Delhi High Court
Supreme Advertising Private Limited vs Genus Power Infrastructures Limited on 13 July, 2026
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: 21.04.2026
Judgment pronounced on: 13.07.2026
+ O.M.P. (COMM) 115/2016 & I.A. 28880/2025 (For release of
interest)
SUPREME ADVERTISING PRIVATE LIMITED .....Petitioner
Through: Mr. Dharmesh Misra, Senior
Advocate along with Mr.
Prateek Gupta, Mr. Pulkit
Agarwal and Ms. Vishakha
Kaushik, Advocates.
versus
GENUS POWER INFRASTRUCTURES LIMITED
.....Respondent
Through: Dr. Amit George, Mr. Ruchir
Mishra, Mr. Sanjiv Kr. Saxena,
Mr. Mukesh Kr. Tiwari, Ms.
Reba Jena Mishra and Ms.
Poonam Shukla, Advocates.
+ O.M.P. (COMM) 159/2016
GENUS POWER INFRASTRUCTURES LTD .....Petitioner
Through: Dr. Amit George, Mr. Ruchir
Mishrra, Mr. Sanjiv Kr. Saxena,
Mr. Mukesh Kr. Tiwari, Ms.
Reba Jena Mishra and Ms.
Poonam Shukla, Advocates.
versus
SUPREME ADVERTISING PVT LTD .....Respondent
Through: Mr. Dharmesh Misra, Senior
Advocate along with Mr.
Prateek Gupta, Mr. Pulkit
Agarwal and Ms. Vishakha
Kaushik, Advocates.
Signature Not Verified
O.M.P. (COMM) 115/2016 & connected matter Page 1 of 69
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.07.2026
16:57:36
CORAM:
HON'BLE MR. JUSTICE HARISH VAIDYANATHAN
SHANKAR
JUDGMENT
HARISH VAIDYANATHAN SHANKAR, J.
1. These cross Petitions, being O.M.P. (COMM.) 115/2016 and
O.M.P. (COMM.) 159/2016, have been instituted under Section 34 of
the Arbitration and Conciliation Act, 19961, challenging different
portions of the Arbitral Award dated 07.03.2014 read with the
Modified Award dated 17.05.20142 rendered by the learned Arbitral
Tribunal comprising two members, namely, Justice P.C. Jain
(Retd.) and Justice Jasraj Chopra (Retd.)3.
2. It is pertinent to note that the Impugned Award arises out of
disputes pertaining to a series of interconnected contractual
arrangements, Memoranda of Understanding and Joint Venture
Agreements entered into between Supreme Advertising Pvt Ltd.4
(formerly Hythro Engineers Pvt. Ltd./Hythro Power Corporation Ltd.)
and Genus Power Infrastructure Limited5 (formerly Genus
Overseas Electronics Ltd.), in relation to electrification and
infrastructure projects awarded by Uttar Pradesh Power
Corporation Limited6 and Jaipur Vidyut Vitran Nigam Limited7.
3. Although the disputes pertain to multiple projects and work
orders, the findings returned by the learned Arbitral Tribunal in the
1
A&C Act
2
Impugned Award
3
Arbitral Tribunal
4
Supreme Advertising
5
Genus Power
6
UPPCL
7
JVVNL
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BHATIA
Signing Date:14.07.2026
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Impugned Award are substantially interconnected, particularly with
respect to the issues raised in the present Petitions by the respective
parties.
4. O.M.P. (COMM.) 115/2016 has been instituted by Supreme
Advertising challenging specific findings returned by the learned
Arbitral Tribunal in favour of Genus Power, inter alia, with respect to
its constitution, findings returned under Issue No. 13 [Counterclaim
No. 1], Issue Nos. 14, 14(i) and 14(ii) [Counterclaim No. 2], Issue No.
9 [Counterclaim No. 3].
5. O.M.P. (COMM.) 159/2016 has been instituted by Genus
Power challenging those portions of the Impugned Award whereby
certain claims raised by Supreme Advertising came to be allowed by
the learned Arbitral Tribunal. The challenge in the said Petition
principally pertains to the findings of the learned Arbitral Tribunal
concerning execution of works, entitlement under the final bills raised
by Supreme Advertising, interpretation of the Minutes of
Meeting/Memorandum of Understanding dated 08.10.20068 and
the evidentiary basis underlying the claims allowed in favour of
Supreme Advertising.
6. Since both Petitions arise out of the same arbitral proceedings,
concern the same contractual relationship and challenge different
portions of the same Impugned Award, they were heard together with
the consent of the parties.
7. However, notwithstanding the commonality of the arbitral
proceedings and the Impugned Award under challenge, this Court
finds that the controversies arising in the two Petitions are distinct and
8
MOM/MOU
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BHATIA
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require independent consideration. The grounds urged, the findings
assailed and the reliefs sought by the respective parties are materially
different and necessitate separate examination.
8. Accordingly, for the sake of convenience, clarity, and
comprehensive adjudication, and in order to arrive at an intelligible
and reasoned determination of the issues arising for consideration, this
Court deems it appropriate to examine the rival challenges in the two
Petitions sequentially under the following separate heads:
A. O.M.P. (COMM.) 115/2016 and
B. O.M.P. (COMM.) 159/2016.
9. Needless to state, wherever common facts, documents or
arbitral findings arise for consideration, the same shall be referred to
only to the extent necessary for adjudication of the respective
Petitions.
BRIEF FACTS:
10. Before proceeding to record the respective contentions
advanced by the parties in the respective Objection Petitions and to
examine the same on merits, this Court considers it apposite to briefly
set out the factual background giving rise to the present proceedings,
which is common and germane to the adjudication of both Petitions,
as follows:
(a) The case set up by Supreme Advertising before the learned
Arbitral Tribunal was that Supreme Advertising claimed to
possess expertise in survey, erection, testing and commissioning
of electrical transmission and electrification projects, whereas
Genus Power is a company engaged, inter alia, in theSignature Not Verified
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Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.07.2026
16:57:36
manufacture and supply of electrical equipment, energy meters
and allied infrastructure products.
(b) In or around the year 2005, UPPCL floated tenders for
electrification and renovation works in various towns of the
State of Uttar Pradesh, including Agra, Jhansi, Hardoi, Etawah,
Varanasi, Firozabad and Shikohabad.
(c) According to Supreme Advertising, since Genus Power did not
independently possess the requisite technical capability for
execution of erection and civil works, the parties entered into a
Memorandum of Understanding dated 27.08.20059, effective
from 11.07.2005, whereby Genus Power was to act as the lead
entity for bidding and procurement purposes, while Supreme
Advertising was to undertake execution of erection, survey,
engineering and allied project works.
(d) Pursuant thereto, UPPCL awarded seven projects to Genus
Power in relation to the aforesaid towns and corresponding
work/purchase orders came to be issued in favour of Supreme
Advertising for execution of erection and civil works. The value
of the erection and civil works to be executed by Supreme
Advertising was stated to be approximately INR 59,05,00,000/-.
(e) During the subsistence of the aforesaid arrangement, the parties
also entered into a Joint Venture Agreement dated 02.09.2005
in relation to projects floated by JVVNL under the Rajiv
Gandhi Gramin Vidyutikaran Yojana in the State of Rajasthan.
Consequent thereto, projects relating to Dholpur, Dausa, Alwar,
Bundi and Kota were awarded and corresponding work orders
9
MoU
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By:HARVINDER KAUR
BHATIA
Signing Date:14.07.2026
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for execution of erection and civil works were issued in favour
of Supreme Advertising.
(f) Supreme Advertising alleged before the learned Arbitral
Tribunal that upon issuance of the work orders, it established
project offices, deployed technical personnel and machinery and
undertook substantial execution work at the project sites.
According to Supreme Advertising, disputes subsequently arose
on account of delayed supply of materials, withholding of
payments against running account bills and failure on the part of
Genus Power to honour its financial obligations under the
contractual arrangements.
(g) Genus Power, on the other hand, disputed Supreme
Advertising‟s assertions and contended that Supreme
Advertising had failed to execute the works in accordance with
the agreed timelines and contractual specifications and had not
furnished requisite approvals, measurement books,
certifications and related documents from the concerned
electricity authorities. It was further the case of Genus Power
that Supreme Advertising abandoned the project works on or
about 19.08.2006, thereby causing serious disruption in
execution of the UPPCL and JVVNL projects resulting in
financial and contractual liabilities upon Genus Power.
(h) In view of the disputes which had arisen between the parties, a
series of meetings took place during September and October
2006 with a view to resolve the disputes concerning execution
of works, reconciliation of materials, pending bills, handing
over of project sites/stores and financial liabilities arising out of
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Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.07.2026
16:57:36
the UPPCL and JVVNL projects. The parties ultimately
executed MOM/MOU, which sought to record certain
modalities concerning execution of works, reconciliation of
accounts, handing over of materials and project sites and other
related matters.
(i) Since the disputes could not be amicably resolved, arbitration
came to be invoked. Initially, Hon‟ble Mr. Justice P.C. Jain
(Retd.) was appointed as the Sole Arbitrator pursuant to
proceedings before the Rajasthan High Court. Subsequently, in
terms of further orders passed by the Rajasthan High Court, the
disputes came to be adjudicated by a learned Arbitral Tribunal
comprising Hon‟ble Mr. Justice J.R. Chopra (Retd.) and
Hon‟ble Mr. Justice P.C. Jain (Retd.).
(j) Before the learned Arbitral Tribunal, Supreme Advertising
raised claims relating to alleged outstanding payments, dues
arising out of execution of erection and civil works, final bills
and other consequential reliefs. Genus Power contested the said
claims and also raised counterclaims alleging loss and
misappropriation of materials, losses arising out of dismantled
materials, delayed payments from project authorities,
incomplete execution of works and financial liabilities allegedly
suffered on account of abandonment of projects by Supreme
Advertising.
(k) The learned Arbitral Tribunal, after completion of pleadings
and upon appreciation of the oral and documentary evidence
placed on record by the parties, rendered the Arbitral Award
dated 07.03.2014 adjudicating the claims and counterclaims of
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Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.07.2026
16:57:36
the parties, including the counterclaims forming subject matter
of challenge in the present Petitions. Thereafter, on proceedings
initiated under Section 33 of the A&C Act, certain
modifications/corrections came to be carried out by the learned
Arbitral Tribunal vide Modified Award dated 17.05.2014.
(l) Since both parties claimed to be aggrieved by different portions
of the Impugned Award, the present Petitions under Section 34
of the A&C Act came to be instituted before this Court.
A. O.M.P. (COMM.) 115/2016 [SUPREME ADVERTISING’S
PETITION]
11. The present Petition, instituted by Supreme Advertising, has
challenged specific findings recorded by the learned Arbitral Tribunal.
12. The challenge is confined to the constitution of the learned
Arbitral Tribunal, the findings returned under Issue No. 13
[Counterclaim No. 1], Issue Nos. 14, 14(i) and 14(ii) [Counterclaim
No. 2], Issue No. 9 [Counterclaim No. 3], the findings relating to the
issue of limitation insofar as the counterclaims are concerned; and
also, the extent and validity of the modifications made to the Arbitral
Award dated 07.03.2014 by way of the Modified Award dated
17.05.2014.
13. This Court shall now proceed to examine each of the aforesaid
challenges by first noticing the respective contentions of the parties
and thereafter considering their merits.
Contentions on Behalf of the Parties:
14. In support of the challenge laid in O.M.P.(COMM.) 115/2016,
learned Senior Counsel appearing on behalf of Supreme Advertising
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Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.07.2026
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would assail the Arbitral Award dated 07.03.2014 to the extent it
allowed certain counterclaims raised by Genus Power and also
challenged the Modified Award dated 17.05.2014. The principal
submissions advanced on behalf of Supreme Advertising are
delineated hereinafter.
15. Learned Senior Counsel appearing on behalf of Supreme
Advertising would, at the outset, challenge the constitution of the
learned Arbitral Tribunal and contend that the disputes between the
parties ultimately came to be adjudicated by a two-member Arbitral
Tribunal comprising Hon‟ble Mr. Justice J.R. Chopra (Retd.) and
Hon‟ble Mr. Justice P.C. Jain (Retd.). According to Supreme
Advertising, the constitution of an even-numbered Arbitral Tribunal
was contrary to the mandate of Section 10 of the A&C Act and
consequently vitiated the arbitral proceedings culminating in the
Impugned Award.
16. Insofar as Issue No. 13 [Counterclaim No. 1] is concerned,
learned Senior Counsel for Supreme Advertising would contend that
the findings returned by the learned Arbitral Tribunal suffer from
patent inconsistency and are unsupported by the evidentiary record. It
would be submitted that while the learned Arbitral Tribunal accepted
claims relating to execution and erection works undertaken by
Supreme Advertising, it simultaneously upheld allegations of shortage
and misappropriation of materials in relation to the very same works.
According to Supreme Advertising, the said findings are mutually
destructive and incapable of standing together.
17. Learned Senior Counsel would further submit that the
counterclaim relating to alleged loss and misappropriation of materials
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Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.07.2026
16:57:36
was founded substantially upon assumptions, estimates and schedules
prepared by Genus Power without any cogent evidence establishing
actual shortage, diversion or misappropriation of materials by
Supreme Advertising. It would be contended that no complete
inventory, reconciliation statement or contemporaneous documentary
record was produced demonstrating the quantity of material supplied,
utilised, returned or allegedly misappropriated.
18. Learned Senior Counsel for Supreme Advertising would
additionally contend that the findings returned under Issue No. 13
[Counterclaim No. 1] are based primarily upon calculations reflected
in schedules relied upon by Genus Power and not upon any
independent material evidencing actual diversion, misappropriation or
unauthorised retention of materials by Supreme Advertising.
