Tarapore & Company vs National Thermal Power Corporation Ltd.

$~J
* IN THE HIGH COURT OF DELHI AT NEW DELHI

Judgment reserved on: 20.12.2025
Judgment pronounced on: 12.05.2026

+ CS (OS) 1499/2008
TARAPORE & COMPANY ....Plaintiff
Through: Ms. Priya Kumar, Sr. Adv. with Ms.
Neelampreet Kaur, Adv.

versus

M/S NATIONAL THERMAL POWER CORPORATION LTD.
....Defendant
Through: Ms. Kanika Agnihotri, Adv.
+ OMP 408/2008
M/S NATIONAL THERMAL POWER CORPORATION LTD.
....Petitioner
Through: Ms. Kanika Agnihotri, Adv.

versus

M/s TARAPORE & CO., ENGINEERS & CONTRACTORS
....Respondent
Through: Ms. Priya Kumar, Sr. Adv. with Ms.
Neelampreet Kaur, Adv.


CORAM:
Digitally Signed
By:MAYANK
Signing Date:12.05.2026
20:38:05
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HON'BLE MR. JUSTICE JASMEET SINGH
J U D G M E N T
1. These are two petitions challenging the Arbitral Award dated
1

14.03.2008. M/s Tarapore and Co. was the claimant before the
2

Arbitrator whereas National Thermal Power Corporation was the
respondent and Counter Claimant before the Arbitrator.
2. NTPC has preferred O.M.P. No. 408/2008 under Section 34 of the
3
Arbitration and Conciliation Act, 199 challenging the Arbitral Award
to the extent of allowing of Claim Nos. 1(ii), 2, 3 and 4 raised by the
Tarapore Co. and to the extent of rejection/partially allowing of
Counter Claim Nos. 2, 3, 4, 6 and 8 raised by NTPC. On the other hand,
Tarapore has preferred C.S. (OS.) No. 1499/2008 filed under Section
4
33 of the Arbitration Act, 1940 challenging the Arbitral Award to the
extent of rejection/ partially allowing of Claim Nos. 1(i), 2, 4, 5, 6, 7, 8,
9 and 10 raised by Tarapore and to the extent of allowing Counter
Claim Nos. 1, 2, 5 and 7 raised by NTPC.
FACTUAL BACKGROUND
3. NTPCis a Government Enterprise and is engaged in the construction
and establishment of Super Thermal Power Projects and generation and
supply of thermal power to various electricity boards or successor
entities throughout India.
4. Tarapore is a duly registered partnership firm engaged in Contracting
Business.

1
“Tarapore” hereinafter.
2
“NTPC” hereinafter.
3
“1996 Act” hereinafter.
4
“1940 Act” hereinafter.
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By:MAYANK
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5. NTPC issued Notice Inviting Tender dated 04.05.1987 for execution of
the work of construction of Ash Bund Structure for Fly Ash Disposal at
Farakka Super Thermal Power Project Stage-I, Farakka, District
5
Murshidabad, West Bengal . Tarapore emerged as a successful bidder
and the Contract valued at Rs. 6.57 crores was awarded to it by NTPC.
6
NTPC issued the Telex of Award dated 16.02.1988 and further issued
7
a Letter of Award dated 28.03.1988.
6. The complete set of tender documents contained:
8
i. General Conditions of Contract
9
ii. Special Conditions of Contract
iii. Technical specifications
iv. Tender drawings
7. The GCC contained an Arbitration Clause being Clause No. 56 which
reads as under:
―Clause 56: Arbitration
Except where otherwise provided for in the contract, all
questions and disputes relating to the meaning of the
specifications, designs, drawings and instructions
hereinbefore mentioned and as to the quality of workmanship
or materials used on the work or as to any other question,
claim, right, matter or thing whatsoever, in any way arising
out of or relating to the contract, designs, drawings,
specifications, estimates, instructions, orders or these

5
“Work” hereinafter.
6
“TOA” hereinafter.
7
“LOA” hereinafter.
8
“GCC” hereinafter.
9
“SCC” hereinafter.
Digitally Signed
By:MAYANK
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conditions or otherwise concerning the works or the
execution or failure to execute the same whether arising
during the progress of the work or after the completion or
abandonment thereof shall be referred to the sole arbitration
of the General Manager of National Thermal Power
Corporation Ltd., and if the General Manager is unable or
unwilling to act, to the sole arbitration of some other person
appointed by the Chairman and Managing Director,
National Thermal Power Corporation Ltd., willing to act as
such arbitrator. There will be no objection if the arbitrator so
appointed is an employee of National Thermal Power
Corporation Ltd., and that he had to deal with the matters to
which the contract relates and that in the course of his duties
as such he had expressed views on all or any of the matters in
dispute or difference. The arbitrator to whom the matter is
originally referred being transferred or vacating his office or
being unable to act for any reason as aforesaid at the time of
such transfer, vacation of office or inability to act, Chairman
and Managing Director, National Thermal Power
Corporation Ltd. shall appoint another person to act as
Arbitrator in accordance with the terms of the contract. It is
also a term of this contract that no person other than a
person appointed by C.M.D., NTPC Ltd., as aforesaid should
act as arbitrator and if for any reason, that is not possible,
the matter is not to be referred to arbitration at all.
Digitally Signed
By:MAYANK
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Subject to as aforesaid, the provision of the Arbitration Act,
1940 or any statutory modification or re-enactment thereof
and the rules made there under and for the time being in
force shall apply to the arbitration proceedings under this
clause...‖
8. The stipulated period for completion of the project, as per the TOA
dated 16.02.1988, was a period of 22 months from the said date.
9. As per NTPC, Tarapore had to mobilize manpower and plant and
machinery during the month of March, 1988 but it was only on
04.04.1988 the Tarapore sought permission from NTPC to bring
machinery from various sites. Further, despite all the facilities and
despite fulfilling the obligations under the contract, Tarapore started the
work only on 06.05.1988. Subsequently, Tarapore stopped work on
11.06.1988 and resumed only in January, 1989,thus, wasting the time
of 5 months. The work was again halted on 22.06.1989 due to monsoon.
Tarapore committed several defaults/breaches of contract and executed
only 19% of the Contract whereafter left the site unilaterally without
any information in the month of June, 1989. Ultimately after several
request, NTPC issued a letter dated 20.04.1990 in terms of Clause No.
41 of GCC to resume the work in 21 days failing which the work would
be carried out at the cost of Tarapore and the bank guarantees, securities
deposited with NTPC would be encashed and machinery would be
confiscated.
10. Since, Tarapore unilaterally abandoned the work, NTPC was left with
no option but to terminate the Contract with immediate effect vide letter
dated 21.09.1990 and was constrained to award the work to
Digitally Signed
By:MAYANK
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Murshidabad Zila Parishad vide Agreement dated 22.09.1990. The Zila
Parishad completed the work on 15.08.1994 and NTPC had to incur an
additional cost of Rs. 2,65,83,518.00.
11. On the other hand, as per Tarapore, NTPC failed to provide peaceful,
congenial conditions at the site of work and due to constant interference
from the local trade union leaders Tarapore was unable to proceed to
complete the work. Tarapore was forced to leave the site and could not
even remove its machinery without the intervention of this Court in suit
bearing No. 2108-A of 1990 filed under Section 20 of the 1940 Act.
12. Since there were disputes between the parties, Tarapore invoked
arbitration vide legal notice dated 11.07.1990.
13. This Court while disposing of the suit No. 2108-A of 1990 vide order
dated 07.10.1996 directed the NTPC to appoint its General Manager as
the Arbitrator, in terms of the Arbitration Clause.
IMPUGNED AWARD
14. Initially, Mr. Shankarlingam, who was then serving as General
Manager was appointed as the Arbitrator. Subsequently, after his
elevation as a Chairman and Managing Director of NTPC, he appointed
Mr. Deshpande, also a General Manager, as the substituted Arbitrator.
Mr. Deshpande passed the impugned Award dated 14.03.2008
awarding Claim Nos. 1, 2, 3 and 4 in favour of Tarapore and Counter
Claim Nos.1, 2, 5 and 7 in favour of NTPC and thus, hereby awarded
NTPC an amount of Rs. 2,55,21,532.85/- and thereafter adjusted an
amount of Rs. 11,73,292/- awarded in the favour of Tarapore. Thus, the
net amount payable to NTPC by Tarapore totalled to Rs.
2,43,48,240.85/-. Aggrieved by the Award, both the parties have
Digitally Signed
By:MAYANK
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challenged the said Award. NTPC filed a petition under Section 34 of
the 1996 Act whereas, Tarapore file objections under Section 33 of the
1940 Act.
SUBMISSIONS ON BEHALF OF PARTIES
Preliminary objections:
a. Application of 1940 Act versus application of the 1996 Act
15. Ms. Priya Kumar, learned senior counsel for Tarapore, at the outset,
challenges the maintainability of the present proceedings filed by the
NTPC under the 1996 Act, submitting that the arbitration was invoked
in 1990 and is therefore, should be governed by the 1940 Act. Further,
the parties consistently proceeded under the 1940 Act, including filing
proceedings under Section 20 of the 1940 Act for appointment of the
Arbitrator and for revocation of the Arbitrator‟s authority, and never
agreed to be governed by the 1996 Act. Despite specific objections, the
present/substituteArbitrator assumed jurisdiction under the 1996 Act
and rendered the Award under the 1996 Act itself. Such unilateral
application of the 1996 Act to proceedings governed by the 1940 Act
vitiates the Award and renders it liable to be set aside on this ground
alone.
16. Opposing the same, Ms. Kanika Agnihotri, learned counsel for NTPC,
objects to the maintainability of Tarapore‟s objections under Section 33
of the 1940 Act and submits that Clause No. 56 of the GCC being the
Arbitration Clause expressly applies the 1940 Act or “any statutory
modification or re-enactment thereof”, thereby making the intention of
parties manifestly clear to be governed by the law in force at the time of
the proceedings, i.e. the 1996 Act. She further submits that the disputes
Digitally Signed
By:MAYANK
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were referred to arbitration by order dated 07.10.1996, by which the
1996 Act had already come into force. Further and most importantly,
Tarapore itself, by letter dated 04.02.1999 and subsequent
correspondence, requested the Arbitrator that the proceedings be
conducted under the 1996 Act. Having consented to and participated in
the proceedings under the 1996 Act, Tarapore cannot now turn around
and invoke the 1940 Act.
b. Appointment of Arbitrator, i.e. the respondent No. 3 in CS (OS)
is contrary to the provisions of the 1996 Act
17. Further, learned senior counsel for Tarapore raises another preliminary
issue and submits that the appointment of the Arbitrator is contrary to
the provisions of the 1996 Act. The appointment of Mr. T.
Shankarlingam as Sole Arbitrator was fundamentally flawed and gave
rise to a serious apprehension of bias. Though his appointment dated
04.12.1996 was earlier challenged on the ground that he was the
General Manager of the very project in dispute, and this Court, while
declining to interfere vide order dated 12.08.1998, did so only on the
premise and presumption that he would act independently and fairly.
However, contrary to NTPC‟s representation that he was no longer in
charge of the project and that the proceedings would be conducted in
Delhi, Mr. Shankarlingam fixed the first hearing at Farakka without
consent or prior intimation to Tarapore. The conduct of a serving NTPC
officer, who had dealt with the project and contract in question, was
inconsistent with the requirement of impartiality and equal treatment
under the 1996 Act. Once his conduct gave rise to a reasonable
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By:MAYANK
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apprehension of bias, not only continuation of his mandate but also any
subsequent appointment made by him stood vitiated.
18. Learned counsel for NTPC submits that the allegations of bias against
Mr. T. Shankarlingam, the respondent No. 2 in C.S. (OS) No.
1499/2008, does not have any basis. Mr. T. Shankarlingam, the original
Arbitrator and Mr. G.J. Deshpande, the respondent No. 3 in C.S. (OS)
No. 1499/2008 and also the subsequent Arbitrator, acted fairly,
independently andwith complete impartiality throughout the
proceedings. In fact, in the meeting dated 23.03.2002, Mr. Deshpande
expressly offered, subject to consent of the parties, to commence the
proceedings de novo , which itself demonstrates the fairness and
transparency adopted in the arbitral process.
19. Moreover, the respondent No. 2, though posted as General Manager,
Farakka, had no role in the execution of the balance work or in raising
Counter Claims, which had in fact been initiated much earlier and was
revised by the competent authority. This Court, in OMP No. 158/1997,
had already rejected Tarapore‟s apprehension that the respondent No. 2
had raised the Counter Claims or had become a judge in his own cause.
In any event, the final Award was not passed by the respondent No. 2,
rather by the substituted Arbitrator, i.e. the respondent No. 3.
Objections on merits:
20. Learned senior counsel for Tarapore vociferously opposes the Award to
the extent of disallowing and partly allowing Claim Nos. 1(i), 2, 4, 5, 6,
7, 9 and 10 and allowing Counter Claim Nos. 1, 2, 5 and 7.She states
that the entire Award is devoid of any reasoning and primarily
predicated on the findings on the preliminary issues. Even the findings
Digitally Signed
By:MAYANK
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on preliminary issues are devoid of any reasons and does not even deal
with contentions of Tarapore.
21. On the other hand, learned counsel for NTPC, vehemently opposes the
challenge of Tarapore and further challenges the Award to the extent of
allowing of Claim Nos. 1 (ii), 2, 3 and 4 and rejection of Counter Claim
Nos. 2, 3, 4, 6 and 8.
th th
Claim No. 1: Payment under 10 and 12 R.A. Bill
Challenged by both Tarapore and NTPC
22. Learned senior counsel for Tarapore states that the Arbitrator has fallen
into manifest error both on facts and in law inasmuch as certain pleas
raised by the NTPC have been accepted as correct without perusing any
evidence on record. He has failed to appreciate that such measurements
were duly and jointly signed by the parties and that the final
quantification of the work executed was never in dispute. Since the
statements were jointly signed, the Arbitrator was duty bound to accept
the Claim in its entirety rather than unjustifiably reducing the same by
permitting disputed recoveries.
23. She further contends that the Arbitrator has committed an error in
recording a finding that delays were occasioned due to outside factors.
He conveniently ignored the fact that NTPC was under a clear
obligation to ensure conducive and workable site conditions to
facilitate timely execution of the work, and the failure to do so resulted
in murder of two engineers of Tarapore. The violation of ensuring
conducive and workable site ought to have enured to the benefit of
Tarapore. Moreover, the Arbitrator has erred in law in accepting vague
and general denials advanced by the NTPC, contrary to the settled
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By:MAYANK
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principles that such general denials are liable to be treated as
admissions.
24. While opposing the submissions of learned senior counsel for Tarapore,
learned counsel for NTPC submits that the challenge to Claim No. 1,
th
pertaining to payments under 10 R.A Bill, is wholly misconceived.
th
The gross amount of the 10 R.A. Bill being Rs. 11,82,064.10 was
jointly signed and duly accepted by both parties. Out of the said
amount, Rs. 8,77,250.10 was released as an advance to Tarapore. The
balance amount stood validly adjusted towards the following:
a. Security deposit @ 5% : Rs. 59,103.00/-
b. Mobilisation advance @ 5% : Rs. 59,103.00/-
c. Secured advance : Rs. 1,71,210.00/-
d. Income Tax @2.16% on the balance amount : Rs. 1,609.00/-
e. Interest on mobilisation advance from 21.06.89 to 10.07.89 on Rs.
2,30,090 : Rs. 13,789.00/-
25. Tarapore was duly informed by the NTPC vide letter dated 08.08.1989
th th
that no amount remained payable against the 10 and 11 R.A. Bills
26. While challenging the Award with respect to Claim No. 1(ii), which
th
pertains to the 12 R.A. Bill for Rs. 14,68,454/-, the learned counsel for
NTPC states that Tarapore failed to send any representative for joint
measurement despite repeated requests, including letter dated
03.07.1989. It was only pursuant to the order dated 30.11.1990 of the
High Court that joint measurement was conducted. Upon such
measurement, the gross value of the Bill came to be Rs. 7,68,933.10/-
and, after recovering security deposit of 5% i.e. Rs. 38,446.65, income
tax of 2.16% i.e. Rs. 16,608/- and cost of 2.27 MT cement i.e. Rs. 6,356
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th
the net amount payable under the 12 R.A. Bill was computed to be Rs.
7,07,521.50. However, the Arbitrator failed to consider that only a sum
of Rs. 4,80,543/- is payable after deducting a sum of Rs. 2,26,798.00
which had already been released to Tarapore as on account payment
towards price adjustment amount, which should not have been payable
in terms of Clause No. 53.7 of the GCC, as it clearly bars price
adjustment where delay was attributable to the contractor, in this case
Tarapore. The Arbitrator has himself held that Tarapore is responsible
for delay and for abandoning the work. In view thereof, the award to the
extent of Rs. 2,26,798.00 is ex facie contrary to the contractual
provisions and is liable to be set aside.
Claim No. 2: Escalation under the Contract
Challenged by both Tarapore and NTPC
27. With respect to Claim No. 2 relating to escalation under the Contract
where the Arbitrator awarded an amount of Rs.3,29,585/-, learned
senior counsel for Tarapore submits that the Arbitrator has acted in an
arbitrary manner in awarding of 50% of the escalation Claim as the
Arbitrator himself has categorically held that the delay in execution of
the works was justified and occasioned by factors beyond the control of
the parties. There was no legal or contractual basis to restrict the
escalation Claim to 50%, rather the entire escalation Claim ought to
have been allowed. The finding of the Arbitrator that third party
interference causing delays fell outside the scope of the contract could
not have been a ground to divide the burden of escalation equally
between the parties. The failure of NTPC to ensure safety and prevent
disruptions, directly contributed to the delays. Furthermore, NTPC
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itself had accepted and paid escalation in full, which renders rationale
of allowing the Claim of escalation only to the extent of 50%, arbitrary.
Thus,the Award, to this extent, suffers from patent illegality and
arbitrariness.
28. Learned counsel for NTPC, in this regard submits that Tarapore‟s
Claim for escalation of Rs. 6,59,170/- is contrary to the express terms of
the Contract. Although provisions for price adjustment exist in the said
contract being Clause No. 8.1.0 of LOA and Clause No. 7.0.0 of the
SCC read with Clause No. 53 of GCC, but the same has to be read with
Clause No. 53.7 of the GCC which clearly bars such price escalation
where delay is attributable to the contractor, in this case Tarapore.
Tarapore failed to adhere to the stipulated schedule by commencing
work belatedly on 06.05.1988 and also did not execute it as per the
work schedule. Hence, no escalation was payable. The Arbitrator,
despite noting the delay, erroneously awarded 50% of the Claim on an
equitable and hypothetical basis by attributing delay to third parties.
The same is dehors the Contract.
Claim No. 3: Miscellaneous Works
Challenged by NTPC
29. NTPC opposes the finding on Tarapore‟s Claim for Rs. 28,550/- and
Rs. 8,250/- towards miscellaneous works. It is stated that the same is
not covered within the scope of executing the construction of the Ash
Bund. The said works were required to be executed by Tarapore for
having temporary access to the site, which squarely falls within the
obligations of the contractor, i.e. Tarapore, under Clause No. 17.1 of
the GCC. The Arbitrator, in allowing the said Claim, has failed to
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appreciate the clear import of Clause No. 17.1 and has erroneously
awarded amounts contrary to the interpretation of the terms of the
Contract. He has further failed to appreciate that there is no provision in
the Contract providing for such payment by NTPC. The Award to the
extent of Claim No. 2 thus, travels beyond the contractual provisions,
including Clause No. 47(a) and (b) of the GCC, and is liable to be set
aside.
30. Learned senior counsel for Tarapore, opposes the said challenge and
submits that the challenge raised by NTPC to the Award allowing Rs.
36,800/- towards miscellaneous works is wholly untenable. Once the
work is executed, NTPC cannot evade payment on a technical plea of
scope of the Contract, particularly when the works were carried out in
connection with and for the benefit of the project. The objection of
NTPC being based on the fact that the Arbitrator has travelled outside
the scope of the terms of the GCC, is an unjust attempt to deny
legitimate dues for work admittedly performed. Therefore, NTPC
cannot be permitted to take advantage of its own breaches, which
hindered the proper execution of corresponding obligations. The
conduct of NTPC in resisting payment, despite deriving benefit from
the work done by Tarapore, is inequitable.
Claim No. 4: Diesel Generating Set Charges
Challenged by both Tarapore and NTPC
31. With regards to Claim No. 4, Ms. Kumar, learned senior counsel, states
that the Arbitrator has acted arbitrarily in restricting the Claim to 50%
despite recording a clear finding that Tarapore was entitled to free
supply of electricity/power and that NTPC had failed to discharge this
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10
obligation, necessitating deployment of diesel generating sets at site.
The detailed expenditure incurred in this regard was duly placed on
record but still was wholly disregarded without any justification.
Further, the Arbitrator arbitrarily presumed that a portion of the
electricity was utilized for residential purposes of the labour, in the
absence of any evidence led by NTPC in that regard. Such an
assumption was beyond the scope of the evidence placed on record.
Thus, Award to the extent of Claim No. 4 is liable to be set side.
32. Learned counsel for NTPC states that the Award of 50% of the Claim
amounting to Rs. 1,99,131/- towards DG set charges is extraneous to
the Contract. As per Clause No. 5.0.0 of the SCC read with Clause No.
48 of the GCC, Tarapore was permitted reimbursement of power
generated strictly for construction purposes at State Electricity
11
Board tariff rates. Tarapore, however, utilized the generated power for
residential accommodation of its staff, which was expressly excluded
from the Contract and chargeable at applicable SEB rates. Despite
specific directions issued by NTPC vide letter dated 27.01.1989 to
segregate lines and install meters for proper assessment, Tarapore
failed to comply. Moreover, the DG set deployed was excessive, and
Claims based on its running or idling were unjustified. Tarapore cannot
seek reimbursement beyond actual and permissible contractual usage.
Thus, Tarapore is not entitled to any amount under this head.
Claim No. 5: Idling charges of resources
Challenged by Tarapore

