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Delhi High Court
Union Of India vs M/S Roshan Real Estate Pvt. Ltd on 13 May, 2025
Author: Sachin Datta
Bench: Vibhu Bakhru, Sachin Datta
$~J
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment pronounced on: 13.05.2025
+ FAO (OS) (COMM) 99/2023
UNION OF INDIA ..... Appellant
Through: Mr. Niraj Kumar and Mr. Chaitanya
Kumar, Advocates.
versus
M/S ROSHAN REAL ESTATE PVT. LTD. ..... Respondent
Through: Ms. Anusuya Salwan and Ms. Sonika
Singh, Advocates.
CORAM:
HON'BLE MR. JUSTICE VIBHU BAKHRU
HON'BLE MR. JUSTICE SACHIN DATTA
JUDGMENT
SACHIN DATTA, J.
1. The present appeal has been filed under Section 37 of the Arbitration
and Conciliation Act, 1996 (hereinafter referred as “the A&C Act”), read
with Section 13(1) of the Commercial Courts Act, 2015, assailing an order
dated 22.02.2023 passed by the learned Single Judge in OMP (COMM)
337/2022, whereby the petition filled by the Appellant under Section 34 of
the A&C Act, partly challenging the arbitral award dated 12.03.2022, was
dismissed.
2. The arbitral award was rendered in the backdrop of an open tender
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floated by the Appellant in the year 2012 for ‘Construction of Office
Building for Archaeological Survey of India (ASI) at 24 Tilak Marg, New
Delhi including electoral installation’ (hereinafter referred as ‘the project’).
The Respondent/Claimant submitted its bid on 23.03.2012, subsequent to
which, contract was awarded to the respondent vide letter no.3983 dated
27.09.2012 and Agreement No. 63/EE-A Division/2012-13, was executed
between the parties.
3. In terms of the agreement between the parties, the construction work
was scheduled to commence on 18.10.2012 and stipulated to be completed
within a period of 18 months from the date of commencement (i.e.,
17.04.2014). However, admittedly, the aforesaid work was completed on
31.03.2017, after a delay of 1079 days.
4. The disputes between the parties arose as regards the monetary
entitlement of the Respondent/Claimant under the agreement. Since the
dispute/s between the parties persisted, the Respondent/Claimant issued
notice of invocation dated 19.11.2019 to the Appellant.
5. Pursuant thereto, in terms of the arbitration clause, vide letter dated
31.12.2019, a Sole Arbitrator was appointed by the Additional Director
General (RD) of the Central Public Works Department (CPWD). The
resultant arbitral proceedings culminated into an award dated 12.03.2022.
The summary of the award rendered by the learned Sole Arbitrator is set out
in paragraph 21.1 of the award as under:-
Claims Claimed Amount Awarded Amount Interest awarded
No. (Rs.) (Rs.) @10% P.A. from
1. 19,01,77,861/- 3,96,50,560/- 18.10.2018
2. 1,98,99,939/- 1,00,00,000/- 18.10.2018
3. 42,97,333/- Nil Nil
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4. 6,00,000/- Nil Nil
5. 3,00,79,897/- 1,43,38,475/- 26.09.2019
6. 1,09,38,144/- Nil Nil
7. 36,57,318/- plus GST 12,30,309/- + GST 18.10.2018
plus NGT TAX (not Declaratory
calculated)
8. Bank charges@3% 12,00,000/- 26.09.2019
p.a. 12,36,000/-
9. 42,20,186/- Nil Nil
10. 12,00,000/- 8,48,006/- Nil
11. Interest @15% p.a. Interest @10% p.a. As per claim no.
11
12. 40,00,000/- 28,00,000/- Nil
Total 27,03,06,678/- plus 7,00,67,350/-
Interest
6. There is no challenge in the present proceedings to the constitution of
the Arbitral Tribunal. In fact, a large part of the award has been accepted by
the petitioner. The grievance of the appellant is confined to the award in
respect of two claims viz. Claim No. 1 (Part-I) Serial No.11 and Claim
No.12.
Claim No. 1 (Part-I) Serial No.11, was towards ‘Pumping and bailing out
water caused by springs, tidal or river seepage, broken water mains or drains
and the like’. A sum of Rs. 2,80,80,000/- has been awarded thereunder as
against the Claim amount of Rs.15,13,60,695/-.
Claim No.12 was towards “Cost of proceedings Rs. 10,00,000/- plus fee and
other expenses to be paid to the arbitrator on actual basis”. A sum of
Rs.28,00,000/- has been awarded in respect thereof.
