Viceroy Engineering vs Smiths Detection Veecon Systems Pvt. Ltd.
- Court
- Delhi High Court
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: 14.09.2026
Judgment pronounced on: 04.11.2026
Judgment uploaded on: 04.11.2026
# CNR No. DLHC010073162026
+ FAO(OS) (COMM) 45/2026, CM APPL. 13348/2026, CM
APPL. 13349/2026 and CM APPL. 13350/2026
VICEROY ENGINEERING .....Appellant
Through: Mr. Murari Tiwari, Sr. Adv.
with Ms. Nimisha Gupta Mr.
Rahul Kumar Ms. Indira
Murthy, Mr. Devansh Malhotra,
Advs.
versus
SMITHS DETECTION VEECON SYSTEMS PVT. LTD.
.....Respondent
Through: Ms. Payal Chawla, Ms. Heena
Shaheen, Mr. Sidharth Kaushik
and Ms. Anushka, Advs.
CORAM:
HON'BLE MR. JUSTICE ANIL KSHETARPAL
HON'BLE MS. JUSTICE SHAIL JAIN
J U D G M E N T
ANIL KSHETARPAL, J.:
1. The present Appeal under Section 37 of the Arbitration and
Conciliation Act, 1996 („the Act‟) assails the judgment dated
17.10.2025 passed in O.M.P. (COMM) 302/2019 captioned Viceroy
1
Engineering v. Smiths Detection Veecon Systems Private Limited .
By the Impugned Judgment, the learned Single Judge dismissed the
Petition filed by Viceroy Engineering („Viceroy‟) under Section 34 of
1
Hereinafter, the Impugned Judgment
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
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the Act challenging the rejection of its counterclaims in the Arbitral
2
Award dated 15.03.2019 . The Award rejected both the claims of
Smiths Detection Veecon Systems Private Limited („Smiths‟) and the
counterclaims of Viceroy. Smiths did not challenge the Award.
2. The principal dispute centres on Viceroy‟s counterclaim for
outstanding payments under an outsourcing agreement. Viceroy
contends that the learned Tribunal rejected this counterclaim despite
admissions and documentary evidence establishing Smiths‟ liability. It
also assails the learned Tribunal‟s refusal to receive correspondence
relating to an amendment to the agreed service fee. The question is
whether these objections justify interference under Sections 34 and 37
of the Act. The rejection of three other counterclaims is also
challenged.
FACTUAL MATRIX
3. Viceroy is an engineering enterprise engaged in providing
technical services and personnel. Smiths is engaged in the business of
detection technologies. On 12.08.2010, the parties entered into an
Outsourcing Agreement („Agreement‟) for a term of five years. Under
the Agreement, Viceroy was to provide technicians for the installation
and commissioning of Smiths‟ equipment, as well as after-sales
support and maintenance services for its customers.
4. Clause 4.1 of the Agreement provided for payment of the
service fee specified in Annexure II, subject to proper performance of
the services. Clause 4.2 required Viceroy to raise monthly invoices
2
Hereinafter, The Award
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NARAYAN
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and Smiths to pay the service fee within fifteen days of receiving an
3
invoice. Under Clause 4.3 of the Agreement , revision of the service
fee required the agreement and approval of Smiths‟ Vice President
Service, Finance Director and Managing Director. Payments were
subject to deduction of tax at source under Clause 4.5.
5. The original Annexure II recorded that the service fee was “To
be agreed later”, while also specifying components of employee cost
and associated fees. Viceroy relied upon an amendment dated
01.04.2011 replacing that schedule with rates for different categories
of personnel, administrative fees and expense reimbursements. The
substituted schedule stated a validity period from 01.04.2011 to
31.07.2012. Viceroy maintained that the amended rates governed its
invoices from April 2011 until July 2015. The contractual effect of the
amendment and proof of the amount remaining payable became
matters of dispute before the learned Tribunal.
6. By a communication dated 24.07.2015, Smiths informed
Viceroy that the Agreement would not be renewed. Its term expired on
11.08.2015. Viceroy maintained that payments for services rendered
during the contractual period remained outstanding. It also alleged that
Smiths had participated in soliciting its employees through ANI
Instruments Private Limited („ANI‟), causing business loss and
reputational injury. Separately, Viceroy claimed payment for services
which it stated it had continued to provide at the airports between
12.08.2015 and 31.08.2015.
3
“4.3 The Service Provider may revise the Service Fee provided that the revised Service Fee has
been agreed and approved by the Company's Vice President Service, Finance Director and
Managing Director.”
