M/S Winner Construction Pvt. Ltd. vs Agricultural Produce Marketing Committee
- Court
- Delhi High Court
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment reserved on: 10.09.2026
Judgment pronounced on: 03.11.2026
# CNR No. DLHC015922132015
+ O.M.P. (COMM) 13/2015
M/S WINNER CONSTRUCTION PVT. LTD. .....Petitioner
Through: Ms. Anusuya Salwan, Ms.
Nikita Salwan and Mr. Rachit
Wadhwa, Advocates.
versus
AGRICULTURAL PRODUCE MARKETING COMMITTEE
.....Respondent
Through: Mr. CS Parasher, Mr. Ashish
and Ms. Mona Sharma,
Advocates with Mr. Kamal
Kumar, Assistant Engineer.
CORAM:
HON'BLE MR. JUSTICE OM PRAKASH SHUKLA
JUDGMENT
% 03.11.2026
1. The present petition has been filed under Section 34 of the
1
Arbitration and Conciliation Act, 1996 , challenging the Arbitral
2
Award dated 28.09.2015 passed by the learned Sole Arbitrator,
Justice S.K. Aggarwal (Retd.). By the impugned Award, the learned
Arbitrator partly allowed the claims preferred by the Petitioner and
rejected the counter-claim of Rs.1,50,10,388/- raised by the
Respondent.
1
“the Act” hereinafter
2
“impugned Award” hereinafter
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2. The dispute between the parties arises out of a contract for
construction of the New Office Building, NFM, Azadpur, Delhi,
which was awarded to the Petitioner by the Respondent vide letter
dated 30.10.2004.
3. Under the Contract, the work was to commence on 14.11.2004
and be completed by 13.11.2005. However, the work continued
beyond the stipulated completion date and was eventually completed
on 30.11.2006.
4. The Respondent granted an extension of time up to the actual
date of completion, without levying any compensation for the delay.
Upon completion, the work was recorded in the Measurement Book.
Thereafter, a joint inspection was conducted on 19.03.2008, in which
the Petitioner’s performance was rated as “Very Good”.
5. After completion of the work, differences arose between the
parties regarding outstanding payments. The Petitioner initially raised
a claim for labour escalation vide letter dated 11.02.2009. Thereafter,
vide letter dated 09.08.2010, it raised further claims aggregating to
Rs.1,75,52,560/-, including claims for escalation in the cost of labour
and materials, amounts allegedly deducted from the final bill, and
additional establishment expenses incurred during the extended
period.
6. According to the Petitioner, the final bill was required to be
paid within six months of completion of the work, i.e., by 31.05.2007.
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The final payment of Rs.1,20,91,212/-, however, was made only on
16.01.2009. On this basis, the Petitioner claimed interest on the
alleged delay in payment of the final bill. The claims were reiterated
vide letter dated 15.09.2010.
7. As the disputes remained unresolved despite the Petitioner’s
demands for payment, the Petitioner sought appointment of an
Arbitrator vide letter dated 19.11.2010, followed by further
correspondence dated 28.06.2011. Thereafter, the Petitioner
approached this Court under Section 11 of the Act, pursuant to which
the learned Sole Arbitrator was appointed vide order dated
13.03.2012.
8. The parties thereafter filed their respective pleadings before the
learned Arbitrator. The Petitioner raised eight claims aggregating to
Rs.1,75,52,560/-, together with interest and costs. The Respondent
disputed the claims and also raised a counter-claim of
Rs.1,50,10,388/-.
9. The Petitioner’s principal case before the learned Arbitrator was
that the delay in completion of the work beyond the stipulated date
was attributable to the Respondent because of various hindrances
encountered during execution. On this basis, the Petitioner sought
escalation price in the cost of labour and materials, and additional
establishment expenses for the extended period. It also contended that
the Respondent had delayed payment of the final bill and was,
therefore, liable to pay interest on the delayed payment.
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10. The Respondent disputed responsibility for the delay and
contended that the Petitioner had failed to comply with the contractual
requirements under Clauses 5.2 and 5.3 regarding sending notice of
hindrances and extension of time. It further disputed the Petitioner’s
entitlement to escalation and additional establishment expenses,
contending that Clause 10CC, which provided for price adjustment,
had been deleted from the Contract.
11. After considering the pleadings, evidence and submissions of
the parties, the learned Arbitrator allowed Claim No. 2 to the extent of
Rs.22,37,935/- towards escalation arising from the statutory increase
in minimum wages, in view of the Respondent’s admission that the
said amount had been recommended for payment. Claim No. 3,
seeking Rs.2,32,474/- towards labour cess deducted from the final bill,
was also allowed because the learned Arbitrator found that the
Contract did not transfer liability to pay labour cess to the Petitioner.
