High CourtsSingle Bench(2026) 09 BOM CK 2248

Union Of India vs B. G. Constructions

Bombay High Court · Decided on 16 September 2026 · Citation: 2023 INSC 742

HON’BLE JUDGES
Somasekhar Sundaresan, J
CASE NUMBER
ARBITRATION PETITION NO. 314 OF 2019

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Judgment

74 paragraphs · 5,288 words

Context and Factual Background:

1.

This Petition under Section 34 of the Arbitration and Conciliation Act, 1996 (“the Act”) challenges an Arbitral Award made on October 31, 2018, as corrected on November 9, 2018 (“Impugned Award”). The Petitioner is the Union of India, acting through the Executive Engineer, Mumbai Central Division-II, Central Public Works Department (“CPWD”), Kane Nagar, Mumbai. The Respondent, M/s. B.G. Constructions, CBD Belapur, Navi Mumbai, is a proprietary concern of Mr. Babu George carrying on business as civil engineers and contractors. The Respondent was the claimant in the arbitration; the Petitioner was the respondent.

2.

By Notice Inviting Tender (“Tender Notice”) percentage-rate bids were invited for the work of “Aesthetic Improvement to Central Government Housing at S.M. Plot, Phase-I, Sector VII, Antop Hill, Mumbai-37”, for providing interlocking paver blocks over the existing road; making a footpath along the road side by raising the road berms; providing coloured (reflective type) paver blocks over the footpath; repairing the existing drain; and constructing a new drain wherever required, from pocket and Building Nos. 121 to 140 (CISF area) and Building Nos. 141 to 149 at an estimated cost was Rs. 2,25,44,879/-. The time allowed for completion was four months from the date of start as defined in Schedule ‘F’ or from the first date of handing over of the site, whichever was later.

3.

The Tender Notice stated that the site for the work was available and that the cement concrete interlocking paver blocks would have to be of the size, shape and shade as approved by the Engineer-in-Charge. The manufacturers were specified in the Tender Notice. Sampling, testing, acceptance criteria and the like were meant to be as per “IS 15658:2006”. The Respondent was the lowest bidder. The work was awarded by the Chief Engineer, WZ-III, CPWD by letter dated March 5, 2016 for Rs. 2,19,13,622.39, being 2.80 per cent below the estimated cost, under Agreement No. 82/EE/MCD-II/2015-16. The stipulated starting date was March 13, 2016 and the stipulated date of completion was meant to be July 12, 2016. The Respondent furnished a performance guarantee of Rs. 10,95,681/-. The agreement incorporated the CPWD General Conditions of Contract, 2014, an Integrity Pact, Schedule ‘F’ (which, at Definitions 2(x), specified 15 per cent as the percentage on cost of materials and labour to cover overheads and profit), and an arbitration clause at Clause 25.

4.

Disputes arose almost from the outset. According to the Respondent, the site was not fully handed over, no drawings or levels beyond a general layout drawing were furnished, the programme and the preferred brand of paver block (“Gubbi”, submitted for approval on March 14, 2016) were not approved, with the Petitioner insisting on “Super” brand blocks, which were approved on June 8, 2016. Cement was not issued, its running bills were not paid, and labour was kept idle. According to the Petitioner, the site was handed over free of hindrance on March 5, 2016, according to the site order book entry, and a layout drawing issued on March 7, 2016. The Respondent thereafter failed to carry out survey work, fix a benchmark or submit a programme chart under clause 5, delayed the submission of samples, adopted oversized measuring boxes for the work of P.C.C. 1:5:10, laid paver blocks before test results were received, and refused to rectify defective work, and therefore, the delay was attributable to the Respondent's poor planning and non-cooperation.

5.

On July 12, 2016, the stipulated date of completion, the Respondent wrote to the Petitioner asking that the agreement be closed and demanding a 10 per cent increase in rates. The Petitioner extended time unilaterally on multiple dates: July 12, 2016 (to October 12, 2016); October 19, 2016 (to January 31, 2017); and January 23, 2017 (to April 30, 2017), each time reserving the right to compensation. An advance payment of Rs. 20,94,104/-against work done but not measured, was made on November 4, 2016, after which, no further payment was made.

