs.1,11,97,692/- & Rs. 11,19,769/- as per paras 33.2
& 33.1 of ITB i.e. 10% % 1% respectively.
65.18. Thereafter, Agreement dated 09.01.2013 was signed by the
parties in that reiterating the Respondent has accepted the
Claimant’s Bid for execution and completion of the work and
remedying the defects at a cost of Rs. 11,19,76,925/-.
65.19. However, the Respondent as an afterthought for the first time
in its Amended Reply dated 07.03.2016 to the Claim Statement has
come up with a plea that the total value of the Contract was
Rs.6,96,19,750/- by referring minutes of meeting of their evaluation
committee.
65.20. AT has carefully analysed and find that neither Letter of
Acceptance dated 06.12.2012 пor Contract Agreement dated
09.01.2013 made a suggests Minutes of Meeting of the Respondent’s
evaluation Committee as part of it. Further, the Claimant is not a
party to the said Minutes of the Meeting of the Respondent’s
Evaluation Committee, rather the last para of it is self-explanation
that “The evaluation committee recommended to award the work to
the lowest bidder i.e. “M/s. S&P Infrastructure Developers (P) Ltd
at a bid amount of Rs.11,19,76,925/- (Rupees Eleven Crore Nineteen
Lakhs Seventy Six Thousand Nine Hundred Twenty Five only)
subject to the submission of performance security of 10% as per
Clause 33.1 of the bid document and to furnish additional BG
corresponding to 1% amount of the quoted rates i.e. 11,19,769/- due
to the bid being below more than 15%”. Accordingly, the
Respondent issued Letter of Acceptance dated 06.12.2012 stating
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the Contract Price of Rs.11,19,76,925/-and the Contract Agreement
dated 09.01.2013 was signed by the parties referring the Contract
price of Rs.11,19,76,925/- for completion of whole works and more
so, the Respondent did not raise such a contention either in their
earlier Reply to the Claim statement or in the Evidence by way of
Affidavit, further there is no document on record which suggests the
Contract was for Rs.6,96,19,750/- or such Minutes of Meeting are
part of the Letter of Acceptance or it has effect of reducing the scope
of Agreement or the Claimant was aware of such reduction in the
scope of Agreement. The observation of the Evaluation Committee
in the Minutes of Meeting that the Project Director of the
Respondent be directed not to get executive positive and negative
variation about 25% in respect of specified items does not conclude
or suggest that the Letter of Acceptance was de fecto limited to
Rs.6,96,19,750/-.
65.21. Thus, for the facts as aforesaid, the AT does not agree with
the Respondent’s submission that the total value of the Contract was
Rs.6,96,19,750/-by referring to the minutes of meeting of its
evaluation committee contending that the Letter of Award was de
facto limited to the said amount of Rs.6,96,19,750/- as it is a part of
the Agreement. However, AT accepts the submissions of the
Claimant that the tendered/Contract amount for which Letter of
Acceptance & the execution of Agreement was for Rs.11,19,76,925/-
65.22. With regard to the Respondent’s submission the Claimant
hardly completed the work of Rs.3,18,66,923/- against the Indents
value of Rs.5,91,68,860/- despite having issued Indent as per Clause
27.1 of Agreement, the AT noticed that admittedly, totally value of
the work done by the Claimant during contractual period till
24.01.2014 is Rs.3,18,66,623.93. It is also an admitted fact that the
Respondent’s Project Director is his Office Note dated 12.09.2014
(filed by the Claimant along with its Rejoinder at Page 457)
confirmed that “The Contractor was mobilized at site and
commenced the work from 25.01.2013. The Contractor took up the
work as per the programme given by the Engineer….. The Original
Contract period of one year expired on 24.01.2014 and accordingly
the defect liability period of 6 Months is expired on 24.07.2014. The
Contractor has completed the work and the Defect Liability period
is over so the bank guarantee may be released (Clause 33, 44.2 &
47.1 of the Contract Agreement). Accordingly, Performance Bank
Guarantee were released by the Respondent. However, the
Respondent did not produce any letter/notice on record or the
Engineer’s Report that the Claimant was not having the required
manpower or machinery since 25.01.2013 over the period till
completion of Contract i.e. 24.01.2014 or it has caused delay in
execution of that it was not interested in execution of work beyondSignature Not Verified
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Rs. 3,18,66,623.93 despite availability of work fronts. The
Respondent also did not clarify and substantiate:
(i) Why no notice was issued to the Claimant for completing
remaining works of the indents;
(ii) Why no action was initiated under risk & cost for the balance
incomplete work of the Indents:
(iii) What is the exact location of the work fronts for the balance
works of Indents stated to be-not executed by the Claimant?
