Delhi District Court
Rajmangal Yadav vs Union Of India Through Executive ... on 29 April, 2026
IN THE COURT OF SH. PULASTYA PRAMACHALA
DISTRICT JUDGE, (COMMERCIAL COURT)-01,
PATIALA HOUSE COURT, NEW DELHI
INDEX
Sl. HEADINGS Page
No. Nos.
1. Memo of Parties 2
2. Description of case 2
3. Brief Facts of the case 2-4
4. Grounds of challenge 4-5
5. Reply of respondent 5-6
6. Arguments addressed on behalf of Petitioner 6-8
7. Arguments addressed on behalf of Respondent 8-10
8. Appreciation of Arguments, Facts & Law 10-22
9. Decision 22
Digitally signed
by PULASTYA
PRAMACHALA
PULASTYA
PRAMACHALA Date:
2026.04.29
14:24:21
+0530
OMP (COMM.) No. 9/2023 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.1 of 22 Patiala House Court, New Delhi
OMP (COMM) No.9/2023
In the matter of: -
Raj Mangal Yadav
Executive Engineer (E)
DED-81, CPWD, CGO Complex
Lodhi Road, New Delhi-11003
Email: [email protected]
...Petitioner
Versus
Union of India
Through Executive Engineer, CPWD
15/32, East Punjabi Bagh
New Delhi -110026
Email: [email protected]
Mob: 9810034909.
...Respondent
Date of Institution : 19.01.2023
Arguments heard on : 18.04.2026
Decided on : 29.04.2026
Decision : Petition is allowed.
JUDGMENT
DESCRIPTION OF THE CASE
1. Petitioner has filed present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act"), assailing the arbitral award dated 31.10.2022 passed by ld. Arbitrator Sh. Brij Mohan Khateek.
BRIEF FACTS OF THE CASE
2. Briefly stated, respondent issued an online tender on 14.03.2017 for the upgradation/renovation of 18 suites at Asia House, K.G. Marg, New Delhi, for the year 2016-17, wherein petitioner, OMP (COMM.) No. 9/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.2 of 22 Patiala House Court, New Delhi being the lowest bidder, was awarded the work under Agreement No. 199/EE/R-Div./2016-17 for a tendered amount of Rs. 49,78,405/-. Pursuant thereto, an agreement was executed between the parties incorporating the terms and conditions governing execution of the work. The stipulated date of commencement was 01.04.2017, while the stipulated date of completion was fixed as 31.03.2018, though the actual completion of work is stated to have been achieved on 30.06.2018, with the completion being officially recorded subsequently on 27.12.2019. Petitioner contends that despite execution of the agreement, the site was not made available in a timely manner, which adversely impacted completion of the work.
3. It is further pleaded by petitioner that the first running bill amounting to Rs. 17,98,477/- was paid on 31.03.2018, followed by an advance payment of Rs. 28,00,000/- on 30.10.2018 against the second R/A bill submitted on 30.06.2018 and duly checked by the Junior Engineers. Thereafter, petitioner submitted the third and final bill in December 2018 for a gross amount of Rs. 26,22,550/- towards work executed up to 30.06.2018, however, no payment was released against the said bill. Subsequently, respondent, vide letter dated 03.06.2021, alleged overpayment of Rs. 6,15,253/- to petitioner, and only a nominal amount of Rs. 16/- was released on 28.03.2022 after appointment of the Arbitrator.
4. A show cause notice dated 18.06.2021 was issued proposing action under Clause 2 of the agreement, to which petitioner OMP (COMM.) No. 9/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.3 of 22 Patiala House Court, New Delhi submitted a reply; however, compensation amounting to Rs. 4,97,841/- was imposed vide letter dated 14.07.2021. Petitioner asserts that such levy was imposed prejudicially, after initiation of arbitration proceedings, and in violation of principles of natural justice. Aggrieved thereby, petitioner invoked the arbitration clause by issuing notices dated 11.08.2021 and 19.01.2022 seeking appointment of an Arbitrator and raising claims for adjudication. It is petitioner's case that Arbitral Tribunal, while pronouncing the award, failed to appreciate the contractual conditions and factual circumstances, rendering the award liable to be set aside.
