Delhi District Court
National Rural Infrastructure ... vs Deccan Consulting Engineers Pvt Ltd ... on 16 April, 2026
IN THE COURT OF SH. PULASTYA PRAMACHALA
DISTRICT JUDGE, (COMMERCIAL COURT)-01,
PATIALA HOUSE COURT, NEW DELHI
INDEX
Sl. HEADINGS Page Nos.
No.
1. Memo of Parties 2
2. Description of case 2
3. Brief Facts of the case 3-4
4. Grounds of objection/challenge 4-12
5. Submissions of Parties 12-15
6. Appreciation of Arguments, Facts & Law 15-27
7. Decision 27
Digitally
signed by
PULASTYA
PULASTYA PRAMACHALA
PRAMACHALA Date:
2026.04.16
17:26:39
+0530
OMP (COMM.) No. 204/2025 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.1 of 27 Patiala House Court, New Delhi
OMP (COMM) No.204/2025
In the matter of: -
National Rural Infrastructure Development Agency
(Formerly National Rural Roads Development Agency)
Through Ms. Shalini Das, Joint Director-
Technical Division and Authorised Representative,
5th Floor, 15th NBCC Tower, Bhikaji Cama Place,
New Delhi-110066.
Mob. 9571563600.
... Petitioner
Versus
Deccan Consulting Engineers Pvt. Ltd.
Through its Director
N-31, 2nd Floor, Green Park Extension,
New Delhi-110016.
Mob. 9810533235.
Email: [email protected]
... Respondent
Date of Institution : 22.12.2025
Arguments heard on : 25.03.2026
Decided on : 16.04.2026
Decision : Petition is allowed.
JUDGMENT
DESCRIPTION OF THE CASE
1. Present petition under Section 34 of the Arbitration and Conciliation Act, 1996, has been filed by petitioner challenging the arbitral award dated 24.09.2025, as passed by ld. Sole Arbitrator Ms. Vidhi Gupta at DIAC, in Case Ref. No. DIAC.8096/03-24.
OMP (COMM.) No. 204/2025 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.2 of 27 Patiala House Court, New Delhi BRIEF FACTS OF THE CASE
2. Briefly stated, the petitioner is an autonomous government body, providing technical management and monitoring support to the Government of India in the implementation of the Pradhan Mantri Gram Sadak Yojan (PMGSY). Petitioner sought expression of interest for consulting services to conduct a design review of detailed project reports and cost estimates for construction, up-gradation and improvement of rural roads, under PMGSY.
3. On 18.06.2015, respondent submitted its expression of interest and after due deliberation, on 28.04.2016 petitioner informed respondent about its selection for DPR Project and invited them to negotiate the terms of contract. Thereafter, various communications took place between both the parties in respect of requirement for reimbursement from 24.05.2016 up to 29.08.2016. Both parties entered into a contract on 14.10.2016. The total value of contract was Rs.2,38,75,000/-. Appendix 'C' of the contract provided the breakdown of the contract prices.
4. The term of the contract was over on 13.04.2017 and on 04.05.2017 petitioner granted extension to the respondent to complete the contract work. In the meantime, several installments of payment were released to the respondent. Respondent submitted final report and thereafter, on the basis of observations made by the petitioner, such report was revised. The consolidated review report dated 07.12.2018 was accepted on 01.07.2020, however, a dispute remained there between the parties in respect of balance amount to be paid to the respondent.
OMP (COMM.) No. 204/2025 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.3 of 27 Patiala House Court, New Delhi
5. Petitioner insisted for providing supporting documents/vouchers for the purpose of reimbursement, but respondent was reluctant to provide such document and claimed that it was part of lumpsum amount to be paid under the contract. Respondent issued a legal notice to the petitioner on 15.09.2020, thereby seeking release of final payment. It was also stated therein that said notice was to be treated as a notice of arbitration u/s. 21 of the Act, in case of non-compliance by the petitioner. Thereafter, respondent filed an application u/s. 11 of the Act, before Hon'ble High Court of Delhi and in Arbitration Petition No. 681/2020 notice was issued to the petitioner.
6. In the meantime, on 04.07.2021 petitioner sent reply to notice dated 15.09.2020. Afore-said Arbitration Petition was dismissed for non-prosecution on 29.08.2022. However, subsequently a restoration application was filed and matter was sent to Mediation Centre for settlement talks. On 18.12.2023, restoration application was allowed and afore-said Arbitration Petition was also allowed to appoint Ms. Vidhi Gupta as the Sole Arbitrator to adjudicate upon the dispute between the parties. The arbitration accordingly was conducted under aegis of Delhi International Arbitration Centre. Vide Award dated 24.09.2025, ld. Arbitrator allowed the claim of the respondent for Rs.28,17,250/- along with interest at the rate of 9% w.e.f. 05.03.2020 till the date of hearing.