According to Supreme Advertising, the learned Arbitral Tribunal
failed to identify any contemporaneous documentary material
establishing the alleged shortages and, therefore, the findings suffer
from perversity and patent illegality.
19. Learned Senior Counsel would further submit that the learned
Arbitral Tribunal failed to appreciate the true scope and effect of the
MOM/MOU. According to Supreme Advertising, the said
arrangement governed reconciliation of accounts, materials and
project sites and expressly contemplated handing over of materials on
an “as is where is basis”. It would be contended that once the parties
had consciously agreed to such an arrangement, Genus Power could
not thereafter maintain claims premised upon alleged shortages and
reconciliation of materials.
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Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.07.2026
16:57:36
20. In relation to Issue Nos. 14, 14(i) and 14(ii) [Counterclaim No.
2] concerning alleged losses arising out of dismantled materials,
learned Senior Counsel for Supreme Advertising would contend that
the findings returned by the learned Arbitral Tribunal are speculative
and unsupported by evidence. It would be submitted that Genus Power
failed to establish any actual financial loss, departmental recovery or
monetary deduction suffered on account of the alleged dismantling of
materials and yet the learned Arbitral Tribunal proceeded to allow the
counterclaim without any satisfactory evidentiary foundation.
21. Learned Senior Counsel for Supreme Advertising would further
submit that the learned Arbitral Tribunal awarded damages under
Counterclaim No. 2 in the absence of proof of actual loss and on an ad
hoc basis unsupported by any cogent evidentiary record. Reliance
would be placed upon Aneja Constructions (India) Private Limited v.
Grim-Tech Projects (I) Private Limited10, to contend that damages
cannot be awarded in the absence of satisfactory proof of loss.
22. Learned Senior Counsel would further submit that the learned
Arbitral Tribunal failed to appreciate that, after execution of the
MOM/MOU, the question of any continuing liability in relation to
dismantled materials did not survive in view of the agreed mechanism
regarding reconciliation and handing over of project sites and
materials.
23. Insofar as Issue No. 9 [Counterclaim No. 3] is concerned,
learned Senior Counsel for Supreme Advertising would contend that
Genus Power failed to place any material on record demonstrating that
the alleged delay in release of payments by the concerned project
10
2022 SCC OnLine Del 452
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BHATIA
Signing Date:14.07.2026
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authorities was attributable to any act or omission on the part of
Supreme Advertising. It would be submitted that no communication,
record or other documentary material was produced establishing any
causal nexus between the alleged withholding of payments and the
conduct of Supreme Advertising.
24. Learned Senior Counsel would further contend that the material
available on record demonstrated that delays in release of payments
arose on account of factors independent of Supreme Advertising‟s
conduct and, therefore, the learned Arbitral Tribunal erred in fastening
liability upon Supreme Advertising under the said counterclaim.
25. Learned Senior Counsel for Supreme Advertising would
subsequently contend, during the course of oral submissions, that the
counterclaims preferred by Genus Power before the learned Arbitral
Tribunal were ex facie barred by limitation and therefore could not
have been entertained or allowed.
26. It would be submitted that, although the issue of limitation was
not expressly raised before the learned Arbitral Tribunal, there was
nonetheless a statutory obligation to independently examine whether
the counterclaims had been instituted within the prescribed period of
limitation. It would be contended that, in view of Section 3 of the
Limitation Act, 1963, the question of limitation goes to the very root
of the matter, and the learned Arbitral Tribunal was duty-bound to
consider the same suo motu, irrespective of whether any specific plea
or objection had been raised by either of the parties.
27. It would be argued that claims barred by limitation cannot be
validated by consent, acquiescence or waiver and that an arbitral
tribunal is equally bound to reject a claim which is ex facie time-
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BHATIA
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barred. To bolster the said argument, reliance would be placed upon
the judgment in Sealand Shipping and Export Pvt. Ltd. v. Kinship
Services Pvt. Ltd.11, contending that the issue of limitation can be
examined even at a subsequent stage, as it raises a pure question of
law in the facts of the present case. It would further be contended that
the relevant factual aspects are undisputed herein and, therefore, the
issue does not require any further enquiry or determination of facts.
28. It would also be submitted that the counterclaims allowed by
the learned Arbitral Tribunal were liable to be rejected as being
beyond limitation and that the Impugned Award, to that extent, suffers
from patent illegality and warrants interference under Section 34 of
the A&C Act.
29. Lastly, learned Senior Counsel for Supreme Advertising would
contend that the learned Arbitral Tribunal, under the guise of
exercising powers under Section 33 of the A&C Act, impermissibly
reviewed the Arbitral Award dated 07.03.2014 despite having become
functus officio upon publication of the Arbitral Award dated
07.03.2014. It would be submitted that the A&C Act permits
correction only of computational, clerical or typographical errors and
does not confer any power to revisit, modify or review the substantive
determinations already made by the learned Tribunal.
30. According to the learned Senior Counsel on behalf of Supreme
Advertising, the learned Arbitral Tribunal exceeded its jurisdiction by
entertaining Genus Power‟s application and altering the amounts
awarded under counterclaims through the Modified Award dated
17.05.2014.
11
2011 SCC OnLine Bom 638
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BHATIA
Signing Date:14.07.2026
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31. It would be further contended by the learned Senior Counsel
that the reductions made in the amounts awarded were not mere
corrections of accidental slips or arithmetical mistakes but amounted
to a fresh determination of the claims themselves.
32. Learned Senior Counsel for Supreme Advertising would submit
that a jurisdictional error cannot be cured under the guise of correction
and that once the learned Tribunal had quantified and awarded
particular sums in the Arbitral Award dated 07.03.2014, any
subsequent modification thereof necessarily constituted an
impermissible review. The Modified Award dated 17.05.2014 is
therefore stated to be without jurisdiction and liable to be set aside.
33. On the aforesaid grounds, it would thus be prayed that the
Arbitral Award dated 07.03.2014 and the Modified Award dated
17.05.2014 be set aside to the extent challenged in this Petition.
34. Per contra, learned counsel appearing on behalf of Genus
Power would support the Impugned Award, to the extent it has been
challenged by Supreme Advertising in the present Petition, and
contend that the learned Arbitral Tribunal, after exhaustive
consideration of the pleadings, oral evidence and documentary
material placed on record by the parties, rendered a detailed and
reasoned Award which does not warrant interference within the
limited scope of jurisdiction vested in this Court under Section 34 of
the A&C Act.
35. In response to the challenge laid to the constitution of the
learned Arbitral Tribunal, learned counsel would contend that the
objection raised by Supreme Advertising is wholly untenable and
barred by waiver. It would be submitted that the constitution of the
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BHATIA
Signing Date:14.07.2026
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learned Arbitral Tribunal pursuant to orders passed by the Rajasthan
High Court was never challenged by Supreme Advertising during the
arbitral proceedings by way of any application under Section 16 of the
A&C Act. According to Genus Power, having participated in the
arbitral proceedings without demur and having invited adjudication on
merits, Supreme Advertising is precluded from questioning the
constitution of the learned Tribunal for the first time in proceedings
under Section 34 of the A&C Act.
36. In support of the contention, reliance would be placed upon the
judgment of the Hon‟ble Supreme Court in Narayan Prasad Lohia v.
Nikunj Kumar Lohia12 to contend that objections relating to the
composition of an arbitral tribunal stand waived in terms of Section 4
of the A&C Act, in the absence of a timely objection under Section 16
of the A&C Act and cannot be permitted to be raised after culmination
of the arbitral proceedings.
37. In relation to the contention regarding limitation of the
counterclaims, learned counsel for Genus Power would contend that
no plea regarding limitation of the counterclaims was ever raised by
Supreme Advertising before the learned Arbitral Tribunal. It would be
submitted that no such objection formed part of the pleadings, issues,
evidence or arguments before the learned Arbitral Tribunal and
consequently no finding on such issue came to be rendered in the
Impugned Award.
38. It would be further submitted that even in the present Petition
under Section 34 of the A&C Act, no ground challenging the
counterclaims on the basis of limitation has been pleaded. According
12
(2002) 3 SCC 572
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BHATIA
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to the learned counsel for Genus Power, the said contention has been
urged for the first time during oral arguments before this Court and
therefore cannot be permitted to be raised at this belated stage.
Learned counsel would submit that the plea now sought to be raised is
not a pure question of law but a mixed question of law and fact and in
the absence of pleadings, evidence and findings on such factual
aspects, the issue cannot be adjudicated for the first time in
proceedings under Section 34 of the A&C Act.
39. Reliance would be placed upon National Highways Authority
of India v. Oriental Structural Engineers Ltd.13, Union of India v.
Susaka Pvt. Ltd.14, Ramesh B. Desai v. Bipin Vadilal Mehta15, Delhi
Transco Ltd. v. Hindustan Urban Infrastructure Ltd.16 and
Municipal Corporation of Greater Mumbai v. RV Anderson
Associates Pvt. Ltd.17 in support of the aforesaid contentions.
40. In response to the challenge laid to Issue No. 13 [Counterclaim
No. 1], learned counsel would contend that the findings returned by
the learned Arbitral Tribunal are based upon a detailed examination of
the documentary record, reconciliation statements, project records and
evidence led by the parties during the arbitral proceedings. It would be
submitted that Genus Power specifically established shortages and
non-accounting of materials supplied for execution of the project
works and that the learned Arbitral Tribunal, upon appreciation of the
evidentiary material, rightly upheld the counterclaim to the extent
proved.
13
2018 SCC OnLine Del 12087
14
(2018) 2 SCC 182
15
(2006) 5 SCC 638
16
2025: DHC: 8941-DB
17
2026 SCC OnLine SC 354
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BHATIA
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41. Learned counsel would further contend that the argument
advanced by Supreme Advertising regarding alleged inconsistency in
the findings returned by the learned Arbitral Tribunal is fundamentally
misconceived. According to Genus Power, the fact that certain claims
relating to execution of works came to be accepted by the learned
Arbitral Tribunal did not ipso facto establish utilisation or accounting
of the entirety of the materials supplied for the projects. It would be
submitted that acceptance of certain erection claims and findings
regarding shortages, non-return or non-accounting of materials operate
in distinct fields and are not mutually destructive, as sought to be
contended by Supreme Advertising.
42. It would further be submitted that the learned Arbitral Tribunal
correctly appreciated the evidence relating to supply, utilisation and
reconciliation of materials and returned findings upon consideration of
the entire evidentiary record. According to Genus Power, the
challenge mounted by Supreme Advertising is, in essence, an
invitation to this Court to undertake a fresh appraisal of the evidence,
which exercise falls outside the permissible scope of review under
Section 34 of the A&C Act.
43. In response to the reliance placed upon the MOM/MOU,
learned counsel would contend that the said arrangement did not
amount to a novation of the contractual relationship nor did it
extinguish the liabilities and defaults allegedly committed by Supreme
Advertising prior thereto. It would be submitted that the said
arrangement merely provided a framework for disengagement and
reconciliation between the parties and could not be construed as
absolving Supreme Advertising of liabilities arising from shortages of
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BHATIA
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materials, dismantled materials, incomplete works or other contractual
breaches. According to Genus Power, the learned Arbitral Tribunal
rightly appreciated the scope and effect of the said arrangement while
adjudicating the disputes between the parties.
44. In relation to Issue Nos. 14, 14(i) and 14(ii) [Counterclaim No.
2], learned counsel would contend that the learned Arbitral Tribunal,
upon consideration of the evidence placed on record, rightly
appreciated the losses suffered by Genus Power on account of
dismantled materials and the consequences flowing therefrom. It
would be submitted that the findings returned by the learned Arbitral
Tribunal are based upon appreciation of the evidentiary material and
do not suffer from perversity, irrationality or patent illegality.
45. Learned counsel would further submit that the findings returned
under Issue Nos. 14, 14(i) and 14(ii) are intrinsically connected with
the factual position that Supreme Advertising had abandoned the
project works, compelling Genus Power to undertake additional
obligations and incur financial and contractual consequences in
relation to completion of the projects. According to Genus Power, the
learned Arbitral Tribunal rightly appreciated the surrounding
circumstances and the documentary material while adjudicating the
said counterclaim.
46. Insofar as Issue No. 9 [Counterclaim No. 3] is concerned,
learned counsel would contend that the learned Arbitral Tribunal
rightly appreciated the evidence and surrounding circumstances
demonstrating that Genus Power suffered financial exposure and
commercial consequences on account of delays and disruptions arising
during execution of the projects. It would be submitted that the
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findings returned by the learned Arbitral Tribunal present a plausible
conclusion based upon the material available on record and are not
amenable to interference merely because another view may also be
possible.
47. In response to the challenge laid to the Modified Award dated
17.05.2014, Genus Power would submit that the challenge proceeds
on an incorrect understanding of the scope and nature of the
modifications carried out by the learned Tribunal. It would be
contended that the application under Section 33 of the A&C Act
merely pointed out computational, clerical and typographical mistakes
apparent from the record and that the learned Arbitral Tribunal
corrected only such errors which had inadvertently crept into the
Arbitral Award dated 07.03.2014. According to the learned counsel on
behalf of Genus Power, no finding on liability, entitlement or merits
was reconsidered and the corrections were confined strictly to matters
falling within the ambit of Section 33 of the A&C Act.
