O.M.P. (COMM) 452/2019 Page 1 of 30

* IN THE HIGH COURT OF DELHI AT NEW DELHI

% Judgment Reserved on: 9

th

March, 2026

Judgment pronounced on: 26

th

May, 2026

+ O.M.P. (COMM) 452/2019 & I.A. 14761/2019

MADHYA BHARAT POWER

CORPORATION LIMITED .....Petitioner

Through: Mr. Ratan K. Singh, Senior Advocate

with Mr. Prateek Khandelwal and Mr.

Anand Murthi Rao, Advocates. Mr. M.

Rajshekhar, DGM (Legal).

Versus

VOITH HYDRO PRIVATE LIMITED .....Respondent

Through: Mr. Raj Shekhar Rao, Senior

Advocate with Mr. Omar Ahmad, Mr.

Vikram Shah, Ms. Simarjeet and Mr.

Ritik Kumar Rath, Advocates

CORAM:

HON’BLE MR. JUSTICE AMIT BANSAL

JUDGMENT

AMIT BANSAL, J.

1.The present petition has been filed under Section 34 of the Arbitration

and Conciliation Act, 1996 (‘Act’) seeking setting aside of the Award dated

31

st

July, 2019 passed by the Arbitral Tribunal (‘Award’).

2.The petitioner (respondent in the arbitration proceedings) shall

hereinafter be referred to as ‘Madhya Bharat’ or ‘the Employer’ and the

respondent (claimant in the arbitration proceedings) shall hereinafter be

referred to as ‘Voith Hydro’or ‘the Contractor’.

O.M.P. (COMM) 452/2019 Page 2 of 30

FACTUALBACKGROUND

3.Brief facts relevant for the adjudication of present dispute are as

follows.

4.Madhya Bharat entered into a Memorandum of Understanding with the

Government of Sikkim by which Rongnichu Hydro Project (‘RHEP’) in

Sikkim was allotted to Madhya Bharat.

5.Madhya Bharat had split RHEP into five different packages, one of

which was for Electro Mechanical Works (‘E&M’). Tender was floated by

Madhya Bharat for E&M in respect of which Voith Hydro submitted its bid.

A Letter of Intent was issued to Voith Hydro on 21

st

June, 2011. Thereafter,

Voith Hydro was awarded the Contract for Electro Mechanical works for the

96 MGW Rongnichu Hydro Project in the State of Sikkim.

6.On 28

th

September, 2011, Madhya Bharat and Voith Hydro entered into

two Contracts:

(a)Supply Contract for sale of electro-mechanical equipment for the

project; and

(b)Services Contract for port clearance, transportation, unloading,

storage and erection among other things.

7.The timeline agreed by the parties for the completion of the Contract

was a period thirty (30) months from the effective date of Contract. However,

within a week of signing of the Contracts, the parties amended the Contract

and revised the time of completion from thirty (30) months to forty-two (42)

months from the effective date of the Contract.

8.On 27

th

November, 2013, Voith Hydro issued a notice of suspension to

Madhya Bharat. Subsequently on 11

th

December, 2013, Voith Hydro

O.M.P. (COMM) 452/2019 Page 3 of 30

suspended the Contract in terms of Clause 41.2(b) of the General Conditions

of Contract (‘GCC’). Madhya Bharat also formally suspended the Contract on

13

th

June, 2014.

9.On 5

th

May, 2016, Voith Hydro issued a notice for settlement of dispute

under Clause 6 of the GCC, which did not materialise.Thereafter,Voith Hydro

nominated an Adjudicator for resolution of disputes, in terms of Clause 6.1 of

the GCC, however, the Adjudicator later on conveyed his unwillingness to

adjudicate the dispute.

10.Accordingly, Voith Hydro issued a notice dated 9

th

March, 2017

invoking the arbitration clause. Both the parties appointed their respective

Nominee Arbitrators who mutually appointed the Presiding Arbitrator.

OVERVIEW OF THEPROCEEDINGS BEFORE THE ARBITRALTRIBUNAL

11.Voith Hydro made the following claims in the Statement of Claim filed

before the Arbitral Tribunal on 19

th

July, 2017:

(a)Claim I: Compensation for engineering works completed

(b)Claim II: Compensation for materials manufactured

(c)Claim III: Compensation for on-site expenses

(d)Claim IV: Compensation for off-site expenses and loss of profits

(e)Claim V: Miscellaneous expenses

(f)Pre-award interest at 15% per annum; post award interest at 18% per

annum

(g)Costs

12.Statement of Defence along with Counter Claim was filed on behalf of

Madhya Bharat on 25

th

September, 2017. Counter Claims raised on behalf of

Madhya Bharat were as under:

O.M.P. (COMM) 452/2019 Page 4 of 30

(a)Return of advance amount of ₹8,18,31,444/- for Supply Contract and

₹1,29,53,966 for Service Contract.

(b)Damages on account of losses suffered (not quantified).

(c)Interest at 8% per annum from 11

th

December, 2013.

(d)Costs

13.Voith Hydro provided testimonies of four fact witnesses and one Expert

witness, Mr. Nigel Grout. For Madhya Bharat, there were three fact witnesses

and one Expert witness, Mr. John Prudhoe.

14.The Arbitral Tribunal observed that the determination of quantum

involved minute and technical scrutiny of engineering and manufacturing

aspects requiring specialised expertise, and therefore relied substantially on

the findings of the Experts in this regard. Both the appointed Experts filed

two individual reports each. After cross examination, both the Experts

prepared a Joint Expert Report on 25

th

September, 2018. In their Joint Expert

Report, the two Experts identified areas of agreement and disagreement, along

with their respective reasoning.

15.Relevant portions of the Award are set out below for ease of reference:

“147. In general, the Experts have agreed as to the approach to valuation

before and after suspension / termination. They agreed that for the period

prior to suspension / termination on 11.12.2013 (the Execution Phase), the

quantum should be a valuation of work done based on the prices in the

Contracts plus any applicable Price Adjustment. From 12.12.2013 (the

Suspension Phase), the quantum should use actual additional costs

incurred. As quantum Experts, they have disclosed their own conclusions as

to the quantum of various claims made by the Claimant and they have also

attempted to give reasons in support of their respective stand on certain

claims and / or related issues on which they have differed from each other.