GROUNDS OF CHALLENGE
5. Aggrieved by the arbitral award dated 31.10.2022, petitioner has preferred the present objections under Section 34 of the Act, inter alia, on the following relevant grounds: -
i. That respondent ignored the running and final bills duly submitted by petitioner under Clause 6A of the agreement and instead unilaterally prepared subsequent bills, making payments without petitioner's acceptance, which was not properly considered in the award.
ii. That Superintending Engineer illegally imposed compensation under Clause 2 by unilaterally holding petitioner responsible for delay, without adjudication by any competent forum, contrary to principles of natural justice.
iii. That learned Arbitrator failed to appreciate the principle laid down in J.G. Engineers Pvt. Ltd. v. Union of India that a party to OMP (COMM.) No. 9/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.4 of 22 Patiala House Court, New Delhi a contract cannot determine its own dispute regarding attribution of delay.
iv. That petitioner's second R/A bill, prepared on the basis of verified measurements and acknowledged by release of advance payment, was ignored, while respondent's independently prepared bill was erroneously relied upon.
v. That petitioner's third and final bill was not considered, whereas respondent arbitrarily processed a nominal payment without petitioner's acknowledgment, which was accepted in the impugned award.
REPLY OF THE RESPONDENT
6. Respondent filed the reply opposing the petition and contended that petition is not maintainable and the contentions therein are erroneous and contrary to law. It has been further replied that during verification, the officials had found that the details given in the bills were false and hence, based on exaggerated measurement, respondent had called upon the petitioner herein to verify the measurement in presence of concerned engineer, but he did not turn up. It has been further replied that respondent had imposed the levy of compensation according to Clause 2 of the agreement, due to slow speed of work carried out by the petitioner, who also abandoned the site without completing the tender work. It has been further replied that ld. Arbitrator has complied with principle of natural justice and kept the highest degree of neutrality towards both parties. It has been further replied that 2nd R/A bill had been verified by the engineers of the respondent after verification of the measurement, for which OMP (COMM.) No. 9/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.5 of 22 Patiala House Court, New Delhi amount of Rs. 1,45,618/- was paid by respondent to the petitioner vide C.V. No. 35 dated 06.06.2019. That 2 nd R/A bill of petitioner was based on false measurement. It has been further replied that 3rd final bill of the petitioner was paid vide cash voucher no.198 on 28.03.2022 after verification and scrutiny of goods and measurement etc. It has been further replied on behalf of respondent that ld. Arbitrator has decided/awarded Rs. 40,000/- against the dues of ESI, EPF and submission of FLRs, on the basis of material produced by petitioner herein.
ARGUMENTS ADDRESSED ON BEHALF OF PETITIONER
7. Ld. counsel for petitioner argued that ld. Arbitrator had rejected the claim erroneously. Ld. counsel further argued that one bill was already approved and paid by the respondent; but after four (4) years a new Executive Engineer had verified the bills and measurement of execution of works. Ld. counsel further argued that fresh measurement was undertaken in his absence and fresh bills were prepared by the respondent. These bills did not bear any proof of acknowledgment on behalf of the petitioner. Ld. counsel for petitioner argued that petitioner's permission was necessary, whereas ld. Arbitrator did not consider it. It was further argued on behalf petitioner that ld. Arbitrator recorded refund of the security deposit of Rs. 2,48,920/-, though there was no refund of security deposit, as the respondent adjusted the Liquidated Damages (herein referred as LD) from security deposit. It was further argued that ld. Arbitrator did not decide at all that who was responsible for the delay and ld. Arbitrator simply accepted the decision of Superintendent Engineer in this OMP (COMM.) No. 9/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.6 of 22 Patiala House Court, New Delhi regard, without proper reasoning.
