Jain, Mr. Siddharth Shekhar, Mr. Sahil Mahganani, Mr. Sarthak Mongha, Advocates v. RAIL VIKAS NIGAM LIMITED
Case Details
Acts & Sections
Judgment
1. This appeal has been filed under Section 37 of the Arbitration & Conciliation Act, 1996 (‘A&C Act’), assailing the judgment dated 01st July 2025 passed by the Single Judge in OMP (COMM) 278/2017, dismissing the petition under Section 34 of the A&C Act filed by the appellant (‘impugned judgment’). 2. The proceedings arise out of an impugned award dated 31st March 2017 passed by Arbitral Tribunal comprising of three Arbitrators (‘AT’) Signature Not Verified Digitally Signed By:MANISH KUMAR Signing Date:07.11.2025 10:41:55 FAO(OS) (COMM) 146/2025 Page 1 of 24 in respect of the Contract Agreement dated 15th December 2011 for the work of “construction of viaduct including related works for 5.400 km length excluding station areas from Ch.20006.60 to Ch.26394.60 between CBD-1 to Rabindra Tirtha in New Garia Airport corridor of Kolkata Metro Railway Line Package-ANV-4" at an accepted cost of Rs.199,10,44,060/-. 3. Letter of acceptance was issued to the appellant on 21st October
2011. Completion period for work was 30 months. Stipulated date of start was 21st October 2011, and stipulated date of completion was 20th April
2014. Actual date of completion was 30th June 2018. 4. Appellant approached AT and filed six claims, out of which the AT allowed Claim Nos.2, 4 and 5 and rejected Claim Nos. 1, 3 and 6. 5. The grievance of the appellant essentially relates to rejection of Claim No.1, which was for idling of resources, where appellant had claimed Rs. 6,52,70,847/-. 6. Appellant contended that on account of delay on the part of respondent in providing drawings & permissions, change of alignment, arranging GTS mark and providing the requisite land within the specified time, appellant was entitled to compensation for delay, which led to idling of its resources. Appellant claimed that it had submitted various letters to the respondent with respect to delay & idling of resources from time to time. 7. Respondent, however, resisted the claim relying upon Clause 2.2 &
8.3 of General Conditions of Contract (‘GCC’). Respondent claimed that Signature Not Verified Digitally Signed By:MANISH KUMAR Signing Date:07.11.2025 10:41:55 FAO(OS) (COMM) 146/2025 Page 2 of 24 the progress achieved by the appellant in the fronts, which were already available to them, was not up to the mark, and the question of idling of resources does not arise. He relied upon correspondence with the appellant in this regard. 8. As regards the appellant’s contention that the land needed for erection of permanent structure pertains to HIDCO and was not provided within 30 days of issuance of LOA, as per Clause 8 of Special Conditions of Contract (‘SCC’), respondent contended that the delay in the diversion of public utility was due to poor coordination between appellant and HIDCO. Appellant was responsible for liaison with the utility-owning agency for diversions and getting the diversions scheme approved as per Clause 4.0 and 3.1.5 of Section 5, Chapter I. Appellant was also supposed to obtain the necessary approval from transport authorities and police department for temporary traffic diversion and control of public road. 9. The AT took note of Clause 2.2 and Clause 8.3, which are extracted as under: Clause 2.2 “The Employer shall grant the Contractor right of access to, and possession of, the Site progressively within the time (or times) stated in the Contract Data for the completion of Works. Such right and possession may not be exclusive to the contractor. The contractor will draw/modify the schedule for completion of Works according to progressive possession/right of such sites. If the contractor suffers delay from failure on the part of the Employer to grant right of access to, or possession of the Site, the Contractor shall give notice to the Engineer in a period of 28 day of such occurrence. After receipt of such Signature Not Verified Digitally Signed By:MANISH KUMAR Signing Date:07.11.2025 10:41:55 FAO(OS) (COMM) 146/2025 Page 3 of 24 notice the Engineer shall proceed to determine any extension of time to which the Contractor is entitled and shall notify the Contractor accordingly. For any such delay in handling over of site, Contractors will be entitled to only reasonable extension of time and no monetary claims whatsoever shall be paid or entertained on this account.” Clause 8.3 “In case of delay on the part of the Contractor, the Contractor shall be liable to pay liquidated damages and any other compensation for the damages suffered by the Employer as per Clause 8. 5. This is without prejudice to the right of the Employer to rescind the Contract. Failure or delay by the employer or the Engineer, to hand over to the contractor the Site necessary for execution of Works, or any part of the Works, or to give necessary notice to commence the Works, or to provide necessary Drawings or instructions or clarifications or to supply any material, plant or machinery, which under the Contract, is the responsibility of the Employer, shall in no way effect or vitiate the Contract or alter the character thereof, or entitled the contractor to damages or compensation thereof but in any such case, the Engineer shall extend the time period for the completion of the Contract, as in his opinion is/ are reasonable.” (emphasis added)
