National Rural Infrastructure … vs Deccan Consulting Engineers Pvt Ltd … on 16 April, 2026

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    Delhi District Court

    National Rural Infrastructure … vs Deccan Consulting Engineers Pvt Ltd … on 16 April, 2026

          IN THE COURT OF SH. PULASTYA PRAMACHALA
            DISTRICT JUDGE, (COMMERCIAL COURT)-01,
                PATIALA HOUSE COURT, NEW DELHI
    
    
                                INDEX
      Sl.                      HEADINGS                     Page Nos.
      No.
       1. Memo of Parties                                          2
       2. Description of case                                      2
       3. Brief Facts of the case                                 3-4
       4. Grounds of objection/challenge                         4-12
       5. Submissions of Parties                                12-15
       6. Appreciation of Arguments, Facts & Law                15-27
       7. Decision                                                27
    
    
    
    
                                                      Digitally
                                                      signed by
                                                      PULASTYA
                                           PULASTYA   PRAMACHALA
                                           PRAMACHALA Date:
                                                      2026.04.16
                                                      17:26:39
                                                      +0530
    
    
    
    
    OMP (COMM.) No. 204/2025                           (Pulastya Pramachala)
                                            District Judge (Commercial Court)-01,
    Page No.1 of 27                            Patiala House Court, New Delhi
          OMP (COMM) No.204/2025
         In the matter of: -
         National Rural Infrastructure Development Agency
         (Formerly National Rural Roads Development Agency)
         Through Ms. Shalini Das, Joint Director-
         Technical Division and Authorised Representative,
         5th Floor, 15th NBCC Tower, Bhikaji Cama Place,
         New Delhi-110066.
         Mob. 9571563600.
                                                                  ... Petitioner
                                        Versus
    
         Deccan Consulting Engineers Pvt. Ltd.
         Through its Director
         N-31, 2nd Floor, Green Park Extension,
         New Delhi-110016.
         Mob. 9810533235.
         Email: [email protected]
                                                               ... Respondent
    
         Date of Institution        :   22.12.2025
         Arguments heard on         :   25.03.2026
         Decided on                 :   16.04.2026
         Decision                   :   Petition is allowed.
    
    
    
         JUDGMENT
    

    DESCRIPTION OF THE CASE

    1. Present petition under Section 34 of the Arbitration and
    Conciliation Act, 1996, has been filed by petitioner challenging
    the arbitral award dated 24.09.2025, as passed by ld. Sole
    Arbitrator Ms. Vidhi Gupta at DIAC, in Case Ref. No.
    DIAC.8096/03-24.

    SPONSORED

    OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
    District Judge (Commercial Court)-01,
    Page No.2 of 27 Patiala House Court, New Delhi
    BRIEF FACTS OF THE CASE

    2. Briefly stated, the petitioner is an autonomous government body,
    providing technical management and monitoring support to the
    Government of India in the implementation of the Pradhan
    Mantri Gram Sadak Yojan (PMGSY). Petitioner sought
    expression of interest for consulting services to conduct a design
    review of detailed project reports and cost estimates for
    construction, up-gradation and improvement of rural roads, under
    PMGSY.

    3. On 18.06.2015, respondent submitted its expression of interest
    and after due deliberation, on 28.04.2016 petitioner informed
    respondent about its selection for DPR Project and invited them
    to negotiate the terms of contract. Thereafter, various
    communications took place between both the parties in respect of
    requirement for reimbursement from 24.05.2016 up to
    29.08.2016. Both parties entered into a contract on 14.10.2016.
    The total value of contract was Rs.2,38,75,000/-. Appendix ‘C’ of
    the contract provided the breakdown of the contract prices.

    4. The term of the contract was over on 13.04.2017 and on
    04.05.2017 petitioner granted extension to the respondent to
    complete the contract work. In the meantime, several
    installments of payment were released to the respondent.
    Respondent submitted final report and thereafter, on the basis of
    observations made by the petitioner, such report was revised. The
    consolidated review report dated 07.12.2018 was accepted on
    01.07.2020, however, a dispute remained there between the
    parties in respect of balance amount to be paid to the respondent.

    OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
    District Judge (Commercial Court)-01,
    Page No.3 of 27 Patiala House Court, New Delhi

    5. Petitioner insisted for providing supporting documents/vouchers
    for the purpose of reimbursement, but respondent was reluctant
    to provide such document and claimed that it was part of
    lumpsum amount to be paid under the contract. Respondent
    issued a legal notice to the petitioner on 15.09.2020, thereby
    seeking release of final payment. It was also stated therein that
    said notice was to be treated as a notice of arbitration u/s. 21 of
    the Act, in case of non-compliance by the petitioner. Thereafter,
    respondent filed an application u/s. 11 of the Act, before Hon’ble
    High Court of Delhi and in Arbitration Petition No. 681/2020
    notice was issued to the petitioner.

    6. In the meantime, on 04.07.2021 petitioner sent reply to notice
    dated 15.09.2020. Afore-said Arbitration Petition was dismissed
    for non-prosecution on 29.08.2022. However, subsequently a
    restoration application was filed and matter was sent to
    Mediation Centre for settlement talks. On 18.12.2023, restoration
    application was allowed and afore-said Arbitration Petition was
    also allowed to appoint Ms. Vidhi Gupta as the Sole Arbitrator to
    adjudicate upon the dispute between the parties. The arbitration
    accordingly was conducted under aegis of Delhi International
    Arbitration Centre. Vide Award dated 24.09.2025, ld. Arbitrator
    allowed the claim of the respondent for Rs.28,17,250/- along
    with interest at the rate of 9% w.e.f. 05.03.2020 till the date of
    hearing.

