1. By way of the present appeal preferred under Section 37 of the
Arbitration and Conciliation Act, 19961, the appellants have challenged
the judgment dated 21.05.2025 2 , passed by the learned District Judge
(Commercial Court)-02, South, Saket Courts, Delhi3 in OMP (Comm.)
No. 7/2020.
2. The learned Commercial Court, vide the impugned judgment,
while holding that the arbitral award dated 02.11.20194 passed by Justice
Indermeet Kaur (Retd.)5, does not suffer from any infirmity, illegality or
perversity, nevertheless proceeded to set aside the arbitral award
whereby appellant no. 2 had been fastened with liability for the
obligations of appellant no. 1.
3. The dispute between the parties, namely Mr. Jatinder Nath6 and
appellant no. 1, a company engaged in the business of real estate and
represented through its director, appellant no. 2, arises out of protracted
litigation spanning a long period of time. During the pendency of the
proceedings, both the respondent and appellant no. 2 expired, and were
thereafter substituted and represented by their respective legal
heirs/successors.
4. The respondent, owner of property bearing Municipal no. G-13,
Malviya Nagar Extension, Saket, New Delhi, admeasuring 400 sq. yds.7,
entered into an agreement dated 16.03.19908, with appellant no. 1.
Hereinafter "arbitral award"
Hereinafter "Arbitrator"
Hereinafter "respondent"
Hereinafter "subject property"
Hereinafter "agreement"
5. The subject property had been allotted to the respondent by the
Delhi Development Authority vide a perpetual lease dated 17.08.1981.
6. Under the said agreement, the appellants were to construct a
multistoried building at its own cost, and upon completion, was to retain
the basement, ground and mezzanine floors with proportionate rights in
the land, while the first floor and second floor were to vest with the
respondents. The construction was to be completed within the stipulated
period, failing which the owner was entitled to terminate the said
Agreement and retain the land and structure, subject to payment of
construction cost to the appellants.
7. The building plans were sanctioned by the Municipal Corporation
of Delhi on 21.05.1990 and construction was undertaken by the
appellants. Disputes arose between the parties regarding alleged
deviations and excess construction, leading to sealing of the premises by
the municipal authorities and multiple proceedings before various fora.
8. During this period, the appellants inducted Mr. P.K. Mathur and
Mr. Pramod Dang into front portions of ground floor and basement of the
premises, respectively, which was objected to by the respondents, who
consequently sought termination of the agreement and recovery of
possession. The disputes led to invocation of arbitration before the
named Arbitrator, Mr. Damodar Sharma, in August 1992, culminating in
an ex-parte award dated 29.03.1994 in favour of appellant no. 1. In terms
of this award, Mr. Damodar Sharma directed the respondents to transfer
the ownership of the basement, and ground floor along with the
proportionate interest in the land underneath and, in lieu of mezzanine
floor, the respondents were directed to transfer ownership of first floor to
the appellants.
9. In the interregnum, Mr. P.K. Mathur instituted a suit seeking to
restrain the respondents from dispossessing him. The said suit came to be
dismissed vide order dated 24.01.1995. Similarly, Mr. Pramod Dang also
instituted a civil suit wherein interim relief was granted in his favour.
However, the said suit was subsequently dismissed in default by this
Court vide order dated 26.04.2000.
10. Proceedings were thereafter initiated under sections 14 and 17 of
the A&C Act before the learned Sr. Sub Judge, Faridabad Court to make
the award dated 29.03.1994, Rule of Court, however, the award was set
aside on 27.05.2010, and the appeals and review petitions arising
therefrom were dismissed, with liberty granted to the parties to pursue
available remedies.
11. A subsequent suit instituted by the respondents in the year 2013,
seeking reliefs of declaration, possession and consequential reliefs, was
filed before this Court and was thereafter transferred to learned District
Judge, South-West, Dwarka Courts, Delhi. The said suit came to be
dismissed vide order dated 02.06.2016, the Court having observed that,
in view of the existence of an arbitration clause in the agreement between
the parties, the suit was not maintainable. Aggrieved, the respondents
preferred an appeal being RFA No. 210/2017 before this Court. Vide
order dated 13.04.2018, this Court appointed Hon‟ble Ms. Justice
Indermeet Kaur (Retd.) as the Sole Arbitrator to adjudicate all disputes,
pursuant to which pleadings were completed, issues framed and evidence
led.
