Delhi District Court
Nine Projects Pvt Ltd vs Alpha Pacific Systems Pvt Ltd on 20 April, 2026
IN THE COURT OF SH. AJAY PANDEY
DISTRICT JUDGE (COMMERCIAL COURT-10) CENTRAL,
TIS HAZARI COURTS, DELHI
OMP Comm 86/2024
Nine Projects Pvt Ltd.
Through AR Sh. Pradeep Kumar Gupta
Khasra No. 405, 406, Opposite metro pillar 121,
Mehrauli Gurgaon Road,
Ghitorni, South-West Delhi
Email : [email protected] Applicant/objector
Vs
Alpha Pacific Systems Pvt. Ltd.
Through its MD/Director/AR
B-1, DSIDC Complex, Kirti Nagar,
New Delhi-110015
Email : [email protected]
Phone: 9811742989 Respondent
Date of Institution : 25.09.2024
Date of Arguments : 06.04.2026
Date of Judgment : 20.04.2026
JUDGMENT:-
APPLICATION/APPEAL U/S 19 OF THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 R/W S. 34 OF THE ARBITRATION AND CONCILIATION ACT, 1996 FILED BY THE CLAIMANT/APPELLANT AGAINST THE AWARD/ORDER DT. 12.06.2024 PASSED BY THE LD. SOLE ARBITRATOR SHRI K.K. NANGIA
1. This order shall decide application/appeal under section 19 of The Micro Small and Medium Enterprises Nine Projects Pvt. Ltd Vs Alpha Pacific Systems Pvt Ltd. Page no. 1 of 37 OMP Comm 86/2024 Digitally signed AJAY by AJAY PANDEY PANDEY Date: 2026.04.20 15:37:41 +0530 Development Act 2006 read with section 34 of The Arbitration and Conciliation Act challenging the arbitral award dated 12.06.2024 and application under section 36(3) for stay of operation of impugned award.
2. Vide impugned award dated 12.06.2024, learned Arbitral Tribunal dismissed the claim of the applicant and allowed counter-claim of the respondent for Rs.11,79,000/-.
FACTS AS PER APPLICATION
3. It is inter-alia stated in the application that :-
3.1 Applicant is a company carrying on inter-
alia business of rendering specialized construction services as well as services of controlled demolition of RCC structure/diamond cutting of RCC structure and supplying material and installation of equipments/machines. The applicant is registered as MSME Enterprise under Micro, Small and Medium Enterprises Development Act, 2006.
3.2 Respondent is a company engaged in business of civil construction work.
3.3 Respondent issued work order dated 06.10.2018 for diamond cutting work to the petitioner in respondent's project of Joshiyara Barrage, Uttarkashi. Applicant rendered its service and supplied material in combination of said work and completed the work on 21.01.2019. On 21.01.2019 a revised work order dated Nine Projects Pvt. Ltd Vs Alpha Pacific Systems Pvt Ltd. Page no. 2 of 37 OMP Comm 86/2024 Digitally signed AJAY by AJAY PANDEY PANDEY Date: 2026.04.20 15:37:52 +0530 21.01.2019 was issued. Copy of both the work orders are annexed with the application.
3.4 Applicant issued following tax invoices :-
S. No. Invoice No. Date Value of Work/Goods Supplied (including GST( (Rs.)
1. 07-2671-2018 16.01.2019 38,94,000.00
2. 07-2672-2018 16.01.2019 98,50,711.00
3. 07-3097-2018 30.03.2019 95,08,571.00 The invoices were accepted by the respondent and no objection was raised. Respondent also made payments against the invoices.
3.5 Respondent made full payment of the invoice no. 07-2671-2018 dated 16.01.2019 for a sum of Rs.38,94,000/- clearly demonstrating that such supply was accepted by the respondent and respondent knowingly cleared the payment through National Small Industries Corporation.
3.6 Respondent issued completion certificate dated 11.12.2019 to the applicant mentioning "Diamond cutting Work - Joshiyara Barrage of total value of Rs.1,64,06,171/- which includes Diamond Wall saving and Core Cutting to our satisfaction and we are pleased with their work." showing that respondent was satisfied from the work of applicant.
3.7 Respondent released only part payment from total due amount of Rs.2,32,53,282/-.
Nine Projects Pvt. Ltd Vs Alpha Pacific Systems Pvt Ltd. Page no. 3 of 37 OMP Comm 86/2024 Digitally signed AJAY by AJAY PANDEY PANDEY Date: 2026.04.20 15:37:59 +0530 3.8 Applicant, sent an email dated 29.01.2021 to the respondent demanding balance outstanding amount of Rs.40,15,000/-. Respondent replied that email through email dated 30.06.2021, admitting the liability to pay balance pending amount to applicant.
3.9 After rigorous follow-up, respondent made part payment of Rs.2,03,32,122/-. Applicant also issued a credit note dated 30.03.2019 to the respondent for Rs.2,06,160/-. Respondent wrongfully continued to withhold the amount of Rs.27,15,000/-.
3.10 Applicant sent legal notice dated 12.10.2022 to the respondent on 15.10.2022 demanding balance outstanding amount of Rs.27,15,000/- but respondent did not make any payment.
3.11 Respondent sent a letter dated 18.08.2023 to the applicant wherein it was mentioned "payment of Appellant was supposed to be Rs.1,93,59,282/- but the Respondent paid Rs.2,05,38,283/- and the Respondent wrongfully demanded Rs.11,79,000/- from the Appellant through such letter."
3.12 Applicant is stated to be entitled to payment of interest as per section 16 of MSMED Act.
3.13 Applicant filed online application under section 18(1) of MSMED Act 2006 before Micro Small Enterprises Facilitation Council. But respondent did not come forward for settlement and conciliation. Hence, the matter was referred to MSME Arbitral Tribunal for Nine Projects Pvt. Ltd Vs Alpha Pacific Systems Pvt Ltd. Page no. 4 of 37 OMP Comm 86/2024 Digitally signed AJAY by AJAY PANDEY PANDEY Date: 2026.04.20 15:38:05 +0530 arbitration proceedings under the provisions of MSMED Act 2006.