148. We find no good reasons not to accept their Joint Report on the claims

/ issues on which they are in agreement. Their agreed views are fit to be

O.M.P. (COMM) 452/2019 Page 5 of 30

accepted, although some reservation has been expressed even against such

agreed views, on behalf of the Respondent. The areas where both the Experts

have differed from each other will have to be carefully examined before

deciding which view is more acceptable on the touchstone of reasons”

16.Ultimately, a unanimous Award was passed by the Arbitral Tribunal

awarding the following amounts in respect of each of the claims:

HEADS OF CLAIM INR USD EUR

Compensation for

Engineering Completed

2,57,13,2671,08,84042,249

Compensation for Material

Manufactured

6,32,09,933

Compensation for On-site

Expenses

91,71,305

Compensation for Off-site

expenses (Project manager)

51,32,518

Compensation for Off-site

overheads and Loss of

Profit on unexecuted

Contract works

8,19,42,1963,81,4211,48,057

Compensation for

Miscellaneous Expenses

NIL NIL NIL

LESS: Amount already paid

9,47,85,4104,08,8521,58,706

TOTAL 9,03,83,809.0081,409.0031,600.00

17.Counter claims made by Madhya Bharat were rejected by the Arbitral

Tribunal.

O.M.P. (COMM) 452/2019 Page 6 of 30

18.The operative directions in paragraph 277 of the Award are set out

below:

“277. The final Award is as follows:

I.The Claimant’s claim is allowed to the extent of INR 9,03,83,809.00, USD

81,409.00 and EURO 31,600.00 (after adjusting the payment already made). The

foreign currency amount will have to be paid in INR at the foreign exchange rate

prevalent on the date of the Award.

II. The Claimant is entitled to pendente-lite interest @ 8% per annum from

09.03.2017. On the foreign currency award, the interest rate would be 3% per

annum from the same date.

III. The Claimant is entitled to costs being 50% fees and expenses of the Tribunal

that had been borne by the Claimant towards its share. Towards the legal

expenses of the Solicitors, Counsel and Expert etc., the parties shall bear their

own costs.

IV. The amount to be paid to the Claimant under this award along with

interest as aforesaid should be paid to the Claimant within a period of three

months failing which the awarded amount will carry interest @ 12% per annum

from the date of the Award until the date of payment.

V. The Respondent is directed to return the papers of the bank guarantees

to the Claimant forthwith.

VI. The Counterclaim by the Respondent is rejected.”

19.Aggrieved by the Award passed by the Arbitral Tribunal, the present

petition has been filed by Madhya Bharat seeking setting aside of the

impugned Award.

20.In the order passed by this Court on 22

nd

October, 2019, it was noted

that a sum of ₹9 crores is lying with Voith Hydro. Accordingly, subject to

Madhya Bharat depositing an amount of ₹1.5 crores, the enforcement of the

impugned Award was stayed.

O.M.P. (COMM) 452/2019 Page 7 of 30

SUBMISSIONS ON BEHALF OF MADHYABHARAT

21.Mr. Ratan K. Singh, senior counsel appearing on behalf of Madhya

Bharat has made the following submissions in support of the present petition.

22.CLAIMI-COMPENSATION IN RESPECT OF ENGINEERINGPRICE FOR

THE WORKS COMPLETED

i.The Arbitral Tribunal awarded excessive value for the engineering

component for the Supply Contract. Voith Hydro claimed 6% of the

Contract value towards engineering component. It was the case of

Madhya Bharat that the actual cost could not exceed 1%, and its

Expert opined that it should not exceed 4%. The Arbitral Tribunal

nevertheless accepted 6% based on the report of the Expert of Voith

Hydro.

ii.The research paper relied upon by the Voith Hydro’s Expert states

that Engineering, Procurement and Construction management

together constitute 7%. As 4% has already been awarded towards

procurement, the balance 3% would cover engineering and

construction management. The award of 6% towards engineering is

contrary to the evidence and the material relied upon.

iii.The engineering cost forms part of the materials manufactured costs

awarded under Claim II, based on purchase orders placed by Voith

Hydro on its sub-suppliers. TheAward results in overlap and double

recovery.

23.CLAIMII–COMPENSATION FOR MATERIALSMANUFACTURED

i.Voith Hydro initially claimed that the turbine housing was ready and

available but later admitted that it had been diverted. Despite this,

O.M.P. (COMM) 452/2019 Page 8 of 30

the Arbitral Tribunal awarded ₹89,19,752/- towards its

manufacturing cost and also granted storage charges, relying on

category-wise values in the Joint Expert Report. Having declined

relief for other diverted items, the award of manufacturing and

storage costs for a diverted turbine housing is contradictory and

unsustainable.

ii.The Arbitral Tribunal awarded ₹1,67,37,958/- towards five items

(Inspection Platform, Generator Coolers, Dovetail Bars, Generator

Shafts and Stator Frames), which were admitted to be available with

Voith Hydro. However, no direction was issued for their delivery to

Madhya Bharat. The award of manufacturing cost without directing

delivery is unsustainable.

iii. A sum of ₹2,21,35,101/- was awarded, including ₹69,41,313/-

(cable system) and ₹20,48,071/- (distributor pipes), though these

were only partially complete (85% and 15%). No delivery was

directed. Further, the letter dated 22

nd

February, 2019 sent by Voith

Hydro did not confirm their availability. The award of cost without

proof of completion or direction for delivery is untenable.

24.CLAIMIII–COMPENSATION FOR ON-SITE EXPENSES

The amounts awarded by the Arbitral Tribunal under this claim were

based on ERP extracts which are unreliable in nature, in absence of

evidence of the person who printed the ERP extract.