10
“DG” hereinafter.
11
“SEB” hereinafter.
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33. Learned senior counsel for Tarapore submits that the rejection of Claim
No. 5, pertaining to idling charges of plant, machinery and equipment,
is liable to be set aside. While the Arbitrator accepted that delays had
been caused because of which Tarapore could not complete the work on
time, however, he erroneously denied the Claim on the ground that the
delays were caused by external factors and that there was no contractual
provision entitling Tarapore to idling charges. The Award is liable to be
set aside with respect to this Claim as the aforesaid reflects a complete
misappreciation of the law of damages, inasmuch as the absence of an
express enabling clause does not bar a legitimate claim for damages
unless specifically prohibited by the contract. Further, the Arbitrator
failed to consider the evidence on record regarding the costs incurred,
summarily rejected a substantial Claim without proper reasoning, and
ignored material relevant to establishing delay attributable to NTPC.
34. Disputing the same, the stance of NTPC is such that Claim of Tarapore
seeking an amount of Rs. 2,72,36,000/- towards alleged idling of plant,
machinery and equipment is wholly untenable and has been rightly
rejected by the Arbitrator. The Claim is de hors the Contract as there is
no provision for computation or payment of idling charges. In the
absence of any term in the Contract, NTPC cannot be held liable to pay
such charges. The alleged delay is attributable to external factors such
as law and order disturbances and heavy monsoon, which were beyond
the control of NTPC. Tarapore cannot seek to shift the burden of such
eventualities upon NTPC.
35. It is further submitted that Tarapore was itself grossly deficient in
performance, having executed only about 19% of the work over a
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substantial period of 16½ months out of the stipulated 22 months.
Tarapore abandoned the site during monsoon in 1988 and resumed only
in January 1989, despite the monsoon having subsided much earlier by
the middle of August. Notably, no responsible officer was posted at site
during this period. The computation of alleged idling charges is,
therefore, baseless. Even otherwise, NTPC extended all reasonable
assistance and cannot be held liable for circumstances beyond its
control. In these circumstances, the Claim has been rightly rejected.
Claim No. 6: Losses on account of removal of components from
machinery and equipment
Challenged by Tarapore
36. Challenging the findings on the said Claim, learned senior counsel for
Tarapore also contends that the Arbitrator has erroneously rejected
Claim No. 6 on the ground that it is outside the scope of Contract. He
ignored the fact that it was due to NTPC‟s fault that Tarapore had to
abandon its work and leave behind the equipment. For compensation on
such a Claim there is no requirement of a positive clause in the contract
in this regard.
37. It is submitted by the learned counsel for the NTPC that the contention
of learned senior counsel for Tarapore in respect of Claim No. 6,
seeking Rs. 15,33,375/- towards alleged losses arising from removal of
components of machinery and equipment, is wholly misconceived and
liable to be rejected. It is an admitted position that the machinery and
equipment were neither in the custody nor within the premises of
NTPC, but were retained by the Tarapore in its own camp office,
occupied as a licensee. The said equipment remained under the
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exclusive control, custody and security of Tarapore. No liability can be
attributed to it for the alleged removal of components or damage to the
equipment. NTPC had no role whatsoever in the upkeep, maintenance
or security of the Tarapore‟s machinery.
Claim No. 7: Loss of profit
Challenged by Tarapore
38. It is stated by Tarapore that the Arbitrator has erred in law in rejecting
the Claim No. 7 on the ground that it fell outside the scope of the
Contract and on the erroneous premise that Tarapore had abandoned the
work. The Arbitrator has failed to appreciate that loss of profit is a
well-recognized legal entitlement, upheld by the Hon‟ble Supreme
Court in catena of cases, and could not have been rejected as being
beyond the scope of the Contract. Moreover, the conclusion regarding
alleged abandonment is also erroneous as the material on record clearly
demonstrates that performance was rendered impossible due to
supervening circumstances, and therefore, the conclusion of
abandonment does not arise.
39. It is submitted by NTPC that the contention of learned senior counsel
for Tarapore in respect of the Claim for Rs. 52,16,179/- towards alleged
loss of profit is also liable to be rejected. The Arbitrator has rightly
disallowed the said Claim, as Tarapore had unilaterally abandoned the
work. Tarapore has committed fundamental breaches of the Contract. A
party in breach cannot be permitted to Claim loss of profit arising out of
its own default. It is an admitted position that Tarapore executed merely
about 19% of the work over 16½ months out of the stipulated 22
months, and thereafter abandoned the project without justification.
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Despite repeated requests and reminders, Tarapore failed to resume and
complete the work.
Claim No. 8: Damages
Challenged by Tarapore
40. Ms. Kumar, learned senior counsel further states that the Arbitrator has
erred in law in rejecting Claim No. 8 pertaining to losses on account of
idle labour/excess wages and idle establishment, on the untenable
ground that involvement of a third party absolves NTPC of its liability.
Clause No. 13.2 of the Contract expressly contemplates acts of third
parties, and therefore, the conclusion of the Arbitrator is contrary to the
terms of the Contract. Even otherwise, it is a well-settled principle that
where a party fails to provide adequate facilities for execution of the
work, it is liable for the consequences arising therefrom. In this regard,
reliance is placed on the judgment of the Hon‟ble Supreme Court in
12
K.N. Sathyapalan v. State of Kerala and Anr.
41. NTPC rebuts the Claim for Rs. 71,39,262/- towards alleged damages
stating that the Arbitrator has rightly disallowed the Claim, holding that
no liability can be fastened upon NTPC. The Claim is de hors the
Contract and is, in substance, merely an extension of Claim No.5.
NTPC further specifically denies any obligation to ensure a peaceful or
congenial working atmosphere at or around the site as being a public
sector undertaking, NTPC cannot be held responsible for matters of law
and order, which fall exclusively within the domain of the government
authorities. The allegations regarding forced imposition of local labour
are unfounded. Hence, the Claim is stated to be baseless.

