Shristi Infrastructure Development Corporation Limited vs Scorpio Engineering Private Limited And Anr

$~87
* IN THE HIGH COURT OF DELHI AT NEW DELHI
th
Date of decision: 19 May, 2026
+ FAO(OS) (COMM) 121/2025 & CM APPL. 44765/2025, CM
APPL. 44767/2025, CM APPL. 32727/2026

SHRISTI INFRASTRUCTURE DEVELOPMENT
CORPORATION LIMITED PLOT NO. X-1, 2 & 3,
BLOCK-EP, SECTOR-V,
SALT LAKE CITY, KOLKATA -700091
.....APPELLANT
Through: Mr. Jayant K. Sud, Senior
Advocate with Mr. Sahib
Kochhar, Mr. Sai Manik Sud,
Mr. Aryan Mishra, Mr. Gaurav
Kumar, Mr. Pratyush
Bhattacharjee and Mr. Prateek
Gupta Advocates

Versus

1. SCORPIO ENGINEERING PRIVATE LIMITED
NO. 132, WHEELER ROAD, COX TOWN,
BANGALORE, KAMATAKA- 560005
… RESPONDENT NO. 1

2. HIRANMAYE ENERGY LIMITED
(FORMERLY KNOWN AS INDIA POWER
CORPORATION (HALDIA) LIMITED)
PLOT NO. X-1, 2 & 3, BLOCK-EP, SECTOR-V,
SALT LAKE CITY, KOLKATA -700 091
… RESPONDENT NO. 2
Through: Mr. Satyam Dwivedi, Advocate
for respondent no.1
Mr. Srideepa Bhattacharyya,
Mr. Aditya Tanay Pandey and
Signature Not Verified
Signed By:PRERNA
RAWAT
Signing Date:04.06.2026
16:47:31
FAO(OS) (COMM) 121/2025 Page 1 of 19

Mr. Aparajita, Advocates for
respondent no. 2

CORAM:
HON'BLE MR. JUSTICE NITIN WASUDEO SAMBRE
HON'BLE MR. JUSTICE AJAY DIGPAUL
J U D G M E N T (O R A L )

