As per case facts, the appellant terminated a concession agreement with the respondent, leading to disputes over project completion and termination payments. The respondent initiated arbitration, where the appellant repeatedly ...
2026 INSC 590
1
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 10877 OF 2018
MADHYA PRADESH ROAD DEVELOPMENT
CORPORATION LTD. THROUGH ITS
MANAGING DIRECTOR …APPELLANT
VERSUS
M/S JABALPUR CORRIDOR PVT. LTD.
THROUGH ITS MANAGING DIRECTOR …RESPONDENT
J U D G M E NT
J.K. MAHESHWARI, J .
1. Arbitration in India has not failed, however Courts sometimes
have failed arbitration in India. Even the Government’s role cannot
be ignored. A single doubtful precedent in the arbitration field has
the potential to cast a shadow on its viability in India and its impact
on the ease of doing business in India. There is no gainsaying that
judicial interference in alternative dispute resolution has often
been a cure without a disease in India. In this context, it is high
time that judges realize that certainty, uniformity and finality are
also cherished values.
2
2. This appeal has been filed against the impugned judgment
and final order dated 21.12.2016 passed by the High Court of
Madhya Pradesh, bench at Jabalpur (hereinafter referred to as
“High Court”) in Arbitration Appeal No. 23 of 2016, wherein the
High Court did not find any ground to interfere in the matter while
exercising its appellate jurisdiction under Section 37 of the
Arbitration and Conciliation Act, 1996 (hereinafter referred to as
“1996 Act”). As such, the High Court affirmed the order of the 10
th
Additional District Judge, Bhopal (hereinafter referred to as
“District Court”) dated 22.02.2016 in Arbitration Case No.
02/2015 dismissing the application under Section 34 of the 1996
Act filed by the Appellant seeking setting aside of the majority
award of the Arbitral Tribunal dated 22.08.2014 (hereinafter
referred to as “Arbitral Award”). The High Court while dismissing
the appeal filed under Section 37 of the 1996 Act held as under:
“68. Accordingly, in the facts and circumstances of the case,
we find that no ground is made out for interference into the
matter exercising our limited jurisdiction in a proceeding
under section 37.
69. It may also be taken note of that in pursuance to the
interim order passed on 7.10.2016, passed in Civil Appeal
Nos. 10152-10153/2016, the Hon'ble Supreme Court has
directed that the amount awarded be deposited with the
Registry of this Court. In view of the fact that the appeal is
being dismissed, the amount deposited before this Court by
the appellant and deposited in the Nationalized Bank by the
3
Registry, be now paid to the respondent M/s Jabalpur
Corridor (India) private Limited.
70. The Appeal is devoid of substance and is accordingly
dismissed, with no order as to costs.”
I. BRIEF FACTS
3. At the outset, it is necessary to briefly discuss the facts which
give rise to the present civil appeal. The Appellant, Madhya Pradesh
Road Development Corporation Ltd. (hereinafter referred to as
“MPRDC”) (previously known as M/s. Madhya Pradesh Rajya Setu
Nirman Nigam Ltd.) is a wholly owned undertaking of the
Government of Madhya Pradesh incorporated under the provisions
of the Companies Act, 1956 for development and maintenance of
roads and other infrastructure projects in the State of Madhya
Pradesh.
4. In the year 2002, the Appellant invited proposals vide tender
Advertisement No. Madhyam/22511/2002 dated 26.11.2002 for
detailed design, engineering, financing, procurement,
construction, operation, and maintenance of the Jabalpur Sagar
Damoh Road Project on SH37 and SH 14 o n ‘Build Operate and
Transfer (BOT) basis’ (hereinafter referred to as “Project”).
5. Tiara Dhaya Maju Constructions (M) SDN BHD (hereinafter
referred to as “TDM Constructions”), a Malaysian company, was
4
the successful bidder for the Project. To implement the Project, the
Respondent, M/s. Jabalpur Corridor Pvt. Ltd. (hereinafter referred
to as “JCPL”), a Special Purpose Vehicle (hereinafter referred to as
“SPV”), was incorporated by TDM Constructions under the
relevant provisions of the Companies Act, 1956.
6. Further, MPRDC/Appellant, TDM Constructions, and
JCPL/Respondent entered into a Concession Agreement on
11.04.2003 to implement and operate the Project of construction,
maintenance, and collection of toll of the Sagar-Damoh-Jabalpur
Road of a length of 176 kms (hereinafter referred to as “Project
Road”) for the Concession Period of 5440 days, inclusive of a period
of construction of 18 months on ‘Build Operate and Transfer (BOT)
basis’ (hereinafter referred to as “Concession Agreement”).
7. At this juncture, we find it apposite to reproduce certain
relevant clauses of the Concession Agreement:
CLAUSE 1.1.29:
“'Debt due' means the aggregate of the following sums
expressed in Indian Rupees, outstanding and payable to
the Lenders under the Financing Documents:
i. the principle amount of the debt provided by the Lenders
under the Financing Documents for financing the Project (the
'principal') which is outstanding as on the Termination Date;
and,
ii. all accrued interest, financing fees and charges payable
on or in respect of the debt referred to in sub-clause (i)
5
above, up to the date preceding the Termination Date but
excluding any penal interest or charges, payable under the
Financing Documents to any Lender."
CLAUSE 1.1.111:
“'Termination Payment' means the amounts payable by
MPRSNN to the Concessionaire and/or Lenders under this
Agreement upon the Termination of this Agreement and
shall consist of payments relating to Debt Due,
Subordinated Debt and Equity, as the case may be, and
such other amounts as are expressly provided for under this
Agreement. Provided, however, that for purposes of
determining Termination Payments to be made by MPRSNN
under this Agreement, shall at all times be reckoned as an
amount not exceeding the Total Project Cost."
CLAUSE 1.1.113:
“'Total Project Cost' for this agreement means the lowest
of the following:
(a) a sum of Rs.89.78 Crores as on Toll date;
(b) actual capital cost of the Project upon completion of the
Project Highway as certified by the Auditors; or
(c) total project cost as set forth in Financing Documents.
Provided further, that if part of the Total Project Cost is
funded in foreign currency, in accordance with the
Financing Package, then the rate of exchange shall be
determined as on the date of Bid, and the Total Project Cost
shall, be computed as if such foreign currency were
converted with reference to such exchange rate."
CLAUSE 13.5
The Site shall be made available to the Concessionaire
pursuant hereto by MPRSNN free from all Encumbrances
and occupations and without the Concessionaire being
required to make any payment to MPRSNN on account of
any costs, expenses and charges for the use of such Site for
the duration of the Concession Period save and except as
otherwise expressly provided in this Agreement. MPRSNN
shall procure for the Concessionaire access to the Site, free
of Encumbrances, not later than 90 (Ninety) days from the
date of this Agreement. Provided, however, that if MPRSNN
does not enable such access to any part or parts of the Site
6
for any reason other than a Force Majeure Event or breach
of this Agreement by the Concessionaire. MPRSNN shall pay
appropriate compensation not exceeding at the rate of Rs.
1000/- (Rupees One Thousand Only) per month per 1000
(one thousand) sq. meters or part thereof, if such area is
required by the Concessionaire for Construction Works and
if such area is critical and severely hampers the
construction and operation of the Project Highway. Provided
further that the Completion Certificate or the Provisional
Certificate, as the case may be, for the Project Highway
shall not be affected or delayed as a consequence of such
parts of the Site remaining under construction even after the
Scheduled Project Completion Date.
CLAUSE 32.2:
“Notwithstanding anything to the contrary contained in this
Agreement, in the event of the Concessionaire being in
default under any of the provisions hereof expressly
providing for Termination under or in accordance with the
Clause 32.1.3. MPRSNN shall be entitled to terminate this
Agreement forthwith by issuing a Termination Notice to the
Concessionaire and upon issue of such Termination Notice
by MPRSNN this Agreement shall stand terminated
forthwith.”
CLAUSE 32.3:
'Concessionaire Event of Default’ (EOD): Upon Termination
by MPRSNN on account of occurrence of Concessionaire
Event of Default, the MPRSNN shall if it deems fit, subject to
the rights of the lenders under the Substitution Agreement,
substitute another Concessionaire to take over the Debts
and subordinate Debts of the Project and maintain the
facilities for the balance Concession Period. In such event
MPRSNN reserves the right to substitute itself as
Concessionaire. However, in the event of non-substitution of
the Concessionaire as referred above, MPRSNN shall pay to
the Lenders subject to the provisions in the Escrow Account
(Project Construction Escrow Account and Toll Escrow
Account), by way of Termination Payment an amount equal
to 90% (Ninety Percent) of the Debt Due less pending
insurance claims, if any. Provided that in the event some
insurance claims are not admitted, then 80% of the amount
7
of such claims shall qualify for being included in the
computation of Debt Due."
CLAUSE 32.4.2:
“Termination of MPRSNN Event of Default: Upon
Termination by the Concessionaire on account of an
MPRSNN Event of Default, the termination payments shall
be made by MPRSNN, a sum equal to:
(i) Debt due less pending insurance claims, if any. Provided
that in the event some insurance claims are not admitted,
then 80% of the amount of such claims shall qualify for
being included in the computation of Debt Due and;
(ii) The entire Subordinated Debt (including interest accrued
but not paid upto the date of termination and excluding debt
forming part of Equity) less pending insurance claims, if
any. Provided that in the event some insurance claims are
not admitted, then 80% of the amount of such claims shall
qualify for being included in the computation of Debt Due
and;
(iii) 100% (One Hundred Per Cent) of the Equity (subscribed
in cash and actually spent on the Project but excluding the
Grant/Subsidy referred to in Clause 23) if such Termination
occurs at any time during two years commencing from the
Commencement Date an d for each successive years
thereafter, such amount shall be adjusted every year to
fully reflect the change in WPI during such year, and the
adjusted amount so arrived at shall be determined.
MPRSNN shall make the payments as specified under (i)
and (ii) above directly to the respective lenders. All the
payments made by MPRSNN in this connection shall
constitute valid discharge of the obligation to pay by
MPRSNN.
It is clarified that the deduction of pending insurance claims
referred in Clause 32.4 shall exclude any prior Insurance
Claims during the Concession Period, for which, the
Concessionaire has already incurred the cost of rectification
thereof, for which, the Insurance Claims are pending prior
to the MPRSNN event of default leading to termination of the
agreement.”
CLAUSE 32.6
8
“Termination Payments': The Termination Payment
pursuant to this Agreement shall become due and payable
to the concessionaire by MPRSNN within 180 (One Hundred
and Eighty Only) days of acceptance of demand made by
the Concessionaire with the necessary particulars duly
certified by the Statutory Auditors and Independent
Consultant. If MPRSNN fails to disburse the full Termination
Payment within 180 (One Hundred and Eighty Only) days,
the amount remaining unpaid shall be disbursed along with
interest @ SBI PLR plus two per cent for the period of delay
on such amount."
CLAUSE 39.3.1
“Any Dispute, which is not resolved amicably as provided
in Clause 39.1 and clause 39.2 shall be finally decided by
reference to Arbitration by a Board of Arbitrators appointed
as per the provisions of the Arbitration & Conciliation Act,
1996 and any subse quent amendments thereto. Such
arbitration shall be held in accordance with the Rules of
Arbitration of the Indian Council of Arbitration and shall be
subject to the provisions of the Arbitration & Conciliation
Act, 1996 and as amended from time to time thereafter”
CLAUSE 54
"'Grant' means cash support by way of outright grant of a
sum by MPRSNN paid to the Concessionaire towards
meeting the Project Cost and shall have the meaning
described thereto in Clause 23.1."
8. Pursuant to the Concession Agreement, the
JCPL/Respondent entered into a loan agreement dated
23.07.2004 with EXIM Bank Malaysia for ₹80.85 Crores (about
US$ 13 Million).
9. However, during the implementation of the Project, several
differences arose between the Appellant and the Respondent in
relation to the completion of the Project. The JCPL/Respondent, in
9
March, 2007 filed Writ Petition No. 4450 of 2007 before the High
Court seeking, inter alia, for handover of vacant possession of land
for construction of roads and bridges since the Project had stalled
due to delay in grant of such vacant possession.
10. On 12.07.2007, the Appellant issued a termination letter to
the Respondent under Clause 32.2 of the Concession Agreement,
thereby terminating the Concession Agreement (hereinafter
referred to as “ Termination Letter ”). Thereafter, the
JCPL/Respondent amended the Writ Petition No. 4450/2007 and
also laid challenge to the Termination Letter in the same writ
petition. In the meanwhile, out of the total loan amount of ₹80.85
Crores taken from EXIM Bank, Malaysia, an amount of ₹49.47
Crores had been expended by the Respondent, by that time. As
such, the Respondent sought ‘Termination Payment’ under Clause
32.6 of the Concession Agreement vide its letter dated 18.07.2008,
it also sought return of seized machinery along with hire charges.