8. A written submission was also filed on behalf of petitioner.
Written submission mentions that ld. Arbitrator failed to properly apply his mind, while adjudicating claim nos. 1, 3, 5 and related sub-claims, and rejected or inadequately considered substantial claims on false, baseless, and unsupported grounds without proper reasoning. It has been further mentioned that despite Clause 6A of the contract requiring bills to be submitted by petitioner, respondent ignored bills submitted by petitioner, arbitrarily prepared its own running account bills without petitioner's acceptance, and made payments on that basis, which material fact was overlooked by ld. Arbitrator. Petitioner further asserted that Superintendent Engineer illegally imposed levy of compensation under Clause 2 by unilaterally deciding attribution of delay, thereby acting contrary to principles of natural justice and in violation of law laid down in J.G. Engineers Pvt. Ltd. v. Union of India, which was allegedly ignored by ld. Arbitrator. It was also argued that time was not the essence of contract in view of extension provisions under Clause 5, and therefore, levy of liquidated damages was legally unsustainable, particularly when delay was attributable to respondent and hindrances exceeding contractual extension requirements were acknowledged, but not properly appreciated. It has been further mentioned that ld. Arbitrator failed to adjudicate upon material correspondence relating to recovery of alleged excess payments, ignored verified measurements forming basis of 2nd R/A bill submitted by petitioner, wrongly relied upon a subsequently and arbitrarily prepared bill raised by Respondent in violation of contractual OMP (COMM.) No. 9/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.7 of 22 Patiala House Court, New Delhi provisions, and awarded only part of withheld sums towards ESI, EPF, and FLRs without any categorical analysis or reasoning. It has been further mentioned that ld. Arbitrator acted arbitrarily in refusing to award full costs of arbitration and litigation under Section 31A of the Arbitration and Conciliation Act, 1996, rendering the Award legally unsustainable and reflective of misconduct in exercise of arbitral jurisdiction.
9. In support of the contention on behalf of petitioner, reliance has been placed upon certain case laws, which are as under: -
i. M/s. J.G. Engineers Pvt. Ltd. v. Union of India & Anr., Civil Appeal No. 3349 of 2005, decided on 28.04.2011, by Hon'ble Supreme Court.
ii. Oil and Natural Gas Corporation Ltd. v. Remi Metals Gujarat Ltd., Civil Appeal No.6834 of 2021, decided on 13.11.2021, by Hon'ble Supreme Court.
ARGUMENT ADDRESSED ON BEHALF OF RESPONDENT
10. Per contra, learned counsel for the respondent conceded that there is no joint MTS with the signature of the petitioner in the arbitral record.
11. The written submission filed on behalf of respondent mentions that present petition is an attempt to invite the Court to re- appreciate evidence, re-examine measurements, recalculate quantities, and reassess findings on alleged prejudice and mala fide conduct of officers of respondent, all of which were extensively considered and conclusively determined by Arbitral Tribunal. Documentary and factual findings are beyond the OMP (COMM.) No. 9/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.8 of 22 Patiala House Court, New Delhi limited scope of interference under Section 34 of Act. It has been further mentioned that allegations of bias, denial of hearing, and the Tribunal going beyond the contract, are wholly unfounded, as repeated hearings were conducted with participation of both the parties, full opportunity was granted to place evidence and submissions, and the Award reflects due consideration of petitioner's contentions in compliance with principles of natural justice. It has been further mentioned that petitioner's reliance on the finality of the Superintendent Engineer's decision is misconceived, since ld. Tribunal rightly examined the contractual clauses, findings of the departmental authorities, and all relevant material, before attributing delay and determining levy of compensation, without exceeding its jurisdiction, particularly where arbitration was not expressly ousted by contract. It has been further mentioned that no case of patent illegality, breach of public policy, statutory contravention, fraud on the face of Award, or fundamental violation of Indian law is made out. It has been further mentioned that petitioner's objections merely relate to dissatisfaction with appreciation of evidence, contractual interpretation, and evidentiary findings, which do not meet threshold for setting aside an arbitral award, and reliance on authorities upon the case titled as J.G. Engineers v. UOI is misplaced, since the Tribunal's conclusions were rooted in contractual interpretation and factual analysis within the scope of arbitral reference.