NITIN WASUDEO SAMBRE, J.
1. This is an appeal under Section 37 of the Arbitration and
Conciliation Act, 1996 (hereinafter referred to as “ Act of 1996 ”),
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questioning the judgment dated 01 May, 2025 delivered by the learned
Single Judge of this Court in OMP (COMM) 246/2022, whereby the
learned Single Judge has confirmed and upheld the arbitral award dated
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16 October 2019.
2. The facts necessary for deciding the present appeal are as under:
A. The appellant claims to be a public limited company
engaged in civil engineering, construction, and infrastructure
development, having its registered office at Kolkata, whereas
respondent no. 1 herein is a private limited company registered
under the Companies Act, 1956, having its registered office at
Bangalore, State of Karnataka. Respondent no.1 is engaged in the
business of bulk material handling systems.
B. Respondent no. 2 owns a 3x150 MW Thermal Power Plant
at Haldia, Purba Medinipur, in the State of West Bengal that was
formerly known as India Power Corporation (Haldia) Limited.
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C. Respondent no. 2 invited bids through a tender process for
engineering, procurement, transportation, supply to the site, and
insurance of the main plant equipment and accessories, along with
balance of plant equipment and accessories, in connection with the
aforesaid thermal power plant.
D. One BF Infrastructure Limited (“BFIL”) submitted a proposal
and was in turn appointed as the EPC Contractor of respondent no. 2
for the establishment of the aforesaid thermal power plant.
E. Respondent no. 2, later in the year 2012, invited bids for
designing, engineering, manufacturing, supply, erection, and
commissioning of the coal handling project pertaining to the aforesaid
plant.
F. For the same, respondent no. 1 submitted its bid to respondent
no. 2, which resulted in the execution of the contract among respondent
no. 1, 2 and BFIL, with a project cost of Rs. 47,50,00,000/-. Out of the
said contract amount, Rs. 43,00,00,000/- was towards the purchase
price of the equipment and the balance amount of Rs. 4,50,00,000/- was
for the services rendered.
G. Along with the aforesaid agreement, the parties also agreed to the
th
General Commercial Terms and Conditions dated 20 December, 2013,
which contained an arbitration clause which reads thus:
“29.0 ARBITRATION
29.1 In the event of any dispute or difference arising out of the
execution of the Order/Contract or the respective rights and
liabilities of the parties or in relation to interpretation of any
provision by the Seller/Contractor in any manner touching upon
the Order/Contract, such dispute or difference shall (except as to
Signature Not Verified
Signed By:PRERNA
RAWAT
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any matter the decision of which is specifically provided for
therein) be referred to the arbitration of the person appointed by
the competent authority of the Purchaser.
Subject as aforesaid, the provisions of Arbitration and
Conciliation Act, 1996 (India) and statutory modifications or
reenactments thereof and the rules made there under and for the
time being in force shall apply to the arbitration proceedings
under this clause. The venue of arbitration shall be at
NOIDA/New Delhi/Delhi.”
H. Later, BFIL, which acted on behalf of respondent no. 2, in turn
invited quotations for the work of design, engineering,
manufacturing/procurement, transportation, unloading, site storage,
erection, testing, commissioning, and performance guarantee testing of
equipment in the matter of execution of the aforesaid project.
I. Pursuant to which, the appellant submitted its offer in the form
of a quotation, which upon the approval of BFIL, led to the issuance of
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two Letters of Intent (“LOI”) by the said agency on 10 December,
2013.
J. On 20th December, 2013, the respondent no. 2 issued a Purchase
Order in favour of respondent no. 1 for the execution of the aforesaid
work, cost of which was estimated at Rs. 43 crores.
K. The said Purchase Order was followed by a Work Order issued
by respondent no. 2 to respondent no. 1 for the services of unloading,
storing, transportation, etc., for a consideration of Rs. 4.5 crores.
L. As a consequence of above, the appellant herein re-issued a
th
Purchase Order and Work Order on 20 December, 2013 in favour of
respondent no. 1 pursuant to directions of respondent no. 2 and BFIL.
Signature Not Verified
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M. The aforesaid Work Order and Purchase Order were followed by
a Tripartite Agreement dated 06th June, 2014, executed between BFIL,
respondent no. 2, and the appellant, whereby BFIL assigned all its
rights, obligations, and liabilities arising under the previous agreement
in favour of the respondent no. 2.
N. In the aforesaid background, BFIL ceased its existence as the
EPC Contractor for the project in question, and the appellant
commenced coordination directly with respondent no. 2 for the
execution of work in the matter of the project installation.