12. On the other hand, the claim for Rs.35,41,897/- towards interest
on delayed payment of the final bill (Claim No. 1) was rejected. The
learned Sole Arbitrator held that Clause 7 of the General Conditions of
3
Contract barred a claim for interest in the circumstances found by
him, namely, where the bill had been prepared by the Engineer-in-
Charge after the Petitioner failed to submit it.
13. The learned Sole Arbitrator also rejected Claim Nos. 4 and 5,
3
“GCC” hereinafter
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which sought escalation and additional establishment expenses for the
extended contractual period. He found that the Petitioner had neither
established that the delay was attributable to the Respondent nor
shown that it had given timely notice of its intention to claim
compensation on that account. Claim No. 6, seeking Rs. 15,34,307/-
towards the increase in the cost of materials, was also rejected on the
ground that the Petitioner had failed to establish any breach of the
Contract by the Respondent.
14. In respect of Claim No.7, the learned Sole Arbitrator awarded
interest at 10% per annum on the amounts allowed under Claim Nos.
2 and 3, with effect from 24.03.2011 until payment, provided that
payment was made within three months of service of the impugned
Award. In the event of default in payment within that period, interest
was made payable at the enhanced rate of 15% per annum from the
date of service of the impugned Award until payment.
15. In the present petition, the Petitioner challenges the findings in
respect of Claim Nos. 1, 4, 5, 6 and 7.
SUBMISSIONS BEFORE THIS COURT
16. Learned Counsel for the Petitioner assailed the rejection of
Claim No. 1 for interest on delayed payment of the final bill,
contending that the learned Sole Arbitrator had wrongly relied on
Clause 7, which, according to the Petitioner, governed interim running
bills and did not apply to the final bill. It was further submitted that
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Clause 9 of the GCC, which stipulated that the final bill was to be paid
within six months of its receipt, had not even been considered, despite
the final payment having been made only on 16.01.2009.
17. Learned Counsel further submitted that the final bill had been
prepared and jointly signed by the parties on 12.12.2007 and that the
measurements had been recorded in the Measurement Book. Reliance
was placed on the note-sheets (Ex. CW1/39) to contend that, although
the bill had been cleared for payment, the actual release of payment
was delayed for administrative reasons attributable to the Respondent.
18. Turning to the rejection of Claim Nos. 4, 5 and 6, learned
Counsel submitted that the claims for escalation in the cost of
materials and labour, as well as additional establishment expenses for
the extended period, had been wrongly rejected. It was contended that
the delay in execution of the work was attributable to the Respondent
and that the learned Sole Arbitrator had failed to properly appreciate
the material bearing on this issue.
19. In this regard, learned Counsel submitted that the learned Sole
Arbitrator had failed to consider relevant correspondence, particularly
the letters dated 13.02.2006, 20.05.2006, 21.06.2006 and 22.06.2006.
According to the Petitioner, these letters recorded site hindrances and
changes in the firefighting, acoustics and air-conditioning work, which
had delayed execution of the Contract. It was, therefore, contended
that the rejection of these claims was based on a failure to consider
material evidence on record and warranted interference by this Court.
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Reliance was placed on PSA Sical Terminals (P) Ltd. v. V.O.
4
Chidambranar Port Trust.
20. Learned Counsel further submitted that the Respondent’s
recommendation for payment under Clause 10C and the grant of
extension of time without levy of compensation also supported the
Petitioner’s case that the delay was not attributable to it.
21. Lastly, learned Counsel challenged the impugned Award in
respect of Claim No.7, contending that interest on the amounts
awarded under Claims Nos.2 and 3 ought to have been granted from
the date of completion of the work, i.e., 30.11.2006.
22. Per contra, learned Counsel for the Respondent supported the
impugned Award and submitted that the Petitioner had neither placed
the complete final bill on record nor explained why it had not
submitted the bill upon completion of the work on 30.11.2006. It was
contended that the learned Sole Arbitrator had correctly applied
Clause 7, which, according to the Respondent, precluded a claim for
interest where the Engineer-in-Charge had to prepare the bill because
the contractor had failed to submit it.
23. In respect of Claims Nos. 4, 5 and 6, learned Counsel submitted
that the Petitioner had failed to establish that the prolongation of the
Contract was attributable to the Respondent. It was further contended
that the alleged hindrances had neither been specifically pleaded in the
4
(2023) 15 SCC 781
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Statement of Claims nor in the rejoinder, and that the details thereof
were introduced for the first time through the affidavit of evidence
dated 03.12.2012.
24. It was further submitted that neither the authenticity of the
additional documents sought to be relied upon nor their service upon
the Respondent had been established. Learned Counsel also
emphasised that the Petitioner had not issued notices in terms of
Clauses 5.2 and 5.3 or sought an extension of time in the prescribed
manner during the execution of the work.
