M/S C.P. & Associates Pvt. Ltd. vs Delhi Metro Rail Corporation Ltd.

Court
Delhi High Court

$~15
* IN THE HIGH COURT OF DELHI AT NEW DELHI

% Date of decision: 02.11.2026

# CNR No. DLHC010337382023
+ FAO(OS) (COMM) 186/2023
M/S C.P. & ASSOCIATES PVT. LTD. .....Appellant
Through: Mr. Vivekanand & Mr.
Abhishek Semwal, Advs.
versus

DELHI METRO RAIL CORPORATION LTD. .....Respondent
Through: Mr. Tarun Johri & Mr. Ankur
Gupta, Advs.
CORAM:
HON'BLE MR. JUSTICE AVNEESH JHINGAN
HON'BLE MS. JUSTICE SHAIL JAIN

AVNEESH JHINGAN, J. (ORAL)
1. This appeal is filed under Section 37 of the Arbitration and
Conciliation Act, 1996 (for short ‘the Act’) assailing the order dated
04.05.2023 (hereinafter ‘the impugned order’) passed by the learned
Single Judge dismissing the petition under Section 34 of the Act.
Brief Facts
2. The brief facts are that the appellant, M/s C.P. & Associates
Pvt. Ltd. is a private limited company engaged in the business of
construction and development. The respondent, Delhi Metro Rail
Corporation Ltd. (hereinafter referred to as ‘DMRC’) is a joint venture
of the Government of India and the Government of the National
Capital Territory of Delhi engaged in the development of the metro
rail system in Delhi.
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2.1 DMRC invited tenders for architectural finishing works at seven
elevated stations on the Inderlok-Mundka Line of Phase-II of the
Delhi MRTS Project. The appellant was the successful bidder and the
Letter of Acceptance (LOA) was issued on 18.07.2008. The contract
was executed between the parties on 14.10.2008 for
Rs.33,76,81,216.12. The work was to be completed within fourteen
months from the date of the LOA.
2.2 Disputes arose between the parties regarding delay in execution
of the work, measurement and settlement of the final bill. The
appellant attributed the delay to the non-availability of work fronts
and delay in drawings whereas DMRC attributed the delay to slow
progress and inadequate deployment of resources by the appellant.
DMRC issued a fourteen-day notice on 21.05.2010 and terminated the
contract vide letter dated 04.06.2010.
2.3 On 11.05.2013, the appellant referred the claims to the engineer
nominated by DMRC under clause 20 of the General Conditions of
the Contract (for short ‘GCC’). Upon rejection of the claims, the
appellant invoked arbitration under clause 20.5 of the GCC vide letter
dated 27.08.2013. The appellant raised thirty-two claims before the
arbitral tribunal and the proceedings culminated in an award dated
28.09.2018 whereby seven claims were allowed, three were partly
allowed and twenty-two claims were rejected. The claims under
challenge and the amounts awarded therein are tabulated below:
Claim No. Amount claimed Amount awarded
Claim A 304,50,000/- Partly allowed
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Amount not paid towards
work executed against BOQ
items
Claim B
Amount due towards extra
items
86,24,000/- Nil

Claim C
Wrongful forfeiture of PBG
137,23,400/- Nil
Claim H
Refund of amount recovered
towards housekeeping
5,00,000/- Nil
Claim M
Refund of amount recovered
for negative item
24,36,600/- Nil
Claim O
Refund of liquidated
damages (LD) recovered for
third and fourth EOT
40,45,000/- Nil
Claim R
Compensation for idle labour
and machinery
45,84,000/- Nil
Claim U
Arbitration Costs
5,00,000/- Nil