12. In support of the contention on behalf of respondent, reliance has been placed upon certain case laws, which are as under: -
OMP (COMM.) No. 9/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.9 of 22 Patiala House Court, New Delhi i. Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131.
ii. Vidya Drolia v. Durga Trading Corporation, (2021) 2 SCC 1.
iii. Associate Builders v. DDA, (2015) 3 SCC 49.
iv. Atlanta Ltd. v. Union of India, 2022 SCC 415.
v. Balco v. Kaiser Aluminium, (2012) 9 SCC 552.
APPRECIATION OF ARGUMENTS, FACTS & LAW
13. The crux of the legal principles explained by superior courts in respect of ambit of Section 34, is 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 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. Vidya Drolia (supra) case dealt with the question of non-arbitrability of subject matter and claim, and laid down test for the same. However, that is not the issue involved herein. In the case of Atlanta (supra), Arbitrator had analysed the evidence and given findings on the fact, and thus, Supreme Court held that in such circumstances OMP (COMM.) No. 9/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.10 of 22 Patiala House Court, New Delhi court would not substitute its view with the one taken by Arbitrator. Similarly, ratio of Balco case (supra) has no application in this case.
14. In Associate Builders v. Delhi Development Authority, (2015) 3 SCC 49, Court held that an award could be said to be against the public policy of India, inter alia, in the following circumstances:-
"1. When an award is, on its face, in patent violation of a statutory provision.
2. When the arbitrator/Arbitral Tribunal has failed to adopt a judicial approach in deciding the dispute.
3. When an award is in violation of the principles of natural justice.
4. When an award is unreasonable or perverse.
5. When an award is patently illegal, which would include an award in patent contravention of any substantive law of India or in patent breach of the 1996 Act.
6. When an award is contrary to the interest of India, or against justice or morality, in the sense that it shocks the conscience of the Court."
15. Hon'ble Supreme Court in case of Ssangyong Engineering & Construction Co. Ltd. v. 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 OMP (COMM.) No. 9/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.11 of 22 Patiala House Court, New Delhi have to be characterized as perverse. It was held that 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.
16. In the impugned Award, ld. Arbitrator decided Claim 1: Payment of final bill due for Rs. 26,22,550/-, with following observations:-
"(A-4)Reasons and award:
The claimant is mainly insisting on 2nd R/A bill and 3rd R/A bill. He has no grievances against 1 st R/A bill paid to him, but Respondent states that 1st R/A bill amounting to Rs.17,98,477/- submitted by Claimant on 13.03.2018 was paid to him on 31/03/2018 without properly scrutiny by Accounts Branch due to business of financial year ending. Later on thorough scrutiny, it was found that claimant had submitted false bill by adding extra quantities in abstract of bill without supportive measurement of extra quantities in Computerized Measurement Book (SOD, P-13) resulting getting over payment to claimant of Rs. 4,01,472/- against 1st R/A bill, for which claimant has been asked to pay interest (SOD- P-14, Exhibit R-25). Claimant submits that 2nd R/A bill of Rs.44,23,884/- was submitted by him in March, 2018 against which advance payment of Rs.28,00,000/- was released and asked thereafter to deposits the overpaid amount of Rs.35,890/- with interest. Respondent stated that 2nd R/A bill was submitted in his office on 30.10.2018 in incomplete shape with serious irregularities in the bill which includes measurements of the quantity executed, submitted by the claimant and need some time for proper scrutiny. So to avoid financial hardship to the claimant, they made an advance payment of Rs.28,00,000/- on 31.10.2018 on submission date itself subject to checking of the bill in respondent's office. Finally measurements were duly signed by both the parties, based on which 3rd & Final bill was prepared, accepted by claimant and paid.
As stated above the advance payments are made to the OMP (COMM.) No. 9/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.12 of 22 Patiala House Court, New Delhi contractors under clause-7 of the Agreement. The advance payments so allowed shall be adjusted in the subsequent interim bill by taking detailed measurements thereof. Hence the action of the respondent is in order. The bill was checked in Division office and claimant was asked to pay the excess amount. During hearing it was repeatedly clarified that all interim payments shall be regarded as payment by way of advances against final payment only.