ANALYSIS
25. It is trite that the scope of interference under Section 34 of the
Act is narrow and confined to the grounds enumerated therein. Where
the challenge concerns interpretation of a contract, the Court must
ordinarily respect a reasonable and plausible interpretation adopted by
the arbitral tribunal after considering the material on record. In
National Highways Authority of India v. Hindustan Construction
5
Company Ltd. , the Supreme Court held as follows:
“16. Now, we turn to the issue of whether the claim for the
construction of embankment forms part of the activity of clearing
and grubbing and was not payable as embankment work. We may
note here that two expert members of the Arbitral Tribunal held in
favour of the respondent on this point, whereas the third member
dissented. There cannot be any dispute that as far as the
construction of the terms of a contract is concerned, it is for the
Arbitral Tribunal to adjudicate upon. If, after considering the
material on record, the Arbitral Tribunal takes a particular view
on the interpretation of the contract, the Court under Section 34
5
(2024) 6 SCC 809
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does not sit in appeal over the findings of the arbitrator.”
(Emphasis supplied)
26.
Similarly, in Indian Oil Corporation Ltd. v. Shree Ganesh
6
Petroleum Rajgurunagar , the Supreme Court observed:
“45. The Court does not sit in appeal over the award made by an
Arbitral Tribunal. The Court does not ordinarily interfere with
interpretation made by the Arbitral Tribunal of a contractual
provision, unless such interpretation is patently unreasonable or
perverse. Where a contractual provision is ambiguous or is
capable of being interpreted in more ways than one, the Court
cannot interfere with the arbitral award, only because the Court is
of the opinion that another possible interpretation would have been
a better one.”
(Emphasis supplied)
27. It is clear from the above that the interpretation of the contract
and the appreciation of evidence fall primarily within the domain of
the learned Arbitrator. This Court cannot substitute its own
interpretation or reassess the evidence merely because the Petitioner
suggests a different contractual construction or an alternative
inference. The question is not whether another view was possible, but
whether the view adopted by the learned Arbitrator falls outside the
range of permissible views or otherwise attracts any of the grounds for
interference under Section 34 of the Act. At the same time, this
limitation does not protect an award that disregards a binding
contractual provision or rests on no relevant material.
28. It is in the light of this settled position that the objections raised
in the present petition are to be examined.
6
(2022) 4 SCC 463
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29. The challenge to the rejection of Claim No.1 rests primarily on
the Petitioner’s contention that the learned Arbitrator wrongly applied
Clause 7 of the GCC, which, according to the Petitioner, concerns
interim running bills and not the final bill. It was further contended
that Clause 9 of the GCC, which specifically deals with payment of
the final bill, was not even considered. The Petitioner also relied on
the note-sheets (Ex. CW1/39) to contend that the delay in release of
payment was attributable to budgetary constraints and administrative
reasons on the part of the Respondent.
30. Before examining these contentions, it is necessary to notice the
relevant findings and reasoning of the learned Arbitrator on Claim
No.1, which read as follows:
“(iii) Law governing the award of interest from the date of cause
of action till the date of the award, as provided under Section 31(7)
of the Arbitration & Conciliation Act, 1996, has been settled by the
recent Supreme Court's decision in Union of India Vs. M/s Bright
Power Projects (1) P. Ltd., 2015 (7) SCALE 638, wherein it has
been held as follows:
"14. Section 31(7) of the Act, by using the words
"unless otherwise agreed by the parties", categorically
specifies that the arbitrator is bound by the terms of the
contract so far as award of interest from the date of
cause of action to date of the award is concerned.
Therefore, where the parties had agreed that no
interest shall be payable, the Arbitral Tribunal cannot
award interest."
(iv) To find out what was the agreement between the parties
about the payment of interest, it will be useful to recall clause 7 of
the agreement, which governs payment of interest in the event of
delay in making the payment by Respondents. The relevant portion
of clause 7 reads as follows:
"For the works estimated to cost over Rs. Twenty
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thousand the interim or running account bills shall be
submitted by the contractor for the work executed on
the basis of such recorded measurements on the format
of the Department in triplicate on or before the date of
every month fixed for the same by the Engineer-in-
Charge........ In the event of the failure of the contractor
to submit the bills, Engineer-in-Charge shall prepare
or cause to be prepared such bills in which event no
claims whatsoever due to delays on payment including
that of interest shall be payable to the contractor.
Payment on account of amount admissible shall be
made by the Engineer-in-Charge certifying the sum to
which the contractor is considered entitled by way of
interim payment at such rates as decided by the
Engineer-in-Charge....." (emphasis added)
(v) The use of the word "shall" in Clause 7 of the contract
makes it mandatory for the contractor to submit the bill by the
fixed date for the work done by them during the preceding
month. It is only when the contractor fails to submit the bill by
the fixed date, the Engineer-In-Charge becomes entitled to
prepare or get the requisite bill for the work done by the
contractor and not otherwise. But, in that event the clause
provides that, contractor is not entitled to raise any claim, for
delay in payment including interest, due to delay in payment.
