Delhi High Court
Ntpc Ltd vs Ampl Resources Private Limited on 26 February, 2026
Author: Purushaindra Kumar Kaurav
Bench: Purushaindra Kumar Kaurav
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
BEFORE
HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV
+ O.M.P. (COMM) 186/2025, I.A. 12141/2025&I.A. 12142/2025
NTPC LTD
THROUGH ITS AUTHORISED REPRESENTATIVE MR. SALIL
KUMAR PANDEY
REGD. OFFICE AT:
NTPC BHAWAN, CORE-7, SCOPE COMPLEX, 7
INSTITUTIONAL
AREA, LODHI ROAD, NEW DELHI - 110003 .....Petitioner
(Through: Mr. Adarsh Tripathi, Mr. Vikram Singh Baid and Mr.
Ajitesh Garg, Advs.)
versus
AMPL RESOURCES PRIVATE LIMITED
(ERSTWHILE AMBEY MINING PRIVATE
LIMITED)
THROUGH ITS DIRECTORS / AUTHORIZED
REPRESENTATIVE,
REGD. OFFICE AT: 8, AJC BOSE ROAD,
CIRCULAR COURT,
9TH FLOOR, UNIT-92, KOLKATA,
WEST BENGAL, 700017 .....Respondent
(Through: Mr. Udayan Jain, Ms. Kajal Sharma, Mr. Ranjan
Mishra, Mr. Harsh Jaiswal, Ms. Amiti Gupta, Ms. Geetika Vyas, and
Mr. Sonal Jain, Advs.)
+ O.M.P. (COMM) 240/2025
AMPL RESOURCES PRIVATE LIMITED
THROUGH ITS AUTHORISED REPRESENTATIVE
CIRCULAR ROAD, 9TH FLOOR,
Signature Not Verified Signature Not Verified
Signed By:AMIT KUMAR Signed
SHARMA
Signing Date:10.03.2026 By:PURUSHAINDRA
19:43:06 Page 1 of 32 KUMAR KAURAV
BLOCK-92, 8, AJC BOSE ROAD,
KOLKATA-700017 .....Petitioner
(Through: Mr. Udayan Jain, Ms. Kajal Sharma, Mr. Ranjan
Mishra, Mr. Harsh Jaiswal, Ms. Amiti Gupta, Ms. Geetika Vyas, and
Mr. Sonal Jain, Advs.)
versus
NTPC LIMITED
THROUGH ITS AUTHORISED SIGNATORY NTPC
BHAWAN, CORE -7,
SCOPE COMPLEX, INSTITUTIONAL AREA, LODHI
ROAD, NEW DELHI - 110003 .....Respondent
(Through: Mr. Adarsh Tripathi, Mr. Vikram Singh Baid and Mr.
Ajitesh Garg, Advs.)
------------------------------------------------------------------------------------
% Reserved on: 20.12.2025
Pronounced on: 26.02.2026
-----------------------------------------------------------------------------------
JUDGMENT
The present set of petitions has been filed both by the claimant as well
as the respondent against the award dated 19.12.2024 (hereinafter referred
to as the “impugned award”). The claimant, AMPL Resources Private
Limited (hereinafter referred to as “petitioner”) is the petitioner in OMP
(COMM) 240/2025 and the respondent, NTPC Limited (hereinafter referred
to as the “respondent”), is the petitioner in OMP (COMM) 186/2025. The
petitioner had instituted arbitration proceedings against the respondent
seeking recovery of money allegedly due under Contract dated 17.12.2019
(hereinafter referred to as “the Contract”). In the impugned award, the
Signature Not Verified Signature Not Verified
Signed By:AMIT KUMAR Signed
SHARMA
Signing Date:10.03.2026 By:PURUSHAINDRA
19:43:06 Page 2 of 32 KUMAR KAURAV
claim of the petitioner has been partly allowed and the petitioner seeks
severance and setting aside of the part rejecting its claim and award of the
full claim in its favour. The respondent seeks that the award be set aside in
toto.
Facts
2. The petitioner was awarded the Contract for coal transportation from
a designated mine to designated railway sidings for a period of one year with
effect from 26.11.2019, which was extendable for a further period of six
months. The terms of the Contract were contained in the General Conditions
of Contract (hereinafter referred to as the “GCC”), Special Conditions of
Contract (hereinafter referred to as the “SCC”), the Technical specifications
and drawings, Schedule of Quantities, Contractor‟s Bid Proposal No. 50727,
and the Purchase Order dated 18.11.2019 (hereinafter referred to as the
“Purchase Order”), among other documents. Under the terms thereof, the
respondent would provide monthly schedules to the petitioner, specifying
the quantity of coal to be transported.
3. After commencement of the work at the scheduled time, the
respondent, vide letter dated 13.04.2020, citing lower coal requirements,
directed the petitioner to suspend transportation till further notice. The
petitioner, thereafter, on various dates, claimed dues under various heads.
The respondent, in its letter dated 04.12.2020, refuted the claims, stating that
the Contract stipulated payment only according to the quantity of coal which
is transported, and therefore, the petitioner‟s claim for the whole contract
was not acceptable. Disputes persisted with regard to the petitioner‟s claims,
leading to the institution of arbitral proceedings.
Signature Not Verified Signature Not Verified
Signed By:AMIT KUMAR Signed
SHARMA
Signing Date:10.03.2026 By:PURUSHAINDRA
19:43:06 Page 3 of 32 KUMAR KAURAV
4. In the arbitral proceedings, the petitioner sought recovery of its
purported dues (principal amount) as per the table extracted below:
Sl. No. Particulars Amount (in Rs)
1. Fixed Cost Claim (Depreciation, 8,16,66,916.00
Interest, Insurance, Tax, Salary,
Minimum Guarantee, Camp
Establishment)
2. Fixed Office Expenses 3,32,90,985.00
3. Retention Money Dues 95,25,979.00
4. Loss of Profit Claim 11,75,71,640.00
Total 24,20,55,520.00
5. The claims for loss of profit and retention money dues were allowed,
and the claims for fixed office expenses and fixed costs were rejected.
Findings in the Impugned Award
6. The following points for determination were framed by the sole
arbitrator:
1. Whether the Claimant is entitled to the outstanding principal amount
in the sum of Rs. 24,20,55,520.00?
2. Whether the claimant is entitled to interest on the outstanding
principal @12% per annum up to 31.03.2023 in the sum of Rs.
6,77,22,492.00?
3. Whether the Claimant is entitled to pendente lite and future interest
@12% p.a. on the allowed outstanding principal and interest amounts
cumulatively?
Signature Not Verified Signature Not Verified
Signed By:AMIT KUMAR Signed
SHARMA
Signing Date:10.03.2026 By:PURUSHAINDRA
19:43:06 Page 4 of 32 KUMAR KAURAV
4. Whether the Claimant is entitled to the legal expenses as per actuals?
7. One of the questions framed by the sole-arbitrator for adjudicating the
claim for the outstanding principal amount, which also has a bearing on the
claim for interest on the principal amount, was whether the contract
envisaged the transportation of a fixed quantity of coal.