12. The appellants contested the claims, raising pleas of completion of
construction, contractual entitlement to portions of the property and
limitation. By arbitral award dated 02.11.2019, the learned Arbitrator
held respondents entitled to the following relief:
"A. Agreement dated 16.03.1990 stands cancelled. In terms of
clause 14.1 the sum of Rs.5 lacs stands forfeited; the clam is
entitled to ownership of the compete building. No 3rd party
interest could have been created by the respondent; the third
parties namely Mr. Dang and Mr. Mathur/third party who
are/were in occupation of the suit property are directed to
forthwith vacate the property.
B. Claimant is entitled to damages @ 10 per Sq. foot w.e.f.
May 2018 on 7396.67 sq. feet upto the date of pronouncement of
the Award i.e. 2.11.2019 which is quantified at Rs. 1,40,538/-.
C. The ownership of the complete building i.e. basement and
front portion and rear portion of the ground floor be handed
over by the respondent within a period of 2 months failing which
the claimant would be entitled to get the Award executed.
D. The amount of Rs. 1,0,538/- shall be paid by the
respondents to the claimant within a period of 2 months failing
which this amount shall be payable by the respondents to the
claimant with interest @ 9% w.e.f. 3.1.2020 upto the date of
receipt of the amount.
E. Costs are awarded in favour of the claimant which
include fee of the undersigned as also the legal fee and other
administrative expenses which are quantified at Rs. 20 lacs."
13. The appellants challenged the award under Section 34 of the A&C
Act in OMP (Comm.) No. 7/2020. By the impugned judgment dated
21.05.2025, the learned Commercial Court upheld the award on merits,
but set it aside to the limited extent of fastening personal liability upon
appellant no. 2.
14. The present appeal is filed against this impugned judgment.
Submissions by the Appellant
15. Mr. Chandra Shekhar Yadav, learned counsel for the appellants,
assails the arbitral award as well as the impugned judgment on several
grounds. At the outset, it is contended that both the learned Arbitrator
and the learned Commercial Court failed to give effect to the express
terms of the agreement dated 16.03.1990, particularly Clause 14, which
stipulates that, in the event of alleged default or termination, while the
respondents would retain the land and incomplete structure, the
appellants would remain entitled to the cost of construction, the valuation
whereof was mandatorily to be determined by the learned Arbitrator.
16. It is pointed out that the appellants invested their own funds and
constructed approximately 13,711-13,843 sq. ft., the benefit whereof has
been wholly enjoyed by the respondents, yet no amount towards
construction cost has been determined or awarded. Reliance is placed on
CPWD norms for the relevant period to indicate that the cost would be
approximately ₹ 60-70 lakhs, which material, according to the appellants,
was overlooked while other valuation guides were selectively relied
upon.
17. Referring to Section 28(3) of the A&C Act, it is urged that an
arbitral tribunal is bound to decide strictly in accordance with the terms
of the contract. However, failure to adhere to the rigours of Section 28(3)
of the A&C Act, would render the award unsustainable. To buttress the
contention that an award passed in contravention to any substantive law
being in force is rendered invalid, reliance is placed on Oil and Natural
Gas Corporation Ltd.(ONGC) v. Saw Pipes Ltd. 9 . Thus, reliance is
placed on Gayatri Balasmy v. ISG Novasoft Technologies Ltd. 10 , to
submit that the court under Section 34 of the A&C Act, can exercise the
doctrine of Severability and vary or modify the award accordingly.
18. It is further contended that the omission to follow the agreed
contractual mechanism, and unreasonable interpretation of the contract
constitutes patent illegality and is opposed to the public policy of India.
For this proposition, reliance is place on Associate Builders v. Delhi
Development Authority11; GVK Jaipur Expressway Pvt. Ltd. v. NHAI12;
State of Rajasthan v. Nav Bharat Construction13; HPCL Mittal Energy
Ltd. v. Arston Engineering Ltd.14, wherein it has been held that a non-
speaking award which dismisses substantial rights of the parties is liable
to be set aside. Reliance is also placed on the case of Ramesh Kumar v.
