Delhi High Court
Container Corporation Of India Limited vs M/S Watrana Traction Company on 21 August, 2025
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: 31.07.2025
Judgment delivered on: 21.08.2025
+ FAO(OS)(COMM) 64/2022 & CM APPL. 13418/2022 (for
stay)
CONTAINER CORPORATION OF INDIA LIMITED
.....Appellant
Through: Mr. Sudhir Nandrajog, Sr. Adv.
with Mr. Rishi Awasthi & Mr.
Avinash Ankit, Advocates.
versus
M/S WATRANA TRACTION COMPANY .....Respondent
Through: Mr. Manish Vashisth Sr. Adv.
with Mr. Sanjeev Kumar & Mr.
Pankaj Kashyap, Advocates.
CORAM:
HON'BLE MR. JUSTICE ANIL KSHETARPAL
HON'BLE MR. JUSTICE HARISH VAIDYANATHAN
SHANKAR
JUDGEMENT
HARISH VAIDYANATHAN SHANKAR J.
1. The present Appeal, filed under Section 37(1)(b) of the
Arbitration & Conciliation Act, 19961 read with Section 13 of the
Commercial Courts Act, 2015, challenges the Judgment dated
17.01.2022 2 passed by the learned Single Judge of this Court in
O.M.P.(COMM) No. 182/2021, as well as the Arbitral Award dated
20.01.2021 3 . By the Impugned Judgment, the learned Single Judge
1
A&C Act
2
Impugned Judgment
3
Award
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 1 of 47
Signing Date:22.08.2025
18:20:07
upheld the Award, which had been rendered by a sole Arbitrator.
BRIEF FACTS:
2. The Appellant issued a Notice Inviting Tender for providing
Mechanized Cargo Handling and Inventory Management Services at
Inland Container Depots. The Respondent submitted an online bid,
was declared the successful bidder, and was issued a Letter of Intent
dated 11.09.20174.
3. A Contract dated 18.09.20175 was thereafter executed, under
which the Respondent undertook to provide the services for a period
of four years, with an option for extension by one year.
4. In compliance with the LOI, the Respondent furnished a Bank
Guarantee6 of Rs. 25,00,000/-.
5. The records indicate that the Respondent could not deploy
certain machinery as agreed, resulting in the imposition of a penalty
by the Appellant.
6. The Respondent vide letter dated 21.04.2018 sought a waiver of
the penalty, citing ongoing losses incurred in performing the
obligations under the Contract. This was followed by a further letter
dated 15.05.2018, wherein the Respondent reiterated its request for a
waiver of the penalty and raised concerns regarding its financial
position. Specifically, the Respondent stated that its billing for the
month of April was lower than its fixed expenses, and further
requested permission to remove certain resources to alleviate its
financial burden until such time as the volumes of containers
stabilized.
4
LOI
5
Contract
6
BG
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 2 of 47
Signing Date:22.08.2025
18:20:07
7. A subsequent letter dated 14.06.2018 was sent by the
Respondent, reiterating its grievance regarding the low volumes of
containers, which had rendered it unsustainable for them to continue.
The Respondent specifically raised the issue that the billable amounts
for imports had decreased to 40% of the projected volume and made a
specific request that the Container Cargo Logistics System7 data for
all import containers, including Green Channels/RMS containers, be
considered for billing purposes. An ancillary issue concerning the
refund of penalties, based on the prevailing business, was also raised
therein.
8. It appears that the issues raised by the Respondent remained
unresolved.
9. By its letter dated 26.07.2018, the Respondent informed the
Appellant that, in response to the Tender, it had quoted an amount of
Rs. 3,53,83,628/-, which was approximately 2.14% lower than the
estimated value, based on the data provided in the tender documents.
The Respondent stated that the existing contract had become unviable
due to heavy losses, as modifications in the CCLS software had
drastically reduced import volumes, causing a significant deviation
from the estimated billing. It explained that the quoted rates were
highly competitive and given on the assurance of increased business
volumes; however, its billing over nine months and twelve days had
reached only about 60% of the projected contract value. Accordingly,
the Respondent sought either an upward revision of the per-unit rates
or suitable compensation for the shortfall, so that it could continue
rendering services satisfactorily.
7
CCLS
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 3 of 47
Signing Date:22.08.2025
18:20:07
10. In the same communication, in the alternative, the Respondent
requested permission to exit the contract within three months. It
further stated that if neither revision nor termination was agreed, an
independent sole arbitrator should be appointed under Clause 20 of the
Contract to resolve the disputes. Meanwhile, the Respondent assured
that it would not suspend operations and would continue providing
services for three months to facilitate the appointment of a new
contractor.
11. Pursuant to this, the Respondent sent another request dated
07.09.2018 on similar lines.
12. The Appellant, by its Communication dated 13.09.2018 in
response to the Respondent‟s letter(s), while accepting the
Respondent‟s request for termination, however, called upon the
Respondent to continue under the Contract until 25.10.2018 or until
the finalization of a new Contract, whichever was earlier. It was also
communicated that, failure to do so would result in the Respondent‟s
BG being forfeited and the Respondent being debarred from
participating in the next tender.
13. In response to the said letter, the Respondent, vide letter dated
14.09.2018, requested the Appellant to appoint a Sole Arbitrator in
accordance with Clause 20 of the Contract.
14. The Appellant, however, sent another letter dated 17.10.2018,
modifying its earlier letter dated 13.09.2018, calling upon the
Respondent to continue under the Contract until finalization of the
new Contract.
15. The Respondent sent a reminder on 20.10.2018 and again by
letter dated 01.11.2018 reiterated its request for appointment of an
Arbitrator, indicating that failing such appointment, it would approach
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 4 of 47
Signing Date:22.08.2025
18:20:07
the High Court for the appointment of an Arbitrator.
16. The Appellant vide letter dated 16.11.2018 responded by
referring to the arbitration clause and stated that the schedule of
quantities set forth in Annexure-I of the Contract were merely
approximations of the expected volumes and there was no dispute that
could be referred to arbitration.
17. The Appellant, thereafter, approached the Delhi International
Arbitration Centre for the appointment of a Sole Arbitrator. The
learned Arbitrator, after entering upon reference and considering the
pleadings, evidence and submissions of both parties, rendered its
Award on 20.01.2021. The relevant portion of the said award is
produced herein below:-
“Point No. (i) & (iv)
(i) Whether the Claimant is entitled for a sum of
Rs.2,08,94,299.7/- against the losses suffered by the Claimant due
to the alleged change of tender conditions? OPC;
(iv) Whether the Claimant is entitled to the amounts as stated in
points 1 to 3 in view of the clauses 1.1 and 1.2 of Chapter III of
the Tender Documents? Onus on Parties.
43. Since both these points are interlinked and interconnected,
the same are being taken together for discussion.
44. The prime contention in respect of loss of business raised
by the Claimant is that there was a change in the billing pattern on
account of a change in CCLS software which amounted to a
change in the tender conditions. It is the case of the Claimant that
despite full cooperation by the Claimant even beyond the
contractual obligations, there was no response from the
Respondent to address the genuine grievances raised by them. The
LOI dated 11.09.2017 and Clause 8 of Chapter II of the Tender
Documents provided that the Claimant should commence the work
within 30 days from the date of LOI. The Claimant has urged that
mobilizing the manpower and machinery within the span of 30
days was itself challenging, however, the Claimant was forced by
the Respondent to commence the work within 7 days of the LOI.
Procurement of the supplies and mobilizing them to the contractual
site within a short period made the Claimant suffer huge losses.
Despite the Claimant’s cooperation, the Respondent levied the
penalty of Rs.1,49,000/- for the delay in the work. The Claimant,
vide letters dated 20.04.2018 and 15.05.2018, requested the
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 5 of 47
Signing Date:22.08.2025
18:20:07
Respondent to waive such penalty as the Claimant was already
performing the Contract under losses and had deployed extra
equipment for smooth running of operations.
45. The Claimant referred to Clauses 3 and 4 of Chapter IV of
the Tender Documents and contended that the terms and
conditions of the Contract were vague and one-sided. It is urged
that the language of Clause 3 is vague as it states that in case of
any change in volume or any insufficient work, the Claimant shall
not be eligible for any compensation. For instance, Clause 3 does
not mention any particular volume, it gives a blanket ambit to the
Respondent to escape the liability. Similarly, under Clause 4, it
was only the Respondent who was entitled to terminate the
Contract with a 7 days’ notice period. The Claimant has placed
reliance on these clauses to show the biasness of the terms of the
Contract.
46. The Claimant submits that the Contract should be read in
entirety, i.e., inclusive of all Tender Documents and Annexures.
Referring to the estimated cost i.e., Rs.3,61,59,917/- per annum,
the Claimant submits that the estimated cost is the maximum cost,
which the Respondent has to levy yearly. The same estimation was
considered as a basis by the Claimant to calculate all its costs
including profits i.e., Rs.3,53,81,782/- per annum. The tally of the
Claimant’s computation can be drawn from the inventory of work,
marked and annexed as Annexure- I to the Tender Documents.
47. The Claimant has urged that the quantities listed in the
Annexures are used as a basis for deciding the financial bid. The
Respondent was liable to provide the stipulated volume to the
Claimant for covering their costs. Clause 6 of Chapter II of the
Tender Documents further confirms the fact by stating that the
tender rate should be in parity with the schedule of rates
(Annexure I). Thus, it is urged that it is wrong on the part of the
Respondent to argue that the Respondent has no liability in
providing specified business to the Claimant.
48. Conversely, the Respondent referred to Sub Clauses 1.1
and 1.2 of Clause 1, Chapter III of the Tender Documents. As per
theseclauses, the scope of the work is subject to variation and
adjustments depending on the pattern and volume of work.
Additionally, the terms related to rates, general conditions, or any
alteration cannot be the matter of dispute and in case it requires
any interpretation or assistance, the same can be sought from the
Tender Accepting Authority of the Respondent. The Respondent
submits that these were the express conditions of the Contract,
which must be adhered to.
49. According to the Respondent, it was the duty of the
Claimant to assess the business potential before submitting the bid
under the initial tender. Instead of making an actual assessment,
the Claimant simply made a vague assumption based on the
Respondent’s estimation of the business from the Tender
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 6 of 47
Signing Date:22.08.2025
18:20:07
Documents. Moreover, the estimation of work volume was not a
guarantee, rather it was an estimation based on the prior
experience of the Respondent. It worked well for the first 8 months
of the Contract. Post March 2018, there was a drop in the volume
of business for which the Respondent could not be blamed.
50. The Respondent further argued that when the 305/507
Contract are express, the Tribunal cannot find theconstruction of
the Contract on implied terms. In support of their contention,
reliance is placed on FCI v. Chandu Construction, (2007) 4 SCC
697, State of Rajasthan v. Nav Bharat Construction Co., (2006) 1
SCC 86 and Vidarbha Irrigation Development v. M/S Anoj
Kumar Agarwala, 2019 SCC OnLine SC 89.