3.14 Applicant filed his claim before the Learned Arbitrator. Respondent filed statement of defence and counter-claim. Applicant filed its rejoinder. Affidavits of evidences were filed. Written submissions were also filed before learned Arbitrator.
3.15 Vide impugned award dated 12.06.2024, learned Arbitral Tribunal dismissed the claim of applicant and allowed counter-claim of respondent for Rs.11,79,000/-.
GROUNDS IN APPLICATION :-
4. In the grounds of application it is stated that :-
4.1 The impugned award is against the facts, law, evidence and material on record and is against the law of land. It is further stated that admitted liability in favour of applicant was not considered and that application sent an email dated 29.01.2021 to the respondent demanding outstanding amount of Rs.40,15,000/- and respondent admitted its liability to pay such balance vide email dated 30.01.2021, but learned Arbitrator ignored such evidence.
4.2 It is further stated that the substantial question of law is involved in the present appeal as tax invoice no. 07-2671-2018 dated 16.01.2019 for a sum of Rs.38,94,000/- was issued by the applicant for supply of Nine Projects Pvt. Ltd Vs Alpha Pacific Systems Pvt Ltd. Page no. 5 of 37 OMP Comm 86/2024 Digitally signed AJAY by AJAY PANDEY PANDEY Date: 2026.04.20 15:38:12 +0530 material in combination of said work and respondent made full payment against the said tax invoice through National Small Industries Corporation (NSIC) but such tax invoice was later on denied by respondent. Hence, this act and conduct of respondent is against the doctrine of Estoppel as per section 115 of the Indian Evidence Act and the same was not considered by learned Arbitrator which is against the violation of law.
4.3 It is further stated that while passing the impugned award dated 12.06.2024, learned Arbitrator has failed to appreciate that as per section 15 of MSMED Act, the respondent was liable to make payment for supply of material by the applicant in combination of service. Learned Arbitrator exceeded the power and jurisdiction which is serious violation of law.
4.4 It is further stated that while passing the impugned award, learned Arbitrator has failed to appreciate the fact that the respondent has not raised any objection to the invoice no. 07-2671-2018 dated 16.01.2019 for a sum of Rs.38,94,000/- from 17.01.2019 to 02.11.2022.
4.5 It is further stated that learned Arbitrator acted in excess of authority by allowing claim of the respondent which was beyond the scop of reference made under section 18 of MSMED Act 2006.
4.6 It is further stated that the impugned award is against the public policy of India and not only defeats Nine Projects Pvt. Ltd Vs Alpha Pacific Systems Pvt Ltd. Page no. 6 of 37 OMP Comm 86/2024 Digitally signed AJAY by AJAY PANDEY PANDEY Date: 2026.04.20 15:38:33 +0530 the legislative intent of MSMED Act 2006 but also goes beyond the jurisdiction conferred by the Arbitral Tribunal under MSMED Act 2006.
4.7 The impugned award is further stated to be miscarriage of justice and misuse of process of law.
Setting-aside of the impugned award is therefore prayed along with other reliefs.
5. The application is supported by Statement of Truth.
RESPONDENT'S REPLY
6. Notice of the application was issued to the respondent who filed its reply. Arbitration record was also received. It is inter-alia stated in the reply that :-
6.1 By way of present application, applicant seeks indulgence of the court in unlawful practice of re-appreciating the evidence already considered by learned Arbitrator; that no substantive or specific ground mentioned in section 34 of The Act has been used in the petition; that the application is barred by limitation.
6.2 In reply on merits, impugned award dated 12.06.2024 is defended and it is stated that well reasoned award was passed by learned Arbitrator. Findings of learned Arbitrator are quoted in the reply to application.
PETITIONER'S ADDITIONAL GROUNDS
7. Vide order dated 07.01.2026 learned counsel for Nine Projects Pvt. Ltd Vs Alpha Pacific Systems Pvt Ltd. Page no. 7 of 37 OMP Comm 86/2024 Digitally signed AJAY by AJAY PANDEY PANDEY Date: 2026.04.20 15:38:38 +0530 applicant/objector filed additional grounds stating inter- alia that impugned award is against the public policy of India since learned Arbitrator failed to comply with the principles of natural justice and failed to conduct cross- examination for extracting the truth despite repeated request made by the applicant. It is further stated that learned Arbitrator even failed to record such request.
ARGUMENTS
8. Both the parties addressed their detailed oral arguments and have also filed their respective written submissions.
9. In his written submissions learned counsel for applicant reiterated the stand taken in the application and also relied upon following judgments :-
1) Associate Builders Vs Delhi Development Authority (2015) 3 SCC 49.
2) Venkatesh Construct Company Vs Karnataka Vidyut Karkhane Limited (Kavika), Civil Appeal No. 461-462 of 2016.
3) Sukhbir Singh VS M/s Hindustan Petroleum Corporatin, O.M.P. 1118/2014 decided on 16.01.2020.
10. Per-contra in his written submissions learned counsel for respondent has relied upon following judgments:-
1) Vastu Invest & Holdings Pvt Ltd. Vs Gujarat Lease Financing Ltd., 2000 SCC OnLine Bom Nine Projects Pvt. Ltd Vs Alpha Pacific Systems Pvt Ltd. Page no. 8 of 37 OMP Comm 86/2024 Digitally signed by AJAY AJAY PANDEY PANDEY Date: 2026.04.20 15:38:44 +0530
729.
2) Silpi Industries Vs Kerala State Road Transport Corporation and Another, 2021 SCC OnLine SC 439.
11. Arguments considered. Record perused.
FINDINGS
12. It is settled law that the objections to the Arbitral Award are required to be strictly confined to the grounds under section 34 (2) and 2A of The Arbitration and Conciliation Act 1996.
13. Said provision is reproduced herein below:-
34.Application for setting aside arbitral award (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-
section (3).
