Nuclear Power Corporation of India Ltd. vs M/s. Standard Corrosion Controls Pvt. Ltd.

Nuclear Power Corporation of India Ltd. (“NPCIL”) has filed the two captioned Petitions under Section 34 of the Arbitration and Conciliation Act, 1996 (“the Act”). They challenge two arbitral awards, each dated December 6, 2016 and each corrected by a corrigendum dated December 27, 2016 (collectively, “Impugned Awards”).

Both the Impugned Awards are passed by a retired Chief Engineer of NPCIL in favour of Standard Corrosion Controls Pvt. Ltd. (“Standard Corrosion”).

The two underlying contracts and the two disputes are near-identical. The two contracts are :

Both contracts incorporate the same General Conditions of Contract (“GCC”). Clause 17.8 of the GCC entails reference of disputes to a sole arbitrator appointed by the Chairman and Managing Director of NPCIL, who appointed the Learned Arbitral Tribunal on June 18, 2015.

The sequence of events is common to both contracts, unless stated otherwise:

Three provisions of the GCC frame the controversy. Clauses 4.10.1 and 6.4.1, which deal with materials, read thus:

Clause 7.1.1 deals with time. It reads thus:

Clause 13.2.1, which deals with termination, reads thus:

Standard Corrosion invoked arbitration on January 14, 2015. It made nine claims. NPCIL made no counter-claim. NPCIL raised three preliminary objections but did not insist on them at the hearing on February 25, 2016. Both sides relied on documents. No oral evidence was led. The Learned Arbitral Tribunal heard the parties on February 25, 2016, March 11, 2016 and March 21, 2016 and received written arguments. He dealt with three issues:

The Learned Arbitral Tribunal decided all three issues in favour of Standard Corrosion:

Five heads of claims were allowed. On quantification, loss of profit was limited to 10% of the value of the unexecuted work. Claims 3, 4 and 9, for tools and tackles, statutory and administrative expenses and costs, were rejected. The sums awarded are as follows:

The corrigenda, issued under Section 33 of the Act, corrected the computation of pendente lite interest in both awards. The Anuvikas corrigendum also substituted the summary table and reduced the total payable from Rs. 39,13,832 to Rs. 33,02,000. If unpaid within 90 days, each sum carries simple interest at 15% per annum from the date of the award until payment. The parties were left to bear their own costs.

The Petitions were admitted on January 17, 2018 and have been on the docket of this Court since then. The Impugned Awards were stayed on condition that NPCIL deposit 75% of the awarded sum with interest within six weeks. Standard Corrosion was permitted to withdraw the deposit against a bank guarantee of a nationalised bank. On February 6, 2026, the parties were directed to file short Notes on Submissions and the hearing was time-bound. NPCIL concluded its submissions on April 2, 2026. Both sides filed Notes on Submissions dated April 8, 2026.

NPCIL primarily contends that the Impugned Awards conflict with the Public Policy of India. It says they contravene the fundamental policy of Indian law and the most basic notions of morality or justice, and that they are perverse and patently illegal. It says the findings are unsupported by evidence or ignore vital material on record. While a number of grounds have been pleaded, including levelling allegations about the lack of impartiality of the Learned Arbitral Tribunal, the aforesaid grounds alone were pressed in the submissions.

NPCIL’s contentions may be summarised thus:

Standard Corrosion’s contentions may be summarised thus:

In light of these contentions, and keeping in mind the narrow confines of the jurisdiction under Section 34 of the Act, the following core issues arise for determination:

I have heard at length Mr. Dhruva Gandhi, Learned Advocate on behalf of NPCIL and Mr. Prithviraj Gole, Learned Advocate on behalf of Standard Corrosion, and with their assistance, and written notes on arguments, I have examined the material on record.

At the threshold, it may be mentioned that arbitration was invoked in January 2015 i.e., well prior to the amendments to the Act that took effect on October 23, 2015, but the captioned Petitions were filed after the amendments took effect. Therefore, the post-amendment standard of review under Section 34 of the Act would apply to the instant case. Yet, even applying the pre-amendment standard and the law declared in Associate Builders^{44.Associate Builders Vs. Delhi Development Authority – (2015) 3 SCC 49}, the Impugned Awards, for the reasons set out below, do not merit interference.