25.CLAIMIV–COMPENSATION FOR OFF-SITE EXPENSES AND LOSS OF

PROFITS

i.Loss of profit was awarded without any proof. TheArbitral Tribunal

accepted non-disclosure on grounds of confidentiality, though a

O.M.P. (COMM) 452/2019 Page 9 of 30

claimant must substantiate actual loss. Even the Society of

Construction Law Delay and Disruption Protocol, 2017 recognises

that confidentiality may have to be sacrificed to prove such claims.

Loss of profit on unexecuted work cannot be granted in absence of

proof.

ii.Voith Hydro had earlier set up a case of suspension of the Contract.

It was only in rejoinder, that Voith Hydro changed its case to that of

termination. Therefore, theArbitral tribunal could not have awarded

loss of profits on the premise that the Contract stood terminated.

26.INTEREST

i.The Arbitral Tribunal has awarded post-award interest at a higher

rate of 12% per annum without furnishing any reasons for the same.

27.COSTS

i.The Arbitral Tribunal awarded the entire costs of arbitration to

Voith Hydro solely on the basis that it partly succeeded and that

Madhya Bharat’s counterclaims were rejected. Costs must be

awarded on a reasoned consideration of conduct and circumstances;

partial success alone does not justify grant of entire costs.

SUBMISSIONS ON BEHALF OF VOITHHYDRO

28.Mr. Rajshekhar Rao, senior counsel appearing on behalf of Voith

Hydro, counters the aforesaid submissions by submitting as under:

29.CLAIMI-COMPENSATION IN RESPECT OF ENGINEERINGPRICE FOR

THE WORKS COMPLETED

i.Contention of Madhya Bharat that the Arbitral Tribunal awarded

price of engineering component at 6% by solely relying on the claim

O.M.P. (COMM) 452/2019 Page 10 of 30

by Voith Hydro and its expert report is misconceived. Report

submitted by Experts of both the parties stated that the percentage

of engineering costs ranged from 4% to 6%. The Arbitral Tribunal

assessed the evidence including the Experts’ reports, as well as cross

examination of the said Experts to arrive at the figure of 6%.

ii.Insofar as the objection of Madhya Bharat with regard to the

duplication in awarding engineering costs is concerned, the claim

for engineering costs cannot be clubbed with the costs of materials

manufactured. The cost for manufacturing and engineering was

different under the Contract and therefore there exists no duplication

of costs.

30.CLAIMII–COMPENSATION FOR MATERIALSMANUFACTURED

i.The record demonstrated continuous execution activity including

technical meetings, progress reports, purchase orders, inspection

calls and manufacturing updates which was without objection from

Madhya Bharat. Critical components were ready for inspection, yet

Madhya Bharat neither sought inspection nor delivery, despite being

informed of storage constraints and financial implications.

ii.The plea for delivery of the materials arose belatedly after it

emerged in cross-examination that part of the Contract had been

awarded to a third party. Both Experts had already discounted

storage and recommissioning costs, and directing delivery after

nearly a decade would generate fresh disputes.

O.M.P. (COMM) 452/2019 Page 11 of 30

31.CLAIMIII–COMPENSATION FOR ON-SITE EXPENSES

i.The contention that the Award is contrary to the evidence on record,

as the identity of the person who generated the ERP extracts was not

established, essentially seeks a reappreciation of evidence, which is

impermissible in proceedings under Section 34 of the Act. In any

case, the ERP extracts had been verified by the project team of Voith

Hydro, and the same stood confirmed during the cross-examination

of the witness of Voith Hydro, Mr. Sundararaman.

32.CLAIMIV–COMPENSATION FOR OFF-SITE EXPENSES AND LOSS OF

PROFITS

i.The Arbitral Tribunal awarded loss of profit after a detailed, fact-

specific analysis based on Expert evidence. Two quantum Experts

were appointed, reports and a joint report were exchanged and oral

evidence was led. The quantification was thus grounded in evidence

and not made on a notional or automatic basis.

ii.Reliance placed onMcDermott International Inc.v.Burn

Standard Co. Ltd.

1

(‘McDermott International’)andNTPC

Limited v. Voith Hydro JV,OMP (COMM) 16/2017decided on2

nd

July, 2019(‘NTPC Limited’), to submit that quantification of

damages and choice of methodology fall within the domain of the

Arbitral Tribunal and do not warrant interference.

33.INTEREST

1

(2006) 11 SCC 181.

O.M.P. (COMM) 452/2019 Page 12 of 30

i.The Arbitral Tribunal has awarded interest in accordance with

prevailing commercial rates. A Court exercising jurisdiction under

Section 34 of the Act would ordinarily not interfere with the rate of

interest awarded unless the same is contrary to the terms of the

Contract, or shocks the conscience of the Court.

34.COSTS

i.TheArbitral Tribunal is vested with discretion under Section 31Aof

the Act to determine the allocation of costs. In view of the settled

legal position, the award of costs cannot be assailed in the present

proceedings.

ANALYSIS ANDFINDINGS

35.I have heard counsel for the parties and perused the material on record.

36.The Supreme Court has defined the scope of interference by courts in

a petition challenging an Award passed by theArbitral Tribunal under Section

34 of the Act in a plethora of judgments.

37.InAssociate Buildersv.Delhi Development Authority

2

(‘Associate

Builders’), the Supreme Court made the following observations:

“31.The third juristic principle is that a decision which is perverse or so

irrational that no reasonable person would have arrived at the same is

important and requires some degree of explanation. It is settled law that where:

(i) a finding is based on no evidence; or

(ii) an Arbitral Tribunal takes into account something irrelevant to the decision

which it arrives at; or

(iii) ignores vital evidence in arriving at its decision, such decision would

necessarily be perverse.”

[emphasis supplied]

2

(2015) 3 SCC 49.

O.M.P. (COMM) 452/2019 Page 13 of 30

38.The findings inAssociate Builders(supra) were reaffirmed by the

Supreme Court inSsangyong Engineering and Construction Company

Limitedv.National Highways Authority of India (NHAI)

3

(‘Ssangyong’).