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NARAYAN
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7. The disputes were referred to a Sole Arbitrator. Smiths sought
recovery on account of alleged overcharging and also advanced claims
alleging collusive activities, failure to furnish service reports, and loss
of reputation and legal costs. Viceroy contested those claims and
sought the following amounts by way of counterclaims:
Counterclaim Amount originally
claimed
Outstanding payments against invoices ₹14,25,52,798/-
(subsequently reduced
to ₹13,92,35,909/-)
Damages for loss of reputation ₹10,00,000/-
Damages for breach of the non-solicitation obligation
and consequent business loss
₹17,40,00,000 /-
Payment for services continued after expiry of the
Agreement
₹63,02,752/-
Viceroy also claimed interest.
8. In its final written submissions before the learned Tribunal,
Viceroy reduced the counterclaim for outstanding payments to
₹13,92,35,909/- after giving credit for an additional TDS amount of
₹33,16,889/-. Its revised computation proceeded on invoices
aggregating to ₹103,95,63,521/- and aggregate receipts of
₹90,03,27,612/-. Separately, the transaction figure of ₹98,83,94,246/-
reflected in Form 26AS, when compared with the corrected receipts,
yielded a difference of ₹8,80,66,634/-.
9. During the arbitral proceedings, Viceroy sought permission to
place the amended Annexure II and related correspondence on record.
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NARAYAN
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By Order dated 09.01.2018, the learned Tribunal admitted the
amended Annexure II but declined to receive the correspondence,
observing that it had neither been filed nor referred to in the statement
of defence nor put to Smiths‟ witness. By a separate order of the same
date, the Tribunal directed production of certain accounting and
employment records of Viceroy sought by Smiths to contest the
counterclaim. Viceroy relies upon the treatment of these applications
in support of its complaint of procedural unfairness.
10. By the Award dated 15.03.2019, the learned Tribunal rejected
the claims and counterclaims. In relation to outstanding payments, it
examined the contractual fee provisions, the asserted amendment and
the evidence relied upon to establish the amount payable. The learned
Tribunal concluded that Viceroy had not proved its entitlement to the
claimed balance. The learned Tribunal also rejected the counterclaims
for reputational injury and breach of the non-solicitation obligation. It
held the counterclaim for post-expiry services to be outside the scope
of the reference.
11. Viceroy challenged the rejection of its counterclaims under
Section 34 of the Act. The learned Single Judge found no ground to
interfere with the Award, rejecting Viceroy‟s objections founded on
admissions, the alleged inconsistency between rejection of the claims
and counterclaims, the exclusion of the correspondence, and the
findings on solicitation and reputational injury. As regards the
counterclaim for post-expiry services, the Court noted the learned
Tribunal‟s ruling on maintainability and also recorded that arguments
had not been advanced on that counterclaim.
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NARAYAN
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12. In the present Appeal, Viceroy seeks setting aside of the
Impugned Judgment and of the Award insofar as its counterclaims
were rejected, together with allowance of those counterclaims. The
rejection of Smiths‟ affirmative claims is not under challenge.
SUBMISSIONS ON BEHALF OF THE PARTIES
13. Learned Senior Counsel appearing for Viceroy, would submit
that the Appellant provided services throughout the contractual period
and that Smiths received and approved its invoices without
communicating any objection. Viceroy relies upon the emails dated
16.07.2015, 25.07.2015 and 03.08.2015, the reply to its counterclaim,
and the answers of Smiths‟ witness in cross-examination. According
to Viceroy, this material establishes an admitted liability which the
learned Tribunal could not reject for want of further proof. Its written
submissions also invoke Section 58 of the Indian Evidence Act, 1872
in support of the proposition that admitted facts need not be proved.
14. Particular emphasis is placed on the TDS records. Viceroy
contends that these records reflect transactions aggregating to
₹98,83,94,246/-, against which Smiths paid only ₹89,70,10,723/-. On
that unadjusted computation, it asserts that, even apart from the full
invoice claim, a balance of ₹9,13,83,523/- stood acknowledged. It
submits that the learned Tribunal failed to consider the combined
effect of the tax records, invoice approvals and assurances of payment.
15. Viceroy further contends that the Award is internally
inconsistent. It argues that, having rejected Smiths‟ claim of
overcharging, the Tribunal could not reject the counterclaim founded
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NARAYAN
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on the same invoices and supporting evidence. Smiths‟ decision not to
challenge the rejection of its claims is also relied upon. In its written
submissions, Viceroy additionally asserts that Smiths had undertaken
to clear its dues in the winding-up proceedings and subsequently
invoked arbitration to avoid payment.
16. The refusal to receive the correspondence relating to the
amended Annexure II is challenged as a denial of a fair opportunity to
present the counterclaim. Viceroy submits that the correspondence
explained the agreed rates and formed part of the transaction
embodied in the amendment. It contrasts its exclusion with the
direction permitting Smiths to obtain further accounting and
employment records during the cross-examination of Viceroy‟s
witness. The Appellant also maintains that the evidence supporting its
counterclaims for solicitation, reputational injury and continued
services after expiry was not properly considered.