    GROUNDS OF OBJECTION / CHALLENGE

    7. Aggrieved by the arbitral award dated 24.09.2025, petitioner has
    preferred the present objections under Section 34 of the

    OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
    District Judge (Commercial Court)-01,
    Page No.4 of 27 Patiala House Court, New Delhi
    Arbitration and Conciliation Act, 1996, inter alia, on the
    following grounds: –

    i. That the impugned award is ex-facie perverse and is liable to be
    set aside, as the petitioner was unable to present its case before
    ld. Sole Arbitrator. Vide order dated 30.01.2025, ld. Sole
    Arbitrator had not taken petitioner’s SoD on the record, closed its
    right to file SoD and struck off the petitioner’s defense on a
    complete erroneous ground.

    ii. That while striking off petitioner’s defence, ld. Sole Arbitrator
    did not cite any precedent to support her finding, or note the
    impact of such a drastic decision on petitioner’s substantive
    ability to participate in the arbitral process. That ld. Sole
    Arbitrator would have been well within her powers to take the
    Petitioner’s SoD on record in the interest of justice. That ld. Sole
    Arbitrator ignored the express provisions of Sections 18, 24 and
    26 of the Act, which make it mandatory that parties in arbitration
    ought to be treated equally and granted full opportunity to
    present their case. That same goes against the fundamental
    principles of fair hearing to be adopted by ld. Sole Arbitrator.

    iii. That ld. Sole Arbitrator did not frame any separate issue for
    determination, and treated respondent’ s claims as the issues for
    determination, thereby making the whole arbitral procedure a
    one-sided affair, with no effective opportunity provided to the
    petitioner to participate in the proceedings, except to cross-
    examine the respondent’s witness.

    iv. That ld. Sole Arbitrator mechanically passed the impugned
    Award without application of mind, as she failed to note that the

    OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
    District Judge (Commercial Court)-01,
    Page No.5 of 27 Patiala House Court, New Delhi
    petitioner never got an opportunity to fully present its case,
    which is in conflict with basic principle of audi alteram partem as
    part of the principles of natural justice enshrined in the
    substantive laws of the land.

    v. That ld. Sole Arbitrator failed to note that the petitioner was a
    government body and it is bound with a formal and tiered
    decision-making structure, and has to meet requirements such as
    obtaining authorisations from multiple persons all the while
    being restricted to a limited amount of resources at its disposal.
    That for such reasons petitioner was unable to ensure that its SoD
    was filed within the time limit prescribed under Section 23(4) of
    the Act, thereby filing SoD after a mere delay of one month after
    the prescribed period.

    vi. That as a bonafide litigant petitioner had already filed SoD, when
    ld. Sole Arbitrator did not take it on record on 25.10.2024, and
    listed it for arguments on the issue “whether the Tribunal was
    empowered to take the SoD on record beyond the statutory
    limitation”. Thus, it was not the case of a party deliberately
    delaying the proceedings or abusing the process.

    vii. That the impugned Award suffers from patent illegality, as it has
    been passed against the express terms of the Contract in
    complete contravention of the mandate under Section 28(3) of
    the Act. That ld. Sole Arbitrator erroneously held that the
    payment scheme under the Contract contemplated that the entire
    contract price i.e. Rs.2,38,75,000/- was to be paid to the
    respondent in lump-sum installments according to the payment
    Schedule in Clause 41.2 of SCC, despite acknowledging that this

    OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
    District Judge (Commercial Court)-01,
    Page No.6 of 27 Patiala House Court, New Delhi
    Contract price was a sum total of two amounts, i.e. a
    remuneration amount of Rs.1,81 ,50,000/- and a reimbursable
    amount of Rs.57,25,000/-, according to Appendix C of the
    Contract. That ld. Sole Arbitrator ignored the fact that the idea of
    reimbursable expenses was premised on actual expenditure, and
    was never in the nature of a lump sum. That ld. Sole Arbitrator
    ignored clause 38.1 of GCC, which provided that the contract
    price breakdown was provided in Appendix C. That clause 38.1
    of GCC read with Appendix C show that the fixed amount of the
    contract price was contained in Fin-3 (breakdown of
    remuneration), which even included the addition of 10% profits
    and overheads, while Fin-4 included the reimbursable expenses
    up to a ceiling of Rs.57,25,000/-, on actuals without any
    profits/overheads. That if the contract was only to be restricted to
    the payment schedule in clause 41.2 of SCC, then there was no
    requirement of Appendix C at all or its mention in clause 38. l of
    GCC. That by an artificial interpretation, ld. Sole Arbitrator has
    rendered Appendix C nugatory, and as a result the Award suffers
    from a patent illegality.

    viii. That the impugned Award suffers from an error on the face of
    record for ignoring the well-settled law that a contract must be
    considered as a whole without reading it in parts in isolation
    from others. That the contractual terms in the present case, when
    read in their entirety, would indicate that although the contract
    was for a fixed price to be paid in lumpsum installments, the
    contract did not prohibit the payment of reimbursable expenses
    on actuals upon submission of supporting documents. That ld.
    Sole Arbitrator erroneously dismissed the petitioner’s contention

    OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
    District Judge (Commercial Court)-01,
    Page No.7 of 27 Patiala House Court, New Delhi
    of reading the contract as a whole stating that the contract itself
    provided an answer to any inconsistency by way of order of
    precedence in clause 1. That ld. Sole Arbitrator committed a
    patent illegality by ignoring the express intention of the
    petitioner, which was clearly evident from the negotiation
    between the parties that primarily surrounded the terms regarding
    the payments under the contract, and specifically on the issue of
    reimbursable expenses. The condition of the petitioner was not
    only explicitly agreed to by the respondent, vide letter dated
    29.08.2016, but the entire correspondence between the parties
    from January 2016 to August 2016 was also attached as a chapter
    in the contract, thus forming a part of the contract. This ex-facie
    demonstrated that the respondent was aware of the requirement
    of furnishing necessary documents, in order to avail
    reimbursement of expenses from the petitioner, despite which,
    they did not comply with it.