(vi) CW 1 Mr. H S Pasricha, MD of claimant in his affidavit by
way of evidence wrongly stated, "As per the provisions of the
contract, the final bill was to be paid to the Claimant within six
months of the above mentioned completion date i.e. by 31.5.2007.
Copy of Clause 30.2.9 of the GCC is exhibited as Ex.CW1/8."
Suffice it to say that 30.2.9 is part of CPWD Manual and is not the
part of contract and the plea sought to be raised is liable to be
rejected.
(vii) In this case, 14th & final running bill was admittedly not
submitted by the contractor on completion of the work. It was got
prepared by the Engineer of the respondent under the contract.
The Claimant neither in the Statement of Claim nor in their
evidence has stated as to why the final bill was not submitted by
them immediately on completion of work on 30.11.2006 or any
time thereafter. The Claimant for the first time vide their letter
dated 9.8.2010 claimed interest along with the other claims
(Ex.CW-1/13).
(viii) Learned counsel in the alternative argued that as per the
information received under the RTI by the claimant, the final bill
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was prepared by the department on 12.12.2007 and payment was
made only on 16.1.2009, i.e. after about one year. Therefore, at
least for this period the claimant would be entitled to interest. This
argument also cannot help because Clause 7 clearly provides that
in case the bills are got prepared by the Engineer-in-Charge, the
contractor will not be entitled to raise any claim whatsoever
towards any interest for delayed payment. In view of the law laid
down by the Supreme Court in UOI Vs. Bright Power Project
(Supra), this contention is liable to be rejected.”
FINDING:
(ix) For the foregoing reason, it is held that the Claimant is not
entitled to Rs.35,41,897/- towards interest on the delayed payment
of the 14th running bill. This claim is accordingly rejected.
(Emphasis supplied)
31. As Petitioner relied upon Clause 9, while the learned arbitrator
relied upon Clause 7, the relevant clauses are reproduced hereinbelow
for reference:
“ CLAUSE-7
No payment shall be made for work, estimated to cost Rs. Twenty
thousand or less till after the whole of the work shall have been
completed and certificate of completion given. For works estimated
to cost over Rs. Twenty thousand, the interim or running account
bills shall be submitted by the contractor for the work executed on
the basis of such recorded measurements on the format of the
Department in triplicate on or before the date of every month fixed
for the same by the Engineer-in-Charge. The contractor shall not
be entitled to be paid any such interim payment if the gross work
done together with net payment/ adjustment of advances for
material collected, if any, since the last such payment is less than
the amount specified in Schedule 'F', in which case the interim bill
shall be prepared on the appointed date of the month after the
requisite progress is achieved. Engineer-in-Charge shall arrange
to have the bill verified by taking or causing to be taken, where
necessary, the requisite measurements of the work. In the event of
the failure of the contractor to submit the bills, Engineer-in-
Charge shall prepare or cause to be prepared such bills in which
event no claims whatsoever due to delays on payment including
that of interest shall be payable to the contractor. Payment on
account of amount admissible shall be made by the Engineer-in-
Charge certifying the sum to which the contractor is considered
entitled by way of interim payment at such rates as decided by the
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th
Engineer-in-Charge. The amount admissible shall be paid by 10
working day after the day of presentation of the bill by the
Contractor to the Engineer-in-Charge or his Asstt. Engineer
together with the account of the material issued by the department,
or dismantled materials, if any. In the case of works outside the
headquarters of the Engineer-in-Charge, the period of ten working
days will be extended to fifteen working days.
All such interim payments shall be regarded as payment by way of
advances against final payment only and shall not preclude the
requiring of bad, unsound and imperfect or unskilled work to be
rejected, removed, taken away and reconstructed or re-erected.
Any certificate given by the Engineer-in-Charge relating to the
work done or materials delivered forming part of such payment,
may be modified or corrected by any subsequent such certificate(s)
or by the final certificate and shall not by itself be conclusive
evidence that any work or materials to which it relates is/are in
accordance with the contract and specifications. Any such interim
payment, or any part thereof shall not in any respect conclude,
determine or affect in any way powers of the Engineer-in-Charge
under the contract or any of such payments be treated as final
settlement and adjustment of accounts or in any way vary or affect
the contract.
Pending consideration of extension of date of completion, interim
payments shall continue to be made as herein provided without
prejudice to the right of the department to take action under the
terms of this contract for delay in the completion of work, if the
extension of date of completion is not granted by the competent
authority.