Kesho Ram15, Gaiv Dinshaw Irani & Ors. v. Tehmtan Irani & Ors.16;
and Pasupuleti Venkateswarlu v. The Motor & General Traders 17 ,
wherein the court has directed that cautious cognizance be taken of
(2003) 5 SCC 705
2025 7 SCC 1
(2015) 3 SCC 49
2021 SCC Online Del 4851
(2006) 1 SCC 86
2018 SCC OnLine Del 7914
1992 Supp (2) SCC 623
(2014) 8 SCC 294
(1975) 1SCC 770
circumstances which have a material bearing on the rights and
obligations of parties. Furthermore, the court also stated that pursuant to
Section 96 of the Civil Procedure Code, 1908, the court is not precluded
from taking into cognizance changing circumstances and afford the relief
accordingly.
19. The findings of delay or breach is assailed as ex facie erroneous. It
is stated that appellant no. 1 had secured an extension of time from DDA
on 09.09.1991, thereby extending the contractual period up to
08.09.1993. Nevertheless, the respondents prematurely issued a notice
dated 03.08.1992 seeking possession. The construction, according to the
appellants, stood completed in 1991 and possession had been taken by
the respondents. The rejection of the extension letter and the contrary
conclusion, it is submitted, run contrary to the documentary and admitted
facts.
20. Attention is also drawn to the completion of five floors by
28.11.1991, submission of statutory Forms C, D and F by the
respondents acknowledging completion, and their taking over possession
of the first, second and third floors on 01.09.1992. Proceedings before
municipal and appellate authorities were likewise pursued in respect of
the completed structure. These circumstances, it is urged, demonstrate
performance of obligations and acquiescence on the part of the
respondents, but were not duly appreciated.
21. The award is additionally questioned on limitation. It is submitted
that without any application for condonation, an extended period was
excluded on account of earlier arbitral proceedings and substantial
amendments were permitted, introducing fresh and time-barred claims
and altering the nature of the dispute, which course is impermissible in
law.
22. Reference is then made to Clauses 4 and 16 of the agreement to
contend that the appellants were contractually entitled to ownership of
the basement, ground floor and mezzanine, or proportionate equivalent
area. It is submitted that despite the said stipulations, neither the agreed
share in the constructed premises nor any compensation in lieu thereof
has been granted. As a result, the respondents continue to retain and
enjoy the entire building without bearing the corresponding construction
costs, leading to unjust enrichment. It is the appellants‟ case that they are
entitled to recovery of construction cost in respect of an area
admeasuring 13,711 sq. ft. It is further contended that both the learned
Arbitrator and the learned Commercial Court failed to give due effect to
the aforesaid contractual provisions.
23. Lastly, reliance is placed on Indian Oil Corporation Ltd. v. Shree
Ganesh Petroleum through its Proprietor Mr. Laxman Dagdu Thite18,
to contend that impermissible construction of the contract by the
Arbitrator, which ignores contractual entitlements, would be an error
which vitiates the award. Circumspectly, the appellant contends that the
learned Arbitrator, and the learned Commercial Court has erred by
2022 4 SCC 463
failing to consider the contractual entitlements of the appellant, thereby
warranting interference by this Court.
Analysis
24. The appellants impugn the judgment dated 21.05.2025 passed by
the learned Commercial Court whereby their objections under Section 34
of the A&C Act were dismissed and the arbitral award dated 02.11.2019
was upheld.
25. The controversy essentially raises issues relating to limitation,
completion of the project, the cost of construction, and the parties‟
subsequent contractual entitlements. The same shall be dealt with under
the aforesaid heads.
Limitation
26. The appellants contend that the claims entertained by the learned
Arbitrator were barred by limitation, submitting that the cause of action
arose in 1992 upon issuance of notice dated 03.08.1992 seeking
cancellation of the agreement and possession. It is urged that any claim
for breach or rescission ought to have been instituted within three years
in terms of Articles 55 and 59 of the Limitation Act, 1963 (hereinafter
referred to as "Limitation Act"), and that exclusion of time under Section
43(4) of the A&C Act was unavailable, as arbitration had never validly
commenced. Reliance is placed on the assertion that the first notice did
not invoke arbitration and the subsequent notice dated 20.08.1992 was
not served.