    ix. That ld. Sole Arbitrator erroneously ignored the inherent
    distinction between remuneration and reimbursement, which are
    well-known terms in the business transactions and cannot be
    collapsed. That ld. Arbitrator erroneously relied upon the Clause
    1 of the contract and blatantly ignored the subsequent sentence in
    Clause 1 which stated that “Any reference to this Contract shall
    include, where the context permits, a reference to its
    Appendices.” That there existed no inconsistency between the
    SCC and GCC and the Appendix C, inclusive of notes in Form
    Fin-4, and both SCC and GCC had to be read together with
    Appendix C. It is well-settled that not considering a crucial part
    of the contract amounts to an infraction of a fundamental notion

    OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
    District Judge (Commercial Court)-01,
    Page No.8 of 27 Patiala House Court, New Delhi
    of justice and results in the impugned Award being in
    contravention with the fundamental policy of Indian Law.

    x. That ld. Sole Arbitrator ignored the real intent of the contract,
    which merely stated that providing documentation and vouchers
    regarding the expenses incurred was required for reimbursement,
    which was a standard requirement. This was reaffirmed in a letter
    dated 24.05.2016 from the side of petitioner to the respondent.
    That ld. Sole Arbitrator selectively omitted relevant portions of
    the contract while interpreting it, which constituted direct
    contravention of basic notions of justice.

    xi. That ld. Sole Arbitrator erroneously misinterpreted the contract
    by finding that Clause 41 of the SCC and GCC was the only
    provision that governed the mode and manner of payments to the
    respondent and the condition of submission of proofs/vouchers
    of reimbursable expenses was nowhere supported by the terms of
    the contract and this was contrary to Clause I of the Contract.

    xii. That ld. Sole Arbitrator unfairly disregarded the petitioner’s
    demonstrated consistency in making payments to the respondent.
    That petitioner had already released the first 5 stages of
    payments, which amounted to 90% of the contract price, thereby
    indicating a willingness to pay. That petitioner merely sought to
    enforce the provisions of the contract that required respondent to
    submit documents for reimbursable expenses in the interest of
    accountability. That by holding the petitioner’s bonafide action of
    paying the 90% of the contract price without seeking supporting
    documents for reimbursable claims against the petitioner itself,
    ld. Sole Arbitrator in fact penalized the petitioner for acting in

    OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
    District Judge (Commercial Court)-01,
    Page No.9 of 27 Patiala House Court, New Delhi
    good faith and adhering to the terms of the contract.

    xiii. That ld. Sole Arbitrator, in an ex-facie incorrect exchanged
    finding, stated that the correspondence exchanged between the
    parties were pre-contract communications that could not have
    any bearing on the interpretation of the contract provisions.

    xiv. That ld. Sole Arbitrator failed to acknowledge that petitioner
    being a government entity requires a certain minimum standard
    of documentation and accountability, as it is dealing with public
    money. That petitioner is well within its rights to ask for
    documentation of expenses, as also provided in Clause 25 of the
    Contract that directs the respondent to keep accurate and
    systematic accounts and records in respect of the services
    provided. That ld. Sole Arbitrator further ignored the express
    stipulation in Clause 2(b) of the contract.

    xv. That the impugned Award blatantly disregards letter dated
    29.08.2016 where respondent explicitly stated that they were
    willing to comply with the requirement of disclosure of
    documents to receive reimbursable expenses. That ld. Sole
    Arbitrator’s refusal to consider the communications exchanged
    between the parties before the contract was executed on
    14.10.2016, which essentially focused on this precise issue of
    providing supporting documents for reimbursable claims, while
    interpreting the contract.

    xvi. That the impugned Award suffers from patent illegality for
    awarding an interest of 9% per annum to the respondent from the
    date of purported cause of action i.e. 05.03.2020 till the date of
    payment. That ld. Sole Arbitrator incorrectly stated that the

    OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
    District Judge (Commercial Court)-01,
    Page No.10 of 27 Patiala House Court, New Delhi
    contract was silent on the aspect of interest on delayed final
    payment, and SCC did not contain a rate of interest to be applied
    under Clause 42.1, which is clearly erroneous. That ld. Sole
    Arbitrator’s decision to award 9% interest per annum is perverse
    and patently illegal, thereby warranting the interference of this
    court.

    xvii. That ld. Sole Arbitrator erroneously adopted a hyper technical
    approach in terms of clause 42.1 of GCC, wherein it stated that
    Clause 42. l was applicable only in the case of delayed payments
    for lumpsum installments (Clause 42.2.2, GCC), and not for
    delayed payments for the final payment (Clause 42.2.3, GCC). At
    the same time, ld. Sole Arbitrator, while incorrectly holding that
    SCC did not contain a rate of interest under Clause 42.1, ignored
    the Clause 42.1 of SCC, which clearly stated “N.A.”, or ‘Not
    Applicable’.

    xviii. That ld. Sole Arbitrator failed to note that the remaining 10% of
    the payment due to the respondent was part of the reimbursable
    claims in Fin-4 as part of the Appendix C, which has to be paid
    on actuals, and on the submission of supporting documents. That
    the respondent itself has not complied with the contractual terms
    by refusing to provide the supporting documents, and then
    cannot be paid interest on reimbursable claims to be paid on
    actuals.