Relevant observations of the Supreme Court inSsangyong(supra) are set out

below:

37. Insofar as domestic awards made in India are concerned, an additional

ground is now available under sub-section (2-A), added by the Amendment Act,

2015, to Section 34.Here, there must be patent illegality appearing on the face

of the award, which refers to such illegality as goes to the root of the matter

but which does not amount to mere erroneous application of the law.In short,

what is not subsumed within “the fundamental policy of Indian law”, namely,

the contravention of a statute not linked to public policy or public interest,

cannot be brought in by the backdoor when it comes to setting aside an award

on the ground of patent illegality.

38. Secondly,it is also made clear that reappreciation of evidence, which is

what an appellate court is permitted to do, cannot be permitted under the

ground of patent illegality appearing on the face of the award.

[emphasis supplied]

39.The Supreme Court has reiterated the same principles recently inOPG

Power Generation Private Limitedv.Enexio Power Cooling Solutions India

Private Limited

4

.

“Scope of interference with an arbitral award

74. The aforesaid judicial precedents make it clear that while exercising power

under Section 34 of the 1996 Act the Court does not sit in appeal over the arbitral

award. Interference with an arbitral award is only on limited grounds as set out

in Section 34 of the 1996 Act.A possible view by the arbitrator on facts is to be

respected as the arbitrator is the ultimate master of the quantity and quality of

evidence to be relied upon. It is only when an arbitral award could be

categorized as perverse, that on an error of fact an arbitral award may be set

aside.Further, a mere erroneous application of the law or wrong appreciation

3

(2019) 15 SCC 131.

4

(2025) 2 SCC 417.

O.M.P. (COMM) 452/2019 Page 14 of 30

of evidence by itself is not a ground to set aside an award as is clear from the

provisions of sub-section (2-A) of Section 34 of the 1996 Act.”

[emphasis supplied]

40.On the aspect of determination of damages, the Supreme Court in

McDermott International(supra), has held that the method to compute

damages and quantum thereof squarely falls within the domain of theArbitral

Tribunal. Paragraphs 109 and 110 from the said judgment are set out below:

“109. Sections 55 and 73 of the Indian Contract Act do not lay down the mode

and manner as to how and in what manner the computation of damages or

compensation has to be made. There is nothing in Indian law to show that any

of the formulae adopted in other countries is prohibited in law or the same would

be inconsistent with the law prevailing in India.

110.As computation depends on circumstances and methods to compute

damages, how the quantum thereof should be determined is a matter which

would fall for the decision of the arbitrator.We, however, see no reason to

interfere with that part of the award in view of the fact that the aforementioned

formula evolved over the years, is accepted internationally and, therefore,

cannot be said to be wholly contrary to the provisions of the Indian law.”

[emphasis supplied]

41.Similarly, the Coordinate Bench of this Court inNTPC Limited(supra),

has held that where the Tribunal has evaluated evidence and materials

produced before it determining the quantum of compensation on the basis of

expert evidence, the Court in exercise of jurisdiction under Section 34 of the

Act cannot re-appreciate evidence. Paragraph 73 is set out below:

“73. This Court finds no infirmity with the aforesaid view, which would warrant

any interference in these proceedings. Apart from the above, it is also seen that

the Tribunal had evaluated the evidence and materials produced before it for

determining the quantum of compensation. It had also relied on the expert

evidence led by the Claimants in this regard.The scope of the present

proceedings does not entail reappreciation of evidence.Suffice it to state that

the impugned award is based on sufficient material and evidence and, therefore,

the same cannot be interfered with in these proceedings.”

[emphasis supplied]

42.The appeal against the aforesaid judgment has been dismissed by the

O.M.P. (COMM) 452/2019 Page 15 of 30

Division Bench and subsequently, the Special Leave Petition has also been

dismissed by the Supreme Court.

43.With this background, I shall now proceed to apply the aforesaid

principles in the facts and circumstances of the present case to deal with the

objections raised in each of the claims.

CLAIMI-COMPENSATION FOR ENGINEERINGWORKSCOMPLETED

44.Under this Claim, Voith Hydro sought compensation for (i) executed

engineering, (ii) cost of unused engineering workforce during suspension of

the project, along with price adjustment.

45.The amounts claimed by Voith Hydro and amounts awarded by the

Arbitral Tribunal under Claim I are tabulated below:

INR USD EUR

Amounts Claimed 3,11,82,3391,08,921 42281

Amounts Awarded 2,57,13,2671,08,840 42249

46.It was an admitted position that the Contract in the present case did not

provide any cost break-up for the engineering component. Voith Hydro sought

remuneration for the engineering works executed till November, 2013 by

claiming the engineering component to be 6% of the total Supply Contract

value, based on the opinion of its Expert, Mr. Nigel Grout.

47.Per Contra, the Expert of Madhya Bharat, Mr. John Prudhoe, opined

that engineering component should not be more than 4% of the total value of

the Contract.

48.TheArbitral Tribunal accepted the value of 6% given on behalf of Voith

Hydro and on that basis, awarded amounts in favour of Voith Hydro.

O.M.P. (COMM) 452/2019 Page 16 of 30

49.On behalf of Madhya Bharat, it is contended that the Arbitral Tribunal

has wrongly accepted the engineering component at 6% of the Contract value.

50.In paragraph 1.30 of the Report given by the Expert of Voith Hydro,

Mr. Nigel Grout, on 25

th

February, 2018, he has opined that after deduction of

procurement and management charges of 3-4%, the engineering element

would be to the tune of 6% of the total value of the Contract. Mr. Nigel Grout

has placed reliance on three research papers to come to conclusion that 6%

would be reasonable consideration of the engineering component. Mr. Nigel

Grout was cross-examined by counsel for Madhya Bharat and in the cross-

examination, he has maintained his stand that the engineering component

should be at 6% of the total Contract value.

