Bombay High Court
Bhartiya Samruddhi Finance Ltd vs The State Of Maharashtra And Anr. on 14 October, 2025
2025:BHC-OS:18781
CARBP.166.2022.Final.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMMERCIAL ARBITRATION PETITION NO.166 OF 2022
Bhartiya Samruddhi Finance Ltd ...Petitioner
Versus
The State of Maharashtra & Anr. ...Respondents
ALONGWITH
INTERIM APPLICATION NO. 2276 OF 2023
IN
COMM. ARBITRATION PETITION NO. 166 OF 2025
State Of Maharashtra & Anr. ....Applicants
IN THE MATTER BETWEEN
Bhartiya Samruddhi Finance Ltd. ...Petitioner
Versus
The State of Maharashtra & Anr. ...Respondents
ALONGWITH
COMM. ARBITRATION PETITION NO. 373 OF 2022
ALONGWITH
INTERIM APPLICATION NO. 1730 OF 2023
IN
COMM. ARBITRATION PETITION NO. 373 OF 2022
State Of Maharashtra & Anr. ....Petitioners/Applicants
Versus
Bhartiya Samruddhi Finance Ltd. ...Respondent
Mr. Yashodeep Deshmukh a/w Mr. Rayyan Nasir, Mr. Nasir
Mohammed, Ms. Vaidehi Deshmukh and Ms. Nehadevi
Prajapati for the Petitioner in CARBP/166/2022 and for
Respondent in CARBP/373/2022.
Mr. Manish Upadhye, AGP for Respondent Nos. 1 and 2 in
CARBP/166/2022 and CARBP/373/2022.
Digitally
signed by Page 1 of 22
AARTI
AARTI GAJANAN October 14, 2025
GAJANAN PALKAR
PALKAR Date: Aarti Palkar
2025.10.14
15:06:21
+0530
::: Uploaded on - 14/10/2025 ::: Downloaded on - 14/10/2025 21:40:09 :::
CARBP.166.2022.Final.doc
CORAM : SOMASEKHAR SUNDARESAN, J.
RESERVED ON : JULY 1, 2025
PRONOUNCED ON : OCTOBER 14, 2025
JUDGEMENT :
1. The captioned proceedings are cross petitions filed under Section
34 of the Arbitration and Conciliation Act, 1996 (" the Act") challenging
an arbitral award dated December 17, 2021 (" Impugned Award")
passed by a Learned Arbitral Tribunal.
2. The Impugned Award adjudicated disputes between Bhartiya
Samruddhi Finance Ltd. ("Samruddhi") and the State of Maharashtra
("State") in relation to a project to provide information to citizens about
the State's services and schemes aided by information and
communication technology by setting up common service centres
("CSCs") through village level entrepreneurs.
3. Samruddhi was selected pursuant to a bid filed by it on April 28,
2010 in response to a tender published through a document dated
March 12, 2010. The bid was accepted on January 5, 2011 and a Master
Service Agreement ("Agreement") was executed on January 18, 2011.
The Agreement had a tenure of 60 months ending on January 17, 2016,
in which period, Samruddhi was expected to operationalise 1,362 CSCs.
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4. Samruddhi was to be compensated by a share of the fees charged
on the transactions provided by the CSCs, and through "viability gap
funding", which essentially meant revenue support from the State.
Such funding was agreed at the rate of Rs.2,291 per CSC per month
over a period of four years in the case of 1,112 pre-identified rural CSCs.
No revenue support was meant to be provided in respect of 139 urban
CSCs and 111 rural CSCs.
5. The Agreement entailed a staggered deadline for rolling out the
CSCs. Overall, Samruddhi set up 1,276 CSCs, of which 1,208 CSCs were
rural, but these were rolled out after the stipulated deadlines.
Samruddhi claims to have sought to be paid for roll out of only 1,112
CSCs as per its entitlement under the Agreement. The State refused to
pay, on the premise that the CSCs were not installed and
operationalised within the stipulated deadlines. The State also claimed
to have suffered losses because of Samruddhi's incompetence and
negligence, and therefore made a counter-claim.
