C R Sons Infra Projects Ltd vs Ircon Internation Ltd

$~31
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 29.10.2026

# CNR No. DLHC010157052019
+ FAO(OS) (COMM) 60/2019
C R SONS INFRA PROJECTS LTD .....Appellant
Through: Mr. Shekhar Gupta & Mr.
Apoorav Gupta, Advs.
versus

IRCON INTERNATION LTD .....Respondent
Through: Mr. Chandan Kumar & Mr.
Vikram Sharma, Advs.
CORAM:
HON'BLE MR. JUSTICE AVNEESH JHINGAN
HON'BLE MR. JUSTICE AMIT SHARMA

AVNEESH JHINGAN, J. (ORAL)
1. This appeal is filed under Section 37 of the Arbitration and
Conciliation Act, 1996 (for short ‘the Act’) against the judgement dated
14.12.2018 whereby the objection petition under Section 34 of the Act
by the respondent was partially allowed.
2. The brief facts are that the respondent-IRCON International Ltd
(hereinafter referred to as ‘IRCON’) invited tenders for the construction
of corporate office buildings at C-4, District Centre, Saket, New Delhi.
The appellant- CR Sons Infra Projects Ltd (hereinafter referred to as
‘CRS’) was the successful bidder and was issued a Letter of Acceptance
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dated 19.07.2004. The parties executed the agreement on 17.08.2004
and provided for dispute resolution through arbitration.
2.1 Disputes arose between parties to the lis and arbitration was
invoked at the instance of CRS. The arbitral proceedings culminated in
the award dated 27.02.2018.
2.2 CRS raised eight claims, partially succeeded in two claims and
was awarded cost of Rs.5.5 lakhs. The claims raised and the amounts
awarded are tabulated below:-
Claim number Amount
Claimed
Amount
Awarded
Claim no. 1
Work done but not paid
2,70,25,343/- 11,83,921.94/-
Claim no. 2
Damages towards delay in
finalizing the drawings and
fulfillment of contractual
obligations on the part of IRCON
94,48,182/- Nil
Claim no. 3
Release of retention/ security
money
31,37,844/- 31,37,844/-
Claim no. 4
Reimbursement of extra
expenditure incurred by IRCON
on transportation of RMC at sight
28,20,312/- Nil
Claim no. 5
Electricity and miscellaneous
services used by IRCON and
their other agencies
15,00,000/- Nil
Claim no. 6
Expenditure toward idle staff,
security and plant and machinery
during prolong period of contract
1,57,28,568/- Nil
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Claim no. 7
Interest over unpaid dues
2,81,78,867/- 9% simple
interest p.a.
w.e.f. January,
2010.
Claim no. 8
Litigation cost
20,00,000/- Rs. 5.50 Lakhs
Total Rs. 48,71,765.94

2.3 IRCON filed the objection petition under Section 34 of the Act
challenging the amount awarded under claim no.1 and the cost. The
objection petition was allowed and the award to the extent of directing
payment of Rs.9,28,205/- under claim no.1 and cost of Rs.5.5 lakhs was
set aside. Hence, the present appeal.
3. Learned counsel for the CRS contends that the learned Single
Judge exceeded the scope of Section 34 of the Act and has substituted
the plausible view taken by the arbitrator. Reliance is placed upon the
decision of the Supreme Court in Konkan Railway Corporation
Limited v. Chenab Bridge Project Undertaking (2023) 9 SCC 85 .
3.1 The argument with regard to claim no.1 is that since the payment
of final bill and the deductions made therein were in dispute, the
arbitrator was empowered to examine the correctness of deductions
made. The contention is that IRCON failed to defend the deductions
during the arbitration proceedings.
3.2 The submission is that the arbitrator recorded detailed reasons for
awarding cost and discretion under Section 31A of the Act was rightly
exercised and calls for no interference. It is canvassed that apart from
the arbitration fee, cost of approximately Rs.95,000/- was reasonable in
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the facts of the case. Reliance is placed upon the decision of the Single
Judge of this Court in Union of India v. Om Vajrakaya Construction
Company 2021:DHC:4273.
4. Per contra the scope of interference under Section 37 of the Act
is limited. The award under claim no.1 was vitiated by contradictions,
the arbitrator found that the final bill and the deductions made by
IRCON were not disputed by CSR yet examined on merits the
deductions made. The setting aside of the cost awarded is justified for
failure of the arbitrator to consider the factors under Section 31A(3) of
the Act.
5. Heard the learned counsel for the parties and perused the record
with their able assistance. Albiet, written submissions have been filed
by the parties but no other contention other than those noted above was
pressed.
6. It is a settled law that in appeal under Section 37 of the Act, it is
to be considered that the exercise of powers under Section 34 of the Act
was within the four corners of the provisions. Reference in this regard
be made to the following decisions of the Supreme Court:-
6.1 In AC Chokshi Share Broker (P) Ltd. v. Jatin Pratap Desai,
(2025) 5 SCC 321 it was held:
“ 29. The limited supervisory role of courts while reviewing
an arbitral award is stipulated in Section 34 of the Act,
beyond whose grounds courts cannot intervene and cannot
correct errors in the arbitral award. [ McDermott
International Inc. v. Burn Standard Co. Ltd. , (2006) 11
SCC 181, para 52] The appellate jurisdiction under Section
37 is also limited, as it is constrained by the grounds
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specified in Section 34 and the court cannot undertake an
independent assessment of the merits of the award by
reappreciating evidence or interfering with a reasonable
interpretation of contractual terms by the Arbitral Tribunal.
[ MMTC Ltd. v. Vedanta Ltd. , (2019) 4 SCC 163, para 14 :
(2019) 2 SCC (Civ) 293; Konkan Railway Corpn.
Ltd. v. Chenab Bridge Project , (2023) 9 SCC 85, para 25 :
(2023) 4 SCC (Civ) 458.] The court under Section 37 must
only determine whether the Section 34 court has exercised
its jurisdiction properly and rightly, without exceeding its
scope. [ MMTC Ltd. v. Vedanta Ltd. , (2019) 4 SCC 163, para
14 : (2019) 2 SCC (Civ) 293; Bombay Slum Redevelopment
Corpn. (P) Ltd. v. Samir Narain Bhojwani , (2024) 7 SCC
218, para 26.]”