48. It would further be submitted that the learned Arbitral Tribunal
itself examined the limits of its jurisdiction under Section 33 of the
A&C Act and consciously rejected several corrections sought by
Genus Power which were found to be beyond the scope of the
provision. This, according to Genus Power, would clearly demonstrate
that the learned Arbitral Tribunal did not undertake any review of the
Arbitral Award dated 07.03.2014 but merely rectified accidental slips
and computational errors borne out from the record. Learned counsel
would therefore submit that the Modified Award dated 17.05.2014
constitutes a lawful exercise of corrective jurisdiction and calls for no
interference under Section 34 of the A&C Act.
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49. Learned counsel would further contend that the findings
assailed by Supreme Advertising are essentially findings of fact
returned by the learned Arbitral Tribunal upon appreciation of oral
and documentary evidence. According to Genus Power, the view
adopted by the learned Arbitral Tribunal is a plausible and reasoned
view arising from the material available on record and cannot be
interfered with merely because another view may also be possible on
the same evidence.
50. Learned counsel would lastly submit that the present Petition,
though couched as a challenge under Section 34 of the A&C Act, is in
substance an attempt to seek re-appreciation of evidence and
reconsideration of factual findings returned by the learned Arbitral
Tribunal. Since the findings contained in the Impugned Award neither
suffer from patent illegality nor disclose any ground falling within the
parameters of Section 34 of the A&C Act, the present Petition is liable
to be dismissed.
Analysis:
51. This Court has heard the learned counsel appearing for the
parties at length and, with their able assistance, carefully perused the
Impugned Award and the material placed on record.
52. At the outset, it is apposite to note that this Court remains
conscious of the limited scope of its jurisdiction while examining an
objection petition under Section 34 of the A&C Act. There is a
consistent and evolving line of precedents whereby the Hon‟ble
Supreme Court has authoritatively delineated and settled the contours
of judicial intervention in such proceedings.
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53. In this regard, a three-Judge Bench of the Hon‟ble Supreme
Court, after an exhaustive consideration of a catena of earlier
judgments, in OPG Power Generation (P) Ltd. v. Enexio Power
Cooling Solutions (India) (P) Ltd.18, while dealing with the grounds
of conflict with the public policy of India and patent illegality,
grounds which have also been urged in the present Petitions, made
certain pertinent observations, which are reproduced hereunder:
“Relevant legal principles governing a challenge to an arbitral
award
30. Before we delve into the issue/sub-issues culled out above, it
would be useful to have a look at the relevant legal principles
governing a challenge to an arbitral award. Recourse to a court
against an arbitral award may be made through an application for
setting aside such award in accordance with sub-sections (2), (2-A)
and (3) of Section 34 of the 1996 Act. Sub-section (2) of Section
34 has two clauses, (a) and (b). Clause (a) has five sub-clauses
which are not relevant to the issues raised before us. Insofar as
clause (b) is concerned, it has two sub-clauses, namely, (i) and (ii).
Sub-clause (i) of clause (b) is not relevant to the controversy in
hand. Sub-clause (ii) of clause (b) provides that if the Court finds
that the arbitral award is in conflict with the public policy of India,
it may set aside the award.
Public policy
31. “Public policy” is a concept not statutorily defined, though it
has been used in statutes, rules, notification, etc. since long, and is
also a part of common law. Section 23 of the Contract Act, 1872
uses the expression by stating that the consideration or object of an
agreement is lawful, unless, inter alia, opposed to public policy.
That is, a contract which is opposed to public policy is void.
*****
35. In Renusagar Power Co. Ltd. v. General Electric Co., 1994
Supp (1) SCC 644, a three-Judge Bench of this Court observed
that the doctrine of public policy is somewhat open–textured and
flexible. By citing earlier decisions, it was observed that there are
two conflicting positions which are referred to as the “narrow
view” and the “broad view”. According to the narrow view, courts
cannot create new heads of public policy whereas the broad view
countenances judicial law making in these areas. In the field of
private international law, it was pointed out, courts refuse to apply
a rule of foreign law or recognise a foreign judgment or a foreign18
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arbitral award if it is found that the same is contrary to the public
policy of the country in which it is sought to be invoked or
enforced. However, it was clarified, a distinction is to be drawn
while applying the rule of public policy between a matter governed
by domestic law and a matter involving conflict of laws. It was
observed that the application of the doctrine of public policy in the
field of conflict of laws is more limited than that in the domestic
law and the courts are slower to invoke public policy in cases
involving a foreign element than when a purely municipal legal
issue is involved. It was held that contravention of law alone will
not attract the bar of public policy, and something more than
contravention of law is required.
*****
37. What is clear from above is that for an award to be against
public policy of India a mere infraction of the municipal laws of
India is not enough. There must be, inter alia, infraction of
fundamental policy of Indian law including a law meant to serve
public interest or public good.
*****
40. In ONGC Ltd. v. Western Geco International Ltd., (2014) 9
SCC 263, paras 35, 38 & 39, which also related to the period prior
to the 2015 Amendment of Section 34(2)(b)(ii), a three-Judge
Bench of this Court, after considering the decision inONGC
Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705, without exhaustively
enumerating the purport of the expression “fundamental policy of
Indian law”, observed that it would include all such fundamental
principles as providing a basis for administration of justice and
enforcement of law in this country. The Court thereafter
illustratively referred to three fundamental juristic principles,
namely:
(a) that in every determination that affects the rights of a citizen or
leads to any civil consequences, the court or authority or quasi-
judicial body must adopt a judicial approach, that is, it must act
bona fide and deal with the subject in a fair, reasonable and
objective manner and not actuated by any extraneous
consideration;
(b) that while determining the rights and obligations of parties the
court or Tribunal or authority must act in accordance with the
principles of natural justice and must apply its mind to the
attendant facts and circumstances while taking a view one way
or the other; and
(c) that its decision must not be perverse or so irrational that no
reasonable person would have arrived at the same.
41. In Associate Builders v. DDA, (2015) 3 SCC 49, a two-Judge
Bench of this Court, held that audi alteram partem principle is
undoubtedly a fundamental juristic principle in Indian law and is
enshrined in Sections 18 and 34(2)(a)(iii) of the 1996 Act. In
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addition to the earlier recognised principles forming fundamental
policy of Indian law, it was held that disregarding:
(a) orders of superior courts in India; and
(b) the binding effect of the judgment of a superior court would
also be regarded as being contrary to the fundamental policy of
Indian law.
Further, elaborating upon the third juristic principle (i.e. qua
perversity), as laid down in ONGC Ltd. v. Western Geco
International Ltd., (2014) 9 SCC 263, it was observed that where:
(i) a finding is based on no evidence; or
(ii) an Arbitral Tribunal takes into account something irrelevant to
the decision which it arrives at; or
(iii) ignores vital evidence in arriving at its decision, such decision
would necessarily be perverse [Associate Builders case,
(2015) 3 SCC 49, para 31].
To this a caveat was added by observing that when a court applies
the “public policy test” to an arbitration award, it does not act as a
court of appeal and, consequently, errors of fact cannot be
corrected; and a possible view by the arbitrator on facts has
necessarily to pass muster as the arbitrator is the ultimate master of
the quantity and quality of evidence to be relied upon when he
delivers his arbitral award. It was also observed that an award
based on little evidence or on evidence which does not measure up
in quality to a trained legal mind would not be held to be invalid on
that score. Thus, once it is found that the arbitrator’s approach is
not arbitrary or capricious, it is to be taken as the last word on
facts.
The 2015 Amendment in Sections 34 and 48
42. The aforementioned judicial pronouncements were all prior to
the 2015 Amendment. Notably, prior to the 2015 Amendment the
expression “in contravention with the fundamental policy of Indian
law” was not used by the legislature in either Section 34(2)(b)(ii)
or Section 48(2)(b). The pre-amended Section 34(2)(b)(ii) and its
Explanation read:
*****
44. By the 2015 Amendment, in place of the old Explanation to
Section 34(2)(b)(ii), Explanations 1 and 2 were added to remove
any doubt as to when an arbitral award is in conflict with the public
policy of India.
45. At this stage, it would be pertinent to note that we are dealing
with a case where the application under Section 34 of the 1996 Act
was filed after the 2015 Amendment, therefore the newly
substituted/added Explanations would apply [Ssangyong Engg. &
Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131].
46. The 2015 Amendment adds two Explanations to each of the
two sections, namely, Section 34(2)(b)(ii) and Section 48(2)(b), in
place of the earlier Explanation. The significance of the newly
inserted Explanation 1 in both the sections is two-fold. First, itSignature Not Verified
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does away with the use of words : (a) “without prejudice to the
generality of sub-clause (ii)” in the opening part of the pre-
amended Explanation to Section 34(2)(b)(ii); and (b) “without
prejudice to the generality of clause (b) of this section” in the
opening part of the pre-amended Explanation to Section 48(2)(b);
secondly, it limits the expanse of public policy of India to the three
specified categories by using the words “only if”.
Whereas, Explanation 2 lays down the standard for adjudging
whether there is a contravention with the fundamental policy of
Indian law by providing that a review on merits of the dispute shall
not be done. This limits the scope of the enquiry on an application
under either Section 34(2)(b)(ii) or Section 48(2)(b) of the 1996
Act.
47. The 2015 Amendment by inserting sub-section (2-A) in
Section 34, carves out an additional ground for annulment of an
arbitral award arising out of arbitrations other than international
commercial arbitrations. Sub-section (2-A) provides that the Court
may also set aside an award if that is vitiated by patent illegality
appearing on the face of the award. This power of the Court is,
however, circumscribed by the proviso, which states that an award
shall not be set aside merely on the ground of an erroneous
application of the law or by reappreciation of evidence.
48. Explanation 1 to Section 34(2)(b)(ii), specifies that an arbitral
award is in conflict with the public policy of India, only if:
(i) the making of the award was induced or affected by fraud or
corruption or was in violation of Section 75 or Section 81; or
(ii) it is in contravention with the fundamental policy of Indian
law; or
(iii) it is in conflict with the most basic notions of morality or
justice.
49. In the instant case, there is no allegation that the making of the
award was induced or affected by fraud or corruption, or was in
violation of Section 75 or Section 81. Therefore, we shall confine
our exercise in assessing as to whether the arbitral award is in
contravention with the fundamental policy of Indian law, and/or
whether it conflicts with the most basic notions of morality or
justice. Additionally, in the light of the provisions of sub-section
(2-A) of Section 34, we shall examine whether there is any patent
illegality on the face of the award.
50. Before undertaking the aforesaid exercise, it would be apposite
to consider as to how the expressions:
(a) “in contravention with the fundamental policy of Indian law”;
(b) “in conflict with the most basic notions of morality or justice”;
and
(c) “patent illegality” have been construed.
In contravention with the fundamental policy of Indian law
51. As discussed above, till the 2015 Amendment the expression
“in contravention with the fundamental policy of Indian law” was
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not found in the 1996 Act. Yet, in Renusagar Power Co.
Ltd. v. General Electric Co., 1994 Supp (1) SCC 644, in the
context of enforcement of a foreign award, while construing the
phrase “contrary to the public policy”, this Court held that for a
foreign award to be contrary to public policy mere contravention of
law would not be enough rather it should be contrary to:
(a) the fundamental policy of Indian law; and/or
(b) the interest of India; and/or
(c) justice or morality.
*****
55. The legal position which emerges from the aforesaid discussion
is that after “the 2015 Amendments” in Section 34(2)(b)(ii) and
Section 48(2)(b) of the 1996 Act, the phrase “in conflict with the
public policy of India” must be accorded a restricted meaning in
terms of Explanation 1. The expression “in contravention with the
fundamental policy of Indian law” by use of the word
“fundamental” before the phrase “policy of Indian law” makes the
expression narrower in its application than the phrase “in
contravention with the policy of Indian law”, which means mere
contravention of law is not enough to make an award vulnerable.
To bring the contravention within the fold of fundamental policy of
Indian law, the award must contravene all or any of such
fundamental principles that provide a basis for administration of
justice and enforcement of law in this country.
56. Without intending to exhaustively enumerate instances of such
contravention, by way of illustration, it could be said that:
(a) violation of the principles of natural justice;
(b) disregarding orders of superior courts in India or the binding
effect of the judgment of a superior court; and
(c) violating law of India linked to public good or public interest,
are considered contravention of the fundamental policy of
Indian law.
However, while assessing whether there has been a contravention
of the fundamental policy of Indian law, the extent of judicial
scrutiny must not exceed the limit as set out in Explanation 2 to
Section 34(2)(b)(ii).
*****
Patent illegality
65. Sub-section (2-A) of Section 34 of the 1996 Act, which was
inserted by the 2015 Amendment, provides that an arbitral award
not arising out of international commercial arbitrations, may also
be set aside by the Court, if the Court finds that the award is visited
by patent illegality appearing on the face of the award. The proviso
to sub-section (2-A) states that an award shall not be set aside
merely on the ground of an erroneous application of the law or by
reappreciation of evidence.
66. In ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705, while
dealing with the phrase “public policy of India” as used in Section
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34, this Court took the view that the concept of public policy
connotes some matter which concerns public good and public
interest. If the award, on the face of it, patently violates statutory
provisions, it cannot be said to be in public interest. Thus, an award
could also be set aside if it is patently illegal. It was, however,
clarified that illegality must go to the root of the matter and if the
illegality is of trivial nature, it cannot be held that award is against
public policy.
67. In Associate Builders v. DDA, (2015) 3 SCC 49, this Court
held that an award would be patently illegal, if it is contrary to:
(a) substantive provisions of law of India;
(b) provisions of the 1996 Act; and
(c) terms of the contract [See also three-Judge Bench decision of
this Court in State of Chhattisgarh v. SAL Udyog (P) Ltd.,
(2022) 2 SCC 275].