10. Taking into account these provisions of GCC, the AT held that respondent was providing extension of completion period, considering delays not attributable to the claimant, including delay in making work site available for execution of work. The AT accepted the submission of respondent that, as per Clause 2.2 and Clause 8.3 of GCC, appellant at Signature Not Verified Digitally Signed By:MANISH KUMAR Signing Date:07.11.2025 10:41:55 FAO(OS) (COMM) 146/2025 Page 4 of 24 best was entitled to extension of time period for completion of contract,
and no monetary claims could be entertained. 11. Submissions of the parties are noted in detail in paragraphs 7.1-7.19 (appellant/claimant’s submission) and paragraphs 8.1-8.13 (respondent’s submissions) of the Award. 12. Counsel for appellant submitted that AT had not given any reason and had mechanically applied Clause 2.2 and Clause 8.3 while the case of the appellant was that ‘the time was of the essence of the contract’. 13. It is contended that AT had failed to consider that the parties had reciprocal obligations and whether Clause 8.3 could insulate the respondent from any claim for losses or damages for breach or failure to perform the obligations, particularly in light of provisions of Contract Act. 14. It was, therefore, contended that Clause 8.3 was inconsistent, inter alia, with Sections 55 and 73 of the Indian Contract Act, 1872 (‘ICA’), and therefore, contrary to fundamental policy of Indian Law. For this, he relied upon Simplex Concrete Piles (India) Ltd. v. Union of India 2010 SCC OnLine Del 821. 15. Respondent submitted before the Single Judge that this argument was neither canvassed before the AT nor was the judgment of Simplex Concrete (supra) placed before it for consideration, and, therefore, this objection cannot be raised. 16. Moreover, the decision in Simplex Concrete (supra) was challenged by Union of India under Section 37 of A&C Act in Union of India v. Simplex Concrete Piles (1) FAO (OS) No.348/2010 and leave had Signature Not Verified Digitally Signed By:MANISH KUMAR Signing Date:07.11.2025 10:41:55 FAO(OS) (COMM) 146/2025 Page 5 of 24 been granted. The said judgment had also been distinguished by Division Bench in the judgment of PLUS91 Security Solutions v. NEC Corpn. India (P) Ltd. 2024 SCC OnLine Del 5114, where it was clarified that contractual bargains between the parties have to be given effect to. 17. With respect to appellant’s arguments under Section 55 of ICA, respondent contended that the appellant had not intimated its intention to seek compensation; only the letter dated 25th February 2013 was issued by the appellant seeking extension of time. It further contended that clauses similarly worded to Clause 2.2 and Clause 8.3 of the GCC were upheld by the Supreme Court in K. Marappan v. TBPHLC (2020) 15 SCC 401. Reliance on PLUS91 Security (supra) and K. Marappan (supra) was contested by appellant before the Single Judge. 18. After assessing these and other contentions made by the parties, the impugned judgment zeroed in on the basic issue of whether the decision of the AT disallowing the claim for idling of men, machinery and resources suffered from shortcomings, which would allow interference under Section 34 of the A&C Act. 19. Impugned judgment, while analysing Clause 2.2 and Clause 8.3 of GCC, observed that, as per these provisions, delay in providing the work site to the contractor would trigger a notice by the contractor within 28 days of such failure in delivery of site, leading to only extension of time, barring any corresponding monetary claim. Clause 8.3 of GCC, which relates to delay on the part of the employer or engineer in handing over the site or providing necessary drawings, etc., stipulated that such delay would Signature Not Verified Digitally Signed By:MANISH KUMAR Signing Date:07.11.2025 10:41:55 FAO(OS) (COMM) 146/2025 Page 6 of 24 neither vitiate the contract nor entitle the contractor to claim damages or/and compensation, but only to an extension of time. 20. The Single Judge in the impugned judgment noted that there was no challenge to the said provisions before the AT or any time prior to the signing of the contract or during its execution or thereafter, and, therefore, it was not open to assail the arbitral award under Section 34 by raising, for the first time, the issue of legality of these provisions. The Single Judge further noted that the appellant was conscious of the absence of its right to claim compensation, which is evident from letter dated 25th February 2013, where the petitioner, while seeking extension of time, attributes the delay to lack of requisite approvals and site availability, but does not seek any compensation. 