51. In FCI (supra), the Hon’ble Supreme Court held that the
Arbitrator is the creature of the contract and is bound to operate
within the ambit of the contract. The relevant paras are extracted
herein below:
“11. It is trite to say that the arbitrator being a creature of
the agreement between the parties, he has to operate
within the four corners of the agreement and if he ignores
the specific terms of the contract, it would be a question of
jurisdictional error on the face of the award, falling within
the ambit of legal misconduct which could be corrected by
the Court. We may, however, hasten to add that if the
arbitrator commits an error in the construction of
contract, that is an error within his jurisdiction. But, if he
wanders outside the contract and deals with matters not
allotted to him, he commits a jurisdictional error (see:
Associated Engineering Co. Vs. Government of Andhra
Pradesh and Anr. and Rajasthan State Mines & Minerals
Ltd. Vs. Eastern Engineering Enterprises & Anr.).
xxxxx xxxxx xxxxx
15. Therefore, it needs little emphasis that an arbitrator
derives his authority from the contract and if he acts in
disregard of the contract, he acts without jurisdiction. A
deliberate departure from contract amounts to not only
manifest disregard of his authority or a misconduct on his
part, but it may tantamount to a mala fide action [Also
see: Associated Engineering Co. Vs. Government of
Andhra Pradesh &Anr. (supra)] “
52. In Nav Bharat Construction (supra), the Hon’ble Supreme
Court held that an Arbitrator needs to adjudicate the dispute
within the four walls of the contract. In the name of justice, the
Tribunal cannot deliver an Award contrary to the contract. If it
does so, the same is liable to be set aside. The relevant paragraphs
are reproduced below:
“25. In the same manner, Mr. Mohta took us through a
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 7 of 47
Signing Date:22.08.2025
18:20:07
large number of other claims to show that they were
contrary to the terms of the Contract. As stated above it is
not necessary, for the purposes of this Judgment, to set out
in detail the submission of Mr. Mohta in respect of other
claims referred to by him.
xxxxx xxxxx xxxxx
27. There can be no dispute to the well-established
principle set out in these cases. However, these cases do
not detract from the law laid down in Bharat Coking Coal
Ltd‘s case or Continental Construction Co. Ltd‘s case
(supra). An arbitrator cannot go beyond the terms of the
contract between the parties. In the guise of doing justice
he cannot award contrary to the terms of the contract. If
he does so…”
53. Similarly, in the later decision of the Hon’ble Supreme
Court in Vidarbha Irrigation (supra), it was stated as follows:
“15) The law on the subject is well settled. In Bakshi
Security and Personnel Services Put. Ltd. Vs. Devkishan
Computed Put. Ltd. And Ors., (2016) 8 SCC 446, this
Court held:
“14. The law is settled that an essential condition of a
tender has to be strictly complied with….
xxxxx xxxxx xxxxx
17) It is clear even on a reading of this judgment that the
words used in the tender document cannot be ignored or
treated as redundant or superfluous – they must be given
meaning and their necessary significance.”
The Respondent in this background submits that the parties are
bound by the specific terms of the Contract and the same cannot be
given a go-by by either of the parties or by the Arbitral Tribunal.
54. There is no dispute about the fact that in Sub Clauses 1.1
and 1.2 of Clause 1, Chapter III of the Tender Documents, it was
specifically provided that the Contract is subject to variation and
the work under this Contract cannot form a basis of the dispute.
The relevant clause regarding the scope of work is reproduced as
under:
“1. SCOPE OF WORK
1.1 The scope of work indicated in the paras below is only
a guide. The actual requirements are subject to variations/
adjustments depending on the pattern and volume of
traffic.
1.2 The scope of work described in this chapter shall not
be a basis for any dispute with regard to rates or for
alteration of terms and conditions including General
Conditions. Doubts, if any, about the interpretation of any
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 8 of 47
Signing Date:22.08.2025
18:20:07
of the clauses in this chapter shall be referred to the
Tender Accepting Authority of Container Corporation of
India Ltd. whose decision in the matter shall be final and
acceptable to the tenderer I contractor.”
55. Further, it is well settled that the Tribunal cannot ignore
the terms of the Contract. The question for consideration is
whether the terms of the Contract have been changed unilaterally
in a manner that has placed the Claimant at a disadvantageous
position during the currency of the Contract. To address this issue,
it is important to analyse the letters exchanged between the parties
and also the cross-examination of the witnesses.
56. At this point, the Claimant referred to Question Nos. 13 and
14 dealing with the estimated cost in the cross-examination of the
Respondent’s witness, RW-1 Ms. Kiran Sharma. The said questions
are reproduced hereunder:
“Q.13 How do you prepare the estimated minimum value of work?
Ans. As per my knowledge, volume is based on the last year
volume. Volume is always anticipated.
Q.14 Is it correct that cost of the contract is finalised on the basis
of the estimated minimum value of work which is mentioned as
Annexure I in the present contract?
Ans. Cost of the contract is based on estimated volume of work.”
57. As mentioned by the RW-1 Ms. Kiran Sharma, the minimum
value of work has been decided based on the past year’s volume.
This is the general practice under a similar type of tender and the
Respondent has been following the same practice as well. It is
difficult to evaluate the actual volume and cost even before running
the Contract, thereby, estimated volume and costs are provided in
the Contract for the Contractor to make an informed choice. Even
these estimations are based on certain parameters to give a
relevant indication of work under the Contract. Generally,
previous tenders and past year activities are considered. Thus, the
Respondent’s declaration of the estimated volume and cost cannot
be treated as valueless since the Contractor/tenderer acts upon the
same to make the bid.
58. The Claimant explained the trajectory of change in
business that led to their losses. In April 2013, the Customs
Department issued a fresh guideline for cutting the seal of specific
containers subject to inspection. But dehors the guidelines for
cutting the seal of specific containers, all the containers since April
2013 and even after the instant Contract came into force and up to
April 2018, the Respondent was paying for all the containers
passing through the Green Channel irrespective of the seal cutting.
However, in April 2018, pursuant to the change in the CCLS
software, the Respondent started paying the Claimant for only
those containers whose seals were opened while still charging all
its customers on all the containers. The same is evident from the
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 9 of 47
Signing Date:22.08.2025
18:20:07
cross-examination of the Respondent’s witness, wherein the
following was stated:
“Q.21 Is it correct that the Respondent is still charging directly
from the customer for the containers passing through green
channel?
Ans. It is correct.”
Although for the customers, the charges for seal cutting were very
nominal, however, it made a huge difference overall in the
Claimant’s collection as they were charging Rs. 70.90 for 20ft.
container and Rs.192.10 for a 40ft. container, as per the Contract
between the parties. Additionally, about 40-45% of the import
business was derived from the seal cutting of the containers. Thus,
making alterations to the mode of payment in respect of import
containers largely affected the Claimant’s billing.
59. It is evident from the answers given to Question Nos. 13 &
14 hereinbefore by RW-1 Ms. Kiran Sharma that the cost of the
tender is finalized based on the estimated minimum value of work.
Although, it is only an estimate, however, there is a categorical
admission by RW-1 that the ‘estimate’ is based on the minimum
value of work. This raises the question as to how the estimate went
wrong and why even in the subsequent tender, the value of the
import containers was less by almost 40% from the previous
tender. Is change in CCLS Software, a mere coincidence or an
intentional act of the Respondent and thereby hiding the containers
passing through the Green Channel on which the cutting charges
were being paid not only since 2013 (when the Green Channel was
introduced) but even in the instant Contract awarded to the
Claimant up to April 2018.
60. Even if the Respondent’s representation during the pre-bid
meeting being not part of the minutes of the meeting, is ignored,
still there is overwhelming material on record to show that the
change in CCLS software by the Respondent amounted to change
in the tender conditions as this drastically reduced the number of
the containers passing through the Green Channel that is
accounted for the invoice. At this juncture, I would like to refer to
the letters written by the Claimant to the Respondent during the
currency of the Contract.
61. The first of such letter is dated 20.04.2018 whereby the
Claimant informed the Respondent about a change in the tender
conditions and putting additional work on the Claimant. Then
again by letter dated 15.05.2018, the Claimant made a complaint
of change in the tender conditions. The relevant portions of the
letter dated 15,05.2018 are reproduced herein below:
“1. It is submitted that we had apprised you about the
business condition vide following letters and your
instructions are awaited:
a) Change in Tender/ Business conditions/lower
Volume for Mechanized Cargo Handling &
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 10 of 47
Signing Date:22.08.2025
18:20:07
Inventory Management at ICD/TKD dated 20
April 2018 (copy enclosed)
b) Waiver of Penalty for Non-Deployment of
Equipments (18 T Hydra & 10 T Forklift)
dated 21 April 2018′ ‘(copy enclosed)
c) Condonation of Time for Deployment of
equipment as per terms and conditions under
the contract for mechanized cargo handling
and inventory management at ICD/TKO dated
01 November 2017 (copy enclosed)
2. The volume of business has really gone down as
compare to tender conditions and hence we are facing
huge losses as the situation is well known to your good
organization. The billing income of April is far less than
the fixed expenses of ours.
3. We have proved our commitment and carrying out our
duties with utmost dedication ……..”
62. This was followed by letter dated 14.06.2018, wherein the
Claimant again made a grievance about the change in tender
conditions leading to very low volume in the import section. The
relevant section of the letter dated 14.06.2018 is reproduced
below:
“Dear Sir
This is with reference to our meeting in your good office
and also our earlier letters dated 20th April, 21st April
and 15th May 2018 refers (Copies Enclosed). We are
running the business at huge losses and will not be able to
pay the salary to our workers in coming months in view of
(sic) following reasons: –
a) Volume very low in import section leading to
low billing thereby not able to sustain fixed
cost of the project.
b) Earlier Billing used to be on all containers for
seal cutting at least at a very nominal rate of
Rs. 170.90 for 20’ft containers and Rs. 192.10
for 40′ ft containers but now the same is not
happening because of change in tender
conditions, such as now few of the Import
containers are cleared through Green
Channel/ RMS Route.
c) We have quoted our rates with respect to your
volume projections in the tender. We can
understand the fluctuation of plus minus 20%
but presently, the import billable amount has
gone down to approx. 40% of projected
volume.
d) Till date total penalty paid to Concor is Rs.
343195/- (Three Lakhs Forty-three thousand
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 11 of 47
Signing Date:22.08.2025
18:20:07
one hundred ninety- five) for no serious fault
of ours.
It may be noted that we are maintaining a fleet of 25
MHE’s and approx. 125 workers. Our fixed cost of this
project is Rs. 22,50,000/- (Rupees Twenty-two Lakhs fifty
thousand only).
As we are doing this business at very low rate, the
following may be considered on compassionate grounds:
a) The CCLS data of Import Container may be
fully considered for billing including Green
Channel/ RMS Containers.
b) Our penalty amount may be refunded to us
knowing the poor business conditions.
(emphasis supplied)
63. The Claimant has urged that the time-period from the
month of October to January is normally a lean period in respect
of import business, still, the Claimant had fairly good volume. The
Claimant also attached month-wise volume of business since the
inception of the Contract up to April 2018, to highlight that the
volume of the business had substantially fallen in April 2018. The
Claimant put forth the letter dated 26.07.2018, wherein the
Claimant again stated about the change in the CCLS software
without taking into consideration the trade that has affected the
Claimant’s billing. The relevant portion of the letter reads as
under: –
“Further the volume had gone down drastically and
CONCOR had also implemented few changes in the CCLS
software without taking into consideration of trade
which has affected our billing and we had to face huge
losses. As we are not even getting the billing as projected,
it is humbly requested to please review the upward
revision of Rate per unit or the loss shall be compensated
by CONCOR based on the estimated value of the contract
for sustaining & providing satisfactory services to your
valuable customers which will help to increase the
prospective volume in future.
Due to the reasons explained above, it is leading us as to
the unsustainable status and the present situation is
forcing us to discontinue our services unless the Rate per
Unit is escalated and Manpower & machine are reduced.
Being bound by the Contract terms & conditions several
requests had been made on various occasions for
improving the conditions.
Further this is also to inform you that till 30th Jun, 2618,
our basic billing without: GST is Rs. 1,82,09,672/- for the
period of 9 months and 12 days, which is only 60% of
estimated value of the contract if it is taken on annual
basis and this loss to us is mainly due to changes in tender
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 12 of 47
Signing Date:22.08.2025
18:20:07
conditions (deviation in billing in CCLS) w.e.f. April 2018
i.e. 6 months after executing the tender.