27. The learned Sole Arbitrator considered the objection and recorded
a categorical finding that while the notice dated 03.08.1992 was confined
to termination, the subsequent notice dated 20.08.1992 expressly invoked
the arbitration clause and was duly served. On that basis, it was held that
arbitral proceedings validly commenced on 20.08.1992, culminating in
an ex-parte award dated 29.03.1994, which was later set aside on
27.05.2010. The entire period having been spent in pursuit of bona fide
litigation, i.e., institution of CS(OS) 532/2013 before this Court; suit
being transferred to learned District Judge, South-West, Dwarka Courts,
Delhi; and dismissal vide order dated 02.06.2016; RFA No. 210/2017
preferred before this Court filed on 16.02.2017, and subsequent
appointment of the Arbitrator vide order dated 13.04.2018.
28. The period spent in the arbitral proceedings and the court
proceedings arising therefrom was, therefore directed to be excluded
while computing limitation for the aforesaid reasons.
29. The learned Commercial Court concurred with the aforesaid
reasoning and observed that the question of limitation had been
examined on the basis of the factual matrix on record, and that the
finding returned by the learned Arbitrator, holding the respondents‟
claim to be within limitation, constituted a plausible view, not amenable
to interference under Section 34 of the A&C Act. It is noticed that
though the initial proceedings were initiated by the respondents before
Mr. Damodar Sharma, however, it was the appellants themselves who
made an endeavor to commence proceedings under Section 14 and 17 of
the 1940 A&C Act seeking to have the award crystalized in the first
round of arbitration made a Rule of Court. The relevant extract from the
impugned judgment reads:
"...13. A perusal of application under section 14-17 of
Arbitration Act filed by the petitioner no. 1 before the Sr. Sub
Judge, Faridabad would show that the petitioner himself stated
that vide letter dt. 20.08.1992, the respondent had asked the
arbitrator to enter the proceedings in terms of agreement and
that the said arbitrator had issued notice on 24.08.1992 and both
the parties had appeared before him on 05.09.1992. The ground
of petitioners stating that period was wrongly excluded is
therefore, not substantiable. Even if it is considered that the
petitioners failed to prove on record the notices for appointment
of arbitrator, the fact that the proceedings were initiated before
the concerned arbitrator are admitted and it was the petitioners
who got benefited in those proceedings. Thus it does not lie in
the mouth of petitioners to say that since those proceedings were
not initiated on the notice of the respondent or such notice has
not been proved or the notice was not as per the provisions of
A&C Act, therefore, the entire proceedings should be considered
as non-existent and respondent be denied benefit of the said
period for the purposes of limitation."
30. The legal position is equally settled in Adavya Projects Private
Limited v. Vishal Structural Private Limited & Ors. 19 ,the Hon‟ble
Supreme Court held:
"19. First, the notice is necessary to determine whether claims
are within the period of limitation or are time-barred. Section
43(1) ACA stipulates that the Limitation Act, 1963 shall apply to
arbitrations as it applies to court proceedings. Further, Section
43(2) provides that for the purpose of the Limitation Act, an
2025 (9) SCC 686
arbitration shall be deemed to have commenced on the date
referred to in Section 21. Hence, the date of receipt of Section 21
notice is used to determine whether a dispute has been raised
within limitation period as specified in the Schedule of
Limitation Act, as held by this Court in Milkfood Ltd. v. GMC Ice
Cream (P) Ltd. and State of Goa v. Praveen Enterprises."
31. Furthermore, the principle underlying Section 43(4) of the A&C
Act has also been recognized in Laguna Resort Pvt. Ltd. v. Concept
Hospitality Pvt. Ltd. 20 , wherein it was held that exclusion of time is
available to prevent prejudice on account of time spent in bona fide
arbitral and court proceedings.
32. In view of the concurrent factual finding that the notice dated
20.08.1992 validly invoked arbitration and was served, commencement
under Section 21 of the A&C Act stood established. Consequently, the
appellants were entitled to the benefit of exclusion under Section 43(4) of
the A&C Act. The objection essentially invites re-appreciation of
evidence, which is impermissible in proceedings under Sections 34 and
37 of the A&C Act. No patent illegality or perversity is demonstrated.
The challenge in limitation, therefore, fails.
Completion of the Project
33. The appellants assail the finding that the construction remained
incomplete, contending that the documentary and statutory record
establishes completion within the contractual period. Reliance is placed
on Forms C and D, Appendix F, the extent of constructed area, the
2025 SCC OnLine Bom 5263
sealing of the building by the MCD, and the fact that possession of
certain floors was taken by the respondent.