The final quantity of the work executed and amount has been mentioned in final (3rd & Final Bill) bill which has been prepared based on the joints measurements signed by both the parties and bill accepted by claimant Exhibit P-23). This final bill quantity is the total work done quantity which include quantity of 1st & 2nd R/A bill and takes care of all the disputes of quantities arose in 1st R/A & 2nd R/A bills which is as per agreement clauses 7 & 9. Hence the main disputes revolve around final bill.
Claim No. 1(a): Taken care off in 3rd and Final Bill hence no comments/action needed. Nil Award.
Claim No. 1(b): Taken care off in 3rd and Final Bill hence no comments/action needed. Nil Award.
Claim No. 1(c): Taken care off in 3rd and Final Bill hence no comments/action needed. Nil Award.
Claim No. 1(d): Taken care off in 3rd and Final Bill hence no comments/action needed. Nil Award.
Claim No. 1(e): Taken care off in 3rd and Final Bill hence no comments/action needed. Nil Award.
Claim No. 1(f): Taken care off in 3 rd and Final Bill hence no comments/action needed. Nil Award.
Claim No. 1(g): Taken care off in 3rd and Final Bill hence no comments/action needed. Nil Award."
17. Ld. Arbitrator also decided Claim 3: Refund Security Deposit of Rs. 2,48,920/-. The relevant portion of impugned Award is as under: -
"c) That the respondent has imposed the levy of compensation OMP (COMM.) No. 9/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.13 of 22 Patiala House Court, New Delhi 10% of the contract amount which is illegal and violation of the judgment of the Hon'ble supreme court of India in the arbitration matter between M/s J.G. Engineer Pvt. Ltd. VS UOI & anrs. Para
13.
Therefore the Ld. Arbitrator may be pleased to set aside the decision of the superintending Engineer in respect of levy of compensation and award the following claim in favour of the claimant-
a) To direct the respondent not to recover the liquidated damages i.e. Rs. 4,97,841/-, illegally imposed by the respondent and recovered from the final bill.
b) To direct the respondent not to recover the amount withheld towards non achievement of mile stone, because the actual delay has been justified and attributable to the respondent this amount has been adjusted from the final bill.
c) Refund of security deposit i.e. Rs. 2,48,920/- because the defect liability period has been completed.
d) To direct the respondent to release Rs. 80,000/- withheld on % of removal of splashes etc. ..........................
From all above version it is clear that claimant was conversant/knew very well about the working conditions and type of hindrances to occur while executing the work & accordingly he quoted the rates for the work. The stipulated time of completion was for 275 days where as after considering valid hindrance of 251 days, an extra period for 463 days was taken by the claimant for completion of the work. This shows that delay was on the part of claimant for which necessary action under the provisions of agreement clause 2 was taken by the competent authority i.e. Superintending Engineer whose decision is in order.
Hence I Award:
On Claim 3 (a): As Security Deposit, already refunded, hence no action & Nil award On Claim 3 (b): Regarding levy of compensation and recovery of Mile Stones the actions of Respondents are as per Agreement OMP (COMM.) No. 9/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.14 of 22 Patiala House Court, New Delhi provisions and are in order, Hence Nil award. On Claim 3c(a): Action of Respondents is in order, hence Nil award.
On Claim 3c(b): Action of Respondents is in order, hence Nil award.
On Claim 3c(c): As security deposit already released, hence Nil award."
18. Perusal of above-mentioned decision of ld. Arbitrator given on Claim No. 1 & Claim No.3, show that no amount has been awarded/refunded to the petitioner, as claimed by him.
19. In the case of Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd., (2019) 20 SCC 1, the Apex Court in respect of importance of reasoning, made following observations: -
"1.The question involved herein revolves around the requirement of reasoned award and the cautionary tale for the parties and arbitrators to have a clear award, rather than to have an award which is muddled in form and implied in its content, which inevitably leads to wastage of time and resources of the parties to get clarity, and in some cases, frustrate the very reason for going for an arbitration.
..................