The Court clarified that if an award is contrary to the substantive
provisions of law of India, in effect, it is in contravention of
Section 28(1)(a) of the 1996 Act. Similarly, violating terms of the
contract, in effect, is in contravention of Section 28(3) of the 1996
Act.
68. In Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (2019)
15 SCC 131 this Court specifically dealt with the 2015
Amendment which inserted sub-section (2-A) in Section 34 of the
1996 Act. It was held that “patent illegality appearing on the face
of the award” refers to such illegality as goes to the root of matter,
but which does not amount to mere erroneous application of law. It
was also clarified that what is not subsumed within “the
fundamental policy of Indian law”, namely, the contravention of a
statute not linked to “public policy” or “public interest”, cannot be
brought in by the backdoor when it comes to setting aside an award
on the ground of patent illegality [ See Ssangyong Engg. &
Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131]. Further, it
was observed, reappreciation of evidence is not permissible under
this category of challenge to an arbitral award [See Ssangyong
Engg. & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131].
Perversity as a ground of challenge
69. Perversity as a ground for setting aside an arbitral award was
recognised in ONGC Ltd. v. Western Geco International Ltd.,
(2014) 9 SCC 263. Therein it was observed that an arbitral
decision must not be perverse or so irrational that no reasonable
person would have arrived at the same. It was observed that if an
award is perverse, it would be against the public policy of India.
70. In Associate Builders v. DDA, (2015) 3 SCC 49 certain tests
were laid down to determine whether a decision of an Arbitral
Tribunal could be considered perverse. In this context, it was
observed that where:
(i) a finding is based on no evidence; or
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(ii) an Arbitral Tribunal takes into account something irrelevant to
the decision which it arrives at; or
(iii) ignores vital evidence in arriving at its decision, such decision
would necessarily be perverse.
However, by way of a note of caution, it was observed that when a
court applies these tests it does not act as a court of appeal and,
consequently, errors of fact cannot be corrected. Though, a
possible view by the arbitrator on facts has necessarily to pass
muster as the arbitrator is the ultimate master of the quantity and
quality of evidence to be relied upon. It was also observed that an
award based on little evidence or on evidence which does not
measure up in quality to a trained legal mind would not be held to
be invalid on that score.
71. In Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (2019)
15 SCC 131, which dealt with the legal position post the 2015
Amendment in Section 34 of the 1996 Act, it was observed that a
decision which is perverse, while no longer being a ground for
challenge under “public policy of India”, would certainly amount
to a patent illegality appearing on the face of the award. It was
pointed out that an award based on no evidence, or which ignores
vital evidence, would be perverse and thus patently illegal. It was
also observed that a finding based on documents taken behind the
back of the parties by the arbitrator would also qualify as a
decision based on no evidence inasmuch as such decision is not
based on evidence led by the parties, and therefore, would also
have to be characterised as perverse [ See Ssangyong Engg. &
Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131].
72. The tests laid down in Associate Builders v. DDA, (2015) 3
SCC 49 to determine perversity were followed in Ssangyong
Engg. & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131 and
later approved by a three-Judge Bench of this Court in Patel Engg.
Ltd. v. North Eastern Electric Power Corpn. Ltd., (2020) 7 SCC
167.
73. In a recent three-Judge Bench decision of this Court in DMRC
Ltd. v. Delhi Airport Metro Express (P) Ltd., (2024) 6 SCC 357,
the ground of patent illegality/perversity was delineated in the
following terms: (SCC p. 376, para 39)
“39. In essence, the ground of patent illegality is available
for setting aside a domestic award, if the decision of the
arbitrator is found to be perverse, or so irrational that no
reasonable person would have arrived at it; or the
construction of the contract is such that no fair or
reasonable person would take; or, that the view of the
arbitrator is not even a possible view. A finding based on
no evidence at all or an award which ignores vital
evidence in arriving at its decision would be perverse and
liable to be set aside under the head of “patent illegality”.
An award without reasons would suffer from patent
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illegality. The arbitrator commits a patent illegality by
deciding a matter not within its jurisdiction or violating a
fundamental principle of natural justice.”
Scope of interference with an arbitral award
74. The aforesaid judicial precedents make it clear that while
exercising power under Section 34 of the 1996 Act the Court does
not sit in appeal over the arbitral award. Interference with an
arbitral award is only on limited grounds as set out in Section 34 of
the 1996 Act. A possible view by the arbitrator on facts is to be
respected as the arbitrator is the ultimate master of the quantity and
quality of evidence to be relied upon. It is only when an arbitral
award could be categorised as perverse, that on an error of fact an
arbitral award may be set aside. Further, a mere erroneous
application of the law or wrong appreciation of evidence by itself
is not a ground to set aside an award as is clear from the provisions
of sub-section (2-A) of Section 34 of the 1996 Act.
75. In Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd.,
(2019) 20 SCC 1, paras 27-43, a three-Judge Bench of this Court
held that courts need to be cognizant of the fact that arbitral awards
are not to be interfered with in a casual and cavalier manner, unless
the court concludes that the perversity of the award goes to the root
of the matter and there is no possibility of an alternative
interpretation that may sustain the arbitral award. It was observed
that jurisdiction under Section 34 cannot be equated with the
normal appellate jurisdiction. Rather, the approach ought to be to
respect the finality of the arbitral award as well as party’s
autonomy to get their dispute adjudicated by an alternative forum
as provided under the law.
*****
Scope of interference with the interpretation/construction of a
contract accorded in an arbitral award
84. An Arbitral Tribunal must decide in accordance with the terms
of the contract. In a case where an Arbitral Tribunal passes an
award against the terms of the contract, the award would be
patently illegal. However, an Arbitral Tribunal has jurisdiction to
interpret a contract having regard to terms and conditions of the
contract, conduct of the parties including correspondences
exchanged, circumstances of the case and pleadings of the parties.
If the conclusion of the arbitrator is based on a possible view of the
matter, the Court should not interfere [See: SAIL v. Gupta Brother
Steel Tubes Ltd., (2009) 10 SCC 63; Pure Helium India (P)
Ltd. v. ONGC, (2003) 8 SCC 593; McDermott International
Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181; MMTC
Ltd. v. Vedanta Ltd., (2019) 4 SCC 163]. But where, on a full
reading of the contract, the view of the Arbitral Tribunal on the
terms of a contract is not a possible view, the award would be
considered perverse and as such amenable to interference [South
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East Asia Marine Engg. & Constructions Ltd. v. Oil India Ltd.,
(2020) 5 SCC 164].
Whether unexpressed term can be read into a contract as an
implied condition
85. Ordinarily, terms of the contract are to be understood in the
way the parties wanted and intended them to be. In agreements of
arbitration, where party autonomy is the ground norm, how the
parties worked out the agreement, is one of the indicators to
decipher the intention, apart from the plain or grammatical
meaning of the expressions used [BALCO v. Kaiser Aluminium
Technical Services Inc., (2016) 4 SCC 126].
86. However, reading an unexpressed term in an agreement would
be justified on the basis that such a term was always and obviously
intended by the parties thereto. An unexpressed term can be
implied if, and only if, the court finds that the parties must have
intended that term to form part of their contract. It is not enough
for the court to find that such a term would have been adopted by
the parties as reasonable men if it had been suggested to them.
Rather, it must have been a term that went without saying, a term
necessary to give business efficacy to the contract, a term which,
although tacit, forms part of the contract [Adani Power (Mundra)
Ltd. v. Gujarat ERC, (2019) 19 SCC 9].
87. But before an implied condition, not expressly found in the
contract, is read into a contract, by invoking the business efficacy
doctrine, it must satisfy the following five conditions:
(a) it must be reasonable and equitable;
(b) it must be necessary to give business efficacy to the contract,
that is, a term will not be implied if the contract is effective
without it;
(c) it must be obvious that “it goes without saying”;
(d) it must be capable of clear expression;
(e) it must not contradict any terms of the contract [Nabha Power
Ltd. v. Punjab SPCL, (2018) 11 SCC 508, followed in Adani
Power case, (2019) 19 SCC 9].
(emphasis supplied)
54. In light of the aforesaid principles, the challenges raised by
Supreme Advertising, as well as the responses thereto by Genus
Power, are required to be examined within the scope of Section 34 of
the A&C Act, without re-appreciating the evidence or reassessing the
findings returned by the learned Arbitral Tribunal. The objections
urged by the parties shall therefore be considered issue-wise, having
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regard to the grounds raised in the present Petition and the settled
principles governing interference with arbitral awards.
Issue No. 1: Whether the Constitution of the Two-Member Arbitral
Tribunal Vitiates the Impugned Award?
55. Before adverting to the merits of the challenge laid to the
Impugned Award, this Court considers it appropriate to first examine
the objection raised by Supreme Advertising with respect to the
constitution of the learned Arbitral Tribunal. Supreme Advertising has
contended that the Arbitration Agreement contemplated adjudication
by a Tribunal consisting of three arbitrators and, therefore, the
constitution of a two-member Arbitral Tribunal comprising Hon‟ble
Mr. Justice J.R. Chopra (Retd.) and Hon‟ble Mr. Justice P.C. Jain
(Retd.) was contrary to the contractual arrangement between the
parties as well as the provisions contained in Part-I of the A&C Act.
According to Supreme Advertising, the very composition of the
learned Arbitral Tribunal being contrary to law, the arbitral
proceedings stood vitiated and consequently the Impugned Award is
liable to be set aside.
56. This Court is unable to subscribe to the aforesaid contention for
more than one reason.
57. At the outset, it deserves to be noted that the constitution of the
learned Arbitral Tribunal was not brought about unilaterally by either
party dehors the arbitral framework or in contravention of any judicial
order. The record reveals that initially Hon‟ble Mr. Justice P.C. Jain
(Retd.) came to be appointed as Sole Arbitrator pursuant to
proceedings before the Rajasthan High Court. Subsequently, upon
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further proceedings before the said Court, the learned Arbitral
Tribunal comprising Hon‟ble Mr. Justice J.R. Chopra (Retd.) and
Hon‟ble Mr. Justice P.C. Jain (Retd.) came to be constituted for
adjudication of disputes between the parties. The learned Arbitral
Tribunal, therefore, derived its constitution pursuant to judicial
proceedings and the parties thereafter consciously participated before
the said Tribunal without demur.
58. Significantly, Supreme Advertising participated in the arbitral
proceedings over a prolonged period extending across several years.
Supreme Advertising filed its statement of claims, documentary
evidence, affidavits and written submissions, examined witnesses,
cross-examined witnesses produced by Genus Power, and invited
adjudication on merits before the learned Arbitral Tribunal.
59. At no stage during the pendency of arbitral proceedings did
Supreme Advertising raise any jurisdictional objection under Section
16 read with Section 4 of the A&C Act questioning the competence or
composition of the learned Arbitral Tribunal. Supreme Advertising,
having voluntarily and consciously submitted itself to the jurisdiction
of the learned Arbitral Tribunal and having sought adjudication on
merits, cannot now be permitted to assail the composition of the
learned Tribunal merely because the Impugned Award has ultimately
not resulted entirely in its favour. The relevant provisions contained in
Sections 4 and 16 of the A&C Act are reproduced herein below:
“4. Waiver of right to object. – A party who knows that-
(a) any provision of this Part from which the parties may
derogate, or
(b) any requirement under the arbitration agreement,
has not been complied with and yet proceeds with the arbitration
without stating his objection to such non-compliance without
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within that period of time, shall be deemed to have waived his right
to so object.
*****
16. Competence of arbitral tribunal to rule on its jurisdiction. –
(1) The arbitral tribunal may rule on its own jurisdiction, including
ruling on any objections with respect to the existence or validity of
the arbitration agreement, and for that purpose,-
(a) an arbitration clause which forms part of a contract shall be
treated as an agreement independent of the other terms of the
contract; and
(b) a decision by the arbitral tribunal that the contract is null and
void shall not entail ipso jure the invalidity of the arbitration
clause.
(2) A plea that the arbitral tribunal does not have jurisdiction shall
be raised not later than the submission of the statement of defence;
however, a party shall not be precluded from raising such a plea
merely because that he has appointed, or participated in the
appointment of, an arbitrator.
(3) A plea that the arbitral tribunal is exceeding the scope of its
authority shall be raised as soon as the matter alleged to be beyond
the scope of its authority is raised during the arbitral proceedings.
(4) The arbitral tribunal may, in either of the cases referred to in
sub-section (2) or sub-section (3), admit a later plea if it considers
the delay justified.
(5) The arbitral tribunal shall decide on a plea referred to in sub-
section (2) or sub-section (3) and, where the arbitral tribunal takes
a decision rejecting the plea, continue with the arbitral proceedings
and make an arbitral award.
(6) A party aggrieved by such an arbitral award may make an
application for setting aside such an arbitral award in accordance
with section 34.”
60. In this context, it becomes necessary to examine the scheme of
the A&C Act. Section 10(1) of the A&C Act provides that parties are
free to determine the number of arbitrators, provided that such number
shall not be an even number. However, the legal consequence flowing
from the constitution of an arbitral tribunal consisting of an even
number of arbitrators has been conclusively settled by judicial
precedents. The prohibition contained in Section 10 of the A&C Act is
not treated as an absolute or non-derogable mandate going to the
inherent jurisdiction of the tribunal. Rather, it is regarded as a
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procedural and derogable requirement capable of waiver by the
conduct of parties.
61. The aforesaid position stands authoritatively settled by the
judgment of the Hon‟ble Supreme Court in Narayan Prasad Lohia
(supra).