(2) An arbitral award may be set aside by the Court only if--
2(a) the party making the application [establishes on the basis of the record of the arbitral tribunal that]--
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not Nine Projects Pvt. Ltd Vs Alpha Pacific Systems Pvt Ltd. Page no. 9 of 37 OMP Comm 86/2024 AJAY Digitally signed by AJAY PANDEY PANDEY Date: 2026.04.20 15:38:50 +0530 valid under the law to which the parties have subjected it or, failing any indication thereon, underthe law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or Nine Projects Pvt. Ltd Vs Alpha Pacific Systems Pvt Ltd. Page no. 10 of 37 OMP Comm 86/2024 Digitally signed AJAY by AJAY PANDEY PANDEY Date: 2026.04.20 15:38:56 +0530
(b) the Court finds that--
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force,or
(ii) the arbitral award is in conflict with the public policy of India.
[Explanation 1.--For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,--
(i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or
(ii) it is in contravention with the fundamental policy of Indian law; or
(iii) it is in conflict with the most basic notions of morality or justice.
Explanation 2.--For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.] [(2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the Nine Projects Pvt. Ltd Vs Alpha Pacific Systems Pvt Ltd. Page no. 11 of 37 OMP Comm 86/2024 Digitally signed by AJAY AJAY PANDEY PANDEY Date: 2026.04.20 15:39:02 +0530 award is vitiated by patent illegality appearing on the face of the award:
PROVIDED that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.] ...........
14. There is only limited scope of interference by the court in the petitions under section 34 of the Arbitration and Conciliation Act 1996. In the case of Associate Builders Vs Delhi Development Authority (2015) 3 SCC 49, relied upon by learned counsel for applicant, it was held by Hon'ble Supreme Court "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 is 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."
15. In the case of Navodaya Mass Entertainment Ltd Nine Projects Pvt. Ltd Vs Alpha Pacific Systems Pvt Ltd. Page no. 12 of 37 OMP Comm 86/2024 Digitally signed AJAY by AJAY PANDEY PANDEY Date: 2026.04.20 15:39:08 +0530 VS J.M. Combines MANU/SC/0735/2014, it was held :-
"scope of interference of the Court is very limited. Court would not be justified in reappraising the material on record and substituting its own view in place of the Arbitrator's view. Where there is an error apparent on the face of the record or the Arbitrator has not followed the statutory legal position, then and then only it would be justified in interfering with the award published by the Arbitrator. Once the Arbitrator has applied his mind to the matter before him, the Court cannot reappraise the matter as if it were an appeal and even if two views are possible, the view taken by the Arbitrator would prevail. (See: Bharat Coking Coal Ltd. Vs. L.K. Ahuja, (2004) 5 SCC 109; Ravindra & Associates Vs. Union of India, (2010) 1 SCC 80; Madnani Construction Corporation Private Limited Vs. Union of India & Ors., (2010) 1 SCC 549; Associated Construction Vs. Pawanhans Helicopters Limited, (2008) 16 SCC 128; and Satna Stone & Lime Company Ltd. Vs. Union of India & Anr., (2008) 14 SCC".
16. In the case of M/s Arosan Enterprises Ltd Vs Union of India & Anr MANU/SC/0595/1999, it was held:-
"that reappraisal of evidence by the court is not permissible and as a matter of fact exercise of power by the Court to reappraise the evidence is unknown to a Nine Projects Pvt. Ltd Vs Alpha Pacific Systems Pvt Ltd. Page no. 13 of 37 OMP Comm 86/2024 Digitally signed AJAY by AJAY PANDEY PANDEY Date: 2026.04.20 15:39:14 +0530 proceeding under Section 30 of the Arbitration Act. In the event of there being no reasons in the award, question of interference of the court would not arise at all. In the event, however, there are reasons, the interference would still be not available within the jurisdiction of the Court unless of course, there exist a total perversity in the award or the judgment is based on a wrong proposition of law: In the event however two views are possible on a question of law as well, the Court would not be justified in interfering with the award. The common phraseology `error apparent on the face of the record' does not itself, however, mean and imply closer scrutiny of the merits of documents and materials on record: The court as a matter of fact, cannot substitute its evaluation and come to the conclusion that the arbitrator had acted contrary to the bargain between the parties. If the view of the arbitrator is a possible view the award or the reasoning contained therein cannot be examined. In this context, reference may be made to one of the recent decision of this Court in the case of State of Rajasthan v. Puri Construction Co. Ltd. (1994 (6) SCC
485) wherein this court relying upon the decision of Sudarsan Trading Co.'s case case (Sudarsan Trading Co. v. Government of Kerala and Anr. (1989 (2) SCC 38) observed in paragraph 31 of the Report as below:- "A court of competent jurisdiction has both right and duty to decide the lis presented before it for adjudication according to the best understanding of law and facts involved in the lis by the judge presiding over the court.