We had trusted the tender document as it was being
prepared by your expert officials and approved by
Competent Authority and we had quoted accordingly, and,
in such circumstances, we are rendering the services by
tweaking/ cutting corners for the expenses and doing the
business at a loss of 40%.”
64. The Respondent in their first response by letter dated
13.09.2018 never refuted any specific averment concerning the
change in business conditions through changes in the CCLS
software. In RW-1 Ms. Kiran Sharma’s cross-examination, it was
admitted that the Respondent never took the responsibility of
making the Claimant aware of the new billing system. At this stage,
it would be expedient to refer to Question No. 20 of her cross-
examination:
“Q.20 Can you show any document or notice on record of the
Arbitral Tribunal that the Respondent has informed the Claimant
about the introduction of new system of billing from April, 2018?
Ans. There is no such document. ”
65. In view of the non-refutation of the Claimant’s averments
regarding the change in the tender conditions by upgrading the
CCLS software contemporaneous to the raising of the dispute in
the aforesaid letters, the averments in the Statement of Defense
after a lapse of two years can only be treated as an after-thought.
66. The Respondent’s deliberate avoidance regarding changes
in the CCLS software is apparent from the Respondent’s solitary
witness’s cross-examination, wherein contrary to her affidavit
(where RW-1 had specifically talked about the updated CCLS
software concerning the procedure of clearance through the Green
Channel), she stated that she was unaware of the changes in the
CCLS software. It would be appropriate to reproduce the relevant
portion of cross-examination of this witness as under:
“Q.17 Is it correct that after March, 2018 the Claimant was denied
payment for the seal cutting of the import container which was to
pass through green channel?
Ans. I have not seen the payment terms of seal cutting of the import
containers.
Q.18 I put it to you that a new billing system was introduced in
April, 2018 without any prior notice to the Claimant wherein the
Respondent stopped paying the Claimant for seal cutting of the
import container which was to pass through green channel. What
do you have to say?
Ans. I have no idea about this.
The attention of the witness was drawn to para 13 of her affidavit
in evidence to find out as to when the new billing system was
introduced.
Q.19 You have mentioned procedure of clearance of RMS/green
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 13 of 47
Signing Date:22.08.2025
18:20:07
channel containers in para 13 of your affidavit. When this system
was introduced in TKD?
Ans. I have not seen the customs notification and therefore cannot
tell about the same.
xxxxx xxxxx xxxxx
Q.21 Is it correct that the Respondent is still charging directly from
the customer for the containers passing through green channel?
Ans. It is correct.
Q.22 Is it correct that 65 to 70% of the volume of work at TKD of
the contractor is from the import containers?
Ans. The volume of work of the contractor is both from import and
export of containers. I can neither admit nor deny that 65 to 70%
of the volume of work is from the import containers. Import
business is more than the export business.
Q.23 Do you have any idea what was the percentage of the import
containers passed (sic passing) through the green channel during
the currency of the contract with the Claimant?
Ans. I do not have any idea.
Q.24 I put it to you that the volume of work from the import
business of the Claimant has gone down 40. to 45% after April,
2018. What do you have to say?
Ans. I cannot say about the same.
xxxxx xxxxx xxxxx
Q.38 I put it to you that due to the change in the tender condition
by introducing a new system of billing the Claimant suffered heavy
losses. What do you have to say?
Ans. I am not aware.
Thus, from the contemporaneous non-refutation of the Claimant’s
letters regarding the change in the tender conditions coupled with
the clear admission and at some places ignorance of RW-1 Ms.
Kiran Sharma amply proves that there was change in the tender
conditions by changing the billing pattern due to the changes
effected in CCLS software. Thus, the judgments in Chandu
Construction, Nav Bharat Construction Co., and Vidarbha
Irrigation Development would not come to the Respondent’s
rescue because it is amply proved that the tender conditions were
impliedly changed by the Respondent.
67. This is further fortified from the fact that the Claimant was
persuaded, rather forced to continue with the Contract on the
threat of invocation of Bank Guarantee, blacklisting and debarring
them from participation in future tenders, although the subsequent
tender even after being published had to be scrapped. All the more,
the tenderer who was awarded the Contract in September 2019
was with 39% less volume in respect of import containers which
exactly is the case of the Claimant. Thus, it appears that at the time
of inviting the bid for the instant tender the Respondent themselves
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 14 of 47
Signing Date:22.08.2025
18:20:07
were not aware that they were going to change the billing pattern
by making changes in the CCLS software. Otherwise, a tenderer
estimation can never go haywire to the extent of almost 40%.
Consequently, since the terms of the contract or tender conditions
were changed, Sub Clauses 1.1 and 1.2 of Clause 1, Chapter III of
the Tender Documents would not stand in the way of the Claimant
in claiming the amount based on the estimated volume of the
business as projected in the Tender Documents. I, therefore, hold
that the Claimant is entitled to be paid the sum of Rs.2,08,94,299/-
on account of the loss of revenue/loss suffered by the Claimant due
to change in the tender conditions. Points (i) and (iv) are decided
accordingly.
Point No. (ii)
Whether the Claimant is entitled for a sum of Rs.25,00,000/-
submitted as bank guarantee en-cashed by the Respondent
arbitrarily and illegally? OPC
68. Vide my findings on points (i) and (iv) above, it is evident
that it was the Respondent who was responsible for the change in
the billing system which amounted to a change in the tender
conditions. Consequently, there was no breach of the Contract on
the part of the Claimant. Rather, the Claimant requested to exit
from the Contract on account of a change in the tender conditions.
As stated hereinbefore, the Claimant since April 2018 made
various representations to the Respondent pointing out the changes
in the CCLS software affecting the Claimant’s billing. But the
Respondent neither refuted the Claimant’s averments by giving any
reply to the various letters referred to hereinabove nor addressed
the issue. The Claimant continued to perform their obligation
under the Contract despite suffering losses. So much so, that
although the Respondent had initially informed the Claimant that
the Contract would be over either on 25.10.2018 or on finalization
of the new Contract, whichever was earlier yet subsequently by
letter dated 17.10.2018, the Claimant was asked to continue the
work till the new Contractor was awarded the work (not even
specifying the date) to which the Claimant duly complied. The
Claimant was not only issued a Satisfaction Certificate dated
25.06.2019 but was also permitted to participate in the subsequent
tender. Thus, the Respondent was not entitled to invoke the Bank
Guarantee. The invocation of the Bank Guarantee in the said
circumstances was arbitrary and illegal.
69. Admittedly, the Respondent has neither pleaded nor led any
evidence to prove that they had suffered any loss on account of the
Claimant exiting the Contract before completion of the full term of
four years. All the more, once the Claimant continued to work till
the next Contractor was appointed and in the absence of any loss
proved by the Respondent due to Claimant’s earlier exit from the
Contract, the Respondent was neither entitled to invoke nor
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 15 of 47
Signing Date:22.08.2025
18:20:07
appropriate the amount of the Bank Guarantee. In this connection,
a reference may be made to the State of Gujarat v. Kothari and
Associates, (2016) 14 SCC 761, wherein the Hon’ble Supreme
Court took a view that the demeanor of the respondent by
extending the work tenure for the Appellant suggested two things,
either there has been no breach as the Respondent kept on
awarding work to the Appellant; or, even if the Respondent
assumes any breach, the act of continuing with the extension to the
Appellant suggested that the Respondent has given up on such
breach and the pressing of the breach has to be immediate in
nature. The relevant paragraphs are reproduced below:
“11. It also appears to us that the contract was clearly not
broken as the respondents chose to keep it alive despite its
repeated breaches by the appellant State…
xxxxx xxxxx xxxxx
12. The respondent, however, could prima facie be
presumed to have accepted a renewal or extension in the
period of performance but with the rider that the claim for
damages had been abandoned by it. If this assumption was
not to be made against the respondent, it would
reasonably be expected that the respondent should have
filed a suit for damages on each of these occasions. In a
sense, a fresh contract would be deemed to have been
entered into between the parties on the grant of each of
the extensions. It is, therefore, not legally possible for the
respondent to contend that there was a continuous breach
which could have been litigated upon when the contract
was finally concluded. In other words, contemporaneous
with the extensions granted, it was essential for the
respondent to have initiated legal action. Since this was
not done, there would be a reasonable presumption that
the claim for damages had been abandoned and given a
go-by by the respondent.”
The Hon’ble Supreme Court explained that for every breach, there
has to be an immediate legal action i.e., discontinuing the
commercial relation. Similarly, in this case despite the termination
sought by the Claimant, the Respondent kept moving ahead with
the Contract. The reasonable presumption reflects that either the
request of termination did not construe as a breach or the
Respondent has abandoned their claim of the breach.
70. Similarly, in the case of Kanchan Udyog Ltd. v. United
Spirits Ltd., (2017) 8 SCC 237, the Hon’ble Supreme Court
observed that there is a demarcation between expecting a loss and
suffering a loss. A mere allegation of loss would not suffice; there
has be to a link between the cause and the loss. The onus is on the
party to prove that a breach from one party leads to the infliction
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 16 of 47
Signing Date:22.08.2025
18:20:07
of loss on the other. The relevant portions of the report are
extracted below:
“26. In the facts of the present case, it cannot be held that
the breach alone was the cause for loss of anticipated
profits, much less was it the primary or dominant
reason….. In the facts of the present case, it cannot be held
that the breach by the respondent was the cause, much
less the dominant cause for loss of anticipated profits by
the appellant.
27. In Galoo Ltd. [Galoo Ltd. v. Bright Grahame Murray,
(1994) 1 WLR 1360 (CA)] the emphasis was on the
common-sense approach, holding that the breach may
have given the opportunity to incur the loss but did not
cause the loss, in the sense in which the word “cause” is
used in the law. The following passage extracted therein
from Chitty on Contracts, 26th Edn. (1989) Vol. 2, pp.
1128-29. Para 1785 may be usefully set out: (WLR p. 1370
A-B)
“… The important issue in remoteness of
damage in the law of contract is whether a
particular loss was within the reasonable
contemplation of the parties, but causation
must also be proved: there must be a causal
connection between the defendant’s breach of
contract and the plaintiff’s loss. The courts
have avoided laying down any formal tests for
causation: they have relied on common sense
to guide decisions as to whether a breach of
contract is a sufficiently substantial cause of
the plaintiff’s loss.”
(emphasis supplied)
Applying the same causation test borne out of the standards of
reasonability to the facts of the present case, the onus was on the
Respondent to substantiate their claim with sufficient evidence,
which would help the Tribunal to draw a nexus between the breach
and the actual losses suffered by the Respondent. However, the
Respondent failed to prove any losses that were borne out of the
termination by the Claimant. So, much so that the Respondent even
did not claim to have suffered any loss. Since the Respondent failed
to prove any loss, the issue of reinstatement of the Respondent to
the previous position did not arise. Therefore, there was no
occasion for invocation of the Bank Guarantee.
71. Likewise, in Kailash Nath Associates v. Delhi
Development Authority and Anr., (2015) 4 SCC 136, the Hon’ble
Supreme Court affirmed that the party claiming to be aggrieved,
has the onus to prove the loss or any damages. Although, Section
74 of the Contract Act awards compensation for the breach, where
the penalty of such breach is pre-determined yet the loss has to be
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 17 of 47
Signing Date:22.08.2025
18:20:07
proved. The Court further explained that even if the claim of the
party is covered under Section 74, there still lies a burden on the
shoulder of the claiming party to prove the losses arising out of
such breach. Additionally, all the losses or damages in question
must be proved as in the case of Section 73 of the Contract Act.