21. Extension of time was granted by letter dated 21st March 2013, and it was specifically provided that the extension was without any penalty. Compensation was sought only subsequently, on 22nd June 2013, but was denied by respondent on 09th July 2013. 22. The impugned judgment, therefore, notes that the Court cannot be asked to reappreciate evidence, and the AT has the power and authority to interpret the provisions of a contract and give a decision on the basis of the factual matrix. On issues of interpretative differences, the Court was not inclined to interfere under provisions of Section 34 of A&C Act. 23. Single Judge placed reliance on the decision of the Supreme Court in Union of India v. Susaka Pvt. Ltd. (2018) 2 SCC 182, noting that if a Signature Not Verified Digitally Signed By:MANISH KUMAR Signing Date:07.11.2025 10:41:55 FAO(OS) (COMM) 146/2025 Page 7 of 24 plea was not raised before the AT, it amounts to a waiver and/or abandonment of a plea at the initial stage. 24. Appellant had also referred to another dispute between the parties, which culminated in an award dated 30th December 2023, where AT had awarded idling claim on the basis of delay by the respondent in providing drawings. 25. Appellant claimed that this award had been accepted and attained finality. In this respect, reliance on the different award between the parties was rejected by the Single Judge on the ground that each case has to be dealt with as per its own merits. 26. Counsel for appellant, therefore, emphasized that the rejection of their submission that Clause 2.2 and Clause 8.3 were unconscionable and that Clause 17.1 of GCC itself provided additional payment under any clause or otherwise in connection with the contract. It was submitted that any exemption defeating the statutory right to compensation under Section 73 of ICA was contrary to fundamental policy of Indian Law. 27. Moreover, it was argued that the disentitlement to statutory benefits under Sections 54 & 55 of the ICA would be void as being against public policy and violative of Section 23 of the ICA. The interference was, therefore, invited under Section 34(2)(b)(ii) of the A&C Act on grounds of patent illegality, perversity, and conflict with the fundamental policy of Indian law. Signature Not Verified Digitally Signed By:MANISH KUMAR Signing Date:07.11.2025 10:41:55 FAO(OS) (COMM) 146/2025 Page 8 of 24 Analysis
28. This Court, after having assessed the submissions of counsel for appellant, and examining the impugned judgment as well as the impugned award, finds that the appeal under Section 37 of the A&C Act is unmerited for reasons which follow. 29. Firstly, Scope of interference under Section 37 is quite limited, as evident from the provision of Section 34 itself, as well as the determination which has been made by the Supreme Court in Associate Builders v. Delhi Development Authority (2015) 3 SCC 49. The Supreme Court held that the interference under Section 34 is limited and extremely circumscribed and is permissible only when the award is tainted by patent illegality, i.e. illegality going to the root, and not mere erroneous application of law. In Ssangyong Engineering & Construction Co. Ltd. v. National Highways Authority of India (2019) 15 SCC 131, the Supreme Court narrowed the scope of "public policy" under Section 34, observing that it is confined to cases where the award is in conflict with the fundamental policy of Indian law, is patently illegal, or is in conflict with most basic notions of morality or justice. Moreover, in MMTC Ltd. v. Vedanta Ltd. (2019) 4 SCC 163, the Supreme Court reiterated that Section 34 is not a provision for appeal, and courts cannot reappreciate evidence or substitute their view for that of the arbitrator. Interference is permissible only on the limited grounds specified in the Act. 29.1. In fact, under Section 37, the scope of interference is even further circumscribed as articulated by the Supreme Court in Somdatt Builders- Signature Not Verified Digitally Signed By:MANISH KUMAR Signing Date:07.11.2025 10:41:55 FAO(OS) (COMM) 146/2025 Page 9 of 24 NCC-NEC (JV) v. NHAI (2025) 6 SCC 757 and Konkan Railway Corpn.