34. From the perusal of the record, it is ascertained that the learned
Arbitrator examined each of these documents in detail. Forms C and D
were found to relate only to inspection of underground sanitary
installations and not to certification of completion of the building as a
whole. Appendix F, pressed into service as a completion certificate, was
held to record „part occupation‟, which, on its own terms, militates
against the plea of full completion. The learned Arbitrator also noted the
absence of any completion certificates issued by the MCD and treated the
same as a material deficiency. On an overall appreciation of the record,
the plea of completed construction was rejected.
35. The learned Commercial Court affirmed the said findings and
additionally took note of the report of the Local Commissioner dated
27.07.2018, appointed in RFA 201/2017, which described the condition
of the structure, and corroborated that the construction was not complete.
It was thus held that the learned Arbitrator had correctly appreciated the
documentary and physical evidence, and that the view taken was both
reasonable and plausible.
36. The scope of interference with such findings is well settled. In
Larsen Air Conditioning and Refrigeration Company v. Union of
India21, the Hon‟ble Supreme Court observed:
(2023) 15 SCC 472
"15. The limited and extremely circumscribed jurisdiction of the
court under Section 34 of the Act, permits the court to interfere
with an award, sans the grounds of patent illegality i.e. that
"illegality must go to the root of the matter and cannot be of a
trivial nature"; and that the Tribunal "must decide in
accordance with the terms of the contract, but if an arbitrator
construes a term of the contract in a reasonable manner, it will
not mean that the award can be set aside on this ground" [ref :
Associate Builders, SCC p.81, para 42]. The other ground would
be denial of natural justice. In appeal, Section 37 of the Act
grants narrower scope to the appellate court to review the
findings in an award, if it has been upheld, or substantially
upheld under Section 34."
(emphasis supplied)
37. The findings of the learned Arbitrator, affirmed by the learned
Commercial Court and supported by the Local Commissioner‟s report,
are concurrent and founded on evidence.
38. In exercise of jurisdiction under Section 37 of the A&C Act, this
Court cannot re-appreciate the evidence or substitute its own view
merely because another interpretation is possible. No patent illegality or
perversity is shown. The challenge on the issue of completion, therefore,
fails.
Cost of Construction and Subsequent Contractual Entitlements
39. The appellants lastly contend that, notwithstanding termination of
the agreement, Clause 14 entitled then to the cost of construction of the
incomplete structure and that denial thereof results in unjust enrichment.
Reliance is also placed on Section 28(3) of the A&C Act and alleged
trade usage mandating reimbursement.
40. The learned Commercial Court has recorded that no such claim
was substantiated before the learned Arbitrator and that no evidence
whatsoever, by way of invoices, bills, accounts, or material
demonstrating procurement of labour or materials, was produced to
establish either the factum or quantum of expenditure. The record shows
that no specific claim or counterclaim for construction cost was pressed
before the learned Arbitrator.
41. In so far as Section 28(3) of the A&C Act is concerned, the legal
position stands clarified by the Hon‟ble Supreme Court in Batliboi
Environmental Engineers Limited v. Hindustan Petroleum
Corporation Limited & Anr.22, wherein it was held:
"45. ...Here again interference would be only if something
shocks the court‟ conscience. Further, "patent illegality" refers
to three sub heads : (a) contravention of substantive law of
India, which must be restricted and limited such that the
illegality must go to the root of the matter and should not be of a
trivial nature. Reference in this regard was made to clause (a) to
Section 28(1) of the A&C Act, which states that the dispute
submitted to arbitration under Part I shall be in accordance with
the substantive law for the time being in force. The second sub-
head would be when the arbitrator gives no reasons in the award
in contravention with Section 31(3) of the A&C Act. The third
sub-head deals with the contravention of Section 28(3) of the
A&C Act which states that the Arbitral Tribunal shall decide all
cases in accordance with the terms of the contract and shall take
into account the usage of the trade applicable to the transaction.