(iv) Why no action was initiated under Clauses 45 & 53 of the
Contract Agreement;
(v) Why Indents were not issued confirming to provisions of
contact data (Page 95,/C.A) in piecemeal?
(vi) Why the indents contract/tendered for entire amount of
Rs.1,19,76,925/- were not issued as per Clause 27.1 of the
Agreement within the contract period of 12-months;
(vii) Why the time was not extended for completing the balance
intended work and/or for the balance contract
value/tendered amount.
(viii) Why no Management meetings were called by the Engineer
as per the provision of contract Clause 3G(Page 81,
Contract Agreement, C.A.), when the Claimant contractor
was not executing the work for months together?
65.23. The Respondent also did not deny or dispute the correctness
of facts recorded in its Office Note dated 12.09.2014 wherein
admitting that The Contractor was mobilized at site and commenced
the work from 25.01.2013. The Contractor took up the work as per
programme given by the Engineer. The Original Contract period of
one year expired on 24.01.2014 and accordingly the defect liability
period of 6 Months is expired on 24.07.2014. The Contactor has
completed the work and the Defect Liability Period is over so the
bank guarantee may be released (Clause: 33. 44.2 & 47.1 of the
Contract Agreement). The Respondent further failed to furnish any
reason as to why Performance Bank Guarantees were released by
it, when it is contended that the Claimant did not complete the work
of the value of Rs.5,91,68,860/- indented.
65.24. Thus, AT does not agree with the Respondent’s submission
that the Claimant hardly completed the work of Rs.3,18,66,923/-
against the Indents value of Rs.5,91,68,86/- despite having issued
the Indents as per Clause 27.1 of Agreement. However. AT is of the
consul view that the Claimant has completed the entire work of
Rs.3,18,66,623.93 on the work fronts made available to against the
tendered/contract amount of Rs.11,19,76,925/-and agree with the
Claimant’s submissions that it was prevented from completing
balance tendered/contract amount of Rs.8,01,10,301/-
(Rs.11,19,76.925.00- Rs.3,18,66,623.93) due to it non-handling
over the work fronts for such balance work of Rs.8,01,10,301/-.
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65.25. Herein, AT does not find necessary that the Claimant has to
make a prayer separately for deciding the breach in respect of its
Claim, when the Claim of the Claimant is itself for the breach of the
Respondent for allowing the execution of work of Rs.3,18,66,623.93
only against the tendered/contract amount of Rs.11,19,76,925/-
resulted in loss of profit due to very less work provided by the
Respondent.
65.26. With regard to the claim in respect of Dispute No.l has not
been included in the final bill, hence it is barred, in this context the
finding of the AT are given in para 31 to 60 above.
65.27. The reference to the provisions contained in Clause 39 & 41
of the Agreement in defence to the claim of the Claimant are not
applicable, as the present claim of the Claimant is neither under the
‘Compensation Events’ described under Clause 41 or for the
Variation. Thus, it was not necessary upon the Claimant to raise
such a claim for the loss of profit due to very less work provided by
the Respondent in the Bills or the Final Bill. This claim of the
Claimant is well maintainable under the law. namely Sections 73 &
54 of the Contract Act, 1872.
65.28. The Respondent’s submission that the Claimant had failed to
demonstrate the rate of profit, it is noticed that the Respondent does
not deny or dispute the 10% profit claimed by the Claimant as per
usage of trade referred in the Standard Data Book for Analysis of
Rates of MORTH applicable in its Department.