62. In the said case, the Hon‟ble Supreme Court was dealing with a
challenge to an arbitral award rendered by a two-member arbitral
tribunal. The contention raised therein was substantially similar to the
contention urged in the present proceedings, namely that Section 10 of
the A&C Act prohibited constitution of an arbitral tribunal comprising
an even number of arbitrators and, therefore, the said arbitral award
stood vitiated. Rejecting the said contention, the Hon‟ble Supreme
Court held that the requirement contained in Section 10 of the A&C
Act is a derogable provision and that objection with respect to
composition of the arbitral tribunal must be raised before the tribunal
itself in accordance with Sections 16 and 4 of the A&C Act.
63. The Hon‟ble Supreme Court in Narayan Prasad Lohia (supra)
further observed that the A&C Act consciously classifies certain
provisions as non-derogable while others remain capable of waiver by
agreement or conduct. It was specifically held that Section 10 of the
A&C Act does not fall within the category of non-derogable
provisions and consequently an objection relating to an even-
numbered arbitral tribunal cannot be permitted to be raised for the first
time at the stage of challenge under Section 34 of the A&C Act after
parties have consciously participated in the proceedings.
64. The Hon‟ble Supreme Court further held that where a party
proceeds with arbitration with full knowledge of the composition of
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the tribunal and fails to raise a timely objection, such party shall be
deemed to have waived its right to object by virtue of Section 4 of the
A&C Act. The relevant observations of the above-mentioned
Judgment bearing upon the issue involved in the present case are
reproduced hereinbelow:
“16. It has been held by a Constitution Bench of this Court, in the
case of Konkan Rly. Corpn. Ltd. v. Rani Construction (P)
Ltd. [(2002) 2 SCC 388] that Section 16 enables the Arbitral
Tribunal to rule on its own jurisdiction. It has been held that under
Section 16 the Arbitral Tribunal can rule on any objection with
respect to existence or validity of the arbitration agreement. It is
held that the Arbitral Tribunal’s authority under Section 16, is not
confined to the width of its jurisdiction but goes also to the root of
its jurisdiction. Not only this decision is binding on this Court, but
we are in respectful agreement with the same. Thus, it is no longer
open to contend that, under Section 16, a party cannot challenge
the composition of the Arbitral Tribunal before the Arbitral
Tribunal itself. Such a challenge must be taken, under Section
16(2), not later than the submission of the statement of defence.
Section 16(2) makes it clear that such a challenge can be taken
even though the party may have participated in the appointment of
the arbitrator and/or may have himself appointed the arbitrator.
Needless to state a party would be free, if it so chooses, not to raise
such a challenge. Thus, a conjoint reading of Sections 10 and 16
shows that an objection to the composition of the Arbitral Tribunal
is a matter which is derogable. It is derogable because a party is
free not to object within the time prescribed in Section 16(2). If a
party chooses not to so object there will be a deemed waiver under
Section 4. Thus, we are unable to accept the submission that
Section 10 is a non-derogable provision. In our view Section 10
has to be read along with Section 16 and is, therefore, a derogable
provision.
*****
18. Even otherwise, under the said Act the grounds of challenge to
an arbitral award are very limited. Now an award can be set aside
only on a ground of challenge under Sections 12, 13 and 16
provided such a challenge is first raised before the Arbitral
Tribunal and has been rejected by the Arbitral Tribunal….”
65. The principle laid down in Narayan Prasad Lohia (supra)
applies on all fours to the facts of the present case. Supreme
Advertising was fully aware, from the very inception, that the learned
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Arbitral Tribunal consisted of two learned Arbitrators. Despite such
knowledge, Supreme Advertising neither objected to the composition
of the learned Arbitral Tribunal before commencement of proceedings
nor invoked Section 16 of the A&C Act at any subsequent stage. On
the contrary, Supreme Advertising actively invoked and participated
in the arbitral process and invited adjudication upon its claims on the
merits. Such conduct clearly constitutes acquiescence and waiver
within the meaning of Section 4 of the A&C Act. Consequently, even
assuming that the constitution of the learned Arbitral Tribunal was not
in strict conformity with Section 10 of the A&C Act, such objection
stood waived upon Supreme Advertising consciously participating in
the arbitral proceedings without raising any objection at the
appropriate stage.
66. It is also pertinent to note that Supreme Advertising had full
knowledge of the constitution of the learned Arbitral Tribunal. The
Orders dated 25.07.2008 and 21.08.2009 passed by the Rajasthan
High Court specifically dealt with and examined the issue relating to
the constitution of the learned Arbitral Tribunal, pursuant to which the
learned Arbitral Tribunal came to be constituted for adjudication of
the disputes between the parties. The proceedings before the learned
Arbitral Tribunal thereafter culminated in the passing of the Impugned
Award.
67. However, despite being fully aware of the aforesaid Orders and
the constitution of the learned Arbitral Tribunal pursuant thereto,
Supreme Advertising did not avail of any legal remedy to challenge
the said Orders of the Rajasthan High Court before the appropriate
forum. Having failed to assail those orders at the relevant stage,
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Supreme Advertising cannot now be permitted to indirectly question
the constitution of the learned Arbitral Tribunal in the present
proceedings.
68. This Court also finds merit in the contention urged on behalf of
Genus Power that the present objection is an afterthought raised only
after rendition of the Impugned Award. A party cannot be permitted to
approbate and reprobate simultaneously by participating in arbitral
proceedings without protest and thereafter, upon being dissatisfied
with the outcome, challenge the very jurisdiction or composition of
the learned Arbitral Tribunal. Permitting such conduct would defeat
the foundational objective of the A&C Act, namely expeditious and
final resolution of disputes through arbitration with minimal judicial
interference.
69. Reference may also be made to the judgment rendered by the
Division Bench of this Court in S.N. Malhotra & Sons v. Airport
Authority of India19, wherein the Court reiterated the principle that
objections concerning composition or jurisdiction of the arbitral
tribunal are liable to be deemed waived if not raised at the appropriate
stage before the tribunal itself. The legislative intent underlying
Sections 4 and 16 of the A&C Act clearly mandates that such
objections must be raised at the earliest available opportunity so that
arbitral proceedings are not rendered vulnerable to belated technical
challenges after conclusion of adjudication. The relevant portion of
the above-mentioned Judgment is reproduced hereinbelow:
“31. To conclude, although ordinarily, we would have been
inclined to hold that in so far as jurisdictional issues are concerned,
the contours of Section 34 are wide enough to enable the Court to
consider such issues though not raised before the arbitrator, apart19
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from other issues. But in the teeth of the statutory provisions
mandating time limits for the setting up of such pleas [Section
16(2), 16(3), 16(4)] and in the teeth of Section 4 of the Act and in
view of the law laid by the Supreme Court, jurisdictional
objections, in our view, cannot be permitted to be raised at a later
point of time, even under Section 34. To hold otherwise, would be
to render otiose the provisions of sub-sections (2) to (6) of Section
16 as well as Section 4 of the Act, and may even result in making a
serious inroad into the provisions of Section 5 of the Act; which is
aimed at cabining and confining judicial intervention in the
arbitration process to the very minimum.”
70. Quite apart from the aspect of waiver, this Court also finds that
no demonstrable prejudice has been shown by Supreme Advertising
on account of the learned Arbitral Tribunal consisting of two learned
Arbitrators. The arbitral proceedings were conducted over several
sittings; both parties were afforded full opportunity to file pleadings,
lead evidence, cross-examine witnesses and advance submissions, and
the Impugned Award itself reflects detailed consideration of the rival
contentions, documentary evidence and contractual arrangements
between the parties. In the absence of any material demonstrating
failure of natural justice or miscarriage of adjudicatory fairness, an
objection to the numerical composition of the Tribunal cannot ipso
facto invalidate the arbitral proceedings.
71. It is equally well settled that proceedings under Section 34 of
the A&C Act do not constitute appellate proceedings and this Court
does not sit in appeal over the procedural decisions adopted during
arbitration unless the same strike at the root of fairness, jurisdiction or
public policy. In the facts of the present case, the constitution of the
learned Arbitral Tribunal neither occasioned failure of justice nor
caused prejudice warranting interference under Section 34 of the A&C
Act.
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72. In view of the aforesaid discussion, this Court is of the
considered opinion that the challenge laid by Supreme Advertising to
the constitution of the learned Arbitral Tribunal is wholly devoid of
merit. The objection, even if otherwise available, stood waived by
virtue of Sections 4 and 16 of the A&C Act, having never been raised
before the learned Arbitral Tribunal despite full knowledge of its
composition. The said challenge is therefore barred by waiver,
acquiescence and the consistent conduct of Supreme Advertising
throughout the arbitral proceedings.
73. Accordingly, Issue No. 1 is answered against Supreme
Advertising and in favour of Genus Power.
Issue No. 2: Whether the Findings of the learned Arbitral Tribunal on
Issue No. 13, Allowing Counterclaim No. 1 Towards
Loss/Unaccounted Material and Awarding INR 20,18,64,000/-
(Subsequently Modified to INR 18,39,00,000/-), are Liable to be Set
Aside under Section 34 of the A&C Act on the Ground of Patent
Illegality, Perversity, or Non-Application of Mind?
74. Supreme Advertising assails the findings of the learned Arbitral
Tribunal on Counterclaim No. 1 on the ground that the Impugned
Award is allegedly based on no evidence and that Genus Power failed
to establish either the quantity of material supplied, the quantity
allegedly unaccounted for, or the quantum of loss suffered by it. The
principal submission of Supreme Advertising is that Genus Power did
not produce inventories, challans, MRHOV20 records or other primary
documents evidencing supply of material and, therefore, the learned
20
Material Receipt and Handing Over Voucher
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Arbitral Tribunal could not have awarded the counterclaim merely on
the basis of the schedules filed by Genus Power.
75. This Court has carefully examined the documents forming part
of the record and submissions made by the parties. Upon such
examination, this Court finds itself unable to agree with Supreme
Advertising‟s contention that the impugned findings are based on no
evidence or suffer from patent illegality.
76. At the outset, it is necessary to notice that the very foundation
of Supreme Advertising’s challenge proceeds on an incorrect
assumption that Genus Power‟s counterclaim was based solely upon
self-serving schedules prepared by it.
77. A reading of the Impugned Award demonstrates that the learned
Arbitral Tribunal accepted Genus Power‟s case that the schedules and
reconciliation statements relied upon by it were prepared from
Supreme Advertising‟s own records, including the erection bills and
statements filed by Supreme Advertising before the learned Arbitral
Tribunal.
78. This Court is of the considered opinion that the learned Arbitral
Tribunal did not proceed merely on the basis of self-generated
schedules prepared by Genus Power. A reading of the discussion
under Issue No.13 of the Impugned Award shows that the learned
Arbitral Tribunal examined the quantities reflected in the erection
bills, RA Bills and Final Bills submitted by Supreme Advertising
itself and compared the same with the quantities which could be
verified through approvals, measurements, departmental records and
site inspections.
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79. The learned Arbitral Tribunal specifically recorded that the
quantities reflected in Schedules RY-4, RY-5 and RY-6 were derived
from the figures claimed by Supreme Advertising itself and thereafter
subjected to reconciliation. The learned Arbitral Tribunal further
found that upon reconciliation of those figures with the quantities
actually traceable and verifiable at site, substantial discrepancies
emerged. It was on the basis of such discrepancy that the counterclaim
came to be examined and ultimately allowed.
80. The challenge raised by Supreme Advertising is therefore not a
case of absence of evidence but, in substance, a challenge to the
manner in which the learned Arbitral Tribunal appreciated and
evaluated the evidence before it.
81. Significantly, the learned Arbitral Tribunal also found that
despite repeated opportunities, Supreme Advertising failed to furnish
any satisfactory reconciliation explaining the difference between the
quantities claimed by it in its erection bills and the quantities which
could actually be traced and verified. The Impugned Award further
reveals that the learned Arbitral Tribunal attached considerable
significance to the evidence emerging from the cross-examination of
Supreme Advertising‟s own witnesses.
82. The learned Arbitral Tribunal noted that Mr. G.S. Rawat (CW-
1), when confronted with discrepancies between the quantities
claimed as utilised and the quantities reflected in the RA Bills and
Final Bills, admitted that reconciliation was required on the basis of
records and further stated that if any shortage was found, the
corresponding amount could be recovered from the erection cost
payable to Supreme Advertising.
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83. Likewise, the learned Arbitral Tribunal noticed that Mr. Rajeev
Jain (CW-2) resiled from portions of his affidavit and admitted that
Genus Power had continued insisting upon material reconciliation
even after the period during which Supreme Advertising claimed that
reconciliation had already been completed. The learned Arbitral
Tribunal was entitled to rely upon these admissions while assessing
the credibility of the rival cases and while determining whether the
material stood duly accounted for.
84. Once Genus Power demonstrated the discrepancy by relying
upon Supreme Advertising’s own records and statements, the burden
clearly shifted upon Supreme Advertising to explain the difference.
Supreme Advertising cannot simultaneously rely upon its erection
bills for sustaining its monetary claims and yet disown the very
figures contained therein when those figures are utilised for
reconciliation of material. The learned Arbitral Tribunal was therefore
justified in drawing an adverse inference from Supreme Advertising‟s
failure to furnish any satisfactory explanation or reconciliation.