Having said that, I have examined the contentions of the parties and the contents of the Impugned Awards. While preliminary objections were taken by NPCIL, they were not jurisdictional in nature but were based on questions of fact and also not pressed in the arbitral proceedings. The issues then boiled down to analysing the causes of delay, the validity of termination and the consequence of whether the risk apportionment would lead to Standard Corrosion having to bear the burden of completion of the work with the use of another contractor.

It is noteworthy that the first “kick off” meeting was held on August 16, 2013, while the contracts had been awarded in June-July 2013. In other words, two to three months had already gone by. The Learned Arbitral Tribunal found that Standard Corrosion had tied down supplies from Kansai Nerolac for internal and external paint, even before bidding. This manufacturer being on the list of four permissible manufacturers, it was found, there was no reason for the kick-off meeting leading to approval of this supplier only for internal paint and deferring the decision on the supplier of the external paint. Samples had been sent to the approved laboratory only on October 7, 2013, by which time, the monsoon season had ended, during which it was found that work would not have been possible. While tools, tackles, scaffolding were ready, the Learned Arbitral Tribunal found that NPCIL could have permitted work to commence subject to approval by the laboratory, considering that Kansai Nerolac was a reputed supplier whose standing as a supplier had been approved by NPCIL.

I am not inclined to interfere with logical and reasonable findings of fact by the Learned Arbitral Tribunal. I must remember that the Section 34 jurisdiction is not an appellate jurisdiction. The reasoning of the Learned Arbitral Tribunal in the Impugned Awards in support of the findings of factors being outside the reasonable control of Standard Corrosion are logical findings based on assessment of evidence by the master of the evidence, who is the best judge of the quality and quantity of evidence. The Learned Arbitral Tribunal has studied and analysed the minutes of each PRM and examined the timeline of activities to arrive at his conclusions.

The Learned Arbitral Tribunal found that the first show cause notice was issued on October 15, 2013 which falls within about a week of provision of samples to the laboratory. The paint material had reached the site on October 5, 2013 and sent for laboratory testing two days later and within few days the show cause notice was issued. It is difficult to get into whether the Learned Arbitral Tribunal was meant to look for documentary evidence of Asian Paints having been brought in for supply of external paint only at the request of NPCIL, when the Learned Arbitral Tribunal was reasonably well placed to arrive at the finding that the intention was to get competitively priced supplies from Kansai Nerolac even before bidding. The Learned Arbitral Tribunal has also found delay in approving the shade by NPCIL.

Even while such activity was carried on in parallel, a second show cause notice was issued on December 13, 2013 and a PRM being held on December 24, 2013. Various commitments with new variables of conditions including deployment of more labour with police verification were reduced to writing in the minutes of this PRM. There was also a delay in supply of paint by Asian Paints. In this context, the Learned Arbitral Tribunal has weighed an email dated January 31, 2014 from NPCIL to Standard Corrosion acknowledging improvement in labour arrangements and that work was progressing smoothly. However, third party laboratory testing certification of the external paint had not been received as yet.

Yet, in about two weeks, NPCIL stopped work on February 17, 2014 on the premise that 20 workers each for internal and external painting had not been deployed. It is not disputed that there was a labour strike but there is a dispute about whether it led to disruption of access issues to just the plant or also the township, between February 24, 2014 and March 31, 2014. The next PRM was held on March 26, 2014 towards the end of the strike period and commitments to deploy 20 workers per site for internal painting and 25 for external painting per site, was recorded in the minutes with an initial deployment of 12 workers on each site from March 27, 2014. Another PRM held on April 2, 2014 recorded further commitments and on the same date, a letter from Standard Corrosion to NPCIL indicating that they would be bound by the terms and also liable to liquidated damages and termination for breach of commitments, was recorded. On April 21, 2014, a termination notice dated April 19, 2014 was served by NPCIL.