The Engineer-in-Charge in his sole discretion on the basis of a
certificate from the Asstt. Engineer to the effect that the work has
been completed up to the level in question make interim advance
payments without detailed measurements for work done (other than
foundations, items to be covered under finishing items) up to lintel
level (including sunshade etc.) and slab level, for each floor
working out at 75% of the assessed value. The advance payments
so allowed shall be adjusted in the subsequent interim bill by
taking detailed measurements thereof.”
CLAUSE-9
Payment of Final bill
The final bill shall be submitted by the contractor in the same
manner as specified in interim bills within three months of physical
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completion of the work or within one month of the date of the final
certificate of completion furnished by the Engineer-in-Charge
whichever is earlier. No further claims shall be made by the
contractor after submission of the final bill and these shall be
deemed to have been waived and extinguished. Payments of those
items of the bill in respect of which there is no dispute and of
items in dispute, for quantities and rates as approved by
Engineer-in-Charge, will, as far as possible be made within the
period specified hereunder, the period being reckoned from the
date of receipt of the bill by the Engineer-in-Charge or his
authorized Asstt. Engineer, complete with account of materials
issued by the Department and dismantled materials.
i) If the Tendered value of work is up to Rs.5 lakhs:
3 Months
ii) If the Tendered value of work exceeds Rs.5 lakhs:
6 Months”
32. A perusal of Clause 9, on which the Petitioner principally relies,
shows that it requires the contractor to submit the final bill and the
period for payment of the final bill is to be reckoned from the date of
its receipt by the Engineer-in-Charge. On the other hand, Clause 7
specifically deals with a situation where the contractor fails to submit
the bill and the Engineer-in-Charge prepares it.
33. The learned Sole Arbitrator found that the Petitioner had not
submitted the final bill and that the “14th and final running bill”, on
which interest was claimed, had been prepared by the Respondent.
The learned Sole Arbitrator, therefore, relied upon the Clause 7 which,
in his view, applied to the circumstances of the case.
34. The Petitioner argues that Clause 7 concerns interim running
bills and could not govern a claim for interest on the final bill.
However, this contention does not displace the specific factual finding
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in the impugned Award that the bill was prepared by the Respondent
because the Petitioner had not submitted it. The fact that the parties
subsequently signed the bill jointly may evidence their acceptance of
the recorded measurements or the amount stated therein. It does not,
however, establish that the bill had initially been submitted by the
Petitioner in the manner contemplated under Clause 9. Nor has the
Petitioner identified any material to demonstrate that the finding as to
the preparation of the bill by the Respondent was perverse or
otherwise unreasonable.
35. In these circumstances, the Petitioner has failed to demonstrate
that why Clause 9, which contemplates submission of the final bill by
the contractor, should govern the present case. Reliance on Clause 6 or
the CPWD Manual does not advance the Petitioner’s case in the face
of the specific finding recorded by the learned Arbitrator that: “In this
case, 14th & final running bill was admittedly not submitted by the
contractor on completion of the work. It was got prepared by the
Engineer of the respondent under the contract.”
36. It is true that the learned Sole Arbitrator did not separately
discuss Clause 9. In this regard, the following observations of the
Division Bench of this Court in National Highways Authority of
7
India v. GVK Jaipur Expressway Pvt. Ltd. , are relevant:
“26. In the opinion of this Court, the non-consideration of
Clause 18.4 of the Concession Agreement cannot be said to be an
error made by the arbitral tribunal which is opposed to the
fundamental policy of Indian law, nor can the same be said to be
7
2023 SCC OnLine Del 3790
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patently illegal. The concession agreement is neither a statute, nor
is it a law which protects the national interests of this nation and a
mere failure of the arbitral tribunal to consider an argument on the
same would not render the arbitral award in contravention of the
fundamental policy of Indian law.
27. Similarly, the non-consideration of Clause 18.4 cannot be
said to be an error that goes into the root of the award and thus
cannot amount to a patent illegality. The reasoning given by the
arbitral award, which is based upon an interpretation of Clause
18.1 is a plausible view, as taken by the majority of the Arbitral
Tribunal. A perusal of the award shows that the Tribunal has gone
through the clauses and has given interpretation on the scope of
the agreement entered into between the parties and after examining
various clauses of the contract came to the conclusion that there is
an obligation of the concessionaire to operate and maintain the
Project Highway and more particularly ensure smooth and
uninterrupted flow of traffic during normal operating conditions.
The Tribunal, therefore, held that whatever is required to be done
to ensure uninterrupted flow of traffic during normal operating
conditions was the obligation of the Respondent and the
construction of the toll plazas cannot be considered as extra
additional work requiring change of scope. The re-interpretation
of Clause 18 of the Concession Agreement by the ld. Single Judge
would amount to a re-appreciation of evidence which is
impermissible under Section 34 of the Arbitration Act. The Ld.
Single Judge had correctly in the Impugned Judgment observed
that its disagreement with view of the arbitral tribunal pertaining
to the interpretation of Clause 18.1 is beyond the scope of its
jurisdiction under Section 34 of the Arbitration Act.”