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By:ABHISHEK THAKUR
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7. In the aforesaid conspectus, the Appellant preferred its petition under
Section 34 of the A&C Act. The said petition came to be dismissed vide
impugned judgment dated 22.02.2023, whereby, the learned Single Judge
held that the learned Sole Arbitrator had given “extensive findings and
elaborate reasons”, and therefore, the challenge was outside the ambit and
scope of Section 34 of the A&C Act. The relevant portion of the aforesaid
judgment reads as under:-
“28. Upon perusal of the pleadings and upon hearing the counsel for the
petitioner, it is found that the grounds that have been invoked and the
contentions that have been raised on behalf of the petitioner are
essentially and substantially on merits of the case, dispute between the
parties and the Arbitral Award.
29. As discussed in the foregoing paragraphs, this Court shall not sit in
appeal and re-adjudicate the disputes between the parties while
exercising its jurisdiction under Section 34 of the Arbitration Act. Hence,
the petitioner does not stand on this ground. Secondly, the petitioner has
raised the grounds of contradiction to the public policy and fundamental
policy, as well as of no evidence and the Award being unreasoned,
however, has miserably failed to establish the same.”
8. In the aforesaid circumstances, the present appeal has been filed by
the Appellant before this Court.
9. It is noted that the challenge in the petition appeal is also confined to
the award in respect of the aforesaid two claims.
SUBMISSIONS ON BEHALF OF THE APPELLANT
10. Learned counsel on behalf of the Appellant submits that the learned
Sole Arbitrator neither had the requisite expertise nor deliberated upon the
issue/s arising in respect of Claim No. 1. (Part-I) serial no. 11. It is stated
that the said claim was dealt with by the learned Sole Arbitrator primarily
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relying upon conjectures and surmises.
11. It is also submitted that the learned Sole Arbitrator assessed the
amount to be awarded as Rs.2,80,80,000/- on a presumption that atleast 10
pumps must have been installed by the Respondent/Claimant along with
extra pumping for dewatering from the construction site for a period of 19.5
months, 24 hours per day manner. It is contended that the extent of
dewatering alleged to be carried out by the Respondent/Claimant is
untenable.
12. Further, it is submitted that the version of the Respondent/Claimant
as regards the number of bore wells that were installed is ex facie untenable
inasmuch as it is practically impossible to install the number of borewells as
asserted by the Respondent/Claimant.
13. It has been further submitted that the reliance placed by the learned
Sole Arbitrator on the ‘Site Order Book’ for the purpose of assessing Claim
No. 1. (Part-I) serial no. 11 is misconceived. It is alleged that the ‘Site Order
Book’ was manipulated and the same is evident from letter dated 11.03.2021
addressed by the Assistant Engineer (who was working in the project at the
relevant time) to the learned Sole Arbitrator. The said letter was obtained
during the pendency of the arbitral proceedings and was filed towards the
end of the said proceedings. It is, however, submitted that the same has not
been taken note of in the impugned award.
14. It is further submitted that the Arbitral Tribunal failed to take note of
the relevant provisions of the contract in terms of which the payment
claimed by the Respondent/Claimant towards dewatering was clearly
inadmissible.
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By:ABHISHEK THAKUR
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15. As regards, the award in respect of Claim No.12, it is submitted that
the claim filed by the Respondent/Claimant before the learned Sole
Arbitrator was for a sum of Rs. 10,00,000/- towards the fee of the learned
Sole Arbitrator and other expenses emanating out of the said proceedings.
However, the arbitrator went beyond what was claimed and awarded a sum
of Rs. 28,00,000/- without disclosing any cogent rationale for arriving at the
said amount. It is further submitted that even though the fee was payable in
terms of the Office Memorandum dated 19.11.2019 issued by the CPWD
[which governs the fee structure and other allowances of panel arbitrators],
the learned Sole Arbitrator erroneously proceeded to charge fee on the basis
of IVth Schedule of the A&C Act.
16. In the circumstances, the learned counsel on behalf of the Appellant
has sought to assail the impugned award in respect of the aforesaid claims
on the premise that the same are vitiated on account of patent illegality and
hence, liable to be set aside.