17. Per contra, learned Counsel appearing for Smiths support the
Impugned Judgment and submits that the Appeal seeks a fresh
assessment of the merits beyond the scope of Section 37. It denies that
the communications or the evidence contain an admission of the debt
claimed. According to Smiths, the learned Tribunal considered the
emails, invoices and TDS material and gave reasons for concluding
that Viceroy had not established its entitlement. It maintains that
deduction of tax at source does not establish an admitted debt and that
rejection of its own claims did not relieve Viceroy of the burden of
proving the counterclaims.
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NARAYAN
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18. On the procedural objection, Smiths‟ position is that the
correspondence was tendered after its evidence had concluded,
although it had neither been referred to in Viceroy‟s pleadings nor put
to Smiths‟ witness. It relies upon the admission of the amended
Annexure II and the learned Tribunal‟s findings on contractual
approval and the amount payable. Smiths also opposes partial setting
aside, contending that the claims and counterclaims are intertwined
and were presented through a common statement of defence and
counterclaim. It also relies upon Gayatri Balasamy v. ISG Novasoft
4
Technologies Ltd . . As regards the remaining counterclaims, it
supports their rejection and relies, in relation to post-expiry services,
upon the recording that the challenge was not argued before the
learned Single Judge.
ANALYSIS AND FINDINGS
19. The jurisdiction under Section 37 is confined by the grounds of
interference available under Section 34 of the Act. The appellate Court
examines whether the learned Single Judge correctly applied those
grounds. It does not undertake a fresh determination of the claims. The
principles governing deference to a possible contractual interpretation
and the limits of review have recently been reiterated in Prakash
5
Atlanta (JV) v. National Highways Authority of India .
20. In Ssangyong Engineering and Construction Co. Ltd. v.
6
National Highways Authority of India , the Supreme Court explained
4
(2025) 7 SCC 1
5
2026 INSC 76
6
(2019) 15 SCC 131
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that patent illegality must go to the root of the matter. Erroneous
application of law or disagreement with the appreciation of evidence
does not suffice. A finding based on no evidence, or reached by
ignoring vital evidence, may warrant interference. Construction of the
contract remains primarily for the Tribunal, provided its interpretation
is a possible one.
21. The procedural objection must be examined under Section
34(2)(a)(iii), read with Sections 18 and 19 of the Act. The learned
Tribunal‟s discretion over procedure and the admissibility, relevance,
materiality and weight of evidence must operate consistently with
equal treatment and the full opportunity to present the case secured by
Section 18. The inquiry turns on the fairness of the proceedings in
their actual context, including the opportunity previously available to
the party seeking to introduce further evidence.
22. In Fortuna Skill Management Pvt. Ltd. v. Jaina Marketing
7
and Associates , this Court explained that the opportunity secured by
Section 18 is subject to considerations of reasonableness and fairness.
A Court reviewing an evidentiary ruling must assess whether it falls
within the range available to a reasonable and fair-minded tribunal in
those circumstances. The significance of the proposed evidence and
the stage at which it was offered must both be considered. A
preference for a different procedural course does not establish a
ground for setting aside the award.
23. A related limit governs the reasons on which an award may be
7
FAO(OS)(COMM.) 123/2024, decided on 03.07.2024
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sustained. In OPG Power Generation Pvt. Ltd. v. Enexio Power
8
Cooling Solutions India Pvt. Ltd. , the Supreme Court distinguished
reasons that are discernible but inadequately expressed from reasons
that are absent, unintelligible or perverse. The Court may explain an
underlying reason apparent from the award read with the documents
recited or relied upon in it, but it cannot supply a different basis for the
decision. These principles govern this Court‟s examination of the
invoice counterclaim.
24. Viceroy‟s submission that the rejection of Smiths‟ claim
necessarily entailed the allowance of its counterclaim proceeds on a
flawed premise. Smiths sought recovery of amounts allegedly
overpaid. Viceroy sought payment of an outstanding contractual
balance. Each party was required to establish the entitlement asserted
by it. The use of common documents did not make the two claims
reciprocal outcomes of a single inquiry, such that failure of one
necessarily established the other.
25. The learned Tribunal‟s reasons for rejecting Smiths‟
overcharging claim bear this out. In Paragraphs 71 and 72 of the
Award, it held that Smiths had not established the quantum of
overcharging or identified the invoices against which excess payments
were recoverable. In Paragraphs 73-75 of the Award, it rejected
reliance on ANI‟s lower rates as a benchmark, since the Agreement
contained no provision permitting such a comparison. Those findings
defeated Smiths‟ claim for recovery, but they did not determine what
8
2024 INSC 711
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amount, if any, remained payable to Viceroy.
