Delhi District Court
Bharat Constaruction Co vs Engineering Projects India Ltd on 7 March, 2026
Digitally signed
by
DHARMENDER
DHARMENDER RANA
RANA
Date:
2026.03.07
17:43:09 +0530
IN THE COURT OF DISTRICT JUDGE- 01,
NEW DELHI DISTRICT, PATIALA HOUSE COURTS,
NEW DELHI
Presided over by :- SH. DHARMENDER RANA (DHJS)
DLND010124782016
DLND010096172022
Arbitration No. 18206/16
Bharat Construction Co.
Shiv Shakti Vihar,
Opposite 20KV Power House,
Jaipur Road, Bikaner,
Rajasthan.
......... Petitioner
Versus
Engineering Project India Ltd.
A Govt. of India Enterprises,
Core-3, Scope Complex,
7, Institutional Area,
Lodhi Road,
New Delhi-110003 ........ Respondent
Arbitration No. 18206/16 & 1285/22
Page no. 1 of 15
Digitally signed
by
DHARMENDER
DHARMENDER RANA
RANA
Date:
2026.03.07
17:43:15 +0530
Petition presented on : 19.10.2016
Arguments Concluded on : 19.02.2026
Judgment Pronounced on : 07.03.2026
Arbitration No. 1285/22
Engineering Project India Ltd.
A Govt. of India Enterprises,
Core-3, Scope Complex,
7, Institutional Area,
Lodhi Road,
New Delhi-110003 ......... Petitioner
Versus
Bharat Construction Co.
Shiv Shakti Vihar,
Opposite 20KV Power House,
Jaipur Road, Bikaner,
Rajasthan. ......... Respondent
Petition presented on : 28.01.2017
Arguments Concluded on : 19.02.2026
Judgment Pronounced on : 07.03.2026
JUDGMENT
1. By way of the instant composite order, I propose to dispose off two connected petitions moved under Section 34 of the Arbitration & Conciliation Act (in short A & C Act) assailing the award dated 05.09.2016.
Arbitration No. 18206/16 & 1285/22 Page no. 2 of 15 Digitally signed by DHARMENDER DHARMENDER RANA RANA Date:
2026.03.07 17:43:29 +0530
2. The brief facts necessary for disposal of instant petitions are abstracted here as under:-
Rajasthan Urban Infrastructure Development Project ('RUIDP"), Government of Rajasthan, had floated tenders for works related to construction of new drainage channel in Bikaner. On 10th July 2002, Bharat Construction Company ['BCC'], addressed a letter to Engineering Projects (India) Limited ['ÉPI'] stating that since BCC has been working with EPI on the Suratgarh project, it was interested in being "associated" with EPI for the above tenders as well. At a meeting between the parties on 17th July 2002, the terms and conditions under which the work could be carried out by the BCC if the contracts were awarded by RUIDP to EPI were discussed and finalized. In Clause 2 of the minutes it was stated that the tie up between BCC and EPI would be "on exclusive basis and no party shall quote separately or jointly with any other agency in respect of the above referred tender." A Bank Guarantee ('BG') towards bids security was agreed to be provided by the BCC to EPI. The BG was to be submitted by EPI to RUIDP. In Clause 4 it was agreed that all terms and conditions agreed between RUIDP and EPI would be applicable between EPI and BCC mutatis mutandis except those specifically agreed in the Minutes of the Meeting ('MoM') dated 17th July 2002. The payment for all extra/ substituted/variation items/works and claims admitted and paid by RUIDP was to be made by EPI to BCC in proportion to the BCC's contract price with EPI and EPI's contract price with Arbitration No. 18206/16 & 1285/22 Page no. 3 of 15 Digitally signed by DHARMENDER DHARMENDER RANA RANA Date:
2026.03.07 17:43:33 +0530 RUIDP. EPI would submit its offer to RUIDP based on the offer of BCC. EPI was to post one Engineer till completion of the project. All other Engineers, Supervisors and supporting staff had to be appointed by BCC at its cost. Clause 16 contained the arbitration clause. The construction work was eventually awarded by RUIDP to EPI and in accordance with the mutual understanding between BCC and EPI, the work was outsourced by EPI to BCC.
2.1. Eventually, dispute arose between BCC and EPI and arbitration clause was accordingly invoked. Both BCC and EPI raised their claims and counter-claims before the Ld. Arbitrator.