Such decision even if erroneous either in factual determination or application of law correctly, is a valid one and binding inter Nine Projects Pvt. Ltd Vs Alpha Pacific Systems Pvt Ltd. Page no. 14 of 37 OMP Comm 86/2024 Digitally signed AJAY by AJAY PANDEY PANDEY Date: 2026.04.20 15:39:19 +0530 parties. It does not, therefore, stand to reason that the arbitrator's award will be per se invalid and inoperative for the simple reason that the arbitrator has failed to appreciate the facts and has committed error in appreciating correct legal principle in basing the award. An erroneous decision of a court of law is open to judicial review by way of appeal or revision in accordance with the provisions of law. Similarly, an award rendered by an arbitrator is open to challenge within the parameters of several provisions of the Arbitration Act. Since the arbitrator is a judge by choice of the parties and more often than not a person with little or no legal background, the adjudication of disputes by an arbitration by way of an award can be challenged only within the limited scope of several provisions of the Arbitration Act and the legislature in its wisdom has limited the scope and ambit of challenge to an award in the Arbitration Act. Over the decades, judicial decisions have indicated the parameters of such challenge consistent with the provisions of the Arbitration Act. By and large the courts have disfavoured interference with arbitration award on account of error of law and fact on the score of misappreciation and misreading of the materials on record and have shown definite inclination to preserve the award as far as possible. As reference to arbitration of disputes in commercial and other transactions involving substantial amount has increased in recent times, the courts were impelled to have fresh look on the ambit of challenge to an award by the arbitrator so that the award does not get undesirable immunity. In recent times, error in law and fact in basing an award has not been given Nine Projects Pvt. Ltd Vs Alpha Pacific Systems Pvt Ltd. Page no. 15 of 37 OMP Comm 86/2024 Digitally signed AJAY by AJAY PANDEY PANDEY Date: 2026.04.20 15:39:25 +0530 the wide immunity as enjoyed earlier, by expanding the import and implication of "legal misconduct" of an arbitrator so that award by the arbitrator does not perpetrate gross miscarriage of justice and the same is not reduced to mockery of a fair decision of the lis between the parties to arbitration. Precisely for the aforesaid reasons, the erroneous application of law constituting the very basis of the award and improper and incorrect findings of fact, which without closer and intrinsic scrutiny, are demonstrable on the face of the materials on record, have been held, very rightly, as legal misconduct rendering the award as invalid. It is necessary, however, to put a note of caution that in the anxiety to render justice to the party to arbitration, the court should not reappraise the evidences intrinsically with a close scrutiny for finding out that the conclusion drawn from some facts, by the arbitrator is, according to the understanding of the court, erroneous. Such exercise of power which can be exercised by an appellate court with power to reverse the finding of fact, is alien to the scope and ambit of challenge of an award under the Arbitration Act. Where the error of finding of facts having a bearing on the award is patent and is easily demonstrable without the necessity of carefully weighing the various possible viewpoints, the interference with award based on erroneous finding of fact is permissible. Similarly, if an award is based by applying a principle of law which is patently erroneous, and but for such erroneous application of legal principle, the award could not have been made, such award is liable to be set aise by holding that there has been a legal misconduct on the part Nine Projects Pvt. Ltd Vs Alpha Pacific Systems Pvt Ltd. Page no. 16 of 37 OMP Comm 86/2024 AJAY Digitally signed by AJAY PANDEY PANDEY Date: 2026.04.20 15:39:30 +0530 of the arbitrator. In ultimate analysis it is a question of delicate balancing between the permissible limit of error of law and fact and patently erroneous finding easily demonstrable from the materials on record and application of principle of law forming the basis of the award which is patently erroneous. It may be indicated here that however objectively the problem may be viewed, the subjective element inherent in the judge deciding the problem, is bound to creep in and influence the decision. By long training in the art of dispassionate analysis, such subjective element is, however, reduced to minimum. Keeping the aforesaid principle in mind, the challenge to the validity of the impugned award is to be considered with reference to judicial decisions on the subject."
17. It is thus clearly established by catena of judgments of Hon'ble Supreme Court and Hon'ble High Courts 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. The Arbitrator is master of the quality and quantity of the evidence. The court would not be justified in re-appraising the material on arbitral record and substitute its own view in place of the view of learned Arbitrator. Once the Arbitrator has applied his mind to the matter before him, the court cannot re- appraise the matter as if it was an appeal and even if two Nine Projects Pvt. Ltd Vs Alpha Pacific Systems Pvt Ltd. Page no. 17 of 37 OMP Comm 86/2024 Digitally signed AJAY by AJAY PANDEY PANDEY Date: 2026.04.20 15:39:35 +0530 views are possible, the view taken by Arbitrator would prevail. No interference in the award is required unless there is existence of total perversity in the award or the judgment is passed on wrong proposition of law. Even when the Arbitrator makes a mistake either in law or in fact but such mistake does not appear on the face of award, the award is good not withstanding the mistake and would not be remitted or set-aside.
18. Further the court would not construe the nature of claim by adopting too technical an approach or by indulging into hair-splitting, otherwise the whole purpose behind holding the arbitration proceedings as an alternative to Civil Courts forum would stand defeated as was held by Apex Court in the case of Sangamner Bhag Sahakari Karkhana Ltd Vs Krupp Industries Ltd, AIR 2002 SC 2221. Further in the case of P.R. Shah, Shares & Stock Brokers Pvt Ltd Vs B.H.H. Securities Pvt Ltd & Ors, (2012) 1 SCC 594, it was held by Hon'ble Supreme Court that in order to provide the balance and to avoid excessive intervention, the arbitration award is not to be set-aside merely on the ground of erroneous application of law or by re-appreciating evidence.
19. In the case of NTPC Ltd Vs Maratho Electric Motors India Ltd, 2012 SCC Online Del 3995, it was held that appreciation of evidence by the Arbitrator is never a matter which the court considers in the Nine Projects Pvt. Ltd Vs Alpha Pacific Systems Pvt Ltd. Page no. 18 of 37 OMP Comm 86/2024 AJAY Digitally signed by AJAY PANDEY PANDEY Date: 2026.04.20 15:39:41 +0530 proceedings under section 34 of The Act as the court is not sitting in appeal over the adjudication of the Arbitrator and the court do not act as court of appeal. An error relatable to interpretation of the contract by an Arbitrator is an error within his jurisdiction and such error is not amenable to the correction by courts as such error is not an error on the face of the award.
20. In the recent judgment of Delhi Airport Metro Express Pvt. Ltd Vs Delhi Metro Rail Corporation Ltd., Civil Appeal No. 5627 of 2021, AIR ONLINE 2021 SC 708, Hon'ble Apex Court, keeping in view the amendment of the Arbitration and Conciliation laws by the Arbitration & Conciliation Act 1996 decided the Contours of the court's power to review arbitral awards. Relevant principles can be summarized amongst others, as follows:-
- One of the principal objectives of the 1996 Act is to minimize the supervisory role of courts in the arbitral process.
- An application for setting aside an arbitral award can only be made in accordance with provisions of Section 34 of the 1996 Act.
- While deciding applications filed under Section 34 of The Act, courts are mandated to strictly act in accordance with and within the confines of Section 34, refraining from appreciation or re-appreciation of Nine Projects Pvt. Ltd Vs Alpha Pacific Systems Pvt Ltd. Page no. 19 of 37 OMP Comm 86/2024 AJAY Digitally signed by AJAY PANDEY PANDEY Date: 2026.04.20 15:39:52 +0530 matters of fact as well as law.