24.There is no dispute that Section 34 of the Arbitration Act limits a challenge to an award only on the grounds provided therein or as interpreted by various courts. We need to be cognizant of the fact that arbitral awards should not be interfered with in a casual and cavalier manner, unless the court comes to a conclusion that the perversity of the award goes to the root of the matter without there being a possibility of alternative interpretation which may sustain the arbitral award. Section 34 is different in its approach and cannot be equated with a normal appellate jurisdiction. The mandate under Section 34 is to respect the finality of the arbitral award and the party autonomy to get their dispute adjudicated by an alternative forum as provided under the law. If the courts were OMP (COMM.) No. 9/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.15 of 22 Patiala House Court, New Delhi to interfere with the arbitral award in the usual course on factual aspects, then the commercial wisdom behind opting for alternate dispute resolution would stand frustrated.
25. Moreover, umpteen number of judgments of this Court have categorically held that the courts should not interfere with an award merely because an alternative view on facts and interpretation of contract exists. The courts need to be cautious and should defer to the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied unless such award portrays perversity unpardonable under Section 34 of the Arbitration Act.
28. Similar to the position under the Model Law, India also adopts a default rule to provide for reasons unless the parties agree otherwise. As with most countries like England, America and Model Law, Indian law recognises enforcement of the reasonless award if it has been so agreed between the parties.
29.There is no gainsaying that arbitration proceedings are not per se comparable to judicial proceedings before the Court. A party under Indian Arbitration Law can opt for an arbitration before any person, even those who do not have prior legal experience as well. In this regard, we need to understand that the intention of the legislature to provide for a default rule, should be given rational meaning in light of commercial wisdom inherent in the choice of arbitration.
30. A five-Judge Constitution Bench of this Court in Raipur Development Authority v. Chokhamal Contractors [Raipur Development Authority v. Chokhamal Contractors, (1989) 2 SCC 721 : AIR 1990 SC 1426] , considered the scope of Section 30 of the Arbitration Act, 1940 and held as under:
(SCC p. 736, para 19) "19. It is now well settled that an award can neither be remitted nor set aside merely on the ground that it does not contain reasons in support of the conclusion or decisions reached in it except where the arbitration agreement or the deed of submission requires him to give reasons. The arbitrator or umpire is under no obligation to give reasons in support of the decision reached by him unless under the OMP (COMM.) No. 9/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.16 of 22 Patiala House Court, New Delhi arbitration agreement or in the deed of submission he is required to give such reasons and if the arbitrator or umpire chooses to give reasons in support of his decision it is open to the court to set aside the award if it finds that an error of law has been committed by the arbitrator or umpire on the face of the record on going through such reasons. The arbitrator or umpire shall have to give reasons also where the court has directed in any order such as the one made under Section 20 or Section 21 or Section 34 of the Act that reasons should be given or where the statute which governs an arbitration requires him to do so."
31. A three-Judge Bench of this Court in another case of S. Harcharan Singh v. Union of India [S. Harcharan Singh v. Union of India, (1990) 4 SCC 647] , reiterated its earlier view that the arbitrator's adjudication is generally considered binding between the parties for he is a Tribunal selected by the parties and the power of the Court to set aside the award is restricted to cases set out in Section 30 of the Arbitration Act, 1940.
32. However, the ratio of Chokhamal case [Raipur Development Authority v. Chokhamal Contractors, (1989) 2 SCC 721 : AIR 1990 SC 1426] has not found favour of the legislature, and accordingly Section 31(3) has been enacted in the Arbitration Act. This Court in Som Datt Builders Ltd. v. State of Kerala [Som Datt Builders Ltd. v. State of Kerala, (2009) 10 SCC 259 : (2009) 4 SCC (Civ) 153 : (2009) 4 Arb LR 13] , a Division Bench of this Court has indicated that passing of a reasoned award is not an empty formulation under the Arbitration Act.
33. It may be relevant to note Russell on Arbitration, 23rd Edn. (2007), wherein he notes that:
"If the Court can deduce from the award and the materials before it, which may include extracts from evidence and the transcript of hearing, the thrust of the tribunal's reasoning then no irregularity will be found....Equally, the court should bear in mind that when considering awards produced by non-lawyer arbitrators, the court should look at the substance of such findings, rather than their form, and that one should approach a OMP (COMM.) No. 9/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.17 of 22 Patiala House Court, New Delhi reading of the award in a fair, and not in an unduly literal way."