6.

In October 2016, the Assistant Engineer II, MCD II sent samples of the paver blocks to the National Test House (Western Region), Andheri (East), Mumbai, a Government of India laboratory. The samples were received on October 14, 2016 and tested between October 25, 2016 and October 28, 2016 against IS 15658:2006. Six certificates dated October 28, 2016 were issued indicating that all six samples (80 mm red, two samples; 80 mm grey, two samples; 60 mm yellow; 60 mm red) failed the water absorption requirement of IS 15658:2006 (individual not more than 7%, average not more than 6%). The recorded averages were 8.7% and 9.8% (80 mm red), 8.3% and 7.4% (80 mm grey), 7.9% (60 mm yellow) and 6.9% (60 mm red).

7.

The two 80 mm grey samples are said to have failed in compressive strength (averages 33.1 and 26.5 N/mm² against a minimum of 40 N/mm²) while the other four samples passed compressive strength test. Visual inspection and abrasion resistance, which are obligatory tests under IS 15658:2006, were not carried out. The remarks on the certificates annexed by the Petitioner are in materially the same terms:

The sample fails to meet the requirements of IS 15658:2006 for Precast Concrete interlocking blocks for paving in respect of Water absorption test. However, the sample conforms to the above said specification as regards the other tests carried out.

[Emphasis Supplied]

8.

A second lot of about 14,000 blocks brought to site in December 2016 was also tested at the NTH at the Respondent’s request (letter dated December 14, 2016). Those samples met the IS requirements, save that the 80 mm red sample marginally failed water absorption (6.7 per cent against 6 per cent) and two 60 mm samples showed a minor deviation in aspect ratio. The Respondent’s position before the Learned Arbitrator was that this second lot was not used at site and was removed by it after February 22, 2017.

9.

A further test was conducted at VJTI at the instance of a vigilance unit of the Director General (Works); its results were not furnished by the Petitioner before the Learned Arbitrator.

10.

By notice dated November 30, 2016, the Petitioner called on the Respondent to rectify or remove the defective paver blocks, invoking Clauses 10A, 14 and 16 of the agreement, which was followed by show cause notices. The Respondent replied on January 17, 2017, gave notice on February 6, 2017 for closing the agreement on account of non-cooperation, and on February 20, 2017 asked for payment of its dues or foreclosure under Clause 13. On January 30, 2017 the Superintending Engineer directed the Executive Engineer to ensure that removal of the failed blocks was documented and carried out in the presence of departmental officers. On February 22, 2017, the Executive Engineer determined the contract under Clause 3(a) and (b) of the General Conditions of Contract, forfeiting the earnest money, security deposit and performance guarantee and providing for the balance work to be taken out of the Respondent’s hands. The Respondent appealed to the Director General (Works) in a letter dated February 28, 2017 for restoration of the agreement. Regardless, the failed blocks were never removed by either side.

11.

Thereafter, on November 27, 2017, the Superintending Engineer levied compensation for delay at 10% of the tendered amount, at Rs. 21,91,362/-. The Petitioner's final bill showed gross work done of Rs. 33,57,708/- and, after deducting the advance and recoveries totalling Rs. 30,21,994/- (security deposit, income tax, water charges, labour cess, the compensation, Rs. 4,600/-for non-submission of labour reports, Rs. 2,80,000/- for non-submission of a programme chart, and a minus extra item of Rs. 3,44,309/- for the cost of removing the failed 80 mm blocks), a net amount recoverable from the Respondent was pegged at Rs. 17,58,390/-.

12.