    xix. That impugned Award is erroneous on the face of record for
    awarding pre-reference interest from the date the cause of action
    arose (w.e.f. 05.03.2020), despite the considerable delays on the
    part of the respondent to initiate the arbitration proceedings,

    OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
    District Judge (Commercial Court)-01,
    Page No.11 of 27 Patiala House Court, New Delhi
    which has resulted in respondent benefiting from its own wrong.

    xx. That ld. Sole Arbitrator awarded interest at the rate of 9% from
    05.03.2020 onwards till the date of payment, which has
    amounted to Rs.14,09,474/- resulting in the total claim amount
    becoming Rs.42,26.724/- i.e. almost 1.5 times the amount due.
    This is punitive, unconscionable and usurious in nature and
    merits being setting aside.

    xxi. That ld. Sole Arbitrator ignored the intent and actions of the
    petitioner to pay the final payment of Rs.28,17,250/- to the
    respondent in return for the corresponding vouchers and
    supporting documents for the reimbursable claim of
    Rs.57,25,000/-

    Prayer has been made to set aside the impugned Award and to
    award costs of the present petition to the petitioner.

    SUBMISSIONS OF THE PARTIES

    8. On behalf of petitioner, it was argued that vide order dated
    30.01.2025, ld. Sole Arbitrator erroneously closed the petitioner’s
    right to file a SoD and struck off its defence by relying on a
    patently wrongful interpretation of Section 23(4) of the A&C
    Act, which is not mandatory. It was further argued that ld.
    Arbitral Tribunal gave wrong reasons and did not cite any case
    laws. It was further argued that despite specific bar in contract,
    interest was granted to the respondent by ld. Sole Arbitrator. It
    was further argued that Clause 42 of GCC says that interest to be
    paid as per Clause 42.1 of SCC, but Clause 42.1 of SCC did not
    provide any interest. It was further argued that ld. Arbitral
    Tribunal wrongly held that SCC was silent on interest part. It was

    OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
    District Judge (Commercial Court)-01,
    Page No.12 of 27 Patiala House Court, New Delhi
    further argued that Clause 42.1 of SCC says “NA” , which means
    that interest was barred. It was further argued that S. 31(7) was
    breached. It was further argued that pre-reference interest was
    also awarded to the respondent, despite the fact that there was
    delay on the part of respondent. It was further argued that there
    was no plea taken in Statement of Claim regarding loss of
    goodwill, still pre-reference interest was granted. Ld. counsel for
    petitioner further argued that impugned Award was passed
    against the terms and intention of the contract at least regarding
    reimbursement.

    9. In support of her contention, ld. counsel placed reliance upon
    certain case laws, which are as under: –

    i. Yashovardhan Sinha HUF v. Satyatej Vyapaar (P) Ltd., 2022
    SCC OnLine Cal 2386.

    ii. Yashovardhan Sinha HUF v. Satyatej Vyapaar (P) Ltd., 2024
    SCC OnLine SC 902.

    iii. Aneja Constructions (India) Ltd. v. Doosan Power Systems India
    (P) Ltd., 2025 SCC OnLine Del 5325.

    iv. Degremont Ltd. v. Yamuna Gases & Chemicals Limited, 2012
    SCC OnLine Del 67.

    v. Associate Builders v. Delhi Development Authority, (2015) 3
    SCC 49.

    vi. Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (2019) 15
    SCC 131.

    vii. Impex Corporation & Ors. V. Elenjikal Aquamarine Exports Ltd.,
    (2007) SCC OnLine Ker 125.

    OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
    District Judge (Commercial Court)-01,
    Page No.13 of 27 Patiala House Court, New Delhi
    viii. Sepco Electric Power Construction Corporation v. GMR
    Kamalanga Energy Limited, (2026) 2 SCC 542.

    ix. DMRC Ltd. v. Delhi Airport Metro Express (P) Ltd., (2024) 6
    SCC 357.

    x. ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705.

    xi. Hindustan Zinc Ltd. v. Friends Coal Carbonisation, (2006) 4
    SCC 445.

    xii. McDermott International Inc. v. Burn Standard Co. Ltd. & Ors.,
    (2006) 11 SCC 181.

    xiii. J.G. Engineers Pvt. Ltd. v. Union of India, (2011) 5 SCC 758.

    xiv. OPG Power Generation Pvt. Ltd. v. Enexio Power Cooling
    Solutions India Pvt. Ltd.
    , (2025) 2 SCC 417.

    xv. MMRDA v. Unity Infraproject Ltd., 2008 SCC OnLine Bom

    190.

    xvi. Technology Information Forecasting & Assessment Council
    (TIFAC) v. Strategic Engineering (P) Ltd.
    , (2025) SCC OnLine
    Del 9486.

    xvii. Gammon India Ltd. v. National Thermal Power Corporation Ltd.,
    (2012) SCC OnLine Del 4656.

    xviii. Associated Engineering Co. v. Government of Andhra Pradesh
    and Anr.
    , (1991) 4 SCC 93.

    xix. ONGC Ltd. v. JSIW Infrastructure (P) Ltd., (2025) SCC OnLine
    Del 3811.

    xx. The Board of Trustees of Chennai Port Trust v. Chennai
    Container Terminal Pvt. Ltd.
    , (2014) 1 CTC 573.

    OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
    District Judge (Commercial Court)-01,
    Page No.14 of 27 Patiala House Court, New Delhi
    xxi. Union of India v. Larsen & Tubro Ltd. (L&T), (2026) INSC 203.

    xxii. Tehri Hydro Development Corporation India Limited v. C.E.C.
    Limited
    , (2023) SCC OnLine Del 2354.

    xxiii. Vedanta Limited v. Shenzhen Shandong Nuclear Power
    Construction Company Ltd.
    , (2019) 11 SCC 465.