26. Paragraph 74 of the Award recognised that the parties‟ agreed
contractual terms could not be displaced by another service provider‟s
rates. It did not hold that the amendment dated 01.04.2011 satisfied
the requirements for revision of the service fee, or that every invoice
represented an amount payable under it. The finality of the rejection of
Smiths‟ claims does not enlarge those findings.
EXCLUSION OF CORRESPONDENCE
27. The procedural complaint relates to the contractual basis of
Viceroy‟s invoice counterclaim. Viceroy asserted that an amendment
to Annexure II replaced the original method of charging with agreed
rates for categories of personnel. By its Order dated 09.01.2018, the
learned Tribunal received the amended instrument but excluded the
correspondence tendered with it. The Award subsequently held that
the approvals required by Clause 4.3 had not been proved. Viceroy
submits that the excluded emails were evidence of those very
approvals.
28. The learned Tribunal possessed the power to receive the
correspondence. Section 19 entrusts it with the conduct of proceedings
and the determination of evidentiary questions, subject to Part I of the
Act. Section 23(2) contemplates submission or identification of
supporting documents, while Section 23(3) permits a claim or defence
to be amended or supplemented unless the Tribunal considers that
course inappropriate having regard to the delay. An earlier omission
did not create an absolute bar to later production. The request required
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consideration in its actual procedural setting, including the continued
examination of Viceroy‟s witness.
29. The question under Section 34(2)(a)(iii) is whether the refusal
deprived Viceroy of a fair opportunity to present its case. The inquiry
turns on the opportunity previously afforded, the purpose of the
proposed evidence, the explanation for its timing and the effect of
receiving it on the opposing party. A party‟s failure to use an adequate
opportunity cannot, without more, be attributed to the Tribunal.
Equally, an earlier opportunity does not place every subsequent
restriction beyond review. Section 37 requires examination of whether
the statutory ground is established. If it is, an additional finding of
patent illegality is unnecessary. The availability of a preferable
evidentiary course does not establish that ground.
30. Viceroy‟s application said that questions regarding the basis of
its invoices prompted its witness to verify earlier records, in which she
came across the correspondence relating to the rates and the
amendment. It also said that Smiths had not previously raised the
particular objection to the charging basis and that the emails and
amendment formed part of the same transaction. The contention that
no explanation was offered cannot be accepted.
31. A participant in an earlier correspondence may retrieve or
recollect it when a particular question arises during cross-examination.
That explanation accounts for what prompted the search. It does not
explain why the amendment and the correspondence asserting its
approval could not have been presented earlier.
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32. The significance of that omission lies in the nature of Viceroy‟s
demand. The counterclaim sought payment of fees asserted to be
contractually due. The terms authorising those fees were part of its
affirmative case. Paragraph 65 of the Award acknowledges that
Smiths had not specifically pleaded overcharging through breach of
the original invoicing formula. Viceroy was entitled to rely on that
limitation when answering Smiths‟ recovery claim. It did not follow
that the contractual foundation of Viceroy‟s own demand could not be
tested.
33. Viceroy had pleaded agreed fees and relied upon acknowledged
invoices, payments and approvals by Smiths‟ officials. Its statement of
defence and counterclaim did not, however, identify the instrument
dated 01.04.2011 or allege that it replaced the original charging
method with category rates. The approval correspondence had also not
been presented before Smiths completed its evidence.
34. The cross-examination of 06.11.2017 brought that omission into
focus. Questions 119-126 addressed particular charges included in the
counterclaim. Viceroy‟s witness referred to subsequent
correspondence and a communication issued in 2011 when asked to
identify their contractual basis. She accepted that the material was not
on the Tribunal‟s record. The fact that these questions prompted
production supports Viceroy‟s account of the sequence. It does not
establish that Smiths introduced a transaction unrelated to the
counterclaim or that Viceroy had previously been prevented from
identifying the terms on which its invoices depended.
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35. Viceroy forwarded the documents under a list dated 10.11.2017.
During the further cross-examination, the learned Tribunal recorded,
after question 160, that they had been filed without being called for or
permission having been sought. Viceroy thereafter applied for leave
by its application dated 15.11.2017. The initial production did not
secure admission in evidence. However, once leave was sought, the
application required consideration on its merits.
36. Viceroy‟s evidence remained open. The application was
therefore materially different from an attempt to introduce evidence
after the entire reference had reached final arguments. Smiths could
have questioned Viceroy‟s witness about the correspondence. The
learned Tribunal could also have allowed time for a response and, if
necessary, further evidence. These were available procedural means of
receiving material bearing directly upon the dispute.