SUBMISSIONS ON BEHALF OF THE RESPONDENT
17. Learned counsel for the Respondent/Claimant has submitted that the
impugned award is well reasoned and is based on an elaborate consideration
and appreciation of the factual and contractual conspectus. It is submitted
that the “dewatering work” performed by the Respondent/Claimant is borne
out from the records. It is submitted that a detailed analysis of rates was
submitted by the Respondent/Claimant to the concerned Executive Engineer
of the Appellant in regards to the extra work performed, however, the same
was not considered during the course of execution of the contract. It is
submitted that a detailed analysis of rates was also filed before the Arbitral
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Tribunal and the same was duly considered by the Arbitral Tribunal. It is
submitted that the quantum of work is evident from the material on record
before the Arbitral Tribunal, and the challenge to the contents of the
appellant’s own site order book was made only at the fag end of arbitral
proceedings
18. It is further submitted that the award in respect of Claim No.12 is also
perfectly justified and based on the quantum of fee/ cost actually borne by
the Respondent/Claimant and as such, the same brooks no interference in
exercise of jurisdiction under Section 34 or 37 of the A&C Act.
19. Reliance is also placed on multiple authorities to emphasise that
jurisdiction of this Court under Section 34 or 37 of the A&C Act is
extremely limited and circumscribed and that it is unwarranted to interfere
with the impugned award in the facts and circumstances of the present case.
REASONING AND CONCLUSION
20. The impugned award deals with Claim No. 1 (Part-I) Serial No.11 i.e.,
‘Pumping and bailing out water caused by springs, tidal or river seepage,
broken water mains or drains and the like’, in the following terms:-
“S. No.11: Pumping and bailing out water caused by springs, tidal or
river seepage, broken water mains or drains and the like.
I have carefully gone through the pleadings of the parties. In the instant
case the date of start of the work was 18.10.2012 and that of stipulated
date of completion 17.04.2014 with time allowed of 18 months. Normally
as per the sound engineering practice, the dewatering is done only till
the structural work maximum up to 2nd floor level is completed which as
per the miles stone provided in the contract should have been done
within 10 months of the date of start, and the dewatering is stopped a
bidding contractor will take in to account that he has to do dewatering
say for a maximum period of 12 months, leaving 6 months for finishing,
but in the instant case instruction through site order book were issued bySignature Not Verified
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the respondents on 05.11.2013. It is pertinent to mention that as per the
instructions, the claimants was instructed as under:-
The consultant has confirmed that the casting of slab can be done subject
to the following precautionary measures.
1. Dewater and maintain the ground water table at least 1.0 meter below
bottom of raft,
2. Dewatering shall be continued till completion of structural work and
earth back filling work and any other permanent finish in the area.
You are (claimants) are requested to strictly follow the above
precautionary measure in order to have structural stability of the
building.
The claimants noted the instruction on 05.11.2013 for compliance and
compliance was recorded by the claimant’s representative 07.11.2013 by
mentioning that 15 Nos of pumps are working with 24 hours with 15 Nos
of stand by pump with all necessary back up as also seen by you and the
payment was also claimed.
To the above the respondents recorded that necessary action taken by the
contractor.
Another note dated 20.12.2013 in the site order book states that,” Please
recall the instruction given on S.O.B. on 05.11.2013, it was instructed
not to discontinue dewatering of the area unless entire structure &
finishing is completed. It is once again directed not to discontinue
dewatering of the area.
3. From the above it is clear that the instructions were not to
discontinue dewatering till finishing work is completed which means
the period of dewatering will end only about six months before the
actual completion. As per the miles stone period of dewatering will be
about 45 months from the date of start as per the table of miles stone.
The drawings were issued and respondents Consultant imposed
precautionary condition and neither the drawings nor such instruction
were part of the tender documents and due to the failures of the
respondents in issuing the drawings the work prolonged by about 33
months and the claimants would have been entitled for extra payment of
pumping after 12 months from date of start as per my observation, i.e.
for about 33 (45- 12) months but the claimants himself has claimed for
the period from 18.04.2014 to 30.11.2015, (19.5 months) i.e. after the
stipulated date of completion which was 17.04.2014 and I feel that the
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approach of the claimants is very fair under the circumstances. It is
also to be noted that no bidder takes in to account the abnormal delay
only due to the fact that the respondents failed to handed over site or
issue drawings, decisions etc. due to which the structural work could
not be completed within time and the claimants had to keep running
the pumps for about 45 months instead of roughly 12 months, hence
the condition referred by the respondents is of no help since the
claimants have excluded the stipulated period and since the losses are
nonrecoverable which needs to be compensated on account of running
the pumps for extra period for which the respondents are responsible.