85. The contention that Genus Power was required to independently
prove each entry in the schedules by producing inventories, challans,
MRHOV records and other documents also does not persuade this
Court to interfere. The learned Arbitral Tribunal accepted Genus
Power’s explanation that the counterclaim was founded substantially
upon Supreme Advertising’s own declarations regarding material
allegedly erected and utilised at site. Once the learned Arbitral
Tribunal found that the relevant figures emanated from Supreme
Advertising’s own records, it was open to the learned Arbitral Tribunal
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to treat the same as a valid evidentiary foundation for determining the
extent of material which remained unaccounted for.
86. It is equally important to note that the Impugned Award records
that Supreme Advertising never specifically controverted the figures
reflected in the schedules relied upon by Genus Power. The challenge
mounted before this Court seeks to question the methodology adopted
by the learned Arbitral Tribunal and the sufficiency of evidence relied
upon by it. Such a challenge necessarily falls within the realm of
appreciation of evidence. It is well settled that a Court exercising
jurisdiction under Section 34 of the A&C Act does not sit as a Court
of appeal and cannot reassess the evidentiary value of material which
has already been considered by the learned Tribunal.
87. This Court also finds no infirmity in the learned Arbitral
Tribunal’s rejection of Supreme Advertising’s plea that material
reconciliation had already been completed prior to the meeting dated
08.10.2006. The learned Arbitral Tribunal expressly recorded that
such a plea did not form part of the pleadings and was not supported
by the evidence led on behalf of Supreme Advertising. The learned
Arbitral Tribunal further found that the said contention stood
contradicted by the Minutes of Meeting dated 08.10.2006, the
subsequent correspondence exchanged between the parties in
December 2006 and the admissions elicited during cross-examination.
Having regard to the contemporaneous documentary record relied
upon by the learned Arbitral Tribunal, this Court is unable to hold that
the said finding is either perverse or based on no evidence.
88. This Court is unable to accept Supreme Advertising‟s
contention that an adverse inference ought to have been drawn against
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Genus Power on account of non-production of inventories or challans.
The learned Arbitral Tribunal was fully conscious of the evidentiary
record before it and nevertheless found that Genus Power had
discharged its burden by relying upon Supreme Advertising’s own
records, the reconciliation statements prepared therefrom and the oral
evidence led before the learned Arbitral Tribunal. The sufficiency of
such evidence is a matter squarely within the domain of the learned
Tribunal and cannot be reopened in proceedings under Section 34 of
the A&C Act.
89. Supreme Advertising’s submission that the Impugned Award
suffers from an inherent contradiction because certain claims relating
to erection works were allowed whereas the counterclaim towards loss
of material was simultaneously accepted is likewise misconceived.
90. The learned Arbitral Tribunal was dealing with two distinct
questions. The first concerned entitlement for execution and erection
of works. The second concerned accounting and reconciliation of
material supplied for execution of those works. Acceptance of a claim
relating to execution of work does not automatically establish that the
entirety of the material reflected in the corresponding bills stood duly
accounted for. The learned Arbitral Tribunal was entitled to
independently examine whether the quantities claimed to have been
utilised by Supreme Advertising were actually traceable and
verifiable.
91. The findings returned on the counterclaim are therefore not
inconsistent with the findings returned on the claims relating to
execution of work. The contention that the quantum awarded under
Counterclaim No.1 was arbitrary is equally untenable. The Impugned
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Award records that material valued at INR 53,31,67,000/- was
claimed by Supreme Advertising to have been erected and utilised.
Upon reconciliation, material worth INR 26,99,89,000/- was found
supported by approvals, measurements and verifications, while
material worth INR 6,13,14,000/- was independently found during site
inspections undertaken by Genus Power.
92. The learned Arbitral Tribunal accepted the reconciliation
exercise reflected in Schedules RY-4 to RY-7 and quantified the
unaccounted material accordingly. Whether a different methodology
could have been adopted for valuation is not a question that falls for
examination under Section 34 of the A&C Act. The Court is
concerned only with whether the view adopted by the learned Arbitral
Tribunal was a possible view based upon the material before it. In the
facts of the present case, the answer must necessarily be in the
affirmative.
93. The challenge founded upon Rajasthan works is also devoid of
merit. The Impugned Award does not reveal any patent contradiction
or mutually destructive finding. What Supreme Advertising seeks is a
re-evaluation of the factual conclusions drawn by the learned Tribunal
on the basis of the evidence before it. Such an exercise is plainly
beyond the permissible scope of Section 34 of the A&C Act.
94. The submission that Genus Power failed to establish
procurement cost, replacement cost or actual loss also cannot be
accepted. The learned Arbitral Tribunal accepted the methodology
adopted by Genus Power for valuation of the unaccounted material
and quantified the claim accordingly. Whether another methodology
would have been more appropriate is not a ground available under
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Section 34 of the A&C Act. The Court cannot substitute its own
assessment for that of the learned Tribunal merely because another
view may appear possible.
95. This Court also cannot lose sight of the fact that the learned
Arbitral Tribunal subsequently reconsidered the quantification while
deciding the application leading to the Modified Award dated
17.05.2014. Upon such reconsideration, the amount awarded under
Counterclaim No.1 was reduced from INR 20,18,64,000/- to INR
18,39,00,000/-. The Modified Award dated 17.05.2014 itself
demonstrates conscious application of mind to the issue of
quantification and effectively dispels Supreme Advertising’s
contention that the claim was granted mechanically or without
scrutiny of the underlying material.
96. The entire challenge raised by Supreme Advertising ultimately
seeks a re-appreciation of evidence, a re-evaluation of the
reconciliation exercise undertaken by the learned Arbitral Tribunal
and a reconsideration of the conclusions drawn on the basis of the
material placed before the learned Arbitral Tribunal. Such an exercise
is impermissible in proceedings under Section 34 of the A&C Act.
97. Having considered the reasoning contained in the Impugned
Award, this Court is unable to conclude that the findings returned
under Issue No.13 are such as no reasonable arbitral tribunal could
have arrived at. The learned Arbitral Tribunal considered the
documentary record, oral evidence, admissions of witnesses,
reconciliation statements and site verification reports before arriving
at its conclusions. The view adopted by the learned Arbitral Tribunal
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is undoubtedly a plausible view arising from the material placed
before it.
98. Even assuming that another view may also have been possible,
the same would not justify interference under Section 34 of the A&C
Act. The findings therefore cannot be characterised as perverse,
patently illegal, based on no evidence, or suffering from such
irrationality as would warrant setting aside of the Impugned Award.
99. Accordingly, this Court finds no ground warranting interference
with the findings returned by the learned Arbitral Tribunal on Issue
No.13 or with Counterclaim No.1 as modified by the Modified Award
dated 17.05.2014. The challenge raised by Supreme Advertising to
Counterclaim No.1 is therefore rejected.
Issue No. 3: Whether the Findings Returned by the learned Arbitral
Tribunal on Issue Nos. 14, 14(i) and 14(ii), Allowing Counterclaim
No. 2 in Respect of Dismantled Material and Awarding INR
40,80,000/- in Favour of Genus Power under the Modified Award
Dated 17.05.2014, Suffer from Patent Illegality, Perversity, or
Otherwise Warrant Interference under Section 34 of the A&C Act?
100. The rival submissions of the parties in relation to Issue Nos. 14,
14(i) and 14(ii) have already been noticed in detail hereinabove and
are not being reproduced again for the sake of brevity. Suffice it to
note that Supreme Advertising’s challenge is essentially founded on
the contention that Counterclaim No. 2 concerning dismantled
material was allowed without any independent evidence establishing
either liability or quantification and that the learned Arbitral Tribunal
erroneously relied upon Schedule RY-8 and obligations allegedly
arising from contracts executed with the Electricity Authorities.
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Supreme Advertising further assails the valuation adopted by the
learned Arbitral Tribunal and contends that the Impugned Award
under this head is arbitrary and unsupported by the record.
101. However, Genus Power maintains that the findings are founded
upon the contractual framework governing the project, documentary
evidence, admissions emanating from Supreme Advertising’s own
correspondence, oral testimony led before the learned Tribunal and the
reconciliation statement reflected in Schedule RY-8. According to
Genus Power, the learned Arbitral Tribunal, upon appreciation of the
material available on record, returned a reasoned finding which does
not warrant interference within the limited scope of Section 34 of the
A&C Act.
102. Having considered the record, the Impugned Award, the
pleadings, evidence and the submissions advanced on behalf of the
parties, this Court is unable to agree with Supreme Advertising’s
challenge to the findings returned by the learned Arbitral Tribunal on
Issue Nos. 14, 14(i) and 14(ii).
103. The principal plank of challenge raised by Supreme Advertising
is that the counterclaim relating to dismantled material was allegedly
based on no evidence and merely on Schedule RY-8 prepared by
Genus Power. The contention does not withstand scrutiny.
104. A perusal of the Impugned Award demonstrates that the learned
Arbitral Tribunal did not award the claim merely on the basis of
Schedule RY-8. The learned Tribunal examined the contractual
obligations governing the execution of the project and specifically
noticed the clauses requiring dismantling, transportation and deposit
of dismantled material in the designated stores of the Electricity
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Authorities. Upon consideration of the contractual framework, the
learned Arbitral Tribunal concluded that the obligation to account for
dismantled material formed part of Supreme Advertising’s
responsibilities while executing the works.
105. The learned Arbitral Tribunal further took into consideration
Supreme Advertising’s own communication dated 02.01.2007 wherein
Supreme Advertising represented that the dismantled material had
already been deposited with the Electricity Authorities. The learned
Arbitral Tribunal treated the said communication as a significant
admission. Once Supreme Advertising itself had asserted that the
dismantled material stood deposited with the concerned authorities,
the learned Arbitral Tribunal found it difficult to accept the
subsequent stand that such material remained lying at project sites,
stores or with subcontractors. This Court finds no perversity in the
learned Arbitral Tribunal drawing such an inference.
106. The submission that there was no evidence whatsoever before
the learned Arbitral Tribunal is therefore demonstrably incorrect. The
Impugned Award is founded upon contractual documents,
correspondence exchanged between the parties, admissions emanating
from Supreme Advertising’s own record, oral testimony and the
reconciliation statement contained in Schedule RY-8. The challenge
raised by Supreme Advertising is thus not a case of “no evidence” but,
at its highest, a challenge to the manner in which the evidence was
appreciated by the learned Arbitral Tribunal.
107. It is well settled that the sufficiency, adequacy or weight to be
attached to evidence falls exclusively within the province of the
learned Arbitral Tribunal. A Court exercising jurisdiction under
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Section 34 of the A&C Act cannot reassess the evidentiary record to
determine whether another conclusion may also have been possible.
Once the view adopted by the learned Arbitral Tribunal is a plausible
one arising from the material placed before it, interference is
impermissible.
108. Supreme Advertising’s challenge founded upon the alleged non-
production of inventories, challans and other supporting documents is
equally unpersuasive. The Impugned Award records that Genus
Power’s claim was supported through Schedule RY-8 and the
testimony of RW-1. The learned Arbitral Tribunal further noted that
the correctness of the said Schedule was not effectively demolished
during cross-examination. Whether additional documentary material
ought to have been produced or whether an adverse inference ought to
have been drawn are matters relating to appreciation of evidence and
cannot furnish an independent ground for setting aside an arbitral
award.
109. Supreme Advertising’s contention that the learned Arbitral
Tribunal wrongly relied upon obligations contained in the project
contracts with the Electricity Authorities also deserves rejection. The
learned Arbitral Tribunal did not seek to enforce rights of third parties.
Rather, it examined the contractual structure governing execution of
the project for the limited purpose of determining responsibility for
dismantled material. Such an exercise plainly fell within the
jurisdiction of the learned Arbitral Tribunal and cannot be
characterised as travelling beyond the contract or beyond the scope of
reference.
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110. Equally devoid of merit is the challenge to quantification. The
Impugned Award reveals that the learned Arbitral Tribunal did not
mechanically accept the valuation suggested by Genus Power. On the
contrary, the learned Arbitral Tribunal independently examined the
nature of dismantled material and concluded that the same could only
be valued as scrap. Proceeding on that basis, the learned Arbitral
Tribunal substantially reduced the value claimed by Genus Power and
restricted the Impugned Award accordingly. The process adopted by
the learned Arbitral Tribunal clearly reflects an independent
adjudicatory exercise and not a mechanical acceptance of Genus
Power’s claim.
111. A perusal of the Modified Award dated 17.05.2014 also does
not lend support to the contention advanced by Supreme Advertising
that the learned Arbitral Tribunal mechanically allowed the
counterclaims without independently appreciating the material
available on record.
112. On the contrary, the modifications incorporated in the Modified
Award dated 17.05.2014, which rectified the computational errors and
resulted in a substantial reduction of the amount originally awarded,
clearly demonstrate that the learned Arbitral Tribunal revisited the
quantification of the claims, re-examined the underlying calculations,
and corrected the arithmetical mistakes to ensure that the Impugned
Award accurately reflected the figures and findings accepted by it.
113. Such an exercise is wholly inconsistent with the Petitioner’s
allegation that the counterclaims were allowed mechanically or
without independent application of mind. Rather, the Arbitral Award
dated 07.03.2014 as well as the Modified Award dated 17.05.2014,
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when read together, manifest a conscious and reasoned consideration
of the quantification of the amounts awarded, thereby reinforcing that
the learned Arbitral Tribunal had duly scrutinised the material on
record before arriving at its final determination.
114. Learned Senior Counsel for Supreme Advertising has also
placed reliance upon the decision in Aneja Constructions (India) Pvt.
Ltd. (supra) to contend that a claim cannot be awarded merely on the
basis of self-serving statements, schedules or tabulations prepared by
a party in the absence of independent proof establishing liability and
quantification. There can be no quarrel with the proposition laid down
in the said decision. However, the reliance is misplaced in the facts of
the present case.