51.Mr. Ratan Singh, Senior Counsel appearing for Madhya Bharat has

drawn attention of the Court to questions 92 to 94 of the cross examination of

Mr. Nigel Grout and the responses thereto. For the sake of convenience, the

said questions from the cross-examination are set out below:

“Q.92. What is the percentage of your total assessment for engineering,

procurement and construction management?

Ans.I have made an assessment of 6% for the engineering. I will have to check

about procurement and construction management.

Q.93Is it correct that in the Joint Report you have assessed 15% for

procurement alone (Sl. No. 13 of Joint Report)?

Ans.15% you are referring to is taken from the price variation formula in the

Contract and is not an assessment by me. That 15% has been merely used for the

calculation of materials manufactured.

Q.94Therefore this is still an assessment by you for procurement, isn’t it?

Ans.No. 15% that you have referred to is purely a percentage shown in cost

adjustment formula. The assessment I have made with relation to the engineering

percentage has already been deducted for procurement and construction

management. Even after these deductions, the engineering percentage from the

studies shows engineering percentage in the region of 6%. The procurement and

O.M.P. (COMM) 452/2019 Page 17 of 30

management percentage deductions amount to 3% to 4% in the studies that have

been referred to.”

52.A perusal of the aforesaid cross-examination makes it abundantly clear

that in the opinion of Mr. Nigel Grout, the Expert of Voith Hydro, the

assessment of 6% is in respect of the engineering costs, excluding

procurement and construction management.

53.In this regard, the finding of the Arbitral Tribunal given in paragraphs

182 and 183 are set out below:

182. The reason for disagreement by the Respondent’s expert is “in the absence

of disclosed documents to show what the actual engineering component is in the

Supply Contract Price, JP believes the percentage is less than 6% particularly

of the engineering on the Rongnichu project is similar to other projects of the

Claimant which would reduce the engineering man hours”. When both parties

that the contract did not contain a separate break up for engineering, then it is

a matter of estimation. There is no admission by the Claimant that its tender

breakup would have contained the engineering component separately. When it

is not separately identified in the contract, then it is also reasonable to assume

that it would not have been part of the tender break up. The Claimant’s argument

that engineering is recoverable as part of the price and not separately provided

is also not questioned by the Respondent. While the Respondent accepts 4% but

does not agree to 6% also on the ground that the present project is similar to the

other projects of the Claimant and thus due to overlap of engineering work, the

percentage is lesser. This argument is attractive, but cannot be accepted.There

is no admission by the Claimant that the other projects are similar to the

present project and there is also evidence lead to that effect. All Hydro Power

projects are unique and are governed by specificities like water levels (head),

water flow conditions including seasonal variations etc., water conditions e.g.

silt/impurities contents etc., topographical, geological, hydrological conditions

as well as operational regime of the power plant e.g. base load or peak load

operations, specific site conditions e.g. cavern type or surface type etc. Thus,

equipment requires tailor made engineering to the specific requirements.

183. Even if there is some overlap of Engineering work between its project and

other works, the fact also is that the hydropower projects are very topographic

specific.The overall engineering of a hydropower project would have to be

done keeping in mind the specific topography, the need and the size of the

project.It cannot be assumed that the overlap would be to the extent that it

O.M.P. (COMM) 452/2019 Page 18 of 30

would reduce the engineering percentage from 6 to 4%.Therefore, the

Tribunal accepts the Engineering percentage at 6%.On this basis and on the

admitted percentage completed of 47.04%, the Tribunalholds the engineering

value of work completed to beINR 18,476,885/-, USD 92,316 & EUR 35,834

towards claim for completed engineering in the following manner:

Supply Contract

Value (A)

Engg

Component

(in %) (B)

Contract Engg

Value in (%)

(C = A*B)

Engg Work

Completion

(in %) (D)

Value of

Completed

Engg work (E

= D*C)

INR 65,46,51,553.000.06 3,92,79,093.180.47 1,84,76,885.43

USD 32,70,819.00 0.06 1,96,249.14 0.47 92,237.10

EURO 12,69,646.00 0.06 76,178.76 0.47 35,804.02

[emphasis supplied]

54.The Arbitral Tribunal has given a categorical finding that different

hydro power projects are unique and topography specific, therefore, it cannot

be said that there would be an overlap of the engineering works. The Arbitral

Tribunal has also noted that both the Experts in their Joint Expert Report have

accepted that 47.04% of the engineering works had been completed at the

time of suspension of the Contract by Voith Hydro.

55.The Arbitral Tribunal has, after carefully analysing the evidence of the

parties and reports given by both the Experts, concluded that engineering

component would be 6%. The Arbitral Tribunal has given cogent reasons for

agreeing with the report of Voith Hydro’s Expert and disagreeing with

Madhya Bharat’s Expert in the paragraphs set out above.

56.It is a settled position of law that the Arbitral Tribunal is the master of

evidence. This Court in exercise of jurisdiction under Section 34 of the Act

cannot reassess or reappreciate the evidence led before the Arbitral Tribunal.

57.The next objection raised by Madhya Bharat is that the awarded amount

towards engineering component is already covered under Claim II, in respect

of the costs of material manufactured, which is inclusive of the costs of

O.M.P. (COMM) 452/2019 Page 19 of 30

engineering.

58.There is nothing to show from the record that claim for engineering

costs has been clubbed with the claim of costs of materials manufactured.

Therefore, it cannot be said that engineering costs, which are the subject

matter of Claim I, have also been awarded as a part of the costs of materials

manufactured under Claim II.

59.In view of the discussion above, I do not find any infirmity in the

findings of the Arbitral Tribunal in respect of Claim I.

CLAIMII – MATERIALSMANUFACTURED

60.Under this claim, Voith Hydro sought compensation for (i) material

manufactured or partly manufactured, (ii) cost incurred in storage, handling,

preserving and scrapping of such material, along with price adjustment.