6. The inability to meet the deadline was attributed by Samruddhi
to the lack of broadband connectivity, in particular, in several villages
in Nandurbar district, which is a "backward area" that fell within the
territory covered by the Agreement. Samruddhi claimed that it needed
extra time to complete the installation of the CSCs and sought
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extension of time under the Agreement - from January 2016 until
August 2016, and thereafter from September 2016 to August 2017.
7. It is noteworthy that the very conceptualisation of the project was
by Government of India. An advisory had been issued to state
governments on December 28, 2011 ("GOI Advisory") requesting the
states to consider the challenges faced in implementing the scheme due
to inadequacy of power supply, non-availability of broadband
connectivity, and the lack of eligible village level entrepreneurs in the
rural areas. State governments were advised to consider taking a
decision, similar to the one taken by the State of Himachal Pradesh, not
to penalise agencies such as Samruddhi for the delay in rolling out the
requisite number of CSCs.
8. The amount claimed by Samruddhi was Rs. ~7.66 crores as the
principal amount, along with interest at the rate of 18% per annum,
computed at Rs. ~7.90 crores until October 15, 2019.
9. The State countered that an agreed and specified number of CSCs
were to be rolled out by the fifth, seventh, ninth and twelfth month of
executing the Agreement, and that Samruddhi had a shortfall in the
number of CSCs rolled out at every milestone. The State claimed a
right to impose liquidated damages of Rs. ~9.29 crores, which it pared
down to Rs. ~7.62 crores.
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10. However, the State had initially released a sum of Rs. 62.91 lakhs
in April 2018 and a further amount of Rs. ~1.66 crores in June 2019.
11. Samruddhi would invoke the GOI Advisory to seek a lenient
view, taking into account the ground reality and challenge in the non-
availability of broadband connectivity which led to the delay in the
actual roll-out. The State refused. The dispute led to the arbitration
proceedings.
12. The State pleaded that Samruddhi was obliged to ensure the
provision of the last mile connectivity. The State would contend that
this had been provided for in the Request for Proposal (" RFP") before
tender and in the Agreement, which is based on the acceptance of such
terms by Samruddhi in its bid. Therefore, the State took the stance that
the absence of broadband connectivity could not be regarded as a
reason that could excuse the delay in rolling out the CSCs.
Impugned Award:
13. The Impugned Award holds in Samruddhi's favour - directing
that it was entitled to Rs. ~7.66 crores, but without an entitlement to
interest. Costs were awarded in the sum of Rs. 20 lakhs. Post-award
interest at 9% was awarded after the expiry of three months from the
date of the Impugned Award. A second round of consideration after a
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Learned Single Judge of this Court requested the Learned Arbitral
Tribunal to reconsider the non-grant of interest and effect a correction
that could remove the vulnerability to the Impugned Award (in
Samruddhi's challenge), took place. The Learned Arbitral Tribunal held
that the non-grant of interest is a conscious one and refused to grant
interest.
14. In consideration of the captioned proceedings, the core issue to
be considered at the threshold is whether the Learned Arbitral Tribunal
has returned a plausible and reasonable view in relation to the lack of
broadband connectivity in the remote areas of the Nashik Revenue
Division, especially in the rural regions of Nashik and Nandurbar
districts.
15. Considering the data on availability of connectivity in the Nashik
Revenue Division, the Learned Arbitral Tribunal considered
Samruddhi's contention about the demonstrated absence of Wi-Fi,
broadband or even terrestrial dial-up connections at the relevant times
in such areas. The Learned Arbitral Tribunal also considered the
stance of the State that the last mile connectivity was meant to be
somehow provided by Samruddhi.