O. Thereafter, the appellant became the EPC Contractor in place of
BFIL pursuant to the Supply Contract executed between the appellant
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and respondent no. 2 on 03 July, 2015.
P. The consequence of above was that respondent no. 2 transferred
the obligations of BFIL to the appellant, which had been previously
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assigned to respondent no. 2 under the Tripartite Agreement dated 06
June, 2014.
Q. In the matter of the aforesaid execution of the contract, since
disputes arose between the parties, respondent no. 1 took recourse to
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the arbitration clause and issued a notice dated 14 April, 2017.
R. Respondent no. 1 initiated proceedings under Section 11 of the
Arbitration and Conciliation Act, 1996, seeking appointment of a Sole
Arbitrator for adjudication of the dispute inter se the appellant and
th
respondent nos. 1 and 2, which came to be allowed vide order dated 18
July, 2017 and a Sole Arbitrator was appointed.
Signature Not Verified
Signed By:PRERNA
RAWAT
Signing Date:04.06.2026
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S. The Sole Arbitrator, accordingly, considered the rival claims of
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the parties and passed an award on 16 October, 2019.
T. The respondent no. 1, herein also preferred a counter-claim for
liquidated damages before the Arbitrator.
U. The learned Arbitrator dismissed the counterclaim and disposed
of the proceedings with the following observations:
“The Respondent no. 1 or 2 are held jointly and severally liable
and thus directed to pay the Claimant a sum of Rs. 6,56,84,982/-
(Rs. 5,73,15,078/- + Rs. 83,69,904/-) with interest @ 38.85%
under the MSME Act, 2006 from the date of the award till the
date of payment. The Respondent no.1 or 2 are directed to pay
the sum awarded in favour of the Claimant within 6 weeks from
the date of the award. In case this is not done by the Respondents
within the period of 6 weeks, the Respondents will be liable to
pay the said amount along with interest at the rate of 2% higher
than the current rate of interest prevalent on the date of award
as per Section 31(7) (b) of the Arbitration and Conciliation Act,
1996 from the date of award to the date of payment.
Both the parties are to bear their own cost of litigation.
The Arbitration proceedings are thus disposed of in terms of this
award.
The deficient stamp duty is required by either of the parties to be
got ascertained and paid on this Award.”
V. The details of the award as awarded by the learned Arbitrator can
be summarized as under:
a. As against the outstanding amount towards supply and
services payable by the appellant and respondent no. 2 jointly and
severally under the ‘Group of Companies Doctrine’ had been
assessed at Rs. 5,73,15,078/-. Insofar as Claim No. 4, viz ., the cost
incurred by respondent no. 1 for keeping the bank guarantee alive,
is concerned, a sum of Rs. 83,69,904/- came to be awarded,
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b. The interest component is evaluated at 38.85% on the
aforesaid principal amount, i.e ., Rs. 5,73,15,078/- plus Rs.
83,69,904/- from the date of the award till the actual date of
payment.
c. The appellant and respondent no. 2 were directed to pay
the award sum within a period of six weeks, failing which the
appellant and respondent no. 2 were directed to pay the award sum
at the rate of 2% higher than the current rate of interest prevailing
on the date of award, from the date of the award to the date of
payment.
W. The appellant, being aggrieved by the arbitral award, preferred
proceedings under Section 34 of Act of the 1996, being O.M.P.
(COMM) 246/2022, which was dismissed vide the impugned order, as
such, the present appeal came to be filed.
SUBMISSIONS OF THE APPLEANT
3. The learned counsel for the appellant would invite our attention
to the scheme of Sections 34 and 37 of the Act of 1996 so as to urge
that the learned Single Judge, while exercising powers under Section
34 of the Act of 1996, has travelled beyond the scope of the aforesaid
provisions.
4. He would claim that a perusal of paragraphs 14, 16, 18, and 19
of the judgment in the matter of MMTC Ltd. v. M/s Vedanta Ltd . ,
(2019) SCC OnLine SC 220, would suggest that the appellant was has
no privity of contract, could not have been held liable for payments to
be made jointly and severally along with the original respondent no. 2.
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RAWAT
Signing Date:04.06.2026
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5. According to the learned counsel for the appellant, the Tripartite
th
Agreement dated 06 June, 2014 reflects that BFIL was the original
EPC Contractor, who was allegedly later substituted by the appellant.
To appreciate the scope of work under the contract in question, it was
necessary that BFIL, i.e ., the earlier EPC Contractor, ought to have been
impleaded as a party.
6. He would further urge that, since the appellant was neither a party
to the arbitration agreement nor a consenting party to the arbitration,
the appellant ought not to have been held jointly and severally liable
along with respondent no. 2 for the payments claimed by respondent
no. 1.
7. From the record, it is sought to be demonstrated that the appellant
merely acted as a communicator between respondent no. 1 and 2 and
that in view of the recitals of the agreement, no financial liability can
be fastened upon the appellant.
8. It is urged that respondent no. 1 always received payment from
respondent no. 2, and the only role attributed to the appellant in the
execution of the project in question was that respondent no. 1 would
submit its bills along with progress reports to the appellant, and the
appellant, in turn, after certifying the same, would submit the same to
respondent no. 2 for further processing and release of payments.
9. It is further urged that the Group Companies Doctrine was not at
all attracted in the factual matrix of the present case. According to the
learned counsel for the appellant, the appellant is in no way connected
with respondent no. 2, either directly or indirectly, but for the extent of
Signature Not Verified
Signed By:PRERNA
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acting as a company that facilitated as the EPC Contractor and its role
was restricted only to certification of the bills and monitoring of the
progress qua the project in question. In such an eventuality, the very
essentials of the Group Company Doctrine are not satisfied and that
being so, it is urged that the very award and the impugned judgment
under Section 34 of the Act of 1996 goes contrary to the scheme of
Sections 34 of the Act.
10. In the aforesaid background, it is urged that, having regard to the
settled position of law, at the most, respondent no. 2, could be