37. The continuing cross-examination addressed only part of the
procedural concern. Testing an opponent‟s witness differs from
preparing and presenting one‟s own evidence on a disclosed case. The
email dated 18.08.2011 addressed the administrative fee and
conditions governing the revised arrangement, required invoices to
follow the amendment, and stated: “Ratish, JK and I approve paying
the outstanding amounts as per these agreed rates”. Its bearing on
approval was substantial. Its reception could also require Smiths to
address the participants‟ capacities, the terms approved and the period
covered.
38. Smiths‟ participation in those historical communications did not
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establish notice, before it completed its evidence, that Viceroy would
rely on them to satisfy Clause 4.3. Failure to put the emails to Smiths‟
witness did not make them intrinsically inadmissible, but was relevant
to Smiths‟ opportunity to meet the case.
39. A further opportunity for Smiths could have addressed that
concern. Its availability weighs in favour of admission, but does not
create an entitlement to every additional opportunity sought. The
learned Tribunal was entitled to assess whether the explanation
justified introducing the specific contractual case at that stage, after
the opponent‟s evidence, notwithstanding the earlier opportunity to
disclose it.
40. The Order dated 09.01.2018 recorded Viceroy‟s explanation,
Smiths‟ objection and the earlier omission. The learned Tribunal
reasoned that the emails had neither been filed nor referred to in the
statement of defence and had not been put to Smiths‟ witness. Read in
its procedural setting, the refusal to admit the emails rested on the late
presentation of the case founded on those communications after
Smiths had given its evidence.
41. The admission of the amendment is the strongest circumstance
supporting Viceroy‟s objection. The instrument and the
correspondence were tendered together, faced the same objection of
earlier omission, and bore upon the effectiveness of the same
transaction. The Order would have been clearer had it explained their
different treatment. The question nevertheless remains whether that
limited permission, viewed with the earlier opportunity and the stage
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reached, made refusal of the remaining documents incompatible with
a fair hearing.
42. Paragraph 65 of the Award gives two reasons for rejecting
Viceroy‟s complaint that it lacked an opportunity to meet the charging
case. It first relies on Viceroy‟s pleading that its fees conformed to the
Agreement and its consequent opportunity to establish that assertion.
It then refers, as an additional reason, to admission of the amendment.
The latter reason does not resolve the present complaint on its own.
The former does not disappear because the Tribunal received one of
the late documents.
43. The refusal remained within the learned Tribunal‟s procedural
discretion. Viceroy sought to introduce the instrument and approval
correspondence after Smiths had completed its evidence, without
identifying an earlier impediment to presenting that case. The Tribunal
could limit further production on those grounds, notwithstanding the
relevance of the correspondence and the continuing cross-
examination. Admission of the instrument did not itself require
admission of every connected document.
44. The financial and employment records were ordered to be
produced after Smiths had pursued interrogatories, a notice for
production and questions seeking documents held by Viceroy. The
Order recorded earlier refusals based on privilege and required
production to complete the pending cross-examination. Viceroy‟s
application sought to introduce contractual material not previously
disclosed as the basis of the amendment case. Their substantive
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connection did not require identical treatment of the two requests.
45. This conclusion accords with the contextual approach in
Fortuna Skill Management (supra) . The request in that case followed
closure of evidence and completion of the claimant‟s arguments, and
the Court identified additional considerations bearing upon its bona
fides . Those circumstances cannot be attributed to Viceroy. The
relevant principle is that the fairness of an evidentiary ruling must be
examined in the circumstances in which it was made, with due regard
to the Tribunal‟s procedural responsibility.
46. The importance of receiving material evidence is illustrated by
9
Sugandhi v. P. Rajkumar . There, the plaintiff had already concluded
his evidence when documents traced later were offered during the
defendants‟ evidence. The Supreme Court found the explanation
cogent and the documents necessary for a just decision, and allowed
their production under Order VIII Rule 1A(3) of the Code of Civil
Procedure, 1908. Closure of the opposing party‟s evidence cannot
therefore be treated as an automatic bar to additional evidence. The
present inquiry remains whether, having regard to the earlier
opportunity, the explanation for the timing and the circumstances of
the proposed production, the refusal deprived Viceroy of the
opportunity protected by Section 34(2)(a)(iii).
47. Taken together, the circumstances do not establish that ground.
The ongoing cross-examination, the relevance of the correspondence
9
(2020) 10 SCC 706
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and admission of the instrument supplied substantial reasons for
granting leave. They did not make refusal incompatible with the fair
opportunity already afforded.
48. This Court‟s conclusion is confined to procedural fairness. The
excluded correspondence could bear materially upon approval.