11. The JCPL/Respondent herein contested the said termination
of Concession Agreement as unlawful and initiated the arbitration
proceedings against the MPRDC/Appellant herein in 2011.
Accordingly, the Arbitral Tribunal consisting of three Arbitrators
10
was constituted. The Claims and Counter Claims raised by the
parties before the Arbitral Tribunal were as under-
CLAIMS:
S.No. Particulars Amount
1. Declaration that the Termination by
MPRDC of the Concession Agreement
dated 11.04.2003 is unlawful, invalid,
and arbitrary.
NIL
2. Reimbursement of Value of work done. INR 48,48,11,310/-
3. Release of unwarranted withholding of
money:
a. Damage for Financial closure.
b. Damage for delay in completion.
c. Miscellaneous recoveries.
INR 17,35,000/-
INR 77,80,000/-
INR 43,77,640/-
4. Hire charges for 200 TPH crusher in
illegal custody of MPRDC.
INR 12,86,32,861/-
5. Interest on loan obtained from EXIM
Bank for the project.
INR 42,55,57,298/-
6. Reimbursement of Bank Guarantee
charges after scheduled completion
date.
INR 42,50,377/-
7. Reimbursement of Insurance Policy
Charges after scheduled completion
date.
INR 48,07,994/-
8. Exemplary damages for unjustified
termination.
INR 10,00,00,000/-
9. Reimbursement of overhead and
Establishment expenses after
scheduled completion date.
INR 6,98,28,151/-
10. Loss of profit due to abrupt wrong
termination.
INR 53,17,96,901/-
11. Reimbursement of legal expenses due to
unwarranted court cases.
INR 6,27,895/-
Total claims INR 1,76,42,05,427/-
12. a. Interest @14.75% on claims Nos.
2,3, 6 & 7 from 12.7.2007 to 30.6.2011.
b. Interest on all claims from
30.6.2011 till date of payment at
14.75%.
INR 29,73,22,661/-
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COUNTER CLAIMS:
S.No. Particulars Amount
1. Refund of grant paid to the claimant. INR 23,85,00,000/-
2. Expenditure incurred by the
respondent in maintaining the project
road after termination of agreement and
up to handing over of the road to the
new concessionaire.
INR 8,86,40,000/-
3. Cost incurred in preparation of DPR
after termination.
INR 40,00,000/-
4. Extra cost of the project i.e. revised cost
of the project minus the original cost of
the project.
INR 238,85,00,000/-
5. Expenditure incurred in defending
cases filed by the claimant.
INR 1,24,000/-
6. Expenditure damages caused due to
failure to complete the work @ 20,000/-
per day per clause 15.4.
INR 5,14,60,000/-
Total Claim INR 2,77,12,24,000/-
7. Interest 14.75% of claim
12. During pendency of the arbitration proceedings, the
Appellants herein had moved an application under Section 16 of
the 1996 Act challenging the jurisdiction of the Arbitral Tribunal,
which was rejected by the order dated 28.04.2012, stating therein
that the detailed reasons will form a part of the final award.
Further, the Appellant herein filed an application before the
District Court in Arbitration Case No. 45 of 2012, seeking
termination of mandate of the arbitrators under Section 14 of the
1996 Act. The Appellant contended mainly that the State of
Madhya Pradesh had a special local law namely Madhya Pradesh
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Madhyastham Adhikaran Adhiniyam, 1983 (hereinafter referred to
as “Adhiniyam”) and since the Concession Agreement was a ‘works
contract’, the 1996 Act did not apply in this case.
13. The District Court vide the order dated 19.02.2013, accepted
the aforesaid contention raised by the Appellant in its application
filed under Section 14 of the 1996 Act and held that the dispute
could not be heard by private arbitrators and had to be heard by
the Tribunal constituted under the Adhiniyam in terms of the local
law. As such, the Respondent was directed to file its claim before
the Madhya Pradesh Arbitration Tribunal.
14. Aggrieved, the Respondent filed Writ Petition No. 6557 of 2013
before the High Court under Article 227 of the Constitution of India
challenging the order dated 19.02.2013 of the District Court, which
by a detailed order dated 04.12.2013, set aside the order dated
19.02.2013 and held that dispute between the parties had to be
resolved under the provisions of the 1996 Act itself. The aforesaid
order attained finality when this Court upheld the same by an
order dated 12.10.2015 in SLP (C) No. 3811 of 2014. It is in this
context that the Arbitral Tribunal under 1996 Act was constituted
and allowed to function. Moreover, a Review Petition filed before
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this Court in Review Petition (C) No. 1580 of 2016 was also
dismissed vide order dated 29.03.2016.
15. At the conclusion of the arbitral proceedings, the Arbitral
Tribunal, vide majority award dated 22.08.2014 while allowing the
claims of the Respondent herein (Claimant before the Arbitral
Tribunal) and dismissing the Counter-claim of the Appellant herein
(Respondent before the Arbitral Tribunal) held as under:
“A. Costs in favour of claimant, being the winning party Rs.
47,00,000/-
Note: The Principal Award amount to be paid to the
Claimant will be recovered by the amount which it might
have received or is expected to receive from the Insurance
Company. The amount of interest awarded shall also
reduce as a consequence. Necessarily information about
receipts in this regard shall be given by the Claimant to the
respondent.
2. Post-lite interest: The Majority AT decides that the
Principal amount of Award plus amount payable towards
costs shall carry interest at 18% p.a. from the date of Award
till realization.
3.The observations, views given herein above comprise the
majority views of Shri K.K. Sethi, Presiding Arbitrator and
Shri R.C. Chugh. Cc Arbitrator The Ld. Co-Arbitrator Shri K.
Shankar Narayan has expressed his different views given
his separate Award, which is annexed to this Award.”
However, one of the learned Arbitrators passed the dissenting
award, thereby dismissing the claim of the Respondent herein as
well as the counter-claim of the Appellant, and held as under:
14
“7. CONCLUSION
In consequence the Claim and Counter Claim are dismissed.
I award an amount of Rs. 5,00,000/ - as costs to the
Respondent.”
16. Aggrieved by the said Arbitral Award, the Appellant filed an
application under Section 34 of the 1996 Act before the District
Court bearing Arbitration Case No. 2 of 2015. The said application
was dismissed by the District Court vide its order dated 22.02.2016
and it was held:
“222. In the light of the aforesaid entire investigation, it is
proved undoubtedly that the learned Arbitration Tribunal
has passed on lawful award with majority. It is also clearly
proved from the documents and evidence placed on record
by the parties that one member of the learned Arbitration
Tribunal Shri R.C. Chugh was not biased in any way the
applicant and he has neither participated in the arbitration
procedure having bias with the applicant nor has he passed
the award. There is no evidence in the case that which.
proves even a little that the non-applicant Jabalpur Corridor
not following the amicable settlement procedure had
referred the case directly for the arbitration. It is also not
proved even a little that the learned Arbitration Tribunal has
declared the award in favor of the non-applicant without
adducing the evidence by the non-applicant. It is not proved
in the case that the award passed by the learned Arbitration
Tribunal being against the contract executed between the
parties is unlawful. It is also not proved in the case that the
learned Arbitration Tribunal going outside the claim has
admitted the claims of the non -applicant during the
arbitration procedure. It is not proved by evidence in the
case that the learned Arbitration Tribunal has committed
the legal misconduct in declaring the award with majority.
223. It is not proved on the basis of the documents,
evidence and material placed on record particularly in the
light of the judgments of the Hon'ble Supreme Court as well
15
the Hon'ble High Court considered above that the impugned
award passed by the learned Arbitration Tribunal has been
passed going beyond the subjects referred by the non -
applicant. It has not been proved also in the case that the
award passed by the learned Arbitration Tribunal is against
the public policy of Indi or it has been passed in violation of
any law of India. It is also not proved in the case that the
learned Arbitration Tribunal has passed the award by fraud
and forgery and corruption with majority. It is also not
proved that the learned Arbitration Tribunal has committed
any legal misconduct in the case.
224. It is also proved in the light of the aforesaid
investigation carried out in the case and in the light of the
records and documents placed on record that the applicant
itself has created obstacles in following the contract by the
non-applicant, it has hindered the trial regularly by moving
unnecessary and baseless applications in the arbitration
trial during the arbitration procedure.
225. In the light of the facts, documents, materials and
evidence placed on record and the aforesaid respected
judgments of the Courts, it is not proved even a little that
the application of the applicant comes under any provision
of subsection of Section 34 of Arbitration and Conciliation
Act, 1996 or it proves any ground for setting aside the
impugned award under provisions of subsection 2 of Section
34 of Arbitration and Conciliation.
226. Resultantly, I am of the opinion on the basis of the all
the facts, materials, evidence placed on record and
provisions of the established law in this regard that there is
no force law in the application moved by the applicant under
Section 34 of Arbitration and Conciliation Act, 1996 and the
aforesaid application to have been filed on untrue and
baseless grounds is proved. Resultantly, I am of the opinion
that the application of the applicant under Section 34 of
Arbitration and Conciliation Act is liable to be dismissed
with costs in the light of the aforesaid entire investigation.
227. Therefore, the aforesaid application filed by the
applicant Madhya Pradesh Road Development Corporation
Limited under Section 34 Arbitration and Conciliation Act,
1996 is dismissed with cost. The entire costs of the
aforesaid case, which includes all expenses incurred by the
16
applicant and the non-applicant, would be given by the
applicant in person. The entire counsel fees incurred by the
parties in the case would be the part of the suit costs.”
17. The Appellant, aggrieved by the said order dated 22.02.2016
in Arbitration Case No. 2 of 2015, filed an appeal under Section 37
of the 1996 Act before the High Court. It was the case of the
Appellant before the High Court that the order dated 22.02.2016,
upholding the award, is contrary to Section 34(2)(a)(iv) and Section
34(2)(b)(ii) of the Act. The said appeal was dismissed by the High
Court vide the Impugned Order. Hence this appeal.
II. SUBMISSIONS
18. Before us, the learned Attorney General of India, Mr. R.
Venkataramani, appearing for the Appellant submitted that:
18.1. At the outset, the Appellant is limiting its challenge to
‘Dispute 2’ as per the Arbitral Award which relates to the claim
against value of work done.
18.2. The Arbitral Award is liable to be set aside under Section
34(2)(a)(iv) of the 1996 Act, as the Arbitral Tribunal have passed
the Arbitral Award beyond the claims of the JCPL/Respondent
herein. It was submitted by learned Attorney General that while
deciding ‘Dispute No. 2’, wherein Respondent had sought
17
reimbursement of ₹48,48,11,310 towards value of work done, the
Arbitral Tribunal travelled beyond the scope of reference and
awarded the amount of ₹49,47,77,236 towards ‘termination
payment’ under Clause 32.4.2 of the Concession Agreement which
was not permissible. It is the case of the Appellant that the award
was made in respect of something which was not even claimed and
the awarded amount was even more than what was claimed.
Further, the Arbitral Tribunal has also awarded a sum of
₹4,92,61,477/- for share capital equity actually spent on the
Project.
18.3. That in any case Clause 32.4.2 is applicable when the
Respondent herein terminates the agreement and is inapplicable
when the termination is done by the Appellant. Admittedly, the
termination has been done by the Appellant, thus the said clause
is inapplicable in the present dispute.
18.4. The Arbitral Tribunal has wrongly relied on Clause 32.6
of the Concession Agreement while awarding the ‘termination
payments’. Under the said clause, only 100% equity is payable
directly to the Respondent, while other termination payments,
including payment of ‘debt due’ and ‘subordinate debt’ are to be
paid directly to the lender and not to the Respondent.
18
18.5. The learned Attorney General, in the alternative,
submitted that even if the termination payment could have been
awarded by the Tribunal, the same had to be calculated as per the
procedure prescribed in Clause 1.1.111 of the Agreement.
18.6. To sum up, it is the case of the Appellant that a conjoint
reading of Clauses 1.1.29, 1.1.111, 32.4.2, and 32.6 makes it
evident that the ‘termination payment’, if at all payable, is payable
only when the Concession Agreement was terminated by the
Respondent, and that too only to the extent of 100% of the equity
already spent, directly to the Respondent and debt, if any, was to
be paid to the lender. In the present case, termination was
admittedly effected by the Appellant, rendering Clause 32.4.2
inapplicable. The Arbitral Tribunal, therefore, not only travelled
beyond the scope of reference in awarding ‘termination payment’
under Clause 32.6 but also misapplied the contractual provisions,
resulting in an award contrary to law and the express terms of the
Agreement.