- As it is only such arbitral awards that shock the conscience of the court that can be set aside on grounds under section 34.
- There must be patent illegality appearing on the face of the award, which refers to such illegality as goes to the root of the matter but which does not amount to mere erroneous application of the law.
- Reappreciation of evidence, which is what an appellate court is permitted to do, cannot be permitted under the ground of patent illegality appearing on the face of the award.
- The construction of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator construes the contract in a manner that no fair- minded or reasonable person would; in short, that the arbitrator's view is not even a possible view to take.
- A finding based on no 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.
- There is a disturbing tendency of courts setting aside arbitral awards, after dissecting and reassessing factual aspects of the cases. This approach would lead to corrosion of the object of the 1996 Act and the endeavours made to preserve this object, which is minimal judicial interference with arbitral awards. Nine Projects Pvt. Ltd Vs Alpha Pacific Systems Pvt Ltd. Page no. 20 of 37 OMP Comm 86/2024 Digitally signed by AJAY AJAY PANDEY PANDEY Date: 2026.04.20 15:39:58 +0530 Several judicial pronouncements of the Court would become a dead letter if arbitral awards are set aside by categorising them as perverse or patently illegal without appreciating the contours of the said expressions.
- Every error of law committed by the Arbitral Tribunal would not fall within the expression 'patent illegality'. In addition, contravention of law not linked to public policy or public interest is beyond the scope of the expression 'patent illegality'.
- Courts do not sit in appeal against the arbitral award. The permissible grounds for interference with a domestic award under Section 34(2-A) on the ground of patent illegality is when the arbitrator takes a view which is not even a possible one.
21. In Indian Oil Corporation Vs Shree Ganesh Petroleum Rajgurunagar, MANU/SC/0127/2022, it was held by Hon'ble Supreme Court :-
44. An Arbitral Tribunal being a creature of contract, is bound to act in terms of the contract under which it is constituted. An award can be said to be patently illegal where the Arbitral Tribunal has failed to act in terms of the contract or has ignored the specific terms of a contract.
45. However, a distinction has to be drawn between failure to act in terms of a contract and an erroneous interpretation of the terms of a contract. An Nine Projects Pvt. Ltd Vs Alpha Pacific Systems Pvt Ltd. Page no. 21 of 37 OMP Comm 86/2024 Digitally signed by AJAY AJAY PANDEY PANDEY Date: 2026.04.20 15:40:04 +0530 Arbitral Tribunal is entitled to interpret the terms and conditions of a contract, while adjudicating a dispute. An error in interpretation of a contract in a case where there is valid and lawful submission of arbitral disputes to an Arbitral Tribunal is an error within jurisdiction.
46. The Court does not sit in appeal over the award made by an Arbitral Tribunal. The Court does not ordinarily interfere with interpretation made by the Arbitral Tribunal of a contractual provision, unless such interpretation is patently unreasonable or perverse.
Where a contractual provision is ambiguous or is capable of being interpreted in more ways than one, the Court cannot interfere with the arbitral award, only because the Court is of the opinion that another possible interpretation would have been a better one.
47. In Associate Builders (supra), this Court held that an award ignoring the terms of a contract would not be in public interest. In the instant case, the award in respect of the lease rent and the lease term is in patent disregard of the terms and conditions of the lease agreement and thus against public policy. Furthermore, in Associate Builders (supra) the jurisdiction of the Arbitral Tribunal to adjudicate a dispute itself was not in issue. The Court was dealing with the circumstances in which a Court could look into the merits of an award.
48. In this case, as observed above, the impugned award insofar as it pertains to lease rent and lease period is Nine Projects Pvt. Ltd Vs Alpha Pacific Systems Pvt Ltd. Page no. 22 of 37 OMP Comm 86/2024 Digitally signed AJAY by AJAY PANDEY PANDEY Date: 2026.04.20 15:40:10 +0530 patently beyond the scope of the competence of the Arbitrator appointed in terms of the dealership agreement by the Director (Marketing) of the Appellant. agreement and thus against public policy. Furthermore, in Associate Builders (supra) the jurisdiction of the Arbitral Tribunal to adjudicate a dispute itself was not in issue. The Court was dealing with the circumstances in which a Court could look into the merits of an award.
48. In this case, as observed above, the impugned award insofar as it pertains to lease rent and lease period is patently beyond the scope of the competence of the Arbitrator appointed in terms of the dealership agreement by the Director (Marketing) of the Appellant.
49. The lease agreement which was in force for a period of 29 years with effect from 15th April, 2005 specifically provided for monthly lease rent of Rs.1750 per month for the said plot of land on which the retail outlet had been set up. It is well settled that an Arbitral Tribunal, or for that matter, the Court cannot alter the terms and conditions of a valid contract executed between the parties with their eyes open.
22. In Civil Appeal No. 369-3700 of 2018 decided on 28.07.2021, it was held :-
"85. It has been held that the role of the Arbitrator is to arbitrate within the terms of the contract. He has no power apart from what the parties have given him under the contract. If he has travelled beyond the contract, he Nine Projects Pvt. Ltd Vs Alpha Pacific Systems Pvt Ltd. Page no. 23 of 37 OMP Comm 86/2024 AJAY Digitally signed by AJAY PANDEY PANDEY Date: 2026.04.20 15:40:16 +0530 would be acting without jurisdiction.
86. It will also be apposite to refer to the following observations of this Court in the case of Md. Army Welfare Housing Organization v. Sumangal Services (P) Ltd. MANU/SC/0797/2003 "43. An Arbitral Tribunal is not a court of law. Its orders are not judicial orders. Its functions are not judicial functions. It cannot exercise its power ex debito justitiae. The jurisdiction of the arbitrator being confined to the four corners of the agreement, he can only pass such an order which may be the subject-matter of reference."
87. It has been held that an Arbitral Tribunal is not a Court of law. Its orders are not judicial orders. Its functions are not judicial functions. It cannot exercise its powers ex debito justitiae. It has been held that the jurisdiction of the arbitrator being confined to the four corners of the agreement, he can only pass such an order which may be the subject-matter of reference.