72. Furthermore, in the case of Bharat Sanchar Nigam
Limited v. Reliance Communication Ltd., (2016) 4 CompLJ314
(SC), the three-judge bench of the Hon’ble Supreme Court
reaffirmed the position of the law that the loss alleged to be
suffered by the contractual breach needs to be proved if the party
is claiming the compensation for the same. The Hon’ble Supreme
Court held as under:
“10… In terms of Section 73 of the Act, the party which
suffers by any breach of contract is entitled to receive,
from the party who has broken the contract, compensation
for any loss or damage caused to him thereby, which
naturally arose in the usual course of things from such
breach. Such compensation is not to be given for any
remote or indirect loss or damage. According to the
learned Counsel in terms of Section 73 of the Contract Act
to receive compensation for loss or damage, the party
claiming such compensation must prove the alleged loss
or damage.”
73. In case of the actual loss, the damages are awarded to
reinstate the aggrieved party in their original financial position,
provided such damages are the direct outcome of the breach. The
onus is on the party to prove that such loss occurred to them.
Applying the ratio to the present case, no evidence has been led by
the Respondent that could reflect any loss suffered by the
Respondent or that it is the direct outcome of the Claimant’s
breach. Hence, the Respondent does not qualify for such damages
and consequently, encashment of the Bank Guarantee and its
appropriation by the Respondent was wrongful.
74. In the background, some secondary arguments concerning
the forfeiture were also placed before this Tribunal. The Claimant
referred to Clause-17 of Chapter IV of the Tender Documents,
which rendered an exclusive exit right upon the Respondent with a
60 days’ notice. The one-sided clause left the Claimant remediless.
Due to this limitation, Claimant vide letter dated 26.07.2018
requested the Respondent for either an increased revised rate or an
exit. The relevant portion of the letter is reproduced as under:
“Since the Clause of Exit i.e. para-17 is unilateral and has
given only CONCOR to terminate the contract with a two-
month notice period. The request regarding the severe loss
due to the reason mentioned above and it is requested to
please arrange to re-negotiate the upward revision of Rate
on an urgent basis or Exit from the said contract be
allowed within three months from the date of said letter.
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 18 of 47
Signing Date:22.08.2025
18:20:07
In case our request for upward revision is not arranged
and exit is not being allowed then it is requested to please
nominate an independent Sole Arbitrator as per Clause-20
of the Contract Agreement in terms of the Arbitration and
Conciliation (Amendment) Act, 2015, to resolve the
grievances & issues related to present contract.”
75. The Claimant wrote another letter dated 07.09.2018,
wherein the Claimant emphasized their inability to continue the
Contract. The Claimant assured the Respondent that despite facing
the financial crisis, the Claimant will not leave the work without
serving the notice period for the sanctity of the business
relationship. The Respondent, vide letter 13.09.2018 accepted the
Claimant’s termination w.e.f. 25.10.2018 or finalization of the new
Contract, whichever was earlier. In the same letter, the Respondent
also intended to forfeit the Bank Guarantee under Clause 4 of
Chapter IV of the Tender Documents. The Claimant vide letter
dated 14.09.2018, challenged the Respondent’s intention of
forfeiting the Bank Guarantee and explained that the termination
granted by the Respondent is on the request of the Claimant and
not for any default. Therefore, such plea of forfeiture is wrong and
untenable. The same contention is supported through the
Respondent’s letter dated 25.06.2019, whereby the Respondent
termed the Claimant’s work as satisfactory. The work satisfaction
could also be proved by the fact that generally during the search of
a new Contractor, the usual practice of the Respondent is to issue
shorter Contracts i.e., for 3-6 months. The same can be confirmed
through RW-1, Ms. Kiran Sharma’s cross-examination. However,
no such measures were adopted in this case.
76. Additionally, in the second letter dated 17.10.2018, the
Respondent changes their stand as was stated earlier in letter
dated 13.09.2018. As per the second letter, the Contract which by
earlier letter was to be terminated by 25.10.2018, made to continue
till the finalization of the new Contract. Further, the Claimant also
participated in the new tender as opposed to the letter dated
13.09.2018. Thus, the Respondent gave a complete go-by to the
conditions incorporated in the letter dated 13.09.2018.
77. The Claimant sought the termination to save themselves
from incurring further losses, as the Respondent ignored the
Claimant’s repeated request to alter the rates, which was well
within the rights of the Claimant under Clause 4.5 of Chapter III
and Clause 23 of Chapter IV of the Tender Documents. The
Respondent’s act of changing the tender conditions and denying
the revised rate led to the termination of the Contract.
78. The Respondent relies on Clause 9.6 of Chapter II of the
Tender Documents and submits that admittedly, there was no exit
clause for the Claimant. Accordingly, the premature termination of
the Contract enabled the Respondent to legally forfeit such security
deposit.
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 19 of 47
Signing Date:22.08.2025
18:20:07
79. Considering the disparity between the parties, 323/507
fruitful to place reliance on Union of India and Others v. M/S
Graphics Industries Co. and Others, (1994) 5 SCC 398, wherein
the Hon’ble Supreme Court emphasized the principle of fairness
and equality under the contractual relationships. The Court held as
under: –
“10…even in contractual matters public authorities have
to act fairly: and if they fail to do so approach under
Article 226 would always be permissible because that
would amount to violation of Article 14 of the
Constitution. In support of this submission, Shri Ganguli
has mainly relied upon a two-Judge Bench decision of this
Court in Kumari Shrilekha Vidyarthi v. State of U.P.
[(1991) 1 SCC 212 (paras 21-28): 1991 SCC (L&S) 742],
of which this aspect of the matter has been dealt with by
stating that the requirement of Article 14 being the duty to
act fairly, justly and reasonably, there is nothing which
militates against the concept of requiring the State always
to so act even in contractual matters (see paragraph 24).
What has been stated in paragraph 28 is that it would be
difficult and unrealistic to exclude the State actions in
contractual matters, after the contract has been made,
from the purview of the judicial review to test its validity
on the anvil of Article 14. The Bench thereafter referred to
various earlier decisions of this Court on this point
including Mahabir Auto Stores v. Indian Oil Corpn.
[(1990) 3 SCC 752] and Dwarkadas Marfatia v. Board of
Trustees of the Port of Bombay [(1989) 3 SCC 293].”
(emphasis supplied)
80. It would also be appropriate to refer to the decision of the
Hon’ble Supreme Court in Pioneer Urban Land & Infrastructure
Ltd. v. Govindan Raghavan and Ors, (2019) 5 SCC 725, whereby
the Court dealt with the one-sided clauses that are unfair and
unreasonable to the weaker party. It was held:
“6.3….The Law Commission of India in its 199th Report,
addressed the issue of Unfair (Procedural & Substantive)
Terms in Contract. The Law Commission inter-alia
recommended that a legislation be enacted to counter such
unfair terms in contracts. In the draft legislation provided
in the Report, it was stated that:
A contract or a term thereof is substantively
unfair if such contract or the term thereof is in
itself harsh, oppressive or unconscionable to
one of the parties.
xxxxx xxxxx xxxxx
6.7 In Central Inland Water Transport Corporation
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 20 of 47
Signing Date:22.08.2025
18:20:07
Limited and Ors. v. Brojo Nath Ganguly and Ors., (1986)
3 SCC 156 this Court held that:
89. … The Constitution was enacted to secure to all the citizens of
this country social and economic justice. Article 14 of the
Constitution guarantees to all persons equality before the law and
equal protection of the laws. This principle is that the courts will
not enforce and will, when called upon to do so, strike down an
unfair and unreasonable contract, or an unfair and unreasonable
Clause in a contract, entered into between parties who are not
equal in bargaining power. It is difficult to give an exhaustive list
of all bargains of this type.
xxxxx xxxxx xxxxx
It will also apply where a man has no choice, or rather no
meaningful choice, but to give his assent to a contract or to sign on
the dotted line in a prescribed or standard form or to accept a set
of Rules as part of the contract, however unfair, unreasonable and
unconscionable a Clause in that contract or form or Rules may be.
(emphasis supplied)
81. Similarly, in Indian Oil Corporation Ltd. v. Nilofer
Siddiqui and Ors., (2015) 16 SCC 125, the Hon’ble Supreme Court
shed the light on unequal bargaining power of the parties,
especially where one party is the State or instrument of the State.
The Court made it evident that although the rights of the parties
are flowing through their contractual relation, the manner and the
method in which the Contract is conducted has to be subject to the
principle of fairness and natural justice. The relevant portion of
the observations are as follows:
24…… IOCL, being a Government of India Undertaking is
bound to act fairly and its conduct is subject to scrutiny on
the touchstone of Article 14 of the Constitution of India.
xxxxx xxxxx xxxxx
“12….So, whatever be the activity of the public
authority, in such monopoly or semi-monopoly
dealings, it should meet the test of Article 14 of
the Constitution. If a governmental action even
in the matters of entering or not entering into
contracts, fails to satisfy the test of
reasonableness, the same would be
unreasonable. In this connection reference
may be made to E.P. Royappa v. State of Tamil
Nadu, Maneka Gandhi v. Union of India, Ajay
Hasia v. Khalid Mujib Sehravardi, R.D. Shetty
v. International Airport Authority of India and
also Dwarkadas Marfatia and Sons v. Board
of Trustees of the Port of Bombay. It appears
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 21 of 47
Signing Date:22.08.2025
18:20:07
to us that rule of reason and rule against
arbitrariness and discrimination, rules of fair
play and natural justice are part of the rule of
law applicable in situation or action by State
instrumentality in dealing with citizens in a
situation like the present one. Even though the
rights of the citizens are in the nature of
contractual rights, the manner, the method and
motive of a decision of entering or not entering
into a contract, are subject to judicial review
on the touchstone of relevance and
reasonableness, fair play, natural justice,
equality and non- discrimination in the type of
the transactions and nature of the dealing as
in the present case.”
(emphasis supplied)
The issue of unequal bargaining power in view of standard
contract has only academic value in this award. I have already
held above that it was the Respondent who had committed a breach
of the Contract by changing the tender conditions and still was
denying exit to the Claimant even when the Claimant was suffering
huge losses due to the change in the tender conditions. Thus,
retaining the exit option by the Respondent was unfair and
arbitrary.
82. As per Clause 9.5 of Chapter II of the Tender Documents,
the security deposit can be deducted in whole or in part depending
upon the actual loss suffered by the Respondent due to the
Claimant’s performance. However, no such loss has been proved
by the Respondent. The issuance of a Satisfaction Certificate would
not have been there if Claimant was at default. Despite not
suffering the loss, the Respondent without any intimation to the
Claimant, invoked the Bank Guarantee and appropriated the same.
83. The Respondent relied on Clause 12 of Chapter II of the
Tender Documents. As per the Clause, the Claimant was expected
to work for 4 years. And thereafter, the Claimant was obliged to
work for an additional period of 4 months if so, required by the
Respondent. Since the Claimant has exited prematurely, the
termination of the Contract by the Claimant amounted to breach of
the Contract.
84. I have already held above that the Claimant exited the
Contract with due notice along with the Respondent’s consent,
despite breach by the Respondent and that the exit clause was also
one-sided. Therefore, Respondent’s reliance on Clause 12 of
Chapter II of the Tender Documents in the circumstances is
misplaced.
85. Thus, as stated above the invocation and appropriation of
the Bank Guarantee was wrongful, arbitrary, and illegal. The point
is answered accordingly.”
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 22 of 47
Signing Date:22.08.2025
18:20:07
18. The Respondent herein was also held entitled to the cost of
arbitration and pendente lite interest @ 9% per annum, along with
future interest @ 9% on the sum awarded, inclusive of pendente lite
interest.
19. Aggrieved by the said Award, the Appellant filed a petition
under Section 34 of the A&C Act before the learned Single Judge of
this Court.