18.7. The Arbitral Award is liable to be set aside under Section
34(2)(b)(i) and 34(2)(b)(ii) of the 1996 Act as the same is in
contravention of provisions of the Adhiniyam, which provides that
19
all disputes relating to “works contract” shall be exclusively
decided by the Tribunal constituted under the said Adhiniyam.
18.8. The learned Attorney General of India relies on the
judgment of this court in Booz Allen & Hamilton Inc. vs. SBI
Home Finance Ltd.,
1 and A. Ayyasamy vs. A. Paramasivam ,
2 to
submit that an arbitral award is liable to be set aside if the subject
matter of the dispute is not capable of settlement by arbitration
under the law in force.
18.9. It is the case of the Appellant that “concession
agreements” are “work contracts”. In this context the Appellant has
relied on the judgment of full bench of the Madhya Pradesh High
Court in Viva Highways Ltd. vs. Madhya Pradesh Road
Development Corporation Ltd.
3.
18.10. The Learned Attorney General of India, relying on the
three-judge bench judgment of this Court in Madhya Pradesh
Rural Road Development Authority & Anr. vs. M/s. LG
Chaudhary Engineers and Contractors,
4 (hereinafter referred to
as ‘LG Chaudhary II’) and a division bench judgment of this court
1
(2011) 5 SCC 532.
2
(2016) 10 SCC 386.
3
2017 SCC Online MP 1448.
4
(2018) 10 SCC 826.
20
in State of Chhattisgarh vs. M/s. KMC Construction, Civil
Appeal No. 4257 of 2018, further submitted that the Adhiniyam
is the local law in force and under Adhiniyam, adjudication of
disputes arising out of “works contracts” is exclusively vested in
the tribunal constituted thereunder. By virtue of Section 7 of the
Adhiniyam, such disputes are expressly excluded from the
jurisdiction of arbitral tribunals constituted under the 1996 Act,
as well as from the jurisdiction of civil courts. Thus, the law in force
bars any forum other that the tribunal established under the
Adhiniyam from entertaining or deciding disputes relating to works
contracts.
18.11. The non-filing of an application under Section 16(2) of
the Act, challenging the jurisdiction of the Arbitral Tribunal would
not affect the challenge to the jurisdiction under Section 34 of the
Act. To support this submission, learned Attorney General placed
reliance on the decision of this court in Lion Engg. Consultants
v. State of M.P.
5.
18.12. The procedural law of waiver or estoppel have no
application when the decree of award was passed by the authority
5
(2018) 16 SCC 758.
21
suffering from inherent lack of jurisdiction. The Arbitral Award is
itself a nullity and the Arbitral Tribunal has been rendered coram
non judice, therefore, the challenge on the grounds of jurisdiction
can be raised at any stage. In order to buttress this submission,
Ld. Attorney General placed relied on the judgement of the
Constitutional bench of this Court in Chief Justice of A.P. vs.
L.V.A. Dixitulu,
6. He further relied on judgments of this court in
Jagmittar Sain Bhagat v. Health Services, Haryana ,
7 and
Karnal Improvement Trust v. Parkash Wanti ,
8.
18.13. Further, the learned Attorney General, relying on the
judgment of this court in Fiza Developers & Inter-Trade (P) Ltd.
v. Amci (India) (P) Ltd.,
9 submitted that if the Court finds that the
subject matter of the dispute was incapable of being settled by
arbitration due to operation of law, the Court is duty bound to set
aside the Arbitral Award under Section 34(2)(b)(i) of the 1996 Act,
even if no such ground has been raised by the Applicant in its
application filed under Section 34 of the 1996 Act. It is the
submission of the Appellant that even if the ground is taken for the
6
(1979) 2 SCC 34.
7
(2013) 10 SCC 136.
8
(1995) 5 SCC 159.
9
(2009) 17 SCC 796.
22
first time in rejoinder before this Court in the present Civil Appeal,
this Court should give effect to the intention of the legislature and
set aside the Arbitral Award. To this effect also, he relies on the
judgment in Lion Engg. (supra).
18.14. Lastly, the learned Attorney General also submitted
before us that the interest levied on the Arbitral Award at the rate
of 14.75% and post award interest of 18% is exorbitant. In this
context various judgments of this court were submitted before us
and it was urged that this Court should take a lenient view and
reduce the rate of interest.
19. The learned senior counsel, Dr. Abhishek Manu Singhvi and
Mr. Vivek Tankha appearing for the Respondent submitted that:
19.1. The scope of interference under Section 34 of the 1996
Act is very narrow and limited. In the present case, the Arbitral
Award, the order passed under section 34 of the 1996 Act, and the
order passed under Section 37 of the 1996 Act are all well detailed
and reasoned orders. All the grounds raised by the Appellant have
been considered and rejected by such reasoned orders by the
forums below. Thus, there are three concurrent findings in favour
of the Respondent herein. In support of his submission concerning
the scope of interference under Section 34 of the 1996 Act the
23
learned Senior Counsel relied on the judgment of this Court in
Municipal Corp. of Greater Mumbai vs. R.V. Anderson
Associates Ltd.
10.
19.2. That there has been no cogent challenge to any finding
on any major issues by the Appellant. The Appellant has itself
admitted that the Respondent had spent an amount of ₹4.92
Crores as their own equity in the Project and the other amount
approximately to the tune of Rs. 49 Crores spent by the
Respondent was the debt so received by them from the lender,
EXIM Bank of Malaysia.
19.3. Further, the interest awarded is at the contractual rate
as provided under Clause 32.6 of the Concession Agreement. In
fact, the Appellant itself has claimed the same rate of 14.75% in its
counter claim before the Arbitral Tribunal. The learned Senior
Counsel relied on the decision of this court in Sri Lakshmi Hotel
(P) Ltd. vs. Sriram City Union Finance Ltd.,
11 to submit that the
issue of interest awarded by the Arbitral Tribunal does not meet
the threshold of challenge under Section 34 of the Act unless so
10
2026 SCC OnLine SC 354.
11
(2026) 3 SCC 600.
24
perverse or unreasonable so as to shock the conscience of the
Court.
19.4. The amount awarded by the Arbitral Tribunal has been
awarded in accordance with the material on record and is in line
with Section 70 and 73 of the Indian Contract Act, 1872. The same
was also confirmed by the District Court and the High Court under
Section 34 and Section 37 of the 1996 Act respectively.
19.5. The conduct of the Appellant, which is a Public Sector
Undertaking, has been mala fide throughout the dispute. The
Appellant has been engaging in various dilatory tactics to avoid
paying the amount owed by it. In this regard, the learned senior
counsel drew our attention to the findings of learned District Court
in Arbitration Case No. 2 of 2015. Furthermore, the learned senior
counsel has also drawn our attention to the anti-expropriation
clause in the Bilateral Investment Treaty between India and
Malaysia (hereinafter referred as “BIT”) to submit that the
Respondent has been kept in waiting for past 19 years, i.e., from
the date of termination of Agreement by the Appellant for the
amount spent by the Respondent in implementation of the Project,
and such delay is akin to an expropriation under the said BIT.
25
19.6. The issue of ‘Termination Payment’ being payable to
Respondent was considered and contested before the Arbitral
Tribunal. It is only after considering all the aspects, including the
submissions of both the parties on the ‘termination payment’, the
Arbitral Tribunal has awarded the said amount. The District Court
and the High Court have held that the termination payment was
covered under the claims raised by the Respondent herein and
such claims were duly contested before the Arbitral Tribunal.
Therefore, such submission on the claim being beyond the scope
of reference to arbitration warrants outright rejection.
19.7. The learned senior counsel has submitted that Clause
32.6 of the Concession Agreement is not a ‘notwithstanding’ clause
rather an independent clause under which the ‘termination
payment’, expressly becomes due and payable to the
Concessionaire/Respondent. There are concurrent findings in
favour of the Respondent by the forum below, and such findings
have been arrived at after due examination of the material on
record and are well-reasoned. Thus, there is no error in awarding
the ‘termination payment’ to the Respondent.
19.8. Finally, it is the case of the Respondent that once the
issue with respect to referral under the Adhiniyam, 1983 has been
26
decided by this Court, such issue becomes final inter-se the parties,
even if the judgment of the High Court was overruled subsequently
in Viva Highways (supra). In support of his contention, learned
senior counsel for the Respondent places reliance on the judgment
of the Constitutional bench of this Court in Natural Resources
Allocation, In re, Special Reference No. 1 of 2012
12.
19.9. The learned senior counsel for the Respondent further
submitted that the issue of jurisdiction based on the Adhiniyam
was neither raised in the application under Section 34 of the 1996
Act nor before the High Court in appeal under Section 37 of the
1996 Act. In fact, even in SLP, the said ground was not raised. It
was raised for the first time in rejoinder affidavit filed in the instant
appeal, which is completely impermissible. In this regard, reliance
was placed on the judgments of this Court in LG Chaudhary II
(supra) and Gayatri Project Ltd. vs. M.P. Road Development
Corpn. Ltd.
13.
III. ANALYSIS
20. Having heard the learned senior counsels appearing for the
parties, and upon perusal of the records, the question which this
12
(2012) 10 SCC 1.
13
(2025) 10 SCC 750.
27
Court has been called upon to answer in the present appeal is
‘Whether the impugned order of the High Court dismissing the
appeal under Section 37 of the 1996 Act and affirming the order of
the District Court dismissing the setting aside application filed under
Section 34 of the 1996 Act, warrants interference by this Court?’
21. At the outset, learned senior counsel for Respondent has
brought to our attention that Respondent herein is a SPV with
investment from M/s. Tiara Dhaya Maju Construction (TDM) , a
company incorporated under the laws of Malaysia. The Respondent
SPV is a protected indirect investment under Article 2 of the India-
Malaysia Bilateral Investment Treaty, 1995 (Agreement between
the Government of the Republic of India and the Government of
Malaysia for the promotion and protection of investments)
(hereinafter referred to as “1995 BIT”). Consequently, the SPV has
sufficient ius standi to seek compensation under the broadly
worded 1995 BIT. In spite of the termination of the said 1995 BIT
in 2017, such indirect investments were explicitly protected for a
period of 10 years from the date of termination as per Article 14 (4)
of the said 1995 BIT. Certainly, we are not deciding a claim under
the 1995 BIT, but it is necessary to state that such submissions
are not a mere red herring, rather an unfortunate reality check of
28
our judicial system in respect of arbitration, which has resulted in
delayed justice and prevented the swift realization of dues against
foreign investment.
22. Is this regard, we may allude to the case of SAIPEM S.P.A v.
Peoples’s Republic of Bangladesh, ICSID Case No. ARB/05/7,
wherein an International Centre for Settlement of Investment
Disputes (ICSID) tribunal awarded compensation for expropriation
on the ground of denial of justice by the judiciary in Bangladesh
which had set aside an arbitral award by a tribunal constituted
through institutional arbitration under the aegis of the
International Chamber of Commerce (ICC) . It was held that
misapplying New York Convention, 1958, for setting aside awards
on domestic standards itself constituted a breach of the Bilateral
Investment Treaty in that case.
23. That being said, this Court ought to be careful in interpreting
the 1996 Act, which needs to be applied in a non-discriminatory
manner, upholding principles of fairness, equality and equity,
particularly when international investments are involved. Recently,
in State of U.P. v. Reliance Industries Ltd. ,
14, a judgment
14
2026 SCC OnLine SC 864.
29
authored by one of us (J.K. Maheshwari, J), this Court while
discussing treaty obligations of India under investment treaties
had held that transactions involving foreign investments and
international element, come with an inherent expectation of
stability in rule of law. Stability and uniformity in application of
our domestic laws, especially those pertaining to dispute
resolution, bring about reliability which is an important metric for
ease of doing business and it is this reliability which attracts
foreign investment.
24. Before we analyse the facts and the Arbitral Award, it would
be apposite to discuss, in brief, the structure of the 1996 Act.
25. The 1996 Act is divided into five parts, wherein, Part I, I-A,
and II relates to Arbitration, Part III deals with Conciliation, and
Part IV deals with supplementary provisions. Within the arbitration
mechanism, the Act classifies Arbitrations into two categories, i.e.,
Domestic Arbitration and International Commercial Arbitration.
This categorisation is necessary as consequences of categorization
would entail different powers of judicial interference.
26. In any arbitration, the process can be divided into three
stages: (i) pre-arbitration, (ii) during the course of arbitration, and
(iii) post-award/execution. Part I of the Act, which mostly applies
30
to domestic arbitration deals with all the three stages. Part II
concerns itself with enforcement of foreign awards under New York
Convention or Geneva Convention respectively.
27. Part I is divided into ten chapters, wherein Chapters I and X
are general and miscellaneous provisions. Chapters II and III
concern pre-arbitral procedure, Chapters IV, V, and VI concern
procedure and process for the conduct of arbitration, and Chapters
VII, VIII, and IX concern post-award and enforcement mechanism.