88. In that view of the matter, we are of the considered view, that the impugned Award would come under the realm of 'patent illegality' and therefore, has been rightly set aside by the High Court."
23. Now coming back to the facts of the present case, after perusal of impugned award dated 12.06.2024, this court is of the humble opinion that it is rightly submitted by learned counsel for respondent that the additional Nine Projects Pvt. Ltd Vs Alpha Pacific Systems Pvt Ltd. Page no. 24 of 37 OMP Comm 86/2024 AJAY Digitally signed by AJAY PANDEY PANDEY Date: 2026.04.20 15:40:24 +0530 ground raised in the application e-filed on 24.11.2025 is an afterthought and are not supported by record.
24. Section 19 of the Arbitration and Conciliation Act 1996 provides as follows :-
19. Determination of rules of procedure (1) The arbitral tribunal shall not be bound by the Code of Civil Procedure, 1908 (5 of 1908) or the Indian Evidence Act, 1872 (1 of 1872).
(2) Subject to this Part, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting its proceedings.
(3) Failing any agreement referred to in sub- section (2), the arbitral tribunal may, subject to this Part, conduct the proceedings in the manner it considers appropriate.
(4) The power of the arbitral tribunal under sub- section (3) includes the power to determine the admissibility, relevance, materiality and weight of any evidence.
25. A bare reading of section 19 demonstrates that learned Arbitrator is master of his proceedings and was not bound by Code of Civil Procedure 1908 or with the Indian Evidence Act 1872. It further provides that parties are free to agree on the procedure followed by learned Arbitrator in conducting its proceedings. Perusal of arbitral record reflects that learned Arbitrator had issued a Nine Projects Pvt. Ltd Vs Alpha Pacific Systems Pvt Ltd. Page no. 25 of 37 OMP Comm 86/2024 AJAY Digitally signed by AJAY PANDEY PANDEY Date: 2026.04.20 15:40:32 +0530 pre-hearing notice dated 18.10.2023 to the parties which contained proposed schedule and practice directions to conduct arbitration. Parties appeared before learned Arbitrator on 30.10.2023 and consented to the said practice directions. Practice directions no.4 is as follows :-
"4. Any claims or counter-claims presented will be considered as issues for arbitration. It should be noted that the arbitration proceedings under the MSMED (Micro, Small & Medium Enterprises Development) Act, 2006 are statutory in nature and will be conducted under a Summary Procedure mode. Accordingly, there will be no provision for oral evidence, including both chief and cross-examination of witnesses." (emphasis supplied).
26. Learned Arbitrator in minutes of proceedings dated 30.10.2023 specifically recorded "The practice directions intended for integration into the current arbitration proceedings were properly communicated and understood, with the both parties present giving consent."
27. Reading the practice directions along with minutes of proceedings dated 30.10.2023 clearly reflects that it was agreed between the parties that there would be no provision of oral evidence including chief and cross- examination of witnesses and proceedings were to be conducted in summary procedure.
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28. Learned counsel for applicant heavily relied upon section 24 of The Arbitration and Conciliation Act, which provides as follows :-
24. Hearings and written proceedings (1) Unless otherwise agreed by the parties, the arbitral tribunal shall decide whether to hold oral hearings for the presentation of evidence or for oral argument, or whether the proceedings shall be conducted on the basis of documents and other materials:
PROVIDED that the arbitral tribunal shall hold oral hearings, at an appropriate stage of the proceedings, on a request by a party, unless the parties have agreed that no oral hearing shall be held:
[Provided further that the arbitral tribunal shall, as far as possible, hold oral hearings for the presentation of evidence or for oral argument on day-to-day basis, and not grant any adjournments unless sufficient cause is made out, and may impose costs including exemplary costs on the party seeking adjournment without any sufficient cause.] (2) The parties shall be given sufficient advance notice of any hearing and of any meeting of the arbitral tribunal for the purposes of inspection of documents, goods or other property.
(3) All statements, documents or other information supplied to, or applications made to the arbitral tribunal by one party shall be communicated to the other party, and Nine Projects Pvt. Ltd Vs Alpha Pacific Systems Pvt Ltd. Page no. 27 of 37 OMP Comm 86/2024 Digitally signed AJAY by AJAY PANDEY PANDEY Date: 2026.04.20 15:40:54 +0530 any expert report or evidentiary document on which the arbitral tribunal may rely in making its decision shall be communicated to the parties.
29. A bare reading of section 24 of the Act clearly specifies that decision of Arbitrator to hold oral hearings for presentation of evidence or for oral arguments is subject to the agreement between the parties.
30. In the present case both the parties have agreed to practice directions which specifies that there will be no provision for oral evidence. Learned counsel for applicant has argued that a request was made to learned Arbitrator to hold oral evidence. He further argued that learned Arbitrator did not record such request. No such request is however available on record. Applicant filed written submissions but there is no reference of any such request even in the written submissions. Learned Arbitrator was cautious enough to pass practice directions in writing. He then communicated those practice directions to both the parties. Thereafter, he recorded consent of both the parties to follow the said practice directions. Any request contrary to such practice directions from the applicant should have been in writing. Hence, it can be safely said that the plea taken in the additional grounds is an afterthought.
31. After going through the award it can be safely said that learned Arbitrator has considered each and every aspect of the matter. The decision of learned Arbitrator is Nine Projects Pvt. Ltd Vs Alpha Pacific Systems Pvt Ltd. Page no. 28 of 37 OMP Comm 86/2024 Digitally signed by AJAY AJAY PANDEY PANDEY Date: 2026.04.20 15:41:01 +0530 passed on the admitted documents i.e. the work orders dated 06.10.2018 and 21.01.2019. He had also considered the communication or emails exchanged between the parties. From page no. 24 of the award, learned Arbitrator had examined the work orders and claims and observed as follows :-
The tribunal has reviewed the agreement/work order entered into between the parties to ascertain the scope of work allotted to the claimant for which the pending payment is being claimed through the claim petition.