GROUNDS OF OBJECTION / CHALLENGE
7. Aggrieved by the arbitral award dated 24.09.2025, petitioner has preferred the present objections under Section 34 of the OMP (COMM.) No. 204/2025 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.4 of 27 Patiala House Court, New Delhi Arbitration and Conciliation Act, 1996, inter alia, on the following grounds: -
i. That the impugned award is ex-facie perverse and is liable to be set aside, as the petitioner was unable to present its case before ld. Sole Arbitrator. Vide order dated 30.01.2025, ld. Sole Arbitrator had not taken petitioner's SoD on the record, closed its right to file SoD and struck off the petitioner's defense on a complete erroneous ground.
ii. That while striking off petitioner's defence, ld. Sole Arbitrator did not cite any precedent to support her finding, or note the impact of such a drastic decision on petitioner's substantive ability to participate in the arbitral process. That ld. Sole Arbitrator would have been well within her powers to take the Petitioner's SoD on record in the interest of justice. That ld. Sole Arbitrator ignored the express provisions of Sections 18, 24 and 26 of the Act, which make it mandatory that parties in arbitration ought to be treated equally and granted full opportunity to present their case. That same goes against the fundamental principles of fair hearing to be adopted by ld. Sole Arbitrator.
iii. That ld. Sole Arbitrator did not frame any separate issue for determination, and treated respondent' s claims as the issues for determination, thereby making the whole arbitral procedure a one-sided affair, with no effective opportunity provided to the petitioner to participate in the proceedings, except to cross- examine the respondent's witness.
iv. That ld. Sole Arbitrator mechanically passed the impugned Award without application of mind, as she failed to note that the OMP (COMM.) No. 204/2025 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.5 of 27 Patiala House Court, New Delhi petitioner never got an opportunity to fully present its case, which is in conflict with basic principle of audi alteram partem as part of the principles of natural justice enshrined in the substantive laws of the land.
v. That ld. Sole Arbitrator failed to note that the petitioner was a government body and it is bound with a formal and tiered decision-making structure, and has to meet requirements such as obtaining authorisations from multiple persons all the while being restricted to a limited amount of resources at its disposal. That for such reasons petitioner was unable to ensure that its SoD was filed within the time limit prescribed under Section 23(4) of the Act, thereby filing SoD after a mere delay of one month after the prescribed period.
vi. That as a bonafide litigant petitioner had already filed SoD, when ld. Sole Arbitrator did not take it on record on 25.10.2024, and listed it for arguments on the issue "whether the Tribunal was empowered to take the SoD on record beyond the statutory limitation". Thus, it was not the case of a party deliberately delaying the proceedings or abusing the process.
vii. That the impugned Award suffers from patent illegality, as it has been passed against the express terms of the Contract in complete contravention of the mandate under Section 28(3) of the Act. That ld. Sole Arbitrator erroneously held that the payment scheme under the Contract contemplated that the entire contract price i.e. Rs.2,38,75,000/- was to be paid to the respondent in lump-sum installments according to the payment Schedule in Clause 41.2 of SCC, despite acknowledging that this OMP (COMM.) No. 204/2025 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.6 of 27 Patiala House Court, New Delhi Contract price was a sum total of two amounts, i.e. a remuneration amount of Rs.1,81 ,50,000/- and a reimbursable amount of Rs.57,25,000/-, according to Appendix C of the Contract. That ld. Sole Arbitrator ignored the fact that the idea of reimbursable expenses was premised on actual expenditure, and was never in the nature of a lump sum. That ld. Sole Arbitrator ignored clause 38.1 of GCC, which provided that the contract price breakdown was provided in Appendix C. That clause 38.1 of GCC read with Appendix C show that the fixed amount of the contract price was contained in Fin-3 (breakdown of remuneration), which even included the addition of 10% profits and overheads, while Fin-4 included the reimbursable expenses up to a ceiling of Rs.57,25,000/-, on actuals without any profits/overheads. That if the contract was only to be restricted to the payment schedule in clause 41.2 of SCC, then there was no requirement of Appendix C at all or its mention in clause 38. l of GCC. That by an artificial interpretation, ld. Sole Arbitrator has rendered Appendix C nugatory, and as a result the Award suffers from a patent illegality.
viii. That the impugned Award suffers from an error on the face of record for ignoring the well-settled law that a contract must be considered as a whole without reading it in parts in isolation from others. That the contractual terms in the present case, when read in their entirety, would indicate that although the contract was for a fixed price to be paid in lumpsum installments, the contract did not prohibit the payment of reimbursable expenses on actuals upon submission of supporting documents. That ld. Sole Arbitrator erroneously dismissed the petitioner's contention OMP (COMM.) No. 204/2025 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.7 of 27 Patiala House Court, New Delhi of reading the contract as a whole stating that the contract itself provided an answer to any inconsistency by way of order of precedence in clause 1. That ld. Sole Arbitrator committed a patent illegality by ignoring the express intention of the petitioner, which was clearly evident from the negotiation between the parties that primarily surrounded the terms regarding the payments under the contract, and specifically on the issue of reimbursable expenses. The condition of the petitioner was not only explicitly agreed to by the respondent, vide letter dated 29.08.2016, but the entire correspondence between the parties from January 2016 to August 2016 was also attached as a chapter in the contract, thus forming a part of the contract. This ex-facie demonstrated that the respondent was aware of the requirement of furnishing necessary documents, in order to avail reimbursement of expenses from the petitioner, despite which, they did not comply with it.