The general scheme of the 1996 Act provides that it is a complete
code in itself and the process is continuous with ‘unbroken
timelines’.
28. The above structure strengthens the objective of the 1996 Act,
particularly the object of providing for a speedy resolution of the
disputes with minimum court intervention. Section 5 of the 1996
Act expressly limits the extent of the judicial intervention, which is
reproduced as under-
“5. Extent of judicial intervention.—Notwithstanding
anything contained in any other law for the time being in
force, in matters governed by this Part, no judicial authority
shall intervene except where so provided in this Part.”
The seven-judge bench of this Court in Interplay Between
Arbitration Agreements under Arbitration Act, 1996 & Stamp
31
Act, 1899, In re,
15 while examining the principle of minimum
judicial interference under the 1996 Act held:
“76. The principle of judicial non-interference in arbitral
proceedings is fundamental to both domestic as well as
international commercial arbitration. The principle entails
that the arbitral proceedings are carried out pursuant to the
agreement of the parties or under the direction of the
tribunal without unnecessary interference by the national
courts. This principle serves to proscribe judicial
interference in arbitral proceedings, which would
undermine the objective of the parties in agreeing to
arbitrate their disputes, their desire for less formal and more
flexible procedures, and their desire for neutral and expert
arbitral procedures. The principle of judicial non -
interference in arbitral proceedings respects the autonomy
of the parties to determine the arbitral procedures. This
principle has also been incorporated in international
instruments, including the New York Convention and the
Model Law.
…
80. Section 5 of the Arbitration Act is based on Article 5 of
the Model Law. However, Section 5 also incorporates a non
obstante clause setting out the scope of judicial intervention.
It reads as follows:
…
Two aspects become clear from a comparison of Section 5 of
the Arbitration Act with Article 5 of the Model Law : first,
Section 5 begins with a non obstante clause unlike Article
5; and second, it limits the scope of judicial intervention to
the extent “so provided” in Part I.
81. One of the main objectives of the Arbitration Act is to
minimise the supervisory role of Courts in the arbitral
process. … Parliament enacted Section 5 to minimise the
supervisory role of Courts in the arbitral process to the bare
minimum, and only to the extent “so provided” under the
Part I of the Arbitration Act. In doing so, the legislature did
not altogether exclude the role of Courts or judicial
15
(2024) 6 SCC 1.
32
authorities in arbitral proceedings, but limited it to
circumstances where the support of judicial authorities is
required for the successful implementation and enforcement
of the arbitral process. The Arbitration Act envisages the role
of Courts to “support arbitration process” by providing
necessary aid and assistance when required by law in
certain situations.
82. Section 5 begins with the expression “notwithstanding
anything contained in any other law for the time being in
force.” The non obstante clause is Parliament's addition to
Article 5 of the Model Law. It is of a wide amplitude and sets
forth the legislative intent of limiting judicial intervention
during the arbitral process. In the context of Section 5, this
means that the provisions contained in Part I of the
Arbitration Act ought to be given full effect and operation
irrespective of any other law for the time being in force…
…
89. Section 5 is of aid in interpreting the extent of judicial
interference under Sections 8 and 11 of the Arbitration Act.
Section 5 contains a general rule of judicial non-interference.
Therefore, every provision of the Arbitration Act ought to be
construed in view of Section 5 to give true effect to the
legislative intention of minimal judicial intervention.”
29. The above pronouncement of this Court, although made in
the context of an application for appointment of arbitrator under
Section 11 of the 1996 Act, when read with the express language
of Section 5 of the 1996 Act reaffirms the position of law with
respect to the limited role of Courts in arbitration. Section 5,
beginning with a non obstante clause, manifests the legislative
intent to restrict the role of Courts to only those instances which
are expressly contemplated under Part I of the 1996 Act.
Accordingly, while exercising any power under any provision of the
33
1996 Act, it is the duty of the Court to ensure that the object of the
1996 Act, i.e., speedy resolution of disputes with minimal judicial
interference is effectuated, and that intervention remains confined
to circumstances where such support is indispensable for the
arbitral process or where there is perversity so manifest that it
shocks the conscience of the Court. The judicial interference with
the arbitral award, if any, is provided for only under Sections 34
and 37 of the 1996 Act.
30. In light of the above, it is pertinent to discuss the scope of
Section 34 of the 1996 Act, which is reproduced as under-
“34. Application for setting aside arbitral award.—(1)
Recourse to a Court against an arbitral award may be made
only by an application for setting aside such award in
accordance with sub-section (2) and sub-section (3).
(2) An arbitral award may be set aside by the Court only
if—
(a) the party making the application furnishes proof
that—
(i) a party was under some incapacity; or
(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
(iv) the arbitral award deals with a dispute not
contemplated by or not falling within the terms of
34
the submission to arbitration, or it contains
decisions on matters beyond the scope of the
submission to arbitration:
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 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
(b) the Court finds that—
(i) the subject-matter of the dispute is not capable
of settlement by arbitration under the law for the
time being in force, or
(ii) the arbitral award is in conflict with the public
policy of India.
Explanation.—Without prejudice to the generality of sub-
clause (ii), it is hereby declared, for the avoidance of any
doubt, that an award is in conflict with the public policy
of India if the making of the award was induced or
affected by fraud or corruption or was in violation of
Section 75 or Section 81.
(3) An application for setting aside may not be made after
three months have elapsed from the date on which the party
making that application had received the arbitral award or,
if a request had been made under Section 33, from the date
on which that request had been disposed of by the arbitral
tribunal:
Provided that if the Court is satisfied that the applicant was
prevented by sufficient cause from making the application
within the said period of three months it may entertain the
application within a further period of thirty days, but not
thereafter.
35
(4) On receipt of an application under sub-section (1), the
Court may, where it is appropriate and it is so requested by
a party, adjourn the proceedings for a period of time
determined by it in order to give the arbitral tribunal an
opportunity to resume the arbitral proceedings or to take
such other action as in the opinion of arbitral tribunal will
eliminate the grounds for setting aside the arbitral award.”
31. Sub - section (1) of Section 34 envisages the recourse against
an arbitral award. It expressly limits such recourse to only those
applications which are made in accordance with sub-section (2)
and (3) of Section 34 of the 1996 Act. Therefore, Section 34 of the
1996 Act, at the outset, clarifies that when a party takes recourse
against the arbitral award, the scope for intervention by the Court
is limited to grounds provided under sub-section (2) and (2A) of the
said section, and can be exercised only if such recourse is taken by
the party within the time limit provided under sub-section (3) to
Section 34 of the 1996 Act. Sub-section (2) provides for the
circumstances/grounds on which the Court can set aside the
arbitral award. Further, it is pertinent to observe that Section 34
of the 1996 Act does not provide for an appeal against the award
of the arbitral tribunal, but only provides for an application to seek
‘setting aside’ of the award.
32. There are a plethora of decisions of this Court, crystalizing
the scope of interference under Section 34 of the 1996 Act. This
36
Court has consistently held that the jurisdiction of the Court under
Section 34 of the 1996 Act is narrowly circumscribed and confined
to the specific grounds enumerated therein. The Court cannot
assume the role of an appellate forum while deciding an application
for setting aside of the award under Section 34 of the 1996 Act to
correct the errors of facts, reconsider costs, or engage in review of
merits of the arbitral award. The Arbitral Tribunal alone is the
master of evidence and of interpretation of contractual terms
between the parties.
33. It is also well settled that once the arbitral tribunal has
applied its mind, appreciated the evidence on record, and
interpreted the terms of the contract to take a certain view, such
view of the arbitral tribunal would ordinarily be accepted and ought
not to be interfered with by the Court unless it is palpably
erroneous, falling within the limited grounds as mentioned in
Section 34 of the 1996 Act. Even if two views are possible, it is
beyond the scope of Section 34 for the Court to reappraise the
evidence to take a view different from the one taken by the arbitral
tribunal. Thus, as long as the conclusion arrived at by the arbitral
tribunal is a plausible one that a reasonable person could arrive
37
at, the Court should be circumspect in intervening with such view
of the Arbitral Tribunal.
34. In this regard, reference may be made to the decision of the
three-judge bench of this Court in Dyna Technologies (P) Ltd. v.
Crompton Greaves Ltd,
16 wherein it was held -
“24. There is no dispute that Section 34 of the Arbitration
Act limits a challenge to an award only on the grounds
provided therein or as interpreted by various courts. We
need to be cognizant of the fact that arbitral awards should
not be interfered with in a casual and cavalier manner,
unless the court comes to a conclusion that the perversity of
the award goes to the root of the matter without there being
a possibility of alternative interpretation which may sustain
the arbitral award. Section 34 is different in its approach
and cannot be equated with a normal appellate jurisdiction.
The mandate under Section 34 is to respect the finality of
the arbitral award and the party autonomy to get their
dispute adjudicated by an alternative forum as provided
under the law. If the courts were to interfere with the
arbitral award in the usual course on factual aspects, then
the commercial wisdom behind opting for alternate dispute
resolution would stand frustrated.
25. Moreover, umpteen number of judgments of this Court
have categorically held that the courts should not interfere
with an award merely because an alternative view on facts
and interpretation of contract exists. The courts need to be
cautious and should defer to the view taken by the Arbitral
Tribunal even if the reasoning provided in the award is
implied unless such award portrays perversity
unpardonable under Section 34 of the Arbitration Act.”
16
(2019) 20 SCC 1.
38
35. The decision of this Court in Consolidated Construction
Consortium Ltd. v. Software Technology Parks of India ,
17
recently reiterated the scope of Section 34 of the 1996 Act and held-
“23. Scope of Section 34 of the 1996 Act is now well
crystallized by a plethora of judgments of this Court. Section
34 is not in the nature of an appellate provision. It provides
for setting aside an arbitral award that too only on very
limited grounds i.e. as those contained in sub-sections (2)
and (2A) of Section 34. It is the only remedy for setting aside
an arbitral award. An arbitral award is not liable to be
interfered with only on the ground that the award is illegal
or is erroneous in law which would require re-appraisal of
the evidence adduced before the arbitral tribunal. If two
views are possible, there is no scope for the court to re-
appraise the evidence and to take the view other than the
one taken by the arbitrator. The view taken by the arbitral
tribunal is ordinarily to be accepted and allowed to prevail.
Thus, the scope of interference in arbitral matters is only
confined to the extent envisaged under Section 34 of the Act.
The court exercising powers under Section 34 has perforce
to limit its jurisdiction within the four corners of Section 34.
It cannot travel beyond Section 34. Thus, proceedings under
Section 34 are summary in nature and not like a full-fledged
civil suit or a civil appeal. The award as such cannot be
touched unless it is contrary to the substantive provisions
of law or Section 34 of the 1996 Act or the terms of the
agreement.
24. Therefore, the role of the court under Section 34 of the
1996 Act is clearly demarcated. It is a restrictive jurisdiction
and has to be invoked in a conservative manner. The reason
is that arbitral autonomy must be respected and judicial
interference should remain minimal otherwise it will defeat
the very object of the 1996 Act.”
17
(2025) 7 SCC 757.
39
36. In Municipal Corpn. of Greater Mumbai v. R.V. Anderson
Associates Ltd.,
18 a judgment which one of us (J.K. Maheshwari,
J) authored, this Court held-
“36. Of course, while saying so we are cognizant of the
sacrosanct principle of party autonomy and the fact that
Courts cannot substitute the commercial wisdom of parties
as is borne out from the plain meaning of the words used in
the contract. However, Clause 8.3(b) has been rightly
interpreted by the learned Arbitral Tribunal in the Section
16 order and the matter has been dealt with in the right
perspective by the learned Single Judge in Section 34 and
the learned Division Bench in the Section 37 appeal. The
law in respect of the scope of interference permissible in
proceedings arising out of a challenge to the arbitral award
under Section 34 of the 1996 Act, is well settled. Generally,
the scope of interference is quite narrow. The arbitrator is
the master of evidence and so also of interpretation of the
terms of contract. If the arbitrator has reached at a certain
view with respect to interpretation which is plausible,
interference is not warranted merely because some other
view may also be possible. This is a settled principle of law
which has been recently reiterated in the decisions of this
Court in Consolidated Construction Consortium
Limited v. Software Technology Parks of India and SEPCO
Electric Power Construction Corporation v. GMR Kamalanga
Energy Ltd. The role of the Court, in the proceedings arising
out of Section 34 of the 1996 Act, is clearly demarcated. The
approach of the Court must be to respect arbitral autonomy
and ensure minimum judicial interference.”