6.2 In SEPCO Electric Power Construction Corpn. v. GMR
Kamalanga Energy Ltd., (2026) 2 SCC 542 it was held:
“ 72. The decision in MMTC [ MMTC Ltd. v. Vedanta Ltd. ,
(2019) 4 SCC 163 : (2019) 2 SCC (Civ) 293] , as referenced
recently by a coordinate Bench of this Court in Reliance
Infrastructure Ltd. [ Reliance Infrastructure Ltd. v. State of
Goa , (2024) 1 SCC 479 : (2024) 1 SCC (Civ) 412] , unfolds
in an involute manner that a court under Section 37 of the
1996 Act can only determine as to whether the court
concerned under Section 34 has not travelled beyond the
parameters of the scope therein. No independent evaluation
is permitted on the merits of the award.”
(emphasis supplied)

7. The learned Single Judge examined the findings recorded by the
arbitrator in paragraph no. 203 to 206 of the award and held that the
CRS did not refute the details of the final bill or the deductions made
from the final bill. The CRS having failed to prove its own bill marked
as Ex.CW-1/20 rather raised the claims based on the final bill prepared
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by the IRCON. The arbitrator observed that in the statement of claim
there was no pleading challenging the correctness of the final bill or the
deductions made thereunder. The deductions were in respect to the
defects in work carried out by CRS and these defects were accepted by
the CRS. In this background, it was held that the arbitrator could not
have independently examined the merits of the deductions made. The
arbitrator went beyond the issue in dispute, by holding that the
deductions could not be made because the CRS was not asked to rectify
the defects. For quantification of the amount payable and for posing
challenge to the deductions made from the final bill, the CRS either had
to prove Ex.CW-1/20 or specifically plead defects in the calculation of
the final bill or challenge the deductions made, in absence thereof the
arbitrator went beyond the scope of dispute to examine each and every
deduction on its merits.
8. Reliance of learned counsel for the CRS on Konkan Railway
Corporation Limited ( supra) is of no avail. The issue involved therein
was whether the Court could interfere under Section 34 of the Act for
another possible view other than the one taken by the arbitrator. In the
present case the arbitrator by contradicting to the findings recorded that
there was no pleading challenging the final bill or the deductions made
therein proceeded to consider the deductions on merits acting beyond
the referred dispute.
9. Under Section 31A of the Act, the arbitrator has a discretion of
awarding cost. The factors to be considered are stipulated in Section
31A(3) of the Act and are as follows:-
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“ 31.A. Regime for Costs.
*
(3) In determining the costs, the Court or arbitral tribunal shall
have regard to all the circumstances, including-
(a) the conduct of all the parties;
(b) whether a party has succeeded partly in the case;
(c) whether the party had made a frivolous counter claim leading
to delay in the disposal of the arbitral proceedings; and
(d) whether any reasonable offer to settle the dispute is made by
a party and refused by the other party.”

10. The learned Single Judge rightly noted that though the provisions
of the Act were reproduced but the factors to be considered for awarding
cost were not gone into by the arbitrator. It was not considered that it
was a case of partial success, the five out of seven claims of the CRS
were found to be frivolous. The award of costs contrary to the statutory
provisions called for interference within the limited scope under Section
34 of the Act and was vitiated by patent illegality.
11. The decision of the learned Single Judge of this Court in Union
of India v. Om Vajrakaya Construction Company (supra) is not
applicable to the facts of the present case. The issue involved in that
case was whether the discretion to award cost under Section 31A of the
Act is subject to the terms of the contract between the parties. It was
held that the power to award cost under Section 31A of the Act is
notwithstanding to the contrary provisions of the Code of Civil
Procedure,1908 and to override Section 31A of the Act, the parties have
to agree for it after the dispute arises.
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12. No case is made out for interference in the impugned judgement.
The appeal is dismissed.


AVNEESH JHINGAN, J

AMIT SHARMA, J
OCTOBER 29, 2026
Ch
Reportable: Yes
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