ix. That ld. Sole Arbitrator erroneously ignored the inherent distinction between remuneration and reimbursement, which are well-known terms in the business transactions and cannot be collapsed. That ld. Arbitrator erroneously relied upon the Clause 1 of the contract and blatantly ignored the subsequent sentence in Clause 1 which stated that "Any reference to this Contract shall include, where the context permits, a reference to its Appendices." That there existed no inconsistency between the SCC and GCC and the Appendix C, inclusive of notes in Form Fin-4, and both SCC and GCC had to be read together with Appendix C. It is well-settled that not considering a crucial part of the contract amounts to an infraction of a fundamental notion OMP (COMM.) No. 204/2025 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.8 of 27 Patiala House Court, New Delhi of justice and results in the impugned Award being in contravention with the fundamental policy of Indian Law.
x. That ld. Sole Arbitrator ignored the real intent of the contract, which merely stated that providing documentation and vouchers regarding the expenses incurred was required for reimbursement, which was a standard requirement. This was reaffirmed in a letter dated 24.05.2016 from the side of petitioner to the respondent. That ld. Sole Arbitrator selectively omitted relevant portions of the contract while interpreting it, which constituted direct contravention of basic notions of justice.
xi. That ld. Sole Arbitrator erroneously misinterpreted the contract by finding that Clause 41 of the SCC and GCC was the only provision that governed the mode and manner of payments to the respondent and the condition of submission of proofs/vouchers of reimbursable expenses was nowhere supported by the terms of the contract and this was contrary to Clause I of the Contract.
xii. That ld. Sole Arbitrator unfairly disregarded the petitioner's demonstrated consistency in making payments to the respondent. That petitioner had already released the first 5 stages of payments, which amounted to 90% of the contract price, thereby indicating a willingness to pay. That petitioner merely sought to enforce the provisions of the contract that required respondent to submit documents for reimbursable expenses in the interest of accountability. That by holding the petitioner's bonafide action of paying the 90% of the contract price without seeking supporting documents for reimbursable claims against the petitioner itself, ld. Sole Arbitrator in fact penalized the petitioner for acting in OMP (COMM.) No. 204/2025 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.9 of 27 Patiala House Court, New Delhi good faith and adhering to the terms of the contract.
xiii. That ld. Sole Arbitrator, in an ex-facie incorrect exchanged finding, stated that the correspondence exchanged between the parties were pre-contract communications that could not have any bearing on the interpretation of the contract provisions.
xiv. That ld. Sole Arbitrator failed to acknowledge that petitioner being a government entity requires a certain minimum standard of documentation and accountability, as it is dealing with public money. That petitioner is well within its rights to ask for documentation of expenses, as also provided in Clause 25 of the Contract that directs the respondent to keep accurate and systematic accounts and records in respect of the services provided. That ld. Sole Arbitrator further ignored the express stipulation in Clause 2(b) of the contract.
xv. That the impugned Award blatantly disregards letter dated 29.08.2016 where respondent explicitly stated that they were willing to comply with the requirement of disclosure of documents to receive reimbursable expenses. That ld. Sole Arbitrator's refusal to consider the communications exchanged between the parties before the contract was executed on 14.10.2016, which essentially focused on this precise issue of providing supporting documents for reimbursable claims, while interpreting the contract.
xvi. That the impugned Award suffers from patent illegality for awarding an interest of 9% per annum to the respondent from the date of purported cause of action i.e. 05.03.2020 till the date of payment. That ld. Sole Arbitrator incorrectly stated that the OMP (COMM.) No. 204/2025 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.10 of 27 Patiala House Court, New Delhi contract was silent on the aspect of interest on delayed final payment, and SCC did not contain a rate of interest to be applied under Clause 42.1, which is clearly erroneous. That ld. Sole Arbitrator's decision to award 9% interest per annum is perverse and patently illegal, thereby warranting the interference of this court.
xvii. That ld. Sole Arbitrator erroneously adopted a hyper technical approach in terms of clause 42.1 of GCC, wherein it stated that Clause 42. l was applicable only in the case of delayed payments for lumpsum installments (Clause 42.2.2, GCC), and not for delayed payments for the final payment (Clause 42.2.3, GCC). At the same time, ld. Sole Arbitrator, while incorrectly holding that SCC did not contain a rate of interest under Clause 42.1, ignored the Clause 42.1 of SCC, which clearly stated "N.A.", or 'Not Applicable'.
xviii. That ld. Sole Arbitrator failed to note that the remaining 10% of the payment due to the respondent was part of the reimbursable claims in Fin-4 as part of the Appendix C, which has to be paid on actuals, and on the submission of supporting documents. That the respondent itself has not complied with the contractual terms by refusing to provide the supporting documents, and then cannot be paid interest on reimbursable claims to be paid on actuals.
xix. That impugned Award is erroneous on the face of record for awarding pre-reference interest from the date the cause of action arose (w.e.f. 05.03.2020), despite the considerable delays on the part of the respondent to initiate the arbitration proceedings, OMP (COMM.) No. 204/2025 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.11 of 27 Patiala House Court, New Delhi which has resulted in respondent benefiting from its own wrong.