37. Having examined the scope of Section 34 of the 1996 Act, it
is relevant to also refer to Section 37 of the 1996 Act which is
reproduced as under –
18
2026 SCC OnLine SC 354.
40
“37. Appealable orders.—(1) 2[Notwithstanding anything
contained in any other law for the time being in force, an
appeal] shall lie from the following orders (and from no
others) to the court authorised by law to hear appeals from
original decrees of the Court passing the order, namely:—
(a) refusing to refer the parties to arbitration under
Section 8;
(b) granting or refusing to grant any measure under
Section 9;
(c) setting aside or refusing to set aside an arbitral award
under Section 34.]
(2) An appeal shall also lie to a court from an order of the
arbitral tribunal—
(a) accepting the plea referred to in sub-section (2) or sub-
section (3) of Section 16; or
(b) granting or refusing to grant an interim measure under
Section 17.
(3) No second appeal shall lie from an order passed in
appeal under this section, but nothing in this section shall
affect or take away any right to appeal to the Supreme
Court.”
There is no gainsaying that the structure of appeal under Section
37 of the 1996 Act is restrictive. The jurisdiction of the Courts to
upset an award can be imagined as a narrowing pyramid. Higher
the Court, lesser is the propensity to interfere. Also, higher the
Court, the higher threshold that a party must meet to convince that
Court to interfere. With each subsequent layer of appeal, the
Court’s approach must become increasingly hands-off in order to
protect the finality of the arbitral process. As a corollary to the
above principle of narrowing pyramid, this Court, subject to
41
exceptions, has very limited scope of interference, more so since
the present appeal is carried out of the discretionary jurisdiction
under Article 136 of the Constitution of India. This interpretation
is in line with the scheme of the 1996 Act, intentions of the
lawmakers and the purpose of the United Nations Commission on
International Trade Law (UNCITRAL) Model Law itself.
38. In the above lines, this Court in Bombay Slum
Redevelopment Corpn. (P) Ltd. v. Samir Narain Bhojwani ,
19
held –
“26. The jurisdiction of the appellate court dealing with an
appeal under Section 37 against the judgment in a petition
under Section 34 is more constrained than the jurisdiction
of the Court dealing with a petition under Section 34. It is
the duty of the appellate court to consider whether Section
34 Court has remained confined to the grounds of challenge
that are available in a petition under Section 34. The
ultimate function of the appellate court under Section 37 is
to decide whether the jurisdiction under Section 34 has been
exercised rightly or wrongly. While doing so, the appellate
court can exercise the same power and jurisdiction that
Section 34 Court possesses with the same constraints.”
39. This Court in Punjab State Civil Supplies Corpn. Ltd. v.
Sanman Rice Mills,
20 held as follows:
“14. It is equally well settled that the appellate power under
Section 37 of the Act is not akin to the normal appellate
jurisdiction vested in the civil courts for the reason that the
19
(2024) 7 SCC 218.
20
2024 SCC OnLine SC 2632.
42
scope of interference of the courts with arbitral proceedings
or award is very limited, confined to the ambit of Section 34
of the Act only and even that power cannot be exercised in
a casual and a cavalier manner.
…
16. It is seen that the scope of interference in an appeal
under Section 37 of the Act is restricted and subject to the
same grounds on which an award can be challenged under
Section 34 of the Act. In other words, the powers under
Section 37 vested in the court of appeal are not beyond the
scope of interference provided under Section 34 of the Act.
…
20. In view of the above position in law on the subject, the
scope of the intervention of the court in arbitral matters is
virtually prohibited, if not absolutely barred and that the
interference is confined only to the extent envisaged under
Section 34 of the Act. The appellate power of Section 37 of
the Act is limited within the domain of Section 34 of the Act.
It is exercisable only to find out if the court, exercising power
under Section 34 of the Act, has acted within its limits as
prescribed thereunder or has exceeded or failed to exercise
the power so conferred. The Appellate Court has no
authority of law to consider the matter in dispute before the
arbitral tribunal on merits so as to find out as to whether
the decision of the arbitral tribunal is right or wrong upon
reappraisal of evidence as if it is sitting in an ordinary court
of appeal. It is only where the court exercising power under
Section 34 has failed to exercise its jurisdiction vested in it
by Section 34 or has travelled beyond its jurisdiction that
the appellate court can step in and set aside the order
passed under Section 34 of the Act. Its power is more akin
to that superintendence as is vested in civil courts while
exercising revisionary powers. The arbitral award is not
liable to be interfered unless a case for interference as set
out in the earlier part of the decision, is made out. It cannot
be disturbed only for the reason that instead of the view
taken by the arbitral tribunal, the other view which is also
a possible view is a better view according to the appellate
court.
21. It must also be remembered that proceedings under
Section 34 of the Act are summary in nature and are not like
43
a full-fledged regular civil suit. Therefore, the scope of
Section 37 of the Act is much more summary in nature and
not like an ordinary civil appeal. The award as such cannot
be touched unless it is contrary to the substantive provision
of law; any provision of the Act or the terms of the
agreement.”
40. From the consistent pronouncements of this Court, it is
evident that the jurisdiction under Sections 34 and 37 of the 1996
Act is narrowly circumscribed and cannot be equated with ordinary
appellate jurisdiction. The appellate Court under Section 37 does
not sit as a court of appeal on the merits of the arbitral award; its
role is confined to examining whether the Court under Section 34
has acted within the limits prescribed by law. Interference is
permissible only where the Section 34 Court has exceeded its
jurisdiction or failed to exercise it within the confines of Section 34,
and not merely because another view of the facts or interpretation
of the contract may appear preferable. Courts ordinarily must give
requisite deference to finality of arbitral awards unless it is
palpably clear that the award is perverse and unreasonable. The
arbitral tribunal remains the final authority on appreciation of
evidence, and concurrent findings under Sections 34 and 37 are
entitled to great deference. The statutory scheme thus reinforces
the principle of minimal judicial intervention, ensuring that
44
arbitral awards are not disturbed save in circumstances expressly
contemplated by the Act.
IV. JURISDICTIONAL CHALLENGE
41. At the outset, it needs to be stated that the Appellant herein
has sought to take the plea before this Court under Section
34(2)(b)(i) and Section 34(2)(b)(ii), only in the rejoinder affidavit to
this appeal filed on 21.06.2017 in light of the judgment dated
05.05.2017, passed by the High Court in AA No. 24/2017, AC No.
79 of 2016 and AC No. 27/2013 – Viva Highways Ltd. (supra). In
this context, it would have been sufficient to only state that such
plea taken at the fag end of the appeal ought not be allowed.
However, this Court shall examine the jurisdictional claim on
merits and also highlight the conduct of the Appellant in trying to
rake up settled issues again and again.
42. The Appellant submitted that the Arbitral Award passed by
the majority of the learned Arbitral Tribunal under the 1996 Act is
without jurisdiction and the Arbitral Tribunal has been rendered
coram non judice as the Tribunal under the Adhiniyam has
exclusive jurisdiction over ‘works contracts’. Therefore, it has been
pleaded that the Arbitral Award deserves to be set aside.
45
43. It was further contended that the Adhiniyam provides that all
disputes relating to “works contract” shall be exclusively decided
by the Tribunal constituted under the said Adhiniyam.
Notwithstanding the presence of a written arbitration agreement
between the parties, the disputes which relate to a “works contract”
could be raised before the said Tribunal alone. Furthermore,
Section 20 of the Adhiniyam bars the jurisdiction of civil courts as
well. The Adhiniyam, therefore, mandates exclusive jurisdiction to
Tribunal. To further strengthen their arguments, the Appellant
relied upon decision in VA Tech Escher Wyass Flovel Ltd. v. M.P.
SEB,
21; LG Chaudhary II (supra), to submit that the law
mandatorily provides for adjudication of disputes relating to “works
contract” by the Tribunal constituted under the Adhiniyam alone
and the jurisdiction of a tribunal constituted under the 1996 Act
as well as jurisdiction of civil courts is barred by operation of law.
44. The Appellant also relied upon the decision in Booz Allen &
Hamilton Inc. (supra) and submitted that as per the mandate
under Section 34(2)(b) of the 1996 Act, an arbitral award could be
set aside if the Court finds that the subject-matter of the dispute
21
(2011) 13 SCC 261.
46
is not capable of settlement by arbitration under the law for the
time being in force.
45. However, the Appellant has admitted during the course of
arguments, that on account of dismissal of earlier Special Leave
Petition arising out of the order of the High Court deciding the
question with respect to applicability of the Adhiniyam , the
Appellant in its application filed under Section 34 of the 1996 Act
had not taken a specific ground under Section 34(2)(b)(i) of the
1996 Act. This was because of the decision of the High Court in
Writ Petition No.6557 of 2013 arising out of the Section 14
application filed by the Appellant herein before the District Court.
The Appellant further admitted that the SLP challenging the
aforesaid decision of the High Court was dismissed in limine vide
order dated 12.10.2015, is SLP (C) No.3811 of 2014.
46. The substance of the argument being raised by the Appellant
is that the main reasoning of the High Court in its judgment dated
04.12.2013 in Writ Petition No. 6557 of 2013 (arising out of the
Section 14 application filed by the Appellant) was that the
Concession Agreement does not fall within the meaning of ‘works
contract’ and therefore the Adhiniyam would not apply to it.
However, it is contended that subsequently, the Full Court of the
47
High Court vide judgment dated 05.05.2017 in Viva Highways
(supra) has overruled the judgment dated 04.12.2013 and also the
Adhiniyam has been amended subsequently to make it so that
such concession agreements fall within the meaning of ‘works
contract’.
47. On the contrary, the Respondent submitted that entire
jurisdictional challenge now sought to be resurrected by the
Appellant is prima-facie barred by principles of finality and
constitutes a belated and impermissible attempt to reopen issues
which already stand conclusively determined inter-se parties up to
this Court.
48. The Respondent stated that the plea regarding the alleged
applicability of the Adhiniyam as against proceedings under the
1996 Act had earlier been specifically raised by Appellant, MPRDC
under Sections 14 and 16 of the 1996 Act and travelled through
multiple judicial forums culminating in dismissal of the special
leave petition as well as review petition before this Court.
49. At the outset, it is pertinent to note that, pursuant to Clause
39 of the Concession Agreement, the Arbitral Tribunal under the
1996 Act was constituted, with the Respondent -Claimant
appointing one Arbitrator on 14-02-2011, followed by the Appellant
48
appointing one Arbitrator on 09 -03-2011. The two learned
Arbitrators thereafter appointed the third (Presiding) Arbitrator on
05-04-2011. It ought to be noted that the Statement of Defence was
filed on 12.02.2012. A Section 16 application was filed by the
Appellant raising the ground of referral under the Adhiniyam. The
Arbitral Tribunal rejected the objection raised by the Appellant but
informed the parties that the detailed reasons for such rejection
shall form part of the award as mentioned in paragraph 59 of the
Arbitral Award.
50. The Appellant herein raised the issue of non-arbitrability
under Section 14 of the 1996 Act, in parallel proceedings before the
District Court. The District Court initially accepted the Appellant’s
contention and terminated the arbitration proceedings, directing
the Respondent to take recourse before the Tribunal constituted
under the Adhiniyam. However, the order was expressly reversed
by the Hon’ble High Court of Madhya Pradesh in WP No. 6557 of
2013 through a detailed judgment dated 04.12.2013. It is pertinent
to note the categorical finding of the writ court, wherein it was held
as under-
“13. It is well settled in law that commercial documents
must be construed in a manner as understood in commercial
parlance. [See: Administrator of the Specified
49
Undertaking of the Unit Trust of India and another
vs. Garware Polyester Limited, (2005) 10 SCC 682) It is
pertinent to mention here that admittedly respondent No.1
has entered into as many as seventeen concession
agreements between the period from 7.8.2009 till 8.8.2012
and in each of the concession agreements, the clause
provides that the dispute shall be resolved under the 1996
Act. The respondent No.1 between the period of February,
2009 till October, 2012 has entered into six agreements
which are works contracts. The same clearly provide that
the dispute between the parties shall be resolved as per the
provisions of the 1983 Act. The aforesaid fact goes a long
way to show that the respondents have clearly understood
the distinction between the works con tract and the
concession agreement and have consciously chosen the
forum provided under the 1996 Act.