8. The sole-arbitrator has examined the relevant clauses and recitals in
the Contract, more particularly, the Bill of Quantity forming a part of the
Letter of Intent, the Bill of Quantity forming a part of the Purchase Order,
and Clause 8 of the SCC. It is pertinent to note that the petitioner‟s case
before the sole-arbitrator was that the Contract was for transportation of
13,69,000 MT (Thirteen Lakh and Sixty-Nine Thousand Metric Tonne) of
coal, with a permissible limit of deviation of (+/-) 30% (thirty per cent). The
respondent‟s case, on the other hand, was that the contract envisaged
transportation of coal according to the needs of the respondent, and did not
guarantee any fixed quantity. Ultimately, in line with the petitioner‟s
submissions and as contained in Clause 8.0 of the SCC, the sole-arbitrator
held that the contract was for a fixed quantity of coal, with a permissible
limit of deviation of (+/-) 30% (thirty per cent).
9. Upon adjudication of various other questions, the sole-arbitrator,
finally, concluded that the respondent has breached the contract.
10. The claim for principal amount, under each of the four heads as per
the table extracted above, was examined separately. At the outset, the sole-
arbitrator rejected the contention of the respondent that the petitioner had not
taken any steps to mitigate its losses, and, therefore, its claim for the entire
principal amount could not be accepted, upon consideration of the evidence
adduced.
Signature Not Verified Signature Not Verified
Signed By:AMIT KUMAR Signed
SHARMA
Signing Date:10.03.2026 By:PURUSHAINDRA
19:43:06 Page 5 of 32 KUMAR KAURAV
Claim for Fixed Costs
11. The sole arbitrator noted the petitioner‟s submission that it had
incurred costs towards the deployment of manpower and machinery for the
performance of its contractual obligations and that the machinery were
subject to wear and tear during the period of contract, all of which were to
be recoverable from the respondent. She also considered the submission that
the petitioner was entitled to recover the interest liability it incurred on the
loans taken for purchase of the aforesaid machinery. Documentary evidence
of the same, namely, depreciation certificate for the machinery duly certified
by a chartered accountant, interest certificate/repayment schedule for the
machinery, copy of the insurance acquired towards the same, and various
invoices for vehicles, equipment, materials, fuel, manpower, etc., as well as
a bank guarantee, were appreciated by the sole arbitrator before holding that
the petitioner had incurred the said costs.
12. The respondent‟s submission that the costs for arranging manpower
and machinery stood included in the contract amount and no additional
amount was payable to the petitioner was also noted, as also the submission
that the claim for depreciation costs was expressly barred under the terms
enumerated in the Purchase Order, and that it was the petitioner which was
solely liable for procuring insurance policies for the machinery.
13. The sole arbitrator proceeded to note that the law of damages required
the party which was not in breach of a contract, to be placed, as far as
possible, in the same position as it would have been if the contract had not
been breached by the other party. She noted that if there had not been any
breach by the respondent, the petitioner would have received the entire
contract amount of Rs. 1,16,77,57,000.00 (Rupees One Billion One Hundred
Signature Not Verified Signature Not Verified
Signed By:AMIT KUMAR Signed
SHARMA
Signing Date:10.03.2026 By:PURUSHAINDRA
19:43:06 Page 6 of 32 KUMAR KAURAV
and Sixty-Seven Million Seven Hundred and Fifty Seven Thousand only).
However, noting that the petitioner would have, anyhow, incurred the
aforesaid fixed costs in its performance of the Contract, it held that the same
were not additional costs and expenses incurred on account of breach by the
respondent and therefore, the petitioner was held as not entitled to recover
the same.
Claim for Fixed Office Expenses
14. The petitioner had sought to recover certain costs and expenses
allegedly incurred by it during the contract period for running its offices.
Upon noting that there was no pleading by the petitioner that it would not
have incurred the same if the respondent had fulfilled its part of the
Contract, the sole arbitrator held that for the same reasons, as assigned for
rejecting the claim for fixed costs, the claim for fixed office expenses could
not be accepted.
Claim for Retention Money Dues
15. The sole-arbitrator noted that as per Clause 4 of Point C of the
Purchase Order, only ninety per cent of the Running Account Bill was paid
to the petitioner for the works executed by it. The remaining ten per cent of
the bill amount was to be paid as per quarterly reconciliation of the works
executed.
16. The parties made submissions on the aspect of „reconciliation of the
works executed‟. The petitioner refuted the authenticity of the Statement of
Final Deviation, which was prepared after assessment of the residual coal at
the Katkamsandi siding, alleging that the same was prepared unilaterally,
and was never supplied to the petitioner. The respondent contended that
Signature Not Verified Signature Not Verified
Signed By:AMIT KUMAR Signed
SHARMA
Signing Date:10.03.2026 By:PURUSHAINDRA
19:43:06 Page 7 of 32 KUMAR KAURAV
Statement of Final Deviation was prepared on the basis of assessment
conducted in the presence of representatives of both parties and the same
had not been objected to by the petitioner at the relevant time. Therefore, it
was the respondent‟s case that the petitioner‟s challenge to the Statement of
Final Deviation was only an afterthought.
17. Upon noting the submissions of the parties, the sole-arbitrator held
that the Statement of Final Deviation was irrelevant to the question at hand,
after considering Clause 4 of Point C of the Purchase Order, as per the terms
of which, the quarterly „re-conciliation‟ of the work executed required
reconciliation of „the quantity of coal billed by the petitioner‟, „the quantity
as received by the respondent in rakes‟, and „the quantity lying at the
siding‟. However, considering that in the preparation of the Statement of
Final Deviation, only the quantity of coal to be transported as per the Letter
of Allotment with the finally executed quantity and amount are taken into
account, therefore, according to the sole-arbitrator, the Statement of Final
Deviation did not fulfill the conditions mandated in Clause 4 of Point C of
the Purchase Order.
18. Thereafter, the sole-arbitrator, considering that the respondent had not
disputed the factum of its retention of an amount of Rs. 95,25,979.00
(Rupees Ninety-Five Lakh Twenty-Five Thousand Nine Hundred and
Seventy-Nine only) from the petitioner, held that the petitioner was entitled
to the same.
Claim for Loss of Profits
19. Considering the earlier finding that the Contract was for a fixed
quantity and the respondent had breached it by not assigning work to the
Signature Not Verified Signature Not Verified
Signed By:AMIT KUMAR Signed
SHARMA
Signing Date:10.03.2026 By:PURUSHAINDRA
19:43:06 Page 8 of 32 KUMAR KAURAV
petitioner, the sole-arbitrator allowed the petitioner‟s claim for loss of
profits. The sole-arbitrator again reasoned that the well settled principle of
the law of damages was that the non-breaching party should, as far as
possible, be placed in the same position as if the contract has been
performed by the breaching party, and held that the petitioner was entitled to
fifteen per cent of the amount that the petitioner would have earned if the
balance work had been performed. The balance work was calculated by
subtracting the quantity of coal transported by the petitioner from the
stipulated contractual quantity from the contractual fixed quantity of
13,69,000 MT (Thirteen Lakh Sixty-Nine Thousand Metric Tonne). The
profits were calculated at fifteen per cent on the basis of the „Earnings
Before Interest, Taxes, Depreciation and Amortisation‟ and the „Profits
Before Taxes‟ as submitted by the petitioner, as well as reports of auditors
for the preceding financial years and a duly certified statement of long-term
and short-term profits by the petitioner‟s chartered accountants.