xx. That ld. Sole Arbitrator awarded interest at the rate of 9% from 05.03.2020 onwards till the date of payment, which has amounted to Rs.14,09,474/- resulting in the total claim amount becoming Rs.42,26.724/- i.e. almost 1.5 times the amount due. This is punitive, unconscionable and usurious in nature and merits being setting aside.
xxi. That ld. Sole Arbitrator ignored the intent and actions of the petitioner to pay the final payment of Rs.28,17,250/- to the respondent in return for the corresponding vouchers and supporting documents for the reimbursable claim of Rs.57,25,000/-
Prayer has been made to set aside the impugned Award and to award costs of the present petition to the petitioner.
SUBMISSIONS OF THE PARTIES
8. On behalf of petitioner, it was argued that vide order dated 30.01.2025, ld. Sole Arbitrator erroneously closed the petitioner's right to file a SoD and struck off its defence by relying on a patently wrongful interpretation of Section 23(4) of the A&C Act, which is not mandatory. It was further argued that ld. Arbitral Tribunal gave wrong reasons and did not cite any case laws. It was further argued that despite specific bar in contract, interest was granted to the respondent by ld. Sole Arbitrator. It was further argued that Clause 42 of GCC says that interest to be paid as per Clause 42.1 of SCC, but Clause 42.1 of SCC did not provide any interest. It was further argued that ld. Arbitral Tribunal wrongly held that SCC was silent on interest part. It was OMP (COMM.) No. 204/2025 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.12 of 27 Patiala House Court, New Delhi further argued that Clause 42.1 of SCC says "NA" , which means that interest was barred. It was further argued that S. 31(7) was breached. It was further argued that pre-reference interest was also awarded to the respondent, despite the fact that there was delay on the part of respondent. It was further argued that there was no plea taken in Statement of Claim regarding loss of goodwill, still pre-reference interest was granted. Ld. counsel for petitioner further argued that impugned Award was passed against the terms and intention of the contract at least regarding reimbursement.
9. In support of her contention, ld. counsel placed reliance upon certain case laws, which are as under: -
i. Yashovardhan Sinha HUF v. Satyatej Vyapaar (P) Ltd., 2022 SCC OnLine Cal 2386.
ii. Yashovardhan Sinha HUF v. Satyatej Vyapaar (P) Ltd., 2024 SCC OnLine SC 902.
iii. Aneja Constructions (India) Ltd. v. Doosan Power Systems India (P) Ltd., 2025 SCC OnLine Del 5325.
iv. Degremont Ltd. v. Yamuna Gases & Chemicals Limited, 2012 SCC OnLine Del 67.
v. Associate Builders v. Delhi Development Authority, (2015) 3 SCC 49.
vi. Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131.
vii. Impex Corporation & Ors. V. Elenjikal Aquamarine Exports Ltd., (2007) SCC OnLine Ker 125.
OMP (COMM.) No. 204/2025 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.13 of 27 Patiala House Court, New Delhi viii. Sepco Electric Power Construction Corporation v. GMR Kamalanga Energy Limited, (2026) 2 SCC 542.
ix. DMRC Ltd. v. Delhi Airport Metro Express (P) Ltd., (2024) 6 SCC 357.
x. ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705.
xi. Hindustan Zinc Ltd. v. Friends Coal Carbonisation, (2006) 4 SCC 445.
xii. McDermott International Inc. v. Burn Standard Co. Ltd. & Ors., (2006) 11 SCC 181.
xiii. J.G. Engineers Pvt. Ltd. v. Union of India, (2011) 5 SCC 758.
xiv. OPG Power Generation Pvt. Ltd. v. Enexio Power Cooling Solutions India Pvt. Ltd., (2025) 2 SCC 417.
xv. MMRDA v. Unity Infraproject Ltd., 2008 SCC OnLine Bom
190. xvi. Technology Information Forecasting & Assessment Council (TIFAC) v. Strategic Engineering (P) Ltd., (2025) SCC OnLine Del 9486.
xvii. Gammon India Ltd. v. National Thermal Power Corporation Ltd., (2012) SCC OnLine Del 4656.
xviii. Associated Engineering Co. v. Government of Andhra Pradesh and Anr., (1991) 4 SCC 93.
xix. ONGC Ltd. v. JSIW Infrastructure (P) Ltd., (2025) SCC OnLine Del 3811.
xx. The Board of Trustees of Chennai Port Trust v. Chennai Container Terminal Pvt. Ltd., (2014) 1 CTC 573.
OMP (COMM.) No. 204/2025 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.14 of 27 Patiala House Court, New Delhi xxi. Union of India v. Larsen & Tubro Ltd. (L&T), (2026) INSC 203.
xxii. Tehri Hydro Development Corporation India Limited v. C.E.C. Limited, (2023) SCC OnLine Del 2354.
xxiii. Vedanta Limited v. Shenzhen Shandong Nuclear Power Construction Company Ltd., (2019) 11 SCC 465.