14. In paragraph 11 (c) of the statement of claim filed before
the arbitral tribunal, the petitioner stated that the contract
value of the concession agreement is Rs.89.78 Cr. whereas
the contract value of EPC contract is Rs.120 Cr. In this
context, the respondent No.1 in paragraph 11 (c) of the
statement of defence has stated as follows:
…
15. Thus, both the parties have clearly understood the
agreement to be a concession agreement and had
consciously taken a decision that the dispute between the
parties shall be resolved under the 1996 Act. The
respondent No.1 in view of its admission made in paragraph
11 (c) of the statement of defence filed before the arbitral
tribunal cannot be permitted now to contend that the
agreement in question is a works contract, as admission in
the pleading stands on a higher footing than evidentiary
admission and is fully binding on the party making such an
admission. [See: Nagindas Ramdas vs. Dalpatram
Iccharam alias Brijram and others, AIR 1974 SC 471]
16. Even assuming that the agreement in question is not a
works contract, yet for another reason the dispute between
the parties has to be resolved under the provisions of 1996
Act. In V.A.Tech Escher Wyass Flovel Ltd. (supra) a two-
Judge Bench of Supreme Court held that 1996 Act would
apply when there is an arbitration clause, whereas 1983
50
Act would apply where there is no arbitration clause. In
Ravikant Bansal (supra) a two-Judge Bench of the Supreme
Court held that where an arbitration clause mentions that
arbitration would be governed by M.P. Arbitration Tribunal,
in such cases, 1983 Act would apply.
17. Again a two-Judge Bench of Supreme Court by judgment
dated 17.2.2011 in A.P.S.Kushwaha (SSI Unit) vs.
Municipal Corporation, Gwalior and others [Civil
Appeal No.1888-889 of 2011] while dealing with a dispute
arising out of an agreement with regard to maintenance of
water supply and electric works in different parts of Gwalior
Municipal Corporation area which is also a works contract,
while taking note of the judgment of Supreme Court in V.A.
Tech Escher Wyass Flovel Ltd. (supra) held that if the
contract between the parties contains an arbitration clause,
the provisions of 1996 Act would apply. However, it is
pertinent to mention here that another two-Judge Bench of
the Supreme Court in case of L.G. Choudhary (supra), inter
alia, held that all disputes pertaining to works contract have
to be statutorily referred to the Tribunal set up under the
1983 Act. However, there was divergence of opinion with
regard to issue whether the dispute regarding cancellation/
determination of such works contract can be referred to
arbitration under the 1983 Act. In view of the aforesaid
divergence of opinion, the matter has been referred for
consideration by a Larger Bench and the view taken by in
V.A.Tech Escher Wyass Flovel Ltd. (supra) has been
held to be per incuriam.
18. It is pertinent to mention here that in the case of L.G.
Choudhary (supra) the Supreme Court has not taken note of
earlier decision rendered by a two-Judge Bench in the case
of A.P.S. Kushwaha (SSI Unit) (supra). A Special Bench
of this Court in the case of Jabalpur Bus Operators
Association vs. State of M.P. and others, 2003 (1) MPLJ
513 has held that in case of a conflict between decisions of
Supreme Court comprising equal number of Judges,
decision of earlier Bench is binding. Therefore, the ratio laid
down by a two-Judge Bench of Supreme Court in A.P.S.
Kushwaha (SSI Unit) (supra), which is prior in point of time
is binding on this Court. For this reason also the dispute
between the parties has to be referred to the arbitral
tribunal under the 1996 Act.
51
19. In view of the preceding analysis, it is evident that the
order passed by the trial Court suffers from an error
apparent on the face of record and, therefore, the same
cannot be sustained in the eye of law. The dispute between
the parties has to be resolved under the provisions of the
1996 Act. In the result, the impugned order dated 19.2.2013
passed by the trial Court is hereby quashed and the writ
petition is allowed. However, there shall be no order as to
costs.”
51. The High Court had categorically held that the Concession
Agreement in question was not a “works contract” within the
meaning of the Adhiniyam and consequently upheld the
continuance of arbitration under the 1996 Act. Aggrieved, the
Appellant approached this Court by way of SLP (C) No. 3811/2014,
however, the same came to be dismissed vide order dated
13.05.2016. Thereafter, even the review petition filed before this
Court stood dismissed vide order dated 29.03.2016 . Thus, the
jurisdictional issue, as between the parties, attained finality and
stood settled. We do not see a reason why the subsequent
amendment in the law or the subsequent overruling of the
judgment dated 04.12.2013 of the High Court would permit re -
opening of the settled question of jurisdiction insofar as the
challenge which was raised under Section 14 of the 1996 Act is
concerned.
52
52. In the final impugned award, this jurisdictional issue raised
under Section 16 of the 1996 Act was extensively dealt with as
under-
“72. The AT observed that the second paragraph of the
"Statements of Objects and reasons in the M.P. act 29 of
1983- Principle Act states public funds should not get
unnecessarily blocked in laws delays" implying clearly that
the said Works under the works contract definition were to
be executed with Government funds alone.
…
74. The AT also observed that in a BOT Project (build
operate transfer project) a Concession gives an operator the
long term right to use all utility assets conferred on the
operator, including responsibility for all operation and
investment. Asset ownership remains with the authority.
Assets revert to the authority at the end of the concession
period, including assets purchased by the operator. In a
Concession the operator typically obtains its revenues
directly from the consumer and so it has a direct
relationship with the consumer. A Concession covers an
entire infrastructure system (so may include the operator
taking over existing assets as well as building and
operating new assets).
75. The AT also observed that BOT projects are clearly
distinct from the works contracts, as defined in the
Adhiniyam, 1983 & executed from Public Funds. These BOT
projects are meant to encourage private investment in the
infrastructure sector, avoid / reduce public direct spending
so that Public budget could be used in other priority areas,
such as education and social programs, besides, passing on
the risks to the private party, which is best suited to handle
it, introduce innovation and increased efficiency from the
private sector, Involvement of experienced and credit worthy
sponsors and commercial lenders, guaranteeing project
viability, tapping of advanced -technologies and expertise
with possible capacity building of contractors and
consultancy firms, development of local capital market and
lastly; better services to users and early delivery.
53
76. The AT also observed that a works contract is for
pecuniary interest concluded in writing between a
contracting agency and an economic operator, which has as
its object the execution of works or the supply of products,
whereas the CA differs as here the source of revenue for the
economic operator consists either solely in the right of
exploitation or in this right together with payment.
77. The AT also observed that a Concession in the strict
sense provides for; the private company to be completely
responsible for operating the system, and making the
necessary investments in the infrastructure, and take
responsibility for financing them at its own risk. Under the
Build-operate-transfer (BOT), Concessionaire, private
company, has to operate the business and carry out
maintenance at its own risk, depending on revenue from
users a but the Government remains the owner of the
infrastructure.
78. The AT also observed that though, it is settled that the
parties cannot confer jurisdiction yet it is reasonable to
presume that the Respondents were very well aware of the
existence of the Adhiniyam, 1983 at the time of drafting the
terms & conditions of the Concession Agreement in the year,
2003. The Respondent, realizing that investors and lenders
will come forward only through a Concession agreement,
which is quite distinct from the 'works contract' defined and
covered by the Adhiniyam, 1983 thought it appropriate to
provide arbitration under Act, 1996. It might have obtained
concurrence of its Finance & legal counterparts, too. It
appears strange that an Public Undertaking a 'State' which
is expected to act reasonably, first provides a Arbitration
Clause in the year, 2003 for arbitration under Act, 1996, to
invite investors but now when confronted with Claims
resulting from disputes, raises the question of Jurisdiction
of The AT under the Act, 1996.
79. The AT further observed that subsequent to the Supreme
Court Decision of 14th January 2010 in the CIVIL APPEAL
NO(s). 3746 OF VA TECH ESCHER WYASS FLOVEL LTD.
M.P.S.E.BOARD & ANR, holding that the Madhya Pradesh
Madhyastham Adhiniyam, 1983 stood repealed because of
the Act 1996, except for such contracts which do not include
an Arbitration clause, another co-ordinate bench of the SC
gave a decision dated 17-02-2011, in A.P.S. Kushwaha (SSI
54
Unit) vs. Municipal Corporation Gwalior and others; This
(Civil Appeal No. 1888-889 of 2011) took note of the earlier
judgment and decided accordingly. The split Judgment of
the Supreme Court of India in (Civil Appeal no. 974 of 2012-
MPRRDA v. M/S L.G. Choudhary Engineers & Contractor
declaring the Judgment dated 14th Jan, 2010 as 'in curiam'
is also a Judgment by a Co-ordinate Bench of the SC.
80. A 5 judge bench of the M.P High Court, in the case of
conflicting judgments of equal number of judges has ruled
that the earlier judgment would prevail- Jabalpur Bus
Operators Association vs. State of M.P and others. 2003 (1)
MPJL 516. Hence, on that point also the Supreme Court
Decision of 14th January 2010 in the CIVIL APPEAL NO(S)
3746 OF VA TECH ESCHER WYASS FLOVEL LTD. V.
M.P.S.E. BOARD & ANR and decision dated 17-02-2011, in
A.P.S. Kushwaha (SSI Unit) vs. Municipal Corporation
Gwalior and others (Civil) Appeal No. 1888-889 of 2011),
would prevail.
81. Decision in the light of the above discussions &
observations, the AT took a considered view that the
Arguments of Shri K. Manoj Menon Counsel for the Claimant
have merit & agreeing with him decided on 28-04-2012 to
reject this application /preliminary objection of the
Respondent (RD-3).
82. During the proceedings on 23-06-2012, yet another
application dated 23-06-2012 was filed by the Respondent
seeking deferment of the arbitration proceeding of the AT as
it earlier application under Section 16 of the Act, 1996 (RD-
3). This application was taken on record and marked as RD-
6. This application was opposed by the Claimant's Counsel
on the ground that the challenge to any adverse decision on
the Respondent application under Section 16 was available
to the Respondent only under section 34 of the Act, 1996,
which can be done only after the publishing of the Award.
After hearing both sides and after due consideration, the
said Application was rejected in the meeting itself, by the
AT and it decided to continue the arbitration proceedings.
83. Thereafter, meetings were suspended following an Ex-
parte stay orders passed by the Addl. District Judge Bhopal
in Arb. Case no. 45/2012. After vacation/suspension of the
said stay orders further meetings of the AT were held from
55
23rd to 25th June 2013, wherein the Counsel for the
Claimant commenced its arguments, which remained
inconclusive.
84. The Ld Counsel of the Claimant concluded his
arguments in the meetings of the AT, held on the 12th &
13th August, 2012.
85.Once again, the Arbitration proceedings were suspended
following a fresh stay order by the 10th Addl. Dist. Judge
Bhopal, who latter by orders dated 19-02-2013 ruled that
this AT has no jurisdiction to adjudicate on the dispute
before it. The Claimant went in appeal to the High Court.
The M.P. High Court decided on 04-12 2013 in WP no.
6557/2013 that the Arbitration in the present dispute shall
be done only under the Arbitration & Conciliation Act. 1996.
86. The proceedings of the AT were recommenced and
finally concluded in the 13th meeting held on 22nd March,
2014 and now only the award was to be pronounced. The
Ld. Counsel for Respondent had chosen to submit written
arguments. Suddenly, on 17 -6-2014 the Respondent
Managing Director, MPRDC submitted an application,
seeking reopening of the closed hearings as it wanted to
present some more documents and evidence etc. He
personally came (without any notice from the AT) just before
the 3rd internal meeting on 18-06-2014 and pressed for
allowing the said application. He was told that the
Arbitrators would discuss the matter amongst themselves
and he would be apprised of the decision. Majority of the
arbitrators (Shri K.K. Sethi and Shri R.C.Chugh) decided to
reject the application and he was informed by way of
minutes, of the 15th & 16th internal meetings held on 18-6-
2014 and 19-6-2014-for recorded reasons. By another
application. dated 03-07-2014, the MD MPRDC prayed for
allowing him to present oral arguments. It is noted that this
has been done when it was already notified that award
would be ready for delivery in the afternoon on 9th July. To
reopen the case and hear oral arguments at this stage
especially when no new facts have been cited to support the
suggestion for the oral arguments is not fair. Had this
prayer been made in reasonable time after the closure of
case for award (March 22), with proper reasons, it would be
worth considering But at so late a stage this application is
considered as without any merit as the Ld. Counsel for
56
Respondent had chosen to submit written arguments in the
13th meeting and therefore it cannot be considered
admissible by the majority of the Arbitrators.”
From the above paragraphs of the Arbitral Award it is
unmistakably demonstrated that the jurisdictional issue
concerning the interplay between the 1996 Act and the Adhiniyam
was consciously considered by the Arbitral Tribunal in the final
award while giving reasons for rejection of the application under
Section 16 of the 1996 Act filed by the Appellant.
53. At the outset, it is significant that the Tribunal did not
assume jurisdiction mechanically or by omission. The
jurisdictional objection was expressly raised by the Appellant itself
under Section 16 and later under Section 14 of the 1996 Act. The
Arbitral Tribunal adjudicated the objection by a detailed and
reasoned determination after considering the nature of the
Concession Agreement, the prevailing legal position, and the
conduct of the parties. The Tribunal therefore exercised the
statutory Kompetenz-Kompetenz jurisdiction vested under Section
16 of the 1996 Act and rendered a considered finding that the
arbitral proceedings under the 1996 Act were maintainable ,
applying the law as it stood at the time.