12
(2007) 13 SCC 43.
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Claim No. 9: Refund of Security Deposit
Challenged by Tarapore
42. With regards to Claim No. 9, Ms. Kumar, states that while deciding
whether NTPC is entitled to retain the security deposit merely on the
ground that Tarapore could not complete the work, the Arbitrator has
failed to appreciate that completion of the work had become impossible
for reasons beyond the control of Tarapore, as already demonstrated. In
such circumstances, Tarapore could not have been penalized and was,
in fact, entitled to appropriate compensation.
43. As per NTPC the Claim of Rs. 1,68,497/- towards refund of security
deposit is wholly misconceived and liable to be rejected. The amount of
Rs. 5 lakhs was released to Tarapore on submission of bank guarantee.
In terms of Clause No. 9.6 of the GCC, 50% of the security deposit is
refundable only upon successful completion of the work, and the
balance 50% upon expiry of the defects liability period or payment of
the final Bill. Tarapore has admittedly failed to perform the contract
and abandoned the work. The very purpose of the security deposit is to
secure due performance, the same is liable to be forfeited in the event of
non-performance.
Claim No. 10: Interest on Claims
44. The Claim pertains to interest and has been challenged by Tarapore.
The said challenge has been disputed by NTPC.
Counter Claim No. 1: Unadjusted amount of balance mobilisation
advance
Challenged by Tarapore
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45. Learned senior counsel for Tarapore, states that the conclusion of the
Arbitrator with respect to allowing refund of the balance mobilisation
advance and adjusting the same against the Claims of Tarapore is
incorrect and illegal.
46. While opposing the said contention, it is submitted by the learned
counsel for NTPC that the terms of Clause No. 6.0.0 of the LOA read
with Clause No. 54 of the GCC, NTPC had disbursed a total sum of Rs.
26.30 lakhs to the Tarapore as mobilization advance against a Bank
Guarantee, carrying interest @ 12% per annum. The said advance was
contractually required to be recovered from R.A.Bills @ 5%. However,
as Tarapore executed only about 19% of the work and thereafter
abandoned the project. NTPC was deprived of the opportunity to fully
recover the advance through running Bills. Only a sum of Rs.
th
5,92,088/- could be adjusted up to the 11 R.A. Bill, leaving a balance
of Rs. 20,37,912/- outstanding, payable to NTPC. In these
circumstances, NTPC was fully entitled to recover the said amount, and
the Arbitrator has rightly allowed the recovery of Rs. 20,37,912/-
towards the unadjusted balance of mobilization advance.
Counter Claim No. 2: Interest on mobilisation advance
Challenged by both Tarapore and NTPC
47. The Counter Claim No. 2 pertains to interest on mobilisation advance.
Learned senior counsel for Tarapore submits that since the Arbitrator
has erred in allowing return of mobilisation advance in Counter Claim
No. 1, the interest allowed thereon is also incorrect in law. The
Arbitrator has applied different yardsticks in allowing the interest.
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48. Learned counsel for NTPC submits that the Arbitrator has rightly
awarded interest on the outstanding mobilization advance. As stated in
Counter Claim No. 1, NTPC had advanced a sum of Rs. 26.30 lakhs to
Tarapore, out of which a balance of Rs. 20,37,912/- remains
unrecovered. In terms of the Contract, the said mobilization advance
carried interest @ 12% per annum, and Tarapore is liable to pay interest
on the outstanding amount from 11.07.1989 till payment. In these
circumstances, the award of Rs. 44,34,049.85/- towards interest was
fully justified.
Counter Claim No. 3: Recovered, secured advance paid against
materials amounting to Rs. 96,534/-
Challenged by NTPC
49. Ms. Agnihotri, learned counsel, further opposes the findings of the
Arbitrator on Counter Claim No. 3 as he has erred in rejecting the
Counter Claim for Rs. 96,534/- towards unrecovered secured advance
paid against the material. A sum of Rs. 2,31,884/-, belonging to NTPC,
remained blocked from 21.04.1989 to 06.08.1991 due to Tarapore‟s
delays and laches, rendering the amount unproductive and unavailable.
It was only from 06.08.1991 the material could be used by
Murshidabad Zila Parishad. In these circumstances, NTPC should be
entitled to interest for the period during which the amount remained
blocked.
50. Learned senior counsel for Tarapore submits that Counter Claim No. 3
does not call for any interference. It is submitted that the materials
purchased from the said advance were admittedly procured by Tarapore
and remained at site when Tarapore was compelled to leave. NTPC,
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therefore, had the benefit and possession of the said materials, and no
further recovery could lawfully be claimed. If the materials had been
used by Tarapore in execution of the work, their value would have
formed part of the running Bills, against which the secured advance
would have stood adjusted. Thus, NTPC cannot be permitted to
repeatedly compensate itself over the same alleged loss.
Counter Claim No. 4: Licence Fee and electricity charges for
accommodation of NTPC and FBP quarters
Challenged by NTPC
51. Learned counsel for NTPC also submits that the rejection of Counter
Claim No. 4 for Rs. 42,767.75/- towards license fee and electricity
charges is wholly erroneous. Clause No. 47 of the GCC only provided
for free allotment of land for site-related purposes. Tarapore, however,
sought and was allotted residential quarters in NTPC and Farakka
Barrage Project townships for its staff, for which it was liable to pay
license fee and electricity charges. Tarapore had, in fact, been regularly
paying such charges earlier without any demur. There is no contractual
provision for waiver of these charges. The Arbitrator, in rejecting the
Counter Claim, has failed to appreciate the clear contractual position,
rendering the impugned finding liable to be set aside.
52. Learned senior counsel for Tarapore submits that the Counter Claim
pertains to alleged license fee and electricity charges for
accommodation provided to Tarapore‟s staff. Under the Contract, it
was NTPC‟s obligation to provide the requisite site area and necessary
facilities for labour and staff accommodation in connection with
execution of the work. Further, Farakka Barrage Project Authorities
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were not parties to the arbitral proceedings, and any claim allegedly
raised by them could not be passed on to Tarapore in arbitration. Once
provision of site and basic facilities formed part of NTPC‟s own
obligations, no separate recovery on this account could be claimed from
Tarapore. Accordingly, the rejection of Counter Claim No. 4 is justified
and warrants no interference.
Counter Claim No. 5: Cost of Balance work executed at the risk and
cost of the Tarapore
Challenged by Tarapore
53. Learned senior counsel for Tarapore submits that the Arbitrator erred in
allowing the Counter Claim towards execution of the balance work at
Tarapore‟s alleged risk and cost. Tarapore was compelled to abandon
the site due to NTPC‟s failure to provide a safe and workable
environment for its staff and labour, despite being aware of persistent
law and order disturbances and external interference at site. Having
failed to ensure workable conditions for execution, NTPC could not
thereafter recover the alleged additional expenditure incurred in getting
the balance work completed through someone else. The said Counter
Claim is contrary to the contract, as the risk and cost clause could be
invoked only upon valid termination/cancellation of the Contract,
which never took place. Mere reference in the TOA dated 16.02.1988
for execution of work at Tarapore‟s risk and cost did not amount to
termination of the Contract. In the absence of termination in terms of
the Contract, the very foundation of the Counter Claim was lacking.
Thus, the Award to this extent is liable to be set aside.
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54. It is submitted on behalf of NTPC that the Arbitrator has erred in
partially allowing the Counter Claim towards cost of balance work
executed at the risk and cost of Tarapore. As per Clause EEE of the
TOA dated 16.02.1988, NTPC was entitled to get the balance work
executed through another agency at the risk and cost of Tarapore upon
its failure to complete the work. Though the Arbitrator has rightly held
Tarapore to be in default, he has incorrectly restricted the Award only
to the differential value of the Contract awarded to Murshidabad Zila
Parishad. The Arbitrator has failed to consider the total financial
implication incurred by NTPC in completing the balance work, which
amounted to Rs. 2,65,83,518/-. In terms of the Contract, the entire cost
was recoverable from Tarapore.
Counter Claim No. 6: Amount spent for raising existing ash dyke due
to non-completion of stage-1 ash dyke
55. Although the Counter Claim No. 6 has been challenged by NTPC, no
substantive arguments were advanced to substantiate the challenge.
The same does not warrant independent consideration.
Counter Claim No. 7: Liquidated Damages
Challenged by Tarapore
56. It is submitted on behalf of Tarapore that the Arbitrator has erred in law
in allowing Counter Claim No. 7 towards liquidated damages. The said
finding is inconsistent with other findings, particularly in the absence of
any termination of the contract or prior notice for imposition of such
damages. There was neither delay nor default attributable to the
Tarapore so as to justify levy of liquidated damages. The Arbitrator has
also failed to consider that the Counter Claim was ex facie barred by
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limitation. In terms of Section 3 of the Limitation Act, 1963 it was
incumbent upon the Arbitrator to independently satisfy himself that the
Counter Claim was within limitation; the burden could not have been
shifted upon Tarapore. Mere existence of a clause in the GCC does not
ipso facto justify imposition of liquidated damages. In any event,
liquidated damages operate as a cap on liability, and the simultaneous
award of both liquidated damages and risk and cost for the same cause
of action is impermissible in law. Thus, it is liable to be set aside.
57. Opposing the challenge to Counter Claim No. 7, learned counsel for
NTPC states that the Arbitrator has rightly awarded a sum of Rs.
32,88,304/- towards liquidated damages, in terms of Clause No. 9.0.0
of the LOA. The Contract stipulated that the work was to be completed
within 22 months from the date of intimation of grant of work, failing
which Tarapore would be liable to pay liquidated damages at ½% per
week of the contract value for the period of delay. Tarapore failed to
complete the work and abandoned approximately 81% of the project,
thereby causing substantial delay and breach of contractual obligations.
Therefore, the findings on said Counter Claim does not warrant any
interference.
Counter Claim No. 8: Interest
Challenged by NTPC
58. It is submitted on behalf of NTPC that the Arbitrator has erred in not
awarding interest on the amounts found due to NTPC. It is well settled
that an Arbitrator is competent to award interest for the pre-reference,
pendente lite , and post award periods. In the present case, a sum of Rs.
2,55,21,532.85 has been awarded in favour of NTPC and hence,
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interest at 18% per annum ought to have been granted from the date the
amounts became due till the date of actual payment.
59. Rebutting the same learned counsel for Tarapore submits that no
amount was payable to NTPC in the first place, consequently, no
question of payment of interest could arise. Since nothing was payable
to NTPC, the Counter Claim for interest was wholly untenable.
ANALYSIS AND FINDINGS
60. I have heard the learned counsel for the parties.
61. Before delving into the merits and contentions raised by the parties of
the present case it is pertinent to decide the applicability of the 1996 Act
vis-à-vis the 1940 Act.
Applicability of the 1996 Act versus the applicability of the 1940 Act
62. The learned counsel for Tarapore argued in the favour of applicability
of the 1940 Act whereas learned counsel for NTPC argued in the favour
of the applicability of the 1996 Act. However, during the course of
arguments, learned counsel for Tarapore fairly conceded to the
applicability of the 1996 Act.
63. In the view of the aforesaid, the objections filed under Section 33 of the
1940 Act shall be treated as objections against the Award under Section
34 of the 1996 Act.
Scope of Section 34 under the 1996 Act
64. Since the parties have agreed to the applicability of the 1996 Act, it is
apposite to highlight the scope of Section 34 of the 1996 Act as it stood
prior to 2015 amendment to the 1996 Act.
65. The Court can only set aside an Arbitral Award on the grounds
mentioned in Section 34 of the 1996 Act and not otherwise. The scope
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of interference under Section 34 of the 1996 Act is very limited and the
Court does not sit as a Court of appeal while adjudicating the objections
against the Award. The Hon‟ble Supreme Court in Associate Builders
13
v. DDA , summarised the scope of Section 34 of the 1996 Act, as it
stood prior to 2015 Amendment as under:
― 19. When it came to construing the expression ―the public
policy of India‖ contained in Section 34(2)(b)(ii) of the
Arbitration Act, 1996, this Court in ONGC Ltd. v. Saw Pipes
Ltd. [(2003) 5 SCC 705 : AIR 2003 SC 2629] held : (SCC pp.
727-28 & 744-45, paras 31 & 74)
―31. Therefore, in our view, the phrase ‗public policy of
India‘ used in Section 34 in context is required to be
given a wider meaning. It can be stated that the concept
of public policy connotes some matter which concerns
public good and the public interest. What is for public
good or in public interest or what would be injurious or
harmful to the public good or public interest has varied
from time to time. However, the award which is, on the
face of it, patently in violation of statutory provisions
cannot be said to be in public interest. Such
award/judgment/decision is likely to adversely affect the
administration of justice. Hence, in our view in addition
to narrower meaning given to the term ‗public policy‘ in
Renusagar case [Renusagar Power Co. Ltd. v. General
Electric Co., 1994 Supp (1) SCC 644] it is required to