and no monetary claims could be entertained. 11. Submissions of the parties are noted in detail in paragraphs 7.1-7.19 (appellant/claimant’s submission) and paragraphs 8.1-8.13 (respondent’s submissions) of the Award. 12. Counsel for appellant submitted that AT had not given any reason and had mechanically applied Clause 2.2 and Clause 8.3 while the case of the appellant was that ‘the time was of the essence of the contract’. 13. It is contended that AT had failed to consider that the parties had reciprocal obligations and whether Clause 8.3 could insulate the respondent from any claim for losses or damages for breach or failure to perform the obligations, particularly in light of provisions of Contract Act. 14. It was, therefore, contended that Clause 8.3 was inconsistent, inter alia, with Sections 55 and 73 of the Indian Contract Act, 1872 (‘ICA’), and therefore, contrary to fundamental policy of Indian Law. For this, he relied upon Simplex Concrete Piles (India) Ltd. v. Union of India 2010 SCC OnLine Del 821. 15. Respondent submitted before the Single Judge that this argument was neither canvassed before the AT nor was the judgment of Simplex Concrete (supra) placed before it for consideration, and, therefore, this objection cannot be raised. 16. Moreover, the decision in Simplex Concrete (supra) was challenged by Union of India under Section 37 of A&C Act in Union of India v. Simplex Concrete Piles (1) FAO (OS) No.348/2010 and leave had Signature Not Verified Digitally Signed By:MANISH KUMAR Signing Date:07.11.2025 10:41:55 FAO(OS) (COMM) 146/2025 Page 5 of 24 been granted. The said judgment had also been distinguished by Division Bench in the judgment of PLUS91 Security Solutions v. NEC Corpn. India (P) Ltd. 2024 SCC OnLine Del 5114, where it was clarified that contractual bargains between the parties have to be given effect to. 17. With respect to appellant’s arguments under Section 55 of ICA, respondent contended that the appellant had not intimated its intention to seek compensation; only the letter dated 25th February 2013 was issued by the appellant seeking extension of time. It further contended that clauses similarly worded to Clause 2.2 and Clause 8.3 of the GCC were upheld by the Supreme Court in K. Marappan v. TBPHLC (2020) 15 SCC 401. Reliance on PLUS91 Security (supra) and K. Marappan (supra) was contested by appellant before the Single Judge. 18. After assessing these and other contentions made by the parties, the impugned judgment zeroed in on the basic issue of whether the decision of the AT disallowing the claim for idling of men, machinery and resources suffered from shortcomings, which would allow interference under Section 34 of the A&C Act. 19. Impugned judgment, while analysing Clause 2.2 and Clause 8.3 of GCC, observed that, as per these provisions, delay in providing the work site to the contractor would trigger a notice by the contractor within 28 days of such failure in delivery of site, leading to only extension of time, barring any corresponding monetary claim. Clause 8.3 of GCC, which relates to delay on the part of the employer or engineer in handing over the site or providing necessary drawings, etc., stipulated that such delay would Signature Not Verified Digitally Signed By:MANISH KUMAR Signing Date:07.11.2025 10:41:55 FAO(OS) (COMM) 146/2025 Page 6 of 24 neither vitiate the contract nor entitle the contractor to claim damages or/and compensation, but only to an extension of time. 20. The Single Judge in the impugned judgment noted that there was no challenge to the said provisions before the AT or any time prior to the signing of the contract or during its execution or thereafter, and, therefore, it was not open to assail the arbitral award under Section 34 by raising, for the first time, the issue of legality of these provisions. The Single Judge further noted that the appellant was conscious of the absence of its right to claim compensation, which is evident from letter dated 25th February 2013, where the petitioner, while seeking extension of time, attributes the delay to lack of requisite approvals and site availability, but does not seek any compensation. 