    10. Per contra, ld. counsel for the respondent argued that there is no
    bar against awarding interest in the Award as passed by ld. Sole
    Arbitrator. It was further argued that para-21 of Award gives
    finding regarding reasons for Award of interest. Ld. counsel
    further argued that delay was not attributable to respondent as
    Hon’ble High Court did not impose cost while restoring its
    petition. It was further argued that no separate bill for
    reimbursement was ever issued and estoppel was used against
    petitioner. Bill had been raised for lumpsum contract amount. It
    was further argued that these are matters of interpretation of
    contract, which cannot be substituted u/s. 34 of the Act. Ld.
    counsel further argued that as per Section 25 of the Act, ld.
    Arbitral Tribunal could close the right for Statement of Defence.

    APPRECIATION OF ARGUMENTS, FACTS & LAW

    11. The general principles underlying S. 34 of the Act are that
    Arbitrator is a Judge of the choice of the parties and his decision,
    unless there is an error apparent on the face of the award which
    makes it unsustainable, is not to be set aside even by the Court,
    even if the Court of law could come to a different conclusion on
    the same facts. The Court cannot reappraise the evidence and it is
    not open to the Court to sit in appeal over the conclusion of the
    Arbitrator. It is not open to the Court to set aside a finding of fact

    OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
    District Judge (Commercial Court)-01,
    Page No.15 of 27 Patiala House Court, New Delhi
    arrived at by the Arbitrator and only grounds on which the award
    can be set aside are mentioned in the Arbitration Act. Where the
    Arbitrator assigns cogent grounds and sufficient reasons and no
    error of law or misconduct is cited, the award will not call for
    interference by the Court in exercise of the power vested in it.

    12. Hon’ble Supreme Court in the case of Associate Builders vs.
    Delhi Development Authority
    , (2015) 3 SCC 49 held that the
    interference with an arbitral award is permissible only when the
    findings of the arbitrator are arbitrary, capricious or perverse or
    when conscience of the Court is shocked or when illegality is not
    trivial but goes to the root of the matter. It was held that once it is
    found that the arbitrator’s approach is neither arbitrary nor
    capricious, no interference is called for on facts. The arbitrator is
    ultimately a master of the quantity and quality of evidence while
    drawing the arbitral award. Patent illegality must go to the root
    of the matter and cannot be of trivial nature.

    13. Hon’ble Supreme Court in case of Ssangyong Engineering &
    Construction Co. Ltd. vs. National Highways Authority of India
    ,
    2019 SCC OnLine SC 677 held that under Section 34 (2A) of the
    Act, a decision which is perverse while no longer being a ground
    for challenge under “public policy of India”, would certainly
    amount to a patent illegality appearing on the face of the award.
    A finding based on the documents taken behind the back of the
    parties by the arbitrator would also qualify as a decision based on
    no evidence inasmuch as such decision is not based on evidence
    led by the parties and therefore, would also have to be
    characterized as perverse. It was held that a finding based on no

    OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
    District Judge (Commercial Court)-01,
    Page No.16 of 27 Patiala House Court, New Delhi
    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.

    14. In the present case, petitioner has relied upon the judgment of
    Yashovardhan Sinha (supra) to submit that provisions u/s. 23(4)
    of Arbitration and Conciliation Act, are not mandatory and thus,
    ld. Arbitrator gave wrong reasons in order dated 30.01.2025 so as
    to refuse to take Statement of Defence on the record.
    Hon’ble
    Calcutta High Court in the case of Yashovardhan Sinha (supra)
    had clarified that Section 23(4) of the Act was not mandatory in
    the sense that on the lapse of time frame the mandate of
    Arbitrator had to stand automatically terminated. However, at the
    same time, Hon’ble Calcutta High Court did not say that
    Arbitrator does not have any discretion and right to close such
    opportunity in accordance with Section 23(4) of the Act. In fact,
    Hon’ble Calcutta High Court did refer to Section 25 of the Act,
    which provides for consequences for default in adhering to time
    line fixed under Section 23(1) of the Act. Section 25(b) of the
    Act does provide discretion to the Arbitral Tribunal to treat the
    right of respondent to file Statement of Defence as having been
    forfeited, in case respondent fails to file the same in accordance
    that Section 23(1) of the Act.

    15. Vide order dated 30.01.2025, ld. Arbitrator had observed that in
    view of Section 23(4) of the Act, she had no further discretion to
    take on record the Statement of Defence, which was filed by
    petitioner herein beyond the outer limit i.e. six months. Though
    the part of the observations that ld. Arbitrator did not have

    OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
    District Judge (Commercial Court)-01,
    Page No.17 of 27 Patiala House Court, New Delhi
    further discretion to extend the time, may not be completely
    consistent with the finding given by the court in the case of
    Yashovardhan Sinha (Supra), still the decision to close the
    opportunity of respondent, cannot be termed as illegal for simple
    reason that even otherwise Arbitrator has such right and
    discretion to close this opportunity as provided in Section 25 of
    the Act. Moreover, after having participated in the remaining part
    of arbitration proceedings without any challenge to afore-said
    order dated 30.01.2025, petitioner cannot now seek to again set
    the clock back, on the plea that respondent should have been
    granted more extension of time. It is worth to mention here that
    respondent was given time of four (4) weeks after receiving
    Statement of Claim, in order to file the Statement of Defence.
    The Statement of Claim was filed by respondent herein on
    27.05.2024. There is no dispute in respect of the procedure and
    time line agreed by both the parties, as recorded by ld. Arbitrator
    in order dated 04.05.2024. Despite that, petitioner herein had not
    filed Statement of Defence up to 24.09.2024, as per extension of
    time granted by ld. Arbitrator time to time. This is very
    unfortunate that petitioner itself had been sleeping over the
    opportunities being granted/extended by ld. Arbitrator and
    thereafter in the present proceeding argument has been presented
    that petitioner was not given fair opportunity to place its defence
    in the arbitration proceedings. In fact, the approach of petitioner
    was apparent example of abuse of the process of law and abuse
    of the lenient approach being taken by the Arbitrator. Such
    argument of petitioner to claim that it was not given fair
    opportunity, is completely misconceived and frivolous argument.

    OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
    District Judge (Commercial Court)-01,
    Page No.18 of 27 Patiala House Court, New Delhi
    No litigant is entitled for unlimited opportunities or opportunities
    as per their sweet-will. Therefore, such argument has to be
    rejected.

    16. Another ground to challenge the Award in question is based on
    the plea that ld. Arbitrator did not follow the procedure as per
    Section 18, 24 or 26 of the Act. This is once again based on the
    same factual plea that petitioner was not allowed extra time
    beyond the given time period for the purpose of filing Statement
    of Defence. The problem with such litigants is that when they are
    bound to act as per some law and time frame given in the law,
    they do not bother to act accordingly. After sleeping over their
    opportunities, when the time is lapsed or opportunity is closed,
    all of sudden they wake-up and start reminding laws to others
    under the slogan of “principal of natural justice”. Lenient
    approach is being sought as a matter of vested right and some
    observations given by superior courts in a particular fact situation
    is used as the matter of right, to flout the given time line in the
    law or by law enforcing agency. Government agencies cannot be
    an exception, as far as application of any law is concerned. In my
    considered opinion, such plea is not to be encouraged even
    otherwise, and within the strict narrow scope of inference u/s. 34
    of the Act, there cannot be any scope of mercy hearing.

    17. Another ground raised by petitioner is that Award has been
    passed against the terms of the contract between the parties. This
    ground is against the finding, wherein ld. Arbitrator treated the
    contract for a lumpsum amount. In support of this plea, my
    attention was taken to para-11 of the Award, wherein ld.

    OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
    District Judge (Commercial Court)-01,
    Page No.19 of 27 Patiala House Court, New Delhi
    Arbitrator had referred to several contract provisions. My
    attention was further taken to Appendix ‘C’ and Fin. 4 (part of
    the contract) providing for breakdown of remuneration and
    reimbursable expenses. The more focus was on Fin.-4, which
    provided for breakdown of reimbursable expenses. My attention
    was further taken to letters dated 06.06.2016 and 24.05.2016,
    which were sent to respondent by the petitioner. My attention
    was also taken to letter dated 29.08.2016 as sent by respondent to
    the petitioner. Accordingly, it was argued that ld. Arbitrator gave
    finding that entire contract price was to be paid in lumpsum
    installment as per payment schedule in clause 41.2 of SCC,
    which was so held beyond the terms of the contract, as
    interpreted and agreed by the parties in their communications
    with each other. The judgments passed by superior courts in
    respect of contract matters were relied upon to buttress the same
    point that Arbitral Tribunal cannot go beyond the terms of the
    contract or cannot substitute its own view with any provisions of
    contract. It was further argued that clause 48.1 of GCC was
    ignored by ld. Arbitrator, which mentions about Appendix ‘C’.

    18. The relevant observations made by ld. Arbitrator are represented
    hereunder: –

    “13. From the above scheme contained in the GCC and SCC, it
    becomes clear that the contract deals with the contract value as
    a fixed amount. In line with this understanding, the Payment
    Schedule in the SCC breaks up this fixed amount into
    percentages of the contract value, payable to the contractor
    upon completion of defined stages or milestones under the
    contract. Therefore, the payment scheme under the contract
    contemplates that the entire consideration, i.e., INR
    2,38,75000, is to be paid to the contractor in lump-sum

    OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
    District Judge (Commercial Court)-01,
    Page No.20 of 27 Patiala House Court, New Delhi
    instalments according to the Payment Schedule. It is important
    to note here that clause 41.2 of the GCC is clear, inasmuch as it
    specifies that the Payment Schedule in the SCC is to be
    followed. Neither this clause, nor the Payment Schedule, makes
    any reference to the subject of reimbursable expenses or Form
    Fin-4.

    15. Coming to Form Fin-4 as contained in Appendix C,
    extracted above, it is seen that the form contains various heads
    pertaining to types of reimbursable expenses such as air travel
    cost, boarding and lodging, local vehicle hire, etc. The unit,
    unit cost, and quantity for each such head is specified, with the
    total cost for each head of expenses. The form then provides a
    total of INR 57,25,000 as the complete amount of reimbursable
    expenses under the contract. It is important to also note here
    that Form Fin-4 is preceded by Form Fin-3, tilted “Breakdown
    of Remuneration.” This form sets out the Key Experts involved
    in the consultation project and provides the monthly and total
    remuneration for each. The total remuneration under the
    contract is specified to be INR 1,81,50,000. Form Fin-3 and
    Form Fin-4 together constitute Appendix C. As per Clause 38.1
    of the GCC seen above, Appendix C provides the contract price
    breakdown.