Taking a holistic view of the events, the Learned Arbitral Tribunal has found the approach of NPCIL of repeatedly and persistently threatening termination even while making progress and agreeing to terms in PRM minutes, to be unreasonable. In this context, the Learned Arbitral Tribunal has arrived at a view that NPCIL appears to have had a predetermined approach of terminating the work orders granted to Standard Corrosion. I do find that the conduct of NPCIL appears to have been one of blowing hot and cold, as found by the Learned Arbitral Tribunal. I am not satisfied that the findings by the Learned Arbitral Tribunal are so implausible and unreasonable that the standard of perversity or patent illegality has been met for the Section 34 Court to interfere with the Impugned Awards.

The Learned Arbitral Tribunal has also found that the award of contract to another contractor at the risk and cost of Standard Corrosion was undertaken well after the originally scheduled contract period for performance by Standard Corrosion. The actual details of the costs and expenditure incurred in completing the work have not been brought on record by NPCIL. This, coupled with the delay would indicate that mitigation efforts were not undertaken. This again, is a finding that is not implausible. I am not inclined to disturb the Learned Arbitral Tribunal’s findings on this facet of the matter – the very absence of what expenditure was occasioned by having to engage someone else to complete the work should be fatal to the element of risk and cost of such completion being to the account of Standard Corrosion.

I am not persuaded that NPCIL has made out a case for me to interfere with the Impugned Awards. The Section 34 Court would need to second-guess the assessment of evidence by the Learned Arbitral Tribunal to accept NPCIL’s contentions. Whether the work orders having been awarded during the monsoon making it improbable for the view on circumstances outside the control of Standard Corrosion; whether the withdrawal of the monsoon complaint in the correspondence should turn the needle; whether the introduction of Asian Paints through a particular dealer matters; and whether the timelines for testing, police verification and supply were within the reasonable control of Standard Corrosion, are not matters for this Court to re-examine.

What is apparent is that the work orders were terminated before the scheduled dates of completion and even the new contractor was not appointed within that period, and worse, no evidence was led about the expenditure incurred in completing the work. On the strength of these facts, for bank guarantees to be invoked, amounts available in other work orders to be extracted, and the severe steps taken in the matter before the scheduled dates of completion, even while the very first “kick off” PRM was held well into the timeline, I believe the best judgement of what has transpired has to be left to the Learned Arbitral Tribunal, who is none other than a former senior official of NPCIL.

I also must state that I do not find the contents of the Impugned Awards to be such that no reasonable or rational person would have arrived at such findings. Likewise, this is not a case where one can hold that there has been a whimsical, arbitrary or unreasonable approach adopted by the Learned Arbitral Tribunal. I have kept in mind the following passage from Associate Builders when considering this challenge to the Impugned Awards (the footnote in the judgement, to the extracted paragraph is also set out below the extract):

NPCIL has relied on Ramesh Kumar Jain^{55.Ramesh Kumar Jain vs. Bharat Aluminium Company Limited, 2025 SCC OnLine SC 2857 (paragraphs 32 to 35).} for what amounts to perversity and patent illegality but the portion cited essentially invokes Associate Builders and therefore, to avoid prolixity, having dealt with Associate Builders, in my opinion, it is not necessary to add further to the analysis.

As regards the assault on the Impugned Awards in reliance upon Unibros, I find that it turns on its own facts. It is apparent that Unibros involved consideration of loss of opportunity (i.e. profitability, rather than loss of profits) in a terminated construction contract. The following extracts are noteworthy:

CFM Asset Reconstruction was a case of a sale of property by lender and the absence of a valuation report to assess the contention that the sale was undervalued. That has no relevance to the facts of this case.

In the matter in hand, in sharp contrast, Claim No. 6 is not at all about loss of profits had Standard Corrosion worked elsewhere, and instead, it is a claim about loss of profit in the two works contracts that was denied by the wrongful termination. The two concepts i.e. loss of profits and loss of opportunity (from deployment elsewhere) are distinct although often confused.

