Mr. Vikas Goel, Mr. Vivek Gupta and Ms. Samiksha Goel, Advs v. UNITECH -NCC

Judgment

1. 1 34. CORAM: HON’BLE MR. JUSTICE C. HARI SHANKAR JUDGMENT

30.05.2025 This petition under Section 341 of the Arbitration and the party making the application establishes on the basis of the record of the Recourse to a Court against an arbitral award may be made only by an application for Application for setting aside arbitral award. – (1) setting aside such award in accordance with sub-section (2) and sub-section (3). An arbitral award may be set aside by the Court only if— (2) (a) arbitral tribunal that — a party was under some incapacity; or (i) (ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or (iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or the arbitral award deals with a dispute not contemplated by or not (iv) falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration: Signature Not Verified Digitally Signed By:AJIT KUMAR Signing Date:04.06.2025 12:15:17 O.M.P. (COMM) 23/2017 Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or (v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was Signature Not Verified Digitally Signed By:CHANDRASHEKHARAN HARI SHANKAR Signing Date:04.06.2025 12:14:39 Conciliation Act, 19962 assails an arbitral award dated 16 May 2011, by a three-member Arbitral Tribunal, in an arbitration between the respondent Unitech-NCC JV3 as the claimant and the petitioner-NHAI as the respondent.

2. The dispute arose in the context of a Contract Agreement4 executed on 25 May 2001 between NHAI and Unitech. The contract was for widening and upgradation of the existing 2-lane road in the State of Andhra Pradesh between the towns of Visakhapatnam and Ichapuram, a section of NH-5. The date of commencement of the contract was 8 June 2001 and the scheduled date of completion was 7 February 2004. The contract was actually completed on 20 March

3. The clauses/provisions of the CA/General Conditions of Contract5, to the extent they are relevant, may be reproduced thus: (b) in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or the Court finds that— (i) arbitration under the law for the time being in force, or (ii) the subject-matter of the dispute is not capable of settlement by the arbitral award is in conflict with the public policy of India. Explanation 1. – For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,— the making of the award was induced or affected by fraud it is in contravention with the fundamental policy of Indian (i) or corruption or was in violation of Section 75 or Section 81; or (ii) law; or (iii) justice. Explanation 2. – For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute. it is in conflict with the most basic notions of morality or An arbitral award arising out of arbitrations other than international commercial (2-A) arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award: Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence. 2 “the 1996 Act” hereinafter 3 “Unitech” hereinafter 4 “CA” hereinafter 5 ‘GCC” hereinafter Signature Not Verified Digitally Signed By:AJIT KUMAR Signing Date:04.06.2025 12:15:17 O.M.P. (COMM) 23/2017 Signature Not Verified Digitally Signed By:CHANDRASHEKHARAN HARI SHANKAR Signing Date:04.06.2025 12:14:39 “42.2 Failure to Give Possession If the Contractor suffers delay and/or incurs costs from failure on the part of the Employer to give possession in accordance with the terms of Sub-Clause, the Engineer shall after due consultation with the Employer and the Contractor, determine: Any extension of time to which the Contractor is entitled a) under Clause 44, and The amount of such costs, which shall be added to the b) Contract Price, And shall notify the Contractor accordingly, with a copy to the Employer. *****

44.1 Extension of Time for Completion In the event of: a) b) c) d) The amount or nature of extra or additional work, Any cause of delay referred to in these Conditions, Exceptionally adverse climatic conditions, Any delay, impediment or prevention by the Employer, or Other special circumstances which may occur, other than e) through a default of or breach of contract by the Contractor or for which he is responsible. Being such as fairly to entitle the Contractor to an extension of the Time for Completion of the Works, or any Section or part thereof, the Engineer shall, after due consultation with the Employer and the Contractor, determine the amount of such extension and shall notify the Contractor accordingly, with a copy to the Employer. *****