65.29. Considering the evidence on record. AT is of the considered
view that the Claimant had deployed the required manpower and
machinery all throughout over the Project length of113.82 Km as
per detail furnished in its letter dated 07.03.2016, samely the
Claimant’s own machinery and the machinery arranged on lease
and deployed the required manpower for carrying on the work of
Rs.11,19,76,925/-within the contract period months commencing of
12-from 25.01.2013 to 24.01.2014. The claimant was having the
required machinery and the manpower at Site for completing
balance work of Rs.8,01 J 0.301/-within the contractual period of 12
months and thus, entitled for loss of profit due to very less work
provided by the Respondent and hold that the breach is on the part
of the Respondent in not providing the work fronts for the balance
tendered/contract amount of Rs.8,01,10,301/-.
65.30. For the reasons aforesaid, AT agrees with the arguments of
the Claimant that it was prevented in completing the balance work
of Rs.8.01.10,301/- as such entitled to the Loss of Profit @10% on
less work provided by the Respondent. Accordingly, AT accept the
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claim of the Claimant for loss of profit @10% based upon Standard
Data Book for Analysis of Rates of MORTH, UPPWD and the
citations (judgments on record) due to very less work provided by
the Respondent.”
38. The contention advanced by the Petitioner that there is a
dichotomy in the findings of the Tribunal, inasmuch as it applied
different standards by rejecting one claim due to lack of
contemporaneous evidence and accepting another claim based largely
on a disputed letter dated 12.04.2014, also does not merit acceptance
since Claim Nos.1 and 2 were completely different. Claim No.1 was for
loss of profits for the non-executed amount of present contract, which
was granted by the Tribunal as it was attributable to the Petitioner for
not providing the complete work front. On the other hand, Claim No.2
was for the loss of profits due to idling of machines and other resources,
which could have been earned by the Respondent in the time period
when the delay was caused and it could not take up another work due
to utilization of resources in the current contract. This claim was denied
by the Tribunal since no “contemporary record” or other sufficient
evidence was produced to this effect and that the Respondent did not
mention this before or while invoking arbitration. Thus, the distinction
drawn by the Tribunal between loss of profit on unexecuted contract
value and idling charges is sound and legally sustainable. While the
former concerns loss arising from non-execution of the balance work
due to alleged breach, whereas the latter requires specific proof of
actual idling of resources, deployment and corresponding financial loss.
Therefore, rejection of idling charges while allowing loss of profit does
not by itself constitute an inconsistent or contradictory approach.
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39. Similarly, the other ground taken by the Petitioner relating to the
finance charges and RO/HO overheads being wrongly awarded
separately because the Standard Data Book already includes such
components within overheads, is again based on re-appreciation of
evidence. Thus, in substance, the Petitioner’s challenge in this regard is
limited to the Tribunal’s evaluation of the evidence led by parties. As
noted above, the scope of examination of an arbitral award is extremely
limited. Nonetheless, this contention is also not factually correct in view
of the specific finding in the award that the Respondent can make
separate claim for the constituents falling under “overheads” so long as
they do not exceed the maximum threshold of 10% of the tendered
amount, as provided by the Standard Data Book. Thus, the Arbitral
Tribunal did not permit any unrestricted or double recovery. The
objection raised by the Petitioner essentially concerns the manner in
which the Tribunal appreciated contractual provisions and assessed
evidence regarding entitlement. Unless such appreciation results in a
finding which ignores the contract altogether or clearly permits double
recovery, the same cannot constitute patent illegality within the
meaning of Section 34 of the Act.
40. Regarding the final bill and EOT bills, the Tribunal considered
the rival assertions regarding recoveries, deductions and outstanding
payments. The existence of disputed factual issues itself shows that the
matter falls within the domain of the Tribunal. This Court, while
exercising jurisdiction under Section 34, cannot reassess whether the
deductions claimed by the Petitioner ought to be accepted or rejected,
unless the findings of the Tribunal are shown to be perverse, irrational,
or contrary to the fundamental legal principles. The Tribunal, after
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considering the material placed before it, arrived at a cogent conclusion
regarding entitlement of the Respondent towards the outstanding
amounts. Such a determination, being based on appreciation of
evidence and interpretation of contractual terms, does not warrant
interference merely because a different view is possible.