10. Per contra, ld. counsel for the respondent argued that there is no bar against awarding interest in the Award as passed by ld. Sole Arbitrator. It was further argued that para-21 of Award gives finding regarding reasons for Award of interest. Ld. counsel further argued that delay was not attributable to respondent as Hon'ble High Court did not impose cost while restoring its petition. It was further argued that no separate bill for reimbursement was ever issued and estoppel was used against petitioner. Bill had been raised for lumpsum contract amount. It was further argued that these are matters of interpretation of contract, which cannot be substituted u/s. 34 of the Act. Ld. counsel further argued that as per Section 25 of the Act, ld. Arbitral Tribunal could close the right for Statement of Defence.
APPRECIATION OF ARGUMENTS, FACTS & LAW
11. The general principles underlying S. 34 of the Act are that Arbitrator is a Judge of the choice of the parties and his decision, unless there is an error apparent on the face of the award which makes it unsustainable, is not to be set aside even by the Court, even if the Court of law could come to a different conclusion on the same facts. The Court cannot reappraise the evidence and it is not open to the Court to sit in appeal over the conclusion of the Arbitrator. It is not open to the Court to set aside a finding of fact OMP (COMM.) No. 204/2025 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.15 of 27 Patiala House Court, New Delhi arrived at by the Arbitrator and only grounds on which the award can be set aside are mentioned in the Arbitration Act. Where the Arbitrator assigns cogent grounds and sufficient reasons and no error of law or misconduct is cited, the award will not call for interference by the Court in exercise of the power vested in it.
12. Hon'ble Supreme Court in the case of Associate Builders vs. Delhi Development Authority, (2015) 3 SCC 49 held that the interference with an arbitral award is permissible only when the findings of the arbitrator are arbitrary, capricious or perverse or when conscience of the Court is shocked or when illegality is not trivial but goes to the root of the matter. It was held that once it is found that the arbitrator's approach is neither arbitrary nor capricious, no interference is called for on facts. The arbitrator is ultimately a master of the quantity and quality of evidence while drawing the arbitral award. Patent illegality must go to the root of the matter and cannot be of trivial nature.
13. Hon'ble Supreme Court in case of Ssangyong Engineering & Construction Co. Ltd. vs. National Highways Authority of India, 2019 SCC OnLine SC 677 held that under Section 34 (2A) of the Act, a decision which is perverse while no longer being a ground for challenge under "public policy of India", would certainly amount to a patent illegality appearing on the face of the award. A finding based on the documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties and therefore, would also have to be characterized as perverse. It was held that a finding based on no OMP (COMM.) No. 204/2025 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.16 of 27 Patiala House Court, New Delhi evidence at all or an award which ignores vital evidence in arriving at its decision, would be perverse and liable to be set aside on the ground of patent illegality.
14. In the present case, petitioner has relied upon the judgment of Yashovardhan Sinha (supra) to submit that provisions u/s. 23(4) of Arbitration and Conciliation Act, are not mandatory and thus, ld. Arbitrator gave wrong reasons in order dated 30.01.2025 so as to refuse to take Statement of Defence on the record. Hon'ble Calcutta High Court in the case of Yashovardhan Sinha (supra) had clarified that Section 23(4) of the Act was not mandatory in the sense that on the lapse of time frame the mandate of Arbitrator had to stand automatically terminated. However, at the same time, Hon'ble Calcutta High Court did not say that Arbitrator does not have any discretion and right to close such opportunity in accordance with Section 23(4) of the Act. In fact, Hon'ble Calcutta High Court did refer to Section 25 of the Act, which provides for consequences for default in adhering to time line fixed under Section 23(1) of the Act. Section 25(b) of the Act does provide discretion to the Arbitral Tribunal to treat the right of respondent to file Statement of Defence as having been forfeited, in case respondent fails to file the same in accordance that Section 23(1) of the Act.
15. Vide order dated 30.01.2025, ld. Arbitrator had observed that in view of Section 23(4) of the Act, she had no further discretion to take on record the Statement of Defence, which was filed by petitioner herein beyond the outer limit i.e. six months. Though the part of the observations that ld. Arbitrator did not have OMP (COMM.) No. 204/2025 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.17 of 27 Patiala House Court, New Delhi further discretion to extend the time, may not be completely consistent with the finding given by the court in the case of Yashovardhan Sinha (Supra), still the decision to close the opportunity of respondent, cannot be termed as illegal for simple reason that even otherwise Arbitrator has such right and discretion to close this opportunity as provided in Section 25 of the Act. Moreover, after having participated in the remaining part of arbitration proceedings without any challenge to afore-said order dated 30.01.2025, petitioner cannot now seek to again set the clock back, on the plea that respondent should have been granted more extension of time. It is worth to mention here that respondent was given time of four (4) weeks after receiving Statement of Claim, in order to file the Statement of Defence. The Statement of Claim was filed by respondent herein on 27.05.2024. There is no dispute in respect of the procedure and time line agreed by both the parties, as recorded by ld. Arbitrator in order dated 04.05.2024. Despite that, petitioner herein had not filed Statement of Defence up to 24.09.2024, as per extension of time granted by ld. Arbitrator time to time. This is very unfortunate that petitioner itself had been sleeping over the opportunities being granted/extended by ld. Arbitrator and thereafter in the present proceeding argument has been presented that petitioner was not given fair opportunity to place its defence in the arbitration proceedings. In fact, the approach of petitioner was apparent example of abuse of the process of law and abuse of the lenient approach being taken by the Arbitrator. Such argument of petitioner to claim that it was not given fair opportunity, is completely misconceived and frivolous argument.