Claim for Interest
20. The sole-arbitrator noted that it was not the respondent‟s case that the
Contract did not allow for grant of interest, as also the fact that neither party
led evidence with regard to the applicable rate of interest. Accordingly, it
proceeded to award pre-litigation and pendente-lite interest on the awarded
amount at the rate of twelve per cent per annum, which according to the
arbitrator, was reasonable. Post award interest was also awarded at a rate
which is „two per cent higher than the rate of interest prevalent at the time of
the award‟, in accordance with Section 31(7)(b) of the Act.
Claim for Legal Expenses
Signature Not Verified Signature Not Verified
Signed By:AMIT KUMAR Signed
SHARMA
Signing Date:10.03.2026 By:PURUSHAINDRA
19:43:06 Page 9 of 32 KUMAR KAURAV
21. On the reasoning that the petitioner has been awarded an amount of
about fifty per cent of the claimed amount, the sole-arbitrator awarded the
petitioner fifty per cent of the legal expenses claimed by it.
Submissions
22. Mr. Udayan Jain, learned counsel for the petitioner, submits that the
award has been assailed on the following grounds:
22.1. The award suffers from perversity insofar as the petitioner‟s
claims for „fixed costs‟ and „fixed office expenses‟ were
rejected despite a clear finding that the petitioner had incurred
such costs. He submits that the sole-arbitrator had proceeded on
a perverse understanding of principles of contractual business
and on the presumption that the aforesaid fixed costs/fixed
office expenses were to be borne by the petitioner even if the
respondent had not breached the contract. According to him, it
is a first principle of contractual business that such costs are to
be recovered from the contractual amount. Therefore, the
petitioner was entitled to recover the fixed costs from the
amount that would be paid in consideration for the work that
would have been done if the contract was not breached.
22.2. The award is perverse insofar as the award of only fifty per cent
of the claimed amount towards legal expenses is concerned, as
the same is de hors any reasonable justification. He submits
that the reasoning assigned for the same, being that since only
fifty per cent of the claimed amount has been awarded, it wouldSignature Not Verified Signature Not Verified
Signed By:AMIT KUMAR Signed
SHARMA
Signing Date:10.03.2026 By:PURUSHAINDRA
19:43:06 Page 10 of 32 KUMAR KAURAV
be fit to award fifty per cent of the claim towards legal
expenses, is based on an erroneous analogy.
23. He submits that the impugned portions of the award are separable
from the rest, and prays that the award be modified to the extent of allowing
the petitioner‟s claims for fixed costs, fixed office expenditure and legal
expenses, in full.
24. Mr. Adarsh Tripathi, learned counsel for the respondent opposes the
aforesaid submissions and contends as follows:
24.1. The rejection of the petitioner‟s claims for fixed costs and fixed
office expenses is neither perverse nor patently illegal. The
fixed costs are factored into the contractual amount and once
compensation for loss of profits is awarded, a separate award
for fixed costs would amount to double liability on the
respondent, which is contrary to the principle underlying
Section 73 of the Contract Act, 1862.
24.2. The award of fifty per cent of the legal expenses claimed by the
petitioner is justified, since, the determination of the amount to
be awarded as costs is left to the discretion of the arbitrator
under Section 31A(1) of the Act. Therefore, there can be no
question of challenge to the same on the grounds of perversity
or patent illegality under Section 34 of the Act.
25. Mr. Adarsh Tripathi submits that the respondent‟s independent
challenge to the award is based on the following grounds:
25.1. The award is perverse insofar as the petitioner has been
awarded loss of profits and interest calculated against the
„balance work‟ taking the contractual quantity to be 13,69,000Signature Not Verified Signature Not Verified
Signed By:AMIT KUMAR Signed
SHARMA
Signing Date:10.03.2026 By:PURUSHAINDRA
19:43:06 Page 11 of 32 KUMAR KAURAV
MT (Thirteen Lakh and Sixty-Nine Thousand Metric Tonne),
despite expressly finding that the said quantity was subject to
permissible deviation of (+/-) 30% (thirty per cent). According
to him, therefore, the loss of profits, if any, was to be calculated
against seventy per cent of 13,69,000 MT, since the Contract
envisaged the same to be the lower permissible contractual
quantity, even as per the findings in the award.
25.2. The award is perverse and patently illegal insofar as the sole-
arbitrator has awarded loss of profits in the teeth of the law laid
down by the Supreme Court in the decisions inBatliboi
Environmental Engineers Limited v Hindustan Petroleum
Corp. Ltd., 1All India Radio v. Unibros and Anr., 2and Unibros
v. All India Radio,3and without any evidentiary basis. He
contends that such damages could not have been awarded
unless the petitioner proved that it had actually lost out on
opportunities due to the breach of the Contract. He further
points out that the petitioner had not produced any document
showing any other work that it may have lost out on, on
account of the breach. He submits that the principle laid down
in the aforesaid cases has erroneously been interpreted in the
award to apply only to cases involving delay in the completion
of the contractual work, whereas it would be applicable even to
cases involving breach during the original contractual period.
1 (2024) 2 SCC 375 2 2010 (115) DRJ 573 3 2023 SCC OnLine SC 1366 Signature Not Verified Signature Not Verified Signed By:AMIT KUMAR Signed SHARMA Signing Date:10.03.2026 By:PURUSHAINDRA 19:43:06 Page 12 of 32 KUMAR KAURAV
25.3. The award is perverse as the rate at which the damages for loss
of profits have been awarded, i.e., fifteen per cent, has been
arrived at without any evidence having been led on that aspect
by the petitioner. He submits that the sole-arbitrator has also not
independently ascertained the rate at which the damages had to
be awarded, and has proceeded on the premise that the rate
claimed by the petitioner seemed reasonable. He places reliance
on the decisions of the Supreme Court in J.G. Engineers
Private Limited v. Union of India and Another,4M/s A.T. Brij
Paul Singh and Others v. State of Gujarat,5 and Mohd.
Salamatullah and Others v. Government of Andhra Pradesh.6
25.4. The award is perverse insofar as the petitioner has been
awarded interest on the awarded amount, without the Contract
providing for the same. Further, with specific reference to the
interest awarded on the retention money, he submits that the
retention amount was not released to the petitioner only
because the procedure prescribed under the Contract for the
same could not be completed on account of the conduct of the
petitioner and onset of the COVID pandemic. The sole-
arbitrator, according to him, has failed to appreciate the said
aspect.
26. He submits that aforesaid aspects go to the root of the award, and
therefore, the impugned portions cannot be separated from the rest of the
4
(2011) 5 SCC 758
5
(1984) 4 SCC 59
6
(1977) 3 SCC 590
Signature Not Verified Signature Not Verified
Signed By:AMIT KUMAR Signed
SHARMA
Signing Date:10.03.2026 By:PURUSHAINDRA
19:43:06 Page 13 of 32 KUMAR KAURAV
award. Therefore, according to him, the award is liable to be set aside in
toto.