13
(2015) 3 SCC 49.
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be held that the award could be set aside if it is patently
illegal. The result would be—award could be set aside if
it is contrary to:
(a) fundamental policy of Indian law; or
(b) the interest of India; or
(c) justice or morality, or
(d) in addition, if it is patently illegal.
Illegality must go to the root of the matter and if the
illegality is of trivial nature it cannot be held that award
is against the public policy. Award could also be set
aside if it is so unfair and unreasonable that it shocks
the conscience of the court. Such award is opposed to
public policy and is required to be adjudged void...
xxxx
Fundamental Policy of Indian Law
27. Coming to each of the heads contained in Saw
Pipes [(2003) 5 SCC 705 : AIR 2003 SC 2629] judgment, we
will first deal with the head ―fundamental policy of Indian
law‖. It has already been seen from Renusagar [Renusagar
Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC
644] judgment that violation of the Foreign Exchange Act
and disregarding orders of superior courts in India would be
regarded as being contrary to the fundamental policy of
Indian law. To this it could be added that the binding effect of
the judgment of a superior court being disregarded would be
equally violative of the fundamental policy of Indian law.
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xxxx
31 . The third juristic principle is that a decision which is
perverse or so irrational that no reasonable person would
have arrived at the same is important and requires some
degree of explanation. It is settled law that where:
(i) a finding is based on no evidence, or
(ii) an Arbitral Tribunal takes into account something
irrelevant to the decision which it arrives at; or
(iii) ignores vital evidence in arriving at its decision, such
decision would necessarily be perverse.‖
66. With this scope in mind, I shall now deal with rival contentions with
respect to preliminary objections, Claims and Counter Claims.
Plea of Bias against the Arbitrator
67. At the outset, I am of the considered view that the Award stands vitiated
by the vice of bias. A detailed analysis which follows, shows that the
initial Arbitrator, Mr. T. Shankarlingam, was a serving General
Manager of NTPC and the substituted Arbitrator, Mr. Deshpande, who
passed the Award was likewise a serving employee of NTPC, having
been appointed by the previous Arbitrator, Mr. Shankarlingam upon his
promotion to the position of Chairman and Managing Director. The
very fact that the appointment of the subsequent Arbitrator was made
by an interested official of NTPC, gives rise to reasonable apprehension
regarding lack of independence and impartiality in the arbitral process.
The doubt further deepens as the impartiality of the previous Arbitrator
was already called into question twice by Tarapore at different stages of
the Arbitral Proceedings. There is already an existing finding of this
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Court in the first challenge to the impartiality of the Mr. T.
Shankarlingam, the Court has proceeded forward with the presumption
that the Arbitrator being the senior employee of NTPC would act
independently and free from bias. The order dated 12.08.1998 passed
by this Court reads as under:
―12.8.1998
Present: Mr. Jagdip Kishore for the Petitioner.
Mr. R.K. Joshi for respondent No. 1
O.M.P. No. 158/96 & I.A. No. 12886/96
….
I have heard Mr. Jagdip Kishore, counsel appearing for
the petitioner as also Mr. R.K. Joshi, counsel for
respondent No.1.
The arbitration agreement is also on record which states
that disputes arising between the parties are to be referred
to the sole arbitration of the GeneralManager of National
Thermal Power Corporation Ltd., and if the General
Manager is unable or unwilling to act, the same shall be
referred to the sole arbitration of some other person
appointed by the Chairman and Managing Director,
National Thermal Power Corporation Ltd. willing to act as
such arbitrator. Effect to the aforesaid arbitration agreement
was given under order dated 7.10.1996 of this Court,
However. while giving effect to the aforesaid arbitration
clause, this Court made it clear that the General Manager
who was in-charge of the project question the relevant time
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might not be appointed as the arbitrator in the present case
in order to do justice to the parties and in order to root out
element of bias on the part of the arbitrator. It was also
mentioned in the said order that the General Manager so
appointed as the arbitrator may be preferably a person who
is working at the Regional/Head Office at Delhi.
I have considered the tenor of the aforesaid order and I
find that the restriction put in the otherwise discretionary
power of the Chairman and the Managing Director of
National Thermal Power Corporation Ltd., was to the extent
that the General Manager who was in-charge of the project
in question at the relevant time should not be appointed as
the arbitrator. The Court also expressed a desire that while
making such appointment, the appointing authority may
consider appointing a General Manager, if possible, from the
Regional/Head Office at Delhi. It has been categorically
stated by the counsel appearing for the respondents that the
respondent No.2 was not in-charge of the project in question
at relevant time nor he had any occasion to deal with the
disputes referred to him for arbitration at that point of time
earlier to the present reference. Counsel appearing for the
respondents states that the respondent No.2 although at the
time of his appointment was working as the General
Manager of Farakka Super Thermal Power Station, but, has
since been promoted as the Executive Director (Engineering
Services) and at present is posted as such at the EOC
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Complex, Noida.
It is also submitted that the counter claim of the
respondent was revised under the charge of the respondent
No.2. However, it is stated by the respondent No.1 in its
affidavit that the claim was revised by and at the instance of
the Chief Construction Manager and that the respondent
No.2 had nothing to do with the said revision. Thus, this
apprehension and statement of the petitioner is also found to
be without basis.
The respondent No.2 is admittedly a very senior and
responsible officer holding a very high position in the
Corporation. No definite allegation of bias except for making
very vaguestatement has been made in the petition by the
petitioner. I have no doubt in my mind that senior and
responsible officer like the respondent No.2 would be always
free from any biasness and would definitely act as an
independent quasi-judicial authority in deciding the
proceedings pending before him. In that view of the matter, I
do not find any merit in this petition and the same stands
dismissed with the aforesaid observations. The interim order
passed on 2.1.1997 stands vacated.
The arbitrator shall proceed with the arbitration
proceedings immediately after giving notice of the parties. As
stated by the counsel for the parties, time for making of the
award by the arbitrator stands extended by one year from the
date of receipt of a copy of this order.‖
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68. This Court deems it appropriate to independently examine the
impartiality of the Arbitrator on the basis of contentions advanced by
the parties. Tarapore, upon noticing that numerous instances of bias on
behalf of Arbitrator, wrote a representation dated 05.03.2002 to the
respondent No. 2, i.e. the previous Arbitrator, highlighting the instances
of such bias and misconduct during proceedings. Before the said
representation, the learned counsel of Tarapore also wrote letters dated
28.02.2002 and 01.03.2002to the Arbitrator mentioning that the dates
for the hearing are not being fixed mutually by the Arbitrator and are
also being cancelled at his pleasure. Further, the misconduct of
Arbitrator to the colleague of the learned counsel for Tarapore was also
highlighted in the letter dated 01.03.2002.
69. NTPC was granted time to file a reply to the representation dated
05.03.2002. Eventually, after a delay of 6 months, the reply to the said
representation was filed by NTPC. Hearing on the said issue was
conducted by the original Arbitrator but no minutes were recorded.
Upon enquiring about the outcome of the representation Tarapore
received a letter dated 12.12.2002 from the Arbitrator that the
objections of Tarapore shall be considered at the time of publishing the
Award. Meanwhile, Mr. T Shankarlingam, the original Arbitrator, got
promoted to the position of Chairman and Managing Director and thus,
appointed Mr. Deshpande as the subsequent Arbitrator.
70. Tarapore protested against the said appointment vide letter dated
18.10.2006 to respondent No. 2 and also wrote a letter dated 14.10.2006
to the subsequent Arbitrator pointing out that Tarapore would require 4
days travel time to reach Farakka and prayed for an alternate venue.
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Despite this the hearing were fixed at Farakka. Tarapore further, vide
letter dated 18.12.2006 informed the subsequent Arbitrator that he had
become functus officio and requested him not to procced with the
Arbitration as a petition revoking his authority had been filed in this
Court. Yet, the subsequent Arbitrator continued with the hearing and
shifted the venue to Kolkata disregarding the fact that there had been a
petition filed to revoke his authority. Furthermore, the Award was
reserved and was passed on 14.03.2008 in the absence of Tarapore.
71. The facts enumerated above show that the apprehension of bias against
the Arbitrator was not unfounded. Upon perusal of the facts and
circumstances, the hierarchical relationship between the two
Arbitrators, being Chairman and Managing Director and a senior
officer of NTPC further strengthens the apprehension of bias which
strikes at the very root of the arbitral process. Additionally, the order
dated 07.10.1996 categoricallyobserved that the General Manager so
appointed as the Arbitrator may preferably be a person who is working
at the regional office/ head office at Delhi. The same was reiterated in
the order of 12.08.1998. The said observations were primarily made for
the reason that Delhi was a convenient and neutral venue for Tarapore.
Despite the same the Arbitration proceedings were conducted at
Farakka only with a view to cause inconvenience and obstacles in
Tarapore pursing the Arbitration proceedings. As a result of holding the
hearing in Farakka and later on shifting the venue to Kolkata, Tarapore
could not participate in the last few proceedings. The said conduct is
clearly contrary to the order of this court on 07.10.1996, reiterated on
12.08.1998.
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72. In the view of the above factual instances, the Award is to be set aside
on the ground of bias alone. Even though the award is likely to be set
aside on this ground only, I am considering the claims on merits as well.
Findings on Preliminary Issues is devoid of reasoning
73. A careful examination of the Award shows that the findings returned by
the Arbitrator on the preliminary issues which pertain to the delay and
abandonment of Work and alleged interference by local politicians and
trade unions, forms the foundation for adjudication of the Claims and
Counter Claims. In the Award at paragraph No. 23, the Arbitrator
framed preliminary issues arising out of the arbitration proceedings as
under:-
―23. PRELIMNARY ISSUES ARISING OUT OF
ARBITRATION PROCEEDINGS :-
Whereas after perusing the entire Arbitration record
including the claims and counter claims, written
statements and rejoinder thereof submitted by the
parties, the undersigned is of the view that to adjudge
the claim and counter claim of the parties the
following issues between the parties needs to be
decided by the undersigned:
a) Whether the reasons like alleged interference by the
local politicians, trade unions leaders and
deteriorating law and order situation in the region as
highlighted by the claimant in their pleadings
resulting in alleged delay in execution of work and
alleged abandonment of contract by the claimant fall
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within the scope of contract, if yes to then what extent.
b) Whether reason of the alleged unprecedented rains
during the contract period resulting in alleged delay in
execution of work and alleged abandonment of the
contract by the claimant thereof fall within the scope
of the contract, if yes then to what extent.
c) Whether respondents had any obligation under the
contract to provide safety and security to the claimant
during execution of contract work and if yes to what
extent.
d) Whether allegedly such conditions were prevalent
at around the site, which made it impossible for the
claimant to continue the work and it made the
claimant company to abandon the work and whether
abandonment of contract due to such reasons is within
the scope of contract , if yes to what extent.‖
74. However, after framing the aforesaid issues, from paragraph No. 24
onwards, the Arbitrator has verbatim reproduced terms of the Contract,
letters written by the parties, averments made by the parties in statement
of Claim, Counter Claim and Rejoinder and documents relied on by the
parties for more than 30 pages. Thereafter, theArbitrator gave his
findings on preliminary issues as under:-
“38. FINDINGS ON PRELIMINARY ISSUES:-
The undersigned after carefully perusing the arbitration
record is of the opinion that the occurrence of law & Order
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problem as mentioned in the above issues was never denied
completely by the respondent company either during the
performance of the contract or during arbitration
proceedings, but only liability for the same is denied.
Further no evidence is raised by either party on the issues of
external problems, but prima facie it seems that claimant had
indeed faced adverse site conditions, but I see no provision in
the contract between the parties by which respondent
company could be made liable to compensate any loss
sustained by the contractor because of intervention of third
parties. Further it is also clear from the record that
respondent company had no control over these external
factors although help was rendered by them to the claimant
company to find a solution to such issues.
The undersigned is of the opinion that it is not within the
jurisdiction of the undersigned to absolve the claimants from
the performance of their part of the contract as undertaken
by them merely because its performance has become onerous
on account of an unforeseen turn of events.
Further from record it seems that though these law & order
problems had initially caused delay in execution of contract
by the claimant, but even when the situation seemed to have
improved, claimant did not chose to perform their
obligations under the contract rather abandoned the
contract.
39. Whereas in view of the above findings, the basic issues
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are decided as follows:-
a) Whether the reasons like alleged interference by the
local politicians, trade unions leaders and deteriorating law
and order situation in the region as highlighted by the
claimant in their pleadings resulting in alleged delay in
execution of work and alleged abandonment of contract by
the claimant fall within the scope of contract, if yes to then
what extent. Finding: Such reasons do not fall within the
scope of the contract and as such claimant could not be
absolved from their obligations under the contract on such
account.
b) Whether reason of the alleged unprecedented rains during
the contract period resulting in alleged delay in execution
of work and alleged abandonment of the contract by the
claimant thereof fall within the scope of the contract, if yes
then to what extent.
Finding: Such reasons do not fall within the scope of the
contract and as such claimant could not be absolved from
their obligations under the contract on such account.
c) Whether respondents had any obligation under the
contract to provide safety and security to the claimant during
execution of contract work and if yes to what extent.
Finding: Under the contract no-where any duty is cast
upon the respondent to provide safety and security.
d) Whether allegedly such conditions were prevalent at
around the site, which made it impossible for the claimant to
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continue the work and it made the claimant company to
abandon the work and whether abandonment of contract due
to such reasons is within the scope of contract, if yes to what
extent.
Finding: From perusal of record, it is apparent that
claimant indeed had faced adverse site conditions at the
start of the contract, but on the strength of records
available in absence of clear evidence, it is difficult to reach
to the conclusion that it was impossible for them to
continue the work, but it is clear that by the time Govt. had
extended help, the claimant had abandoned the contract.
So I had no difficulty in holding that claimant could not be
absolved from their obligations under the contract on such
account.”
75. A perusal of the above shows that the Arbitrator while adjudicating the
preliminary issues has failed to undertake the exercise of appreciating
the documents, analysing the submissions made by the parties. The
Award to the extent of preliminary findings, to say the least, is cryptic
and unreasonable.
76. The Arbitrator has without any form of analysis has made a brief
conclusions that even though law and order situation did create
hindrance for Tarapore to complete the work but the delay caused due to
the same could not absolve Tarapore from its liability under the
Contract. The same is not supported by any other reasoning. Further, the
Arbitrator observed that the government had extended support and
assistance to Tarapore, but the Award does not disclose as to what
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assistance was extended and how such assistance was adequate. The
averments regarding the kidnapping of the officials, lapses in the law
and order situation, forced employment of local labour at higher wages
has neither been adverted to not analysed by the Arbitrator. It has
nowhere been discussed in the paragraphs reproduced above as to how
there was interference by local politicians, trade unionsand its
consequences on the delay of execution of work. Even though hindrance
in completion of work was caused,there is no analysis or reasons
underpinning the conclusion of the Arbitrator that Tarapore could not be
absolved from its liability under the Contarct. The said findings of delay
attributable to Tarapore is unreasoned.
77. The Statement of Claim and Rejoinder clearly raised averments
regarding the such hinderances. The same is reproduced as under:
―22. That the Claimant gave repeated notices to the
Respondent that the political & labour atmosphere prevalent
in the region and particularly at the work site was not
congenial and conducive to working. There was a lot of
politicalinterference by the local parties. Labour was being
forced upon the Claimant by these local politicians and trade
union leaders with arbitrary rates of wages attached to the
said workforce irrespective of the fact whether these
workmen did any work or not. Any resistance resulted in
throwing of bombs on the officers of the Claimant, creation
of law and order situation and thereby preventing the
execution of Claimant‘s work at the site, which included
kidnapping and gheroaing of the officials of the Claimant,
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thereby causing further hinderance to the execution of the
work. The police and district administration also failed to
check these unsocial and anti-social elements. In this
manner, the Claimant to employ against its will, workers of
these local political parties and trade union leaders at wages
higher than those contemplated by the Claimant while
making the offer to the Respondent and the Respondent failed
to do anything about it. Over and above, these workmen
expected payment of wages to be made to them irrespective of
the fact whetherthey work or not in the course of the day. This
added burden also contributed to the delays in as much as the
forced Claimant was prevented from making full use of the
plant, machinery and equipment mobilised for this work. The
Claim-also not permitted to bring its labour force altogether
and was coerced into agreeing to 50% of the labour force
being employed locally which was also increased to 70%
under threat of violence, The Respondent was fully aware
these circumstances but failed to do anything about it except
a few letters to the Police and Local Administration and in
this manner the claimant was prevented from executing the
work due to the failure of the Respondent in providing
peaceful and conducive atmosphere at and around the place
of work at the project site. These factors will be further
elaborate while dealing with the specific claims in this
regard.‖
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Further there were several correspondences between Tarapore and the
senior officers of NTPC and the local administration of Murshidabad
which the Arbitrator has reproduced in his Award. The same are
reproduced as under:
a. ―In a letter dated24.05.1988 Tarapore. has written to
NTPC that the work is started on 06.05.88 and was
proceeding smoothly but stopped from yesterday due to
some extraneous problem. In another letter dated.
01.06.88 the GM of Claimant Company had written to
officer in charge that some unidentified miscreants have
thrown 5 nos. of country bombs on the air at our ash pond
area. You are therefore requested to kindly institute a case
and do the needful to avoid further such incidents. In
another communication dated 04.06.88 the GM of
claimant company has written to the officer in charge,
Farakka P.S. that Mr. Panu Sekha of Jodpokharia village
has threatened our site engineer Sh. T Khadanga with dire
consequences if he has not been employed immediately.
Thereafter there is a series of letters annexed with their
claim by M/s. Tarapore & Co. where they have written to
the state authorities about law and order problems and
attacked on their officials.‖
b. In letter dated. 24.12.1988, Tarapore had written to Senior
Manager of NTPC as under:
―Yesterday, we met SDO alongwith the letter of your
Manager (P&A). Be apprised him the situation prevailing
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here and requested for Immediate police picket at
Malancha and he advised us to meet S.P., Murshidabad.
We rushed to Berhampore to meet S.P. who had agreed for
police picket from 24.12.88. In their letter dated. 06.01.89
at page 173 of their claim addressed to the Chief
Construction Manager, NTPC the claimant company had
asked to depute the NTPC officials to attend the site
regularly.‖
c. In a communication dated 24.02.1989, Tarapore had addressed
several issues to the DM, Murshidabad. The same is reproduced
as follows:-
“ Our present problem is supply of sand, metal and
boulder. Our sub-contractors, whom we engaged recently
to execute the work, are creating problems to us. Before
recruitment of these subcontractors we had agreed that
50% of the entire work will be given to subcontractors and
the remaining 50% will be done by our company,
including earthwork and supply of boulder, metal, sand
etc. But of late our earth work area was reduced to 14%,
as this area has been encroached by the sub contractors.
To have a calm and peaceful atmosphere, we have not
viewed this seriously. But we reiterated them that 50%
supply of materials will be done by us. When we started
bringing materials through our appointed Agencies, some
subcontractors objected them. They terrorized our agency
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and forced them to flee with their trucks fully loaded with
supplies.
The subcontractors recruited recently are mainly from
Malancha and Shankarpur village. Appointment of these
contractors were made in consultation with the local
leaders, and selection were their choice only. It appears
that they are hard core criminals. Now they are out of
control of the leaders and doing everything at their own
will and pleasure.
The sub contractors are supposed to supply materials at
their area only allotted to them by us. Now they are
demanding that they will take entire supply and not to
allow anyone else to ring materials. They are not agreeing
the rate fixed to other agency for supply and demanding
Increase in rate.
If we are cannot started the pitching work now, the
earthwork whatever we have done, will be washed away
during rainy season which will cause heavy loss to us.
We strongly feel that unless we remove some bad elements,
we cannot achieve our progress here. We apprehend
Intimidation from them, if we take such action. We
therefore, request you to kindly help us in this regard. We
may also require personal protection for us as these
people will Gherao and humiliate us on our way .”
d. In another letter dated 05.04.1989 Tarapore had written to the
following to Senior Manager (CC) the following:
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“ Further to our letter No.358/862/89 dated. 05.04.89, we
wish to Inform you that SARBA DALIYA COMMITTEE
formed by all parties except CPM posting a threat to us.
They may enforce us to employ their workmen around 500
through agitation. We presume that they may launch a
blockade on NH-34 to pressurize us to concede their
demands. We may mention that we are having enough
workmen with us, more than our requirements. Hence, the
question of recruitment of workmen does not arise. if they
launch mass movement, it may hamper our progress. This
is for your information .”
e. In letter dated 09.05.1989 Tarapore highlighted several issues to
the then Power Minister of West Bengal by stating the
following:
―From 11.01.89, the work appeared to have started
smoothly, but periodic pin pricks and disruptions in work
have continued and are getting worse. Against 50% area
agreed to be worked by local sub-contractors, they have
now usurped more than 80% area under coercion and
threat of violence. Also while the local sub contractors do
not possess the means to cope up with pace of quantum of
work, they are obstructing agencies employed directly by
us from bringing materials and doing work. Also local
sub-contractors do not listen to our engineers, frightening
them by threats of violence. The local political leadership
does not seem to have the desired influence, nor hold, over
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the prevailing situation and cannot bring matters under
control. We are bringing to their notice almost daily
disruptive activities taking place and they are either
unwitting or unable to do anything.
Our machinery is not being permitted to be utilized and
are largely idle. We are not being allowed to operate at
optimum levels to sustain ourselves. We have already
incurred crushing losses and continue to incur further
heavy losses month after month. Beside this, daily large
quantities of diesel, petrol are drained out by the Drivers
in connivance with our security guards, from the vehicles,
adding us to further loss. We are neither able to take
disciplinary action nor remove them from service due to
intimidation and threats.
The materials such as boulder, huts pipes etc. brought to
our work site are not allowed to be unloaded unless
‗MASTAN‘ taxes are paid to local goudas, though our
contract are Inclusive of loading and unloading charges.
Lastly, a fantastic charter of demands has been initiated by
the CITU, on behalf of our workmen, and we were forced
to agree to their demands, resulting an additionalexpenses
of Rs. One lakh per month. To have peaceful atmosphere
and to augment the progress we also agreed to exorbitant
rates to all item of work.‖
78. No doubt the award can be short on detailed reasons and analysis but
cannot be devoid of the same. The present award is one such Award
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where the reasoning is not merely brief but is substantially absent, is
totally cryptic and does not show any basis much less reasonable basis
for the Arbitrator to arrive at his conclusions on the preliminary
issues.Hence, the fountain head of the analysis of the Claims and
Counter Claims itself is perverse and against the public policy of India.
A mere reproduction of pleadings followed by conclusions cannot
satisfy the requirement of “reasons”.
79. The Award must show a link between the material on record and the
conclusion reached, which is lacking in the present case. The
requirement of a reasoned Award is not a mere formality rather a
statutory mandate by Section 31 (3) of the 1996 Act. The same reads as
under:
31. Form and contents of arbitral award.—
xxx
(3) The arbitral award shall state the reasons upon which it
is based, unless-
(a) the parties have agreed that no reasons are to be given, or
(b) the award is an arbitral award on agreed terms under
Section 30.‖
80. The requirement of an Award having adequate and intelligible
reasoning is further fortified by catena of judgments including Dyna
14
Technologies (P) Ltd. v. Crompton Greaves Ltd. , wherein the
Hon‟ble Supreme Court held as under:
―34. The mandate under Section 31(3) of the Arbitration Act
is to have reasoning which is intelligible and adequate and,