20. The learned Single Judge, after hearing the parties, rendered the
Impugned Judgment, which is now the subject matter of challenge in
the present Appeal. The relevant portion of the Impugned Judgement
dated 17.01.2022 is produced herein below:-
“Reasons and Conclusions
19. CONCOR has challenged the impugned award, primarily,
on two grounds. First, that CONCOR had not breached the
Agreement in question and therefore, WTC’s claim for damages
was required to be rejected. Second, that even if it was accepted
that CONCOR was in breach of the Agreement and WTC was
entitled to a claim for damages, it was, nonetheless, essential for
WTC to establish loss suffered by it. CONCOR claims that there
was no material on record to substantiate the alleged loss suffered
by WTC. Therefore, the impugned award is vitiated by patent
illegality.
20. Mr Jain, learned counsel appearing for CONCOR,
contended that the impugned award is contrary to the express
terms of the Agreement between the parties. He pointed out that
Clause 3 of the General Conditions of Contract (GCC), expressly
stipulate that, WTC would not be entitled for any compensation
from CONCOR, in the event of any change in the business pattern,
drop in the volumes or insufficient work. He contended that WTC’s
entire claim is founded on the basis that there has been a drop in
the business and therefore, its billings were reduced. Thus, the
impugned award is contrary to the terms of the Agreement.
21. CONCOR had issued the NIT for Mechanized Cargo
Handling and Inventory Management Services at ICD in two bid
mode (Financial and Technical). The bids would be considered on
a reverse auction basis and the technically qualified bidder
quoting the lowest bid price (L-1) would be considered successful.
The bidders were required to quote the schedule of rates as per
Annexure-I to the Tender Documents. The bidders were required to
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 23 of 47
Signing Date:22.08.2025
18:20:07
quote separate rates for separate items of works such as ICD
stuffing, direct stuffing, direct transshipment of cargo, loading and
unloading of cargo, examination of cargo/container. It is clear that
the financial bids submitted by the bidders were required to be
evaluated on the said basis. The Tender Document also indicated
the estimate value of business at ₹3,61,59,917/- per annum.
Annexure- I to the bidding document also indicated the estimated
volume of work for each item of work. The bidders were required
to deploy the specified resources in terms of manpower and
machinery at the ICD and maintain themselves in a state of
readiness to carry on the work of cargo handling.
22. The rates submitted by WTC were found to be the lowest.
Accordingly, CONCOR had issued the LoI dated 11.09.2017, in
favour of WTC, accepting its tender. Annexure-I to the LoI sets out
the rates for certain activities as accepted. Annexure-I to the LoI is
relevant and is reproduced below:
“Annexure-1
ACTIVITY SIZE Rate per
container
(in ₹)
2.7: Export Cargo Handling
2.7.1: ICD Stuffing 20′ 257.50
40′ 324.50
2.7.2: Direct Stuffing 20′ 257.50
40′ 324.50
2.7.3.1:Factory Stuffing (Seal Cutting) 20′ 165.00
40′ 185.50
2.7.3.2: Factory Stuffing (Seal Cutting 20′ 257.50
and Cargo Handling) 40′ 324.50
2.8: Import Cargo Handling
2.8.1: ICD De-Stuffing 20′ 247.00
40′ 310.00
2.8.2: Direct De-Stuffing 20′ 247.00
40′ 310/00
2.8.3.1:Factory De-Stuffing (Seal 20′ 165.00
Cutting) 40′ 185.50
2.8.3.2: Factory De-Stuffing (Seal 20′ 278.00
Cutting and Cargo Handling) 40′ 288.50
2.9: OUT OF CYCLE
2.9.1: De-Stuffing of containers 20′ 247.00
40′ 310.00
2.9.2: Stuffing of containers 20′ 247.00
40′ 247.00
2.9.3: Direct Transhipment of Cargo 20′ 247.00
40′ 247.00
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 24 of 47
Signing Date:22.08.2025
18:20:07
2.9.4: Loading/unloading of cargo Per MT 45.00
20′
2.9.5: Examination of Cargo/Container 45.00
40′ 45.00
2.10: Work for Inventory Management Rate per 268.00″
of Cargo Container
23. There is no dispute that WTC was paid for each activity
conducted by it, at the rates as agreed.
24. As noted above, WTC’s grievance is that the volume of
revenue generated was less than the value of business as projected
in the Tender Documents. WTC claimed that it had submitted its
tender based on the estimated volume projected by CONCOR. The
officials of CONCOR had assured WTC that the volume of business
at the ICD, Tughlakabad, was increasing and the actual volume of
business would be more than the estimated value as set out in the
Tender Documents. WTC claimed that it had quoted approximately
2.4% less than the estimated value. WTC believed that it would be
paid on the basis of the number of containers and other data as
captured under the CCLS data as this was the procedure being
followed by CONCOR prior to the Agreement in question. WTC
claimed that it had incurred costs of more than 2.5 crores in
material handling equipment to perform the Agreement but had
found that the business was significantly less than as estimated by
CONCOR. WTC claimed that the reduction in the volume was on
account of change in the CCLS software made by CONCOR and
the same amounted to a change in the Tender Conditions. It also
claimed that there was a change in the policy and the billing for
cutting seals, which was earlier fixed at 170.90 for a 20 feet
container and 192.10 for a 40 feet container, was stopped.
25. The Statement of Claims does not contain any allegations
that CONCOR had breached any term of the provisions of the
Agreement. A plain reading of the impugned award indicates that
no such finding had been returned by the Arbitral Tribunal as well.
26. However, as stated above, WTC had premised its claim on
the allegation that CONCOR had changed the Tender Conditions
and the Arbitral Tribunal had also returned a finding to the
aforesaid effect.
27. The allegation that CONCOR had changed the Tender
Conditions is required to be understood by examining the
pleadings. In the Statement of Claims filed by the WTC before the
Arbitral Tribunal, it had claimed an amount of 2,08,94,299/-.
According to WTC, CONCOR had changed the Tender Conditions.
WTC claimed that it had suffered a loss to the extent of
2,09,22,028/- on account of change in the Tender Conditions and
low volume of business from the month of April, 2018 to
September, 2019. Paragraph 29 of the Statement of Claims reads
as under:-
“29. That due to the change in tender condition and low
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 25 of 47
Signing Date:22.08.2025
18:20:07
volume of business from April 2018 to September 2019,
the claimant has suffered a huge loss of Rs.2,09,22,028/-
inn running the contract. That as per the business volume
projected by the Respondents on which the Claimant has
submitted their bid and the contract was awarded to them
the Claimant is supposed to get an amount of Rs.
6,97,80,736.7/- for the work done for a total period of 23
months and 20 days but the Claimant has received an
amount of Rs.4,88,86,437/- therefore, the Claimant as per
the volume of business has suffered a loss of Rs.
2,08,94,299.7/- is due and payable to the claimant by the
Respondents. The details are annexed herewith as
ANNEXURE P-18.”
28. The computation of the amount as claimed (Annexure P-18
to the Statement of Claims) is relevant and set out below: –
“SCHEDULE OF THE MONETARY CLAIM OF THE
CLAIMANTS
Projected Business as per the tender Rs. 3,53,81,782/-
2017 for one year.
Total projected business as per the Rs. 6,97,80,737/-
tender document for 23 months and 20
days
Total amount received under invoices Rs. 4,88,86,437/-
Total amount received under invoices Rs. 4,88,86,437/-
Actual loss as per tender Rs. 2,08,94,299/-
Bank Guarantee Encashed Rs. 25,00,000/-
3. Damages on account of loss of Rs. 5,00,000/-
reputation And mental agony
Total Rs. 2,38,94,299/-
(Rupees Two Crores Thirty Eight Lakhs Ninety four
thousand and two hundred and ninety nine only)
4. Add interest at the rate of 18% on the sum of
Rs.2,38,94,299/- from the date of filing of the statement of
claim till the passing of the award and thereafter from the
date of the award till the full and final payment of the
entire amount as per the award.”
29. A plain reading of the impugned award indicates that the
Arbitral Tribunal accepted WTC’s contention that dehors the
guidelines issued by the Custom Department for cutting seals of
only specific containers, CONCOR was paying for all the
containers which were passing through the Green Channel
irrespective of seal cutting since the month of April, 2013. This
continued till the month of April, 2018. However, in the month of
April, 2018, CONCOR changed the CCLS software and started
paying only for those containers of which the seals were opened.
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 26 of 47
Signing Date:22.08.2025
18:20:07
However, it continued to charge its customers for all the
containers. The fact that CONCOR was charging its customers for
all the containers passing through the Green Channel was
admitted by CONCOR’s witness. The Arbitral Tribunal accepted
that the change in the billing made a huge difference in the volume
of the business. The Arbitral Tribunal also found that the cost of
the tender was finalized based on the estimated value of work.
Although, the volume of business indicated in the Tender
Document was only an estimate, however, the same was based on
the minimum volume of work. The Arbitral Tribunal found that
there was material change in the billing pattern due to changes in
the CCLS software. The said findings are based on appreciation of
evidence produced before the learned Arbitrator. The said
conclusion cannot be held to be patently erroneous or one that
vitiates the impugned award. It is, therefore, not amenable to
review these proceedings.
30. The Arbitral Tribunal also found that the estimated volume
of import containers as projected by CONCOR in the tender
floated leading to the award of the contract to the new contractor
in the month of September, 2019, was 39% lower in volume than as
projected by CONCOR in the Tender Documents. The Arbitral
Tribunal inferred that at the time of inviting bids, CONCOR was
not aware that it would change its billing pattern by making
changes in the CCLS software.
31. A reading of the impugned award indicates that the
Arbitral Tribunal had accepted that the drop in the volume of
business was on account of change in the billing pattern
introduced in the CCLS software. In other words, the estimated
business as projected in the Tender Documents was based on a
billing system that provided for payments for all containers. If the
volume of business was estimated solely on the basis of the
payments to be made on activity to be performed by the contractor,
the volumes as projected would be much lower.
32. It is clear that the award entered by the Arbitral Tribunal is
not for failure on the part of CONCOR to perform its payment
obligations under the Agreement as WTC was paid for the
activities performed by it at the agreed rates. The Arbitral Tribunal
had entered an award on the ground that CONCOR had changed
the Tender Conditions. A plain reading of the impugned award
clearly indicates that the expression “change in the tender
conditions” is used to mean that the projections of estimated
volume of business as made by CONCOR in the Tender Conditions
would be correct if it followed the billing pattern as was being
followed earlier. But that was subsequently changed. The change
in the billing pattern rendered the said estimate untrue.
33. The Arbitral Tribunal has entered an award on the basis
that CONCOR had procured the Agreement by making a wrong
representation as to the volume of business and therefore, WTC is
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 27 of 47
Signing Date:22.08.2025
18:20:07
liable to be compensated on the basis that the representation was
incorrect. The Arbitral Tribunal did not articulate its reasons in
the aforesaid manner. However, a meaningful reading of the
impugned award clearly indicates so.
34. In Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd.:
(2019) 20 SCC 1, the Supreme Court has observed as under:
24.There is no dispute that Section 34 of the Arbitration
Act limits a challenge to an award only on the grounds
provided therein or as interpreted by various courts. We
need to be cognizant of the fact that arbitral awards
should not be interfered with in a casual and cavalier
manner, unless the court comes to a conclusion that the
perversity of the award goes to the root of the matter
without there being a possibility of alternative
interpretation which may sustain the arbitral award.
Section 34 is different in its approach and cannot be
equated with a normal appellate jurisdiction. The mandate
under Section 34 is to respect the finality of the arbitral
award and the party autonomy to get their dispute
adjudicated by an alternative forum as provided under the
law. If the courts were to interfere with the arbitral award
in the usual course on factual aspects, then the
commercial wisdom behind opting for alternate dispute
resolution would stand frustrated.