The Respondent applied for a Dispute Redressal Committee, which was constituted on June 16, 2017 but gave no decision within the 90 days provided. On November 6, 2017, the Respondent applied to the Chief Engineer for appointment of an arbitrator, and by letter dated December 5, 2017 a retired Additional Director General, CPWD, was appointed as sole arbitrator under Clause 25, to decide the eight claims listed in the enclosure to that letter, the ninth claim for interest, and the Petitioner’s counter-claims, if any, subject to admissibility under Clause 25.

13.

The Respondent’s Statement of Facts claimed: (1) work done up to date less advance, Rs. 51,11,488/- (on a corrected bill of Rs. 72,05,591.63 less the advance of Rs. 20,94,104/-); (2) idling of workers’ wages for want of cement, Rs. 2,80,000/-; (3) testing fees, Rs. 1,86,441/-; (4) compensation for delay, Rs. 10,50,000/-; (5) extra payment for increase in labour and material costs after the stipulated date of completion, Rs. 5,20,559/-; (6) cost difference between Super and Gubbi materials, Rs. 4,73,890/-; (7) loss of profit and establishment loss, Rs. 26,02,934/-; (8) refund of the performance guarantee, Rs. 10,95,681/; and (9) interest at 18 per cent per annum.

14.

The Petitioner’s Counter Statement of Facts dated June 18, 2018 denied the claims and raised three counter-claims: (1) recovery of Rs. 17,58,390/- per its final bill; (2) Rs. 2,50,000/- as costs of the arbitration; and (3) interest at 7.5 per cent per annum.

15.

The Impugned Award records the parties’ respective statements of facts and exhibits (paragraphs 1 to 6), sets out the Learned Arbitrator’s approach to judicial guidance (paragraph 7), frames the issues – twelve in number with one for each head of claim and counter-claim (paragraph 7.1), decides the threshold question of breach (paragraph 8), and then adjudicates each claim and counter-claim issue by issue (paragraphs 9 to 21), with a recapitulation at paragraphs 18.0 and 22.0.

16.

The claims were allowed as follows: Issue 1 (work done), Rs. 24,87,507/-; Issue 2 (idling of labour), Rs. 16,000/-; Issue 3 (testing charges), Rs. 64,642/-; Issue 4 (compensation for delay), Rs. 4,22,308/-; Issue 5 (increase in costs after the stipulated date), Rs. 2,10,000/-; Issue 6 (Super/Gubbi cost difference), nil; Issue 7 (loss of profit and establishment loss), Rs. 15,54,089/-; Issue 8 (performance guarantee), Rs. 10,95,681/-; total Rs. 58,50,227/-, with simple interest at 9 per cent per annum on that sum from 22-2-2017 (the date of determination of the contract) to the date of actual payment, covering the pre-reference, pendente lite and post-award periods (Issue 9, paragraph 17.6). All three counter-claims were rejected (Issues 10 to 12) and each party was left to bear its own costs (paragraphs 15.1.8 and 20.2). The Award was declared to be in full satisfaction of all claims and counter-claims referred.

17.

The Learned Arbitral Tribunal has noted the VJTI test reports had been sought by e-mail on July 19, 2018 and again on July 26, 2018, and that the Petitioner did not furnish them. The minutes of the hearing of September 6, 2018 record the Petitioner’s statement that clarifications on the results were still awaited (paragraph 9.2.14). The Impugned Award notes that despite the Integrity Pact, the pleadings contained a number of “startling” accusations on both sides (including an allegation that the Respondent had given a “supari” to a labour contractor, allegations of replacement of measuring boxes, and an allegation of sub-letting to one Mr. Jacob Oomman) on which no action under the Pact was shown to have been taken. These were not treated as established.

18.

The Learned Arbitral Tribunal first examined which party was in breach, treating that as the threshold question1. Reference is made to Sections 37, 39, 54 and 55 of the Indian Contract Act, 1872 and to Hudson’s Building Contracts and Gajaria’s Law relating to Building and Engineering Contracts for the proposition that the employer’s obligations in a building contract include giving full, uninterrupted and exclusive possession of the site, supplying necessary drawings and instructions, and making payments in time2.