61.The amounts claimed by Voith Hydro and amounts awarded by the

Arbitral Tribunal under Claim II are tabulated below:

INR

Amounts Claimed 22,99,98,495

Amounts Awarded 6,32,09,933

62.As per Voith Hydro, the manufacturing of the materials commenced

soon after the effective date of Contract and majority of the material was fully

or partly manufactured in November, 2013,i.e.the date when notice of

suspension was given. Further, the material was customised for the work

package under the Contract and could not be used for another project.

63.Voith Hydro had divided this claim into seven categories depending

upon the stage of manufacturing, as stated below:

O.M.P. (COMM) 452/2019 Page 20 of 30

i.Material Status Category-I: Material completely made ready by the

Voith Hydro’s sub-supplier and available.

ii.Material Status Category-II: Material completely made ready by the

Voith Hydro’s sub-supplier and scrapped.

iii.Material Status Category-III: Material completely made ready by the

Voith Hydro’s sub-supplier and diverted.

iv.Material Status Category-IV: Material partially made by the Voith

Hydro’s sub-supplier and available.

v.Material Status Category-V: Material partially made by the Voith

Hydro’s sub-supplier and scrapped.

vi.Material Status Category-VI: Material partially made by the Voith

Hydro’s sub-supplier and diverted.

vii.Material Status Category-VII: Order placed, engineering done.

Under planning and manufacturing at sub-suppliers.

64.The Arbitral Tribunal undertook a detailed category-wise examination

of seven sub-categories of materials, including fully manufactured, scrapped

and diverted items, and evaluated methodologies submitted by both the

Experts. To adjust the said claim, the Arbitral Tribunal substantially accepted

the Purchase Order method (‘PO Method’) based valuation as recommended

by the Expert of Madhya Bharat and rejected speculative valuation under the

Billing Break-Up method (‘BBU method’) as proposed by the Expert of Voith

Hydro. For the fixed portion for procurement, the Arbitral Tribunal adopted

the rate of 4% as agreed by the Experts of the parties.

65.In paragraph 238 of the Award, the Arbitral Tribunal has summarised

the claim of Voith Hydro, assessment made by the respective Experts and the

O.M.P. (COMM) 452/2019 Page 21 of 30

amounts ultimately awarded by the Arbitral Tribunal under each of the sub-

categories, as set out below:

66.From the table above, it is manifest that the amounts awarded by the

ArbitralTribunal are substantially closer to the assessment made by the Expert

of Madhya Bharat.

67.The challenge in the present petition by Madhya Bharat is confined to

Material Status (‘MS’) Categories I, II and IV.

68.In respect of MS Category I, it is submitted that Arbitral Tribunal has

awarded a sum of ₹89,90,752/- in respect of the cost of manufacturing of

turbine housing along with storage cost, even though the same has been

diverted by Voith Hydro. Insofar as MS Category II is concerned, it is

submitted by Madhya Bharat that five items worth ₹1,67,37,958/- that were

available with Voith Hydro have not been directed to be delivered to Madhya

O.M.P. (COMM) 452/2019 Page 22 of 30

Bharat. Insofar as MS Category IV is concerned, which includes cable system

and distribution pipes, the Tribunal has awarded ₹2,21,35,101. However, the

said items were not directed to be delivered to Madhya Bharat.

69.The aforesaid objections of Madhya Bharat have been duly dealt by the

Arbitral Tribunal in paragraph 239 to 241 of the award which are set out

below:-

“239. In the course of arguments (certainly not raised in pleadings), the

Respondent prayed that if the Tribunal would be compensating the Claimant for

the materials manufactured then those materials should also be directed to given

to the Respondent. In response to this oral argument, the Claimant has submitted

that both the experts have discounted the storage, preservation and

refurbishment costs of the above items and should the Tribunal direct the

Claimant to provide the said materials to the Respondent, then the Respondent

should also be directed to bear the cost for storage, preservation and

refurbishment as well.

240. The Tribunal notices that this is a new and unpleaded case of the

Respondent. The contract is already over and the Respondent did not make any

claim on the Respondent for these goods. A relief not prayed for cannot be

granted. Since there is no pleading, there is also no evidence and it would not be

just to allow such kind of prayer to be made in oral submissions.

241. Even theoretically, liability is on the Claimant to limit its loss and it cannot

be expected to preserve those completed items and incur expenditure in storage,

security etc. If the claim of the Respondent is to be allowed, there may be other

attendant costs like transportation, security. Storage which would result in

further claims and counter claims. For these reasons also, it would not be

possible to consider this prayer of the Respondent raised during oral

submissions and is rejected.”

70.The Arbitral Tribunal has observed that the submission with regard to

delivery of the manufactured materials was made by Madhya Bharat only at

the stage of final arguments. No pleading in this regard was made, nor was

any evidence lead. The Arbitral Tribunal has correctly held that Voith Hydro

could not be expected to preserve the completed engineering items and incur

additional costs towards storage, security, etc.

O.M.P. (COMM) 452/2019 Page 23 of 30

71.The Arbitral Tribunal also notes that the amounts that were awarded in

favour of Voith Hydro were after discounting the storage, preservation and

refurbishment costs and if the aforesaid contention of Madhya Bharat was to

be accepted, Madhya Bharat would have been liable to pay not only the

storage charges but also other attendant costs like transportation and security.

72.Accordingly, I do not find any error in the findings of the Arbitral

Tribunal in respect of Claim II.

CLAIMIII–COMPENSATION FOR ON-SITEEXPENSES

73.Under this claim, Voith Hydro sought compensation towards on-site

expenses, including site man-hours and site running expenses, for both the

pre-suspension and post-suspension period.

74.The amounts claimed by Voith Hydro and amounts awarded by the

Arbitral Tribunal under Claim III are tabulated below:

INR

Amounts Claimed 1,30,57,815

Amounts Awarded 91,71,305

75.The Arbitral Tribunal after analysing the evidence came to the

conclusion that even during the suspension period Voith Hydro was required

to maintain safety infrastructure, project management teams and other

establishment staff thereby incurring actual standby expenses. The Arbitral

Tribunal calculated the cost, based on the report of the experts of the parties.