115. A perusal of the Impugned Award demonstrates that the learned
Arbitral Tribunal has not awarded the counterclaim merely on the
basis of Schedule RY-8 or upon Genus Power’s unilateral assertions.
The learned Arbitral Tribunal has examined the contractual provisions
governing dismantled material, considered Supreme Advertising’s
own correspondence including its communication dated 02.01.2007,
evaluated the oral evidence led by the parties and thereafter assessed
the reconciliation statement relied upon by Genus Power. The finding
returned by the learned Arbitral Tribunal is thus founded upon a
cumulative appreciation of documentary and oral evidence available
on record.
116. The decision in Aneja Constructions (India) Pvt. Ltd. (supra)
was rendered in a factual context where the claim was found to be
unsupported by adequate evidentiary material and rested substantially
upon unilateral assertions.
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117. In the present case, however, the learned Arbitral Tribunal has
relied upon multiple pieces of evidence, including admissions
emanating from Supreme Advertising’s own record. The challenge
therefore is not one of absence of evidence, but of sufficiency and
appreciation of evidence. Such an exercise lies squarely within the
domain of the learned Arbitral Tribunal and cannot be reopened in
proceedings under Section 34 of the A&C Act. The said decision is
consequently distinguishable and does not advance Supreme
Advertising’s case.
118. This Court is therefore satisfied that the findings returned by the
learned Arbitral Tribunal on Issue Nos. 14, 14(i) and 14(ii) are based
on material available on record, represent a plausible view of the
evidence and do not suffer from patent illegality, perversity or conflict
with the fundamental policy of Indian law.
119. The challenge to Counterclaim No. 2 is accordingly rejected.
Issue No. 4: Whether the Findings Returned by the learned Arbitral
Tribunal on Issue No. 9, Partly Allowing Counterclaim No. 3 of
Genus Power Towards Interest on Account of Delayed Payments,
Warrant Interference under Section 34 of the A&C Act?
120. Supreme Advertising challenges the findings returned by the
learned Arbitral Tribunal on the ground that the counterclaim was
unsupported by evidence and that the Impugned Award rests merely
upon Schedule RX-7 without any material establishing either the
alleged delay in payments or the quantum of loss suffered by Genus
Power. According to Supreme Advertising, the learned Arbitral
Tribunal awarded compensation on assumptions and conjectures,
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thereby rendering the Impugned Award vulnerable to interference
under Section 34 of the A&C Act.
121. Genus Power, on the other hand, contends that the claim was
supported by documentary and oral evidence, including the fourteen
(14) complaints made by Supreme Advertising, the material relating
to withholding of payments, and the computation contained in
Schedule RX-7. It is contended that details of all fourteen (14)
complaints made by Supreme Advertising were specifically pleaded
and proved through Annexure R-20. It is further submitted that the
calculation was duly proved through the testimony of RW-1 and
remained substantially unchallenged during cross-examination.
122. Having considered the rival submissions and examined the
Impugned Award, this Court finds no ground warranting interference
with the findings returned by the learned Arbitral Tribunal.
123. At the outset, it is necessary to note that the challenge proceeds
substantially on the assertion that the Impugned Award is based on
“no evidence”. However, a perusal of the Impugned Award
demonstrates that the learned Arbitral Tribunal considered the
material placed before it in support of Genus Power‟s claim, such as
Annexure R-20, and arrived at a factual finding that Genus Power had
suffered delay in receipt of payments did not grant the counterclaim
merely on the basis of Schedule RX-7 in isolation.
124. The learned Arbitral Tribunal further recorded that Schedule
RX-7, containing the computation of interest, stood proved through
the testimony of RW-1 and that the said computation was not
effectively challenged during cross-examination. Upon consideration
of the evidence on record, the learned Arbitral Tribunal accepted the
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claim only in part and awarded interest at a reduced rate of 12% per
annum instead of the rate originally claimed. The Impugned Award
therefore rests not merely upon a schedule of calculations, but upon a
combination of documentary material, oral testimony and the
inferences drawn therefrom by the learned Arbitral Tribunal.
125. The principal submission advanced by Supreme Advertising is
that the evidence relied upon by the learned Tribunal was insufficient
to sustain the Impugned Award. However, once it is found that the
learned Arbitral Tribunal’s conclusion is founded upon material
available on record, the sufficiency or adequacy of such evidence falls
outside the scope of examination under Section 34 of the A&C Act.
126. Supreme Advertising’s contention that no evidence was
produced to establish delayed payments is, in substance, an invitation
to re-appreciate the evidentiary record and to substitute the factual
conclusions of the learned Arbitral Tribunal with another possible
view. Such an exercise falls outside the limited scope of interference
available under Section 34 of the A&C Act.
127. It is well settled that once the arbitral tribunal has considered
the evidence before it and adopted a plausible view, the Court does
not sit in appeal over the award and cannot reassess the sufficiency or
adequacy of evidence merely because another conclusion may also be
possible.
128. This Court also finds no merit in the submission that Genus
Power, if aggrieved by delayed payments, could only have proceeded
against the concerned electricity authorities and not against Supreme
Advertising. The learned Arbitral Tribunal accepted Genus Power‟s
case that the delay was occasioned by complaints made by Supreme
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Advertising and that the resulting financial consequences flowed
therefrom.
129. Whether such causal connection stood established on the
evidence was a matter squarely within the domain of the learned
Arbitral Tribunal. Once the learned Arbitral Tribunal, upon
appreciation of the evidence led before it, arrived at such a finding, the
same cannot be reopened in proceedings under Section 34 of the A&C
Act unless shown to be perverse or based on no evidence whatsoever.
No such case is made out in the present matter.
130. The findings returned by the learned Arbitral Tribunal are
findings of fact based upon appreciation of the evidence placed before
it and the learned Arbitral Tribunal duly considered the pleadings,
documentary material, oral evidence and the conduct of the parties
during trial before arriving at its conclusion. Supreme Advertising has
been unable to demonstrate that the findings suffer from perversity,
patent illegality, jurisdictional error, or are based on no evidence
whatsoever. The challenge, in substance, seeks a reconsideration of
the evidentiary record and substitution of the learned Arbitral
Tribunal‟s view with that of the Court, which is impermissible in
proceedings under Section 34 of the A&C Act.
131. Accordingly, the objections raised by Supreme Advertising to
the Impugned Award rendered on Issue No. 9 are rejected and the
findings of the learned Arbitral Tribunal on the said issue warrant no
interference.
Issue No. 5: Whether Supreme Advertising Can Be Permitted to
Contend, for the First Time During Oral Arguments in the Present
Petition under Section 34 of the A&C Act, that the counterclaims
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Preferred by Genus Power Before the learned Arbitral Tribunal Were
Barred by Limitation?
132. Having considered the rival submissions on this particular issue,
this Court is of the opinion that the contention sought to be raised by
Supreme Advertising cannot be entertained in the facts of the present
case.
133. At the outset, this Court is conscious of the settled position that
limitation is not a mere technical defence and that claims barred by
limitation cannot ordinarily be decreed merely because an objection
was not raised. Equally, there can be no quarrel with the proposition
that an arbitral tribunal is expected to decide disputes in accordance
with law.
134. However, the issue before this Court is not whether limitation is
important, but whether the present objection can be permitted to be
raised for the first time in proceedings under Section 34 of the A&C
Act in the absence of any foundational pleadings and factual
determination before the learned Arbitral Tribunal.
135. It is equally well settled that the plea of limitation is ordinarily a
mixed question of law and fact. In Ramesh B. Desai (supra), the
Hon’ble Supreme Court observed that a plea of limitation cannot be
decided as an abstract proposition of law divorced from facts and that
determination of limitation necessarily requires ascertainment of the
starting point of limitation, which is itself a question of fact. The
Hon‟ble Supreme Court further held that unless the issue is apparent
on the face of the record, the question of limitation ordinarily requires
pleadings, framing of issues and appreciation of evidence. The
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relevant portion of the above-mentioned Judgment is reproduced
hereinunder:
“19. A plea of limitation cannot be decided as an abstract principle
of law divorced from facts as in every case the starting point of
limitation has to be ascertained which is entirely a question of fact.
A plea of limitation is a mixed question of law and fact. The
question whether the words “barred by law” occurring in Order 7
Rule 11(d) CPC would also include the ground that it is barred by
law of limitation has been recently considered by a two-Judge
Bench of this Court to which one of us was a member (Ashok
Bhan, J.) in Balasaria Construction (P) Ltd. v. Hanuman Seva
Trust [(2006) 5 SCC 658, below] it was held: (SCC p. 661, para 8)
“8. After hearing counsel for the parties, going through
the plaint, application under Order 7 Rule 11(d) CPC and
the judgments of the trial court and the High Court, we
are of the opinion that the present suit could not be
dismissed as barred by limitation without proper
pleadings, framing of an issue of limitation and taking of
evidence. Question of limitation is a mixed question of
law and fact. Ex facie in the present case on the reading
of the plaint it cannot be held that the suit is barred by
time.”
This principle would be equally applicable to a company
petition. Therefore, unless it becomes apparent from the
reading of the company petition that the same is barred
by limitation the petition cannot be rejected under Order
7 Rule 11(d) CPC.”
136. In the present case, this Court finds that the objection now
sought to be urged by Supreme Advertising would require
examination of several foundational facts.
137. Determination of the issue would necessarily require the Court
to examine, inter alia, when the causes of action underlying the
respective counterclaims accrued, whether the claims were continuing
in nature, the effect of the Minutes of Meeting dated 08.10.2006, the
impact of subsequent correspondence exchanged between the parties,
whether any acknowledgements existed, and whether any facts existed
which extended, postponed or otherwise affected the computation of
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limitation. None of these factual aspects were ever placed in issue
before the learned Arbitral Tribunal by Supreme Advertising.
138. Significantly, no issue on limitation of the counterclaims was
framed before the learned Arbitral Tribunal. No evidence was led by
either party specifically directed towards such a plea. More
importantly, the present Petition under Section 34 of the A&C Act
also contains no foundational pleadings raising any challenge to the
counterclaims on the ground of limitation.
139. The decision of this Court in National Highways Authority of
India (supra) assumes significance in this regard. While considering a
similar contention, it was held that where limitation was never raised
before the arbitral tribunal and consequently never decided by it, such
a plea cannot ordinarily be permitted to be raised for the first time in
proceedings under Section 34 of the A&C Act. The Court observed
that once the arbitral award contains no determination on limitation
owing to absence of such a plea, it would be wholly misconceived to
contend that the arbitral tribunal erred in deciding an issue which was
never raised before it. That the relevant portion of the judgment is
reproduced hereinunder:
“10(ii). The learned senior counsel for the respondent/contractor
argues that no doubt the issue of limitation is an issue of law,
however an issue of limitation can always be waived by a person in
whose favour the right to plead the bar of limitation arises. It is
argued on behalf of the respondent/contractor that admittedly at no
stage in the arbitration proceedings, i.e. either in the pleadings of
the petitioner/employer, or during the course of evidence, or even
during the course of final arguments, the petitioner/employer ever
urged before the AT this ground of limitation, and the same is now
urged for the first time in this petition under Section 34 of the Act.
11. In my opinion, the argument urged on behalf of the
respondent/contractor is justified that the plea of limitation if not
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under Section 34 of the Act because a petition under Section 34 of
the Act has to challenge the Award on the ground that what the
award decides is violative of the provisions and ingredients
of Section 34 of the Act. Once there is nothing decided in the
Award with respect to the issue of limitation, then how can the
petitioner/employer argue that Award is wrong on the ground of
awarding time barred claims. The Award has not decided this issue
of limitation as this issue was admittedly never raised by the
petitioner/employer in the arbitration proceedings. An issue before
being argued as wrongly decided, has to first be decided on raising
of such a defence, and once there is no decision on the issue of
limitation, as it was not raised by the petitioner/employer, then
how can the petitioner/employer urge that the issue of limitation is
wrongly decided. This argument of the petitioner/employer is
wholly misconceived and is therefore rejected.
12. In view of the aforesaid facts, I do not find that the impugned
Awards in any manner violate any provisions of law or the contract
between the parties, or that the Awards can be said to be in any
manner wholly perverse, for this Court to interfere under Section
34 of the Act.”
140. Similar principles were reiterated by the Hon’ble Supreme
Court in Susaka Pvt. Ltd. (supra), wherein it was observed that a plea
available to a party, whether on facts or in law, must be raised at the
appropriate stage and, if not raised, the party may be precluded from
asserting the same at a later stage on principles analogous to waiver
and procedural fairness. The rationale underlying the principle is self-
evident. Permitting an entirely new contention at a belated stage
deprives the opposite party of the opportunity to meet the case and
causes manifest prejudice which is irreparable and against the settled
principles of law. The relevant portion of the judgment is reproduced
hereinunder:
“27. If a plea is available, whether on facts or law, it has to be
raised by the party at an appropriate stage in accordance with law.
If not raised or/and given up with consent, the party would be
precluded from raising such plea at a later stage of the proceedings
on the principle of waiver. If permitted to raise, it causes prejudice
to other party. In our opinion, this principle applies to this case.”