Rejecting the procedural challenge does not require a finding that it
was irrelevant, legally incapable of proving approval, or necessarily
insufficient on its merits.
49. Smiths nevertheless relies on Paragraph 107 of the Award as an
independent reason for rejecting the counterclaim even if the
amendment were accepted. Paragraph 107 of the Award reads:
“107. Even otherwise, it was incumbent on the Respondent to
demonstrate and prove the said amount as payable by the Claimant, which
it has been unable to do. The Respondent has not filed any documentation,
or led any evidence to demonstrate that the aforesaid allegedly unbilled
amount was as per even Amended Annexure II. The ledger of Accounts of
the Respondent filed at pp.71-107 of its List of Documents with index
dated 16.11.2016, is admittedly an internal document of the Respondent,
and since payment was made by the Claimant on a running account basis,
the same also does not indicate which invoices remained due and payable.
Furthermore, admittedly the invoices raised by the Respondent and filed
by the Claimant in its List of Documents, do not provide the heads of the
charges on the basis of which the Respondent has invoiced the Claimant.
In the absence of any documentation to prove the same, given that the
Claimant had strongly disputed (which I agreed with) the requirement to
pay any charges beyond those specified in Annexure II, I find myself
unable to agree with the Respondent that the said amount was payable. I
have already expressed my views regarding the lack of any evidentiary
value of the so-called 2011 Annexure II, amended in 2011.”
50. Paragraph 107 opens with the words „Even otherwise‟ and finds
the amount unproved, referring to Viceroy‟s internal ledger, running-
account payments and invoice particulars. Its concluding sentences
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return to the original Annexure II and the rejection of the amendment.
It is unnecessary to decide the weight of the ledger or the adequacy of
the invoice particulars. Equally, the Court cannot supply a
reconciliation or an accounting defect which the learned Tribunal did
not identify. OPG Power Generation (supra) requires attention to the
reason actually discernible in the Award.
51. This Court will assume in Viceroy‟s favour that Paragraph 107
supplies no independent answer and examine whether the other
reasons sustain rejection.
52. The procedural ground has failed for the reasons already given.
The separate challenge to the admitted evidentiary record remains to
be considered. Paragraph 105 of the Award contains the finding on the
prescribed approvals, while Paragraph 98 assesses further entitlement
under the original charging arrangement. Neither can be sustained by
assuming the correctness of the other. The contractual finding must
first withstand the challenge before the cost comparison can answer
the demand.
COUNTERCLAIM FOR OUTSTANDING PAYMENTS
53. Viceroy contends that rejection of the invoice counterclaim
cannot be reconciled with Smiths‟ pleadings, the answers of its
witness, the correspondence and the tax records. This Court must
identify the facts said to be admitted and the material said to have
been disregarded, and examine their bearing on the Award‟s reasons.
54. The nature of each alleged admission must first be identified. A
clear admission in a pleading may dispense with proof of the admitted
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fact. An acknowledgment in correspondence is evidence whose scope
and effect must be assessed with the rest of the record. The distinction
10
is explained in Nagindas Ramdas v. Dalpatram Ichharam . Section
19 of the Act does not bind an arbitral tribunal to the Evidence Act,
but procedural flexibility does not justify treating a clearly admitted
fact as unproved without addressing the admission. Equally, the fact
admitted must be identified accurately. An admission that invoices
were raised or remained unpaid does not necessarily resolve a dispute
about the contractual basis on which they were raised.
55. Smiths‟ reply acknowledges deployment of Viceroy‟s
employees, monthly invoices and payments on a running account. It
then uses the words “It was specifically admitted” in a sentence stating
that ₹14,25,52,798/- billed up to 31.07.2015 had not been paid despite
assurances and remained “outstanding and payable”. The following
sentence explicitly denies liability to pay that amount. The
surrounding passage also asserts that Viceroy‟s breaches disentitled it
to further payment. The Court cannot replace “admitted” with
“denied” on an assumed drafting error. Nor can it extract that sentence
without considering the express denial which immediately follows it.
56. Read as a whole, the passage does not unequivocally abandon
Smiths‟ defence to contractual recovery. For the limited purpose of
testing the other reasons in the Award, this Court will nevertheless
assume that the balance asserted on Viceroy‟s invoicing basis
remained unpaid, subject to the additional credit which Viceroy
subsequently conceded. This is an assumption in Viceroy‟s favour, not
10
(1974) 1 SCC 242.
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a finding that its account or the debt stood proved. The inquiry is
whether the existing contractual reasons sustain rejection even on that
footing.
57. For the purpose of examining this challenge, this Court accepts
Viceroy‟s reading of the answers to questions 50, 51 and 54 as
acknowledging approval of the invoices for payment. Their
relationship to the later answers in questions 115-119 need not be
resolved, nor does this Court determine the witness‟s credibility.