27. Mr. Udayan Jain opposes the aforesaid submissions and contends as
follows:
27.1. The respondent is seeking re-evaluation of the findings in the
award on merits and re-appreciation of the evidence, which are
beyond the scope of the Court‟s power under Section 34 of the
Act. Reliance is placed in this regard, on the decision of the
Supreme Court in Gayatri Balaswamy v. ISG Novasoft
Technologies Limited.7
27.2. The award of damages on account of loss of profits is justified
as the petitioner had duly established the existence of the
essential ingredients in this case; a. breach of the Contract, b.
injury caused to the petitioner on account of the breach c. the
injury caused is proximate to and attributable as a direct
consequence of the breach. Reliance is placed on the decision
of this Court in Sudhershan Kumar Bhayana v. Vinod Seth,8
in this regard. He further submits that Courts have consistently
held that loss of profits is a necessary and direct consequence of
illegal/arbitrary cancellation/abandonment of a contract.
Reliance is placed on the decisions in Dwaraka Das v. State of
M.P., 9and Union of India v. M/s J. Sons Eng. Corp Ltd.
7 2025 INSC 605 8 2023:DHC:7053-DB 9 (1999) 3 SCC 500 Signature Not Verified Signature Not Verified Signed By:AMIT KUMAR Signed SHARMA Signing Date:10.03.2026 By:PURUSHAINDRA 19:43:06 Page 14 of 32 KUMAR KAURAV
&Anr.10Therefore, according to him, there is no perversity in
the impugned portion of the award.
27.3. He submits that the contention that the Contract allowed for a
deviation of thirty per cent against the contractual quantity, and
hence, any loss of profits, if awarded, could only be against
seventy per cent of the contractual quantity, was not taken as a
defence in the respondent‟s statement of defence and was only
raised in the written submissions as an afterthought. Therefore,
according to him, the respondent is foreclosed from raising
such objection in a proceeding under Section 34 of the Act.
27.4. The award of interest is also justified despite there being no
express provision in the Contract providing for the same, since
the Contract did not prohibit the same.
Analysis
28. The scope for interference under Section 34 of the Act is quite limited
and is only permissible when one or more of the explicit grounds laid down
in the provision are satisfied. Section 34 is a carefully guarded provision
which not only lays down the grounds which permit interference, but also
cautions against any excessive interference by misconstruction of the
grounds.The explanations in sub-section (2), starting with the words “for the
avoidance of doubt”, are suggestive of the legislative intent to not turn this
limited remedy into a roving inquiry into the merits of the arbitral award or
into a full-fledged appeal. In Ramesh Kumar Jain vs. Bharat Aluminium
10
2015:DHC:3350
Signature Not Verified Signature Not Verified
Signed By:AMIT KUMAR Signed
SHARMA
Signing Date:10.03.2026 By:PURUSHAINDRA
19:43:06 Page 15 of 32 KUMAR KAURAV
Company Limited,11 the Supreme Court noted the narrow scope of this
supervisory jurisdiction and the availability of four narrow grounds of
challenge. The relevant part reads thus:
“28. The bare perusal of section 34 mandates a narrow lens of supervisory
jurisdiction to set aside the arbitral award strictly on the grounds and
parameters enumerated in sub-section (2) & (3) thereof. The interference
is permitted where the award is found to be in contravention to public
policy of India; is contrary to the fundamental policy of Indian Law; or
offends the most basic notions of morality or justice. Hence, a plain and
purposive reading of the section 34 makes it abundantly clear that the
scope of interference by a judicial body is extremely narrow. It is a settled
proposition of law as has been constantly observed by this court and we
reiterate, the courts exercising jurisdiction under section 34 do not sit in
appeal over the arbitral award hence they are not expected to examine the
legality, reasonableness or correctness of findings on facts or law unless
they come under any of grounds mandated in the said provision. In ONGC
Limited. v. Saw Pipes Limited, this court held that an award can be set
aside under Section 34 on the following grounds: “(a) contravention of
fundamental
policy of Indian law; or (b) the interest of India; or (c) justice or morality,
or (d) in addition, if it is patently illegal.”
29. It is equally settled that the Court, while exercising its supervisory
jurisdiction under Section 34, is not supposed to act like an Appellate Court.
The scope of examination is not akin to a review of the merits of the dispute,
rather, it is limited to situations wherein the findings are arbitrary, capricious
or perverse, or when the conscience of the Court is shocked or the illegality
is not trivial but goes to the root of the matter. The following observation of
the Supreme Court in MMTC Ltd. v. Vedanta Ltd.,12 is quite instructive:
“12. It is only if one of these conditions is met that the Court may interfere
with an arbitral award in terms of Section 34(2)(b)(ii), but such
interference does not entail a review of the merits of the dispute, and is
limited to situations where the findings of the arbitrator are arbitrary,
capricious or perverse, or when the conscience of the Court is shocked, or11
2025 SCC OnLine SC 2857
12
(2019) 4 SCC 163Signature Not Verified Signature Not Verified
Signed By:AMIT KUMAR Signed
SHARMA
Signing Date:10.03.2026 By:PURUSHAINDRA
19:43:06 Page 16 of 32 KUMAR KAURAV
when the illegality is not trivial but goes to the root of the matter. An
arbitral award may not be interfered with if the view taken by the
arbitrator is a possible view based on facts …”
30. In the present case, the cross-challenges to the impugned award are
primarily based on the ground of perversity. The Supreme Court, in its
decision in Delhi Metro Rail Corporation Limited v. Delhi Airport Metro
Private Limited,13 examined the scope of the term „perversity‟ as interpreted
in its earlier decisions, and held that a finding would be perverse if it is so
irrational that no reasonable person could have arrived at the same. The
instant challenges, therefore, allege that the impugned portions are perverse,
being contrary to the sole-arbitrator‟s own findings in the award and as such,
could not have been arrived at by any reasonable person.
31. The petitioner‟s challenge to the impugned award, on the aspect of
rejection of its claim for fixed costs and fixed office expenses, is primarily
based on the ground that the sole-arbitrator has given an explicit finding that
the petitioner had incurred the said costs, but owing to a perverse
understanding of business-practices, has proceeded on the presumption that
the said costs were to be incurred by the petitioner, even if the Contract had
not been breached by the respondent.
32. It is seen that in paragraphs 122 to 124 of the award, an explicit
finding has been rendered that the petitioner had deployed such workforce
and machinery at the site as it reasonably expected to be necessary to
complete the work as and when required by the respondent. The said
paragraphs are extracted below, for reference:
“122. The Tribunal notes, that in the letter dated 13.04.2020, NIL
13
2024 INSC 2024Signature Not Verified Signature Not Verified
Signed By:AMIT KUMAR Signed
SHARMA
Signing Date:10.03.2026 By:PURUSHAINDRA
19:43:06 Page 17 of 32 KUMAR KAURAV
schedules or any of the communications issued by it, the Respondent
had not indicated recommencement of the works. It also did not
direct the Claimant to reduce or demobilize the manpower and
machinery. The Respondent did not terminate the Contract with the
Claimant but kept it alive. It is the case of the Respondent that the
transportation of the coal is dependent on the Respondent’s
requirement for it for generation of electricity. Thus, it was the
Respondent, rather than the Claimant, who was the positioned to
assess/determine as to the time when the works will recommence.