OMP (COMM.) No. 204/2025 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.18 of 27 Patiala House Court, New Delhi No litigant is entitled for unlimited opportunities or opportunities as per their sweet-will. Therefore, such argument has to be rejected.
16. Another ground to challenge the Award in question is based on the plea that ld. Arbitrator did not follow the procedure as per Section 18, 24 or 26 of the Act. This is once again based on the same factual plea that petitioner was not allowed extra time beyond the given time period for the purpose of filing Statement of Defence. The problem with such litigants is that when they are bound to act as per some law and time frame given in the law, they do not bother to act accordingly. After sleeping over their opportunities, when the time is lapsed or opportunity is closed, all of sudden they wake-up and start reminding laws to others under the slogan of "principal of natural justice". Lenient approach is being sought as a matter of vested right and some observations given by superior courts in a particular fact situation is used as the matter of right, to flout the given time line in the law or by law enforcing agency. Government agencies cannot be an exception, as far as application of any law is concerned. In my considered opinion, such plea is not to be encouraged even otherwise, and within the strict narrow scope of inference u/s. 34 of the Act, there cannot be any scope of mercy hearing.
17. Another ground raised by petitioner is that Award has been passed against the terms of the contract between the parties. This ground is against the finding, wherein ld. Arbitrator treated the contract for a lumpsum amount. In support of this plea, my attention was taken to para-11 of the Award, wherein ld.
OMP (COMM.) No. 204/2025 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.19 of 27 Patiala House Court, New Delhi Arbitrator had referred to several contract provisions. My attention was further taken to Appendix 'C' and Fin. 4 (part of the contract) providing for breakdown of remuneration and reimbursable expenses. The more focus was on Fin.-4, which provided for breakdown of reimbursable expenses. My attention was further taken to letters dated 06.06.2016 and 24.05.2016, which were sent to respondent by the petitioner. My attention was also taken to letter dated 29.08.2016 as sent by respondent to the petitioner. Accordingly, it was argued that ld. Arbitrator gave finding that entire contract price was to be paid in lumpsum installment as per payment schedule in clause 41.2 of SCC, which was so held beyond the terms of the contract, as interpreted and agreed by the parties in their communications with each other. The judgments passed by superior courts in respect of contract matters were relied upon to buttress the same point that Arbitral Tribunal cannot go beyond the terms of the contract or cannot substitute its own view with any provisions of contract. It was further argued that clause 48.1 of GCC was ignored by ld. Arbitrator, which mentions about Appendix 'C'.
18. The relevant observations made by ld. Arbitrator are represented hereunder: -
"13. From the above scheme contained in the GCC and SCC, it becomes clear that the contract deals with the contract value as a fixed amount. In line with this understanding, the Payment Schedule in the SCC breaks up this fixed amount into percentages of the contract value, payable to the contractor upon completion of defined stages or milestones under the contract. Therefore, the payment scheme under the contract contemplates that the entire consideration, i.e., INR 2,38,75000, is to be paid to the contractor in lump-sum OMP (COMM.) No. 204/2025 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.20 of 27 Patiala House Court, New Delhi instalments according to the Payment Schedule. It is important to note here that clause 41.2 of the GCC is clear, inasmuch as it specifies that the Payment Schedule in the SCC is to be followed. Neither this clause, nor the Payment Schedule, makes any reference to the subject of reimbursable expenses or Form Fin-4.
15. Coming to Form Fin-4 as contained in Appendix C, extracted above, it is seen that the form contains various heads pertaining to types of reimbursable expenses such as air travel cost, boarding and lodging, local vehicle hire, etc. The unit, unit cost, and quantity for each such head is specified, with the total cost for each head of expenses. The form then provides a total of INR 57,25,000 as the complete amount of reimbursable expenses under the contract. It is important to also note here that Form Fin-4 is preceded by Form Fin-3, tilted "Breakdown of Remuneration." This form sets out the Key Experts involved in the consultation project and provides the monthly and total remuneration for each. The total remuneration under the contract is specified to be INR 1,81,50,000. Form Fin-3 and Form Fin-4 together constitute Appendix C. As per Clause 38.1 of the GCC seen above, Appendix C provides the contract price breakdown.