58. The emails dated 16.07.2015, 25.07.2015 and 03.08.2015 are
relied upon for the same purpose. They concern collection of dues,
Smiths‟ cash position and arrangements or assurances to honour
outstanding payments. Their significance is not exhausted by the
absence of a quantified closing balance in each communication. An
acknowledgment may be read with the documents identifying the
liability to which it relates. Paragraph 57 of the Award considered the
communications of 16.07.2015 and 03.08.2015 when rejecting the
plea of estoppel. That rejection permitted the invoices to be disputed,
but it did not establish the merits of the defence.
59. Viceroy further relied upon deductions of ₹9,88,39,433/- and
the corresponding transaction figure of ₹98,83,94,246/- reflected in
Form 26AS. Paragraphs 99-102 of the Award considered that
material. The records may corroborate recognition of the invoiced
transactions without conclusively establishing contractual
recoverability or the balance after all credits. That corroborative
significance is consistent with the favourable assumption adopted
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above. It does not dispense with examination of the contractual basis
of recovery.
60. The Company Court proceedings provide no independent
admission of liability. The order dated 06.05.2019 records no
undertaking to pay the quantified counterclaim, while the earlier
dismissal of the winding-up petition proceeded upon the Award itself
and therefore cannot independently validate it.
61. The question is whether the finding that the original charging
arrangement continued to govern survives the challenge. Approval of
invoices and approval of a revision to the fee arrangement are distinct
matters, although evidence of the former may bear upon the latter.
This Court cannot assume that the original arrangement governed in
order to treat evidence of its replacement as immaterial.
62. The words “TO BE AGREED LATER” in the original
Annexure II do not stand alone. The schedule contains heads for
salary and benefits, the cost of the employee and an administration fee
of 16%, although the corresponding amounts are blank. Annexure III
contains a sample billing format based on the employee‟s monthly
costs. The Tribunal‟s reading of those provisions as prescribing a
method of charging, while leaving figures to be supplied, was
reasonably available on the contractual text. The absence of completed
amounts did not compel it to find that the agreement contained no
charging method.
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63. The instrument dated 01.04.2011 purported to replace Annexure
II with category rates and different administrative fees. Clause 4(a) of
the instrument preserved the Agreement‟s other terms except as
explicitly modified. The learned Tribunal‟s application of Clause 4.3
to that instrument cannot be regarded as an interpretation unavailable
on the contract. Viceroy‟s description of the instrument as completing
an earlier blank schedule does not eliminate the changes which it
introduced.
64. Clause 4.3 permitted revision of the service fee provided that
the revised fee had been agreed and approved by the Company‟s Vice
President Service, Finance Director and Managing Director. Clause 19
required an amendment to be in writing and executed by both parties.
The two provisions address different requirements. The relevant
question was whether the prescribed approvals had been proved,
whatever permissible form the evidence of approval took.
65. In Paragraph 105 of the Award, the learned Tribunal noted the
Managing Director‟s signature and found that approval by the Vice
President Service and Finance Director had not been established. It
also relied upon Clause 17, which required a waiver to be in writing,
and found that no such waiver had been pleaded or proved. The
finding must therefore be understood as a failure to establish the
additional approvals or a waiver of their requirement. It cannot be
sustained by enlarging Clause 4.3 into a requirement that all three
officers countersign the same instrument.
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66. The excluded 2011 correspondence was relevant to the
procedural challenge. Having rejected that challenge, this Court must
now test the contractual finding on the admitted evidence. It cannot
use the excluded emails as substantive proof that the prescribed
approvals were obtained.
67. The case founded on admissions must first be distinguished
from the case founded on an inference from conduct. On the
favourable reading adopted above, the invoices were approved for
payment, payments were made and outstanding dues were
acknowledged. The pleaded admission, the answers relied upon and
the payment correspondence does not establish that the amended
schedule received both additional approvals identified in Paragraph
105 of the Award. The approval finding therefore does not contradict
an express admission of compliance with Clause 4.3. Whether the
conduct could establish that compliance by inference requires separate
consideration.
68. Viceroy also advanced an argument from conduct. Part
VIII(B)(xi) of its arbitral written submissions states that, since the
rates had not been agreed in the original Annexure II, the agreement
on rates had to be established from the parties‟ dealings. It relied upon
the August 2013 correspondence to show invoice approval by foreign
directors. That argument was before the learned Tribunal and cannot
be dismissed as a new contention. Its premise must nevertheless be
tested against the Tribunal‟s permissible reading of the original
schedule as prescribing a method of charging, and of Clause 4.3 as
governing its revision. The question is whether the treatment of
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conduct in Paragraph 106 vitiates the findings on compliance with that
requirement or its waiver.