37. It emerges from the aforesaid decision that the non-
consideration of a contractual provision does not, by itself, constitute
patent illegality unless such omission goes to the root of the Award. In
the present case, the learned Arbitrator applied Clause 7 upon finding
that the final running bill had been prepared by the Respondent.
Clause 9, on the other hand, provides for reckoning the period from
the receipt of the final bill submitted by the contractor, a condition
which was not fulfilled in the present case. Further, the Petitioner has
not identified any express part in Clause 9 which grants an entitlement
to interest in the circumstances found by the learned Arbitrator or to
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apply six months period when the bill at the first instance is not
submitted by the Contractor.
38. Thus, the ultimate finding on Claim No. 1 cannot be said to be
directly contrary to Clause 9 or to rest on an interpretation that no
reasonable decision-maker could adopt. In view of the finding that the
final running bill had been prepared by the Engineer-in-Charge upon
the Petitioner’s failure to submit it, the omission to separately discuss
Clause 9 does not materially affect the basis of the decision. The
omission, therefore, cannot be said to constitute an error going to the
root of the impugned Award or render the finding perverse or patently
illegal so as to warrant interference under Section 34 of the Act.
39. The reliance placed by the Petitioner on the note-sheets also
does not alter this position. Even if the note-sheets indicate that
payment was delayed for budgetary or administrative reasons after the
bill had been cleared, they may explain the reason for non-release of
payment but do not, by themselves, resolve the anterior contractual
question of whether the Petitioner was entitled to interest where the
bill had been prepared by the Engineer-in-Charge following its failure
to submit the bill. Even if the delay in release of payment was
attributable to the Respondent, that circumstance cannot, by itself,
create an entitlement to interest contrary to the express bar on interest
given in Clause 7.
40. In view of the above, this Court finds that the Petitioner has not
been able to make out any ground for interference with the rejection of
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Claim No. 1 under Section 34 of the Act.
41. The challenge to the rejection of Claim Nos. 4, 5 and 6 is
principally based on the alleged non-consideration of nine letters
which, according to the Petitioner, recorded hindrances encountered
during execution. The Petitioner also contended that, under Clause 5.4
of the Agreement, the Engineer-in-Charge could grant an extension
even without an application by the contractor and that the absence of
applications under Clauses 5.2 and 5.3 ought not to have been held
against it, particularly when the extension was granted without levy of
compensation.
42. In view of this Court, none of the objections raised by the
Petitioner is sufficient to dislodge the findings in the impugned
Award. A reading of the Award shows that the learned Arbitrator did
not reject the claims merely on account of the Petitioner’s failure to
follow the procedure prescribed under Clauses 5.2 and 5.3. The
principal finding in the impugned Award for rejection of Claim No.
4,5 and 6 was that the Petitioner had failed to establish that the delay
for which compensation was sought was attributable to the
Respondent. Without proof of that causal connection, the learned
Arbitrator found no sufficient basis to hold the Respondent liable for
the amounts claimed.
43. This finding is borne out by the manner in which the learned
Arbitrator dealt with the evidence. The learned Arbitrator noted that
the Petitioner referred to the alleged hindrances for the first time in his
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affidavit by way of evidence (examination-in-chief). Even then, the
affidavit did not identify the dates or period during which the alleged
hindrances delayed the work. The finding was not that no hindrances
had occurred, rather, it was that the Petitioner had failed to “ prove that
delay was caused on account of the hindrances attributable to
Respondent ”. The distinction between the occurrence of a hindrance
and establishing its attribution to the Respondent and its impact on the
completion of the work is central to the claims for prolongation costs.
The Petitioner was required to establish not merely the occurrence of
the hindrances, but also that they were attributable to the Respondent
and had caused the delay for the period of which compensation was
claimed. This is precisely what the Petitioner failed to do.
44. Nor does the reliance placed on Clause 5.4 advance the
Petitioner’s case. The fact that the Engineer-in-Charge was
empowered to grant an extension even in the absence of an application
by the contractor does not, by itself, determine who caused the delay.
An extension may be granted to facilitate completion of the work
without necessarily determining liability for the delay or the
contractor’s entitlement to compensation. This Court, in DDA v.
8
Swastic Construction Co. , has also taken the view that the grant of
extension without levy of compensation may be a relevant
circumstance, but cannot, by itself, be treated as an admission of
responsibility for the delay.
45. A further circumstance considered by the learned Arbitrator was
8
2026 SCC OnLine Del 6892
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the absence of contemporaneous notice of the Petitioner’s intention to
claim compensation for delay. The learned Arbitrator relied on
9
General Manager, Northern Railway v. Sarvesh Chopra , in which
the Supreme Court considered Section 55 of the Indian Contract Act,
1872, and recognised the significance of notice of an intention to
claim compensation where delayed performance is accepted.