16. Considering Form Fin-4 and Appendix C in its entirety, it becomes clear that these forms are used to provide the details of the breakdown of the various costs that constitute the total contract price. This is evident from the fact that the sum of INR 1,81,50,000, which is the total remuneration under the contract, and INR 57,25,000, which is the total reimbursable under the contract, comes out to be INR 2,38,75000, that is, the total contract price as per Clause 38.l of the SCC. Therefore, the total amounts of remuneration and reimbursables are included in the contract price. As the claimant rightly contends, both Form Fin-3 and Fin-4 are used to show the break-up of the costs involved, to arrive at the total contract price. Read with the provisions of the GCC and the SCC discussed above, this contract price is fixed, payable in accordance with the Payment Schedule provided in the SCC.
18. In view of such ambiguity between Form Fin-4 and the OMP (COMM.) No. 204/2025 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.21 of 27 Patiala House Court, New Delhi provisions of the GCC and SCC, it becomes necessary to advert to Clause 1 of the main contract to resolve the same, extracted above. By virtue of this provision, in the event of any ambiguity or inconsistency between the documents, the SCC shall take precedence over the other contract provisions, followed by the GCC, and then Appendix C. .........
19. It is important to note here that the Payment Schedule is not qualified by any requirement from the claimant to claim reimbursables either. Under the SCC, payments to the claimant are nor subject to claims of reimbursable expenses and submission of proofs thereof. The demand of the respondent essentially seeks to make the release of the final payment conditional upon submission of proofs/vouchers of reimbursable expenses, contrary to the plain provisions of the Payment Schedule. Requiring proofs/vouchers before releasing the final payment to the claimant is not supported by the terms of SCC or the GCC. Therefore, the respondent is not permitted under the terms of the contract to impose such a condition before making the final payment; and is bound to follow the Payment Schedule as it is.
23. The above letters cannot come to the respondent's aid at this stage, firstly because correspondence exchanged between the parties does not form part of the integral contract documents by virtue of Clause 1 of the main contract, as also discussed above. Secondly, the contract also contains an Entire Agreement provision in clause 15 of the GCC, extracted above for reference. As a consequence of the Entire Agreement clause, any discussions or negotiations between the parties that are not incorporated into the contract document cannot be used to vary the express intention of the parties as recorded in the contractual provisions. The letters relied upon by the respondent arc pre-contract communications that cannot have any bearing on the interpretation of the contract provisions. .............."
19. The underlined portion of the above-mentioned findings of ld.
Arbitrator, is clearly in ignorance or derogation to the terms and conditions mentioned in Fin.4. There was categorical term laying OMP (COMM.) No. 204/2025 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.22 of 27 Patiala House Court, New Delhi down the requirement of furnishing vouchers etc. for reimbursable items. Fin.4 is reproduced hereunder: -
"FIN - 4: BREAKDOWN OF REIMBURSABLE EXPENSES B. REIMBURSABLE EXPENSES No. Type of Reimbursement Expenses Unit Unit Cost Quantity (Total in INR) 1 Air Travel Cost Round 16000 80 12,80,000 Trips 2 Boarding & Lodging Expense Per day 6000 450 27,00,000 charges during 80 roundtrips @ 10 days/trip 3 Local Vehicle Hire Expenses Per day 2500 90 2,25,000 4 Establishment of Office at 2 Per 50000 12 6,00,000 locations for 6 months *See Note Below Month 5 Jr. Professionals/Support Staff-3 Months 30000 24 7,20,000 persons for 8 months 6 Documentation & Communication LS 200000 1 2,00,000 Costs 7 Sub Total of Reimbursable expenses 57,25,000 8 Total Reimbursable in INR 57,25,000 Total in words: FIFTY SEVEN LAKHS TWENTY FIVE THOUSAND ONLY
1. Necessary documents in support of claims for reimbursable expenses would be required to provide assurance that the expenditure being reimbursed is in connection with the project work, assigned by NRRDA
2. Items indicated above shall be operated as per actual without any reference to the quantities or unit costs. Indicated against each. Total amount of reimbursable shall be limited to Rs. 57,25,000/-"
20. There was no overlapping or conflict between Fin 3 and Fin 4 as such, because they dealt with different subjects. Fin 4 was integral part of contract between the parties, and hence, same could not have been ignored or made nugatory. The exchange of communications between the parties, were not required to be treated as part of contract, but same were to be looked into for the purpose of looking into the stand taken by the parties and in OMP (COMM.) No. 204/2025 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.23 of 27 Patiala House Court, New Delhi order to appreciate the intentions of the parties. The communications, do show that petitioner had been taking stand that furnishing voucher/documents for reimbursable items, would be required. The letter dated 06.06.2016 (paragraph-5), letter dated 24.05.2016 (paragraph-5), as sent by petitioner to the respondent, were categorical to mention that "the reimbursable expenses should be reimbursed as per actual, based on supporting documents. The firm should submit the actual vouchers in order to provide necessary assurance to NRRDA......" Letter dated 29.08.2016 as sent by respondent to the petitioner mentioned that "we clarify that while performing this assignment, the ceiling limit for reimbursable expenses under Fin Form 4 shall remain at Rs. 5725000/- but individual items between Sl No. 1 to 6 shall operate as per actuals ...... "
Thus, exchange of communications between the parties, did show that there had been such requirement to furnish supporting documents/vouchers within knowledge of respondent, to claim reimbursable expenses. Both the parties had clear understanding that these expenses were to be paid as per actual. The term 'reimbursable' and 'actual', signify without any ambiguity that such payments had to be made as per actual expenses incurred. It is matter of common sense that actual expenses can be shown through relevant document/voucher only and hence, requirement to furnish such supporting documents, was not there without any purpose or logic. In that situation, findings given by ld. Arbitrator was certainly in derogation of material contractual terms and hence, the decision based on such findings has to be treated as perverse.