Ld. Arbitrator vide Award dated 07.03.2013 dismissed the claim and counter-claim filed by both the parties observing that neither of the parties is entitled to any amount from its respective opponent besides costs of expenses and arbitration proceedings.
2.2. Aggrieved by the dismissal of their counter-claim, BCC approached the Hon'ble High Court of Delhi by instituting OMP no. 32/2013 which came to be disposed of by the Hon'ble Delhi High Court vide order dated 29.04.2015 in the following terms:-
"13. Resultantly as far as BCC's counter-claim nos. 1 to 5 are concerned, fresh arbitration will have to be ordered but based on the same pleadings and documents and affidavits already on record. It will however be open to both parties to make oral submissions and file written submissions on the basis of the evidence already placed on record.
Arbitration No. 18206/16 & 1285/22
Page no. 4 of 15
Digitally signed
by
DHARMENDER
DHARMENDER RANA
RANA Date:
2026.03.07
17:43:38
+0530
14. Accordingly, the counter-claims of the BCC in both matters are referred to the sole arbitration of Mr. R.K. Yadav, former District Judge, residing at A-353, 2nd Floor, Derewal Nagar, Delhi- 110009 (Mob. No. 9910384623). The learned Arbitrator will proceed in the matter on the basis of the arbitral record already filed. The arbitration shall take place under the aegis of Delhi International Arbitration Centre (DAC). The fees of the learned Arbitrator will be in terms of the Delhi High Court Arbitration Centre (Arbitrator's Fees) Rules."
2.3. Resultantly, a fresh round of arbitration commenced and vide Award dated 05.09.2016, Ld. Arbitrator awarded a sum of Rs.37,28,277/- to BCC with no order as to costs. Besides the above amount of Rs.37,28,277/- EPI was also directed to refund a sum of Rs.1,89,361/- towards the fees on account of arbitration proceedings. Ld. Arbitrator refused to award any past or pendente lite interest upon the aforesaid sum of Rs.37,28,277/-, however, future interest @ 10% from the date of Award till the date of payment was awarded to BCC in case of default of payment by EPI.
3. Aggrieved by the refusal to pay interest, BCC has instituted the present petition no. 18206/2016 whereas EPI has also assailed the said Award by instituting Arbitration petition no. 1285/2022.
4. I have heard the rival submissions and carefully perused the record.
Arbitration No. 18206/16 & 1285/22 Page no. 5 of 15 Digitally signed by DHARMENDER DHARMENDER RANA RANA Date:
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5. Before adverting to the rival claims of the parties, this Court deems it appropriate to remind itself of the scope of powers U/s 34 of the Arbitration Act. It has been held in Delhi Airport Metro Express Pvt. Ltd. Vs. Delhi Metro Rail Corporation Ltd. Civil Appeal no. 5627 of 2021, Arising out of SLP (C) no. 4115 of 2019 decided on 09.09.2021 as under:
"...22. A cumulative reading of the UNCITRAL Model Law and Rules, the legislative intent with which the 1996 Act is made, Section 5 and Section 34 of the 1996 Act would make it clear that judicial interference with the arbitral awards is limited to the grounds in Section 34. 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 matters of fact as well as law. (See: Uttarakhand Purv Sainik Kalyan Nigam Limited. v. Northern Coal Field Limited. 1, Bhaven Construction Through Authorised Signatory Premjibhai K. Shah v. Executive Engineer Sardar Sarovar Narmada Nigam Ltd. and Another2 and Rashtriya Ispat Nigam Limited v. Dewan Chand Ram Saran3 ).