proceeded against and not the appellant, particularly when the
observations go against the public policy of India.
11. It is claimed that though it is the case of respondent no. 1 that a
notice invoking the arbitral proceedings was issued before the
commencement of arbitration, however, no such notice was ever
received by the appellant, and the appellant was directly impleaded as
a party in the proceedings under Section 11 relating to the appointment
of the Arbitrator.
12. It is sought to be pointed out from the record that though the
appellant appeared before the learned Arbitrator on the initial five dates,
its subsequent appearance was not required, as the appellant under the
arbitration agreement was not liable for any such liability.
13. It is urged that it was the failure of the arbitrator to put to
appellant the appropriate notice in relation to the arbitral proceedings
and that being so, the arbitrator has passed the award against the
appellant without the appellant being proceeded/declared ex-parte or
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otherwise, according to him, this procedural lapse is a serious illegality
rendering the arbitral award illegal.
14. According to the learned counsel for the appellant, even the
award of interest is expressly illegal, as interest at the exorbitant rate of
38.85% has been awarded without there being any basis.
15. The learned counsel for the appellant so as to substantiate the
aforesaid contentions has relied on the following judgments:
i. Cox & Kings Ltd v. SAP India Pvt. Ltd. & Anr. [(2024) 4 SCC 1]
ii. Hindustan Petroleum Corporation Ltd. v. BCL Secure Premises
Pvt. Ltd. [(2026) 3 SCC 711]
iii. Vingro Developers Pvt. Ltd. v. Nitya Shree Developers Pvt. Ltd.
[(2024) SCC OnLine Del 486]
iv. Ajay Madhusudhan Patel & Ors. v. Jyotrindra S. Patel & Ors.
[(2025) 2 SCC 147
v. Mittal Pigments Pvt. Ltd. v. Gail Gas Ltd. [(2023) SCC OnLine
Del 977]
vi. Lovely Benefit Chitfund & Financev. Puran Dutt Sood & Ors. [ILR
(1983) I Delhi 594]
vii. M/s Savio Industrial & Structural Corporation v. Southern
Railway [2016 SCC OnLine Mad 30027]
viii. Lion Engineering Consultants v. State of Madhya Pradesh & Ors.
[(2018) 16 SCC 758]
ix. State of Chhattisgarh v. Sal Udyod Private Limited [(2022) 2 SCC
275]
x. MTNL v. Canara Bank [(2020) 12 SCC 767
xi. ONGC v. M/s Discovery [Civil Appeal No. 2042 of 2022]
xii. Bharti Cellular Limited v. Assistant Commissioner of Income Tax
[(2024) 8 SCC 608]
xiii. Vivek Automobile v. Indian INC. [(2009) 17 SCC 657
xiv. Kuchwar Lime & Stone Co. v. Dehri Rohtas Light Railway & Co.
Ltd. [1968 SCC OnLine SC 267]
xv. Ssangyong Engineering & Customs Company Ltd. v. National
Highway Authority of India [(2019) 15 SCC 131]
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xvi. Trans Engineers India Private Limited v. Ostuka Chemicals
(India) Pvt. Ltd. [O.M.P (COMM) 310/2022, IA No. 11536/2022
& 1013/2023]
SUBMISSIONS OF THE RESPONDENTS
16. While countering the aforesaid submissions, the learned counsel
for the respondent would urge that the claim put forth by the appellant
is beyond the scope of interference permissible under Section 37 of the
Act of 1996.
17. According to the learned counsel, the parameters which have
been laid down in a catena of judgments defining the scope of Section
37 of the said Act do not permit re-appreciation of the factual matrix,
the evidence or the entire case in exercise of powers under Section 37
of the Act.
18. According to the learned counsel, the burden is on the appellant
to demonstrate that the award, so as to judgment under Section 34 of
the Act delivered by the learned Single Judge, goes contrary to the
public policy of the country.
19. He would further claim that the grounds which are sought to be
canvassed in the present appeal were never urged before the learned
Arbitrator. In view of the law laid down by the Apex Court in the matter
of Union of India v. Susaka (P) Ltd and Ors. (2017) SCC OnLine SC
1436, it is not open for the appellant to raise the contentions which were
not canvassed before the learned Arbitrator.
20. The further contention of the respondents is that it was the
appellant who had issued the Work and Purchase Order to the
respondent no. 1 and, in such circumstances, the appellant had also
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made certain payments to respondent no. 1, which indicates the
existence of a contract between the parties.
21. The very transactions and the Work and Purchase Orders issued
by the appellant speak of the appellant being an active and interested
party to the contract.
ANALYSIS AND CONCLUSION
22. Having considered the rival submissions, the foremost issue that
warrants consideration is the scope to which the appellant can agitate
or canvass its grievance before this Court under Section 37 of the Act
of 1996.
23. Rightly so, the learned counsel for the respondents has raised an
objection to the very conduct of the appellant in not resisting the claim
before the learned Arbitrator and the grounds were raised for the first
time before the Court in proceedings under Section 34 of the Act of
1996.
24. In the matter of Azizur Rehman Gulam and Others v. Radio
Restaurant and Others (2023) SCC OnLine Bom 2320, the Bombay
High Court, while dealing with an identical issue, recorded a finding
that the Court taking up the proceedings under Section 37 of the Act of
1996 cannot travel beyond the restrictions laid down under Section 34
of the said Act.
25. In such an eventuality, the Court cannot undertake an
independent assessment of the merits of the award and while exercising
powers under Section 34 of the Act, the Court cannot exceed the scope
of the statutory mandate.
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26. The aforesaid issue stands further endorsed by the Apex Court in
the matter of Union of India v. Susaka (P) Ltd. and Ors . (2017) SCC
OnLine SC 1436, wherein the Apex Court held that if a plea was
available to a party during the arbitral proceedings but was not raised
before the learned Arbitrator, such plea is not open to be canvassed
either in proceedings under Section 34 or in an appeal under Section 37
of the Act.
27. The aforesaid judgment is rightly so referred by the learned
Single Judge for the purpose of restricting the scope of consideration
while dealing with the claim of the appellant in exercise of powers
under Section 34 of the Act of 1996. Paragraph 27 of the aforesaid
judgement reads thus:-
“27. If a plea is available, whether on facts or law, it has to be raised
by the party at an appropriate stage in accordance with law. If not
raised or/and given up with consent, the party would be precluded
from raising such plea at a later stage of the proceedings on the
principle of waiver. If permitted to raise, it causes prejudice to other
party. In our opinion, this principle applies to this case. "