57
54. Moreover, the finding by the Writ Court in WP No. 6557 of
2013, has a binding effect inter se the parties. The legal effect of
such finality cannot be understated. The doctrine of issue estoppel
and finality of litigation squarely applies. Once a jurisdictional
issue has been specifically raised, adjudicated through the
hierarchy of Courts, and permitted to attain conclusiveness even
after dismissal of review petition by this Court, the same issue
cannot thereafter be repeatedly resurrected in collateral
proceedings under the guise of “public policy” or subsequent legal
developments.
55. The Constitution Bench of this Court, in Natural Resources
Allocation, In re, Special Reference No.1 of 2012,
22 has clearly
held that once the appellate remedies and review jurisdiction stand
exhausted, the dispute inter-se the parties is considered “settled for
eternity in the eye of law”. Even if a precedent is subsequently
overruled, such overruling does not reopen decrees or
adjudications which have attained finality between parties.
56. In background of long protracted litigation over the aforesaid
issue of jurisdiction, the present attempt of the Appellant to once
22
(2012) 10 SCC 1.
58
again reopen the same question at the stage of Special Leave
Petition, especially by raising it for the first time in rejoinder
affidavit constitutes a clear abuse of process and an impermissible
attempt to indefinitely defer the finality of the arbitral award.
57. Furthermore, the conduct of the Appellant itself demonstrates
complete acquiescence to the arbitral process under the 1996 Act.
The Statement of Defence was filed as early as 12.02.2012. The
Section 16 application was filed only subsequently on 28.04.2012,
and thereafter a Section 14 application was preferred on
25.06.2012. The Section 14 application was decided by the District
Court on 19.02.2013. W.P. No. 6557 of 2013 was allowed on
04.12.2013. The award along with reasons for dismissal of the
Section 16 application was rendered on 22.08.2014. The earlier
Special Leave Petition arising out of the High Court’s order dated
04.12.2013 was dismissed on 13.05.2015, and Review Petition
arising out of it was dismissed on 29.03.2016. In the meantime,
the Section 34 was filled, and decided on 22.02.2016. Thereafter,
Section 37 was filed on 12.04.2016 and was dismissed on
21.12.2016. Thereafter, the present SLP was preferred on
11.01.2017. The judgment of the Full Bench of the High Court in
Viva Highways (supra) which overruled the judgment dated
59
04.12.2013 of the High Court in Writ Petition No. 6557 of 2013,
was only pronounced subsequently on 05.05.2017.
58. Significantly, despite now attempting to characterize the issue
as one going to the root of jurisdiction, the Appellant never raised
the present plea as a substantive ground under Section 34 which
is the appropriate stage to challenge a finding rendered against the
Appellant in an application under Section 16 of the 1996 Act, as
provided under Section 16(6). Equally, no jurisdictional challenge
was urged by the Appellant in its appeal under Section 37. It ought
to be noted that, the Appellant claims to have been purportedly
strengthened by the judgment of the Full Bench of the High Court
in Viva Highways (supra) which was pronounced after the filing of
the instant special leave petition, at which point, they raised the
objection with respect to jurisdiction again by means of a rejoinder
affidavit.
59. There is another aspect of the matter, that the jurisdictional
objection raised by the Appellant under Section 16 of the Act was
filed after the filing of the statement of defence, contrary to the
provisions of Section 16(2) of the 1996 Act. In this respect, the
Appellant has placed much reliance on the judgment of this Court
in Lion Engg. (supra) where it was held that the objection
60
regarding lack of jurisdiction of the tribunal, being a question of
law, can be raised in Section 34 proceedings, even if no such
objections had been raised during the arbitral proceedings.
60. Subsequent to the three-judge bench judgment in Lion Engg.
(supra), another three-judge bench of this Court in LG Chaudhary
II (supra) dealt with the very same objection that is being raised in
the instant appeal, i.e., that in light of the Adhiniyam, the
arbitration could not have been carried out by the Arbitral Tribunal
under the 1996 Act. This Court held that the Adhiniyam will prevail
in terms of Section 2(4) of the Central Act, but in para 17 of the
said judgment, held as under:
“17. We do not express any opinion on the applicability of
the State Act where the award has already been made. In
such cases if no objection to the jurisdiction of the arbitration
was taken at relevant stage, the award may not be
annulled only on that ground.”
61. There was an apparent conflict between the judgments of
Lion Engg. (supra) and LG Chaudhary II (supra) which was
noticed by this Court in Gayatri Project Ltd. (supra), wherein this
Court dealt with an identical issue and a similar objection was
raised by the Appellant (which was Respondent in that case) with
respect to applicability of the Adhiniyam. In the facts of the said
case, a works contract was entered into by the Appellant therein
61
with the Corporation. Some disputes arose between the parties
which were referred to arbitration under the 1996 Act as opposed
to the Adhiniyam. The tribunal in that case ruled in favour of the
Appellant therein. During the arbitration proceedings, the
Corporation did not raise any objection to the jurisdiction of the
Tribunal and the challenge was raised for the first time before the
High Court by way of an amendment in the application for setting
aside of the award under Section 34 of the Act. The High Court set
aside the award of the tribunal on the ground of lack of jurisdiction,
holding that arbitral proceedings should have been initiated before
the Tribunal constituted under the Adhiniyam. Upon an appeal
being filed by the Appellant therein, this Court examined the entire
line of judgments which govern the interplay between the
Adhiniyam and the Act. Referring to the decision in LG Chaudhary
II (supra), this Court held that if a party files a statement of defence
without raising a plea of lack of jurisdiction at the relevant stage,
such a plea cannot be raised in light of Section 16(2) of the Act.
The Court held that since a plea of lack of jurisdiction is a legal
objection, it can be raised even at the Section 34 stage, but if a plea
about lack of jurisdiction of the arbitral tribunal on the grounds of
applicability of the Adhiniyam has not been raised at the
62
appropriate stage, the arbitral award cannot be set aside on that
ground alone. Relevant portion of the judgment in Gayatri Project
Ltd. (supra) is quoted herein for reference:
“66. In view of the above exposition of law, what has been
conveyed by this Court in L.G. Chaudhary (2) [M.P. Rural
Road Development Authority v. L.G. Chaudhary Engineers
& Contractors, (2018) 10 SCC 826 : (2019) 1 SCC (Civ) 97]
in so many words is that:
66.1. Where the arbitration proceedings are still underway,
but no statement of defence has been filed, there it would
be open for the parties to raise an objection of lack of
jurisdiction in view of the applicability of the M.P. Act, 1983.
The parties will also be at liberty to approach the High Court
by way of a petition under Article 227 of the Constitution for
seeking a transfer of the arbitration proceedings to the M.P.
State Arbitration Tribunal under the M.P. Act, 1983.
66.2. Where the arbitration proceedings are still
underway, but statement of defence has already been
filed i.e. the relevant stage for raising an issue of
jurisdiction is already crossed, there it would not be
open for the parties to raise an objection of lack of
jurisdiction in view of the applicability of the M.P. Act,
1983. Furthermore, in such scenarios since the
arbitration proceedings have already commenced and
made substantial progress, it would not be
appropriate to transfer such proceedings to the M.P.
State Arbitration Tribunal under the M.P. Act, 1983,
and the better course of action would be to let the
arbitration proceedings conclude.
66.3. As per L.G. Chaudhary (2) [M.P. Rural Road
Development Authority v. L.G. Chaudhary Engineers
& Contractors, (2018) 10 SCC 826 : (2019) 1 SCC (Civ)
97] where the arbitration proceedings have concluded
and an award has been passed, and if no objection to
the jurisdiction in view of the applicability of the M.P.
Act, 1983 was taken at the relevant stage then such
an award cannot be annulled only on the ground of
lack of jurisdiction.
63
66.4. Any award passed by an Arbitral Tribunal under the
1996 Act, where otherwise the M.P. Act, 1983 was
applicable, such an award may be challenged or assailed
in terms of Section 34 and thereafter Section 37 of the 1996
Act and other relevant provisions thereunder.
66.5. Any award passed by an Arbitral Tribunal under the
1996 Act, where otherwise the M.P. Act, 1983 was
applicable, such an award must be executed in terms of the
M.P. Act, 1983 and the relevant provisions thereunder.
66.6. Where the objection based on applicability of
the M.P. Act, 1983 had been raised in the written
statement or statement of defence, but the parties
never took steps towards challenging the jurisdiction
of the Arbitral Tribunal under Section 16 of the 1996
Act or where such plea of jurisdiction was turned
down in view of the position of law that was
prevailing prior to L.G. Chaudhary (2) [M.P. Rural
Road Development Authority v. L.G. Chaudhary
Engineers & Contractors, (2018) 10 SCC 826 : (2019)
1 SCC (Civ) 97] i.e. such challenge to the jurisdiction
was decided prior to the date of pronouncement
of L.G. Chaudhary (2) [M.P. Rural Road Development
Authority v. L.G. Chaudhary Engineers &
Contractors, (2018) 10 SCC 826 : (2019) 1 SCC (Civ) 97]
, then even in such cases, as per the decision of this
Court in Modern Builders [Modern Builders v. State of
M.P., (2024) 10 SCC 637 : (2024) 4 SCC (Civ) 639] , the
award should not be disturbed or set aside only on the
ground of lack of jurisdiction.”
62. A sharp parallel may be drawn between the facts of this case
and that of Gayatri Project Ltd. (supra). In that case, the plea of
lack of jurisdiction was not raised by filing a Section 16 application,
nor was such a plea taken in the original application under Section
34. It was taken for the first time by way of an amendment in the
application under Section 34 at a belated stage. In the present
64
case, the application under Section 16 raising the issue of non-
arbitrability in view of the Adhiniyam was raised by the Appellant
after filing of the statement of defence, which is beyond the
statutory time limit prescribed under Section 16(2) of the 1996 Act.
Further, no such challenge was made, not only at the Section 34
stage, but also at the Section 37 stage or even in the special leave
petition. It is only in the rejoinder affidavit that this plea has been
taken by the Appellant. There is no reason therefore to take a
different view in this matter than what this Court held in Gayatri
Project (supra).
63. Further, this Court in Gayatri Project (supra) clarified the
apparent conflict with the judgment in Lion Engg. (supra) and held
as follows:
“47. What can be discerned from the aforesaid is that L.G.
Chaudhary (2) [M.P. Rural Road Development
Authority v. L.G. Chaudhary Engineers & Contractors,
(2018) 10 SCC 826 : (2019) 1 SCC (Civ) 97] carved out an
exception to the general rule that was laid in Lion
Engg. [Lion Engg. Consultants v. State of M.P., (2018) 16
SCC 758 : (2019) 1 SCC (Civ) 699] , that although a plea of
lack of jurisdiction being a question of law can be raised for
the first time in the proceedings under Section 34 of the
1996 Act, yet insofar as the M.P. Act, 1983 is concerned,
particularly the state of flux in which the position of law
regarding its applicability stood, in cases where either the
award has already been passed or where the statement of
defence has already been filed, and no plea of lack of
jurisdiction or applicability of the M.P. Act, 1983, has been
raised before the Arbitral Tribunal, then such a plea of
65
jurisdiction will no longer be available, and the award
cannot be annulled solely on such ground.”
64. The conclusion reached by this Court in paragraph 66.6 of
Gayatri Project (supra) squarely applies to the instant case.
Certainly, an objection to jurisdiction of the Arbitral Tribunal
constituted under the 1996 Act, in light of the Adhiniyam, was
made by the Appellant, but it was belated and beyond the statutory
time limit under Section 16(2) of the 1996 Act, which would attract
statutory waiver under Section 4 of the 1996 Act.