(emphasis supplied)
34.The mandate under Section 31(3) of the Arbitration Act is to have reasoning which is intelligible and adequate and, which can in appropriate cases be even implied by the courts from a fair reading of the award and documents referred to thereunder, if the need be. The aforesaid provision does not require an elaborate judgment to be passed by the arbitrators having regard to the speedy resolution of dispute.
35.When we consider the requirement of a reasoned order, three characteristics of a reasoned order can be fathomed. They are: proper, intelligible and adequate. If the reasonings in the order are improper, they reveal a flaw in the decision-making process. If the challenge to an award is based on impropriety or perversity in the reasoning, then it can be challenged strictly on the grounds provided under Section 34 of the Arbitration Act. If the challenge to an award is based on the ground that the same is unintelligible, the same would be equivalent of providing no reasons at all. Coming to the last aspect concerning the challenge on adequacy of reasons, the Court while exercising jurisdiction under Section 34 has to adjudicate the validity of such an award based on the degree of particularity of reasoning required having regard to the nature of issues falling for consideration. The degree of particularity cannot be stated in a precise manner as the same would depend on the complexity of the issue. Even if the Court comes to a conclusion that there were gaps in the reasoning for the conclusions reached by the Tribunal, the Court needs to have regard to the documents submitted by the parties and the contentions raised before the Tribunal so that awards with inadequate reasons are not set aside in casual and cavalier manner. On the other hand, ordinarily unintelligible awards are to be set aside, subject to party autonomy to do away with the reasoned award. Therefore, the courts are required to be careful while distinguishing between inadequacy of reasons in an award and unintelligible awards."
31. In the present case, in respect of claim no. 1, ld. Arbitrator OMP (COMM.) No. 9/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.18 of 22 Patiala House Court, New Delhi observed that "Finally measurements were duly signed by both the parties, based on which 3rd & Final bill was prepared, accepted by claimant and paid." This observation is found to be based on either blind acceptance of plea of respondent or complete ignorance of the evidence. If petitioner was paid as per first two bills submitted by him, then revising the entitlement of petitioner after long gap of time, was certainly not a normal action. Ld. Arbitrator had to closely look into the evidence produced by respondent, to support such action. But unfortunately, ld. Arbitrator held that final measurements were signed by both the parties, which was not based on record placed before ld. Arbitrator. Ld. counsel for respondent was given opportunity to point out the final measurement book with acknowledgment of petitioner, but no such signed measurement was found in the arbitral record. Thus, it is well apparent that aforesaid finding of ld. Arbitrator is based on no evidence.
32. Ld. Arbitrator also gave observation that petitioner had been false bills by adding extra quantities, however, there is no reference/discussion of any material, on the basis of which ld. Arbitrator could reach to such conclusion. It appears to be again repeating the contentions of respondent. Thus, reasoning of ld. Arbitrator does not refer to any particular evidence, nor does it give any idea of reasons for accepting plea of respondent. Simply declaring that the advance could be given to contractor and care was taken in the final bill, it does not reflect adjudication based on analysis of evidence. Hence, I do find approach of ld. Arbitrator to be contrary to judicious approach.
33. Similarly, reasons given by ld. Arbitrator to reject claim 3 of the petitioner also needs a serious look. Relevant part is as follows: -
"From all above version it is clear that claimant was conversant/knew very well about the working conditions and type of hindrances to occur while executing the work & OMP (COMM.) No. 9/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.19 of 22 Patiala House Court, New Delhi accordingly he quoted the rates for the work. The stipulated time of completion was for 275 days where as after considering valid hindrance of 251 days, an extra period for 463 days was taken by the claimant for completion of the work. This shows that delay was on the part of claimant for which necessary action under the provisions of agreement clause 2 was taken by the competent authority i.e. Superintending Engineer whose decision is in order."