19.

The Learned Arbitral Tribunal then examined six aspects3):

A] the availability of the site;

B] the decisions and drawings required for execution (holding, on the drain-related items in particular, that the identification of stretches to be repaired or reconstructed, and the levels and profiles, were decisions for the tender-inviting authority and that clear written instructions were missing until July 16, 2016 i.e. after the stipulated completion date);

C] the selection of the manufacturer of paver blocks (holding the Petitioner responsible for the delay in approving the brand up to June 8, 2016);

D] the Petitioner's insistence on a mock-up of the rubble masonry;

E] the delay in payment of the advance bill up to November 4, 2016 (observing that the Petitioner had not explained how the interest of the work was served by refusing payment); and

F] the programme chart (holding that the Petitioner could not be faulted in requiring a programme chart under Para 2 of the Special Conditions, but that the clause 5.1 penalty applied only to works above Rs. 5 crores).

20.

In the course of this discussion the Learned Arbitrator also observed that inspection of the site in the limited period available to a bidder can impart only limited information and that the tendering authority, with the technical manpower and time available to it, must indicate fuller details in the tender documents.

21.

Having considered various judgements4 on the arbitrability of the question of breach and of departmental decisions on delay, the Learned Arbitrator has concluded5 in the Respondent’s favour, thus (the Petitioner was the Respondent in the arbitration):

After considering all the relevant written & oral submissions, arguments etc, exhibits submitted by the parties, the relevant Court decisions in the matter, as also all other relevant factors etc., I finally hold that the Respondents committed the initial fundamental breach of the contract in the instant case . There were also certain continuing breaches of the contract on Respondents' part; and accordingly I hold that finally the Respondents are liable for appropriate damages to be paid to Claimants. [Emphasis Supplied]

Petitioner’s Contentions:

22.

The Petition presses into service 29 grounds, contending that the Impugned Award is vitiated by patent illegality on the face of the record and is contrary to the public policy of India. The principal grounds are that:

A] The Learned Arbitrator acted as a court of equity rather than in accordance with the contract, contending that the Learned Arbitrator was not entitled to strike a via media and fix a fresh rate for defective material. The Learned Arbitrator acted contrary to the contract and exceeded his jurisdiction, in that, despite recording that the material was not in conformity with the specifications and had failed laboratory testing, he applied “logic” rather than the contract, when neither he nor the Respondent is a technical expert. The Respondent produced no counter test report, and the Respondent has admitted in its reply that the blocks failed the water absorption test, thereby rewriting the contract, diluting mandatory quality requirements adopted for public safety, and converting a strict obligation into a discretionary equitable adjustment;

B] That having found that the material was not as per specification and had failed the government laboratory test, he ought to have upheld the termination and rejected the claims rather than accept the material at a reduced rate, contrary to the mandatory requirement of IS 15658:2006 in clause 6 of the Particular Specifications, the requirement of PU moulds at internal page 71, and the quality assurance provisions at clauses 3.0 to 3.18 of the Special Conditions, and against the public interest in a public work affecting the safety of users;

C] findings beyond the pleadings and issues, in entertaining the sufficiency of time available to bidders and characterising the tender conditions as harsh or impractical, when the Respondent, having participated without protest, was estopped from taking that ground;

D] that under clauses 4 and 5 of the Tender Notice, the Petitioner was required only to provide the site and all plans and specifications were available online, so that the delay could not be justified by non-availability of drawings;

E] that the final bill was not in dispute and could not be reopened;

F] that the Learned Arbitrator exceeded his jurisdiction and showed bias by entering into whether a bidder had sufficient time to study the tender, which was not the Respondent’s case;

G] that damages were awarded although not claimed, and although the Respondent had sought extensions of time without notice of any claim for compensation as required by Section 55 of the Contract Act;

H] that the Respondent failed to set up a bench mark as required by the additional conditions;

I] that the arbitrator relied on “trade practice” without either party having pleaded any such practice or being given an opportunity to deal with it;

J] that the Learned Arbitrator was silent on the Petitioner's case that the work had been sublet to one Jacob Oomman, a blacklisted person; and

K] that the Petitioner was not given an opportunity to lead oral evidence

23.