It is undisputed between the parties that the claimant entered into an agreement/work order with the respondent on 06.10.2018 for the diamond cutting work of the respondent's project at Jooshiyara Barrage, Uttarkashi. It is also an admitted position between the parties that the said agreement was revised on 21.01.2019.
Upon perusal of the terms of the initial and revised order, the following schedule of quantities and prices are found to be incorporated in the work order :
SCHEDULE OF QUANTITIES & PRICES SL. Item Description UOM Qty Unit Total No. Price Amoun t 1 Controlled Sqm 1500 9,900.00 1,48,50 demolition of RCC ,000.00 wall by Sqm HILIT Diamond wire sawing, wall dimension 24 M height, 30 M length of uniform thickness of 1 M. in Nine Projects Pvt. Ltd Vs Alpha Pacific Systems Pvt Ltd. Page no. 29 of 37 OMP Comm 86/2024 Digitally signed AJAY by AJAY PANDEY PANDEY Date: 2026.04.20 15:41:06 +0530 pieces of 2 M X 1M X 1M. Scope of work shall include core drilling in RCC wall to pass wire through it, cutting of RCC pieces by wire sawing.
2 Drilling of diameter RMT 155 650.00 1,00,75 25 mm depth 1 M 0.00 through the RC wall to enable wire sawing
3. Core Cutting of RMT 300 3,200.00 9,60,00 diameter 100 mm 0.00 depth 1 M through the RCC wall to enable wire sawing
4. Hydraulic Month 3 3,50,000. 10,50,0 Excavator with 00 00.00 breaker (Additional hour pro-rata basis) Total Amount (Rs.) 1,69,60,750.00 The claimant alleged that they have raised the first invoice dated 16.01.2019 amounting to Rs. 38,94,000/-, the second invoice dated 16.01.2019 amounting to Rs. 98,50,711/-, and the third invoice dated 30.03.2019 amounting to Rs. 95,08,571/-, totaling Rs. 2,32,53,282/-. Out of these three invoices, the dispute in the matter relates only to the first invoice, as its validity is contested by the respondent.
Thus, the primary question that needs to be answered is whether the invoice dated 16.01.2019 amounting to Rs. 38,94,000/- for the purchase of Diamond wire is valid and can be considered for payment as per the terms of contract entered between the parties?
The tribunal has reviewed and gone
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through the above schedule of quantities and rates as prescribed in the workorder, it is found that the respondent had issued the said work according to the quantities mentioned in the schedule. The unit price of the quantity was also clearly mentioned alongwith work order. Even the unit of measurement for measuring the quantity of work to be carried out was also clearly mentioned as square meters (sqm)/running meters. The said workorder was issued for the total amount of Rs. 1,69,60,750/-.
It was further observed that the invoice dated 16.01.2019 amounting to Rs.
38,94,000/- was raised by the claimant for the purchase and supply of Diamond wire DS- W SI 10.5-100m C F2 MP for 5 units at the rate of Rs. 6,60,000/- per unit. However, this rate has not been specifically mentioned in the schedule of quantities and prices included as Annexure 1 to the contract. Annexure 1 is an exhaustive list containing the rates of various items to be used or jobs to be done for the complete work by the claimant.
Furthermore, serial number 1 in Annexure 1 includes the scope of work for core drilling in the RCC wall to pass the wire through it, cutting of RCC pieces by wire sawing at a unit price of Rs. 9,900/-. This makes it unambiguous that the scope of work included passing the wire along with the sawing work at a fixed rate of Rs. 9,900/- per sqm.
The tribunal fails to identify or corroborate any amount mentioned for the procurement of Diamond wire in the given schedule of quantities. No document or additional purchase order was placed on record by the claimant demonstrating that the respondent was supposed to make payment for this item as per the contract entered into Nine Projects Pvt. Ltd Vs Alpha Pacific Systems Pvt Ltd. Page no. 31 of 37 OMP Comm 86/2024 AJAY Digitally signed by AJAY PANDEY PANDEY Date: 2026.04.20 15:41:18 +0530 between the parties. In the absence of such a document or agreement, this claim of the claimant cannot be substantiated either through the terms of the work order or through any communication between the parties suggesting that the respondent had at any point accepted the payment for this extra item beyond the items mentioned in schedule of quantities. The tribunal is of the opinion that merely raising invoices for items that were not part of the purchase order/work contract cannot be accounted for payment.
32. The court do not find any justification to interfere in the findings of learned Arbitrator that no document or additional purchase order was placed on record by applicant demonstrating that respondent was supposed to make payment for the supply of material. On the basis of documents i.e. work orders dated 06.10.2018 and 21.01.2019, learned Arbitrator has observed that these documents provide exhaustive list containing the rates of various items to be used or jobs to be done for the complete work by the applicant.
33. Learned Arbitrator further examined the work completion certificate which tallied with the 2 nd invoice dated 16.01.2019 amounting to Rs.98,50,111/- and 3rd invoice dated 30.03.2019 amounting to Rs.95,08,571/-. It was further observed that total value of the project mentioned in the completion certificate dated 11.12.2019 corresponds to these two invoices. Learned Arbitrator Nine Projects Pvt. Ltd Vs Alpha Pacific Systems Pvt Ltd. Page no. 32 of 37 OMP Comm 86/2024 AJAY Digitally signed by AJAY PANDEY PANDEY Date: 2026.04.20 15:41:23 +0530 observed as follows :-
Furthermore, the subsequent work completion certificate dated 11.12.2019, issued by the respondent also mentioned the total value of the project as Rs. 1,64,06,171/-. This fact is duly acknowledged by the claimant as the claimant itself filed this document alongwith its SOC. This value of Rs. 1,64,06,171/- (excluding taxes) and Rs. 1,93,59,282/- (with taxes) corroborates with the total of two invoices i.e. the second invoice dated 16.01.2019 amounting to Rs. 98,50,711/-, and the third invoice dated 30.03.2019 amounting to Rs. 95,08,571/-.
The claimant's claim of Rs.