25. Moreover, umpteen number of judgments of this Court
have categorically held that the courts should not interfere
with an award merely because an alternative view on facts
and interpretation of contract exists. The courts need to be
cautious and should defer to the view taken by the Arbitral
Tribunal even if the reasoning provided in the award is
implied unless such award portrays perversity
unpardonable under Section 34 of the Arbitration Act.
*** *** ***
35. When we consider the requirement of a reasoned order,
three characteristics of a reasoned order can be fathomed. They
are: proper, intelligible and adequate. If the reasonings in the
order are improper, they reveal a flaw in the decision-making
process. If the challenge to an award is based on impropriety or
perversity in the reasoning, then it can be challenged strictly on the
grounds provided under Section 34 of the Arbitration Act. If the
challenge to an award is based on the ground that the same is
unintelligible, the same would be equivalent of providing no
reasons at all. Coming to the last aspect concerning the challenge
on adequacy of reasons, the Court while exercising jurisdiction
under Section 34 has to adjudicate the validity of such an award
based on the degree of particularity of reasoning required having
regard to the nature of issues falling for consideration. The degree
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 28 of 47
Signing Date:22.08.2025
18:20:07
of particularity cannot be stated in a precise manner as the same
would depend on the complexity of the issue. Even if the Court
comes to a conclusion that there were gaps in the reasoning for the
conclusions reached by the Tribunal, the Court needs to have
regard to the documents submitted by the parties and the
contentions raised before the Tribunal so that awards with
inadequate reasons are not set aside in casual and cavalier
manner. On the other hand, ordinarily unintelligible awards are to
be set aside, subject to party autonomy to do away with the
reasoned award. Therefore, the courts are required to be careful
while distinguishing between inadequacy of reasons in an award
and unintelligible awards.”
36. The principle that a party, who has entered into a contract
by relying on a representation made by the other party, is liable to
be compensated, if the representation is found to be untrue is well
settled. The aggrieved party is required to be placed in the same
position as if the representation was correctly made. It is apparent
that the Arbitral Tribunal has awarded damages on the aforesaid
principle and the same warrants no interference in these
proceedings.
37. Mr Jain, had contended that the representation regarding
volume of business as set out in the Tender Documents was merely
an estimate and WTC had been put to notice that the actual volume
of business would vary. He also referred to Clauses 1.1 and 1.2 of
Chapter III of the Agreement and Clause 3 of the GCC and
contended that WTC could not make any claim on account of
variation in the volume of business.
38. Clauses 1.1 and 1.2 of Chapter III of the Agreement, reads
as under:
“1. SCOPE OF WORK
1.1. The scope of work indicated in the paras below is only
a guide. The actual requirements are subject to
variations/adjustments depending on the pattern and
volume of traffic.
1.2. The scope of work described in this chapter shall not
be a basis for any dispute with regard to rates or for
alteration of terms and conditions including General
Conditions. Doubt, if any, about the interpretation of any
of the clauses in this chapter shall be referred to the
Tender Accepting Authority of Container Corporation of
India Ltd. whose decision in the matter shall be final and
acceptable to the tenderer/contractor.”
39. Clause 3 of the GCC is set out below:
“3. CHANGE IN BUSINESS PATTERN: In case of drop in
volumes or insufficient work contractor will not be entitled
for any compensation from CONCOR on this account.”
40. The Arbitral Tribunal had rejected the contention that the
aforesaid clauses proscribed the award of damages. A plain
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 29 of 47
Signing Date:22.08.2025
18:20:07
reading of Clause 3 of the GCC indicates that it proscribes of
raising any claim based on variation of volume of business. There
is no dispute that WTC was required to bear the risk of change in
the volume of business. The volume of business as mentioned in the
Tender Documents was merely an estimate and CONCOR had not
held out any assurance that that volume of business would be
generated. However, the principal issue in this case is not any
variation in the volume of traffic. Clearly, WTC is required to bear
the risks in variation in the volume of traffic. However, the Arbitral
Tribunal found that a drop in WTC’s billing was not attributable to
a drop in traffic of containers. The same was as a result of a
change in the billing pattern. CONCOR had projected the volume
of business on a billing pattern that was subsequently changed
thereby, rendering its representation to be incorrect. The variation
in the volume of business resulting from change in traffic of
containers, is materially different from a variation in the value of
billing because the estimated cost was based on a billing pattern
different from the one followed for making payments.
41. The estimated volume of business was based on the volumes
in the period prior to issuing the NIT. The bidders were required to
take that into account, while submitting their bids. CONCOR could
not be held liable for any variation in the volume of business.
However, in this case, the impugned award is based on the finding
that although there was no material change in the volume of work,
the billings dropped below the estimate as represented by
CONCOR. There was no material reason not to hold CONCOR
liable for the accuracy of its estimate as the bidders had submitted
their bid on the aforesaid basis. It is not seriously contended that
WTC had any means to check the accuracy of the estimated volume
of business.
42. In view of the above, the decision of the Arbitral Tribunal
to hold that Clauses 1.1. and 1.2 of Chapter III of the Agreement
and Clause 3 of the GCC do not apply, cannot be held to be
perverse or patently erroneous. The impugned award is based on
the finding that CONCOR had made an incorrect representation
for procuring the bids.
43. Mr Jain contended that WTC had led no evidence with
regard to the quantum of loss and the award was based on no
evidence at all. The said contention is unmerited as the Arbitral
Tribunal has entered an award based on the volume of billing
projected by CONCOR. The Arbitral Tribunal has awarded the
amount being the difference between the amount paid and the
projected volume of business. As stated above, this is to place WTC
in the same position as it would have been if the representation
made by CONCOR regarding the volume of business,
44. The Arbitral Tribunal also awarded a sum of 25 lakhs in
favour of WTC being the amount recovered by CONCOR by
encashing the BG furnished by WTC. The Arbitral Tribunal found
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 30 of 47
Signing Date:22.08.2025
18:20:07
that CONCOR had not presented any evidence, which would
reflect the loss suffered by it. It, accordingly, directed refund of the
said amount. This Court finds no infirmity with the said decision.
Mr Jain had fairly not advanced any contention to challenge the
impugned award on this ground.
45. In view of the above, the petition is dismissed. The pending
applications are also disposed of.”
CONTENTIONS OF THE APPELLANT:
21. Learned Senior Counsel for the Appellant would commence his
submissions by emphasizing that the Contract clearly stipulates that
payment would be made strictly on the basis of work actually
executed by the Respondent, and since the Respondent has already
been paid for the work performed, the claims now advanced are
unfounded and appear to rest upon “pre-contractual assumptions”.
22. Learned Senior Counsel for the Appellant would further argue
that both the Award and the Impugned Judgment suffer from patent
errors, for the sum granted in favour of the Respondent is in the nature
of damages which cannot be awarded in the absence of breach, and
since the learned Single Judge has categorically held that no breach
occurred, there remains no legal basis for granting damages.
23. To fortify his argument, the learned Senior Counsel for the
Appellant would draw attention to specific contractual provisions,
namely, Clauses 1.1 and 1.2 of Chapter III of the Contract and Clause
3 of the General Conditions of Contract8, which collectively provide
that the scope of work is merely indicative and subject to variations,
that such scope cannot form the basis for disputes or alteration of
terms, and that in case of a drop in volumes, the contractor would not
be entitled to compensation. The said clauses are set out as follows:-
8
GCC
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 31 of 47
Signing Date:22.08.2025
18:20:07
1.1. “The scope of work indicated in the paras below is only a
guide. The actual requirements are subject to
variations/adjustments depending on the pattern and volume of
traffic.
1.2. The scope of work described in this chapter shall not be a
basis for any dispute with regard to rates or for alteration of terms
and conditions including General Conditions, Doubts, if any, about
the interpretation of any of the clauses in this chapter shall be
referred, to the Tender Accepting Authority of Container
Corporation of India Ltd. whose decision in the matter shall be
final and acceptable to the tenderer/contractor.
*****************
3. CHANGE IN BUSINESS PATTERN: In case of drop in
volumes or insufficient work contractor will not be entitled for any
compensation from CONCOR on this account.”
24. Learned Senior Counsel for the Appellant would also rely upon
Clause 13.4 of the Contract, which stipulates that monthly bills must
be submitted strictly on the basis of work handled and would be paid
after necessary checks and deductions, and while such payments
would ordinarily be made within ten days, occasional delay would
neither entitle the contractor to claim interest nor allow termination of
the Contract. Clause 13.4 of the Contract reads as follows:-
“13.4 The contractor shall prepare and submit monthly bills in
prescribed forms based on the quantum of work handled during the
previous month to the Terminal In-charge of ICD/TKD. (The
format in which the bills should be prepared by the contractor
shall be in time with the format in which CONCOR’s reports are
prepared. This will help to check the bills faster. Payment of the
amount claimed will he arranged after necessary checks of the
correctness of the claim, deducting all
charges/damages/fines/recoveries due, including TDS and/or any
other levies at the prescribed rates. The aforesaid payment of the
bill will ordinarily be made within (10) ten days of submission. An
occasional or inadvertent delay, however, shall neither entitle the
contractor to claim interest nor provide a basis for termination of
contract. The work shall in no case be hampered on account of
non-payment of bills.”
25. The gist of the arguments advanced by the learned Senior
Counsel for the Appellant would be that, first, since payment was to
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 32 of 47
Signing Date:22.08.2025
18:20:07
be made solely on the basis of the actual work performed by the
Respondent and such payments have already been made, the scope of
work cannot form the basis for any dispute regarding rates or
alteration of the terms and conditions, including those in the GCC; and
second, a reading of Clause 1.2 of Chapter III, when read with Clause
3 of the GCC, makes it clear that no dispute can be raised on account
of a drop in volumes.
26. Learned Senior Counsel for the Appellant would further argue
that there was, in fact, no change in the Contract but only in the
business model, and that the Award wrongly proceeded on the
assumption that the tender conditions had been altered, for while the
learned Arbitrator in paragraph 66 of the Award observed that the
terms stood „impliedly changed‟, the only change was in the billing
pattern due to the introduction of the CCLS software, and none of the
contractual conditions had actually been modified.
27. It would also be contended by the learned Senior Counsel for
the Appellant that by awarding claims to the Respondent, the learned
Arbitrator effectively altered the contractual framework, which is
impermissible in law.