The NIL schedules were being issued on the monthly basis. Thus, the
Tribunal cannot find fault with the Claimant expecting that the works
can be recommenced at any time and in maintaining the manpower
& machinery at the site.
123. The Respondent does not dispute that the Claimant was
required to maintain adequate machine and manpower at the site to
execute the works as and when schedules are issued by the
Respondent. It is also not in dispute that the Respondent was
empowered to impose heavy penalty and damages if the Claimant
failed to perform the works as per the schedules issued to it.
124. The Tribunal also finds merit in the submission of the Claimant
that the machinery and equipment at the site are specialised and
included heavy items which are not easy to demobilize and
remobilize when the works recommenced. Despite this position, the
Tribunal notes that, the Claimant made effort to and did demobilize
certain machinery and equipment such as Hyva tipper trucks and
other vehicles. It also reduced the workforce and facilities.”
33. In paragraph 130 of the award, the sole arbitrator records the
respondent‟s submission that the cost component, to be incurred initially by
the petitioner, was included in the contractual price. In paragraph no. 131,
the submission that as per the terms of the Contract, the petitioner was not
entitled for any claim with respect to idleness of its machinery/manpower
has been noted. The said paragraphs are reproduced below, for reference:
“130. The Respondent denies the claims of the Claimant. The
Respondent has submitted that the costs incurred by the Claimant on
account of arranging manpower and machinery stood included in the
price to be paid to the Claimant under the Contract and no such
expenses can be held to be additionally payable to the Claimant
under the Contract.
131. Referring to Clause 12 of Point G under Important Notes in the
Signature Not Verified Signature Not Verified
Signed By:AMIT KUMAR Signed
SHARMA
Signing Date:10.03.2026 By:PURUSHAINDRA
19:43:06 Page 18 of 32 KUMAR KAURAV
PO, the Respondent submits that, the Claimant is not entitled for any
claim whatsoever for the idleness of its tipping/trucks/Pay
loaders/equipment/ employees for want of coal or lack of space
available at the unloading site or any dislocation, reroute or non-
availability of third-party Sampling team or any other reasons.”
34. Further, in paragraph 135 of the award, the principle of law of
damages, requiring the non-breaching party to be placed in the same
position as it would have been but for the breach of the contract, is noted.
The sole-arbitrator proceeds to observe that under the Contract, the
petitioner would have been entitled to the contractual amount, which would
be the sum of the costs to be initially incurred by the petitioner and the
profits that it would earn out of the contract. In paragraph 137, it is then held
that the said costs were not additional costs and expenses incurred by the
petitioner on account of the breach of the Contract and therefore, the
petitioner was not entitled to the same. The said paragraphs are reproduced
below, for reference:
“135. At the outset the Tribunal notes that it is a trite principle of the
law if damages that the party which has not committed breach of the
contract should be as far as possible be placed in the same position
as if the contract had been performed by the breaching party. In the
present case, the Contract was for transportation of 13,69,000 MT
coal with a permissible deviation of +/-30%. Thus, had the parties
performed the Contract without any breach or failure, at the end of
the Contract Period, the Claimant would have been in a position
where it would receive the Contact Price of 116,77,57,000.00.
However, at the same time the Claimant would have incurred all
costs and expenses for performing its part of the Contract. To put it
differently, at the end of the Contract Period, the Claimant would
have earned certain profit in the ordinary course of business, which
is the difference between the total Contract Price and the expenses
that the Claimant would have incurred to perform the Contract.
Thus, essentially, this loss of profit would be the damages which
would have been incurred by the Claimant. The Claimant’s claims
should be analysed in this context.
XXXX
Signature Not Verified Signature Not Verified
Signed By:AMIT KUMAR Signed
SHARMA
Signing Date:10.03.2026 By:PURUSHAINDRA
19:43:06 Page 19 of 32 KUMAR KAURAV
137. Thus, the Tribunal finds that the Fixed Costs claimed by the
Claimant are not additional costs and expenses incurred to the
Claimant on account of breach of the Contract by the Respondent.
Hence, it cannot be considered as losses or damages to the
Claimant.”
35. The petitioner‟s claim for fixed expenses has also been rejected on the
same grounds as the claim for fixed costs, as noted above.
36. The aforesaid findings categorically suggest that as per the tribunal‟s
understanding of the contract and respective obligations of the parties
thereunder, the petitioner was only entitled to the contract price. It further
implies that the contractual arrangement between the parties did not provide
for any stipulation for payment of fixed costs or expenses in addition to the
said contract price. Thus, as per the findings of the tribunal, it was an
inherent part of the petitioner‟s contractual obligations to make
arrangements for machinery, manpower and other facilities for the proper
fulfilment of its part of the bargain and in lieu thereof, a contract price was
fixed. The tribunal‟s view, furthermore, indicates that the petitioner was
supposed to deduct the expenses/costs incurred by it from the contract price
and to ascertain its profits after such deductions. The view taken by the
tribunal is a possible view in light of the terms of contract, more specifically
in light of the fact that there is no express stipulation for payment of fixed
costs/expenses to the petitioner, over and above the contract price. Even if,
arguendo, the entire contract would have been performed, there is nothing to
suggest that the additional costs/expenses incurred by the petitioner in
performance thereof were recoverable from the respondent, in addition to
the payment of contract price. The tribunal‟s view that the respondent‟s
obligation was limited to the payment of contract price and fixed
Signature Not Verified Signature Not Verified
Signed By:AMIT KUMAR Signed
SHARMA
Signing Date:10.03.2026 By:PURUSHAINDRA
19:43:06 Page 20 of 32 KUMAR KAURAV
costs/expenses were adjustable from the contract price itself and profits were
to be ascertained after such adjustment, is a view which could have been
taken by a reasonable man in light of the terms of the contract.
37. Therefore, the view taken by the sole arbitrator cannot be termed as
perverse as it is a possible view of the contractual arrangement between the
parties. It would be apposite, at this stage, to refer to the decision of the
Supreme Court in Consolidated Construction Consortium Limited Vs.
Software Technology Parks of India,14 wherein the Court discussed the
scope of Section 34 of the Act and unequivocally noted that the remedy
under Section 34 is not meant for re-appreciation of evidence or to discard a
possible view of the matter. The relevant part reads thus:
“46. Scope of Section 34 of the 1996 Act is now well crystallized by a
plethora of judgments of this Court. Section 34 is not in the nature of an
appellate provision. It provides for setting aside an arbitral award that too
only on very limited grounds i.e. as those contained in Sub-sections (2) and
(2-A) of Section 34. It is the only remedy for setting aside an arbitral award.
An arbitral award is not liable to be interfered with only on the ground that
the award is illegal or is erroneous in law which would require re-appraisal
of the evidence adduced before the arbitral tribunal. If two views are
possible, there is no scope for the court to re-appraise the evidence and to
take the view other than the one taken by the arbitrator. The view taken by
the arbitral tribunal is ordinarily to be accepted and allowed to prevail.