28. The learned Judge, while dealing with the claim of the appellant,
has considered issues such as the scope of Section 34 of the Act, the
availability of the MSME forum to the party, the merits of the matter,
the applicability of the Group Company Doctrine, the restrictions on
claims against respondent no. 1, and the award of interest.
29. As far as the issue relating to the MSME forum and the Group
Companies Doctrine, which is sought to be canvassed by the appellant,
is concerned, it is the contention of the appellant that it is raising a
question of law based on the admitted factual matrix.
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30. According to him, there is an absence of privity of contract with
the respondent and, in such an eventuality, the inference drawn that the
appellant is part of the group company, i.e ., respondent no. 2, is without
any basis.
31. In the case at hand, the status of the present appellant under the
Agreement dated 3rd July, 2015 was that of an EPC Contractor.
32. The nature of the obligations cast upon the appellant, as could be
inferred from the recitals of the agreement itself, clearly indicates that
the appellant was a party to the proceedings.

33. Once it could be inferred from the record that the appellant had
made payment to respondent no. 1 and along with respondent no. 2, had
acted in honouring the contract, towards payment for the execution of
work carried out by respondent no. 1, the factual inference drawn for
invoking the Group Company Doctrine appears to be justified.

34. Thus, the reliance placed by the learned Single Judge on the
relevant observations contained in paragraphs 96, 123, 127, and 132 of
the judgment of the Apex Court in Cox and Kings Ltd. v. SAP India
Pvt. Ltd. , (2023) SCC OnLine SC 1634, is quite justified.