4. The respondents vide their submission dated 12.04.2021, has filed a
letter dated 11.03.2021 said to be observation of the then AE in charge
has no meaning because the respondents have not led any evidence, the
letter is dated 11.03.2021 from Mr. Malik, now Executive Engineer is
meaningless and cannot be relied upon and such letter should have
been filed along with the statement of defence and then with the Sur
Rejoinder which was filed vide letter dated 15.02.2021, i.e. after the
claimants completed their oral arguments on 01.02.2021 having not
done so, the stage at which the letter was filed, it cannot be ruled out
that the such letter is an obtained letter/document after thought. Since
the copy of the letter is endorsed to the claimants the claimants have
already clarified in rejoinder that any letter neither addressed to
claimants nor copy endorsed to them should be treated as not admitted.
Therefore, the letter is of no legal consequence.
5. In view of my finding above the claim against the item is justified. The
claimants have filed the A/R of the item on page 311 of volume-II and the
detail measurement also with the A/R on page 310 of Volume IL The
claimants have considered 15 Nos of pumps as under: (15X24X60X180X
592)/1000 =2301696 kl/pm
Whereas: -15 is number of pumps, 24 are hours per day, 60-minute per
hour, 180 the discharge of pump in liters per minute and 592 number of
days.
6. Although the respondents have denied the claim but have not offered
any comments on quantification and rate. But of my own, I feel that there
cannot be a constant discharge because the discharge also depends on
other factor and one being height of discharge. The Claimant is claiming
a total amount of Rs.15,13,60,695/- which is too high.
7. It is noticed that pumping has to be done for about 45 months instead
of 12 months i.e., for about 33 months extra whereas the Claimant has
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claimed for extra pumping of about 19.5 months only which is
reasonable.
8. As the work has been delayed due to the Respondent including clients
etc., as decided in para 8.2.6.11 & 8.3.3 the Claimant is to be
compensated for extra cost of pumping. Which is part of nonrecoverable
losses.
9. The Claimant has claimed 15 nos. of pumps installed and 15 nos.
pumps stand by whereas the Respondents has doubted that so many nos.
of pumps were installed as per the Respondent submission dated
21.04.2021, though the Respondent version is not reliable. However, I
assessed at least 10 nos. of pump must have been installed with some
stand by pumps.
10. In view of above I asses that 10 nos. of pump were installed and extra
pumping was done for 19 .5 months. The running cost of each pump
including all expenses is about Rs.200 per hrs. Thus, the cost for running
of pumps per months is Rs. 10 x 200 x 24 x 30 = Rs.14,40,000/- per
month. Thus, the cost for running of pumps for 19.5 months is
Rs.14,40,000 x 19 .5 = Rs.2,80,80,000/- Therefore, the Claimant is
entitled for Rs.2,80,80,000/- against this Claim.
Keeping in view of above, I award Rs. 2,80,80,000/- in favour of the
Claimant against this claim.”
21. From perusal of the aforesaid, it can be seen that the arbitral award
takes into account the following aspects while assessing the aforesaid
claim:-
i. As per usual practise, dewatering is contemplated only till
completion of structural work upto second floor level, which in
terms of the contractual milestones, should have been confined
to a period of 10-12 months from the date of start of the work;
ii. However, in terms of instructions issued through the ‘Site
Order Book’ on 05.11.2013 the Respondent/Claimant was
instructed to continue with dewatering so as to maintain the
ground water table at least 1.0 meter below bottom of the raft,Signature Not Verified
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and to continue with dewatering till completion of the entire
structural work, earth back filling work and other finishing
work;
iii. Consequently, the dewatering work had to be done through the
entire duration of the contract (including prolongation period of
33 months);
iv. The award renders elaborate findings (not challenged by the
appellant) that the appellant was “entirely responsible” for the
prolongation of the contract;
v. Given that the contractual period was significantly elongated,
Respondent/Claimant could have claimed additional dewatering
charges for a period of 33 months. However, the
Respondent/Claimant confined its claim for dewatering charges
only for a period of 19.5 months (for 18.04.2014 to
30.11.2015). The learned Sole Arbitrator found this to be “fair”.
vi. The award notes that the claim of Rs. 15,13,60,695/- raised by
the Respondent/Claimant under this claim, was on the premise
that the Respondent/Claimant installed 15 dewatering pumps
working 24 hours per day. The learned Sole Arbitrator found
that the claim was unreasonably excessive and accordingly,
moderated the claim and assessed the Respondent/Claimant
entitlement on the basis that ‘atleast 10 number of pumps were
installed for 19.5 months and the running cost of each pump
including all expenses is approximately Rs. 200 per hour’.