21. Extension of time was granted by letter dated 21st March 2013, and it was specifically provided that the extension was without any penalty. Compensation was sought only subsequently, on 22nd June 2013, but was denied by respondent on 09th July 2013. 22. The impugned judgment, therefore, notes that the Court cannot be asked to reappreciate evidence, and the AT has the power and authority to interpret the provisions of a contract and give a decision on the basis of the factual matrix. On issues of interpretative differences, the Court was not inclined to interfere under provisions of Section 34 of A&C Act. 23. Single Judge placed reliance on the decision of the Supreme Court in Union of India v. Susaka Pvt. Ltd. (2018) 2 SCC 182, noting that if a Signature Not Verified Digitally Signed By:MANISH KUMAR Signing Date:07.11.2025 10:41:55 FAO(OS) (COMM) 146/2025 Page 7 of 24 plea was not raised before the AT, it amounts to a waiver and/or abandonment of a plea at the initial stage. 24. Appellant had also referred to another dispute between the parties, which culminated in an award dated 30th December 2023, where AT had awarded idling claim on the basis of delay by the respondent in providing drawings. 25. Appellant claimed that this award had been accepted and attained finality. In this respect, reliance on the different award between the parties was rejected by the Single Judge on the ground that each case has to be dealt with as per its own merits. 26. Counsel for appellant, therefore, emphasized that the rejection of their submission that Clause 2.2 and Clause 8.3 were unconscionable and that Clause 17.1 of GCC itself provided additional payment under any clause or otherwise in connection with the contract. It was submitted that any exemption defeating the statutory right to compensation under Section 73 of ICA was contrary to fundamental policy of Indian Law. 27. Moreover, it was argued that the disentitlement to statutory benefits under Sections 54 & 55 of the ICA would be void as being against public policy and violative of Section 23 of the ICA. The interference was, therefore, invited under Section 34(2)(b)(ii) of the A&C Act on grounds of patent illegality, perversity, and conflict with the fundamental policy of Indian law. Signature Not Verified Digitally Signed By:MANISH KUMAR Signing Date:07.11.2025 10:41:55 FAO(OS) (COMM) 146/2025 Page 8 of 24 Analysis
28. This Court, after having assessed the submissions of counsel for appellant, and examining the impugned judgment as well as the impugned award, finds that the appeal under Section 37 of the A&C Act is unmerited for reasons which follow. 29. Firstly, Scope of interference under Section 37 is quite limited, as evident from the provision of Section 34 itself, as well as the determination which has been made by the Supreme Court in Associate Builders v. Delhi Development Authority (2015) 3 SCC 49. The Supreme Court held that the interference under Section 34 is limited and extremely circumscribed and is permissible only when the award is tainted by patent illegality, i.e. illegality going to the root, and not mere erroneous application of law. In Ssangyong Engineering & Construction Co. Ltd. v. National Highways Authority of India (2019) 15 SCC 131, the Supreme Court narrowed the scope of "public policy" under Section 34, observing that it is confined to cases where the award is in conflict with the fundamental policy of Indian law, is patently illegal, or is in conflict with most basic notions of morality or justice. Moreover, in MMTC Ltd. v. Vedanta Ltd. (2019) 4 SCC 163, the Supreme Court reiterated that Section 34 is not a provision for appeal, and courts cannot reappreciate evidence or substitute their view for that of the arbitrator. Interference is permissible only on the limited grounds specified in the Act. 29.1. In fact, under Section 37, the scope of interference is even further circumscribed as articulated by the Supreme Court in Somdatt Builders- Signature Not Verified Digitally Signed By:MANISH KUMAR Signing Date:07.11.2025 10:41:55 FAO(OS) (COMM) 146/2025 Page 9 of 24 NCC-NEC (JV) v. NHAI (2025) 6 SCC 757 and Konkan Railway Corpn.