35. The relevant paragraphs are reproduced below:-
“96. An arbitration agreement encapsulates the commercial
understanding of business entities as regards to the mode and
manner of settlement of disputes that may arise between them in
respect of their legal relationship. In most situations, the language
of the contract is only suggestive of the intention of the signatories
to such contract and not the non-signatories. However, there may
arise situations where a person or entity may not sign an arbitration
agreement, yet give the appearance of being a veritable party to
such arbitration agreement due to their legal relationship with the
signatory parties and involvement in the performance of the
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underlying contract. Especially in cases involving complex
transactions involving multiple parties and contracts, a non-
signatory may be substantially involved in the negotiation or
performance of the contractual obligations without formally
consenting to be bound by the ensuing burdens, including
arbitration.
xxx
123. The participation of the non-signatory in the performance of
the underlying contract is the most important factor to be considered
by the Courts and tribunals. The conduct of the non-signatory
parties is an indicator of the intention of the non-signatory to be
bound by the arbitration agreement. The intention of the parties to
be bound by an arbitration agreement can be gauged from the
circumstances that surround the participation of the non-signatory
party in the negotiation, performance, and termination of the
underlying contract containing such agreement. The UNIDROIT
Principle of International Commercial Contract, 201679 provides
that the subjective intention of the parties could be ascertained by
having regard to the following circumstances:
(a) preliminary negotiations between the parties;
(b) practices which the parties have established between
themselves;
(c) the conduct of the parties subsequent to the conclusion of the
contract;
(d) the nature and purpose of the contract;
(e) the meaning commonly given to terms and expressions in the
trade concerned; and
(J) usages.

xxx

127. In Cox & Kings, Surya Kant, J. observed that Reckitt Benckiser
fixed a higher threshold of evidence for the application of the Group
of Companies doctrine as compared to earlier decisions of this
Court. This Court's approach is Reckitt Benckiser is indicative of
the fact that the mere presence of a group of companies is not the
sole or determinative factor to bind a non-signatory to an
arbitration agreement. Rather, the Courts or tribunals should
closely evaluate the overall conduct and involvement of the non-
signatory party in the performance of the contract. The nature or
standard of involvement of the non-signatory in the performance of
the contract should be such that the non-signatory has actively
assumed obligations or performance upon itself under the contract.
In other words, the test is to determine whether the non-signatory
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has positive, direct, and substantial involvement in the negotiation,
performance, or termination of the contract. Mere incidental
involvement in the negotiation or performance of the contract is not
sufficient to infer the consent of the non-signatory to be bound by
the underlying contract or its arbitration agreement. The burden is
on the party seeking joinder of the non-signatory to the arbitration
agreement to prove a conscious and deliberate conduct of
involvement of the non-signatory based on objective evidence.
xxx

132. We are of the opinion that there is a need to seek a balance
between the consensual nature of arbitration and the modern
commercial reality where a non-signatory becomes implicated in a
commercial transaction in a number of different ways. Such a
balance can be adequately achieved if the factors laid down under
Discovery Enterprises are applied holistically. For instance, the
involvement of the non-signatory in the performance of the
underlying contract in a manner that suggests that it intended to be
bound by the contract containing the arbitration agreement is an
important aspect. Other factors such as the composite nature of
transaction and commonality of subject matter would suggest that
the claims against the non-signatory were strongly interlinked with
the subject-matter of the tribunal's jurisdiction. Looking at the
factors holistically, it could be inferred that the non-signatories, by
virtue of their relationship with the signatory parties and active
involvement in the performance of commercial obligations which
are intricately linked to the subject-matter, are not actually
strangers to the dispute between the signatory parties.”