34. Above-mentioned observations show that ld. Arbitrator straight away declared that extra period of 463 days was taken by petitioner and petitioner was responsible for such delay. What was the material to establish that petitioner was responsible for such delay, is nowhere mentioned. Such findings are to be treated as findings without any reasoning, as the same are bereft of any sort of discussion or reference to any piece of evidence.
35. It is relevant to refer to some observations made by Hon'ble Supreme Court in the case of J.G. Engineers (P) Ltd. v. Union of India, (2011) 5 SCC 758, which do have bearing over the issue in question. Same are as follows: -
"18. Thus what is made final and conclusive by Clauses (2) and (3) of the agreement, is not the decision of any authority on the issue whether the contractor was responsible for the delay or the Department was responsible for the delay or on the question whether termination/rescission is valid or illegal.
What is made final, is the decisions on consequential issues relating to quantification, if there is no dispute as to who committed breach. That is, if the contractor admits that he is in breach, or if the arbitrator finds that the contractor is in breach by being responsible for the delay, the decision of the Superintending Engineer will be final in regard to two issues. The first is the percentage (whether it should be 1% or less) of the value of the work that is to be levied as liquidated damages per day. The second is the determination of the actual excess cost in getting the work completed through an alternative OMP (COMM.) No. 9/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.20 of 22 Patiala House Court, New Delhi agency. The decision as to who is responsible for the delay in execution and who committed breach is not made subject to any decision of the respondents or its officers, nor excepted from arbitration under any provision of the contract.
19. In fact the question whether the other party committed breach cannot be decided by the party alleging breach. A contract cannot provide that one party will be the arbiter to decide whether he committed breach or the other party committed breach. That question can only be decided by only an adjudicatory forum, that is, a court or an Arbitral Tribunal."
36. Above-mentioned observations of Supreme Court are very relevant in this case also, because they were made in the context of similar kind of contractual clauses. In the present case, ld. Arbitrator did not adjudicate over the reasons for delay, responsible party for such delay etc., with reference to analysis of any evidence, and he simply accepted the decision of Superintendent Engineer as being in order. Thus, even in respect of claim 3, I find that approach of ld. Arbitrator was not judicious, and his findings are bereft of any reasoning. Thus, I find that ld. Arbitrator failed to enter into the merits of the disputes raised and did not undertake a proper adjudication process of the foundational issues viz. attribution of delay, legality of levy of liquidated damages, the exact date of completion of work etc.
37. The description of claims made by petitioner herein before ld.
Arbitrator is as follows: -
"(A) Claim No. 1- The payment of final bill due for Rs. 26,22,550/-
(B) Claim No. 2- The commercial interest @18% P.A on Rs. 26,22,50/-
(C) Claim No. 3- Refund security deposit Rs. 2,48,920/-.
OMP (COMM.) No. 9/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.21 of 22 Patiala House Court, New Delhi (D) Claim no. 4- Commercial interest @18% P.A on the claim no. 3 from the due date of the refund of SD to the payment. (E) Claim no. 5- Cost of arbitration and litigation Rs. 2,00,000/- (F) Claim no. 6- Claims based on final bill and deduction, discussed during the hearing on 30.08.22 Counter claims :-
Counter Claim 1 :- Respondent's claim for the cost of interest over excess payment in 1st RA Bill - ₹ 23,321/- CC2- Respondent's claim for the cost of Arbitration and consultation for - ₹1,00,000/-"
38. Thus, it is apparent that aforesaid claim nos.1 and 3 constituted basic part of subject matter of arbitration. In such circumstances, I also find that a complete relook over all the claims of petitioner, is required for fresh adjudication.
DECISION
39. In view of my foregoing discussions, observations and findings, I do find that award in question suffers from perversity, and cannot be sustained. Hence, 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: 2026.04.29 14:24:30 +0530 Pronounced in the (PULASTYA PRAMACHALA) Open Court on this District Judge (Commercial Court)-01, 29th Day of April, 2026 Patiala House Court, New Delhi OMP (COMM.) No. 9/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.22 of 22 Patiala House Court, New Delhi