Thus, the scope of interference in arbitral matters is only confined to the
extent envisaged Under Section 34 of the Act. The court exercising powers
Under Section 34 has perforce to limit its jurisdiction within the four
corners of Section 34. It cannot travel beyond Section 34. Thus, proceedings
Under Section 34 are summary in nature and not like a full-fledged civil suit
or a civil appeal. The award as such cannot be touched unless it is contrary
to the substantive provisions of law or Section 34 of the 1996 Act or the
terms of the agreement.”
14
(2025) 7 SCC 75
Signature Not Verified Signature Not Verified
Signed By:AMIT KUMAR Signed
SHARMA
Signing Date:10.03.2026 By:PURUSHAINDRA
19:43:06 Page 21 of 32 KUMAR KAURAV
38. Further, Hindustan Construction Co. Ltd. v. NHAI,15 the Supreme
Court has rendered the following observations on the scope of proceedings
under Section 34 of the Act, especially when the arbitrator‟s interpretation of
contract is challenged:
“27. For a long time, it is the settled jurisprudence of the courts in the
country that awards which contain reasons, especially when they
interpret contractual terms, ought not to be interfered with, lightly. The
proposition was placed in State of U.P. v. Allied Constructions [State of
U.P. v. Allied Constructions, (2003) 7 SCC 396] : (SCC p. 398, para 4)
“4. … It was within his jurisdiction to interpret Clause 47 of
the Agreement having regard to the fact-situation obtaining
therein. It is submitted that an award made by an arbitrator
may be wrong either on law or on fact and error of law on the
face of it could not nullify an award. The award is a speaking
one. The arbitrator has assigned sufficient and cogent reasons
in support thereof. Interpretation of a contract, it is trite, is a
matter for the arbitrator to determine (see Sudarsan Trading
Co. v. State of Kerala [Sudarsan Trading Co. v. State of
Kerala, (1989) 2 SCC 38] ). Section 30 of the Arbitration Act,
1940 providing for setting aside an award is restrictive in its
operation. Unless one or the other condition contained in
Section 30 is satisfied, an award cannot be set aside. The
arbitrator is a Judge chosen by the parties and his decision is
final. The Court is precluded from reappraising the evidence.
Even in a case where the award contains reasons, the
interference therewith would still be not available within the
jurisdiction of the Court unless, of course, the reasons are
totally perverse or the judgment is based on a wrong
proposition of law.”
28. This enunciation has been endorsed in several cases (Ref. McDermott
International Inc. v. Burn Standard Co. Ltd. [McDermott International
Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181] ). In MSK Projects
(I) (JV) Ltd. v. State of Rajasthan [MSK Projects (I) (JV) Ltd. v. State of
Rajasthan, (2011) 10 SCC 573 : (2012) 3 SCC (Civ) 818] it was held that
an error in interpretation of a contract by an arbitrator is “an error
within his jurisdiction”. The position was spelt out even more clearly
in Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 :
(2015) 2 SCC (Civ) 204] , where the Court said that : (Associate Builders
15
(2024) 2 SCC 613Signature Not Verified Signature Not Verified
Signed By:AMIT KUMAR Signed
SHARMA
Signing Date:10.03.2026 By:PURUSHAINDRA
19:43:06 Page 22 of 32 KUMAR KAURAV
case [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ)
204] , SCC p. 81, para 42)
“42. … 42.3. … if an arbitrator construes a term of the
contract in a reasonable manner, it will not mean that the
award can be set aside on this ground. Construction of the
terms of a contract is primarily for an arbitrator to decide
unless the arbitrator construes the contract in such a way
that it could be said to be something that no fair-minded or
reasonable person could do.””
39. As discussed above, the view taken by the sole arbitrator is a fairly
possible view in light of the contractual controversy between the parties, and
even if it is held that an alternate view is possible, this reason is not enough
to discard the view taken by the sole arbitrator. The distinction between
supervisory jurisdiction and appellate jurisdiction would effectively be
obliterated if the Court enters into re-appreciation of evidence to alter a
legally possible view.
40. The award, therefore, insofar as it rejects the petitioner‟s claims for
fixed costs and fixed expenses, cannot be termed as perverse.
41. The petitioner‟s challenge to the award of fifty per cent of the amount
claimed towards legal expenses is also meritless. As rightly pointed out by
Mr. Adarsh Tripathi, the grant of costs and the determination of the amount
thereof, is left to the discretion of the arbitrator under Section 31A of the
Act. In fact, the said provision explicitly provides that „costs‟ would include
„legal fees and expenses‟ and that in determining the amount, the arbitrator
shall have regard to „whether the party has succeeded partly in the case‟. The
said provision is extracted below, for reference:
31A. Regime for costs.–(1) In relation to any arbitration proceeding
or a proceeding under any of the provisions of this Act pertaining to
the arbitration, the Court or arbitral tribunal, notwithstanding
anything contained in the Code of Civil Procedure,1908 (5 of 1908),
shall have the discretion to determine–
Signature Not Verified Signature Not Verified
Signed By:AMIT KUMAR Signed
SHARMA
Signing Date:10.03.2026 By:PURUSHAINDRA
19:43:06 Page 23 of 32 KUMAR KAURAV
(a) whether costs are payable by one party to another;
(b) the amount of such costs; and
(c) when such costs are to be paid.
Explanation.–For the purpose of this sub-section, “costs” means
reasonable costs relating to–
(i) the fees and expenses of the arbitrators, Courts and
witnesses;
(ii) legal fees and expenses;
(iii) any administration fees of the institution supervising the
arbitration; and
(iv) any other expenses incurred in connection with the arbitral
or Court proceedings and the arbitral award.
(2) If the Court or arbitral tribunal decides to make an order as to
payment of costs,–
(a) the general rule is that the unsuccessful party shall be ordered to
pay the costs of the successful party; or
(b) the Court or arbitral tribunal may make a different order for
reasons to be recorded in writing.
(3) In determining the costs, the Court or arbitral tribunal shall have
regard to all the circumstances, including–
(a) the conduct of all the parties;
(b) whether a party has succeeded partly in the case;
(c) whether the party had made a frivolous counterclaim leading to
delay in the disposal of the arbitral proceedings; and
(d) whether any reasonable offer to settle the dispute is made by a
party and refused by the other party.
(4) The Court or arbitral tribunal may make any order under this
section including the order that a party shall pay–
(a) a proportion of another party’s costs;
(b) a stated amount in respect of another party’s costs;
(c) costs from or until a certain date only;
(d) costs incurred before proceedings have begun;
(e) costs relating to particular steps taken in the proceedings;
(f) costs relating only to a distinct part of the proceedings; and
(g) interest on costs from or until a certain date.
(5) An agreement which has the effect that a party is to pay the whole
or part of the costs of the arbitration in any event shall be only valid
if such agreement is made after the dispute in question has arisen.