36. The learned Single Judge has not only referred to certain recitals
in the Tripartite Agreement but has also, in law, rightly recorded a
finding against the appellant and in favour of respondent no. 1 regarding
the applicability of the Group Company Doctrine.
37. The relevant observations are reproduced below:
“54. Thus, whether the arbitrator has rightly invoked the 'Group of
Companies' doctrine is to be seen from factors such as mutual intent,
relationship between the signatories and non-signatories,
commonality of subject matter, composite nature of transactions and
performance of the contract.
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55. In the present case, the arbitration clause is encapsulated in the
General Terms and Conditions in consonance with the agreement
executed between the respondent nos. 1, 2 and BFIL, in the year
2012. The petitioner was not a party to the said contract and the
petitioner only became a party in the year 2013 by way of Letter(s)
of Intent dated 10.12.2013 issued by the BFIL for the purpose of
design, manufacturing, and commissioning of equipment for the
complete project on behalf of respondent no. 2. As per the contract
executed between the BFIL and the petitioner, the petitioner was to
conduct a reliability test of equipment and items for complete Coal
Handling System Package. In addition, the petitioner was also
appointed for the purposes of checking invoices and clearing them
(Ref. Para 65 of the Impugned Award). Thereafter, BFIL exited the
said contract and assigned all its rights, liabilities, and obligations
in favor of respondent no. 2 by way of the Tripartite Agreement
dated 06.06.2014. It is an admitted position that BFIL was appointed
as an EPC Contractor by the respondent no. 2. Since, BFIL exited
the project, the rights and liabilities of the BFIL was transferred in
favor of the petitioner by way of Supply Contract dated 03.07.2015.
56. Admittedly, the role of the petitioner was to issue purchase and
work order(s) to respondent no. 1 and also to check the invoices
raised by respondent no. 1 and thereafter, recommending payments
of the invoices raised to the respondent no. 2. The petitioner played
a pivotal role in the overall execution of the project, even though it
was not originally a party to the contract(s) between respondent nos.
1, 2, and BFIL. The petitioner was responsible for issuing the
purchase and work orders that formed the basis for the invoices
raised by the involved parties. Following this, the petitioner
reviewed and verified the invoices to ensure their completeness.
Only after the petitioner's clearance of these invoices did respondent
no. 2 proceed with the release of payments to respondent no. 1. In
my view, considering the role, obligations and responsibilities of the
petitioner, the petitioner is indeed a veritable party to the
contract(s). On this basis, the learned arbitrator has rightly
concluded that the petitioner is a group company of respondent no.
2. Therefore, I find no infirmity in the said finding.”
38. In this background, the contentions raised by the appellant cannot
be accepted and are liable to be rejected.
Signature Not Verified
Signed By:PRERNA
RAWAT
Signing Date:04.06.2026
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39. The award of the claim by the learned Arbitrator was based on
an analysis of the expert’s report and the obligations under the
agreement, so also the conduct of the parties.
40. The aspect of interest in the matter is based on the status of
respondent no. 1 as an MSME registered company.
41. The learned Single Judge, while dealing with the aspect of
interest, has relied upon the judgment of the Delhi High Court in the
matter of Indian Highways Management Company Limited v. SOWIL
Limited , (2021) SCC OnLine Del 5523 and, from paragraph 72
onwards of the judgment of the learned Single Judge, it has been held
that the provisions of Sections 15 and 16 of the Micro, Small and
Medium Enterprises Development Act, 2006 (in short “MSME Act”)
are independent of Section 18 and that in order to attract the rigour of
Sections 15 and 16, it need not be that the dispute redressal mechanism
provided under Section 18 of the MSME Act be initiated.
42. In such an eventuality, the interest contemplated under Section
16 can be granted even in ad hoc arbitration proceedings.
43. In regard to the award of interest, it was rightly relied upon on
the very object with which the statute, viz ., the MSME Act, was enacted.
44. In the aforesaid background, having regard to the overall facts of
the matter, viz ., the claim put forth by respondent no. 1, the award
passed by the learned Arbitrator, the appellant having chosen not to
contest the claim on merits and rather had abandoned its right to
effectively defend the claim before the learned Arbitrator, its stand
before the learned Single Judge under Section 34 of the Act of 1996,
Signature Not Verified
Signed By:PRERNA
RAWAT
Signing Date:04.06.2026
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and the position of law that the appellant cannot raise a plea, which was
not agitated before the learned Arbitrator, in proceedings under
Sections 34 or 37 of the Act of 1996, in our opinion, the findings
recorded by the learned Arbitrator and that of the learned Single Judge
are totally in tune with the provisions of the Act of 1996 and the MSME
Act.
45. That being so, we see no reason to infer that the award or that of
the judgment delivered under Section 34 of the Act of 1996 can be
termed as going against the public policy of this country.

46. As such, the appeal lacks merit and stands dismissed.
47. Parties to bear their own costs.
48. Pending applications also stand disposed of.


NITIN WASUDEO SAMBRE
(JUDGE)




AJAY DIGPAUL
(JUDGE)
MAY 19, 2026/DM/OK/SK
Signature Not Verified
Signed By:PRERNA
RAWAT
Signing Date:04.06.2026
16:47:31
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