46. Applying that principle, the learned Arbitrator found that the
Petitioner had not given timely notice of its intention to claim
compensation and had attributed responsibility for the delay to the
Respondent only at a later stage, by way of its letter dated 09.08.2010.
The absence of contemporaneous notice was not considered in
isolation. It was examined along with the failure to identify the
periods of hindrance and to establish that the Respondent was
responsible for the delay in question. In that context, the learned
Arbitrator treated the absence of timely notice as a relevant
circumstance in rejecting Claim Nos. 4 and 5.
47. In the view of this Court, the approach adopted by the learned
Arbitrator cannot be said to be contrary to the legal principles
governing acceptance of delayed performance. The Petitioner has not
demonstrated that the learned Arbitrator applied an incorrect legal
principle or that the conclusion reached was one that no reasonable
decision-maker could reach on the material before him. The findings
regarding the absence of a demonstrated causal link, the failure to
establish the periods during which the alleged hindrances affected the
9
(2002) 4 SCC 45
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work, and the absence of contemporaneous notice, when considered
together, provide a rational basis for rejecting Claim Nos. 4 and 5. The
Court cannot reassess the relative weight of those circumstances as if
hearing an appeal on facts.
48. The Petitioner seeks to overcome these findings by contending
that the learned Arbitrator failed to consider nine letters concerning
the hindrances encountered during execution of the work. Although
the impugned Award does not discuss each letter separately, the mere
absence of an item-by-item discussion does not, without more,
warrant interference. As recognised in Supreme Advertising Private
10
Limited v. Genus Power Infrastructures Limited , the assessment of
evidence and the weight to be attached to it ordinarily fall within the
domain of the arbitral tribunal. The issue, therefore, is whether the
documents contained material evidence of such significance that their
omission undermines the reasoning or conclusion of the Award, and
not merely whether each document finds separate mention in the
Award.
49. The material question remains whether the delay in completion
of the work was attributable to the Respondent. In this regard, the
learned Arbitrator found that the extension applications dated
03.10.2006 and 24.11.2006 did not attribute the delay to the
Respondent, whereas, the specific allegation that the Respondent was
responsible for the delay was raised much later, in the letter dated
09.08.2010. This chronology was relevant to the learned Arbitrator’s
10
2026:DHC:5580
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conclusion that the Petitioner failed to establish the Respondent’s
responsibility for the delay during execution of the work.
50. As regards the nine letters allegedly not considered by the
learned Arbitrator, it is material to note that the evidence had
concluded on 24.07.2013, whereas the Petitioner moved an application
on 24.11.2014 seeking to bring 50 additional documents on record.
Vide order dated 19.01.2015, the Petitioner was directed to file the
relevant documents along with the original acknowledgements of
receipt and/or postal receipts, supported by an affidavit. The
Petitioner, however, failed to furnish the requisite receipts and
therefore, its application was dismissed for want of proof that the said
documents had been delivered to the Respondent’s office.
51. Although the learned Arbitrator subsequently took the nine
letters produced by the Respondent’s representative on record, they
remained subject to the Respondent’s objections as to admissibility
and evidentiary value. Therefore, their placement on record did not, by
itself, establish that their contents had to be accepted as proof of the
alleged hindrances.
52. Nevertheless, since the Petitioner relies on these letters as vital
evidence, this Court has examined their contents to determine whether
they undermine the findings in the impugned Award. Only four out of
the nine letters relate to the period after the stipulated date of
completion. Read cumulatively, they refer to certain hindrances, but
do not establish conclusively that those hindrances were exclusively
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attributable to the Respondent or the period for which they delayed
completion. It is pertinent to reiterate that the finding of the learned
Arbitrator was not that no hindrances had occurred, but that the
Petitioner had failed to establish that those hindrances were
attributable to the Respondent. The letters do not, therefore, contradict
the finding of the learned Arbitrator so as to render their non-
consideration an omission to consider vital evidence warranting
interference under Section 34 of the Act and reliance on PSA Sical
Terminals (P) Ltd. (supra) is of no assistance.
53. On the contrary, these letters lend support to the finding of the
learned Arbitrator that the Petitioner did not raise a contemporaneous
claim for additional compensation on account of delay during
execution of the work. A communication recording a site issue is not
necessarily equivalent to a notice informing the employer that the
contractor attributes the resulting delay to it and intends to claim
compensation on that account.
54. In these circumstances, the absence of an individual discussion
of each letter cannot be characterised as an error going to the root of
the Award, particularly when their admissibility and evidentiary value
remained disputed. The objection, therefore, does not disclose
perversity or any other ground warranting interference under Section
34 of the Act.