Resultantly, the amount of Rs. 2,80,80,000/- was worked out.
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22. The primary contention of the learned counsel for the Appellant is
that the learned Sole Arbitrator failed to take note of the letter dated
11.03.2021 furnished by the concerned official (who was working in
capacity of an Assistant Engineer at the time of execution of the contract)
whereby a doubt has been cast on the veracity of the remarks of the
respondent on the ‘Site Order Book’, and as regards the assertion of the
Respondent/Claimant as regards the number of bore wells installed. It is
significant that the letter does not controvert or dispute the instruction/s
recorded in the site order book to the effect that dewatering measures were
instructed to ensure (i) that the water table is maintained at least 1 meter
below the bottom of the raft; (ii) dewatering shall be continued till
“completion of structural work and earth back filling and any other
permanent finish in the area”.
23. The said letter was obtained from the then Assistant Engineer during
the course of arbitral proceedings and sought to be placed on record. It is
further pointed out in these proceedings that subsequent to the said letter
being obtained, a police complaint was also filed by the Appellant alleging
forgery in the ‘Site Order Book’.
24. With regard to the aforesaid aspect, the learned Sole Arbitrator notes
in the impugned award the contents of ‘Site Order Book’ were not
impeached by the appellant in its statement of defence, and not even in its
sur-rejoinder. It was noted that the letter was belatedly submitted, after oral
arguments had been completed by the respondent/ claimant. The learned
Sole Arbitrator found that the same was of no legal consequence.
25. The aforesaid view taken by the learned Sole Arbitrator cannot be
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said to be untenable. It is noticed that in the Statement of Defence filed by
the appellant in the arbitral proceedings (‘the SoD’), all that was submitted
with regard to this Claim, was as under:
“The claim made under para 5 is also false and not tenable because it is
covered under different conditions of the contract, that nothing shall be
paid extra for pumping out of water”
26. It can be seen that the SoD does not specifically deny the extent of
deployment of pumps as asserted in the Statement of Claim (hereinafter
referred as ‘the SoC’) based on instructions of the Appellant. The relevant
averments in the SoC read as under:-
“The other major item is item No. EI 21/3 at S. No.11 read as: Pumping
out water…………….
In the BOQ there was no such item but the water level of the sub-soil was
very high requiring continuous running of pumps for dewatering for
24X7; 15 Nos. of pumps, each with a discharge of 180 LPM and equal
number of standby pumps were deployed. The deployment of pumps is an
admitted fact and the respondents were informed through monthly report
as well as through letters. Refer C-5, C-10, C-23, C-43, C-44, C-45, C-49
and others. The instructions were not to stop dewatering till completion
of structure work and to maintain the ground water table at least one
meter below from the bottom of the raft. Hence extra item and claim.”
27. It has been noticed that while assessing the claim, the learned Sole
Arbitrator has taken care to assess the entitlement of Respondent/Claimant
based on a realistic level of deployment. Accordingly, the sum awarded is
only a fraction of what was claimed by the Respondent/Claimant.
28. As regards the contract conditions relied upon by the appellant to urge
that the work of dewatering was included in the item rates and no extra
amount was payable for the same, the impugned award notices that the
dewatering work stretched for an additional period of 33 months (over and
above the period envisaged under the contract). The respondent/ claimant
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confined its claim only to a certain period after the scheduled completion
date. The award lays the blame for prolongation of the contract, squarely
upon the appellant. It is in this peculiar background, that the claim was
found to be admissible.
29. In the above context, it cannot be said the view taken in the impugned
award is not even a possible view, so as to warrant interference in
proceedings under Section 34 and/or 37 of the A&C Act, 1996. On the
contrary, the approach of the arbitrator appears to be judicious; the learned
arbitrator has also moderated the claim, taking into account the attendant
facts and circumstance.
30. In the circumstances, there is no justification to interfere with the
findings in the impugned award in respect of the aforesaid claims, having
regard to the scope of jurisdiction under Section 34 and/or 37 of the A&C
Act. The legal position in this regard is well settled and reiterated time and
again by the Supreme Court.