16. The Learned Arbitral Tribunal examined the Agreement and
extracted Paragraph 4.1 of the RFP to set out the reference to the
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National e-Governance Plan of the Government of India. The RFP had
pointed out that the bidders would need to invest in the mast, radio
transceiver and other customer premise equipment at each of the
locations. The Learned Arbitral Tribunal returned a finding that the
provision of internet connectivity up to the block level was not
Samruddhi's responsibility as a matter of the project design.
Samruddhi's obligation was to ensure that the CSCs have the necessary
equipment to communicate with the rest of the telecommunications
network to ensure provision of services by the CSCs.
17. The Government of India had an ambitious plan to set up the
State Wide Area Network ("SWAN"). Indeed, it was Samruddhi's role to
engage with service providers such as Bharat Sanchar Nigam Ltd.
("BSNL"), Airtel, Reliance Tata etc. but this would not translate into an
automatic ability of a service provider such as Samruddhi to access and
get connected to SWAN. The Learned Arbitral Tribunal noted that at
the time of making the Impugned Award, 257 out of 324 tehsils had
been connected to the State Headquarters. The Government of India
was facilitating BSNL to enhance broadband connectivity in about
20,000 rural digital exchanges across the country. BSNL was the lone
telecom service provider for rural exchanges at the sub-block level.
There was no material to indicate how many of these rural exchanges
were earmarked for Maharashtra.
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18. The Learned Arbitral Tribunal found it impossible to accept the
contention of the State that Samruddhi should be held responsible for
setting up the last mile connectivity on its own. The State had
contended that Samruddhi was obliged to conduct due diligence before
making its bid and accepting the targeted milestones, but the State
could simply not expect Samruddhi to arrange for the last mile
connectivity when it had no power to provide telecom services on its
own and no licensed telecom service provider was able to provide
broadband connectivity all across the territory covered by the
Agreement.
19. The witness of the State, himself a Director of Information
Technology, had deposed that he was unaware that to provide such
connectivity on one's own, a telecom service provider license would be
required. The Learned Arbitral Tribunal found this unacceptable.
Samruddhi brought on record evidence about the number of villages in
Nandurbar and Nashik which had internet connectivity through BSNL
by seeking the information under the Right to Information Act, 2005. It
was found that the State had itself informed that 114 Gram Panchayats
in Nandurbar had internet connectivity, and as late as October 1, 2018,
there were 317 Gram Panchayats in that district that had connectivity.
Out of 1,382 Gram Panchayats in Nashik, 1,012 had internet
connectivity while 370 Gram Panchayats had no connectivity at all.
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20. The Learned Arbitral Tribunal returned a finding based on the
material on record, that internet connectivity was not available in every
corner of Nashik Revenue Division. Against this backdrop, the Learned
Arbitral Tribunal analysed that of the 1,362 CSCs to be rolled out in
months of January 18, 2011, 1,112 CSCs were admittedly rural CSCs, for
which viability gap funding was to be provided. It was not available
only for 111 rural CSCs and 139 urban CSCs. The shortfall by the twelfth
month of the roll out expected for 1,112 CSCs was 831 CSCs. However,
the first tranche of revenue support from the State was released only in
April 2018 for a sum of Rs. 62.91 lakh, two and half years after the
invoice for 1,112 invoices were submitted. The second tranche of Rs.
~1.66 crores was released in June 2019. The Learned Arbitral Tribunal
accepted that the non-release of funding support led to a cash crunch
and that delayed matters further. The Learned Arbitral Tribunal found
that indeed there was unexplained delay in releasing the revenue
support.
Analysis and Findings:
21. I have heard Mr. Pankaj Sawant, Learned Senior Advocate for
the State and Mr. Yashodeep Deshmukh, Learned Advocate or
Samruddhi. With their assistance, I have examined the record and
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gone through the Impugned Award, bearing in mind the scope of
jurisdiction under Section 34 of the Act.