55. The reliance placed by the Petitioner on the allowance of Claim
No. 2 under Clause 10C is misplaced, as that claim was allowed on
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the basis of the Respondent’s admission under the specific contractual
provision. The allowance of that claim, therefore, does not establish
that the Respondent was responsible for the hindrances or the resulting
delay, nor does it dispense with the requirements of Clauses 5.2 and
5.3 for establishing the Petitioner’s entitlement to compensation on
that account.
56. In the absence of proof that the relevant delay was attributable
to the Respondent, and in view of the findings concerning timely
notice and the evidentiary value of the correspondence, no ground has
been made out to find fault with the rejection of Claim Nos.4 and 5.
57. As to Claim No. 6, the learned Arbitrator relied upon the earlier
finding that the delay was not attributable to the Respondent and held
that the Petitioner had not established any breach of contract by the
Respondent that caused or otherwise justified the claimed increase in
material costs. The learned Arbitrator also took note of paragraph 2 of
the letter of award dated 30.10.2004, which expressly provided that no
extra payment would be payable to the contractor. The Petitioner has
not demonstrated that this finding disregarded any applicable
contractual provision entitling it to a price adjustment or was
otherwise unsupported by the record. In substance, the challenge seeks
a fresh assessment of the correspondence and a substitution of the
factual inference drawn by the learned Arbitrator with that of this
Court. Such an exercise is impermissible under Section 34 in the
absence of a recognised ground for setting aside the Award. No such
ground has been made out in respect of Claim No. 6.
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58. As far as Claim No. 7 is concerned, the Petitioner contended
that interest ought to have been awarded from the date of completion
of the project, i.e., 30.11.2006. However, it is well-settled that the
award of pre-reference interest is not a matter of course and must be
founded either on a contractual provision or other substantive legal
11
basis . The Petitioner has not identified a contractual provision or
other substantive legal basis entitling it to interest from that date. Nor
has it demonstrated that the date from which interest was awarded by
the learned Arbitrator is contrary to the Contract or otherwise legally
unsustainable. Therefore, no error can be found in the decision of the
learned Arbitrator on this aspect warranting interference.
59. In Ramesh Kumar Jain v. Bharat Aluminium Company
12
Limited (BALCO) , the Supreme Court observed that the test of
patent illegality must be applied with caution. Where the arbitrator has
relied upon evidence that reasonably supports the conclusion reached,
the Court cannot set aside the Award merely because another view of
that evidence is possible. Interference is warranted only where the
conclusion is such that it cannot reasonably be sustained on the
evidence or on any permissible interpretation of the material on
record. The relevant observations are as follows:
“Considering the aforesaid precedents, in our considered view, the
said terminology of ‘patent illegality’ indicates more than one
scenario such as the findings of the arbitrator must shock the
11
North Eastern Electric Power Corporation Limited (NEEPCO) v Astra Construction
Private Limited 2026 INSC 1036; Pam Developments Private Limited v. State of West
Bengal and Another (2024) 10 SCC 715
12
2025 INSC 1457
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judicial conscience or the arbitrator took into account matters he
shouldn’t have, or he must have failed to take into account vital
matters, leading to an unjust result; or the decision is so irrational
that no fair or sensible person would have arrived at it given the
same facts. A classic example for the same is when an award is
based on “no evidence” i.e., arbitrators cannot conjure figures or
facts out of thin air to arrive at his findings. If a crucial finding is
unsupported by any evidence or is a result of ignoring vital
evidence that was placed before the arbitrator, it may be a ground
the warrants interference. However, the said parameter must be
applied with caution by keeping in mind that “no evidence” means
truly no relevant evidence, not scant or weak evidence. If there is
some evidence, even a single witness’s testimony or a set of
documents, on which the arbitrator could rely upon or has relied
upon to arrive at his conclusions, the court cannot regard the
conclusion drawn by the arbitrator as patently illegal merely
because that evidence has less probative value. This thin line is
stood crossed only when the arbitral tribunal’s conclusion cannot
be reconciled with any permissible view of the evidence.”
60. Applying the aforesaid principles to the objections raised in
this petition, this Court finds that the Petitioner has not established any
ground under Section 34 for interference with the findings on Claim
Nos. 1, 4, 5, 6 and 7. The findings are supported by the evidence and
reflect a plausible view of the contractual provisions and evidence.
This Court has also examined the principal contractual arguments, the
note-sheets and the nine letters relied upon by the Petitioner. After
such examination, this Court does not find that the learned Arbitrator
has disregarded any vital evidence or contractual provision, arrived at
a finding unsupported by evidence or adopted an interpretation of the
Contract that is not reasonably possible. The objections, therefore, do
not meet the applicable threshold for setting aside the impugned
Award.
61. Accordingly, the present petition is dismissed.
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62. There shall be no order as to costs.
OM PRAKASH SHUKLA, J
NOVEMBER 03, 2026/at/gunn
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