14
(2019) 20 SCC 1.
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which can in appropriate cases be even implied by the courts
from a fair reading of the award and documents referred to
thereunder, if the need be. The aforesaid provision does not
require an elaborate judgment to be passed by the
arbitrators having regard to the speedy resolution of dispute.
35. When we consider the requirement of a reasoned order,
three characteristics of a reasoned order can be fathomed.
They are: proper, intelligible and adequate. If the reasonings
in the order are improper, they reveal a flaw in the
decision-making process. If the challenge to an award is
based on impropriety or perversity in the reasoning, then it
can be challenged strictly on the grounds provided under
Section 34 of the Arbitration Act. If the challenge to an award
is based on the ground that the same is unintelligible, the
same would be equivalent of providing no reasons at all.
Coming to the last aspect concerning the challenge on
adequacy of reasons, the Court while exercising jurisdiction
under Section 34 has to adjudicate the validity of such an
award based on the degree of particularity of reasoning
required having regard to the nature of issues falling for
consideration. The degree of particularity cannot be stated in
a precise manner as the same would depend on the
complexity of the issue. Even if the Court comes to a
conclusion that there were gaps in the reasoning for the
conclusions reached by the Tribunal, the Court needs to have
regard to the documents submitted by the parties and the
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contentions raised before the Tribunal so that awards with
inadequate reasons are not set aside in casual and cavalier
manner. On the other hand, ordinarily unintelligible awards
are to be set aside, subject to party autonomy to do away with
the reasoned award. Therefore, the courts are required to be
careful while distinguishing between inadequacy of reasons
in an award and unintelligible awards.
xxxx
42. From the facts, we can only state that from a perusal of
the award, in the facts and circumstances of the case, it has
been rendered without reasons. However, the muddled and
confused form of the award has invited the High Court to
state that the arbitrator has merely restated the contentions
of both parties. From a perusal of the award, the inadequate
reasoning and basing the award on the approval of the
respondent herein cannot be stated to be appropriate
considering the complexity of the issue involved herein, and
accordingly the award is unintelligible and cannot be
sustained.
81. The said principle was reaffirmed by the Hon‟ble Supreme Court in
OPG Power Generation (P) Ltd. v. Enexio Power Cooling Solutions
15
(India) (P) Ltd. The relevant paragraphs read as under:
“80. We find ourselves in agreement with the view taken
in Dyna Technologies [Dyna Technologies (P)
Ltd. v. Crompton Greaves Ltd., (2019) 20 SCC 1, paras

15
(2025) 2 SCC 417.
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27-43] , as extracted above. Therefore, in our view, for the
purposes of addressing an application to set aside an arbitral
award on the ground of improper or inadequate reasons, or
lack of reasons, awards can broadly be placed in three
categories:
(1) where no reasons are recorded, or the reasons recorded
are unintelligible;
(2) where reasons are improper, that is, they reveal a flaw in
the decision-making process; and
(3) where reasons appear inadequate.
81. Awards falling in Category (1) are vulnerable as they
would be in conflict with the provisions of Section 31(3) of
the 1996 Act. Therefore, such awards are liable to be set
aside under Section 34, unless:
(a) the parties have agreed that no reasons are to be given, or
(b) the award is an arbitral award on agreed terms under
Section 30.
82. Awards falling in Category (2) are amenable to a
challenge on ground of impropriety or perversity, strictly in
accordance with the grounds set out in Section 34 of the 1996
Act.
83. Awards falling in Category (3) require to be dealt with
care. In a challenge to such award, before taking a decision
the Court must take into consideration the nature of the
issues arising between the parties in the arbitral proceedings
and the degree of reasoning required to address them. The
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Court must thereafter carefully peruse the award, and the
documents referred to therein. If reasons are intelligible and
adequate on a fair reading of the award and, in appropriate
cases, implicit in the documents referred to therein, the
award is not to be set aside for inadequacy of reasons.
However, if gaps are such that they render the reasoning in
support of the award unintelligible, or lacking, the Court
exercising power under Section 34 may set aside the award.
82. The preliminary findings rendered by the Arbitrator, being short of
adequate and intelligible reasoning, are thus in clear contravention of
Section 31 (3) of the 1996 Act. The requirement of a reasoned Award
acts as a fundamental safeguard in ensuring fairness in the Arbitration
proceedings. Inadequacy of reasons or unintelligible reasons strikes at
the very root of Arbitral process. In the present case, absence of reasons
goes to the root of matter as the findings on the preliminary issues.
Accordingly, the findings on preliminary issues are set aside for being
violative of fundamental policy of the Indian Law and perverse under
Section 34 of the 1996 Act.
Claim No. 1
83. There are two parts to the challenge to Claim No. 1. The total Claim
amount raised in Claim No. 1 is Rs. 17.73 lakhs out of which first being
th
Claim No. 1(i) relates to pending amount of Rs. 3,04,814 for 10 R.A.
Bill and the second being Claim No. 1(ii) relates to pending amount of
th
Rs.14,68,454 against the 12 R.A.Bill. The amount awarded by the
Arbitrator is Rs. 7,07,341/-. The challenge to the findings on the said
Claim is due to the non-consideration of joint measurements made by
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the parties and further non-appreciation of the fact that the final
quantification in the R.A.Bills was never disputed by the NTPC. Thus,
NTPC did not have the right to unilaterally adjust the outstanding
amounts towards various heads. It is NTPC‟s case that with respect to
th
10 R.A. Bill the amount alleged to have been pending was adjusted
under various heads and thus, there was nothing payable under the
th th
10 R.A. Bill and that with respect to the 12 R.A. Bill the price
escalation adjustment is barred by the Contract in case the delay is
attributable to Tarapore. Thus, the said Claim should not have been
allowed.
th
84. The Arbitrator disallowed the Claim No. 1(i) pertaining to the 10 R.A.
th
Bill and allowed the Claim No. 1 (ii) pertaining to 12 R.A. Bill. The
findings of the Arbitrator is reproduced as under:
―In view of the above rival submissions made by the parties
and also perusing the documents relied upon in the light of
admissions/denial by the other party, including the general
condition of the contract as applicable in the present
contract which says as follows regarding contract price
adjustment:-
―53.1 The rates quoted by the tenderer shall be the base
price, which will be subjected to PRICE ADJUSTMENTS In
accordance with the conditions and formats prescribed
herein and further subject to satisfying the requirements
specified in this clause only.
53.2 The contract price (for definition please refer clause
No.3(e) of GCC-Definitions) as awarded shall be the base
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price, unless otherwise specified. A certain fixed percentage
of the base price shall not be subject to any price adjustment.
The balance percentage to be specified shall be of identified
components towards Labour, Materials and HS Diesel 0:1
(POO and shall be subjected to price adjustment.
The fixed component and the identified components shall
vary from contract to contract depending upon the scope of
works) and shall be furnished in the special conditions of
contract, which will be attached to the tender documents.
53.7 Price adjustment(s) shall be calculated for the quantum
of works executed for the month or the period of the bill as
per agreed work schedule. For the purposes of
payment/recovery of price variation provisions, the
contractor would be eligible for such claims or shall be liable
for refund on the quantum of work scheduled to have been
executed in the month or period as per the agreed work
schedule or the actual quantum of work done provided
always that such quantum of work done is more than or equal
to the scheduled quantum of work as per the agreed work
schedule. In other words the contractor shall not be eligible
for these claims nor liable for payment/refund under these
provisions if the work has been delayed beyond the scheduled
dates for reason attributable to contractor. However, the
contractor would be eligible for claim or liable for refund for
price adjustments for quantities of work executed beyond the
schedule date based on the value of Indices as applicable to
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the schedule dates of execution, for such delayed work
provided that If the Indices during the extended period are
lower than the indices during scheduled dates of execution,
then lower Indices shall be applicable.‖
th
I am of the view that so far as the claim towards 10 RA Bill
is concerned, the claimant had denied as having received the
letter dated 08.08.1989 and also denied the adjustments as
given by respondent in their Written Statement in relation to
th
10 RA Bill. But it is seen that other than making a general
denial, the claimant had failed to show exactly how such
adjustments were are wrong. In order to disprove such
adjustments, the onus, was on the claimants to show that such
adjustments were not valid, in my opinion a mere denial
would not be suffice and accordingly the claim of the
th
claimant in regard to 10 RA Bill is disallowed.
th
So far as the claim in regard to 12 RA Bill is concerned, I
am of the view that unless otherwise agreed thereafter, the
parties would be governed by the above provisions of GCC,
So far as the question "whether the delay is attributable to the
contractor or not" is concerned, undersigned is of the view
that as decided above in preliminary issues, it has been held
that the acts of the third parties were indeed involved in the
delay, but within the scope of contract such third parties
cannot be taken into account.
Initially, in the claim the claimant had contended that they
are entitled to a sum of Rs. 14,68,454.00, whereas the
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th
respondent had contended that under the 12 RA Final Bill
only a sum of Rs.7,07,521.50. The respondent had paid a sum
of Rs.2,26,798/- as on account payment as price adjustment
amount which it was not entitled to received and accordingly
claimant are entitled to receive a sum of Rs. 4,80,543.50/-
only. In their rejoinder, the claimant had not contended that
the sum of Rs.7,07,521.50. as calculated by respondent is
wrong, rather the claimant had contended that all these
th
adjustments against the 12 RA Bill are impugned and are
denied. However, in view of an admission of the respondent
that a sum of Rs.4,80,543.50 was found as payable against
th
the 12 RA Bill, an interim award on admissions may be
made to this effect. As for the payment of escalation made
already by the respondent and appropriate from the
claimant's RA Bill, the question of unilaterally adjusting the
same would not arise once the payment is agreed and paid.In
my view also, the amount of Rs. 2,26,798/- paid to claimant
cannot be subsequently adjusted by respondent by holding
that Price adjustment was not payable.
AWARD:-
In view of the findings given above, the claimant is awarded
a sum of 4,80,543.50/-+ Rs. 2,26,798/- = 7,07,341.50/- only
th
towards 12 RA Final Bill. So far as the question of interest
on this amount is concerned, the same would be dealt in
award to claim no.10, which deals with interest on all
claims.”
Digitally Signed
By:MAYANK
Signing Date:12.05.2026
20:38:05
OMP No. 408/2008 & CS(OS) No. 1499/2008 Page 56 of 96

th
85. With respect to 10 R.A. Bill, being Claim No. 1(i), challenged by
Tarapore, the Gross amount of Bill stood to be Rs. 11,82,064/-. It is not
th
disputed that the 10 R.A. Bill of the said amount was jointly signed by
both the parties. Further it is also not in dispute that only an amount of
Rs. 8,77,250 was released towards the said Bill and thebalance amount
Rs. 3,04,814 was adjusted towards various heads being contractual
deductions. The argument of Tarapore rests on the fact that the joint
th
10 R.A.Bill was signed and accepted by NTPC without any
reservations or qualifications. Once the Bill has been raised and
accepted in totality no deductions could be permitted. The said
argument of Tarapore has neither been considered nor been adverted to.
In this regard NTPC further relies on the letter dated 08.08.1989 was
duly sent to Tarapore informing them about the status of payment under
th th
the 10 and 11 R.A. Bills. The same reads as under:
“NTPC REGD. ACK.DUE

PS: 42: 01: 01/245 08-08-89

To
The Managing Partner,
M/s. Tarapore & Co.
Dhun Building, 827, Anna Salai,
Madras : 600 002.
Subj :Constn of Ash bund structure for fly ash disposal,
LOA No. 01:CC:42:128(R)/DICA dated 28-3-88.
Ref. No. Your letter No. 600/2422/89 dtd. July 21, 1989.
Digitally Signed
By:MAYANK
Signing Date:12.05.2026
20:38:05
OMP No. 408/2008 & CS(OS) No. 1499/2008 Page 57 of 96

Dear Sir,

With reference to your above letter the matter has been
verified from our Finance Deptt and it is found that after
correction nothing is payable to you against 10th & 11th
bills. As regards to the 12th RA bill you may please note that
the joint measurement of works were not completed due to
non-availability of Engineers from your end. A letter to this
affect was issued to R.E.at site (Copy enclosed) which is
self-explanatory. Though it was told to us by your Site
engineer, Shri T. Khadanga that he would be available here
for taking the measurements and signed in the bill, he left site
suddenly without any intimation to us.
Under the circumstances, processing of 12th RA bill could
not be possible at this end. However, after the completion of
Joint measurement and signing of the bill by your
representative there- after bill would be forwarded to
Finance for further disposal.
Necessary action from your end in this matter is requested
please.
Thanking you,
Yours Faithfully,

(A K Bhattachrarya)
Dy. Manager (CC)

Digitally Signed
By:MAYANK
Signing Date:12.05.2026
20:38:05
OMP No. 408/2008 & CS(OS) No. 1499/2008 Page 58 of 96

Copy forwarded for information :
1) CCM/FS TPP
2) SR.MGR( CC )
86. It is the contention of NTPC that the letter crystalises the position of
th
NTPC regarding 10 R.A.Bill. The receipt of letter has been disputed
by Tarapore in its Rejoinder before the Arbitrator as under:
―It is denied that the claimant received any letter dated
03/07/1989 or 08/08/1989, as alleged by the Respondent and,
as such, no such intimation as alleged, was received by the
claimant from the Respondent. The fact that the claimant had
prepared and submitted its 12th R.A.Bill, did not prevent the
Respondent from cross-checking the correctness of the
measurements and making payments therefor, but it lacked
the will and intent to make payments. On the contrary, the
Respondent was responsible for virtually pushing the
claimant out of the site and not even allowing the claimant to
remove its plant, machinery and other equipment, for which
the claimant had to take recourse to law and seek
appropriate orders from court in this regard.‖
87. The Arbitrator has not given any finding regarding the letter dated
08.08.1989, whereas the Arbitrator has just mentioned that Tarapore
has denied ever receiving such letter. This shows that the Arbitrator has
failed to take into consideration and material evidence and objections
with respect to the same. Further, the assumption of the Arbitrator that
the adjustments made by NTPC needed to be shown to be wrong is
beyond the terms of the Contract and is contrary to the clear evidence
Digitally Signed
By:MAYANK
Signing Date:12.05.2026
20:38:05
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on record. There is no term in the Contract that permits NTPC to
unilaterally adjust the any amount in a Bill already signed by both the
parties.
88. In this view of the matter, an Award in violation of the terms of the
Contract or going against the terms of the Contract falls within the
parameter of Section 34 of the 1996 Act and is, thus, vitiated by
patently illegality. In the view of the above, the Award is liable to be set
aside to the extent of Claim No. 1(i) as being patently illegal as per the
ratio laid down in PSA Sical Terminals (P) Ltd. v. V.O. Chidambranar
16
Port Trust. The relevant paragraphs read as under:
“85. As such, as held by this Court in Ssangyong Engg. &
Construction Co. Ltd. [Ssangyong Engg. & Construction Co.
Ltd. v. NHAI, (2019) 15 SCC 131 : (2020) 2 SCC (Civ) 213],
the fundamental principle of justice has been breached,
namely, that a unilateral addition or alteration of a contract
has been foisted upon an unwilling party. This Court has
further held that a party to the agreement cannot be made
liable to perform something for which it has not entered into
a contract. In our view, rewriting a contract for the parties
would be breach of fundamental principles of justice entitling
a court to interfere since such case would be one which
shocks the conscience of the court and as such, would fall in
the exceptional category.
86. We may gainfully refer to the following observations of
this Court in Bharat Coking Coal Ltd. v. Annapurna

16
(2023) 15 SCC 781.
Digitally Signed
By:MAYANK
Signing Date:12.05.2026
20:38:05
OMP No. 408/2008 & CS(OS) No. 1499/2008 Page 60 of 96