44.3 Interim Determination of Extension Provided also that where an event has a continuing effect such that it is not practicable for the Contractor to submit detailed particulars within the period of 28 days referred to in Sub-Clause 44.2(b), he shall nevertheless be entitled to an extension of time provided that Signature Not Verified Digitally Signed By:AJIT KUMAR Signing Date:04.06.2025 12:15:17 O.M.P. (COMM) 23/2017 Signature Not Verified Digitally Signed By:CHANDRASHEKHARAN HARI SHANKAR Signing Date:04.06.2025 12:14:39 he has submitted to the Engineer interim particulars at intervals of not more than 28 days and final particulars within 28 days of the end of the effects resulting from the event. On receipt of such interim particulars, the Engineer shall, without undue delay, make an interim Engineer shall review all the circumstances and shall determine an overall extension of time in regard to the event. In both such cases the Engineer shall make his determination after due consultation with the Employer and the Contractor and shall notify the Contractor of the determination with a copy to the Employer. No final review shall result in a decrease of any extension of time already determined by the Engineer. *****

47.1 Liquidated Damages for Delay If the Contractor fails to comply with the Time for Completion in accordance with Clause 48, for the whole of the Works or, if applicable, any Section within the relevant time prescribed by Clause 43, then the Contractor shall pay to the Employer the relevant sum stated in the Appendix to Tender as liquidated damages for such default and not as a penalty (which sum shall be the only monies due from the Contractor for such default) for every day or part of a day which shall elapse between the relevant Time for Completion and the date stated in a Taking-Over Certificate of the whole of the Works or the relevant Section, subject to the applicable limit stated in the Appendix to Tender. The Employer may without prejudice to any other method of recovery, deduct the amount of such damages from any monies due or to become due to the Contractor. The payment or deduction of such damages shall not relieve the Contractor from his obligation to complete the Works, or from any other of his obligations and liabilities under the Contract. ***** Sub-Clause 47.3 Bonus for Early Completion “If the Contractor achieves completion of the whole of the works prior to the specified period of completion of 32 calendar months from the date of commencement, the Employer shall pay to the Contractor a sum stated in the Appendix to Tender as bonus for every completed month which shall elapse between the date of completion of all items of works as stipulated in the contract, including variations ordered by the Engineer and the specified period of completion of 32 calendar months. In case of any time extension bonus for early completion considering the extended time shall NOT be payable. Signature Not Verified Digitally Signed By:AJIT KUMAR Signing Date:04.06.2025 12:15:17 O.M.P. (COMM) 23/2017 Signature Not Verified Digitally Signed By:CHANDRASHEKHARAN HARI SHANKAR Signing Date:04.06.2025 12:14:39 *****

53.1 Notice of Claims Notwithstanding any other provision of the Contract, if the Contractor intends to claim any additional payment pursuant to any Clause of these Conditions or otherwise, he shall give notice of his intention to the Engineer, with a copy to the Employer, within 28 days after the event giving rise to the claim has first arisen. *****

53.4 Failure to Comply If the Contractor fails to comply with any of the provisions of this Clause in respect of any claim which he seeks to make, his entitlement to payment in respect thereof shall not exceed such amount as the Engineer or any arbitrator or arbitrators appointed pursuant to Sub-Clause 67.3 assessing the claim considers to be verified by contemporary records (whether or not such records were brought to the Engineer’s notice as required under Sub-Clause 53.2 and 53.3). *****

69.4 Contractor’s Entitlement to Suspend Work Without prejudice to the Contractor’s entitlement to interest under Sub-Clause 60.10 and to terminate under Sub-Clause 69.1, the Contractor may, if the Employer fails to pay the Contractor the amount due under any certificate of the Engineer within 28 days after the expiry of the time stated in Sub-Clause 60.10 within which payment is to be made, subject to any deduction that the Employer is entitled to make under the Contract, after giving 28 days prior notice to the Employer, with a copy to the Engineer, suspend work or reduce the rate of work. If the Contractor suspends work or reduces the rate of work in accordance with the provisions of this Sub-Clause and thereby suffers delay or incurs costs the Engineer shall, after due consultation with the Employer and the Contractor, determine; any extension of time to which the Contractor is entitled a) under Clause 44, and the amount of such costs, which shall be added to the b) Contract Price. And shall notify the Contractor accordingly, with a copy to the Signature Not Verified Digitally Signed By:AJIT KUMAR Signing Date:04.06.2025 12:15:17 O.M.P. (COMM) 23/2017 Signature Not Verified Digitally Signed By:CHANDRASHEKHARAN HARI SHANKAR Signing Date:04.06.2025 12:14:39 Employer.”