42. Therefore, on a bare reading of the said provision, it appears that the
determination of costs falls within the discretionary realm of the arbitrator
and the exercise of such discretion could be guided by the parameters laid
Signature Not Verified Signature Not Verified
Signed By:AMIT KUMAR Signed
SHARMA
Signing Date:10.03.2026 By:PURUSHAINDRA
19:43:06 Page 24 of 32 KUMAR KAURAV
down in sub-section (4) of Section 31A. Evidently, one of the parameters is
part success of the winning party. Therefore, it is clear that the sole-
arbitrator was fully justified in determining the legal expenses to be paid by
the respondent to the petitioner at fifty per cent of the claimed amount, as
around fifty per cent of the petitioner‟s total claim came to be allowed. In
view thereof, there is no infirmity in the exercise of discretion by the sole-
arbitrator in determination of cost.
43. Adverting to the respondent‟s challenge to the award, it is seen that
the dispute is with respect to the sole-arbitrator‟s perception of the quantity
of coal envisaged under the Contract to be transported by the petitioner. In
the award, the sole-arbitrator has proceeded on the basis that the contract
stipulated the transportation of 13,69,000 MT (Thirteen Lakh Sixty Nine
Thousand metric tonne only) of coal, despite explicitly finding that the said
quantity was subject to a permissible limit of deviation of (+/-) 30% (Thirty
per cent only). In paragraph 54 of the award, which is extracted below for
reference, the sole-arbitrator records the said finding:
” 54. In view of the above discussion, the Tribunal holds that
Contract was fixed quantity contract with a provision for deviation
+/- 30%.”
44. In paragraph 158 of the award, the submissions of the petitioner on its
claim for loss of profits are recorded. The petitioner‟s claim, as recorded
therein, was that under the Contract, it was to transport 13,69,000 MT
(Thirteen Lakh Sixty-Nine Thousand metric tonne only) of coal and
accordingly, the contractual amount was Rs. 1,16,77,57,000/-. Accordingly,
the loss of profits was calculated against the balance amount out of Rs.
1,16,77,57,000/-. In paragraph 170 of the award, the sole arbitrator has
Signature Not Verified Signature Not Verified
Signed By:AMIT KUMAR Signed
SHARMA
Signing Date:10.03.2026 By:PURUSHAINDRA
19:43:06 Page 25 of 32 KUMAR KAURAV
accepted the contractual amount, as urged by the petitioner, to be Rs.
1,16,77,57,000/- and has proceeded to calculate the quantum of loss of
profits accordingly. The aforesaid paragraphs are extracted below, for
reference:
“158. The next claim of the Claimant is loss of profit. The Claimant
submits that in lieu of the resources, it would have earned certain
profits in the ordinary course of business. The Claimant has
submitted that under the Contract it was required to transport
13,69,000.00 metric tonnes. Referring to the BOQ forming part of
the LOA and the PO, the Claimant submits that the Tipper Loading
of the mine end was to be carried out at the rate of ₹80.00 per metric
tonnes and the Wagon Loading at Siding was to be carried out at the
rate of 155.00 per metric tonne. Under the Contract, the Claimant
was also required to transport a total quantity of 8,21,40,000 MK
(metric tonnes per kilometre) (13,69,000 metric tonnes x 60 kms) of
coal to be transported at the rate of ₹ 10.30 per MK. Thus, the total
consideration of the Contract was ₹1,16,77,57,000.00.
XXXXX
170. The Tribunal has already noted above that the it is a well settled
principle of the law of damages that the non-breaching party which
is not at fault should be as far as possible be placed in the same
position as if the contract has been performed by the breaching
party. The Tribunal also found that had the parties performed the
Contract without any breach or failure, at the end of the Contract
Period, the Claimant would have been in a position where it would
receive the Contact Price of ₹ 116,77,57,000.00, and would have
earned certain profit in the ordinary course of business. Thus,
essentially, the loss of profit is the damage which has enured to the
Claimant.”
45. On this aspect, the primary submission advanced on behalf of the
petitioner is that the contention regarding permissible limits of deviation was
not raised by the respondent in its statement of defence and hence, the same
cannot be raised in a challenge under Section 34 of the Act. Essentially, it is
an argument of default on the part of the respondent in raising this objection
at the appropriate stage. Be that as it may, this Court does not find it
necessary to examine this argument as the findings of the sole arbitrator are
Signature Not Verified Signature Not Verified
Signed By:AMIT KUMAR Signed
SHARMA
Signing Date:10.03.2026 By:PURUSHAINDRA
19:43:06 Page 26 of 32 KUMAR KAURAV
sustainable on merits. It is, no doubt, correct that the contract provided for a
deviation of +/- 30% in the transferable quantity. It is also correct that the
sole arbitrator has not taken the possible deviations into account and has
proceeded to calculate the profits on the assumption that the entire
transferable quantity of coal would have been transferred had the contract
not been breached. However, it is of utmost importance to note that in
calculation of loss of profits, the Court could only take into account the state
of affairs in ordinary and natural course of events and the underlying
assumption in the calculation of profits is the fulfilment of the contract,
barring deviations or contingencies which may or may not have arisen.
Essentially, the determination of loss of profits takes into account the
„expected‟ profits and the expectation ought to be based on the fulfilment of
the whole contract i.e. transfer of the full quantity of coal.
46. The sole arbitrator has proceeded on the premise of fulfilment of the
whole contract in ordinary course of events, without entering into the
speculative zone of taking the deviations into account. This Court finds no
perversity in the said view and again, it is a view which could flow from the
mind of a reasonable man, as deviations are nothing but probable future
contingencies. Furthermore, while calculating the loss of profits, an
assumption of the quantity which ought to have been transferred by the
petitioner to be 30% lesser than the fixed quantity would make it a
vulnerable assumption, as such an assumption could also be made on the
higher side to increase the quantity by 30%. Therefore, the sole arbitrator‟s
finding is based on the fixed quantity of coal, without speculating any
deviations, and the same is rightly intended to avoid any arbitrariness. This
Court finds no infirmity in the said view, being a legally tenable view.