Construction [Bharat Coking Coal Ltd. v. Annapurna
Construction, (2003) 8 SCC 154] : (SCC pp. 161-62, para
22)
―22. There lies a clear distinction between an error within
the jurisdiction and error in excess of jurisdiction. Thus, the
role of the arbitrator is to arbitrate within the terms of the
contract. He has no power apart from what the parties have
given him under the contract. If he has travelled beyond the
contract, he would be acting without jurisdiction, whereas if
he has remained inside the parameters of the contract, his
award cannot be questioned on the ground that it contains an
error apparent on the face of the record.‖
87. It has been held that the role of the arbitrator is to
arbitrate within the terms of the contract. He has no power
apart from what the parties have given him under the
contract. If he has travelled beyond the contract, he would be
acting without jurisdiction.
89. It has been held that an Arbitral Tribunal is not a court of
law. Its orders are not judicial orders. Its functions are not
judicial functions. It cannot exercise its powers ex debito
justitiae. It has been held that the jurisdiction of the
arbitrator being confined to the four corners of the
agreement, he can only pass such an order which may be the
subject-matter of reference.
90. In that view of the matter, we are of the considered view,
that the impugned award would come under the realm of
Digitally Signed
By:MAYANK
Signing Date:12.05.2026
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―patent illegality‖ and therefore, has been rightly set aside
by the High Court.‖
89. Claim No. 1 (ii) is challenged by NTPC. With respect to Claim No.
1(ii), initially the Claim was quantified at Rs. 14,68,454. The same
th
included the amount under 11 R.A. Bill which remained unmeasured
th
and amount of 12 R.A. Bill, where final sum payable was Rs.
7,07,512/-. It is the case of NTPC that it paid a sum of Rs. 2,26,798/- on
account of price adjustment and the same should not have been paid in
terms of Clause No. 53.7 of the GCC. The said Clause reads as under:
“53.7 Price adjustment(s) shall be calculated for the
quantum of works executed for the month or the period of the
bill as per agreed work schedule. For the purposes of
payment/recovery of price variation provisions, the
contractor would be eligible for such claims or shall be liable
for refund on the quantum of work scheduled to have been
executed in the month or period as per the agreed work
schedule or the actual quantum of work done provided
always that such quantum of work done is more than or equal
to the scheduled quantum of work as per the agreed work
schedule. In other words the contractor shall not be eligible
for these claims nor liable for payment/refund under these
provisions If the work has been delayed beyond the
scheduled dates for reason attributable to contractor.
However, the contractor would be eligible for claim or liable
for refund for price adjustments for quantities of work
executed beyond the schedule date based on the value of
Digitally Signed
By:MAYANK
Signing Date:12.05.2026
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Indices as applicable to the schedule dates of execution, for
such delayed work provided that If the Indices during the
extended period. are lower than the Indices during scheduled
dates of execution, then lower Indices shall be applicable.‖
90. In the preliminary findings, the Arbitrator holds that although delays
were due to third parties and external conditions, Tarapore could not be
absolved from the delays caused in execution of the project but on the
other hand permits price escalation contrary to Clause No. 53.7 of the
GCC. The Arbitrator, despite having recorded a preliminary finding
that there was no cogent evidence to establish that the hindrances
allegedly caused by external factors were of such a grave nature as to
compel Tarapore to abandon the work, and that Tarapore could not be
absolved of its contractual liability to complete the work, failed to
consider NTPC‟s case in the context of Clause No. 53.7 of the GCC.
91. In the light of such a finding, it was incumbent upon the Arbitrator to
consider whether, in view of delay being attributable to Tarapore, the
amount of Rs.2,26,798/-, earlier paid towards price adjustment, was at
all payable under the contract or was liable to be adjusted from the
th
amount found due under the 12 R.A. Bill. However, the Arbitrator has
rendered no reasons as to why the said amount could not be adjusted
afterwards. He has awarded the same by merely observing that, once
the amount stands paid, it could not subsequently be appropriated.
Thus, the Arbitrator has completely overlooked the Clause No. 53.7 of
the GCC despite his own finding. Therefore, impugned Claim No. 1(ii)
is exfacie inconsistent, self-contradictory and contrary to the terms of
the contract, unsupported by reasons. Consequently, the Award in
Digitally Signed
By:MAYANK
Signing Date:12.05.2026
20:38:05
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relation to Claim No. 1(ii) is liable to be set aside as being patently
17
illegal as per the ratio in PSA Sical Terminals (P) Ltd.
92. I have also earlier part of my judgment held that the findings on the
preliminary issues are also devoid of reasons and hence, needs to be set
aside. The above analysis of the Claim No. 1(ii), is not withstanding the
fact that even the preliminary issues are findings are unsupported by
any reasoning.
Claim No. 2
93. The Arbitrator awarded Rs. 3,29,585/-, i.e. 50% of the price escalation
claimed by Tarapore after recording a finding that delay in execution of
the work was attributable to third parties. Since, the delay attributable
to third parties were held not covered by the Contract, the Arbitrator
allowed 50% of the Claim on equitable grounds. The said finding of the
Arbitrator reads as under:
―Findings
Considering the rival submissions, arguments and
documents produced by the parties in regard to this claim,
the undersigned is of the opinion that the delay indeed had
rd
been caused due to the intervention of 3 parties, but these
rd
3 parties do not come within the scope of the contract and
accordingly both the parties should bear the brunt for delay
in work equally as the same cannot be attributable to either
of them in totality.
In addition, it is found that the respondent were paying
escalation to the claimant during the performance of the

17
Supra n. 16.
Digitally Signed
By:MAYANK
Signing Date:12.05.2026
20:38:05
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contract and accordingly following award
Award on claim no.2.
The claimant are awarded 50% of the claimed amount
towards price escalation in view of the above finding of the
undersigned in regard to this claim and accordingly an
amount of Rs.3,29,585.00 is awarded in regard to claim no.2
to claimant.‖
94. The learned senior counsel for Tarapore opposes the said finding of
only 50% of escalation Claim as the Arbitrator has himself held that
delay was justified and was caused due to factors beyond control of the
parties whereas learned counsel for NTPC states that such a Claim is
contrary to the terms of the contract.
95. The contractual framework with regard to price escalation is governed
by Clause No. 8 of the LOA read with Clause No. 53 of the GCC and
Clause No. 7 of the SCC. These provisions provide for specific set of
formulas and circumstances where such price escalation can be given.
The Clause No. 8 of the LOA and Clause No. 7 of SCC read as under:
― 8.0.0 CONTRACT PRICE ADJUSTMENT
8.0.1 The item rates mentioned in Schedule of items
(Annexure-A) are subject to price adjustment as detailed in
clause 7.0.0 of Special Conditions of Contract, read in
conjunction with clause 53 of General Conditions of
Contract (for Civil Works). The total quantum of such price
adjustment amount shall be limited to Rs.
78,91,929/-(Rupees Seventy eight lakhs ninety one thousand
nine hundred and twenty nine only) being 12% of the
Digitally Signed
By:MAYANK
Signing Date:12.05.2026
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contract value defined in clause 3.0.0 above.‖
7.0.0 CONTRACT PRICE ADJUSTMENT (__ REFER
CLAUSE NO. 53 OF GCC)
7.1.0 The value of co-efficients for contract price
Adjustment as detailed under clause 53.4 of general
condition of contract shall be as under.
S. NO. COMPONENT VALUE OF CO-EFFICIENT
1. Fixed Component 0.50
2. Labour Component 0.20
3. Material Component
(other than the owner issue 0.25
materials)
4. Fuel Component 0.05
96. It is pertinent to highlight that Clause No. 53.7 stipulates that Tarapore
shall be eligible for such price escalations only in the case when the
delay is not attributable to Tarapore. The Arbitrator was required to
adjudicate the Claim in dispute as per the terms of the Contract. On the
perusal of the findings of the Arbitrator, it is evident that 50% of the
price escalation was granted to Tarapore only on equitable grounds as
the delay could not have been attributed to just one party. The same is
outside the scope of the Contract. The reasoning does not show reliance
on any term of the Contract which permits that the price escalation can
be apportioned in case the delay is attributable to third party.
97. The role of an Arbitrator is to interpret and apply the terms of the
Contract. Being the creature of Contract and bound by its four corners,
the Arbitrator certainly could not have travelled outside the scope of the
Digitally Signed
By:MAYANK
Signing Date:12.05.2026
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Contract and nor could have decide the Claim based on equity, side
lining the contractual terms. Granting benefit of price escalation
partially in the present Claimwould, thus, amount to re-writing of the
terms of the Contract. The Arbitrator could not have allowed 50% of
the Claim to do equity when the Contract itself does not permit him to
18
do so. This approach is also contrary to Section 28 (2) of the 1996 Act
and strictly prohibited under the scheme of the 1996 Act. It proscribes
the Arbitrator to decide disputes between the parties, ex aequoet bono ,
i.e. on the basis of equity and conscience, unless the parties so permit.
In the absence of express authorisation to decide the dispute on the
basis of equitable considerations, the Award to the extent it grants relief
under Claim No. 2 is contrary to 1996 Act and thus, violative of
Fundamental policy of Indian Law.
19
98. Reliance in this regard is placed on M.S.T.C. Ltd. v. Jain Traders
wherein the Court held that the Arbitrator cannot decide a Claim based
on equity. The relevant paragraphs read as under:
― 18 . This distinction has been completely ignored by the
learned Arbitrator and he has, on the basis of equitable
considerations and his notions of fairness, superimposed the
concept of proportionate refund in Clause 5.3, even though
the same is specifically excluded from Clause 5.3.
19 . The Arbitrator is bound to implement the contractual
clauses and cannot go contrary to them. He cannot decide on
the basis of his notions of equity and fairness, particularly in

18
Section 28 (2): The arbitral tribunal shall decide ex aequoet bono or as amiable compositeur only if the
parties have expressly authorised it to do so.
19
2011 SCC OnLine Del 3304.
Digitally Signed
By:MAYANK
Signing Date:12.05.2026
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such a manner that it goes contrary to the specific
contractual terms. Section 28(2) of the Act provides that
―The arbitral tribunal shall decide ex aequoet bono or as
amiable compositeur only if the parties have expressly
authorized it to do so‖. (emphasis supplied). The phrase ―ex
aecquo et bono‖ means ―according to equity and
conscience‖ (see Black's Law Dictionary 6th edition). In
relation to the expression ―Amiables compositeurs‖ the
Black's Law Dictionary refers to ―Amicable compounders‖
and states that ―amicable compounders are arbitrators
authorized to abate something of the strictness of the law in
favour of natural equity‖. The parties in this case have not
agreed that the Arbitrator may ―decide as an amiable
compositeur or on the basis of ―justice and fairness‖.
Therefore, the learned Arbitrator could not have disregarded
the plain and grammatical meaning of Clauses 5.3 and 5.4 of
the General Conditions of Contract to give way to his own
sense of equity, fairness or justice. Reference in this regard
may also be made to the decision in Food Corporation of
India v. Chandu Construction, (2007) 4 SCC 697 The
Supreme Court in this decision held as follows…‖
99. The above principle was also reaffirmed in Power Grid Corporation of
20
India Limited v. Ranjit Singh And Company LLP wherein it was
reiterated that the Arbitrator is bound by the terms of the Contract, the
Claims cannot be decided on the basis of equity and fairness.

20
O.M.P. (COMM) 134/2023, Ref Paragraph Nos. 21-25.
Digitally Signed
By:MAYANK
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Claim No. 3
100. The said Claim pertains to payment for miscellaneous works. Under
Claim No. 3 (i) and (ii), Tarapore sought separate payments of Rs.
28,550/- and 8,250/- towards miscellaneous work being construction of
temporary pipe culverts across an existing nallah and for providing a
bund across a nallah.
101. In this regard the submission on behalf of NTPC is that the
miscellaneous charges are not covered under the Contract. Rather the
work falls within the obligation of Tarapore. On the other hand,
Tarapore contends that once the work is executed, NTPC cannot evade
payment on a technical plea of scope, particularly when the works were
carried out in connection with and for the benefit of the project.
102. The Arbitrator has awarded the said Claim in the favour of Tarapore as
Clause No. 17.1 of the GCC nowhere states that incidental works to the
main contract would be done by Tarapore at their own cost. The said
finding reads as under:
―Findings
The respondent had relied upon clause no.17.1 of the GCC,
the same is reproduced below:
"The contractor shall provide, if necessary or if required on
the site, all temporary access thereto and shall alter, adapt
and maintain the same as required from time to time and
shall take up and clear them away as and when no longer
required and as and when ordered by the
Engineer-in-Charge and make good all damage done to the
site".
Digitally Signed
By:MAYANK
Signing Date:12.05.2026
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The undersigned is of the view that the above provision of
GCC nowhere states that such incidental works to the main
contract would be done by them at their own cost, so
accordingly this claim of the claimant cannot be denied to
them as the respondent have not denied the performance of
such Incidental works".
Award on claim no.3
The claim no.3 is awarded in favour of the claimant for an
amount of Rs.28,550.00+ 8,250.00 =Rs.36,800.00 only.‖
103. The plain reading of Clause No. 17. 1 of the GCC makes it evident that
it is the responsibility of Tarapore to alter, adapt and maintain the site
and temporary access thereto. The nature of construction, i.e.
construction of temporary pipe culverts across an existing nallah and
for providing a bund across a nallah, were undertaken to provide
temporary access to the site and thus, in terms of Clause No. 17.1 of the
GCC, the liability to pay for such miscellaneous work which is clearly
the responsibility of the Contractor, Tarapore herein, cannot be fastened
upon NTPC. Thus, the Award is liable to be set aside as it is contrary to
the plain reading of the Contract. The Arbitrator has gone beyond the
terms of the Contract. The Award contrary to the terms of the Contract
is liable to be set aside under Section 34 of the 1996 Act as the same
falls under patently illegality. Reliance in this regard is placed PSA
21
Sical Terminals (P) Ltd.
Claim No. 4