22. What is evident is that for 1,112 CSCs, the absence of viability was
an accepted position. To be able to ensure the same standard of service
to citizens located in the regions covered by such CSCs, considering
that the volume of transactions for access to information for citizens
would not be large, the revenue support from the State was an integral
element of the project design. The deadlines for rolling out the CSCs
was also a feature of the Agreement. The Learned Arbitral Tribunal
had to consider whether the delay in roll-out of the CSCs gave the State
the basis to not pay Samruddhi the revenue support contracted, on the
premise that there was a delay.
23. Therefore, what fell for consideration was whether the State
could withhold or deduct from amounts owed to Samruddhi towards
the viability gap funding, on the ground of liquidated damages being
owed to the State by Samruddhi.
24. To deal with this issue, the Learned Arbitral Tribunal has indeed
analysed all the material necessary for adjudication, and has indeed
returned a plausible view. The contentions of the State appear
implausible to me. Even in the Section 34 proceedings, it was
contended on behalf of the State that the last mile connectivity was the
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responsibility of the service provider and the State cannot be expected
to ignore a binding term in the contract.
25. In my opinion, what Samruddhi was expected to ensure was
investment in technology to ensure that it is able to receive
telecommunication signals and to ensure that the CSCs actually work
on the basis of connectivity, but for that to happen, it goes without
saying that broadband telecom connectivity ought to have been
available in the respective CSCs in the first place.
26. The Learned Arbitral Tribunal has returned an eminently
plausible finding that despite the delay in the rollout of CSCs, revenue
support for the identified CSCs ought to have been provided. The first
payment was made in April 2018 nearly three years late. But for the
claim of liquidated damages, it was found that the invoice raised by
Samruddhi was admittedly accurate. That the CSCs were indeed rolled
out and that too despite the hurdle of telecom connectivity not being
available across every corner of the Nashik Revenue Division in a
manner that the milestones could have been met within the stipulated
deadlines, is writ large on the record.
27. It is in this context that one must examine the Learned Arbitral
Tribunal's view that even in cases where the parties may have
contracted provisions on liquidated damages, it would be necessary to
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demonstrate that some loss had been occasioned. The Learned Arbitral
Tribunal's invocation of Kailash Nath1 is indeed relevant and
appropriate. Dealing with Section 74 of the Indian Contract Act, 1872
and the law on compensation for breach of contract, the Supreme Court
has declared the law in Kailash Nath, as follows:
43.1. Where a sum is named in a contract as a liquidated amount
payable by way of damages, the party complaining of a breach can
receive as reasonable compensation such liquidated amount only if it
is a genuine pre-estimate of damages fixed by both parties and found
to be such by the court. In other cases, where a sum is named in a
contract as a liquidated amount payable by way of damages, only
reasonable compensation can be awarded not exceeding the amount
so stated. Similarly, in cases where the amount fixed is in the nature of
penalty, only reasonable compensation can be awarded not exceeding
the penalty so stated. In both cases, the liquidated amount or penalty
is the upper limit beyond which the court cannot grant reasonable
compensation.
43.2. Reasonable compensation will be fixed on well-known
principles that are applicable to the law of contract, which are to be
found inter alia in Section 73 of the Contract Act.
43.3. Since Section 74 awards reasonable compensation for damage
or loss caused by a breach of contract, damage or loss caused is a
sine qua non for the applicability of the section.
43.4. The section applies whether a person is a plaintiff or a
defendant in a suit.
Kailash Nath Associates vs. Delhi Development Authority and Anr. - (2015) 4
SCC 136
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43.5. The sum spoken of may already be paid or be payable in
future.
43.6. The expression "whether or not actual damage or loss is
proved to have been caused thereby" means that where it is possible
to prove actual damage or loss, such proof is not dispensed with. It is
only in cases where damage or loss is difficult or impossible to prove
that the liquidated amount named in the contract, if a genuine pre-
estimate of damage or loss, can be awarded.
43.7. Section 74 will apply to cases of forfeiture of earnest money
under a contract. Where, however, forfeiture takes place under the
terms and conditions of a public auction before agreement is reached,
Section 74 would have no application.