76.Madhya Bharat submits that the Arbitral Tribunal has wrongly allowed

the aforesaid claim based on ERP extracts when Voith Hydro’s own witness

stated that he did not know the identity of the person who took the printout of

O.M.P. (COMM) 452/2019 Page 24 of 30

ERPextracts.Accordingly, theArbitral Tribunal has awarded on-site expenses

without any proof.

77.The objection raised on behalf of the Madhya Bharat has been

specifically dealt with by the Arbitral Tribunal in paragraph 194 of the Award

which is set out below:

“194. According to the Respondent, the Claimant can be awarded only actual

cost for the hours worked and the hours claimed are also not legally proved in

absence of the evidence of the person who printed the ERP Extract. However, in

view of evidence of Mr. K.A. Sudararaman (CW-3), there appears to be no merit

in the submission that the ERP Extract is not reliable because it is not the direct

output of the software maintaining, the ERP. CW-3 clearly stated that he does

not know who took the printout of the ERP Extract. In view of evidence of CW -

3 and the circumstances, the ERP records appear to be reliable, being the output

of the software used for maintaining the ERP.”

78.In the opinion of this Court, the Tribunal has correctly placed reliance

on ERP records produced by Voith Hydro to determine the claim for site man-

hours and site running expenses pre-suspension and post-suspension of the

Contract. Merely because Voith Hydro’s witness did not know the name of the

person who took the printout of ERP extract cannot be the basis to disregard

the evidence.

79.In the opinion of this Court, the aforesaid objection of Madhya Bharat

would require this Court to re-appreciate the evidence lead before theArbitral

Tribunal which is impermissible.

80.In view of the discussion above, no fault can be found with the findings

of the Arbitral Tribunal in respect of Claim III.

CLAIMIV-COMPENSATION FOR OFF-SITEEXPENSES ANDLOSS OFPROFIT

81.Under this claim, Voith Hydro sought compensation towards off-site

expenses and loss of profit which includes (i) project manager (‘PM’) man-

O.M.P. (COMM) 452/2019 Page 25 of 30

hours pre-suspension (ii) project manager (‘PM’) man-hours pre-suspension

(iii) license fee (iv) offsite overheads and (v) computation of loss of profits.

The amounts claimed by Voith Hydro under each of the sub categories under

this claim were as follows:

Head INR USD EUR

PM Man-hours (pre-suspension)5,385,600 - -

PM Man-hours (post-suspension)949,575 - -

Compensation for off-site

overheads, license fees and loss of

profit for the unexecuted

value/portion of the Contract

175,696,826932,760362,073

Total 182,032,001932,760362,073

82.The amounts claimed by Voith Hydro and amounts awarded by the

Arbitral Tribunal under Claim IV are tabulated below:

INR USD EUR

Amounts Claimed 18,20,32,001 9,32,760 3,62,073

Amounts Awarded 8,19,42,196 3,81,421 1,48,057

83.Madhya Bharat challenges the finding of the Arbitral Tribunal on the

ground that loss of profit has been awarded without any proof submitted by

Voith Hydro.

84.On the aspect that Voith Hydro has failed to establish that it suffered

losses, the Arbitral Tribunal has returned the finding in paragraph 143, which

is set out below:

“143. In the present case the facts are different, both on pleadings and evidence.

The Claimant has supported its case and the Respondent has not been able to

O.M.P. (COMM) 452/2019 Page 26 of 30

establish that the Claimant has not suffered any loss. Contracts and business

arrangements can be of various types and in all situations, it is not possible to

assess the loss or damage with exact certainty. In such a situation, it is quite

usual to take help of Experts for quantifying the damages / loss as has been done

in the present case.”

85.Another objection taken on behalf of Madhya Bharat is that Voith

Hydro had earlier set up a case of suspension of Contract. It was only in

rejoinder, that Voith Hydro changed its case to that of termination. Therefore,

theArbitral tribunal could not have awarded loss of profits on the premise that

the Contract stood terminated.

86.In this regard, the Arbitral Tribunal observed that it emerged only

during the cross-examination of Madhya Bharat’s witness that the Contract

had been awarded to a third party on 17

th

February, 2017 and 28

th

February,

2017, a fact which was neither disclosed in the pleadings nor in the

examination-in-chief. Noting that the Contract had remained suspended for

over five years without either party seeking specific performance, theArbitral

Tribunal has correctly concluded that the Contract was no longer subsisting.

The findings of the Arbitral Tribunal in this regard, as recorded in paragraphs

105 and 106 of the Award, are set out below:

105.In the course of trial, it emerged in the cross-examination of the

Respondent’s witness Mr. Chhanghani (cross examination on 06.08.2018) that

the Respondent has awarded the work forming part of the Claimant's contract to

a third party on 17.02.2017 and 28.02.2017 (which are prior to the date of filing

of the Statement of Defence, though not disclosed). This aspect was not revealed

either in the pleadings or in the examination in chief of the Respondent's

witnesses and the new contracts were also not brought on record.

106.The Tribunal finds that the contract has remained suspended for more

than 5 years at the time of filing of the present claim, and the Respondent having

already appointed a new contractor, it is obvious that the Respondent does not

intend to continue with the present contract with the Claimant. The appointment

of the third party contractor was done by the Respondent without notice to the

O.M.P. (COMM) 452/2019 Page 27 of 30

Claimant or formally terminating the contract. Neither party has sought specific

performance of the contract. Under such circumstances, it would be reasonable

for this Tribunal to proceed on the basis that the contract is no more surviving

any more for all practical purposes and there is no further performance either

demanded. or expected by either party. Whatever the claims of the Claimant or

the Respondent are would have to be determined on the basis of which party is

in breach of the contractual obligations and the principles of Section 73 of the

Indian Contract Act, 1872. This aspect is being also dealt with while dealing

with the quantum claims of the Claimant.”

87.Yet another objection raised by Madhya Bharat in respect of loss of

profits is that Voith Hydro withheld tender break-ups and cost account

statements by invoking confidentiality, and therefore, the quantum of

damages assessed by the experts was speculative in nature.