23. For a better understanding of the role ascribed to courts in reviewing arbitral awards while considering applications filed under Section 34 of the 1996 Act, it would be relevant to refer to a judgment of this Court in Ssangyong Engineering and Construction Company Limited v. National Highways Authority of India (NHAI)4 wherein R.F. Nariman, J. has in clear terms delineated the limited area for judicial interference, taking into account the amendments brought about by the 2015 Amendment Act. The relevant passages of the judgment in Ssangyong (supra) are noted as under:-
"34. What is clear, therefore, is that the expression "public policy of India", whether contained in Section 34 or in Section 48, would now mean the "fundamental policy of Indian law" as explained in paras 18 and 27 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49: (2015) 2 SCC (Civ) 204] i.e. the fundamental policy of Indian law would be relegated to "Renusagar" understanding of this expression. This would necessarily mean that Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 1 (2020) 2 SCC 455 2 2021 SCC OnLine SC 8 3 (2012) 5 SCC 306 4 (2019) 15 SCC 131 Arbitration No. 18206/16 & 1285/22 Page no. 6 of 15 Digitally signed by DHARMENDER DHARMENDER RANA RANA Date:
2026.03.07 17:43:47 +0530 263 : (2014) 5 SCC (Civ) 12] expansion has been done away with. In short, Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12] ,as explained in paras 28 and 29 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , would no longer obtain, as under the guise of interfering with an award on the ground that the arbitrator has not adopted a judicial approach, the Court's intervention would be on the merits of the award, which cannot be permitted post amendment. However, insofar as principles of natural justice are concerned, as contained in Sections 18 and 34(2) (a)(iii) of the 1996 Act, these continue to be grounds of challenge of an award, as is contained in para 30 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 :
(2015) 2 SCC (Civ) 204] .
35. It is important to notice that the ground for interference insofar as it concerns "interest of India" has since been deleted, and therefore, no longer obtains. Equally, the ground for interference on the basis that the award is in conflict with justice or morality is now to be understood as a conflict with the "most basic notions of morality or justice". This again would be in line with paras 36 to 39 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , as it is only such arbitral awards that shock the conscience of the court that can be set aside on this ground.
36. Thus, it is clear that public policy of India is now constricted to mean firstly, that a domestic award is contrary to the fundamental policy of Indian law, as understood in paras 18 and 27 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49: (2015) 2 SCC (Civ) 204], or secondly, that such award is against basic notions of justice or morality as understood in paras 36 to 39 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204]. Explanation 2 to Section 34(2)(b)(ii) and Explanation 2 to Section 48(2)(b)(ii) was added by the Amendment Act only so that Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12] , as understood in Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , and paras 28 and 29 in particular, is now done away with.
37. Insofar as domestic awards made in India are concerned, an additional ground is now available under sub-section (2- A), added by the Amendment Act, 2015, to Section 34. Here, 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. In short, what is not subsumed within Arbitration No. 18206/16 & 1285/22 Page no. 7 of 15 Digitally signed by DHARMENDER DHARMENDER RANA RANA Date:
2026.03.07 17:43:51 +0530 "the fundamental policy of Indian law", namely, the contravention of a statute not linked to public policy or public interest, cannot be brought in by the backdoor when it comes to setting aside an award on the ground of patent illegality.
38. Secondly, it is also made clear that 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.
39. To elucidate, para 42.1 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , namely, a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an arbitral award. Para 42.2 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , however, would remain, for if an arbitrator gives no reasons for an award and contravenes Section 31(3) of the 1996 Act, that would certainly amount to a patent illegality on the face of the award.
40. The change made in Section 28(3) by the Amendment Act really follows what is stated in paras 42.3 to 45 in Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 :
(2015) 2 SCC (Civ) 204] , namely, that 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. Also, if the arbitrator wanders outside the contract and deals with matters not allotted to him, he commits an error of jurisdiction. This ground of challenge will now fall within the new ground added under Section 34(2-A).
41. What is important to note is that a decision which is perverse, as understood in paras 31 and 32 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 :
(2015) 2 SCC (Civ) 204] , 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. Thus, 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. Additionally, a finding based on documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties, and therefore, would also have to be characterised as perverse."...
25. Patent illegality should be illegality which goes to the root of the matter. In other words, every error of law committed by the Arbitral Tribunal would not fall within the expression 'patent Arbitration No. 18206/16 & 1285/22 Page no. 8 of 15 Digitally signed by DHARMENDER DHARMENDER RANA RANA Date:
2026.03.07 17:43:56 +0530 illegality'. Likewise, erroneous application of law cannot be categorised as patent illegality. In addition, contravention of law not linked to public policy or public interest is beyond the scope of the expression 'patent illegality'. What is prohibited is for courts to re-appreciate evidence to conclude that the award suffers from patent illegality appearing on the face of the award, as 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, or interprets a clause in the contract in such a manner which no fair-minded or reasonable person would, or if the arbitrator commits an error of jurisdiction by wandering outside the contract and dealing with matters not allotted to them. An arbitral award stating no reasons for its findings would make itself susceptible to challenge on this account. The conclusions of the arbitrator which are based on no evidence or have been arrived at by ignoring vital evidence are perverse and can be set aside on the ground of patent illegality. Also, consideration of documents which are not supplied to the other party is a facet of perversity falling within the expression 'patent illegality'...