Loss of profit in a wrongly terminated contract is a function of assessing what profits may have been made had the contract not been terminated. Implicit in any commercially sensible party executing a contract is an acknowledgement that the other party had something to profit from by agreeing to the contract^{66.A.T. Brij Paul Singh & Ors. v. State of Gujarat, (1984) 4 SCC 59}. This has been adopted by the Supreme Court in MSK Projects^{77.MSK Projects India (JV) Ltd. v. State of Rajasthan, (2011) 10 SCC 573} as a “reimbursement” and restoration. The following extracts are noteworthy:

This again leads to an intersection with Associate Builders (paragraphs 52 to 54) where interference with awards which allowed the claims for loss of profitability purely based on formula was disapproved by the Supreme Court. Therefore, in my view, one must differentiate between where loss of profit is awarded in cases of illegally terminated contracts based on a percentage of the unexecuted portion, without always requiring detailed evidentiary proof, and loss of profitability where one has to assess what other opportunities may have arisen and what overheads would have been and what profitability analysis would need to be brought to bear.

In the matter in hand, Claim No. 6 is purely a claim for a reasonable profit margin that may have been earned had the two work orders not been cancelled even before their scheduled expiry dates, and the Learned Arbitral Tribunal was entitled to make a reasonable estimate, which he exercised by truncating the profit margin to 10% from the 15% claimed.

It is now trite law that the Supreme Court has repeatedly iterated that Courts must not lightly interfere with arbitral awards. The scope of review by the Section 34 Court is also well covered in multiple judgements of the Supreme Court in judgements apart from Associate Builders, including Dyna Technologies^{88.Dyna Technologies Private Limited v. Crompton Greaves Ltd – (2019) 20 SCC 1}, Ssangyong^{99.Ssangyong Engineering & Construction Co. Ltd. v. National Highways Authority of India – (2019) 15 SCC 131}, Konkan Railway^{1010.Konkan Railways Co. Ltd. v. Chenab Bridge Project Undertaking – 2023 INSC 742} and OPG Power^{1111.OPG Power Generation Pvt. Ltd. v. Enexio Power Cooling Solutions India Pvt. Ltd & Anr.– (2025) 2 SCC 417}. Even implied reasons that are discernible may be inferred to support the just and fair outcome arrived at in arbitral awards. To avoid prolixity, I do not think it necessary to burden this judgement with quotations from these judgements. Suffice it to say (to extract from just one of the foregoing), in Dyna Technologies, the Supreme Court held thus:

To conclude, I am not persuaded that the Impugned Awards contravene the fundamental policy of Indian law or the most basic notions of morality or justice, or that they are perverse and patently illegal. It is hard to hold that the reasons set out are incapable of being given by a rational and reasonable mind, or that the findings are unsupported by evidence or ignore vital material on record. Individual elements of what more could have been dealt with or how differently it could have been dealt with, do not lend themselves for acceptance in the facts of this case.

Therefore, I see no reason to disturb the finding that the pace of work was not solely attributable to Standard Corrosion. Likewise the reasons for which termination was held to be unlawful do not warrant interference. The interpretation of evidence such as the email of January 31, 2014 is a plausible one, and considering the language in the contract and the conduct of the parties, it would be hard to displace the finding that time was not of the essence. The termination having been validly held as unlawful, it would follow that there was no case for visiting upon Standard Corrosion, the consequences of termination. That apart, no evidence was led to indicate the expenditure incurred, for it to be visited upon Standard Corrosion and for the further steps such as invocation of bank guarantees and extraction of amounts lying in other works contracts, to be effected. Finally, in the matrix of this case, the reasonable estimation of loss of profit from the two works contracts (as opposed to loss of opportunity) does not merit interference by the Section 34 Court.

In the result, the captioned Petitions are dismissed and the Impugned Awards are upheld.

Within a period of four weeks from the upload of this Order on the Court’s website, the security, if any, given by Standard Corrosion for release of amounts deposited in Court shall stand discharged and released along with the balance amounts lying with the Registry of this Court. All amounts to be released shall be paid along with earnings thereon.

All actions required to be taken pursuant to this order shall be taken upon receipt of a downloaded copy as available on this Court’s website.