31. In Punjab State Supplies Corporation Ltd and Anr. vs Sanman Rice
Mills and Ors., 2024 SCC OnLine SC 2632 the Supreme Court has once
again reiterated that 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. The relevant
portions of the said judgment are as under:
“LEGAL POSITION:
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9. The object of the Act is to provide for a speedy and inexpensive
alternative mode of settlement of dispute with the minimum of
intervention of the courts. Section 5 of the Act is implicit in this regard
and prohibits interference by the judicial authority with the arbitration
proceedings except where so provided in Part-I of the Act. The judicial
interference, if any, is provided inter-alia only by means of Sections 34
and 37 of the Act respectively.
10. Section 34 of the Act provides for getting an arbitral award set aside
by moving an application in accordance with sub-Section (2) and sub-
Section (3) of Section 34 of the Act which inter-alia provide for the
grounds on which an arbitral award is liable to be set aside. One of the
main grounds for interference or setting aside an award is where the
arbitral award is in conflict with the public policy of India i.e. if the
award is induced or affected by fraud or corruption or is in
contravention with the fundamental policy of Indian law or it is in
conflict with most basic notions of morality and justice. A plain reading
of Section 34 reveals that the scope of interference by the court with the
arbitral award under Section 34 is very limited and the court is not
supposed to travel beyond the aforesaid scope to find out if the award is
good or bad.
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 theSignature Not Verified
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terms of the contract, there is 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.”
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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 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.
19. In Bombay Slum Redevelopment Corporation Private Limited v.
Samir Narain Bhojwani, a Division Bench of this Court followed and
reiterated the principle laid down in the case of MMTC Limited (supra)
and UHL Power Company Limited v. State of Himachal Pradesh. It
quoted and highlighted paragraph 16 of the latter judgment which
extensively relies upon MMTC Limited (supra). It reads as under:
“16. As it is, the jurisdiction conferred on courts under Section 34
of the Arbitration Act is fairly narrow, when it comes to the scope
of an appeal under Section 37 of the Arbitration Act, the
jurisdiction of an appellate court in examining an order, setting
aside or refusing to set aside an award, is all the more
circumscribed. In MMTC Ltd. v. Vedanta Ltd. [MMTC Ltd. v.
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Vedanta Ltd., (2019) 4 SCC 163 : (2019) 2 SCC (Civ) 293], the
reasons for vesting such a limited jurisdiction on the High Court in
exercise of powers under Section 34 of the Arbitration Act have
been explained in the following words : (SCC pp. 166-67, para 11)“11. As far as Section 34 is concerned, the position is well settled
by now that the Court does not sit in appeal over the arbitral
award and may interfere on merits on the limited ground provided
under Section 34(2)(b)(ii) i.e. if the award is against the public
policy of India. As per the legal position clarified through
decisions of this Court prior to the amendments to the 1996 Act in
2015, a violation of Indian public policy, in turn, includes a
violation of the fundamental policy of Indian law, a violation of the
interest of India, conflict with justice or morality, and the existence
of patent illegality in the arbitral award. Additionally, the concept
of the “fundamental policy of Indian law” would cover compliance
with statutes and judicial precedents, adopting a judicial
approach, compliance with the principles of natural justice, and
Wednesbury [Associated Provincial Picture Houses Ltd. v.
Wednesbury Corpn., [1948] 1 K.B. 223 (CA)] reasonableness.
Furthermore, “patent illegality” itself has been held to mean
contravention of the substantive law of India, contravention of the
1996 Act, and contravention of the terms of the contract.
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 in the
earlier part of the decision, is made out. It cannot be disturbed only for
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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.”
32. Similarly, a three-judge Bench of the Supreme Court in UHL Power
Co. Ltd. v. State of H.P., (2022) 4 SCC 116 have discussed the limited
scope of interference under Sections 34 and 37 of the A&C Act and
observed as under:-
“15. This Court also accepts as correct, the view expressed by the
appellate court that the learned Single Judge committed a gross error in
reappreciating the findings returned by the Arbitral Tribunal and taking
an entirely different view in respect of the interpretation of the relevant
clauses of the implementation agreement governing the parties inasmuch
as it was not open to the said court to do so in proceedings under Section
34 of the Arbitration Act, by virtually acting as a court of appeal.
16. As it is, the jurisdiction conferred on courts under Section 34 of the
Arbitration Act is fairly narrow, when it comes to the scope of an appeal
under Section 37 of the Arbitration Act, the jurisdiction of an appellate
court in examining an order, setting aside or refusing to set aside an
award, is all the more circumscribed….”