This last sub-head should be understood with a caveat that the
arbitrator has the right to construe and interpret the terms of the
contract in a reasonable manner. Such interpretation should not
be a ground to set aside the award as the construction of the
terms of the contract is finally for the arbitrator to decide. The
(2024) 2 SCC 375
award can only be set aside under this sub-head if the arbitrator
construes the award in a way that no fair-minded or reasonable
person would do."
42. Thus, cost of construction and evaluation of entitlement fall
primarily within the domain of the learned Arbitrator.
43. Clause 14 of the Construction Agreement itself provides:
"14. That, the time being the essence of this agreement, the
builders bind themselves to construct the entire Housing
Complex duly approved with completion certificate procured
from the concerned authorities, within a period of 24 months
from the date of the Extension letter is issued by the
DDA/permission to commence construction work. The period of
24 months shall count from such a date.
i) That in the event of builders failing to complete the
construction of the Housing Complex within the said stipulated
period for whatsoever reasons, the owner shall be within his
rights to treat the agreement having been
vitiated/cancelled/null and void. And consequently, the
ownership of land as well as incomplete building shall rest with
the owner only. However, the builder may claim the
construction cost of the incomplete building, the valuation as
may be decided by the Hon‟ble Arbitrator..."
44. The learned Commercial Court has rightly observed:
"26. The clause thus says that the builder would have been
entitled for cost of construction of incomplete building had it
claimed the same, the word having been used „may claim
construction cost of incomplete building.‟ Admittedly, the
petitioners at no point of time applied for cost of construction
before the arbitrator. No evidence was led by the petitioners to
prove the level and cost of construction. It was argued by Ld.
Counsel for petitioners that the Ld. Arbitrator could have made
an assessment of cost as the assessment of damages was made
relying upon a book. It needs to be understood that assessing
damages/occupational charges/rent is easier than assessing the
cost of construction for which the petitioners were supposed to
lead positive evidence. The petitioners were supposed to prove
before the arbitrator the level of construction; the cost of
material used etc. Thus in view of petitioners having not claimed
the cost of construction as per agreement and having not led any
evidence in proof of cost of construction, no error was committed
by Ld. Arbitrator in not granting the cost of construction to the
petitioners. The judgments relied upon by Ld. Counsel for the
petitioners do not held the petitioner as most of them were
regarding interpretation of clause of agreement/contracts. In the
instant matter the petitioner have not been able to prove any
diversion from the contract in not granting the cost of
construction to the petitioners."
45. It is settled that a party cannot seek to urge, in challenge
proceedings, a claim which was neither properly pleaded nor proved
before the Tribunal. In MSK Projects India (JV) Ltd. v State of
Rajasthan & Anr.23, the Hon‟ble Supreme Court held:
"23. The Tribunal considered the relevant agreement provisions
as well as the land lease deed, total package documents, minutes
of pre-bid meetings and the deed authorizing collection of toll
fee, etc., and proceeded with the arbitration proceedings. The
State of Rajasthan had not taken the defence that it was not
agreed between the parties to issue the notification barring the
traffic through the markets of Bharatpur City. The only issue
remained as to whether there was delay in issuance of
notification and implementation thereof. In such a fact situation
and considering the settled legal propositions, we are of the view
that the District Judge as well as the High court fell in error
considering the issue which was not taken by the State before the
Tribunal during the arbitration proceedings."
(2011) 10 SCC 573
46. Similarly, this Court in Krishna Kumar & Anr. v. Shakuntala
Agency Pvt. Ltd.24, observed:
"14. In any event, having participated in the arbitral proceedings and
having not chosen to raise any such objection before the learned
arbitrator, the petitioners cannot, in proceedings under Section 34,
seek to contend that the arbitral proceedings were with respect to a
plot which was different from the plot in respect to which the Section
21 notice was issued.
xxx
16. In any event, it is clear from the above that the submissions
advanced by Mr. Dubey are essentially seeking an entire
reappreciation of the disputes on facts. Section 34, quite apart from its
classically limited scope, is certainly not intended to be used as tool
for a litigant to desist from participating in the arbitral proceedings,
despite being fully aware thereof, and thereafter, seek a second bite at
the arbitral cherry.
17. That apart, it is trite that, under Section 34, the Court cannot enter
into a re-appreciation of facts. The objections that have been raised by
Mr. Dubey are all aspects which the petitioners could have raised
before the learned Arbitral Tribunal. ..."