2,32,53,282/- (including taxes) i.e total of all 3 invoices was neither acknowledged nor accepted for payment by the claimant at any point of time. The completion certificate mentioned the value of the project based on two invoices only. The claimant has raised no objections against the value of the project and has duly acknowledged it. Had the value of the project been more, the claimant would not have acknowledged the work completion certificate at the value of Rs.1,64,06,171/-. This makes it clear that the first invoice was never the part of aggregate value of the project. The respondent had already made payment of Rs. 2,05,38,283/- to the claimant i.e in excess of the aggregate value of the project. The reasoning given by the respondent for release of excess payments is plausible.
Additionally, the claimant, to demonstrate their bona fide intentions, has not produced any email or WhatsApp communication indicating that the invoice dated 16.01.2019 was sent to the respondent for their acknowledgment before receiving Nine Projects Pvt. Ltd Vs Alpha Pacific Systems Pvt Ltd. Page no. 33 of 37 OMP Comm 86/2024 AJAY Digitally signed by AJAY PANDEY PANDEY Date: 2026.04.20 15:41:29 +0530 the work completion certificate. Instead, the respondent has clearly mentioned the total value of the work in the work completion certificate as Rs. 1,64,06,171/- and promptly replied to the claimant's legal notice dated 12.10.2022 on 02.11.2022, making their stand clear with respect to the invoice dated 16.01.2019 and the total value of the project.
34. Even before this court no document or additional purchase order has been placed by the applicant demonstrating that respondent was supposed to make payment for extra items allegedly used in the diamond cutting work. The work orders dated 06.10.2018 and 21.01.2019, quoted by learned Arbitrator are exhaustive inclusive of material. In such circumstances, decision of learned Arbitrator that the invoice no.1 07-2671-2018 dated 16.01.2019 was ultra-wire of the contract between the parties, cannot be faulted. Learned Arbitrator had observed that these invoices raised by the applicant/claimant for charges towards diamond cutting wire cannot be considered for payment. If this invoice no. 07-2671-2018 dated 16.01.2019 of Rs.38,94,000/- is excluded, respondent had already made excess payment of Rs.11,79,000/- to the applicant. Applicant cannot retain extra amount paid by the respondent by mistake and cannot be allowed to unlawfully act beyond the terms of contract between the parties. Hence, it cannot be said that any mistake on fact or law was done by learned Arbitrator while allowing counter-claim of Rs.11,79,000/- of the Nine Projects Pvt. Ltd Vs Alpha Pacific Systems Pvt Ltd. Page no. 34 of 37 OMP Comm 86/2024 Digitally signed by AJAY AJAY PANDEY PANDEY Date: 2026.04.20 15:41:35 +0530 respondent.
35. After consideration of material and evidence, learned sole Arbitrator passed the impugned award in favour of respondent.
36. In the case of McDermott International Inc. v.
Burn Standard Co. Ltd. (2006) 11 SCC 181, it was held that interpreting the terms of a contract, even when it involves legal questions, is a matter for the arbitrator to decide. Relevant paragraphs of the judgment are extracted as under:
"112. It is trite that the terms of the contract can be express or implied. The conduct of the parties would also be a relevant factor in the matter of construction of a contract. The construction of the contract agreement is within the jurisdiction of the arbitrators having regard to the wide nature, scope and ambit of the arbitration agreement and they cannot be said to have misdirected themselves in passing the award by taking into consideration the conduct of the parties. It is also trite that correspondences exchanged by the parties are required to be taken into consideration for the purpose of construction of a contract. Interpretation of a contract is a matter for the arbitrator to determine, even if it gives rise to determination of a question of law.
113. Once, thus, it is held that the arbitrator had the jurisdiction, no further question shall be raised and the court will not exercise its jurisdiction unless it is found that there exists any bar on the face of the award."
(emphasis added).
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37. In the case of Associate Builders v. Delhi Development Authority (2015) 3 SCC 49, Hon'ble Supreme Court held that the interference under Section 34 is limited and extremely circumscribed and is permissible only when the award is tainted by patent illegality, i.e. illegality going to the root, and not mere erroneous application of law. In the case of Ssangyong Engineering & Construction Co. Ltd. v. National Highways Authority of India (2019) 15 SCC 131, the Hon'ble Supreme Court narrowed the scope of "public policy" under Section 34, observing that it is confined to cases where the award is in conflict with the fundamental policy of Indian law, is patently illegal, or is in conflict with most basic notions of morality or justice. Moreover, in the case of MMTC Ltd. v. Vedanta Ltd. (2019) 4 SCC 163, the Hon'ble Supreme Court reiterated that Section 34 is not a provision for appeal, and Courts cannot reappreciate evidence or substitute their view for that of the arbitrator. Interference is permissible only on the limited grounds specified in the Act
38. No ground as required under section 34 (2) of The Arbitration and Conciliation Act is made out calling for any interference in the award dated 12.06.2024.
39. Neither the court see any error apparent on the face of record nor any such error is pointed out in the entire objection petition. All legal objections are vague and unsubstantiated. The present objection petition is not Nine Projects Pvt. Ltd Vs Alpha Pacific Systems Pvt Ltd. Page no. 36 of 37 OMP Comm 86/2024 Digitally signed by AJAY AJAY PANDEY PANDEY Date: 2026.04.20 15:41:46 +0530 covered within the limited scope of section 34 of The Act.
40. Objection petition is accordingly dismissed.
41. Application under section 34 of The Arbitration & Conciliation Act as well as application under section 36 (2) for stay of operation of impugned award are accordingly dismissed with cost.
42. The FDR of Rs.11,79,000/- bearing seal of HDFC Bank, Gurgaon which was filed on behalf of applicant on 16.02.2026 in the name of this court, be released to respondent after endorsement of encashment in his favour.
43. Arbitration record be sent back along with copy of this order.
44. File be consigned to record room after due compliance.
Announced in the open court AJAY Digitally signed by AJAY PANDEY on the 20th day of April, 2026 PANDEY Date: 2026.04.20 15:41:51 +0530 (Ajay Pandey) District Judge (Commercial Court-10) Central, Tis Hazari Courts, Delhi.
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