The Petitioner has also raised issues with each component of the Impugned Award and disputed computations under various heads, and also on the rate of interest of 9% terming it excessive when 7.5% is provided for under Clause 7 of the GCC being sufficient, with interest to run from three months after the Award rather than from the date of rescission.

Respondent’s Contentions:

24.

The Respondent contends that the Award is a reasoned award by a retired Additional Director General of CPWD appointed by the Petitioner’s own Chief Engineer; that the Petition does not fall within Section 34(2) and does not comply with Section 34(5). The Impugned Award is a well-reasoned decision on a thorough evaluation of the evidence, which neither violates public policy nor exhibits patent illegality going to the root of the matter. The Petitioner has not shown any contravention of public policy, and mere disagreement with findings grounded in evidence is no ground for setting aside, the Respondent would contend.

25.

On the merits, the Respondent contends that:

A] The Petitioner delayed the work at every stage by not approving samples, not issuing cement, not furnishing drawings and levels for the roads, footpaths and drains, not handing over the full site, and not permitting all items to be executed simultaneously within the four-month period;

B] The Respondent had proposed Gubbi blocks on March 14, 2016 but was directed orally to buy Super blocks, which were approved only on June 8, 2016 after the Respondent had submitted test reports of both brands. Where the Learned Arbitrator finds delay attributable to the employer, the consequential matters are not “excepted matters” and unconnected to the matter in dispute;

C] The CPWD Specifications 2009 (clauses 46.57.2 and 5.4.9.2B) the compressive strength test is the criterion for payment, so that failure in water absorption is not a valid reason to withhold payment. The Respondent contends that the Engineer-in-charge is indeed empowered to accept work not conforming to specification at reduced rates, and this is all that the Learned Arbitral Tribunal has applied. Besides, on account of failure in water absorption, the Petitioner contends, the Learned Arbitral Tribunal has rightly reduced the claim amount and compensated both parties.;

D] The blocks remain in good condition three years after laying and have not been replaced, the Respondents contends, adding that the VJTI test reports sought on July 6, 2018 have never been received. On the VJTI test, the Respondent contends that the Petitioner cannot rely before the Court on a report it failed to produce before the Learned Arbitrator despite being called upon;

E] The Respondent denies sub-letting work to Mr. Jacob Oomman, who was the Respondent's project manager on its payroll;

F] Since the Petitioner never removed and replaced the allegedly defective blocks, the Rs. 3,44,309/- deduction was rightly reversed, and the Respondent, having spent over Rs. 30 lakhs on paver blocks, was awarded only about Rs. 9 lakhs for them.

Analysis and Findings:

26.

I have heard at length Ms. Uma Wagle, Learned Advocate on behalf of the Petitioner and Mr. Ranit Basu, Learned Advocate on behalf of the Respondent. With their assistance, I have examined the record. For the reasons set out below, I do not believe that a case has been made out for the Section 34 Court to interfere with the Impugned Award:

27.

On the core issue of the quality of the paver blocks; in Paragraphs 9.3 and 9.4, the Learned Arbitral Tribunal has examined ‘IS 15658:2006’, noting that the obligatory requirements included visual inspection, dimensions and tolerances, water absorption, compressive strength and abrasion resistance. It was found that the NTH tests of October 2016 omitted two of these and therefore the Learned Arbitral Tribunal found that NTH had not conducted a visual observation test of the blocks laid. It was found that while the water absorption tests had failed, the compressive strength test was found to be satisfactory for all the blocks except the 80mm grey blocks. Noting that no secondary sampling had been carried out as required by the IS Code, that the schedule of quantities did not differentiate the loading conditions for 80 mm and 60 mm blocks and that no abrasion test had been done to distinguish them. The Learned Arbitral Tribunal noted that the Superintending Engineer had himself accepted the 60 mm blocks at a reduced rate while rejecting the 80 mm blocks outright.

