Chennai Metropolitan Water Supply And Sewerage Boa vs M/s SPML Infra Limited
- Court
- Madras High Court
REV.APPL No. 172 of 2026
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 29 / 09 / 2026
DATE OF DECISION : 26 / 10 / 2026
CORAM
THE HON'BLE MR JUSTICE P. VELMURUGAN
AND
THE HON'BLE MRS.JUSTICE K. GOVINDARAJAN THILAKAVADI
REV.APPL No. 172 of 2026
CNR: {HCMA011791372026}
Chennai Metropolitan Water Supply
and Sewerage Board,
No.1 Pumping Station Road,
Chintadripet, Chennai-600 002,
Rep by its Managing Director.
…. Applicant
Vs
1. M/s SPML Infra Limited
(Formerly known as Subhash Projects and
Marketing Ltd)
Having its Office at F-27/2,
Okhla Industrial Area, Phase II,
New Delhi 110 020.
Rep by its Authorized Signatory.
2. Dr.T.S.Sethuraman,
Presiding Arbitrator,
C-137 Sarvodaya Enclave,
New Delhi-110 017.
3. Capt.S.Raja Rao,
Arbitrator, House No. 279,
1st B-Cross, 8th Main Road,
4th Block, Basaveswara Nagar,
Bangalore 560 079.
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4. K.Ramalingam
Arbitrator,
(Deceased R4 deleted vide operational record)
..Respondent(s)
This Review Application is filed under Section 114 r/w Order 47 Rule 1
of C.P.C., to review order made in O.S.A.No.135 of 2020 dated 09.06.2026
For Petitioner(s): Mr.Vijay Narayan, Advocate General
Advocate General
Assisted by Mr.D.Balaraman
For Respondent(s): Mr.K.Ashok Kumar
No appearance for R2 and R3
R4 - died
J U D G M E N T
P.VELMURUGAN J.
The present Review Application has been filed by the applicant, Chennai
Metropolitan Water Supply and Sewerage Board (hereinafter referred to as the
“Board”), seeking to review the judgment dated 09.06.2026 passed in
O.S.A.No.135 of 2020.
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2. The dispute arises out of a contract awarded to the first respondent for
the construction of a permeate conveyance pipeline as part of the Chennai
Sewerage Renovation and Functional Improvement Project. Disputes arose
between the parties regarding the execution of the work, reduction in the scope
of work, additional excavation, prolongation costs and other amounts claimed
by the contractor. The disputes were referred to arbitration. By a majority
Award dated 15.12.2007, the Arbitral Tribunal allowed certain claims made by
the contractor and awarded interest. One of the Arbitrators passed a separate
minority Award granting substantially lesser amounts.
3. Aggrieved by the majority Award, the Board filed O.P.No.324 of 2009
under Section 34 of the Arbitration and Conciliation Act, 1996, before this
Court.
4. By order dated 14.08.2019, the learned Single Judge set aside the
Award in respect of Claim No.6, relating to prolongation costs. The challenge to
the other claims, including Claim Nos.5 and 12, was dismissed, and the Award
in respect of the remaining claims was confirmed.
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5. Aggrieved by the said order, the Board preferred O.S.A.No.135 of
2020 under Section 37 of the Arbitration and Conciliation Act, 1996. By
judgment dated 09.06.2026, the present Bench dismissed the appeal and
confirmed the order of the learned Single Judge.
6. The present Review Application has been filed contending that the
judgment dated 09.06.2026 suffers from errors apparent on the face of the
record and that certain material submissions made by the Board were not
considered.
7. The learned Additional Advocate General appearing for the
appellant/Board submitted that the Board was not seeking a reappreciation of
the evidence, but contended that the Award was contrary to the express terms of
the contract and suffered from patent illegality. It was submitted that these
objections had not been properly considered while deciding the appeal.
8. With regard to Claim No.5, the learned Additional Advocate General
submitted that the contract had been partially terminated under Clause 74 due to
the delay attributable to the contractor. It was contended that the compensation
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awarded for the reduction in the scope of work was contrary to the contractual
provisions and that Exs.C.5/17, C.5/26 and C.5/27 supported the Board’s case.
It was further submitted that the contractor had failed to furnish the supporting
documents sought by the Board and that the amount awarded by the Tribunal
was not justified under the terms of the contract.