88.The Arbitral Tribunal has rejected the objection and observed that the

absence of tender break-ups could not by itself defeat the claim for damages,

particularly in view of the assessment undertaken by quantum experts. The

Arbitral Tribunal observed that such tender documents were internal pre-

contract workings without any standard methodology, and therefore, reliance

on expert analysis based on available material was justified. Relevant

paragraphs 159 and 160 of the Award are set out below:

159. … The Claimant has not submitted the tender breakups or its price breakups

for claiming its losses. Even if we assume that the Claimant would have

submitted it, then it is not that the Respondent would have accepted such tender

breakup and loss computation thereof. While the Claimant is not relying upon its

tender breakup to justify a particular loss claim, the Respondent is seeking to

rely upon its absence to question the Claimant's claim. It is open to the

Respondent to question those bases of the Claimant. Such tender break up, if it

existed, would be a pre-contract internal working of the Claimant. There is no

standard format or methodology of this break up and it may be based on very

broad calculations. Mr. Prudhoe, who has an experience of acting as an expert

in many arbitrations, could cite only one example where a tender was produced

and that too it was a case, the parties did not have any other engagement

ongoing.

O.M.P. (COMM) 452/2019 Page 28 of 30

160. More so, in the present case, both parties have, presented their experts to

deal with the aspect of quantum who have given their views on the different

claims. Since the Claimant is not relying upon the tender break up for its claims,

the Tribunal would be adjudging the Claimant's claim on its own merits and by

examining the correctness of the basis on which those claims have been made by

the Claimant and greater scrutiny with due caution.

89.For determination of the claim on loss of profits, the Arbitral Tribunal

noted that in the Statement of Claim Voith Hydro has claimed 15% of profits

which has been accepted by the Expert of Voith Hydro. On the other hand, the

Expert of Madhya Bharat in his report fixed it at 5% profit. The Arbitral

Tribunal rejected the claim of 15% of profit as claimed by Voith Hydro and

awarded compensation for loss of profits at rate of 6%. Relevant extracts from

the findings of the Arbitral Tribunal are set out below:

“171. … The Tribunal also feels that in project involving competitive bidding, a

profit margin as high as 15% claimed by the Claimant is not possible,

particularly since the Tribunal takes into account the non-filing of tender

breakup by the Claimant to support its claim for profit percentage of 15% and

holds the same against 1t. Moreover, the Hon'ble Supreme Court in case of Barat

Coking Coal (Supra) has rejected the claim for loss of profit @ 15% as

unreasonable. Insofar as the objection that the loss of profit claim cannot be

granted in case of a suspension is also rejected in view of the Tribunal's decision

on the aspect relating to suspension and termination.

172. In this backdrop, the Tribunal rejects the Claim of 15% of Profit setup by

the Claimant and awards profit @6% considering it to be reasonable. Since the

claim under this head is to be calculated on unexecuted value of the Contract,

and therefore the unexecuted value of Contract is to be determined, which would

be determined in the section below”

90.As is manifest from the aforesaid extracts of the Award, the Arbitral

Tribunal has given cogent reason for awarding loss of profits at 6% of the

unexecuted part of the Contract value.

91.With respect to amounts awarded towards off-site overheads, the

O.M.P. (COMM) 452/2019 Page 29 of 30

Arbitral Tribunal analysed the report of the Expert of Voith Hydro, as well as

the Expert of Madhya Bharat. Madhya Bharat’s Expert has assessed 3%

towards off-site overheads, whereas the Expert of Voith Hydro has assessed

the same at 10%. The Arbitral Tribunal has held 6% foroff-site overheadson

the unexecuted portion of the Contract. Paragraph 263 from the Award is set

out below:

“263. Offsite-overheads

Mr. Grout in his report has supported the claim of 10% for off-site overheads.

However, Mr. Prudhoe in his report considered 10% as too high and assessed

the same as 3%. Moreover, the Tribunal feels that 3% overheads assessed by Mr.

Prudhoe is too conservative. In this backdrop, and in absence of any document

to support 10% claim of the Claimant, the Tribunal wishes to adopt middle path

and holds 6% to be a reasonable overhead. The Claimant is entitled to off-site

overheads @6% on the unexecuted portion.”

92.In view of the discussion above, I do not find any perversity or patent

illegality in the findings of the Arbitral Tribunal in respect of Claim IV.

INTEREST

93.Even though Voith Hydro had claimed pre-award interest at the rate of

12% and post-award interest at the rate of 18%, the Arbitral Tribunal has

allowed 8% pre-award interest and 12% post-award interest. It is submitted

on behalf of Madhya Bharat that 12% post-award interest awarded by the

Arbitral Tribunal is at a higher rate without any discussion or finding.

94.It is correctly pointed out on behalf of Voith Hydro that this objection

has not been raised by Madhya Bharat in the petition.

95.In the opinion of this Court, the post-award interest at the rate of 12%

per annum is not excessive and hence, does not require interference under

Section 34 of the Act.

O.M.P. (COMM) 452/2019 Page 30 of 30

COSTS

96.Insofar as the aspect of costs is concerned, theArbitral Tribunal has the

sole discretion to allocate the cost of arbitration process in terms of Section

31A of the Act.

97.In the present case, while the Arbitral Tribunal has directed that the

entire fees and expenses of the Arbitral Tribunal was payable by the Madhya

Bharat. However, insofar as the legal expenses pertaining to lawyers’fees and

fees of the experts, the Arbitral Tribunal has directed that each party would

bear its own expenses.

98.In the opinion of this Court, the aforesaid finding is just and reasonable

and no ground for interference has been made out on behalf of Madhya

Bharat.

CONCLUSION

99.In light of the discussion above, I am of the view that Madhya Bharat

has failed to make out any ground for interference with the impugned Award

under Section 34 of the Act.

100.Accordingly, the petition is dismissed.

AMIT BANSAL

(JUDGE)

MAY 26, 2026

Vivek/-