28.

The Learned Arbitral Tribunal also noted that the blocks were reported to be performing satisfactorily after nearly two years. On that footing it was held as follows:

All the blocks have failed in water absorption test. The work was executed quite some time ago and the paver blocks are understood to be still in good condition. … It was clearly held there that one party cannot be allowed to benefit at the cost of the other party unlawfully / unreasonably. Therefore, extending the logic here, payment at reduced rates would be the most appropriate adjudication in this matter also. I have also carefully considered the actual likelihood of deterioration, failure etc due to such exceeding of the maximum limit specified in the Code for water absorption. Incidentally, the Respondents-SE has also accepted the reduced rate principle — though in respect of only 60 mm blocks. I hold that the same logic would apply for both 60 mm & 80 mm blocks in respect of the failure in water absorption test.

[Emphasis Supplied]

29.

I am afraid this appears to be a sound exercise of arbitral discretion in adjudication when seen through the lens of the Section 34 jurisdiction. I am not able to agree that the Petitioner’s grievance falls within the ambit of the scope of interference permissible under Section 34 of the Act. It is reasonable to adopt the price reduction principle deployed by the Petitioner in relation to the 60 mm blocks, and to apply the same to the 80mm blocks, bearing in mind that the blocks remained laid and were not replaced. If the blocks were not efficacious, necessitating their removal and replacement at the hands of another contractor, a case for damages would have been made out. On the other hand, where it is found that regardless of the grounds on which fault is found with the paver blocks, the blocks that have been laid remained laid and not replaced, it would stand to reason that the Learned Arbitral Tribunal could deploy the logic contemporaneously applied by the Petitioner to the 60 mm blocks to the treatment of the 80 mm blocks on the ground that continued to be used. This is clearly an area of appreciation of evidence and assessment of evidence, which the Learned Arbitral Tribunal has done. I am not persuaded that there is perversity going to the root of the matter, warranting interference under Section 34 of the Act.

30.

The Learned Arbitral Tribunal adjudicated reductions at the rate of 10% on the agreement rates of all blocks for the failure in water absorption; a further 5% on the 80 mm blocks because the manufacturer’s process (metal moulds on an automatic vibration and pressing machine) differed from the PU-mould process specified in the schedule of quantities; and a further 30% on the 80 mm grey blocks for the shortfall in compressive strength. The 80 mm red blocks were thus paid at 85 per cent of the agreement rate (380 sq. m adjudicated, Rs. 3,24,520/-), the 80 mm grey blocks at 55 per cent (1,010 sq. m, Rs. 5,58,146/-), and the 60 mm blocks at 90 per cent (273.69 sq. m as measured by the Petitioner, giving an additional Rs. 60,767/- over what the Petitioner had paid)6. The quantities of 80 mm blocks were fixed by the Learned Arbitrator on the basis of the material available record, after allowing for cracked and defective blocks.

31.

I have also examined the deductions for excess sand and the alleged replacement of measuring boxes. The only agreed fact was the joint measurement of the boxes on May 3, 2016, which showed no oversize. When one examines the reasoning through Paragraphs 9.8 and 9.9, I find that the nature of the grievances raised by the Petitioner are appellate in character rather than grievances that would fit within the realm of the judicial review contemplated under Section 34 of the Act.

32.

It is now trite law that the Learned Arbitral Tribunal being the master of the quality and quantity of evidence, and the appreciation of evidence is squarely in the domain of the Learned Arbitrator. Indeed, if the appreciation is of a nature that no reasonable mind could return that view, i.e. the approach to assessment of the evidence is so arbitrary and unreasonable that no reasonable person would take such a view, it would fit within the scope of perversity that strikes at the root of the matter. However, if the view taken is not something no reasonable person would take, but another view is possible, it would not be open to the Section 34 Court to substitute the Learned Arbitrator’s wisdom with its own wisdom. It is not possible to hold that the fidelity to a judicial approach has been abandoned by the Learned Arbitral Tribunal, who is in fact a unilaterally appointed arbitrator, and a former senior official of the CPWD.