9. With regard to Claim Nos.7 and 8, the learned Additional Advocate
General submitted that the Tribunal had awarded amounts exceeding those
claimed by the contractor in its claim petition. It was contended that this
objection required consideration and that the failure to consider it amounted to
an error apparent on the face of the record.
10. With regard to Claim No.15, relating to interest, the learned
Additional Advocate General submitted that the Tribunal had awarded pre-
award interest at 12% per annum and post-award interest at 15% per annum
without assigning adequate reasons or providing any contractual or commercial
basis for such rates. It was further submitted that the interest had accumulated
substantially, imposing a heavy financial burden on the Board, which is a public
utility undertaking.
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11. The learned Additional Advocate General further submitted that the
objection regarding interest had been raised as part of the Board’s challenge to
the Award from the beginning and that the contention that it was raised for the
first time in the appeal was incorrect. Reliance was placed on the decision in
O.P.No.325 of 2009, dated 14.06.2017, reported in [2017 (6) MLJ 582] , which,
according to the Board, involved the same parties, similar contractual conditions
and an Award passed by the same Arbitral Tribunal on the same date. It was
submitted that the rate of interest in that case had been reduced to 8% per
annum and that the said decision had not been considered while deciding the
appeal.
12. The learned Additional Advocate General submitted that the
judgment under review had not adequately dealt with the objections relating to
Claim Nos.5, 7, 8 and 15 and the earlier decision relied upon by the Board. It
was therefore submitted that the judgment needs to be reviewed.
13. Per contra, the learned senior counsel appearing for the first
respondent/claimant submitted that the Arbitral Tribunal had passed a reasoned
Award after considering the evidence and the terms of the contract. It was
further submitted that the scope of interference under Section 34 of the
Arbitration and Conciliation Act, 1996, was limited and that the learned Single
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Judge had set aside the Award only in respect of Claim No.6. The learned senior
counsel further submitted that the scope of interference under Section 37 of the
Act was also limited and that the Division Bench had dismissed the appeal after
considering the rival submissions. With regard to the rate of interest, the
learned senior counsel appearing for the first respondent/claimant placed
reliance on the judgment of the Hon’ble Supreme Court in Reliance
Infrastructure Limited v. State of Goa [(2024) 1 SCC 479].
14. We have considered the rival submissions made on either side and
perused the records.
15. The learned Additional Advocate General submitted that the findings
on Claim Nos.5, 7, 8 and 15 had not been properly considered and that the
judgment dated 09.06.2026 requires review.
16. As regards Claim No.5, the judgment under review has already
considered the reduction in the scope of work. The quantity of pipes to be
supplied was reduced by about 65%, while the quantity of pipes to be installed
was reduced by nearly 80%. We held that such a substantial reduction was far
beyond an ordinary contractual variation and upheld the Tribunal’s finding that
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it amounted to an abnormal post-contractual reduction in the scope of work. The
Tribunal’s interpretation of the contract was found to be a possible view based
on the evidence available. Therefore, the grounds raised in the review
application do not disclose any error apparent on the face of the judgment
warranting review.
17. As regards Claim Nos.7 and 8, the learned Additional Advocate
General submitted that the amounts awarded by the Arbitral Tribunal exceeded
the amounts claimed by the contractor. In paragraph No.13.6 of the judgment in
the appeal, we had recorded the respondent’s submission that the Board had
mainly challenged Claim Nos.5, 6 and 12 before the learned Single Judge and
could not raise fresh grounds concerning Claims 7(c) and 7(d) for the first time
in the appeal. Upon considering the rival submissions and the scope of
interference under Section 37 of the Arbitration and Conciliation Act, 1996, the
appeal was dismissed and the order of the learned Single Judge was confirmed.
On considering the grounds raised in the Review Application, we find no error
apparent on the face of the judgment warranting review.
18.With regard to Claim No.15, the learned Additional Advocate General
submitted that the Arbitral Tribunal had awarded pre-award interest at 12% per
annum and post-award interest at 15% per annum without giving adequate
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reasons. Reliance was also placed on the decision in O.P.No.325 of 2009, dated
14.06.2017 , reported in [2017 (6) MLJ 582] , wherein the rate of interest was
stated to have been reduced to 8% per annum.