OMP (COMM.) No. 204/2025 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.24 of 27 Patiala House Court, New Delhi
21. In the case of OPG Power Generation Private Limited v.
ENEXIO Power Cooling Solutions India Private Limited and Anr., (2025) 2 SCC 417, while dealing with scope to interfere on the basis of reasoning and interpretation of terms of contract, Hon'ble Supreme Court observed as under: -
"80. We find ourselves in agreement with the view taken in Dyna Technologes, as extracted above. Therefore, in our view, for the purposes of addressing an application to set aside an arbitral award on the ground of improper or inadequate reasons, or lack of reasons, awards can broadly be placed in three categories:
(1) where no reasons are recorded, or the reasons recorded are unintelligible;
(2) where reasons are improper, that is, they reveal a flaw in the decision-making process; and (3) where reasons appear inadequate.
81. Awards falling in Category (1) are vulnerable as they would be in conflict with the provisions of Section 31(3) of the 1996 Act. Therefore, such awards are liable to be set aside under Section 34, unless:
(a) the parties have agreed that no reasons are to be given, or
(b) the award is an arbitral award on agreed terms under Section 30.
82. Awards falling in Category (2) are amenable to a challenge on ground of impropriety or perversity, strictly in accordance with the grounds set out in Section 34 of the 1996 Act. (emphasis supplied)
83. Awards falling in Category (3) require to be dealt with care. In a challenge to such award, before taking a decision the Court must take into consideration the nature of the issues arising between the parties in the arbitral proceedings and the degree of reasoning required to address them. The Court must thereafter carefully peruse the award, and the OMP (COMM.) No. 204/2025 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.25 of 27 Patiala House Court, New Delhi documents referred to therein. If reasons are intelligible and adequate on a fair reading of the award and, in appropriate cases, implicit in the documents referred to therein, the award is not to be set aside for inadequacy of reasons. However, if gaps are such that they render the reasoning in support of the award unintelligible, or lacking, the Court exercising power under Section 34 may set aside the award. Scope of interference with the interpretation/construction of a contract accorded in an arbitral award
84. An Arbitral Tribunal must decide in accordance with the terms of the contract. In a case where an Arbitral Tribunal passes an award against the terms of the contract, the award would be patently illegal. However, an arbitral Tribunal has jurisdiction to interpret a contract having regard to terms and conditions of the contract, conduct of the parties including correspondences exchanged, circumstances of the case and pleadings of the parties. If the conclusion of the arbitrator is based on a possible view of the matter, the Court should not intefere. But where, on a full reading of the contract, the view of the Arbitral Tribunal on the terms of a contract is not a possible view, the award would be considered perverse and as such amenable to interference. (emphasis supplied) Whether unexpressed term can be read into a contract as an implied condition
85. Ordinarily, terms of the contract are to be understood in the way the parties wanted and intended them to be. In agreements of arbitration, where party autonomy is the grund norm, how the parties worked out the agreement, is one of the indicators to decipher the intention, apart from the plain or grammatical meaning of the expressions used.
86. However, reading an unexpressed term in an agreement would be justified on the basis that such a term was always and obviously intended by the parties thereto. An unexpressed term can be implied if, and only if, the court finds that the parties must have intended that term to form part of their contract. It is not enough for the court to find OMP (COMM.) No. 204/2025 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.26 of 27 Patiala House Court, New Delhi that such a term would have been adopted by the parties as reasonable men if it had been suggested to them. Rather, it must have been a term that went without saying, a term necessary to give business efficacy to the contract, a term which, although tacit, forms part of the contract.
87. But before an implied condition, not expressly found in the contract, is read into a contract, by invoking the business efficacy doctrine, it must satisfy the following five conditions:
(a) it must be reasonable and equitable;
(b) it must be necessary to give business efficacy to the contract, that is, a term will not be implied if the contract is effective without it;
(c) it must be obvious that "it goes without saying";
(d) it must be capable of clear expression;
(e) it must not contradict any terms of the contract."
22. In the present case, I do find that findings of ld. Arbitrator being in derogation to explicit term of contract and contrary to intentions of the parties as appearing from the communications, fall in the category of perversity.
DECISION
23. In view of my foregoing discussions, observations and findings, petition is allowed and award in question is set aside.
File be consigned to record room after due compliance.
Digitally signed by PULASTYA PULASTYA PRAMACHALA PRAMACHALA Date: 2026.04.16 17:26:45 +0530 Pronounced in the (PULASTYA PRAMACHALA) Open Court on this District Judge (Commercial Court)-01, 16th day of April, 2026 Patiala House Court,New Delhi OMP (COMM.) No. 204/2025 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.27 of 27 Patiala House Court, New Delhi