2.4 Aggrieved by the award, the appellant filed a petition under
Section 34 of the Act. Vide the impugned order dated 04.05.2023, the
learned Single Judge dismissed the petition. Hence, the present appeal.
Submissions of the Appellant
3. Learned counsel for the appellant contends that the learned
Single Judge while referring to the limited scope of interference under
Section 34 of the Act failed to consider the specific claim-wise
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objections raised against the award.
3.1 The contention is that the termination of the contract was
contrary to clauses 11.4.2(b), (g) and (i) of the GCC. It is submitted
that after issuance of the fourteen-day notice dated 21.05.2010, the
further two-day notice stipulated under the contract was not issued
before termination on 04.06.2010. The submission is that the delay
was attributable to the non-availability of work fronts and delay in
drawings by DMRC which formed the basis of claim R for idle labour
and machinery.
3.2 It is canvassed that the forfeiture of Rs.1,37,23,365/- from the
performance bank guarantee (for short ‘PBG’) of Rs. 3.37 crore under
claim C was not justified. The submission is that DMRC neither
pleaded nor proved any loss and the amounts sought to be recovered
were already adjusted in the final bill and the subsequent agency
executed the work at lower rates. Reliance is placed on Fateh Chand
v. Balkishan Dass, 1963 SCC OnLine SC 49, Maula Bux v. Union of
India, (1969) 2 SCC 554 and Kailash Nath Associates v. DDA ,
(2015) 4 SCC 136.
3.3 The submission is that the tribunal erred in rejecting claims B-2
and B-9 for extra items on the ground that approval of the engineer
was not obtained despite other extra items having been accepted and
paid for without prior written approval.
3.4 The grievance is that claim B-7 for rectification of damaged
false ceiling framing was wrongly rejected and the damage was
caused by another agency working at the site. The submission is that
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the appellant could not be held liable for the damage under clauses
18.1(i) and (v) of the GCC.
3.5 The submission regarding claim H is that the recovery of Rs.5
lakh for housekeeping was contrary to the letter dated 16.03.2010 and
clause 56 of the GCC. Further that DMRC failed to prove the
expenditure incurred towards the housekeeping work.
3.6. Qua claim M, it is submitted that Rs.24,36,610.32 deducted
from the final bill was neither included in the amount enhanced under
claim A nor separately awarded under claim M. The grievance is that
the amount remained unpaid.
3.7 The grievance under claim O is that LD of Rs.40.45 lakh was
recovered for the third and fourth extensions of time (EOT) without
DMRC pleading or proving any loss. Reliance is on Indian Oil
Corporation Ltd. v. Lloyds Steel Industries Ltd., 2007 SCC OnLine
Del 1169, Vishal Engineers & Builders v. Indian Oil Corporation
Ltd., 2011 SCC OnLine Del 5124 and Indian Oil Corporation Ltd. v.
Standard Casting Pvt. Ltd., FAO (COMM) 83/2021 and FAO
(COMM) 84/2021 decided on 13.11.2025.
3.8 Lastly, it is contended that the rejection of claim U for
arbitration costs is contrary to Sections 31(8) and 31A of the Act. The
submission is that there was no agreement between the parties after
the disputes had arisen, to waive the claim for costs.
Submissions of DMRC
4. Per contra , the scope of interference under Section 37 of the
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Act is limited and does not permit re-appreciation of the findings of
the tribunal. The submission is that this court is required to examine
whether the learned Single Judge rightly exercised jurisdiction under
Section 34 of the Act.
4.1 The argument is that the dispute involves technical aspects of
the execution of the contract and the tribunal after considering the
material on record has passed a reasoned award taking a plausible
view. It is submitted that the learned Single Judge was not required to
undertake a fresh examination of the technical findings or substitute
the view taken by the tribunal with another view.
4.2 It is canvassed that the appellant failed to establish patent
illegality in the award and the fact that the impugned order refers to
the findings recorded in the award cannot be a ground for interference
under Section 34 of the Act.
5. Heard the learned counsel for the parties and perused the record
with their able assistance. No other contention than those noted above
was pressed.
Analysis
6. The Act is a self-contained code providing an alternative
mechanism for resolution of disputes. The intent of the Act is to
ensure minimum judicial intervention. The first stage of judicial
intervention after the passing of an arbitral award is by filing
objections under Section 34 of the Act. Reference is made to the
following decisions of the Supreme Court:
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6.1 In NHAI v. M. Hakeem, (2021) 9 SCC 1 it was held:
“15. Section 34 of the Arbitration Act, 1996 occurs in
Chapter VII under the title “Recourse against arbitral
award”. We are directly concerned with sub-sections (1) and
(4) of Section 34 which are set out hereunder:
“34. Application for setting aside arbitral
award.—(1) Recourse to a Court against an
arbitral award may be made only by an
application for setting aside such award in
accordance with sub-section (2) and sub-section
(3).
*
(4) On receipt of an application under sub-section
(1), the Court may, where it is appropriate and it
is so requested by a party, adjourn the proceedings
for a period of time determined by it in order to
give the Arbitral Tribunal an opportunity to
resume the arbitral proceedings or to take such
other action as in the opinion of Arbitral Tribunal
will eliminate the grounds for setting aside the
arbitral award.”
*
19. The statutory scheme under Section 34 of the
Arbitration Act, 1996 is in keeping with the Uncitral Model
Law and the legislative policy of minimal judicial
interference in arbitral awards.