21
Supra n. 16.
Digitally Signed
By:MAYANK
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104. Under Claim No. 4,Tarapore sought reimbursement of charges towards
expenditure incurred on DG sets. Tarapore contends that the
Arbitrator‟s findings of restricting the Claim to 50% despite there being
a clear contractual provision that Tarapore is entitled to a free
electricity supply, is arbitrary. On the other hand,NTPC relies on
Clause No. 5.0.0 of SCC read with Clause No. 48 of GCC and states
that Tarapore was permitted reimbursement of power generated only
for construction purposes at the SEB rates. However, Tarapore utilised
the power for the staff colony purposes.
105. In this regard the finding of the Arbitrator with respect to Claim No. 4
readsas under:
―Findings with regard to claim No.4:
The clause 5.0.0 of the special conditions of contract and
clause 48 of GCC are reproduced below as the same are
relied upon by the respondent.
Clause 5.0.0 of the Special Condition of Contract
POWER SUPPLY: (CLAUSE 48 OF GCC)
NTPC may supply power free of cost subject to availability at
one point in site fabricator shop and at one point in erection
site. But NTPC cannot assure continuous power supply to the
contractor. Non-supply of continuous power shall not be a
reason for force majeure and extension of time or this
account shall not be granted. In order to adhere to the work
schedule contractor should make their own arrangement for
power by setting up diesel generating sets. The cost of power
so generated and utilized for construct purpose alone will be
Digitally Signed
By:MAYANK
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reimbursed at the prevailing tariff rates of SEB for industrial
consumption.
Considering the rival submission of the party and the
documents in this regard as referred by the parties, the
undersigned is of the opinion that clause 5.0.0 is indeed
attracted notwithstanding the fact that respondent could not
supply power to the claimant and the claimant was free to
charge from the respondent as per the prevailing tariff rate of
SEB for industrial consumption. It is seen that the claimant
has stated that the DG sets were brought at site for the
purpose of the project and they were put to use or remain idle
for the project and nothing else.
No evidence was led by either party to prove or disprove that
electricity generated from the DG set was or was not used for
residential or construction purposes. In view of this fact the
payment should have been raised by the claimant as per
clause 5.0.0 of the Special Terms and Conditions only but it
is admitted fact that respondent to have failed to provide
electricity to the claimant and claimant used the DG sets.
Award on claim no.4:-
In view of the above findings, the undersigned is of the
opinion that in absence of tariff rate of S.E.B at the relevant
time and the quantum of electricity consumption, the
undersigned is of the opinion that 50% of the claim amount in
regard to claim 4 may awarded to the claimant in the
peculiar circumstances of the case to meet the ends of justice.
Digitally Signed
By:MAYANK
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Accordingly an amount of Rs. 99,565.50/- is awarded in
favour of the claimant in respect of this claim.
106. In this regard Clause No. 5.0.0 of the SCC and Clause No. 48 of the
GCC are relevant and are reproduced as under:
“5.0.0 POWER SUPPLY:(CLAUSE 48 of GCC)
NTPC may supply power free of cost subject to availability at
one point in site fabricating shop and at one point in erection
site. But NTPC cannot assure continuous power supply to the
Contractor.
Non-supply of continuous power shall not be a reason for
force majeure and extension of time on this account shall not
be granted. In order to adhere at the work schedule
Contractor should make their own arrangement for power by
setting up Diesel Generating sets.
The cost of power so generated and utilized for construction
purpose alone will be reimbursed at the prevailing tariff
rates of SEB for industrial consumption.‖
“48. Power Supply:
(a) Engineer-in-Charge will provide without charge
electricity consumed at the job site at one point of the
distribution system as per requirement as may be decided by
the Engineer-in-Charge, Electricity furnished will be 440
volts, 3 phase, 50 cycles and 230 Volts. 1 phase 50 cycles.
Each Contractor shall provide and install all necessary
transformers, switch-gear, wiring, fixtures, bulbs and other
temporary equipment for further distribution and utilisation
Digitally Signed
By:MAYANK
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of energy for power and lighting and shall remove same on
completion of the work. Should, however, electricity be used
in the Contractors labour staff colony, the power so
consumed shall be charged at the prevailing tariff rate of
State Electricity Board as prevalent for that area at the time
of award of work; the supply may be withdrawn if the power
is used for purposes other than for the work of the project and
the Contractor shall not be entitled to any claim whatsoever
or account of any such action taken by the
Engineer-in-Charge.
(b) The Contractor shall indicate in his proposal his
requirements of the above facilities
107. Perusal of Clause No. 5.0.0 of the SCC read with Clause No. 48 of the
GCC clearly recognises that NTPC was required to provide free
electricity subject to the availability and in case the supply was not
available, Tarapore was required to make its own arrangements of DG
sets and the cost incurred by Tarapore was to be reimbursed at the
prevailing tariff rates of the SEB.
108. The Arbitrator has agreed that it was NTPC which had the liability to
provide the electricity and it was due to NTPC‟s failure to provide the
power, Tarapore had to deploy DG sets. Further, the Arbitrator himself
has recorded a finding that NTPC has led no evidence which could
show that the power generated was used for residential purposes or any
purpose other than construction. Even in the absence of the said
evidence and only on the basis of non-availability of prevalent SEB
tariff rates 50% of the amount claimed was awarded in the favour of
Digitally Signed
By:MAYANK
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Tarapore. The Arbitrator‟s reasoning to allow or disallow the 50% of
the Claim is based on nothing but surmises and conjectures.
109. The award of 50% of the Claim to meet the ends of justice is against the
22
dicta laid down in M.S.T.C. Ltd. and Power Grid Corporation of
23
India Limited as no claim can be allowed on the basis of equity and
the same is strictly barred under the 1996 Act. Due to the aforesaid
reasons, the Award is liable to be set aside to the extent of Claim No. 4.
Claim No. 5 to Claim No. 9
110. Tarapore has further challenged Claim Nos. 5, 6, 7, 8 and 9 and are
being considered together.
111. The Claim No. 5 pertains to idling charges to the tune of Rs.
2,72,36,000/-. The said Claim is challenged by Tarapore. While
challenging the finding on the said Claim learned senior counsel for
Tarapore has contended that the Arbitrator has erroneously denied the
Claim on the ground that the delays were caused by external factors and
that there was no contractual provision entitling Tarapore to idling
charges. On the other hand, NTPC supports the finding of the Arbitrator
and states that the Claim of Tarapore is de hors the Contract as there is
no provision for computation of such idling charges. Further, Tarapore
itself is grossly deficient in the performance as it executed only 19% of
the work in 16 ½ months out of the stipulated 22 months for completion
of work. After adjudicating the Claim, the Arbitrator held as under:
“FINDINGS
Whereupon considering the rival submissions made by the

22
Supra n. 19.
23
Supra n. 20.
Digitally Signed
By:MAYANK
Signing Date:12.05.2026
20:38:05
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parties with regard to claim 5 and documents produced in
this regard, the undersigned is of the opinion that claimant
have failed to show any provision in the contract as per
which idling charges are to be calculated and accordingly to
be paid by the respondent. Unless the contract contains a
provision for the same, it would not be open for the
undersigned to adjudicate upon the same.
While examining the claim on merits, it is found out by the
undersigned that the interference by the third parties due to
law-order problem as also the monsoon emerges as the main
reason for delay resulting in idling charges and as per
respondent, they cannot held liable for the same even though
they had not denied the occurrence of the same. So far as the
other reasons for delay are concerned, it is submitted that the
same are denied by the respondent and upon examination,
the same could not be proved by the claimant.
The undersigned has held in the preliminary issues itself that
delay on account of external interference cannot be taken
into account and the same is outside the scope of the contract
and moreover, no indulgence on this account may be shown
to the claimant in the facts and circumstances of this claim
no.5.
AWARD ON CLAIM NO. 5
A Nil award is given in respect of claim no. 5 in view of the
above findings.‖
Digitally Signed
By:MAYANK
Signing Date:12.05.2026
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112. Tarapore has challenged Claim No. 5 on the grounds summarised under
the following heads:
a. Delay in issuance of detailed construction drawings
b. Delay in allotment/release of the camp/construction site
c. Delay in release of mobilisation advance
d. Failure on part of NTPC to provide peaceful working conditions
e. Interference by the local politicians due to which workers with
higher wages were forced upon Tarapore
f. Unscheduled and excessive monsoon that flooded the ashpond/
worksite.
113. From the perusal of the Award, in the facts and circumstances of the
case, it is apparent on the face of the Award that the Award to the extent
of Claim No. 5 has been rendered without any reasons. The Arbitrator
has devoted so many pages in recording the rival submissions and the
arguments of Tarapore and NTPC and has provided absolutely no
reasoning to dismiss the Claim. Considering the complexity of the
issues involved, the Arbitrator ought to have provided some analysis/
reasoning, if not detailed, dealing with the contentions of each Claim
raised and not merely by stating the opinion it has formed. It is equally
important for an Award to provide reasoning as to how the Arbitrator
has arrived on a particular conclusion.
114. A perusal of the contentions of Tarapore and the basis of the Claim of
Tarapore shows that the Arbitrator has left the Claim„unreasoned‟ and
the contentions of the parties „unanswered‟. He has nowhere dealt with
or adverted to the challenges posed by Tarapore with respect to delay in
issuance of detailed construction drawings, delay in allotment of the
Digitally Signed
By:MAYANK
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construction site and the delay in releasing of mobilisation advance. He
briefly dismissed the reasons for delay stating that no evidence has been
led. The reasoning provided by the Arbitrator is namesake and the
merits of the dispute have not been dealt with. Thus, the Award is
unintelligible. An Award that does not deal with the contentions of
parties shows that the Arbitrator has conveniently ignored questions
and arguments which were uncomfortable and were going against its
employer, NTPC. Such an apparent bias hits at the foundation of the
Award and the Arbitral proceedings.
115. Tarapore, in Claim No. 6, has challenged the non-granting of losses on
account of removal of components from machinery and equipment to
the tune of 15,33,375/- on the following grounds:
a. Tarapore was compelled to leave the site due to the disturbed and
hostile environment and was not permitted to remove its plant and
machinery which resulted into retention of the same on the site.
b. NTPC failed to provide safe and secure working environment and
the site was affected by various reasons including but not limited to
political pressure, bomb attacks, trade union disputes which
rendered the performance of the project impossible.
c. Further, even after the work had become impossible, NTPC
prevented the removal of Tarapore‟s machinery and equipment from
the site. Tarapore further relied on the order dated 30.11.1990 of this
Court to emphasise that NTPC did not permit the removal of
machinery in the ordinary course.
d. Upon re-entry, Tarapore conducted an inventory check whereupon
it found that major equipment were missing thus causing actual loss
Digitally Signed
By:MAYANK
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of machinery. The machinery was in good working condition when
it was left at site and subsequently became non-operational due to
the loss of parts. The loss was occasioned due to omission on part of
NTPC.
116. The Arbitrator while adjudicating Claim No. 6 failed to consider or deal
with any of the contentions advanced by Tarapore in that respect. The
Claim has been rejected by rendering minuscule and cursory reasoning
that the Claim is outside the scope of Contract. Tarapore has
categorically stated that even though this Claim is not covered by any
contractual clause same is predicated on the fact that NTPC did not
permit Tarapore to remove its machinery from the site as NTPC failed
to provide a secure working environment. In order to substantiate the
said aspect Tarapore also pleaded that two of its engineers were
murdered at site.The Arbitrator failed to discuss said contentions of
Tarapore. The finding on the Claim is conspicuously silent on the basis
for such a conclusion. I have already held that preliminary findings
regarding delay being attributable to Tarapore and that despite third
party hindrances Tarapore could not be absolved from its liability to
complete the work, is unsupportive and unreasoned. Hence, the above
finding on preliminary objection adversely affects this Claim.
117. Further, the Arbitrator also did not deal with any evidence placed on
record by Tarapore particularly, the order dated 30.11.1990 of this
Court, which specifically ordered NTPC to let Tarapore remove its
machinery from the site. Equally, the Arbitrator did not advert to the
contentionwith respect to the missing inventory, despite the same
having been urged. The approach adopted by the Arbitrator is clearly
Digitally Signed
By:MAYANK
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one sided and suffers from selective consideration of evidence which
favoured NTPC. The relevant finding of the Arbitrator reads as under:
“Findings :-
Considering the rival submissions of the parties, the
undersigned is the opinion that the claim 6 is outside the
scope of the contract and respondent cannot be held liable
for any loss to machinery and equipments left behind by the
claimant.
So far as the claim of the claimant that the respondent have
forcibly retained the machinery and equipment is also not
corroborated by any evidence
Award :-
In view of the above finding, Nil award is given in respect of
Claim 6.‖
118. Claim No. 7 pertains to Loss of profit to the tune of Rs. 52,16,179/-.
Tarapore challenged the Claim on the ground that Tarapore estimated
the total Contract value to be Rs. 6,57,66,082/- meanwhile they were
only permitted to execute the work to the extent of Rs. 1,36,04,290/-
and substantial work was left unexecuted. Consequently, it was
contended that they were deprived of an opportunity to earn profit on
unexecuted portion and the delays and defaults were solely attributable
to NTPC.
119. The Arbitrator while adjudicating the Claim No. 7, has again
conveniently ignored his own earlier and contradictory finding on
preliminary issues that there were third party hindrances. Again, the
finding on preliminary issues have bearing on this Claim and this
Digitally Signed
By:MAYANK
Signing Date:12.05.2026
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should be set aside on that ground only. Without prejudice, the
Arbitrator was required to appreciate the effect and consequence of
such finding of third party hinderances on the Claim No. 7 raised by
Tarapore. No evidence has been appreciated and discussion has been
held in that regard. Further, yet again, no reasoning has been rendered
as to how the Claim falls outside the scope of the Contract especially
when Tarapore has pleaded that it was NTPC who did not allow
Tarapore to complete the remaining work thus, depriving Tarapore of
the opportunity to earn profit. The findings are based on bald
conclusion and clearly suffers from the vice of one sided and selective
approach convenient to NTPC.The same is reflected and evident
fromfindings on Claim No. 7 which reads as under:
“Finding:
Considering the rival submission of the parties, the
undersigned is of the opinion that this claim is outside the
scope of the contract. Even otherwise, no liability can be held
on respondent as the claimant themselves have abandoned
the work and respondent were not liable for the same in any
way.
Award:
In view of the above findings, this claim of the claimant is not
admissible, accordingly a Nil award is given.‖
120. Claim No. 8 pertains to damage on account of idle labour or excess
wages to the tune of Rs. 40,80,676/- and idle establishment and
infructuous overhead expenses to the tune of 30,58,586/-. Tarapore
challenged the said Claim on the ground that Tarapore was compelled
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By:MAYANK
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to employ local labour unions which insisted that only local persons be
engaged who also charged higher rate of wages. Tarapore had
contended that it was NTPC‟s obligation to provide a congenial and
workable site. Thus, after considering the 20% overhead and profit, the
labour component of the executed work was taken at approximately
80% of the value of work done. Further it was due to the hostile work
environment it was compelled to keep its establishment, supervisory
staff and overhead structure expenses.
121. The Arbitrator adjudicated the Claim and recorded his finding as under:
“Findings:
On perusal of rival submission of the parties and record, the
undersigned is of the opinion that this claim is outside the
scope of the contract. Moreover, as it had been held by the
rd
undersigned that acts of 3 parties were involved and for
which, no liability can be put upon respondents for either
engagement of local labour by claimant or on the ground of
idle establishment and infructuous over-head. It is also
pertinent to point out here that in addition to above
conclusion, it is also found that claimant have failed to put
forth any evidence to prove their contentions in regard to this
claim.
Award on claim no.8:
In view of the above findings, Nil award is given in respect of
claim no.8.‖
122. Since, I am already of the opinion that the findings of the Arbitrator
with respect to the preliminary issues are unsupported by reasons and
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By:MAYANK
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suffer from non-application of mind, the reasoning with respect to
Claim No. 8 founded upon and substantially influenced by the said
preliminary findings also cannot be sustained. The preliminary findings
have been inconsistently applied in all the Claims and Counter Claims
to suit the advantage of NTPC. Once the foundational basis of the
Claim stands vitiated, the finding with respect to the Claim No. 8 also
goes away as the same does not contain any other reasoning or basis.
123. Claim No. 9 pertains to Refund of security deposit Rs. 1,68,497/-.
Tarapore raised the Claim of refund of security deposit as in terms of
Clause No. 9.1 (a) of the GCC, NTPC was entitled to deduct security
deposit from running Bills until the aggregate amount reached the
prescribed ceiling of Rs. 1,00,000/. NTPC ignored the above ceiling
and continued to deduct amount from the Bills. NTPC only released an
amount of Rs. 5,00,000/- thereby leaving the sum of 1,18,497/- being
retained by the respondent without any justification. Further, NTPC
had already accepted a demand draft of Rs. 50,000/- towards initial
security deposit and despite this NTPC deducted Rs. 50,000/- in lieu of
the said security.
124. The findings of the Arbitrator with respect to Claim No. 9 clearly
ignore the challenge posed by Tarapore. The Arbitrator yet again did
not give any findings or reasonings with respect to Clause No. 9.1 (a) of
the GCC and did not return any finding as to why prescribed ceiling of
Rs. 1,00,000/- was ignored by the Arbitrator. He has merely reproduced
Clause No. 5.0.0 of the LOA and has not even dealt with the said Clause
of the LOA. The findings read as under:
“Finding:-
Digitally Signed
By:MAYANK
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Considering the rival submissions and clause 5.0.0 of the
letter of award which says as follows:
5.1.0 ―In line with clause 18 of the notice inviting tenders of
the GCC for civil works, the earnest money deposit will be
treated as a part of the security deposit, on acceptance of
tender. Since you have furnished a bank guarantee for
Rs.50,000/- (Rupees fifty thousand only) in lieu of earnest
money deposit alongwith your proposal you are requested to
deposit Rs.50,000/- through demand bank draft drawn in
favour of National Thermal Power Corporation Ltd., payable
at New Delhi along with your unconditional
acknowledgement & confirmation of this letter of award,
where after the bank guarantee earlier submitted by you
shall be discharged by us. Alternatively you shall submit a
fresh unconditional and irrevocable bank guarantee from a
nationalized bank for Rs.50,000/- towards initial security
deposit, in the proforma acceptable to NTPC, valid for a
period of 90 (ninety only) days after the defects liability
period as defined in clause 33 of the GCC for civil work i.e.
upto and inclusive of 16.03.91 and you shall extend the
validity of the bank guarantee as required by NTPC at your
own cost.
5.2.0 Further, security deposit shall be deducted from all
your ‗on account payments‘ at the rate of 5% only of the
gross value of each bill till the security deposit so deducted
together with the initial security deposit of Rs.50,000/-
Digitally Signed
By:MAYANK
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referred to in para 5.1.0 above amounts to Rs. 10,00,000/-
(Rupees ten lakhs only) unless the entire security deposit
amounting to Rs. 10,00,000/-only is de posited by you in cash
or in any of the forms mentioned in clause 9.0 of the GCC for
civil work.
5.3.0 You shall keep the bank guarantee submitted by you
towards earnest money deposit valid till such period(s) till
the bank guarantee towards initial security deposit/security
deposit furnished by you is accepted by NTPC‖.
Keeping in view of the above rival submissions, the
undersigned is of the opinion that in view of the fact that
claimant could not complete the work and left the site, so the
respondent may adjust the same towards their dues and can
forfeit the security deposit.
Award on claim no.9 :
In regard to claim no.9 Nil award is given.‖
125. The Arbitrator has dealt with all the Claims in a wholly cursory manner
by merely stating his opinion without affording any reasoning for the
said opinion. The Award does not disclose any discussion whatsoever
with respect to the reasoning as to why the said Claims were outside the
scope of the contract and what material or terms of the Contract was
considered to come to a specific findings in all the aforesaid Claims.
Further, there is no analysis of pleadings and submissions of the parties.
The Arbitrator has mechanically reproduced the paragraphs of the
pleadings of the parties with respect to that Claim but has not analysed
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By:MAYANK
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them. There is no reasoning afforded to connect the conclusions of the
Arbitrator with the discussion in the Award.
126. A reasoned Award is not an empty formality. It ensures that the
Arbitrator has applied its mind to adjudicate the dispute. The Arbitrator
is required to give a reasoned Award. The same is also supported by the
scheme of the 1996 Act. Section 31(3) of the 1996 Act mandates the
Arbitrator to give a reasoned Award. Such reasoning must be
intelligible and adequate. The same was held in the case of Dyna
24
Technologies (P) Ltd. and reaffirmed by the Hon‟ble Supreme Court
25
in OPG Power .
127. For the aforesaid reasons, the Award in respect of Claim Nos. 6 to 9
does not survive.
128. Claim No. 10 pertains to interest on all Claim amounts. It does not
survive for consideration as the Award to the extent of findings on
Claim is set aside.
Counter Claims
Counter Claim Nos. 1 and 2
129. The Counter Claim No. 1 relates to unadjusted amount of balance
mobilisation advance to the tune of 20,37,912/- and the Counter Claim
No. 2 pertains interest on mobilisation amount.
130. It is Tarapore‟s case that allowing refund of the balance mobilisation
advance and adjusting the same against the Claims of Tarapore is
incorrect. On the other hand it is NTPC‟s case that it had disbursed a
total sum of Rs. 26.30 lakhs to Tarapore as mobilization advance. The