28. Learned Counsel for the Appellant would submit that it appears
that the impugned Judgment and Award appears to be based on the
principles of fairness and reasonableness coupled with what according
to him is effectively an alteration of the contractual terms, and to
support this submission, reliance would be placed on Para 26 of the
judgment in Assistant Excise Commissioner v. Issac Peter 9, where
the Hon‟ble Supreme Court held that in contracts voluntarily entered9
1994 (4) SCC 104
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 33 of 47
Signing Date:22.08.2025
18:20:07
into with the State through tender or negotiation, the doctrine of
fairness and reasonableness cannot be invoked to rewrite or
supplement the terms merely because one party is the State. Para 26 of
the said judgement reads as under:-
“26. Learned counsel for respondents then submitted that doctrine
of fairness and reasonableness must be read into contracts to
which State is a party. It is submitted that the State cannot act
unreasonably or unfairly even while acting under a contract
involving State power. Now, let us see, what is the purpose for
which this argument is addressed and what is the implication? The
purpose, as we can see, is that though the contract says that supply
of additional quota is discretionary, it must be read as obligatory
— at least to the extent of previous year’s supplies — by applying
the said doctrine. It is submitted that if this is not done, the
licensees would suffer monetarily. The other purpose is to say that
if the State is not able to so supply, it would be unreasonable on its
part to demand the full amount due to it under the contract. In
short, the duty to act fairly is sought to be imported into the
contract to modify and alter its terms and to create an obligation
upon the State which is not there in the contract. We must confess,
we are not aware of any such doctrine of fairness or
reasonableness. Nor could the learned counsel bring to our notice
any decision laying down such a proposition. Doctrine of fairness
or the duty to act fairly and reasonably is a doctrine developed in
the administrative law field to ensure the rule of law and to prevent
failure of justice where the action is administrative in nature. Just
as principles of natural justice ensure fair decision where the
function is quasi-judicial, the doctrine of fairness is evolved to
ensure fair action where the function is administrative. But it can
certainly not be invoked to amend, alter or vary the express terms
of the contract between the parties. This is so, even if the contract
is governed by statutory provisions, i.e., where it is a statutory
contract — or rather more so. It is one thing to say that a contract
— every contract — must be construed reasonably having regard
to its language. But this is not what the licensees say. They seek to
create an obligation on the other party to the contract, just because
it happens to be the State. They are not prepared to apply the very
same rule in converse case, i.e., where the State has abundant
supplies and wants the licensees to lift all the stocks. The licensees
will undertake no obligation to lift all those stocks even if the State
suffers loss. This one-sided obligation, in modification of express
terms of the contract, in the name of duty to act fairly, is what we
are unable to appreciate. The decisions cited by the learned
counsel for the licensees do not support their proposition. In
Dwarkadas Marfatia v. Board of Trustees of the Port of Bombay
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 34 of 47
Signing Date:22.08.2025
18:20:07
[(1989) 3 SCC 293] it was held that where a public authority is
exempted from the operation of a statute like Rent Control Act, it
must be presumed that such exemption from the statute is coupled
with the duty to act fairly and reasonably. The decision does not
say that the terms and conditions of contract can be varied, added
or altered by importing the said doctrine. It may be noted that
though the said principle was affirmed, no relief was given to the
appellant in that case. Shrilekha Vidyarthi v. State of U.P. [(1991)
1 SCC 212 : 1991 SCC (L&S) 742] was a case of mass termination
of District Government Counsel in the State of U.P. It was a case
of termination from a post involving public element. It was a case
of non-government servant holding a public office, on account of
which it was held to be a matter within the public law field. This
decision too does not affirm the principle now canvassed by the
learned counsel. We are, therefore, of the opinion that in case of
contracts freely entered into with the State, like the present ones,
there is no room for invoking the doctrine of fairness and
reasonableness against one party to the contract (State), for the
purpose of altering or adding to the terms and conditions of the
contract, merely because it happens to be the State. In such cases,
the mutual rights and liabilities of the parties are governed by the
terms of the contracts (which may be statutory in some cases) and
the laws relating to contracts. It must be remembered that these
contracts are entered into pursuant to public auction, floating of
tenders or by negotiation. There is no compulsion on anyone to
enter into these contracts. It is voluntary on both sides. There can
be no question of the State power being involved in such contracts.
It bears repetition to say that the State does not guarantee profit to
the licensees in such contracts. There is no warranty against
incurring losses. It is a business for the licensees. Whether they
make profit or incur loss is no concern of the State. In law, it is
entitled to its money under the contract. It is not as if the licensees
are going to pay more to the State in case they make substantial
profits. We reiterate that what we have said hereinabove is in the
context of contracts entered into between the State and its citizens
pursuant to public auction, floating of tenders or by negotiation. It
is not necessary to say more than this for the purpose of these
cases. What would be the position in the case of contracts entered
into otherwise than by public auction, floating of tenders or
negotiation, we need not express any opinion herein.”
29. It would thereafter be asserted by the learned Senior Counsel
for the Appellant that Clause 1.2 of Chapter III read with Clause 3 of
the GCC expressly prohibits raising disputes on account of reduction
in volumes, and hence both the Award and the Impugned Judgment
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 35 of 47
Signing Date:22.08.2025
18:20:07
are unsustainable in law. To reinforce this contention, he would
submit that the Contract must be read as a whole, and since the
specific clauses cited above expressly preclude claims arising from a
drop in volumes, the claims are barred, and in support of this
argument reliance would be placed on Para 10 of Continental
Construction Co. Ltd. v. State of M.P.10, which reads as under:-
“10. The question about specific reference on a question of law
was examined by this Court recently in the case of Tarapore and
Company v. Cochin Shipyard Ltd., Cochin [(1984) 2 SCC 680].
There it was observed that if the agreed fact situation, on the basis
of which agreement was entered into, ceases to exist, the
agreement to that extent would become otiose. If rate initially
quoted by the contractor became irrelevant due to subsequent
price escalation, it was held in that case that contractor’s claim for
compensation for the excess expenditure incurred due to the price
rise could not be turned down on ground of absence of price
escalation clause in that regard in the contract. Agreement as a
whole has to be read. Reliance was placed very heavily on this
decision on behalf of the appellant before us. It has to be borne in
mind that in the instant case there are specific clauses referred to
hereinbefore which barred consideration of extra claims in the
event of price escalation. That was not so in Tarapore and
Company case [(1984) 2 SCC 680]. That made all the difference.
The basis of bargain between the parties in both these two cases
were entirely different.”
30. Similarly, reliance would be placed by the learned Senior
Counsel on SAIL v. J.C. Budharaja, Govt. and Mining Contractor11,
where the Hon‟ble Supreme Court held that arbitrator cannot ignore
contractual provisions that expressly bar claims, and if they do so,
they act beyond jurisdiction and in manifest disregard of the contract,
which makes such an award arbitrary and unsustainable. Para 15 of
the said judgement states as under:-
“15. Clause 32 of the agreement specifically stipulates that no
claim whatsoever for not giving the entire site on award of work10
(1988) 3 SCC 82
11
1999 (8) SCC 122
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 36 of 47
Signing Date:22.08.2025
18:20:07
and for giving the site gradually will be tenable and the Contractor
is required to arrange his working programme accordingly. Clause
39 further stipulates that no failure or omission to carry out the
provisions of the contract shall give rise to any claim by the
Corporation and the Contractor, one against the other, if such
failure or omission arises from compliance with any statute or
regulation of the Government or other reasons beyond the control
of either the Corporation or the Contractor. Obtaining permission
from the Forest Department to carry out the work in the wildlife
sanctuary depends on statutory regulations. Clause (vi) of the
general conditions of the contract also provides that failure or
delay by the Corporation to hand over to the Contractor
possession of the lands necessary for the execution of the work or
any other delay by the Corporation due to any other cause
whatsoever would not entitle the Contractor to damage or
compensation thereof; in such cases, the only duty of the
Corporation was to extend the time for completion of the work by
such period as it may think necessary and proper. These conditions
specifically prohibit granting claim for damages for the breaches
mentioned therein. It was not open to the arbitrator to ignore the
said conditions which are binding on the contracting parties. By
ignoring the same, he has acted beyond the jurisdiction conferred
upon him. It is settled law that the arbitrator derives the authority
from the contract and if he acts in manifest disregard of the
contract, the award given by him would be an arbitrary one. This
deliberate departure from the contract amounts not only to
manifest disregard of the authority or misconduct on his part, but it
may tantamount to mala fide action. In the present case, it is
apparent that awarding of damages of Rs 11 lakhs and more for
the alleged lapses or delay in handing over the work site is, on the
face of it, against the terms of the contract.”
31. Learned Senior Counsel for the Appellant would thereafter refer
to the judgment of the Hon‟ble Supreme Court in Joshi Technology
International Inc. v. Union of India & Ors.12, to contend that since
no written amendment was made, the Contract could not be deemed to
have been altered, and therefore the learned Arbitrator‟s finding that
the Contract was “changed or impliedly changed” is contrary to law
and unsustainable.
12
2015 (7) SCC 728
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 37 of 47
Signing Date:22.08.2025
18:20:07
CONTENTIONS OF THE RESPONDENT:
32. Per contra, learned Senior Counsel for the Respondent would
start by drawing this Court‟s attention to the fact that both the learned
Arbitrator and the learned Single Judge of this Court have
concurrently ruled in his favor.
33. It would be the learned Senior Counsel‟s contention that the
tender itself was altered during the performance of the Contract,
which had been entered into on the premise of certain specified
volumes based on the conditions prevailing at the time the tender was
floated.
34. Learned Senior Counsel for the Respondent would rely upon
the tender document, which projected an estimated cost of
Rs.3,61,59,917/-, against which the Respondent had tendered at a
discounted value of Rs.3,53,83,628/-, and he would further contend
that the Appellant‟s assertion that the CCLS system had to be
modified at the instance of the Customs Department, was incorrect,
since the proposal for segregating containers into the Green Channel
or the Red Channel under the CCLS system had been mooted as early
as 2013 but had not been implemented at the time of tendering.
35. Learned Senior Counsel for the Respondent would contend that
the belated introduction of the CCLS software in its present form was
a departure from the tender as originally floated, and that its
imposition during the tenure of the Contract amounted to a substantive
change in the operational conditions, since the tender document, by
virtue of Clause 16 of Chapter I, formed an integral part of the
Contract and thereby rendered the change a modification in the
operation of the Contract itself.
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 38 of 47
Signing Date:22.08.2025
18:20:07
36. Learned Senior Counsel for the Respondent would also point
out that as early as April 2013 the Customs Department had issued
guidelines requiring inspection of containers before sale, yet up until
April 2018 the Appellant continued to make payments for all
containers passing through the Green Channel regardless of whether
the seal was severed, and with the introduction of the CCLS software
in its present form, the volume of billable traffic available to the
Respondent was reduced by nearly 40%, thereby causing significant
financial losses.
37. Learned Senior Counsel for the Respondent would further
emphasize that when the Appellant re-tendered the same work in
2019, the estimated volume was consciously reduced by almost 40%,
which, according to him, clearly demonstrated that the Respondent‟s
grievances, now conclusively upheld by both the Arbitral Award and
the Impugned Judgment, were genuine; and therefore, there was no
infirmity in either the Award or the Impugned Judgment.
38. Although both learned Senior Counsel for the Appellant and the
Respondent referred to various portions of the Award and the
Judgment to support their arguments, we do not consider it necessary
to reproduce them, since the relevant extracts have already been set
out earlier.
ANALYSIS:
39. This Court has carefully heard the detailed submissions
advanced on behalf of both parties, examined the pleadings along with
documents, and scrutinized the Impugned Judgment as well as the
Arbitral Award in their entirety.
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 39 of 47
Signing Date:22.08.2025
18:20:07
40. At the outset, it must be reiterated that the scope of judicial
interference with arbitral awards under Section 37 of the A&C Act is
extremely limited. The legislative intent, reinforced by the
authoritative pronouncements of the Hon‟ble Supreme Court, is to
preserve the sanctity of arbitral proceedings and to prevent courts
from reappreciating evidence or substituting their own views for that
of the arbitral tribunal. In Punjab State Civil Supplies Corpn. Ltd. v.
Sanman Rice Mills 13 , the Hon‟ble Supreme Court once again
underscored that interference is permissible only when the award
suffers from patent illegality, perversity, or contravention of
fundamental policy of Indian law, and that even under Section 37, a
court cannot act as a court of appeal over the arbitral award. The
relevant paragraphs of Punjab State Civil Supplies Corpn.
Ltd.(supra) state as under:-
“11. Section 37 of the Act provides for a forum of appeal inter-alia
against the order setting aside or refusing to set aside an arbitral
award under Section 34 of the Act. The scope of appeal is naturally
akin to and limited to the grounds enumerated under Section 34 of
the Act.
12. It is pertinent to note that an arbitral award is not liable to be
interfered with only on the ground that the award is illegal or is
erroneous in law that too upon reappraisal of the evidence
adduced before the arbitral trial. Even an award which may not be
reasonable or is non-speaking to some extent cannot ordinarily be
interfered with by the courts. It is also well settled that even if two
views are possible there is no scope for the court to reappraise the
evidence and to take the different view other than that has been
taken by the arbitrator. The view taken by the arbitrator is
normally acceptable and ought to be allowed to prevail.