6.2 In Fiza Developers & Inter-Trade (P) Ltd. v. Amci (India) (P)
Ltd. , (2009) 17 SCC 796 it was held:
“17. The scheme and provisions of the Act disclose two
significant aspects relating to courts vis-à-vis arbitration.
The first is that there should be minimal interference by
courts in matters relating to arbitration. Second is the sense
of urgency shown with reference to arbitration matters
brought to court, requiring promptness in disposal.
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21. We may therefore examine the question for
consideration by bearing three factors in mind. The first is
that the Act is a special enactment and Section 34 provides
for a special remedy. The second is that an arbitration award
can be set aside only upon one of the grounds mentioned in
sub-section (2) of Section 34 exists. The third is that
proceedings under Section 34 requires to be dealt with
expeditiously.”
(emphasis supplied)

7. The scope of interference under Section 34 is limited to the
grounds stipulated therein. The court dealing with the objections has a
dual duty; firstly, to restrict itself to the parameters laid down under
Section 34 of the Act and secondly, to apply mind to the contentions
raised and consider them within the scope of Section 34 of the Act.
8. The Supreme Court in HUDA v. Mehta Construction Co. ,
(2022) 5 SCC 432 while dealing with the dismissal of objections
under Section 34 of the Act without consideration of the specific
issues raised held:
“10. The learned counsel for the respondent, however,
contends that the Additional District Judge, Karnal had also
dismissed the objections on merits. We have considered this
contention but observe that the observation and findings
recorded by the Additional District Judge are cryptic and
perfunctory. The same is equally true of the reasoning given
by the High Court in the impugned order [ Haryana Urban
Development Authority (HUDA) v. Mehta Construction Co. ,
2019 SCC OnLine P&H 6257], which is full of
generalisation and does not deal with specific issues and
contentions raised by the appellant in the objections. In
particular, the objection that the claims of the respondent
were barred by limitation.
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13. We have briefly noted the provisions of the Act only to
highlight that the objections under Section 34 of the Act did
require consideration and in-depth examination and should
not have been dismissed without proper and full application
of mind with reference to the provisions of the Limitation
Act and the Act.”

9. From a perusal of the impugned order, it is evident that the facts
were narrated, the contentions of both the parties were noted and the
law with regard to the scope of limited interference under Section 34
of the Act was elaborated. However, the specific contentions raised by
the appellant under Section 34 of the Act were not considered.
Instead, the relevant portions of the award dealing with the respective
claims were reproduced and the objections were rejected by stating
that the award does not warrant interference as the adjudication was in
accordance with the contract.
10. The contentions raised by the appellant having not been
specifically dealt with in the impugned order there is no scope under
Section 37 of the Act for this court to examine whether the decision
was within the four corners of Section 34 of the Act. In the eventuality
of the objections being decided for the first time in an appeal under
Section 37 of the Act the parties will be deprived of one of the
statutory remedies available.
11. The Supreme Court in Bombay Slum Redevelopment Corpn.
(P) Ltd. v. Samir Narain Bhojwani , (2024) 7 SCC 218 while
considering the power of the appellate court to remand a matter in an
appeal under Section 37 of the Act held:
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“29. There may be exceptional cases where remand in an
appeal under Section 37 of the Arbitration Act may be
warranted. Some of the exceptional cases can be stated by
way of illustration:
( a ) Summary disposal of a petition under Section 34 of the
Arbitration Act is made without consideration of merits;
( b ) Without service of notice to the respondent in a petition
under Section 34, interference is made with the award; and
( c ) Decision in proceedings under Section 34 is rendered
when one or more contesting parties are dead, and their
.
legal representatives have not been brought on record ”
(emphasis supplied)

12. In the present case, the failure to consider the specific
objections raised by the appellant violates the principles of natural
justice. Consequently, the impugned order is set aside and the matter
is remitted to the learned Single Judge for deciding the objections
under Section 34 of the Act afresh.


AVNEESH JHINGAN, J

SHAIL JAIN, J
NOVEMBER 2, 2026
‘TL’

Reportable: Yes
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