23 It has not been
urged before us that the delay in filing the Section 16 application
was condoned by the Arbitral Tribunal under Section 16(4) of the
1996 Act even though the Respondent has raised a contention
about delayed filing of the Section 16 application. Even otherwise,
the jurisdictional challenge raised under Section 14 of the 1996 Act
was negatived, up till this Court and the objection under Section
16 was rejected by the Arbitral Tribunal; both objections stood
decided by the Arbitral Tribunal and the Courts based on the law
which was prevalent at the time. The Arbitral Award was dated
22.08.2014, which was much prior to the judgment of this Court
23
See: Narayan Prasad Lohia v. Nikunj Kumar Lohia , (2002) 3 SCC 572;
Quippo Construction Equipment Ltd. v. Janardan Nirman (P) Ltd. , (2020)
18 SCC 277.
66
in LG Chaudhary II (supra) which was pronounced on
22.03.2018. As per the principles of law laid down in LG
Chaudhary II (supra) and Gayatri Project (supra), the Arbitral
Award in the instant appeal pre -dates the judgment in LG
Chaudhary II (supra) and the objection raised under Section 16 of
the 1996 Act was filed after filing of the statement of defence, which
is barred by Section 16(2) of the 1996 Act. As such, the award
cannot be annulled only on the ground of lack of jurisdiction in
terms of paragraph 66.3 of the judgment in Gayatri Project
(supra). Even if it is assumed that the objection under Section 16
of the 1996 Act was validly made, the said objection was decided
as per the law prevailing prior to LG Chaudhary II (supra) and in
terms of paragraph 66.6 of the judgment in Gayatri Project
(supra), the award should not be disturbed or set aside on the
ground of lack of jurisdiction. The intent behind this Court’s
pronouncement in Gayatri Project (supra) which appears to have
expanded the scope of the exception carved out in LG Chaudhary
II (supra), particularly in paragraph 66.6 thereof, appears to be
that since there was uncertainty in law with respect to applicability
of the Adhiniyam vis-à-vis the 1996 Act up until the time when the
judgment in LG Chaudhary II (supra) was pronounced, if the
67
jurisdictional objections had been decided as per the law as it stood
prior to the judgment in LG Chaudhary II (supra), there would be
no reason to upset the applecart and nullify the entire arbitral
process on the ground of jurisdiction alone.
65. The Appellant’s approach also fundamentally undermines the
core objectives of the 1996 Act, namely certainty, expediency, and
finality of adjudication. The award-holder Respondent has already
endured over a decade of litigation despite having succeeded before
the Arbitral Tribunal and through multiple judicial stages. To
permit the Appellant now to reopen a jurisdictional issue which
already stood concluded up to review proceedings before the
Hon’ble Supreme Court would amount to sanctioning perpetual
litigation and defeating the very sanctity of arbitral finality,
especially when as per the judgment of Gayatri Project (supra) the
award cannot be set aside on the ground of lack of jurisdiction
alone. Accordingly, the present jurisdictional challenge under
Section 34(2)(b)(i) and Section 34(2)(b)(ii) deserves to be rejected
outright being contrary to the settled principles of finality and
procedural fairness and also in light of the law laid down by this
Court in Gayatri Project (supra).
68
V. CHALLENGE ON MERITS
66. The first challenge raised by the Appellant herein relates to
one under section 34(2)(a)(iv) of the Act. The Appellant contents
that the impugned award of the Arbitral Tribunal was on a claim
which was beyond the scope of reference. It is the case of the
Appellant that the Respondent claimed for refund of value of work
done, however, the Arbitral Tribunal awarded the ‘termination
payment’ which was not even claimed. This aspect of the Arbitral
Award is accordingly a perversity and patently erroneous.
67. We need to observe that such arguments must necessarily be
dispelled on a harmonious construction of various clauses under
the Concession Agreement. From the records, it is clear that there
was an clear delay in the execution of the work, which was
occasioned by the non-handover of the vacant land. This issue was
agitated before the High Court in Writ Petition No. 4450 of 2007.
During the currency of the above writ, the contract was terminated
on 12.07.2007. It is in this context that the Respondent challenged
the termination notice before the Arbitral Tribunal and claimed INR
69,67,60,270/- under clause 32.6 of the Agreement relatable to
‘termination payment’.
69
68. There is no doubt that under contract law, a claim for
damages under Section 73 of the Contract Act has to be in lieu of
a breach of contract. A party gets a right to terminate the contract
only when there is an breach of a condition under the contract. In
this case at hand, the termination by the Appellant was held to be
non-est as there was no justification for the same. We have
considered the elaborate reasoning of the Tribunal on the claim
under Dispute 1 from paragraph 256 to 286, wherein the Arbitral
Tribunal has by extensive examination of evidence on record
returned a finding that the Respondent was not at fault and the
termination of the contract by the Appellant herein was completely
unjustified. Pertinently, ‘Dispute 1’ out of the claims filed before
the Arbitral Tribunal entailed ‘For a declaration that the termination
by MPRDC of the Concession Agreement dated 11.04.2003 is
unlawful, invalid and arbitrary’. The said claim has been found
against the Appellant and the termination of the Concession
Agreement has been found to be arbitrary, unlawful and void. The
learned Attorney General appearing on behalf of the Appellant has
categorically stated to us across the Bar that they are challenging
only the findings of the Tribunal on merits in respect of ‘Dispute 2’
with respect to grant of termination payment, therefore they do not
70
have any dispute regarding the finding of the Tribunal about the
termination of the Concession Agreement being illegal. It is in this
context that the Respondent could invoke its rights under clause
32.4.2 of the Agreement as the Appellant itself failed to provide land
for construction. This was no doubt a material breach which
justified invocation of clause 32.4.2 of the Concession Agreement.
Consequently, the Respondents became entitled to remedies
provided under Clause 32.6 of the Concession Agreement.
69. The interpretation placed by the Appellant herein on the
invocation of clause 32.4.2 of the Agreement as the same being not
applicable is to be rejected in toto. The understanding of the
Concession Agreement by the Appellant is completely disjointed
and the interpretation of the contractual terms by the Arbitral
Tribunal is a plausible view which cannot be doubted herein.
70. The view taken by the District Court and the High Court
under Section 34 and 37 of the 1996 Act is concurrent and
categorically finds that the Respondents herein had claimed
Termination Payment which was clubbed to include damages for
financial closure, damages for delay in completion, miscellaneous
recoveries, reimbursement of Bank Guarantee charges,
reimbursement of insurance policy and reimbursement for
71
overheads. Clause 1.1.111 of the Concession Agreement which
defines the word ‘Termination Payment’ is quite all-encompassing
and it consists of debt due, subordinated debt and equity. Even
though the Appellant would argue that ‘debt due’ and ‘cost of
machinery seized’ were never specifically claimed by the
Respondent, the view taken by the Arbitral Tribunal, District Court
and the High Court that a specific demand had been made for
‘Termination Payment’ under Clause 32.6 with requisite
documentation, requires no interference. The Arbitral Tribunal has
found that the claim for compensation under Clause 32.6 is
independent of Clause 32.4.2 and even Clause 32.3. While the two
latter clauses relate to payment of dues in respect of termination
on account of default by either party, Clause 32.6 makes the
payment of ‘Termination Payment’ mandatory if due as per the
contractual terms. We see no illegality in the approach of the
Arbitral Tribunal which is in terms of the contractual
understanding and in our opinion, it is not only a plausible view,
but the only possible view, and as such, must be given due
deference and regard. Therefore, the challenge on this ground has
to be rejected.
72
71. The second challenge raised by the Appellant is that Clause
1.1.29 and 1.1.111 of the Concession Agreement had to be read in
an manner wherein the ‘debt due’ is to be paid only to the lender
and not to the Respondent. They contend that the amount in
respect of ‘debt due’ was obtained as a loan from the lender, i.e.,
EXIM Bank of Malaysia and as such, while directing payment of
‘termination payment’ inclusive of ‘debt due’, the contractual terms
dictate that such payment must be made to the lender. The
Appellant had made a submission before us that the lender of the
Respondent has not made any claim for ‘termination payment’ from
the Appellant as of yet. The said contention must meet rejection,
since the interpretation made by the Arbitral Tribunal is based on
evidence and the privity of contract. Once ‘termination payment’
under Clause 32.6 becomes due and payable and Clause 1.1.111
includes ‘debt due’ within the fold of such ‘termination payment’,
there is no occasion for the lender of the Respondent to seek
payments from the Appellant directly. The lender of the
Respondent has no privity with respect to the Concession
Agreement and even though Clause 1.1.111 mentions that
termination payment includes amounts which are payable to
Concessionaire (the Appellant) and/or Lenders under the
73
Concession Agreement, the Arbitral Tribunal has found that as per
Clause 32.6, the termination payment is payable to the
Concessionaire, i.e., the Appellant. Therefore, while the definition
of ‘termination payment’ includes the amount payable to the
Appellant and / or to the Lenders, the payment itself is to be made
to the Appellant as per Clause 32.6. We do not find any reason to
override the reasoned interpretation made by the Arbitral Tribunal,
keeping in view that the arbitral disputes have to be kept between
the parties and privity of contract has to be maintained.
Pertinently, Clause 1.1.111 is definitional, while the amount itself
is due under Clause 32.6. At best, the interpretation of reading
‘and/or’ in the definition of ‘termination payment’ (under Clause
1.1.111) may help determine what constitutes termination
payment, but the amount is payable as per Clause 32.6 itself to the
Appellant. The argument of the Appellant is at best a different
interpretation suggested by it, which in our opinion is not at all a
correct reading of the contract, but in any case such a challenge
does not come within the ambit of challenge under section
34(2)(a)(iv) of the 1996 Act since merely the existence of a different
possible view is not sufficient for an award to be set aside.
74
72. Lastly, the challenge is laid to the quantum of interest which
is canvassed to be exorbitant. This plea has to be rejected at the
threshold on the ground that the aforesaid interest was
contractually agreed and is based on the bargain between the
parties. Pre-award interest rate of 14.75% is nothing but SBI PLR
+ 2% which came to 12.75% + 14.75% which is ordained as per
Clause 32.6 of the Concession Agreement itself. The post-award
interest rate of 18% is the statutory interest as per the unamended
Section 31 of the 1996 Act (as it stood prior to the 2016
Amendment, w.e.f. 23.10.2015). Interestingly, even the Appellant
has sought for the same rate of interest in their counter claim filed
before the Arbitral Tribunal. When the parties have, in exercise of
their party autonomy, laid down in the terms of the contract itself,
the contractual rate of interest, we see no reason to go behind the
agreement reached between them at a time when there was no
dispute. Party autonomy is one of the most sacrosanct principles
relating to arbitration law and in fact it is the backbone of
alternative dispute resolution mechanism. This Court is only to
uphold the bargain between the parties and their agreement in true
sense and not go into the thicket of reasonability behind such
bargain, unless the interest rate is so perverse and so
75
unreasonable as to shock the conscience of this Court. There may
be various reasons for the Appellant to have contractually accepted
a higher rate of interest as the parties were seeking international
finance and technology in executing the contract, we are not
required to go into this question and attempt to perceive the reason
behind such acceptance, but only to acknowledge that the
contractual rate is set.
73. Appellant has cited the Constitution bench judgment of this
Court in Gayatri Balasamy v. ISG Novasoft Technologies
Ltd.,
24 to state that this Court has power to reduce the interest
rate. Our attention is drawn to the reasoning of the Constitution
Bench wherein it has been held that post-award interest are future
oriented and depends on facts and circumstances of each case. In
this case at hand, the conduct of Appellant has been deplorable, it
has fought tooth and nail in pursuit to delay payment of
contractual dues. It has taken nineteen years since the Project was
terminated for the award to fructify. The pace of the dispute
resolution mechanism in the present case is a star witness for the
statement ‘justice delayed is justice denied’. It is even more
shocking that an interim application filed by the Respondent
24
(2025) 7 SCC 1.
76
herein in I.A. No. 187532 of 2019 has pointed out that there exists
various diplomatic exchanges between Malaysian High
Commission and Ministry of External Affairs, Government of India
regarding the delayed adjudication of this issue. It is in the holistic
consideration of facts and circumstances that we do not see any
reason to interfere with the saddling of the contractual and
statutory interest rate on the Appellant, which is completely just
and fair. Reliance in this regard may be placed on the recent
judgment of this Court in Sri Lakshmi Hotel (P) Ltd. v. Sriram
City Union Finance Ltd.
25
74. Before we part, we need to note that arbitral awards and
processes have to be treated with open judicial mind. There
remains a hesitancy still for some Courts to accept alternative
dispute resolution mechanisms. This hesitance is rooted in
suspicion of the process which often leads to re-examination of
evidence and re-interpretation of contractual terms at the stage of
Section 34 and Section 37 . This Court has to ensure that
arbitration is accepted as a norm, and its true essence, which is
party autonomy and equality is realized. Finality and uniformity in
judicial processes associated with or arising out of arbitration,
25
(2026) 3 SCC 600.
77
therefore, are ideals which are to be progressively realized by the
judiciary as a whole.
75. Consequently, this appeal is dismissed. Accordingly, all the
Interim Applications also stand disposed of. Further, the Registry
of the High Court is directed to release the deposited amount along
with accrued interest to the Respondent within two weeks from the
date of this judgment. So also, the Appellant is directed to pay the
remaining amount along with the accrued interest within a period
of three months to the Respondent herein.
….…….…………….………… J.
(J. K. MAHESHWARI)
…..…….…………….………… J.
(ATUL S. CHANDURKAR)
NEW DELHI;
MAY 29, 2026.
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