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As per case facts, an Arbitral Tribunal awarded damages for delayed commissioning of a solar power plant. A Single Judge, under Section 34 of the Arbitration Act, 1996, increased the
...liquidated damages from Rupees 1.2 crores to Rupees 27.06 crores. Subsequently, the Division Bench, in a Section 37 appeal, reduced this amount to Rupees 20.70 crores. These cross appeals were brought to the Supreme Court to challenge the Division Bench's modification of the compensation. The central legal question for the Supreme Court was whether a Section 34 Court can enhance an arbitral award and if a Section 37 Court can re-calculate damages. Finally, the Supreme Court held that the Section 34 Court's enhancement of reasonable compensation was permissible, especially for public utility projects where actual loss proof is not strictly required. However, the Division Bench had exceeded its Section 37 jurisdiction by re-calculating and substituting its own view for the Single Judge's plausible determination. Consequently, the Division Bench's judgment was set aside, and the Single Judge's Order was restored.
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