[Emphasis Supplied]
28. The application of Kailash Nath to the facts of the case by the
Learned Arbitral Tribunal cannot be faulted at all. In fact, the GOI
Advisory was meant to address precisely situations such as the one at
hand. It is not as if the State was unaware of the policy intent behind
the CSCs and the need to reach out the State's services, digitally, to
citizens all over the State. The CSCs could evidently not have been
rolled out where there was no telecom broadband connectivity. The
Learned Arbitral Tribunal has rightly held that the contention that
Samruddhi should have somehow provided the last mile connectivity to
the regions where the CSCs were meant to be located, would have
required Samruddhi to be a telecom service provider. Samruddhi has
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to engage with telecom service providers such as BSNL or the State
ought to have set up full access to Samruddhi to the SWAN network.
That not having been done, the very ability to roll out the CSCs stood
frustrated, and therefore a claim for liquidated damages, without
demonstrating how loss was suffered, could not be routinely made in
view of the law declared in Kailash Nath.
29. More importantly, the perspective of the business efficacy test
would be applicable in the instant case, simply because it is neither
commonsensical nor reasonable to read the Agreement as one that
requires Samruddhi to magically provide the last mile
telecommunication connectivity. To expect a private entity that is not
even licensed to be a telecom service provider to ensure connectivity in
areas where, admittedly, there is no telecom connectivity, is untenable.
30. In my view, the Agreement only requires service providers such
as Samruddhi to invest in equipment that would send and receive
telecom signals - evidently on the presumption that telecom coverage
was in existence to be able to send and receive signals. However, should
the State perceive that the provisions in the Agreement mandate such
an unreasonable expectation, it would at best raise an issue of
ambiguity in the Agreement. In this regard, the law declared by the
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Supreme Court in Nabha Power2 must be noticed, since the State's
reading of the Agreement would thoroughly fail the business efficacy
test. The following extracts are noteworthy:
"49. We now proceed to apply the aforesaid principles which have
evolved for interpreting the terms of a commercial contract in question.
Parties indulging in commerce act in a commercial sense. It is this
ground rule which is the basis of The Moorcock test of giving 'business
efficacy' to the transaction, as must have been intended at all events by
both business parties. The development of law saw the 'five condition
test' for an implied condition to be read into the contract including the
'business efficacy' test. It also sought to incorporate 'The Officious
Bystander Test' [Shirlaw vs. Southern Foundries (supra)]. This test has
been set out in B.P. Refinery (Westernport) Proprietary Limited vs. The
President Councillors and Ratepayers of the Shire of Hastings (supra)
requiring the requisite conditions to be satisfied: (1) reasonable and
equitable; (2) necessary to give business efficacy to the contract; (3) it
goes without saying, i.e., The Officious Bystander Test; (4) capable of
clear expression; and (5) must not contradict any express term of the
contract. The same penta-principles find reference also in Investors
Compensation Scheme Ltd. vs. West Bromwich Building Society (supra)
and Attorney General of Belize and Ors. vs. Belize Telecom Ltd. and Anr.
(supra). Needless to say that the application of these principles would not
be to substitute this Court's own view of the presumed understanding of
commercial terms by the parties if the terms are explicit in their
expression. The explicit terms of a contract are always the final word
with regards to the intention of the parties. The multi-clause contract
inter se the parties has, thus, to be understood and interpreted in a
Nabha Power Ltd. Vs. Punjab State Power Corporation Ltd. And Anr. - (2018) 11
SCC 508
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manner that any view, on a particular clause of the contract, should not
do violence to another part of the contract."