6. Having examined the law, let us now deal with the rival contentions.
7. Bharat Construction Co. assails the Award on the ground that no past or pendente lite interest was awarded by Ld. Arbitrator while allowing the counter-claims of Bharat Construction Co.
8. Record reveals that during the course of arbitration proceedings, Bharat Construction Co. confined its claim only with respect to the payment of bills upto 7% amount of the construction value and gave up the other claims.
Arbitration No. 18206/16 & 1285/22 Page no. 9 of 15 Digitally signed by DHARMENDER DHARMENDER RANA RANA Date:
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9. Ld. Arbitrator eventually, vide order dated 05.09.2016, admitted the claim of Bharat Construction Co. and awarded a sum of Rs.37,28,277/-.
10. As far as the claim of interest by Bharat Construction Co. is concerned, it would be relevant to reproduce herein para no. 65 of the impugned Award which reads here as under:-
"65. During the course of adjudication the counter claimant specifically submitted that it restricts its claim for payment of past bills upto 7% amount of the contract value and gives up the other claims, made in the counter claim. In view of the submission made the other issues relating to counter claim made, except the payment of past bills to the limit of 7% of contract value, became redundant."
11. Ld. Counsel for Bharat Construction Co., upon specific query by this Court, has fairly conceded that past interest and pendente lite interest were duly claimed by Bharat Construction Co. in its counter-claims. She further admits that there was no contractual stipulation between the parties with respect to payment of any interest upon the delayed payments.
12. Once Bharat Construction Co. has itself voluntarily abandoned its claim to past and pendente lite interest, no fault can be ascribed to the approach of Ld. Arbitrator in not awarding the past and pendente lite interest. Reliance in this regard can be placed upon Delhi Airport Metro Express (P) Ltd. vs. DMRC Arbitration No. 18206/16 & 1285/22 Page no. 10 of 15 Digitally signed by DHARMENDER DHARMENDER RANA RANA Date:
2026.03.07 17:44:05 +0530 (2022) 9 SCC 286: 2022 INSC 522 wherein it has been observed here as under:-
"15. It could thus be seen that the part which deals with the power of the Arbitral Tribunal to award interest, would operate if it is not otherwise agreed by the parties. If there is an agreement between the parties to the contrary, the Arbitral Tribunal would lose its discretion to award interest and will have to be guided by the agreement between the parties. The provision is clear that the Arbitral Tribunal is not bound to award interest. It has a discretion to award the interest or not to award. It further has a discretion to award interest at such rate as it deems reasonable. It further has a discretion to award interest on the whole or any part of the money. It is also not necessary for the Arbitral Tribunal to award interest for the entire period between the date on which the cause of action arose and the date on which the award is made. It can grant interest for the entire period or any part thereof or no interest at all."
13. Thus, the petition bearing ARBT no. 18206/16 by Bharat Construction Co. is found to be bereft of merits and is accordingly dismissed.
14. Aggrieved by the impugned Award dated 05.09.2016, Engineering Project India Ltd. also instituted a separate petition under Section 34 of A & C Act which came to be registered as ARBT no. 1285/22.