Signature Not Verified Signature Not Verified
Signed By:AMIT KUMAR Signed
SHARMA
Signing Date:10.03.2026 By:PURUSHAINDRA
19:43:06 Page 27 of 32 KUMAR KAURAV
47. The submission advanced on behalf of the respondent that the award
of loss of profits to the petitioner is in contravention of the law laid down by
the Supreme Court in Batliboi Environmental Engineers Limited, All India
Radio, and Unibros is unfounded. The sole-arbitrator, upon examination of
the aforesaid decisions, has concluded that the said cases, having involved
an aspect of delay in completion of the contract and the consequential claim
for loss of profits during the extended contract period, were not applicable in
the present case, where the breach of the Contract was within the original
contractual period. A perusal of the said decisions indicates that the facts
therein involved delay in completion of the Contract for reasons attributable
to the employer. There is no indication in any of the three decisions that the
principle enunciated therein would be applicable to cases not involving any
such aspect of delay. Further, as noted, with approval, by the Supreme Court
in McDermont International Inc v. Burn Standard Company Ltd.,16 the
Court, in M.N. Gangappa v. Atmakur Nagabhushanam Setty & Co.,17 has
held that the method used for computation of damages will depend on the
facts and circumstances of each case. While allowing the claim for loss of
profits, the sole-arbitrator has reasoned that the Contract being a fixed
quantity contract, would have entitled the petitioner to a certain amount of
profit, that, ultimately, did not accrue to it on account of the breach by the
respondent. Therefore, according to the sole-arbitrator, no additional
evidence was required for the petitioner to establish that on account of the
breach, it had lost the profits that it would have otherwise earned out of the
Contract. The said conclusion, as correctly highlighted by Mr Udayan Jain,
16
(2006) 11 SCC 181
17
(1973) 3 SCC 406
Signature Not Verified Signature Not Verified
Signed By:AMIT KUMAR Signed
SHARMA
Signing Date:10.03.2026 By:PURUSHAINDRA
19:43:06 Page 28 of 32 KUMAR KAURAV
is in line with the decision of the Supreme Court in Dwarka Das and of this
Court in M/s J. Sons Engineers. Further, in A.T. Brij Paul Singh, the facts
involved were similar to those before the Court herein. The facts therein
involved two suits arising out of similar contracts for similar works. The
Trial Court had awarded damages for loss of profits at the rate of fifteen per
cent of the price of the balance works in both the suits. The decision of the
Trial Court in both the cases had been appealed against, before the High
Court. While in one of the cases, the High Court held that the Trial Court
was justified in computing the damages for loss of profits at the rate of
fifteen per cent of the balance works, in the other case, the High Court held
that actual loss of profit had to be proved and a mere percentage, as
specified by the parties, would not furnish adequate evidence to sustain the
claim. The Supreme Court, on an appeal against the High Court decision
setting aside the judgment of the Trial Court, observed that in works
contracts, an expectation of reasonable profit is implicit and in case of
breach of the same, any loss of the same has to be compensated. The
relevant portion of the said decision is extracted below, for reference:
“10. …..What would be the measure of profit would depend upon
facts and circumstances of each case. But that there shall be a
reasonable expectation of profit is implicit in a works contract and
its loss has to be compensated by way of damages if the other party
to the contract is guilty of breach of contract cannot be gainsaid. In
this case we have the additional reason for rejecting the contention
that for the same type of work, the work site being in the vicinity of
each other and for identical type of work between the same parties, a
Division Bench of the same High Court has accepted 15% of the
value of the balance of the works contract would not be an
unreasonable measure of damages for loss of profit. We are
therefore, of the opinion that the High Court was in error in wholly
rejecting the claim under this head.
11. Now if it is well-established that the respondent was guilty of
breach of contract in as much as the recission of contract by the
Signature Not Verified Signature Not Verified
Signed By:AMIT KUMAR Signed
SHARMA
Signing Date:10.03.2026 By:PURUSHAINDRA
19:43:06 Page 29 of 32 KUMAR KAURAV
respondent is held to be unjustified, and the plaintiff-contractor had
executed a part of the works contract, the contractor would be
entitled to damages by way of loss of profits. Adopting the measure
accepted by the High Court in the facts and circumstances of the
case between the same parties and for the same type of work at 15%
of the value of the remaining parts of the work contract, the damages
for loss of profit can be measured.”
(Emphasis supplied)
48. The submission that the rate at which the damages for loss of profits
were computed is perverse, also cannot be accepted. The sole-arbitrator has
clearly considered the documents produced by the petitioner in this regard,
i.e., auditors‟ reports for the preceding years and certified statements from
its chartered accountants regarding its short-term and long-term profits, and
on the basis of the contents thereof, has found that the rate claimed by the
petitioner, i.e., fifteen per cent of the balance contractual amount, was
reasonable. The reliance placed by Mr. Adarsh Tripathi on the decisions of
the Supreme Court in J.G. Engineers Private Limited, A.T. Brij Paul Singh,
and Mohd. Salamatullah, is misplaced for the fact that none of the said
decisions lay down any straightjacket formula for determination of the rate
at which damages are to be calculated. In fact, as noted earlier, in the
decision in A.T. Brij Paul Singh, the Supreme Court rejected the reasoning
of the High Court that the Trial Court had computed the rate at which
damages had been awarded on the basis of „inadequate evidence‟ and upheld
the judgment of the Trial Court. Similarly, in Mohd. Salamatullah, the
Supreme Court upheld the computation of damages by the Trial Court,
which had been assailed before the High Court on the ground that the same
had been arrived at without any evidentiary basis. Therefore, the award does
not suffer from perversity or any illegality as far as the said aspect is
concerned.
Signature Not Verified Signature Not Verified
Signed By:AMIT KUMAR Signed
SHARMA
Signing Date:10.03.2026 By:PURUSHAINDRA
19:43:06 Page 30 of 32 KUMAR KAURAV
49. The challenge to the award as regards the grant of interest at the rate
of twelve per cent per annum is also sans merits. Under Section 31(7) of the
Act, the arbitrator is expressly conferred with the power to include any
interest component in the award, unless otherwise agreed by the parties.
Further, the arbitrator is conferred with the discretion to determine the
quantum of interest at such rate as he deems reasonable. The said provision
is extracted below, for reference:
“31. Form and contents of arbitral award.–
XXXXX
(7) (a) Unless otherwise agreed by the parties, where and in so far as
an arbitral award is for the payment of money, the arbitral tribunal
may include in the sum for which the award is made interest, at such
rate as it deems reasonable, on the whole or any part of the money,
for the whole or any part of the period between the date on which the
cause of action arose and the date on which the award is made.”
50. The respondent has not pointed out any clause in the Contract
prohibiting the grant of interest. Further, the submission that while awarding
interest on the retention money, the sole-arbitrator failed to appreciate that
the delay in releasing the same was attributable to the conduct of the
petitioner itself and the onset of the COVID pandemic and therefore, interest
could not have been awarded on the same, also cannot be accepted. Under
Section 34 of the Act, the scope of interference by the Court is restricted.
The Court cannot undertake the role of a fact-finding authority, and has to
accept the factual findings in the award as they are. Reference can be made
to the decision in Gayatri Balaswamy. Therefore, it is not open for the
respondent to urge the said submissions in the present proceedings.
Therefore, there is no perversity or any other error in the award as far as the
grant of interest is concerned.
Signature Not Verified Signature Not Verified
Signed By:AMIT KUMAR Signed
SHARMA
Signing Date:10.03.2026 By:PURUSHAINDRA
19:43:06 Page 31 of 32 KUMAR KAURAV
Conclusion
51. In view of the foregoing discussion, it is seen that the findings
rendered in the impugned award do not suffer from any infirmity and the
award, in its entirety, cannot be held as perverse or patently illegal. None of
the grounds for setting aside the impugned award under Section 34 are
attracted, and the issues raised by the parties herein essentially pertain to re-
appreciation of the evidence for setting aside a legally possible view in the
facts of the case, which is impermissible. Accordingly, the impugned award
is upheld.
52. Thus, both the petitions stand dismissed. No order as to costs.
(PURUSHAINDRA KUMAR KAURAV)
JUDGE
FEBRUARY 26, 2026
aks.
Signature Not Verified Signature Not Verified
Signed By:AMIT KUMAR Signed
SHARMA
Signing Date:10.03.2026 By:PURUSHAINDRA
19:43:06 Page 32 of 32 KUMAR KAURAV