[Emphasis Supplied]
31. Applying these principles to the facts of this case, it is clear that
any proposition that Samruddhi ought to have managed to ensure
telecommunications connectivity in remote areas that were without
telecommunications connectivity, for the CSCs to be rolled out in time,
despite the State and other governmental telecom service providers
themselves had not ensure such connectivity, can never be equitable,
reasonable or practicable. It would inflict some violence to the business
efficacy of the Agreement. It would go without saying that no
commercial party would expect the State to expect that the private
party must do what even the State or service providers licensed by the
State have not been able to do. The Agreement has to be read as one
requiring the CSCs to be housed with equipment that can communicate
with the telecom network and not for Samruddhi to become a telecom
service provider.
32. I have already stated why the Learned Arbitral Tribunal's
invocation of Kailash Nath is apt. The Learned Arbitral Tribunal has
rightly held that the State has not been able to prove that it suffered
loss or damage to be entitled, to routinely and as a matter of course, to
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deduct liquidated damages. The Learned Arbitral Tribunal found that
the State indeed released payments without invoking the liquidated
damages clause, and it imposed the liquidated damages once
Samruddhi invoked arbitration. Pointing also to inherent errors and
inconsistencies in the amounts claimed by the State towards liquidated
damages, after analysing the evidence on record, the Learned Arbitral
Tribunal held that the State had not been able to prove that the
liquidated damages were a genuine pre-estimate of the loss or damage
suffered by the State.
33. The views expressed and the conclusions drawn by the Learned
Arbitral Tribunal are eminently plausible. There is nothing in the
material on record that would render the findings perverse. The
Learned Arbitral Tribunal has examined the evidence and returned
cogent and clear findings that are just and fair. The Impugned Award
cannot be said to be in conflict with the contract since on both counts -
the issue of connectivity and the imposition of liquidated damages -
the Impugned Award is in line with the law declared by the Supreme
Court in relation to business efficacy as well as the need to establish
damage and loss to impose liquidated damages.
34. On the contrary, the contention of the State that a private entity
should be able to ensure telecom service provision without regard to
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whether licensed telecom service providers even have coverage of the
areas involved, is perverse and incapable of acceptance. The invocation
by the State, of the law declared by the Supreme Court in Energy
Watchdog3 is of no assistance. In that case, power purchase
agreements were sought to be declared as being frustrated by the
unexpected increase in price of coal, which was the input for the
electricity generated. The Supreme Court held that the inability to buy
coal at profitable prices would not lead to frustration of the power
purchase agreements and refused to declare the power purchase
agreements as void. That has no relevance to the matter in hand. It
was nobody's case that coal was not available at all. Since the price
factored in for purchase of coal had changed, the contract became
unprofitable, and it was held that this was no ground to hold the
contracts as having been frustrated. In the matter at hand, there was
no telecommunication connectivity for Samruddhi to purchase. This is
not a case of Samruddhi stating that purchase of telecommunication
services has become expensive. In fact, as and when connectivity was
available, CSCs have been rolled out.
35. Indeed, there is no complaint in the record about the service
provided by Samruddhi. The core issue is about delay in rolling out the
CSCs and its implications for paying the bills, by way of deduction of
Energy Watchdog vs. Central Electricity Regulatory Commission & Ors. - (2017)
14 SCC 80
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liquidated damages. The witness of the State has confirmed that but
for the liquidated damages, the invoice amount is accurate. The
Impugned Award is not vulnerable to inference in exercise of the
jurisdiction under Section 34 of the Act.