33. The Supreme Court in Haryana Tourism Ltd. v. Kandhari Beverages
Ltd., (2022) 3 SCC 237, again reiterated the limited scope of interference
under Sections 34 and 37 of the A&C Act and held as under:-
“8. So far as the impugned judgment and order passed by the High Court
quashing and setting aside the award and the order passed by the
Additional District Judge under Section 34 of the Arbitration Act are
concerned, it is required to be noted that in an appeal under Section 37
of the Arbitration Act, the High Court has entered into the merits of the
claim, which is not permissible in exercise of powers under Section 37 ofSignature Not Verified
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the Arbitration Act.
9. As per settled position of law laid down by this Court in a catena of
decisions, an award can be set aside only if the award is against the
public policy of India. The award can be set aside under Sections 34/37
of the Arbitration Act, if the award is found to be contrary to : (a)
fundamental policy of Indian Law; or (b) the interest of India; or (c)
justice or morality; or (d) if it is patently illegal. None of the aforesaid
exceptions shall be applicable to the facts of the case on hand. The High
Court has entered into the merits of the claim and has decided the appeal
under Section 37 of the Arbitration Act as if the High Court was deciding
the appeal against the judgment and decree passed by the learned trial
court. Thus, the High Court has exercised the jurisdiction not vested in it
under Section 37 of the Arbitration Act. The impugned judgment and
order passed by the High Court is hence not sustainable.”
34. As regards the Award in respect of Claim No.12, it is noticed that the
statement of claim filed on behalf of the Respondent/Claimant, avers as
under:-
“Claim No.12:- The contractor claim cost of proceeding Rs, 10,00,000/-
plus the fee and other expenses to be paid to the arbitrator on actual
basis.
Since the claimants have been unnecessary dragged in to litigation, and
had to pay legal expenses, therefore it is prayed that a sum of Rs. Ten
lacs as cost of proceeding plus the fee and other expenses to be paid to
the Ld. Arbitrator may please be awarded in favour of the claimants.
The Ld. Arbitrator is further requested to please award service tax/GST
as per rule on the whole amount awarded since it is compulsory to pay
GST.”
35. The impugned award in respect of the aforesaid claim, is in the
following terms:-
“20. Claim No.12: – The contractor claim cost of proceeding
Rs.10,00,000/- plus the fee and other expenses to be paid to the
arbitrator on actual basis.
And
Counter claim No.1
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Signing Date:16.05.2025
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20.1. Claimant’s submission:
Since the claimants have been unnecessary dragged in to litigation, and
had to pay legal expenses, therefore it is prayed that a sum of Rs. Ten
lacs as cost of proceeding plus the fee and other expanses to be paid to
the Ld. Arbitrator may please be awarded in favour of the claimants.
The Ld. Arbitrator is further requested to please award service tax/GST
as per rule on the whole amount awarded since it is compulsory to pay
GST.
20.2 Respondent’s submission:
That the claimant has unnecessarily dragged to the respondent in
litigation on the basis of the false and fabricated claim hence the claim is
denied & deserve to be rejected.
It is specifically mentioned here that the Ld. Arbitrator can adjudicate
the issues in terms of the contract/ agreement, as the Hon’ble High
Court Of Allahabad has held in the matter between the Executive
Engineer, Lucknow Central Div. and District Judge and others, dated
29 may 2020. Judgement of Hon’ble High Court has been upheld by
Apex Court.
Counter Claim no.1:
The Claimant has unnecessarily and with malafide intension has
dragged to the Respondent in litigation therefore the Ld. Arbitrator
humbly prayed to award Rs.3.00 lakhs the cost of litigation in addition
on the payment to be made to the Ld. Arbitrator in favour of the
Respondent and against the Claimant.
Any other relief, the Ld. Arbitrator may deem fit, be awarded in favour of
the Respondent and against the Claimant.
20.3. Rejoinder submission by the Claimant:
The claimants reiterate their submission made in the SOC and the
contents of SOD are denied. The Ld. Arbitrator may please be awarded
in favour of the claimants.
The Ld. Arbitrator is further requested to please award GST as per rule
on the whole amount awarded since it is compulsory to pay GST.
20.4. Analysis & Finding of the Tribunal:
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By:ABHISHEK THAKUR
Signing Date:16.05.2025
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20.4.1. After overall analyses of the record placed before this tribunal, it
is found that the Claimants had to undergo arbitration for their claims
which have been found payable to them. Although Claimant claims are
found slightly exaggerated, some of them also found justified on merits.
Accordingly, the claim of cost is also not unjustified. Therefore, they are
entitled to be compensated for the cost of arbitration.