19. We have considered the contentions raised by the Board regarding the
rate of interest and the decision relied upon in O.P.No.325 of 2009. The grounds
raised do not disclose any error apparent on the face of the judgment under
review. The Review Application cannot be used to seek reconsideration of the
matter on the ground that a different view on the rate of interest ought to have
been taken. Having regard to the grounds raised in the Review Application and
the limited scope of review, we find no error apparent on the face of the
judgment under review warranting interference in respect of Claim No.15. At
this juncture, it would be useful to refer to the judgment relied upon by the
learned senior counsel appearing for the first respondent in Reliance
Infrastructure Limited v. State of Goa [(2024) 1 SCC 479] . In that case, the
Hon’ble Supreme Court held that the reduction of post-award interest from 15%
to 10% was not justified, having regard to the facts of that case and the
prevailing lending rates. The Court upheld the award of post-award interest at
15% per annum. The relevant portion of the said judgment is extracted
hereunder:-
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“90. We are of the view that the aforesaid reduction of rate of interest
by the High Court is also unjustified. We have noticed the provisions of
Section 31(7)( b ) that unless the award otherwise directs, the sum payable
under the arbitral award shall carry interest @ 2% higher than the current rate
of interest prevalent on the date of the award, from the date of the award to the
date of payment. The expression “current rate of interest” has been explained
in the Explanation to the said section to have the same meaning as assigned
under Section 2( b ) of the Interest Act, 1978. The High Court has referred to
the decision in Vedanta [ Vedanta Ltd. v. Shenzhen Shandong Nuclear Power
Construction Co. Ltd. , (2019) 11 SCC 465 : (2019) 4 SCC (Civ) 724] to hold
that a Court may reduce interest awarded by the arbitrator when such interest
does not reflect the prevailing economic condition or where it is not found
reasonable or where it promotes interest of justice.
91. We do not find any basis in the impugned judgment [ State of Goa
v. Reliance Infrastructure Ltd. , 2021 SCC OnLine Bom 306] of the High
Court for reducing the rate of interest, as in Vedanta [ Vedanta Ltd. v.
Shenzhen Shandong Nuclear Power Construction Co. Ltd. , (2019) 11 SCC
465 : (2019) 4 SCC (Civ) 724] , wherein this Court was dealing with an
International Commercial Arbitration involving rupee as well as euro
components. Moreover, in Vedanta [ Vedanta Ltd. v. Shenzhen Shandong
Nuclear Power Construction Co. Ltd. , (2019) 11 SCC 465 : (2019) 4 SCC
(Civ) 724] , the rate of interest was reduced in respect of the foreign currency
component to bring the interest rate in line with the international rate on the
ground that the rate of interest prevailing on the rupee debt in India and on
international currency abroad were different and the international rates were
lower. Such a situation is not obtaining in the present case.
92. The High Court seems to have not considered the relevant factual
aspects. On the contrary, as has been submitted before us as well as the High
Court, the prevailing interest rate being the prime lending rate of State Bank of
India was in the range of 13% to 14% p.a. Thus, the Arbitral Tribunal was
justified in granting interest @ 15% p.a. post-award. In our view, the Arbitral
Tribunal was well within its jurisdiction under Section 31 of the Act to award
interest @ 15% p.a. and there was no justification to reduce the same to 10%
p.a. We may observe with respect that the High Court was not exercising any
equity jurisdiction so as to resettle the rate of interest as deemed fit by it. It
had been a matter relating to an award made by the Arbitral Tribunal in a
commercial dispute.”
20. On an overall consideration of the grounds raised, we find no error
apparent on the face of the judgment dated 09.06.2026 warranting the exercise
of the review jurisdiction.
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21. Accordingly, the Review Application is dismissed. There shall be no
order as to costs.
(P.V.,J.) (K.G.T.,J.)
26 /10 / 2026
Index: Yes/No
Speaking/Non-speaking order
Neutral Citation: Yes/No
r n s
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To
The Sub Assistant Registrar,
(Original Side),
Madras High Court,
Chennai.
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REV.APPL No. 172 of 2026
P.VELMURUGAN, J.
AND
K.GOVINDARAJAN THILAKAVADI, J.
r n s
REV.APPL.No. 172 of 2026
26 / 10 / 2026
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