36. It is now trite law that the Section 34 Court must not lightly
interfere with arbitral awards. The scope of review by the Section 34
Court is also well covered in multiple judgments of the Supreme Court
including Dyna Technologies4, Associate Builders5, Ssyangyong6,
Konkan Railway7 and OPG Power8. Even implied reasons are
discernible and may be inferred to support the just and fair outcome
arrived at in arbitral awards. To avoid prolixity, I do not think it
necessary to burden this judgment with quotations from these
judgments. Suffice it to say (to extract from just one of the foregoing),
in Dyna Technologies, the Supreme Court held thus:
"24. There is no dispute that Section 34 of the Arbitration Act limits a
challenge to an award only on the grounds provided therein or as
interpreted by various courts. We need to be cognizant of the fact that
arbitral awards should not be interfered with in a casual and cavalier
manner, unless the court comes to a conclusion that the perversity of
the award goes to the root of the matter without there being a
Dyna Technologies Private Limited v. Crompton Greaves Ltd - (2019) 20 SCC 1
Associate Builders vs. Delhi Development Authority - (2015) 3 SCC 49
Ssangyong Engineering & Construction Co. Ltd. v. National Highways Authority
of India - (2019) 15 SCC 131
Konkan Railways v. Chenab Bridge Project Undertaking - 2023 INSC 742
OPG Power vs. Enoxio - (2025) 2 SCC 417
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possibility of alternative interpretation which may sustain the arbitral
award. Section 34 is different in its approach and cannot be equated
with a normal appellate jurisdiction. The mandate under Section 34 is
to respect the finality of the arbitral award and the party autonomy to
get their dispute adjudicated by an alternative forum as provided
under the law. If the courts were to interfere with the arbitral award in
the usual course on factual aspects, then the commercial wisdom
behind opting for alternate dispute resolution would stand frustrated.
25. Moreover, umpteen number of judgments of this Court have
categorically held that the courts should not interfere with an award
merely because an alternative view on facts and interpretation of
contract exists. The courts need to be cautious and should defer to the
view taken by the Arbitral Tribunal even if the reasoning provided in
the award is implied unless such award portrays perversity
unpardonable under Section 34 of the Arbitration Act."
[Emphasis Supplied]
37. Applying this principle to the Impugned Award, I find no scope
for interference with the Impugned Award.
38. As regards, the challenge by Samruddhi on the ground of non-
award of interest before the arbitration proceedings and pendente lite,
on December 16, 2024, disposing of proceedings under Section 34(4)
of the Act, the Learned Arbitral Tribunal has elaborated on why interest
was not awarded to Samruddhi. The Learned Arbitral Tribunal had
ruled that the date from which interest was being claimed was not
pleaded. Even the prayers had not sought the relief of interest but the
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Learned Arbitral Tribunal found that the pleadings indeed indicated a
claim for interest. Interest would need to be paid from the date on
which the viability funding gap was to be released, which, as per the
Agreement, was linked to the roll out of specified number of CSCs by
specified milestone deadlines. The Learned Arbitral Tribunal has ruled
that interest is a matter of discretion and the implications of non-
availability of connectivity is an issue for both sides.
39. The Learned Arbitral Tribunal has chosen its own means of
adjusting of equities by not granting pre-award and pendente lite
interest. The Learned Arbitral Tribunal, as the master of the evidence
has appreciated the evidence, and has been satisfied that to adjust
equities, interest need not be paid, one must give the Learned Arbitral
Tribunal a reasonable play in the joints to take that view.
40. The Learned Arbitral Tribunal has found that the parties were
diligent and did not protract the arbitration proceedings, and
concluded that pendente lite interest was not necessary. Here too, it is
entirely in the domain of the Learned Arbitral Tribunal to determine if
interest is to be awarded.
41. The Learned Arbitral Tribunal has indeed awarded post-arbitral
award interest.
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42. The exercise of discretion in relation to interest is not so
irrational or perverse that it warrants interference by the Section 34
Court. If the Learned Arbitral Tribunal has formed this view of a
measure that would be equitable to the State, there can be no reason to
interdict that approach. Therefore, on this count too, I see no basis to
interfere with the Impugned Award.
43. The Impugned Award is upheld and both the Petitions
challenging it, along with attendant Interim Applications, if any, are
dismissed. Should any deposits have been made, the same shall stand
released within a period of four weeks from the date of upload of this
judgment on the Court's website.
44. All actions required to be taken pursuant to this order shall be
taken upon receipt of a downloaded copy as available on this Court's
website.
[SOMASEKHAR SUNDARESAN J.]
October 14, 2025
Aarti Palkar