15. Engineering Project India Ltd. assails the impugned Award arguing that the sum awarded to Bharat Construction Co. has been mechanically arrived and there is no piece of evidence, Arbitration No. 18206/16 & 1285/22 Page no. 11 of 15 Digitally signed by DHARMENDER DHARMENDER RANA RANA Date:
2026.03.07 17:44:11 +0530 leave aside a credible one, worth its salt justifying the Award of Rs.37,28,277/- to Bharat Construction Co. It is argued that it was incumbent upon Bharat Construction Co. to lead evidence to prove the extent of work carried out under the impugned contract. It is submitted that neither any bills nor any measurement book was placed on record by Bharat Construction Co., yet Ld. Arbitrator went on to accept the counter-claims and awarded a sum of Rs.37,28,277/- in favour of Bharat Construction Co. Ld. Counsel for Engineering Project India Ltd. has forcefully argued that from the work order (Ex. C-6), it is evident that the contract awarded to Bharat Construction Co. was on Item Rate basis and the Price Schedule and the Bill of Quantity was annexed with the work order. It is submitted that once the parties have specifically agreed to make the payments on 'Item Rate basis', it was legally not permissible for the Ld. Arbitrator to quantify the rates to the amount of 7% of the contract value. Counsel for Engineering Project India Ltd. has further argued that even as per the directions of Hon'ble Delhi High Court passed in OMP no. 32/2013 dated 29.04.2015, passed during the earlier round of litigation between the same parties qua the same dispute, it was specifically directed that the precise extent of work performed by Bharat Construction Co. was subject matter of evidence and yet the Ld. Arbitrator allowed the counter-claims filed by Bharat Construction Co. sans any evidence led by Bharat Construction Co. Counsel for Engineering Project India Ltd. has further forcefully argued that when admittedly, there was contractual relationship between the Arbitration No. 18206/16 & 1285/22 Page no. 12 of 15 Digitally signed by DHARMENDER DHARMENDER RANA RANA Date:
2026.03.07 17:44:15 +0530 parties, the doctrine of quantum merit cannot be legally invoked. It is thus argued that the Award suffers from a patent illegality and thus deserves to be set aside.
16. On the contrary, Counsel for Bharat Construction Co. has forcefully argued that Ld. Arbitrator has rightly appreciated the material available on record. Counsel for Bharat Construction Co. has drawn my attention to Termination Letter (Ex. C-38) dated 18.06.2003, to contend that there is an admission on the part of Engineering Project India Ltd. to the effect that Bharat Construction Co. has completed 7% work of the total work order. Counsel for Bharat Construction Co. further argues that such an admission is also evident in the claim filed by Engineering Project India Ltd. and thus Ld. Arbitrator has acted upon the admission of the parties and rightly awarded the impugned sum in favour of Bharat Construction Co. Ld. Counsel has accordingly prayed for dismissal of petition filed by Engineering Project India Ltd.
17. In rebuttal, Counsel for Engineering Project India Ltd. has forcefully argued that the claim for 7% amount of Bharat Construction Co. was infact based upon a bill and even though there is some admission in the Termination Letter, that would not supplant the requirement of leading evidence on behalf of Bharat Construction Co. It is argued that no bill was placed on record, leave aside being proved, and thus Engineering Project India Ltd. prayed that impugned award be set aside.
Arbitration No. 18206/16 & 1285/22 Page no. 13 of 15 Digitally signed by DHARMENDER DHARMENDER RANA RANA Date:
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18. The main thrust of counsel for Engineering Project India Ltd. is that the Ld. Arbitrator has awarded the impugned sum sans any evidence. However, perusal of the impugned award would reveal that it is not a case of no evidence and Ld. Arbitrator has awarded the impugned sum upon the strength of Termination Letter dated 18.06.2003 (Ex. C-38). Perusal of the said Termination Letter (Ex. C-38) would reveal that Engineering Project India Ltd. in the said letter has specifically admitted that before abandoning the work, Bharat Construction Co. has executed work to the extent of '7% of the contract value'. The said Termination Letter further unequivocally reveals that Engineering Project India Ltd. has claimed that the said assessment was upon the basis of 'measurement recorded by EPI's representative', which ultimately, being not disputed by the other side, was held to be conclusive. The words used in the said Termination Letter assumes significance in light of the contentions of counsel for Engineering Project India Ltd. It is neither argued nor borne out from the record that the word '7%' qualifies the various items of work carried out but it specifically refers to 'contract value'.
19. Section 58 of Indian Evidence Act specifically stipulates that facts admitted, need not be proved. Therefore, in my considered opinion, Ld. Arbitrator has rightly acted upon the unequivocal admission of Engineering Project India Ltd. and accordingly awarded the impugned sum.
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20. Thus, it cannot be argued that it is a case of no evidence. The argument is found to be bereft of merits and is accordingly rejected.
21. In wake of my above discussion, I do not find any merits in the instant petitions. Both the petitions are accordingly dismissed for want of merits. Ordered accordingly.
22. File be consigned to record room. Copy of the instant order be sent to Ld. Arbitrator alongwith the arbitral record.
Pronounced in open Court
on 07.03.2026 (Dharmender Rana)
District Judge-01,
New Delhi District,
Patiala House Courts,
New Delhi
Arbitration No. 18206/16 & 1285/22
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