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141. This Court also finds considerable force in the observations of
the Division Bench of this Court in Delhi Transco Ltd. (supra)
wherein it was held that while a pure question of law requiring no
factual enquiry may in an appropriate case be permitted to be urged at
a later stage, such latitude cannot be extended where adjudication
would necessitate examination of foundational facts. The Court
specifically cautioned that appellate or supervisory jurisdiction under
Sections 34 and 37 of the A&C Act cannot be converted into a forum
for conducting a fresh factual enquiry in the absence of pleadings and
supporting material. That the relevant portion of the judgment is
reproduced hereinunder:
“65. While it is true that a pure legal issue for which no additional
enquiry or proof is required may be raised in proceedings under
Section 37, as held by this Court in Union of India v. Inland World
Logistics Pvt. Ltd.21, it is evident that, in the present case, no such
averments were made in the Section 34 petition, nor were any
supporting details provided. Similarly, the present Section 37
proceedings contain neither specific averments nor any factual or
documentary material to lend even a semblance of support to this
contention.
66. Even assuming, arguendo, that this proposition were to be
examined, a foundational basis would at the very least need to be
established. This Court, in its exercise of jurisdiction under Section
37, cannot engage in a fresh appreciation of the entire matter that
would require delving into the factual gamut. In the considered
opinion of this Court, the present case falls squarely within the
latter category. The objection sought to be urged is not a pure
question of law capable of determination on admitted facts. Rather,
it is a mixed question of law and fact requiring investigation into
matters which were never put in issue before the learned Arbitral
Tribunal and on which no findings exist.”
142. The observations of the Hon‟ble Supreme Court in Municipal
Corporation of Greater Mumbai (supra) are also apposite. The Court
cautioned against permitting parties to keep what it described as a
21
2025 SCC OnLine Del 2735
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“jurisdictional ace” up their sleeve and thereafter seek to deploy it at a
belated stage after having participated in the proceedings without
demur. The principle applies with equal force in the facts of the
present case. A party cannot consciously allow proceedings to proceed
on a particular footing, invite adjudication on merits, and thereafter
seek to introduce an entirely new challenge requiring adjudication on
a mixed question of law and facts for the first time at the stage of final
arguments. The relevant portion of the judgment is reproduced
hereinunder:
“67. … In such a fact situation, no party can be permitted to take
the dispute resolution process, the nominee arbitrators or the
opposite party for a ride. A party cannot keep a „jurisdictional ace‟
up their sleeve and then claim that filing of the jurisdictional
challenge under Section 16 would go back in time and wipe out the
past conduct and acquiescence of the party which would clearly
evince how the contractual terms were viewed by the parties. If the
same is permitted, it will erode the basic principles of alternative
dispute resolution and ethos of arbitration.”
143. This Court is, therefore, of the considered view that the plea
sought to be raised by Supreme Advertising for the first time before
this Court, by way of oral submissions, regarding the limitation of the
counterclaims is not a pure question of law capable of being
determined solely on the basis of the existing record.
144. It is an admitted position that the aforesaid plea was neither
raised before the learned Arbitral Tribunal nor specifically pleaded in
the present Petition under Section 34 of the A&C Act.
145. In these circumstances, permitting Supreme Advertising to raise
the said contention for the first time at the stage of final arguments
would necessarily require this Court to undertake an enquiry into
factual issues, including the determination of foundational facts and, if
necessary, the appreciation of evidence which ought to have been led
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before the learned Arbitral Tribunal. Such an exercise is clearly
impermissible within the limited scope of judicial review under
Section 34 of the A&C Act.
146. Accordingly, the objection raised by Supreme Advertising
regarding limitation of the counterclaims is therefore rejected.
Issue No. 6: Whether the Modified Award Dated 17.05.2014 Amounts
to an Impermissible Review of the Arbitral Award Dated 07.03.2014
or Constitutes a Permissible Correction under Section 33 of the A&C
Act?
147. The challenge to the Modified Award dated 17.05.2014
proceeds on the assumption that the learned Arbitral Tribunal
exercised a power of review which is not available under the A&C
Act.
148. There can be no dispute with the proposition that an arbitral
tribunal does not possess any substantive power of review. Once an
award is rendered, the learned Tribunal becomes functus officio except
to the limited extent preserved under the A&C Act. Section 33 of the
A&C Act constitutes one such statutory exception and permits
correction of computational, clerical, typographical and similar errors
occurring in the award. The controversy, therefore, is whether the
modifications carried out by the learned Arbitral Tribunal fall within
the corrective jurisdiction recognised under Section 33 of the A&C
Act or amount to a reconsideration of the award on the merits.
149. Section 33 of the A&C Act permits correction of computational
errors, clerical errors, typographical mistakes and other errors of a
similar nature occurring in an arbitral award. The provision is
intended to enable rectification of accidental slips and mistakes so that
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the award correctly reflects the adjudication actually rendered by the
learned Tribunal. What is prohibited is a reconsideration of the merits
of the dispute, reassessment of evidence, alteration of findings or
substitution of conclusions already reached.
150. A perusal of the Modified Award dated 17.05.2014
demonstrates that the learned Arbitral Tribunal was fully conscious of
this distinction. The learned Arbitral Tribunal expressly considered
the scope of Section 33 of the A&C Act and examined the objection
raised by Supreme Advertising that the application sought an
impermissible review of the Impugned Award. The learned Arbitral
Tribunal thereafter scrutinised each correction sought by Genus Power
individually. Significantly, the learned Arbitral Tribunal did not allow
every request made by Genus Power. Several proposed modifications
were expressly rejected on the ground that they did not constitute
clerical, typographical or computational errors and would fall outside
the scope of Section 33 of the A&C Act. This approach itself indicates
that the learned Arbitral Tribunal did not proceed as a reviewing
authority but remained confined to the limited corrective jurisdiction
available under the statute.
151. The corrections ultimately allowed by the learned Tribunal
were founded upon errors apparent from the record, including
mistakes in figures, calculations and transcription. The learned
Arbitral Tribunal specifically recorded that certain mistakes had
occurred while transcribing the Arbitral Award dated 07.03.2014 and
that the corrected figures were borne out from the underlying material
already available on record. The exercise undertaken was therefore
one of rectification and not re-adjudication.
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152. Equally significant is the fact that no finding on liability,
entitlement or merits was altered. The learned Arbitral Tribunal did
not revisit its conclusions regarding the parties’ rights and obligations.
The learned Arbitral Tribunal neither revisited the evidence nor re-
evaluated the merits of the controversy. No fresh reasoning was
introduced and no conclusion previously reached was substituted by
another. The modifications were confined to the figures ultimately
reflected in the Arbitral Award dated 07.03.2014 and arose from
discrepancies between the amounts claimed, the calculations recorded
and the amounts inadvertently awarded. A reduction in the amount
awarded, by itself, does not establish that the learned Arbitral Tribunal
reviewed its earlier decision. The determinative test is not whether the
numerical outcome changed, but whether the learned Tribunal
reopened the adjudicatory process. On the material available, no such
reopening is discernible. The exercise was therefore corrective rather
than adjudicatory in nature.
153. This Court is therefore unable to accept Supreme Advertising’s
contention that the learned Arbitral Tribunal exercised a power of
substantive review. The Modified Award dated 17.05.2014 reflects an
exercise of correction expressly contemplated under Section 33 of the
A&C Act and cannot be equated with a rehearing or reconsideration
of the dispute on merits.
154. Viewed thus, this Court finds no merit in the contention that the
learned Arbitral Tribunal exercised a power of review unknown to the
Act. The modifications carried out under the Modified Award dated
17.05.2014 were confined to correction of errors falling within the
ambit of Section 33 of the A&C Act and did not entail any
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reconsideration of the merits of the dispute. The challenge founded
upon alleged review of the Arbitral Award dated 07.03.2014 is
therefore liable to fail.
155. Accordingly, the objection raised as against the Modified
Award dated 17.05.2014 is rejected.
B. O.M.P. (COMM.) 159/2016 [GENUS POWER’S PETITION]
156. The present Petition, instituted by Genus Power, has assailed
the Impugned Award insofar as it relates to the findings of the learned
Arbitral Tribunal concerning the execution of the works, Supreme
Advertising’s entitlement under the final bills, the interpretation of the
MOM/MOU dated 08.10.2006, and the claims allowed in its favour.
157. Genus Power has contended that the learned Arbitral Tribunal
failed to correctly appreciate the contractual framework, the
documentary evidence, and the material on record, resulting in
findings that are contrary to the evidence and liable to be set aside
under Section 34 of the A&C Act.
158. At the outset, it is necessary to note that although the present
Petition was heard along with O.M.P.(COMM.) 115/2016 and arises
out of the same Impugned Award, no independent oral submissions
were advanced on behalf of Genus Power in support of the challenge
during the course of oral hearing.
159. Nevertheless, this Court has independently examined the
pleadings, the grounds urged in the Petition, and the Reply filed by
Supreme Advertising.
160. The principal challenge raised by Genus Power, as discernible
from the grounds set out in the present Petition, pertains to the
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findings of the learned Arbitral Tribunal in relation to the claims
concerning business loss and the Rajasthan Bills. Supreme
Advertising has opposed the Petition by contending that the Impugned
Award, to the extent challenged in the present Petition, is a reasoned
and well-considered Award rendered after a comprehensive
appreciation of the pleadings, the documentary and oral evidence
adduced by the parties, as well as the contractual terms regulating
their rights and obligations.
161. It has further been contended that the grounds urged by Genus
Power seek nothing more than a re-appreciation of facts, evidence,
and contractual interpretation, which falls outside the limited scope of
judicial interference under Section 34 of the A&C Act. According to
Supreme Advertising, the findings recorded by the learned Arbitral
Tribunal are based on a plausible and reasonable appreciation of the
material on record and, therefore, do not warrant interference.
162. Having considered the pleadings of the parties, the rival
contentions, the material placed before the learned Arbitral Tribunal,
and the Impugned Award, this Court is of the considered opinion that
the present Petition does not disclose any ground warranting
interference under Section 34 of the A&C Act.
163. The objections raised by Genus Power essentially assail the
learned Arbitral Tribunal’s appreciation of evidence, interpretation of
the contractual documents, and findings on facts. As already
discussed, while adjudicating O.M.P.(COMM.) 115/2016, the
jurisdiction of this Court under Section 34 of the A&C Act is
supervisory and not appellate. This Court cannot undertake a fresh
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evaluation of the evidence or substitute its own interpretation merely
because another view is possible.
164. This Court has, while deciding the connected Petition, already
undertaken a detailed examination of the contractual documents, the
evidence led by the parties, and the reasoning adopted by the learned
Arbitral Tribunal. The findings recorded therein equally govern the
issues raised in the present Petition. The Impugned Award neither
suffers from patent illegality nor discloses any perversity,
jurisdictional error, or violation of the fundamental policy of Indian
law so as to justify interference under Section 34 of the A&C Act. No
independent ground has been demonstrated by Genus Power in its
Petition that merits a different conclusion.
165. Accordingly, this Court is of the considered opinion that the
present Petition is devoid of merit and is, therefore, liable to be
dismissed.
CONCLUSIONS ON BOTH PETITIONS:
(a) In O.M.P. (COMM.) 115/2016
166. Having examined each of the challenges raised by Supreme
Advertising in the light of the limited scope of interference available
under Section 34 of the A&C Act, this Court finds no merit in the
objections urged against the Impugned Award.
167. Insofar as the challenge to the constitution of the learned
Arbitral Tribunal is concerned, this Court has already held that the
objection was never raised before the learned Arbitral Tribunal in
accordance with law and, therefore, cannot be permitted to be urged at
this belated stage.
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168. The challenge to the findings returned under Issue No. 13
[Counterclaim No. 1] has also been found to be devoid of merit. The
findings returned by the learned Arbitral Tribunal are based upon
appreciation of the material placed on record and cannot be
characterised as perverse, unsupported by evidence or suffering from
patent illegality warranting interference under Section 34 of the A&C
Act.
169. Similarly, the objections directed against the findings under
Issue Nos. 14, 14(i) and 14(ii) [Counterclaim No. 2] do not disclose
any ground falling within the limited contours of Section 34 of the
A&C Act. The view adopted by the learned Arbitral Tribunal is a
plausible view arising from the material available on record and does
not call for interference.
170. The challenge to the findings returned under Issue No. 9
[Counterclaim No. 3] has also been found to be unsustainable. The
findings returned by the learned Arbitral Tribunal cannot be said to
suffer from perversity, patent illegality or any infirmity going to the
root of the matter.
171. Insofar as the contention regarding limitation of the
counterclaims is concerned, this Court has already held that the said
plea was neither raised before the learned Arbitral Tribunal nor forms
part of the pleadings in the present Petition. The same, being a mixed
question of law and fact, cannot be permitted to be raised for the first
time during oral submissions in proceedings under Section 34 of the
A&C Act.
172. This Court had further found no merit in the challenge to the
Modified Award dated 17.05.2014. The corrections carried out by the
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learned Arbitral Tribunal fall squarely within the ambit of Section 33
of the A&C Act and do not amount to an impermissible modification
of the Arbitral Award dated 07.03.2014.
173. Consequently, no ground is made out for interference with
either the Arbitral Award dated 07.03.2014 or the Modified Award
dated 17.05.2014 under Section 34 of the A&C Act. Accordingly,
O.M.P. (COMM.) 115/2016 is dismissed.
174. Pending Application(s), if any, shall also stand disposed of
accordingly.
175. No Order as to costs.
(b) O.M.P. (COMM.) 159/2016
176. This Court finds that Genus Power has failed to make out any
ground warranting interference under Section 34 of the A&C Act.
Accordingly, O.M.P. (COMM.) 159/2016 is dismissed.
177. Pending Application(s), if any, shall also stand disposed of.
178. No Order as to costs.
HARISH VAIDYANATHAN SHANKAR, J.
JULY 13, 2026/ma
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