47. Further, in State of Rajasthan & Anr. v. Ferro Concrete
Construction Private Limited25, it was held:
"52. We may also refer to another aspect. A sum of Rs 12,072
per day was claimed as damages by the contractor in a tow-line
calculation without any supporting evidence or document. As
noticed above, the claim was on the basis that the contractor
would have manufactured 15 pipes per day of the value of Rs.
1,20,000 and that the profit and overhead element out of it would
have been 15% or Rs 18,000 per day. By taking the working days
as 306 in a year, and deducting 20% of labour component, the
loss of profit per day was calculated to be Rs 12,072 per day.
There is no evidence to show that the contractor was at any point
of time manufacturing 15 pipes a day of the value of Rs 8000
each or that he would have made a profit of 15% on the cost
2024 SCC OnLine Del 5081
(2009) 12 SCC 1
thereof. The claim is made on the ground that it is disabled from
manufacturing that many number of pipes elsewhere.
xxx
"55. While the quantum of evidence required to accept a claim
may be a matter within the exclusive jurisdiction of the
arbitrator to decide, if there was no evidence at all and if the
arbitrator makes an award of the amount claimed in the claim
statement, merely on the basis of the claim statement without
anything more, it has to be held that the award on the account
would be invalid. Suffice it to say that the entire award under
this head is wholly illegal and beyond the jurisdiction of the
arbitrator, and wholly unsustainable."
48. These principles apply with equal force here. A claim for cost of
construction is a positive monetary claim, the burden squarely lies on the
claimant to establish entitlement and quantum by cogent evidence.
Section 28(3) of the A&C Act does not dispense with proof, nor can
trade usage substitute evidentiary foundation. The Appellant has, in our
opinion, erroneously relied on the case of ONGC v. SAW Pipes Ltd.
(supra), to contend that the award passed herein is contrary to Section
28(3) of the A&C Act, and is thus liable to be set aside. In our opinion,
there is no contravention of Section 28(3) as no effort was made by the
appellant to prove the quantum of cost of construction. Since no such
effort has been made, it cannot be said that the learned sole arbitrator
failed to take into account the trade usage.
49. In the present case, the appellants neither advanced a proper claim
nor led any material to prove the level of construction or the expenditure
incurred. The distinction between proving that construction exists and
proving the cost thereof is fundamental. In the absence of pleadings and
evidence, the learned Arbitrator could not have embarked upon an
independent assessment. The approach of the learned Arbitrator, as
affirmed by the learned Commercial Court, does not suffer from any
infirmity and warrants no interference. The reliance placed by the
appellants on Associate Builders, GVK Jaipur Expressway Pvt. Ltd.,
HPCL Mittal Energy Limited & IOCL (supra), is misconceived, as the
principles enunciated therein, relating to interference with an award on
the ground of patent unreasonableness or impermissible construction of
contractual terms affecting the rights of the parties, have no application
to the facts of the present case. Having consciously chosen to not proffer
a counterclaim, and lead evidences thereto, it is now not open to the
appellant to question the construction of the terms by the learned
Arbitrator, especially, when the claim sought is a monetary claim,
requiring proofs from the claimant.
50. Once it has been concurrently held that the project was not
completed and the contract stood terminated, no further contractual
entitlements survive. Any claim predicated on completion necessarily
fails.
Conclusion:
51. Upon perusal of the arbitral award and the impugned order, it is
evident that all objections raised by the appellant were duly considered
and adjudicated by the learned Commercial Court by a detailed reasoned
order. The objections urged before this Court are merely a reiteration of
those already dealt with and rejected.
52. The arbitral award dated 02.11.2019 and the judgment dated
21.05.2025 disclose a reasoned determination of the disputes, and the
findings on limitation, completion of construction and contractual
entitlements stand supported by evidence and have been concurrently
affirmed. The challenge essentially seeks appreciation of facts and re-
interpretation of the contract, which is impermissible in an appeal under
Section 37 of the Arbitration and Conciliation Act. No ground for
interference is made out.
53. Accordingly, the present appeal stands dismissed, along with
pending application(s), if any.
54. No order as to costs.
55. The judgment be uploaded on the website forthwith.
AJAY DIGPAUL
(JUDGE)
NITIN WASUDEO SAMBRE
(JUDGE)
FEBRUARY 9, 2026/gs/sg