13. In paragraph 11 of Bharat Coking Coal Ltd. v. L.K. Ahuja, it
has been observed as under:
“11. There are limitations upon the scope of interference
in awards passed by an arbitrator. When the arbitrator
has applied his mind to the pleadings, the evidence
adduced before him and the terms of the contract, there is13
2024 SCC OnLine SC 2632
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 40 of 47
Signing Date:22.08.2025
18:20:07
no scope for the court to reappraise the matter as if this
were an appeal and even if two views are possible, the
view taken by the arbitrator would prevail. So long as an
award made by an arbitrator can be said to be one by a
reasonable person no interference is called for. However,
in cases where an arbitrator exceeds the terms of the
agreement or passes an award in the absence of any
evidence, which is apparent on the face of the award, the
same could be set aside.”
14. It is equally well settled that the appellate power under Section
37 of the Act is not akin to the normal appellate jurisdiction vested
in the civil courts for the reason that the scope of interference of
the courts with arbitral proceedings or award is very limited,
confined to the ambit of Section 34 of the Act only and even that
power cannot be exercised in a casual and a cavalier manner.
15. In Dyna Technology Private Limited v. Crompton Greaves
Limited, the court observed as under:
“24. There is no dispute that Section 34 of the Arbitration
Act limits a challenge to an award only on the grounds
provided therein or as interpreted by various courts. We
need to be cognizant of the fact that arbitral awards
should not be interfered with in a casual and cavalier
manner, unless the court comes to a conclusion that the
perversity of the award goes to the root of the matter
without there being a possibility of alternative
interpretation which may sustain the arbitral award.
Section 34 is different in its approach and cannot be
equated with a normal appellate jurisdiction. The mandate
under Section 34 is to respect the finality of the arbitral
award and the party autonomy to get their dispute
adjudicated by an alternative forum as provided under the
law. If the courts were to interfere with the arbitral award
in the usual course on factual aspects, then the
commercial wisdom behind opting for alternate dispute
resolution would stand frustrated.
25. Moreover, umpteen number of judgments of this Court
have categorically held that the courts should not interfere
with an award merely because an alternative view on facts
and interpretation of contract exists. The courts need to be
cautious and should defer to the view taken by the Arbitral
Tribunal even if the reasoning provided in the award is
implied unless such award portrays perversity
unpardonable under Section 34 of the Arbitration Act.”
16. It is seen that the scope of interference in an appeal under
Section 37 of the Act is restricted and subject to the same grounds
on which an award can be challenged under Section 34 of the Act.
In other words, the powers under Section 37 vested in the court of
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 41 of 47
Signing Date:22.08.2025
18:20:07
appeal are not beyond the scope of interference provided under
Section 34 of the Act.
17. In paragraph 14 of MMTC Limited v. Vedanta Limited, it has
been held as under:
“14. As far as interference with an order made under
Section 34, as per Section 37, is concerned, it cannot be
disputed that such interference under Section 37 cannot
travel beyond the restrictions laid down under Section 34.
In other words, the court cannot undertake an independent
assessment of the merits of the award, and must only
ascertain that the exercise of power by the court under
Section 34 has not exceeded the scope of the provision.
Thus, it is evident that in case an arbitral award has been
confirmed by the court under Section 34 and by the court
in an appeal under Section 37, this Court must be
extremely cautious and slow to disturb such concurrent
findings.”
18. Recently a three-Judge Bench in Konkan Railway Corporation
Limited v. Chenab Bridge Project Undertaking referring to MMTC
Limited (supra) held that the scope of jurisdiction under Section 34
and Section 37 of the Act is not like a normal appellate jurisdiction
and the courts should not interfere with the arbitral award lightly
in a casual and a cavalier manner. The mere possibility of an
alternative view on facts or interpretation of the contract does not
entitle the courts to reverse the findings of the arbitral tribunal.
***
CONCLUSION:
20. In view of the above position in law on the subject, the scope of
the intervention of the court in arbitral matters is virtually
prohibited, if not absolutely barred and that the interference is
confined only to the extent envisaged under Section 34 of the Act.
The appellate power of Section 37 of the Act is limited within the
domain of Section 34 of the Act. It is exercisable only to find out if
the court, exercising power under Section 34 of the Act, has acted
within its limits as prescribed thereunder or has exceeded or failed
to exercise the power so conferred. The Appellate Court has no
authority of law to consider the matter in dispute before the
arbitral tribunal on merits so as to find out as to whether the
decision of the arbitral tribunal is right or wrong upon reappraisal
of evidence as if it is sitting in an ordinary court of appeal. It is
only where the court exercising power under Section 34 has failed
to exercise its jurisdiction vested in it by Section 34 or has
travelled beyond its jurisdiction that the appellate court can step in
and set aside the order passed under Section 34 of the Act. Its
power is more akin to that superintendence as is vested in civil
courts while exercising revisionary powers. The arbitral award is
not liable to be interfered unless a case for interference as set out
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 42 of 47
Signing Date:22.08.2025
18:20:07
in the earlier part of the decision, is made out. It cannot be
disturbed only for the reason that instead of the view taken by the
arbitral tribunal, the other view which is also a possible view is a
better view according to the appellate court.
21. It must also be remembered that proceedings under Section 34
of the Act are summary in nature and are not like a full-fledged
regular civil suit. Therefore, the scope of Section 37 of the Act is
much more summary in nature and not like an ordinary civil
appeal. The award as such cannot be touched unless it is contrary
to the substantive provision of law; any provision of the Act or the
terms of the agreement.”
41. Bearing these settled principles in mind, we, upon careful
analysis of the pleadings, documents, Arbitral Award, and the
Impugned Judgment, are of the opinion that the Impugned Judgment
does not exhibit any infirmity that would warrant the exercise of
jurisdiction under Section 37 of the A&C Act. On the contrary, the
Impugned Judgment reflects a correct appreciation of the arbitral
record and a proper application of the law.
42. We find ourselves in agreement with the learned Single Judge‟s
finding that the Contract in question was executed purely on the basis
of estimates, computations, and projections furnished by the Appellant
itself. The Respondent had no independent means of verifying or
authenticating these figures, nor was it provided any occasion to
question their veracity.
43. It has come on record that the Respondent was induced to enter
into the Contract on the basis of data generated from the CCLS system
in its existing form at the time of tendering. The estimates reflected
total container traffic passing through the terminal without any
exclusion. The Respondent was thus led to reasonably believe that its
billing and remuneration would be premised upon that basis.
44. Both the learned Arbitrator and the learned Single Judge rightly
concluded that the Appellant‟s subsequent unilateral modification of
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 43 of 47
Signing Date:22.08.2025
18:20:07
the CCLS software, which redefined the billing criteria, amounted to a
fundamental alteration of the tender and consequently of the Contract.
Such a modification, made without the consent or participation of the
Respondent, went to the root of the contractual framework and
materially undermined the basis upon which the Respondent had
placed its bid.
45. It is also significant that the Respondent‟s original estimate
was, in fact, lower than the Appellant‟s projections. The subsequent
unilateral change by the Appellant directly prejudiced the
Respondent‟s performance, rendering the contract unviable and
unfairly shifting the economic burden.
46. A concurrent factual finding has also been recorded that, since
April 2013, the Appellant had been paying charges for all containers,
irrespective of the channel of clearance or the seal-cutting process,
which practice was inconsistent with the prevailing Customs
guidelines. This continued until April 2018, during the subsistence of
the Contract under question, when the Appellant unilaterally altered
the CCLS software to restrict billing only to containers whose seals
were opened. This change was not a mere procedural adjustment but a
substantive departure from the contractual understanding, which
altered the revenue model of the Respondent.
47. The learned Single Judge took into account the fact that,
although a change had been made to the CCLS software, which
ultimately became the sole basis on which the Respondent could raise
their invoices, the Appellant continued to charge its customers for all
containers that passed through the green channel which was also
admitted by the Appellant‟s witnesses.
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 44 of 47
Signing Date:22.08.2025
18:20:07
48. The learned Single Judge rightly appreciated that while the
Respondent was gravely prejudiced by this unilateral alteration, the
scope of interference under Section 34 did not permit a reappraisal of
the learned Arbitrator‟s findings. The learned Arbitrator‟s factual
findings, based on documentary and oral evidence, therefore deserved
deference, and the learned Single Judge was correct in upholding the
award on that basis.
49. The learned Single Judge‟s reasoning is further fortified by the
fact that, in the subsequent tender floated by the Appellant for the
successor or the party that took over the work from the Respondent,
the projected container volumes were almost 40% lower than those
reflected in the tender on the basis of which the Respondent had
entered the Contract. This lends credence to the Respondent‟s
consistent plea that the altered billing mechanism under the modified
CCLS software had materially reduced the contractual revenue base.
50. The Respondent‟s repeated representations to the Appellant
seeking to be released from the contract, on account of mounting
losses directly attributable to the software modification, also
demonstrate its bona fides. These requests, however, went
unanswered, and the Appellant compelled the Respondent to continue
performing its obligations, thereby deepening the financial hardship.
51. Further, the communications from the Appellant to the
Respondent were coercive in nature, explicitly threatening blacklisting
if the Respondent ceased performance. This Court notes that the
Respondent had no exit mechanism under the contract, which reserved
the right of termination exclusively with the Appellant. The imbalance
of bargaining power was thus stark, and the Respondent was left
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 45 of 47
Signing Date:22.08.2025
18:20:07
without any lawful recourse except continued performance of the
contract.
52. In these circumstances, in our opinion, both the learned
Arbitrator and the learned Single Judge were correct in holding that
the Respondent‟s grievance did not arise from any natural variation in
container traffic or business volume, but from a unilateral alteration of
the tender conditions and the billing mechanism by the Appellant
itself.
53. The conclusion of the learned Single Judge that the Respondent
must be restored to the contractual position originally projected by the
Appellant does not appear to be unjustified or perverse. The
Appellant‟s own conduct, continuing to charge its customers on the
original basis, while simultaneously denying the Respondent the same
benefit, further exposes the inequity of its actions.
54. The Appellant‟s submission that the Arbitrator impermissibly
invoked the doctrine of fairness and reasonableness merely because
the Appellant is an entity of the State, in our considered opinion, is
wholly misconceived. The findings indeed are rooted not in any such
doctrine but in a careful appreciation of evidence, which established
that the Appellant‟s unilateral alteration of the billing pattern
constituted a substantive change in the contractual terms themselves.
55. We are also of the opinion that the present is not a case where
the terms of the Contract may have been changed, but the continued
performance of which had been unilaterally altered. The foundational
document, namely the tender, in itself, had undergone a material and
substantial alteration, thereby rendering all actions thereupon, as
specified in the Contract, to be performed in a manner not originally
contemplated or provided for.
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 46 of 47
Signing Date:22.08.2025
18:20:07
56. In light of the afore-stated facts and circumstances, we believe
that the findings of the learned Arbitrator and the learned Single Judge
are well-reasoned, supported by evidence, and consistent with the
settled principles of law, and thus, no ground has been made out,
before us, for interference under Section 37 of the A&C Act.
Accordingly, the present appeal is devoid of merit and the same stands
dismissed.
57. The present Appeal, along with pending application(s), if any, is
disposed of in the above terms.
58. No order as to costs.
ANIL KSHETARPAL
(JUDGE)
HARISH VAIDYANATHAN SHANKAR
(JUDGE)
AUGUST 21, 2025/tk/nd/sm/ds
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA FAO(OS) (COMM) 64/2022 Page 47 of 47
Signing Date:22.08.2025
18:20:07