41. In the present case, no case has been made out by the Petitioner
that the arbitral award is contrary to the fundamental policy of India.
The arbitral award cannot, by any stretch of imagination, be considered
to be opposed to justice or morality as well.
42. The grounds essentially raised in the instant petition under
Section 34 of the Act only pertain to re-appreciation of evidence and
seeks a review on merits. Needless to state that there is no question that
such an approach falls beyond the permissible limits of judicial
interference under the statute.
43. Insofar as the ground of patent illegality is concerned, it is clearly
established in Associate Builders (supra), this Court does not sit in
appeal while undertaking whilst scrutinising an arbitral award from the
lens of public policy. Thus, an award merely based on little evidence or
an award not of stout quality will not render it otiose. At the cost of
repetition, the arbitrator “is the ultimate master of the quantity and
quality of evidence”. Therefore, the correctness of the Tribunal’s
factual conclusions cannot be tested by undertaking a fresh evaluation
of the evidence. The limited question before this Court is only whether
the view taken by the Tribunal is a possible and plausible view based
upon the material placed before it and within the parameters of the
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contract. Only if the award is based on no evidence, or if irrelevant
evidence is considered or if something material has been overlooked,
can this Court come to the rescue of the Petitioner.
44. Accordingly, once this Court is of the view that the Tribunal’s
approach is not arbitrary or capricious and is founded upon a reasonable
appreciation of the material available on record, then the Tribunal has
the last word on facts. The aforesaid view is also reiterated by the
Supreme Court in P.R. Shah, Shares & Stock Brokers (P) Ltd. v.
B.H.H. Securities (P) Ltd20.
45. As is apparent from the foregoing, the evaluation of evidence by
the Tribunal may, at best, be alleged to be erroneous and perhaps this
Court may have taken a different view but that is not the scope of
examination under Section 34 of the Act and this Court cannot interfere
with the arbitral award merely on the ground that it does not concur
with the inference drawn by the Tribunal from the evidence led by the
parties. The legislative intent behind Section 34 is to restrict judicial
intervention and not to provide a forum for an appeal on merits against
the findings of the Tribunal. In Ssangyong Engineering (supra), the
Supreme Court had authoritatively held that, “reappreciation of
evidence, which is what an appellate Court is permitted to do, cannot
be permitted under the ground of patent illegality appearing on the face
of the award.”
46. Turning to the precedents relied upon by the Petitioner, the
reliance placed on Kanchan Udyog Ltd. (supra), Board of Trustees of
20
(2012) 1 SCC 594
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V.O. Chidambaranar Port Trust (supra), Batliboi Environmental
Engineers Ltd. (supra), Unibros (supra) and C&P Haulage (supra) is
of no avail. Judgments are to be applied keeping in mind the entirety of
facts and circumstances of the case at hand and not like Euclid’s
theorem. These decisions do not come to the rescue of the Petitioner
particularly in view of the cogent findings returned by the Tribunal
based on evidence on record including the Petitioner’s admission in its
office note that the Respondent had completed the work, which is also
evident from release of the security deposit and performance guarantee
and the categorical conclusion of the Tribunal that the Petitioner is
liable for not providing the remaining work to the Respondent.
47. As a sequitur to the foregoing, the Petitioner has failed to
establish the existence of any ground contemplated under Section 34 of
the Act warranting interference with the impugned award. The
challenge raised by the Petitioner essentially seeks re-appreciation of
evidence and re-consideration of the merits of the dispute, which is
impermissible within the limited scope of jurisdiction available under
Section 34 of the Act.
48. This Court is unable to accept the contention that interference in
the arbitral award is warranted merely because the Tribunal has arrived
at an erroneous conclusion on the evidence led by the parties.
49. In my considered view, the arbitral award does not offend any
of the grounds envisaged under Section 34 of the Act. The findings of
the Tribunal well-reasoned and are based on cogent inference and
interpretation of the material on record. Therefore, no grounds for any
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interference with the arbitral award are made out in terms of Section 34
of the Act.
50. The petition is accordingly dismissed. No order as to costs.
51. Pending applications, if any, are disposed of.
OM PRAKASH SHUKLA, J.
JULY 30, 2026/gunn
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