    16. Considering Form Fin-4 and Appendix C in its entirety, it
    becomes clear that these forms are used to provide the details
    of the breakdown of the various costs that constitute the total
    contract price. This is evident from the fact that the sum of INR
    1,81,50,000, which is the total remuneration under the contract,
    and INR 57,25,000, which is the total reimbursable under the
    contract, comes out to be INR 2,38,75000, that is, the total
    contract price as per Clause 38.l of the SCC. Therefore, the
    total amounts of remuneration and reimbursables are included
    in the contract price. As the claimant rightly contends, both
    Form Fin-3 and Fin-4 are used to show the break-up of the
    costs involved, to arrive at the total contract price. Read with
    the provisions of the GCC and the SCC discussed above, this
    contract price is fixed, payable in accordance with the Payment
    Schedule provided in the SCC.

    18. In view of such ambiguity between Form Fin-4 and the

    OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
    District Judge (Commercial Court)-01,
    Page No.21 of 27 Patiala House Court, New Delhi
    provisions of the GCC and SCC, it becomes necessary to
    advert to Clause 1 of the main contract to resolve the same,
    extracted above. By virtue of this provision, in the event of any
    ambiguity or inconsistency between the documents, the SCC
    shall take precedence over the other contract provisions,
    followed by the GCC, and then Appendix C. ………

    19. It is important to note here that the Payment Schedule is not
    qualified by any requirement from the claimant to claim
    reimbursables either. Under the SCC, payments to the claimant
    are nor subject to claims of reimbursable expenses and
    submission of proofs thereof. The demand of the respondent
    essentially seeks to make the release of the final payment
    conditional upon submission of proofs/vouchers of
    reimbursable expenses, contrary to the plain provisions of the
    Payment Schedule. Requiring proofs/vouchers before releasing
    the final payment to the claimant is not supported by the terms
    of SCC or the GCC. Therefore, the respondent is not permitted
    under the terms of the contract to impose such a condition
    before making the final payment; and is bound to follow the
    Payment Schedule as it is.

    23. The above letters cannot come to the respondent’s aid at
    this stage, firstly because correspondence exchanged between
    the parties does not form part of the integral contract
    documents by virtue of Clause 1 of the main contract, as also
    discussed above. Secondly, the contract also contains an Entire
    Agreement provision in clause 15 of the GCC, extracted above
    for reference. As a consequence of the Entire Agreement
    clause, any discussions or negotiations between the parties that
    are not incorporated into the contract document cannot be used
    to vary the express intention of the parties as recorded in the
    contractual provisions. The letters relied upon by the
    respondent arc pre-contract communications that cannot have
    any bearing on the interpretation of the contract
    provisions. …………..”

    19. The underlined portion of the above-mentioned findings of ld.

    Arbitrator, is clearly in ignorance or derogation to the terms and
    conditions mentioned in Fin.4. There was categorical term laying

    OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
    District Judge (Commercial Court)-01,
    Page No.22 of 27 Patiala House Court, New Delhi
    down the requirement of furnishing vouchers etc. for
    reimbursable items. Fin.4 is reproduced hereunder: –

    “FIN – 4: BREAKDOWN OF REIMBURSABLE EXPENSES
    B. REIMBURSABLE EXPENSES

    No. Type of Reimbursement Expenses Unit Unit Cost Quantity (Total in INR)
    1 Air Travel Cost Round 16000 80 12,80,000
    Trips
    2 Boarding & Lodging Expense Per day 6000 450 27,00,000
    charges during 80 roundtrips @ 10
    days/trip
    3 Local Vehicle Hire Expenses Per day 2500 90 2,25,000
    4 Establishment of Office at 2 Per 50000 12 6,00,000
    locations for 6 months *See Note Below Month
    5 Jr. Professionals/Support Staff-3 Months 30000 24 7,20,000
    persons for 8 months
    6 Documentation & Communication LS 200000 1 2,00,000
    Costs
    7 Sub Total of Reimbursable expenses 57,25,000
    8 Total Reimbursable in INR 57,25,000

    Total in words: FIFTY SEVEN LAKHS TWENTY FIVE THOUSAND ONLY

    1. Necessary documents in support of claims for reimbursable expenses would be
    required to provide assurance that the expenditure being reimbursed is in
    connection with the project work, assigned by NRRDA

    2. Items indicated above shall be operated as per actual without any reference to
    the quantities or unit costs. Indicated against each. Total amount of
    reimbursable shall be limited to Rs. 57,25,000/-”

    20. There was no overlapping or conflict between Fin 3 and Fin 4 as
    such, because they dealt with different subjects. Fin 4 was
    integral part of contract between the parties, and hence, same
    could not have been ignored or made nugatory. The exchange of
    communications between the parties, were not required to be
    treated as part of contract, but same were to be looked into for
    the purpose of looking into the stand taken by the parties and in

    OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
    District Judge (Commercial Court)-01,
    Page No.23 of 27 Patiala House Court, New Delhi
    order to appreciate the intentions of the parties. The
    communications, do show that petitioner had been taking stand
    that furnishing voucher/documents for reimbursable items, would
    be required. The letter dated 06.06.2016 (paragraph-5), letter
    dated 24.05.2016 (paragraph-5), as sent by petitioner to the
    respondent, were categorical to mention that “the reimbursable
    expenses should be reimbursed as per actual, based on
    supporting documents. The firm should submit the actual
    vouchers in order to provide necessary assurance to
    NRRDA……” Letter dated 29.08.2016 as sent by respondent to
    the petitioner mentioned that “we clarify that while performing
    this assignment, the ceiling limit for reimbursable expenses
    under Fin Form 4 shall remain at Rs. 5725000/- but individual
    items between Sl No. 1 to 6 shall operate as per actuals …… ”

    Thus, exchange of communications between the parties, did
    show that there had been such requirement to furnish supporting
    documents/vouchers within knowledge of respondent, to claim
    reimbursable expenses. Both the parties had clear understanding
    that these expenses were to be paid as per actual. The term
    ‘reimbursable’ and ‘actual’, signify without any ambiguity that
    such payments had to be made as per actual expenses incurred.
    It is matter of common sense that actual expenses can be shown
    through relevant document/voucher only and hence, requirement
    to furnish such supporting documents, was not there without any
    purpose or logic. In that situation, findings given by ld. Arbitrator
    was certainly in derogation of material contractual terms and
    hence, the decision based on such findings has to be treated as
    perverse.

    OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
    District Judge (Commercial Court)-01,
    Page No.24 of 27 Patiala House Court, New Delhi

    21. In the case of OPG Power Generation Private Limited v.

    ENEXIO Power Cooling Solutions India Private Limited and
    Anr., (2025) 2 SCC 417, while dealing with scope to interfere on
    the basis of reasoning and interpretation of terms of contract,
    Hon’ble Supreme Court observed as under: –

    “80. We find ourselves in agreement with the view taken in
    Dyna Technologes, as extracted above. Therefore, in our
    view, for the purposes of addressing an application to set
    aside an arbitral award on the ground of improper or
    inadequate reasons, or lack of reasons, awards can broadly
    be placed in three categories:

    (1) where no reasons are recorded, or the reasons recorded
    are unintelligible;

    (2) where reasons are improper, that is, they reveal a flaw in
    the decision-making process; and
    (3) where reasons appear inadequate.

    81. Awards falling in Category (1) are vulnerable as they
    would be in conflict with the provisions of Section 31(3) of
    the 1996 Act. Therefore, such awards are liable to be set
    aside under Section 34, unless:

    (a) the parties have agreed that no reasons are to be given,
    or

    (b) the award is an arbitral award on agreed terms under
    Section 30.

    82. Awards falling in Category (2) are amenable to a
    challenge on ground of impropriety or perversity, strictly in
    accordance with the grounds set out in Section 34 of the
    1996 Act. (emphasis supplied)

    83. Awards falling in Category (3) require to be dealt with
    care. In a challenge to such award, before taking a decision
    the Court must take into consideration the nature of the
    issues arising between the parties in the arbitral proceedings
    and the degree of reasoning required to address them. The
    Court must thereafter carefully peruse the award, and the

    OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
    District Judge (Commercial Court)-01,
    Page No.25 of 27 Patiala House Court, New Delhi
    documents referred to therein. If reasons are intelligible and
    adequate on a fair reading of the award and, in appropriate
    cases, implicit in the documents referred to therein, the
    award is not to be set aside for inadequacy of reasons.
    However, if gaps are such that they render the reasoning in
    support of the award unintelligible, or lacking, the Court
    exercising power under Section 34 may set aside the award.
    Scope of interference with the interpretation/construction of
    a contract accorded in an arbitral award

    84. An Arbitral Tribunal must decide in accordance with
    the terms of the contract. In a case where an Arbitral
    Tribunal passes an award against the terms of the contract,
    the award would be patently illegal. However, an arbitral
    Tribunal has jurisdiction to interpret a contract having
    regard to terms and conditions of the contract, conduct of
    the parties including correspondences exchanged,
    circumstances of the case and pleadings of the parties. If the
    conclusion of the arbitrator is based on a possible view of
    the matter, the Court should not 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. (emphasis supplied)
    Whether unexpressed term can be read into a contract as an
    implied condition

    85. Ordinarily, terms of the contract are to be understood in
    the way the parties wanted and intended them to be. In
    agreements of arbitration, where party autonomy is the
    grund norm, how the parties worked out the agreement, is
    one of the indicators to decipher the intention, apart from
    the plain or grammatical meaning of the expressions used.

    86. However, reading an unexpressed term in an agreement
    would be justified on the basis that such a term was always
    and obviously intended by the parties thereto. An
    unexpressed term can be implied if, and only if, the court
    finds that the parties must have intended that term to form
    part of their contract. It is not enough for the court to find

    OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
    District Judge (Commercial Court)-01,
    Page No.26 of 27 Patiala House Court, New Delhi
    that such a term would have been adopted by the parties as
    reasonable men if it had been suggested to them. Rather, it
    must have been a term that went without saying, a term
    necessary to give business efficacy to the contract, a term
    which, although tacit, forms part of the contract.

    87. But before an implied condition, not expressly found in
    the contract, is read into a contract, by invoking the
    business efficacy doctrine, it must satisfy the following five
    conditions:

    (a) it must be reasonable and equitable;

    (b) it must be necessary to give business efficacy to the
    contract, that is, a term will not be implied if the contract is
    effective without it;

    (c) it must be obvious that “it goes without saying”;

    (d) it must be capable of clear expression;

    (e) it must not contradict any terms of the contract.”

    22. In the present case, I do find that findings of ld. Arbitrator being
    in derogation to explicit term of contract and contrary to
    intentions of the parties as appearing from the communications,
    fall in the category of perversity.

    DECISION

    23. In view of my foregoing discussions, observations and findings,
    petition is allowed and award in question is set aside.

    File be consigned to record room after due compliance.

    
                                                                   Digitally signed
                                                                   by PULASTYA
                                                 PULASTYA   PRAMACHALA
                                                 PRAMACHALA Date: 2026.04.16
                                                                   17:26:45 +0530
    
    
    
    
          Pronounced in the                  (PULASTYA PRAMACHALA)
          Open Court on this             District Judge (Commercial Court)-01,
          16th day of April, 2026           Patiala House Court,New Delhi
    
    
          OMP (COMM.) No. 204/2025                                      (Pulastya Pramachala)
                                                             District Judge (Commercial Court)-01,
          Page No.27 of 27                                      Patiala House Court, New Delhi
     



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