4. In exercise of the rights conferred by an arbitration agreement existing in the CA, Unitech raised certain claims against NHAI. On the claims not being considered by NHAI, the matter was referred to a three-member Arbitral Tribunal. The Arbitral Tribunal came to render its award on 16 May 2011. This petition assails the said award.

5. NHAI submits, at the outset, that it is restricting its challenge to the impugned award vis-a-vis Claims 3, 4 and 7.

6. I, therefore, propose to deal with the said claims, the award of the learned Arbitral Tribunal thereon, and the rival contentions before this bench in that regard and the sustainability of the said contention, given the parameters of Section 34 of the 1996 Act.

7. Before that, we deem it appropriate to examine the law regarding the power of judicial review under Section 34 of the 1996 Act, with arbitral award. Scope of judicial interference under Section 34

8. I had, in my judgment in NDMC v R & T Enterprises6, attempted to analyze the scope of Section 34 of the 1996 Act as it stood on that date, and noted thus: “55. The decisions on the scope of Section 34 of the 1996 Act are too numerous to justify any paraphrasing, but the position is, Signature Not Verified 6 2024 SCC OnLine Del 5436 Digitally Signed By:AJIT KUMAR Signing Date:04.06.2025 12:15:17 O.M.P. (COMM) 23/2017 Signature Not Verified Digitally Signed By:CHANDRASHEKHARAN HARI SHANKAR Signing Date:04.06.2025 12:14:39

by now, certain. UHL Power Co. Ltd. v State of H.P.7 and Dyna Technologies (P) Ltd. v Crompton Greaves Ltd.8 hold that the jurisdiction of the Court under Section 34 cannot be likened to normal appellate jurisdiction. Casual and cavalier interference with arbitral awards, and proscription from interfering on the ground that a better, alternative view was possible, stands clearly foreclosed by Ssangyong Engineering & Construction Co. Ltd. v N.H.A.I.9 and Parsa Kente Collieries Ltd. v Rajasthan Rajya Vidyut Utpadan Nigam Ltd.10. The autonomy of the Arbitral Tribunal was required to be respected and interference with arbitral awards on factual aspects firmly eschewed. At the same time, if the award was found to be perverse, or that the interpretation of the contractual covenants by the Arbitral Tribunal was one which could not possibly be accepted, the Court was bound to interfere. Instances where the construction of the contractual clauses, by the Arbitral Tribunal, was found to be so unacceptable as to justify interference, are South East Asia Marine Engineering & Constructions Ltd. v Oil India Ltd.11 and Patel Engineering Ltd. v North Eastern Electric Power Corporation Ltd.12.

56. “Perversity”, as would justify interference with an arbitral award, connotes a situation in which the finding of fact, by the Arbitral Tribunal, was arrived at by ignoring or excluding relevant material, or by taking into consideration irrelevant material, or where the finding is so outrageously in defiance of logic as to irrationality13. Associate suffer Builders v D.D.A. also placed especial reliance, on the concept of “perversity”, on the following clarification, provided in Kuldeep Singh v Commissioner of Police14: “10. A broad distinction has, therefore, to be maintained between the decisions which are perverse and those which are not. If a decision is arrived at on no evidence or evidence which is thoroughly unreliable and no reasonable person would act upon it, the order would be perverse. But if there is some evidence on record which is acceptable and which could be relied upon, howsoever compendious it may be, the conclusions would not be treated as perverse and the findings would not be interfered with.”