20.4.2. The claimant has claimed Rs.10.00 Lakhs cost of proceeding plus
Arbitrator fee and other expenses on actual basis during SOC which is
not also quantified at the time of written submission. However, taking
into consideration the claimant’s share towards fee and other expenses,
stamp duty payable on the awarded amount and also the expenses
incurred in engagement of Counsel and other miscellaneous expenses,
and the claimants having able to establish most of his claim this tribunal
is of the opinion that the amount of claim towards cost is not
unreasonable when it is compared with the amount of award. Hence
Rs.28,00,000 lakhs will be reasonable.
20.4.3. The Respondent has also given counter Claim of Rs. 3,00,000/-
lakhs towards cost of arbitration. After going through the above award,
it is clear that most of the claim has gone in the favour of Claimant,
hence the Claimant cannot be blamed for the arbitration. Thus, the
counter claim of the Respondent is rejected.
20.4.4. In view of above I award Rs. 28,00,000/- lakhs in favour of
Claimant under this claim & Nil amount is awarded in favour of the
Respondent against counter claim.
36. Substantial arguments have been addressed on the aspect of whether
the learned Sole Arbitrator was entitled to charge fee based on the IVth
Schedule of A&C Act or in terms of the Office Memorandum dated
19.11.2019 issued by the CPWD. It appears to have been assumed that the
award of Rs. 28,00,000/- under Claim No.12 has been worked out taking
into account the fees charged by the Arbitrator as per the IVth Schedule.
However, a perusal of the award reveals that the same discloses no basis at
all for arriving at a figure of Rs. 28,00,000/-.
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By:ABHISHEK THAKUR
Signing Date:16.05.2025
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37. The amount claimed by the Respondent/Claimant was “Rs.
10,00,000/- plus the fees and other expenses to be paid to the arbitrator on
actual basis.” Neither does the award indicate as to what is the fees and
expenses paid to the Sole Arbitrator on actual basis, nor is there anything in
the award to indicate as to how the Sole Arbitrator has apportioned the fees
and expenses between the parties.
38. There is also no reasoning discernible in the award as to how the
claim of the Respondent/Claimant for Rs. 10,00,000/- as “cost of
proceedings” has been dealt with by the learned Sole Arbitrator.
39. The Supreme Court in Delhi Metro Rail Corporation Limited v.
Delhi Airport Metro Express Private Limited 1, (2024) 6 SCC 357, relying
upon Associate Builders vs. DDA, (2015) 3 SCC 49, has affirmed that
“patent illegality may also arise where the award is in breach of the
1
“34. The contours of the power of the competent court to set aside an award under Section 34
has been explored in several decisions of this Court. In addition to the grounds on which an
arbitral award can be assailed laid down in Section 34(2), there is another ground for challenge
against domestic awards, such as the award in the present case. Under Section 34(2-A) of the
Arbitration Act, a domestic award may be set aside if the Court finds that it is vitiated by “patent
illegality” appearing on the face of the award.
35. In Associate Builders v. DDA [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC
(Civ) 204] , a two-Judge Bench of this Court held that although the interpretation of a contract is
exclusively within the domain of the arbitrator, construction of a contract in a manner that no fair-
minded or reasonable person would take, is impermissible. A patent illegality arises where the
arbitrator adopts a view which is not a possible view. A view can be regarded as not even a
possible view where no reasonable body of persons could possibly have taken it. This Court held
with reference to Sections 28(1)(a) and 28(3), that the arbitrator must take into account the terms
of the contract and the usages of trade applicable to the transaction. The decision or award should
not be perverse or irrational. An award is rendered perverse or irrational where the findings are:
(i) based on no evidence;
(ii) based on irrelevant material; or
(iii) ignores vital evidence.
36. Patent illegality may also arise where the award is in breach of the provisions of the
arbitration statute, as when for instance the award contains no reasons at all, so as to be
described as unreasoned.
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provisions of the arbitration statute, as when for instance the award
contains no reasons at all, so as to be described as unreasoned”.
40. As such, the award in respect of Claim No.12 is unsustainable.
41. Accordingly, the present appeal is partly allowed, to the extent of
setting aside the impugned arbitral award in respect of Claim No. 12. The
award in respect of Claim No.1. (Part-I) serial no. 11 is not liable to be
interfered with.
42. The appeal is disposed of in the above terms.
SACHIN DATTA, J
VIBHU BAKHRU, J
MAY 13, 2025/uk, sl
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By:ABHISHEK THAKUR
Signing Date:16.05.2025
15:35:13
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