24
Supra n. 14.
25
Supra n. 15.
Digitally Signed
By:MAYANK
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said advance was contractually required to be recovered from
R.A.Bills. However, as Tarapore executed only about 19% of the work
and thereafter abandoned the project, Tarapore has deprived NTPC of
the opportunity to fully recover the advance through running Bills.
th
Only a sum of Rs. 5,92,088/- could be adjusted up to the 11 R.A. Bill,
leaving a balance of Rs. 20,37,912/- outstanding, payable to NTPC.
131. Tarapore opposed the said Counter Claim before the Arbitrator
contending that although NTPC had paid a sum of Rs. 26.30 lakhs
towards mobilisation advance, however, the said amount does not
remain recoverable by NTPC as the substantial Contractual Claims of
Tarapore remained unpaid by NTPC. Thus, mobilisation advance stood
adjusted against the amounts otherwise due and payable by NTPC
under the Contract. The Arbitrator with regard to the said Counter
Claim has merely recorded the objection of Tarapore that substantial
amounts have not been paid, but he has nowhere dealt as to how these
unpaid amounts should not be adjusted against the mobilisation
advance. The Award to the extent of Counter Claim No. 1 is devoid of
reasoning. The Arbitrator merely mechanically reproduced the
pleadings of the parties in extenso and without dealing with any rival
contentions and delving into reasoning the Arbitrator just rendered his
bald conclusion. Such an approach goes contrary to the law laid down
26 27
in Dyna Technologies (P) Ltd. and OPG Power. The Arbitrator is
expected to return proper adequate and intelligible findings in order for
the Award to be proper. For the said reasons, Counter Claim No. 1 is

26
Supra n. 14.
27
Supra n. 15.
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By:MAYANK
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liable to be set aside. Same is evident on perusal of the findings
reproduced below:
― Finding:
In view of the rival submissions it is very clear that a
mobilization advance of Rs. 26.30 lacs was paid by the
respondent to the claimant and the sole ground of the
claimant in opposing this counter claim is that substantial
claims of the claimant having not been paid by the
respondent. In view of the undersigned, this counter claim is
maintainable.
Award on counter claim no.1
In view of the above findings in regard to counter claim no. 1,
the respondent is entitled to a sum of Rs. 20,37,912/- only and
accordingly respondent are awarded this sum in respect of
counter claim no. 1.‖
132. Further, Counter Claim No. 2 pertains to interest on the mobilisation
advance which is the subject matter of Counter Claim No. 1. Since
finding with respect to Counter Claim No. 1 has already been held to be
unsustainable in law, it shall be apposite to set aside the finding on
Counter Claim No. 2 as well as it is purely consequential in nature.
133. The finding with respect to Counter Claim No. 4 suffers from the same
infirmity and reads as under:
―Finding:
Considering the rival submissions, it is found that respondent
were not under any contractual obligation to pay to FBP and
accordingly such payment if any made by respondent is
Digitally Signed
By:MAYANK
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outside the scope of this contract.
Award on counter claim no.4:
Keeping in view the findings a nil award is made in regard to
this counter claim. ―
134. This finding is liable to be set aside for the very same reasons as
provided for Counter Claim No. 1.The Arbitrator has with respect to
Counter Claim No. 4, in a single line, merely observed that NTPC was
under no obligation to make payment to FBP and that such payment
was made outside the scope of the Contract. However, no reasons
whatsoever have been assigned as to how such conclusion has been
arrived at. In the absence of any proper, intelligible or adequate
reasoning, the finding on Counter Claim No. 4 cannot be sustained and
is accordingly liable to be set aside.
Counter Claim No. 3
135. The Counter Claim No. 3 pertains to unrecovered secured advance paid
against materials amounting to Rs. 96,534/- calculated on diminishing
value. The case of NTPC is that since the sum of Rs. 2,31,884 remained
unrecovered and blocked from Tarapore, it is liable to pay interest on
the said amount from 21.04.1989 to 06.08.1991. On the other hand
Tarapore contends that materials purchased from the said advance were
procured by Tarapore and remained at site when Tarapore was
compelled to leave which were later used by Murshidabad Zila
Parishad.
136. The Arbitrator‟s rejection of the said Counter Claim is premised on the
admission of NTPC having used the material left behind by Tarapore in
completion of the project. The said finding reads as under:
Digitally Signed
By:MAYANK
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―Findings:
In their Counter claim itself, the respondent themselves
have said that the left over materials of the claimant were
used by the Murshidabad Zilla Parishad. In their reply also,
the claimant have not disputed the amount advanced, but
according to them they have left materials of the value of
about Rs. 4.40 lacs and the respondent have consumed these
materials while getting the job done through Murshidabad
Zilla Parishad. The respondent is oblige to give credit of that
amount in the overall accounting. Keeping in view the rival
submissions, the undersigned is of the opinion that in the
light of respondent‘s own admission about use of materials
by Murshidabad Zilla Parishad while executing the balance
work done, this counter claim is not proved by the
respondent.
Award on counter claim no.3 :-
Accordingly a Nil award is made in respect of this claim‖
137. The finding returned by the Arbitrator on Counter Claim No. 3 is also
unsustainable and liable to be set aside. A perusal of the Award shows
that the Arbitrator rejected the said Counter Claim solely on the basis
that the leftover materials of Tarapore were used by Murshidabad Zila
Parishad while executing the balance work. However, the Arbitrator
failed to examine the real nature and scope of the Counter Claim,
namely, recovery of the unrecovered secured advance paid against
material and the interest thereon. The mere assertion that some
materials were left at site and were subsequently used for completion of
Digitally Signed
By:MAYANK
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the balance work could not, by itself, furnish a complete answer to the
Counter Claim unless there was a clear finding, supported by reasons as
to whether that the value of such materials had in fact been duly
adjusted or appropriated towards the advance already released. No such
calculation has been undertaken in the Award. The Arbitrator has not
returned any finding as to how the unrecovered component of the
advance of Rs. 96,534/-ceased to remain recoverable. The Award is
silent as to the basis for rejecting the Counter Claim for interest for the
period during which the amount allegedly remained blocked and was
not utilised by anyone. Thus, the finding does not account for the extent
of adjustment, or the consequences flowing from the admitted advance
paid under the contract. In the absence of any cogent and intelligible
reasoning on these aspects, the rejection of Counter Claim No. 3 cannot
be sustained and is accordingly liable to be set aside.
Counter Claim No. 5 and Counter Claim No. 7
138. The Counter Claim No. 5 is with respect to cost of balance work
executed at the risk and cost of Tarapore. The Arbitrator has partially
awarded an amount of Rs. 1,57,61,267/- in the favour of NTPC. The
said liability, maintainability and quantification of the said Counter
Claim was challenged by Tarapore on the following grounds:
a. Tarapore contended that the Counter Claim was barred by limitation
b. Further, it contended that without prejudice to its denial towards
liquidated damages, once the Contract itself provided for liquidated
damages, NTPC was not entitled to raise any independent or
additional claim for damages, more so when the delay and
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By:MAYANK
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non-completion of work is Tarapore‟s fault and the termination of
contract on part of NTPC was not justified.
c. Balance work has been awarded much after the expiry of the
original contractual period. Thus, while computing the differential
cost, Tarapore was entitled to credit for escalation in prices of labour
and material. Thus, the calculation is erroneous.
139. The Arbitrator while adjudicating the said Counter Claim only relied on
Clause EEE of the TOA. The finding of the Arbitrator is based on the
interpretation of the said Clause itself. He has not appreciated the
objections aforesaid, raised by Tarapore. Such an Award based on non-
appreciation of contentions of parties cannot be found to be intelligible.
The findings are reproduced as under:
―Considering the rival submissions and upon perusal of
record, the undersigned is of the opinion that as per the
clause EEE of the telex of award dtd. 16.02.88, which
provided as follows:
―Your performance of work under this contract will be
closely monitored initially for a period of 3 (three only)
calendar months from the start of work at site after the
mobilization period specified in the work schedule. In
case of any shortfall in execution of the quantities of
works as per the contractual schedule quantities
specified in the work schedule, you will be advised and
required to make good the shortfall in the quantities in
the next two only month. In case the shortfall in the
quantities of works could not be made up by you, then
Digitally Signed
By:MAYANK
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action will be taken in terms of clause 41 of GCC for
civil works. NTPC shall have a right to engage another
agency to execute the balance quantities of work
covered under the scope of this contract at your risk and
cost.‖
In view of the above, it is clear that uncompleted work in the
contract was to be executed at the risk and cost of the
claimant. In their reply to this claim, the claimant have stated
that the balance value of the work left by the claimant is
stated to be Rs. 5,31,55,388.00 and the value of work
awarded to Murshidabad Zilla Parishad is stated as Rs.
6,89,16,655.00 and the difference between the two is about
Rs. 1.58 crores. The respondent have calculated alongwith
this amount the permissible deviation limit stipulated in the
contract and as per them the net final implication is Rs.
2,65,83,518.00 only. The calculation as given by them at
Annexure 27 & 28 of their counter claims had been perused
by the undersigned. It is also found that the claimant have not
said anything with regard to such calculations in their reply
to counter claims. So far as the congenial working condition
not provided to the claimant is concerned, it has been held
above that the same is outside scope of the contract and
respondent cannot be held liable for the same.
Considering the totality of the circumstances, the
undersigned is of the views that by awarding the net
difference between Rs. 6,89,16,655/- and Rs. 5,31,55,388/-,
Digitally Signed
By:MAYANK
Signing Date:12.05.2026
20:38:05
OMP No. 408/2008 & CS(OS) No. 1499/2008 Page 93 of 96

that comes to Rs. 1,57,61,267/- only, the justice would be
done in the matter.
Award on counter claim no.5 :-
Accordingly, in regard to counter claim no.5, the respondent
are awarded a sum of Rs. 1,57,61,267.00/- only towards this
claim.‖
140. The Counter Claim No. 7 pertains to liquidated damages to the tune of
Rs, 32,88,304/-. Tarapore opposed the said Counter Claim on the
preliminary ground that the Counter Claim is barred by limitation and
further on merits that liquidated damages cannot be levied against
Tarapore when the execution of work was itself impeded due to
NTPC‟s own acts. The Arbitrator awarded an amount of 32,88,304/- to
NTPC. From the perusal of the Award it is evident that the Arbitrator
has failed to discuss how and why the Counter Claim is not barred by
limitation and further, has not adverted any findings on objections of
Tarapore on merits. The finding to the extent of Counter Claim No. 7 is
inadequate.
―Findings:-
Considering the rival submissions and documents of record,
the undersigned is of the opinion that the claimant have
failed to prove as exactly how this claim is barred by
limitation. The other objections of the respondent have
already been dealt earlier and I am of the opinion that
liquidated damages are indeed payable by the claimant in
accordance with the terms of the GCC applicable to the
contact.
Digitally Signed
By:MAYANK
Signing Date:12.05.2026
20:38:05
OMP No. 408/2008 & CS(OS) No. 1499/2008 Page 94 of 96

So far as the quantum of compensation is concerned, the
same is found to be correct in accordance with the terms of
the contract i.e. 5 % of the total contract value – Rs.
32,88,304/-
Award on counter claim no. 7 :-
In view of the above findings, the respondent are awarded a
sum of Rs. 32,88,304/- only towards claim no. 7.‖
141. The Arbitrator again mechanically reproduced the pleadings of the
parties and without dealing with any rival contentions and delving into
reasoning, the Arbitrator just rendered his conclusion. As already
observed above, such an approach goes contrary to the law laid down in
28 29
Dyna Technologies (P) Ltd. and OPG Power. The Arbitrator is
expected to return proper, adequate and intelligible findings in order for
the Award to be proper. For the said reasons, Counter Claim Nos. 5 and
7 are liable to be set aside.
142. Counter Claim No. 8 pertains to interest on all Counter Claim amounts.
It does not survive for consideration as the Award to the extent of
Counter Claim is set aside.
143. Since the Award is being set aside, the Claim No. 11 and Counter Claim
No. 9 relating to the costs of litigation also are set aside.
CONCLUSION
144. For the reasons recorded herein above, the Award is at the outset
vitiated by the apprehension of bias and should be set aside on this
ground alone. Even otherwise, a perusal of the analysis of the Award

28
Supra n. 14.
29
Supra n. 15.
Digitally Signed
By:MAYANK
Signing Date:12.05.2026
20:38:05
OMP No. 408/2008 & CS(OS) No. 1499/2008 Page 95 of 96

shows that the Arbitrator has either based its reasoning on equity or is
unintelligible and the Arbitrator has not rendered any findings for
allowing or disallowing of Claims or Counter Claims. Such an
unreasoned and unintelligible Award should be set aside on the ground
of perversity under Section 34 of the 1996 Act.
145. Accordingly, suit and petition are allowed and the impugned Award
dated 14.03.2008 is set aside in its entirety.
146. The suit and petition are disposed of with pending applications, if any.




JASMEET SINGH, J.
MAY 12, 2026/(MU)

Digitally Signed
By:MAYANK
Signing Date:12.05.2026
20:38:05
OMP No. 408/2008 & CS(OS) No. 1499/2008 Page 96 of 96