33.

Seen from this prism, in my view, no case is made out for taking a view that the aforesaid reasoning by the Learned Arbitrator is perverse. Considering that the Petitioner was empowered to accept the work and reduce the consideration to adjust for shortcomings, in my view, it cannot be said that the approach of the Learned Arbitral Tribunal to the 80 mm blocks is perverse. Equally, it cannot be ignored that the VJTI tests have remained elusive and it cannot be ignored that the blocks were admittedly never replaced. Therefore, I am not able to agree that the Learned Arbitral Tribunal has gone beyond the contract. Instead of find that his approach is within the scope of what the Petitioner was entitled to do under the contract, and therefore, the approach of the Learned Arbitral Tribunal falls within the scope of adjudication and interpretation of the terms of the contract as applied to the factual matrix of the case.

34.

While the aforesaid analysis deals with the core issue of paver blocks, on the other issues too I find that the manner of adjudication does not fall foul of the law declared under Section 34 of the Act. The approach to delays in providing cement, and scrutiny of labour records (Issue 2) and the provision of amounts for tests (Issue 3) the computation of overheads for prolongation of work (Issue 4), and the increased costs for the extended period (Issue 5) are all well within the domain of a reasonable assessment of evidence by the Learned Arbitral Tribunal. These views ought not to be interfered with merely because another view may be possible. The question to ask is whether the views are implausible for any reasonable mind to take. So is the case with rejection of claim based on the difference between the Super brand and the Gubbi brand of blocks and the rejection of various facets of loss of profit claim, as indeed is the case with reversal of forfeiture effected by the Petitioner. It would not be appropriate to interfere under Sectio 34 of the Act.

35.

I am also not inclined to interfere with the interest rate, which is also squarely in the domain of the Learned Arbitral Tribunal. The rate of interest is not perverse and merely because I could hold another view, it would not be proper to interfere on that count and alter the post-award interest rate.

36.

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 including Dyna Technologies7, Associate Builders8, Ssyangyong9, Konkan Railway10 and OPG Power11. Even implied reasons are discernible and 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:

“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.”

[Emphasis Supplied]

37.

In the result, the challenge to the Impugned Award is without merit and is dismissed without any interference with the arbitral award.

38.

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.

Footnotes

  1. 1.Paragraph 8 of the Impugned Award
  2. 2.Paragraphs 8.1 and Paragraph 8.2
  3. 3.Paragraph 8.2.1 to Paragraph 8.2.6
  4. 4.U.O.I. v. V. Pundarikakshudu & Sons, 2003 (3) Arb. LR 168 (SC); J.G. Engineers v. U.O.I. (2011) 5 SCC 758; State of Karnataka v. Shree Rameshwara Rice Mills, (1987) 2 SCC 160; BSNL v. Motorola India, (2009) 2 SCC 337; and Asian Techs v. U.O.I., (2009) 10 SCC 354
  5. 5.Paragraph 8.3.3
  6. 6.Paragraphs 9.4.1 to 9.4.3
  7. 7.Dyna Technologies Private Limited v. Crompton Greaves Ltd, (2019) 20 SCC 1 Dyna Technologies Private Limited v. Crompton Greaves Limited, (2019) 20 SCC 1 Jute Corporation of India Ltd. Vs. CIT, 1991 Supp 2 SCC 744
  8. 8.Associate Builders vs. Delhi Development Authority, (2015) 3 SCC 49
  9. 9.Ssangyong Engineering & Construction Co. Ltd. v. National Highways Authority of India, (2019) 15 SCC 131
  10. 10.Konkan Railways v. Chenab Bridge Project Undertaking, 2023 INSC 742
  11. 11.OPG Power vs. Enoxio, (2025) 2 SCC 417