69. Paragraph 106 states too broadly that subsequent conduct may
be considered only where contractual terms are ambiguous. MMTC
11
Ltd. v. Vedanta Ltd . recognises the relevance of conduct and
correspondence in construing a contract. Here, there is the further
distinction between using conduct to interpret the original
arrangement and using it to prove approval of a later arrangement. The
absence of ambiguity does not answer the latter contention. An
erroneous refusal to consider vital evidence for that purpose could
undermine Paragraph 105. Such evidence need not conclusively
establish Viceroy‟s case in order to be vital.
70. Approval may be inferred from conduct and need not take the
form of signatures on the revised schedule. The difficulty here is that
Viceroy‟s argument moves from acceptance of invoices by Smiths‟
officials to enforceability of the revised rates, without addressing the
further approval requirement identified in Paragraph 105. The August
2013 correspondence extends the evidence of invoice approval beyond
the local Managing Directors. Viceroy has not, however, identified
how that correspondence, the later payment assurances and the tax
records evidence assent to the revised fee by both the Vice President
Service and Finance Director, even after taking the invoice approvals,
payments and acknowledgments together in Viceroy‟s favour.
11
(2019) 4 SCC 163
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71. In Paragraph 105, the learned Tribunal separately considered
whether the additional approval requirement had been waived.
Viceroy identifies no written waiver under Clause 17. That does not
answer whether the approvals were actually obtained. On the learned
Tribunal‟s interpretation, however, acceptance and payment of
invoices did not dispense with the requirement of approval.
72. Paragraph 105 therefore survives the challenge. This Court has
examined the asserted admissions and the argument from conduct
against the approval and waiver requirements which the learned
Tribunal applied. It has not supplied a fresh assessment of whether the
prescribed approvals were given, or treated circumstantial proof as
inadmissible. The proposition in Paragraph 106 is disapproved to the
extent stated above, but the challenge has not shown that its
overstatement vitiates the findings on the prescribed approvals and
waiver.
73. Paragraph 98 of the Award must therefore be examined under
the original charging method. It compared Viceroy‟s recorded
expenditure with payments received and found no further entitlement
proved. The learned Single Judge considered that reasoning in
Paragraphs 22-25 of the Impugned Judgment.
74. Paragraph 98 recorded Viceroy‟s salary, benefit and wage-
register figures and ultimately used the larger amount of
approximately ₹20.53 crore in the Staff Salary Statements, including
other reimbursements, against approximately ₹89 crore received. Its
assessment was therefore not confined to basic salary or dependent
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upon excluding every disputed reimbursement.
75. Ground I(E) of the Section 34 Petition correctly points out that
salary was not the only contractual component. The original Annexure
II also addressed the administrative fee, disbursement fees excluding
T&E, bonus and separate T&E reimbursement. Paragraph 98 of the
Award recognised the administrative fee and service tax in stating the
formula, and its discussion extended beyond basic salary to benefits
and other reimbursements, including repair, travel, boarding and
lodging expenses.
76. Paragraph 98 of the Award does not set out a complete
reconciliation, and the percentage additions mentioned at its
commencement are not separately worked out in the concluding
comparison. Ground I(E) does not identify, by reference to the
accounting evidence, any particular cost or reimbursement omitted
from the larger total considered by the Tribunal. Nor does the
challenge demonstrate how the absence of a separate calculation of the
contractual additions undermines the Tribunal‟s conclusion. The
category rates in the invoices reflect the different contractual basis
advanced by Viceroy, which the Tribunal rejected for the reasons
already examined. On the challenge as advanced, the absence of a
separately worked computation does not establish patent illegality
going to the root of the determination.
77. The use of Viceroy‟s financial records for that purpose was
consistent with the order directing their production. Paragraph 71 of
the Award records that production had been allowed to answer the
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counterclaim, and Paragraph 97 identifies the same defensive purpose.
As explained earlier, rejection of Smiths‟ claim to recover an
identified overpayment did not establish Viceroy‟s entitlement to
further payment. It also did not prevent the Tribunal from considering
those records for the purpose for which they had been required.
78. This does not revive Smiths‟ rejected recovery claim or use it as
a set-off against an otherwise established debt. The finding rests on
Viceroy‟s failure to establish that any further sum was payable after
crediting receipts under the applicable fee arrangement. The learned
Single Judge read Paragraph 98 of the Award with the reasons for
rejecting Smiths‟ claim and found no contradiction between the two
results. On the contractual basis which has survived the present
challenge, no error in that conclusion requiring interference under
Section 34 has been demonstrated.
79. The challenge to rejection of the invoice counterclaim
accordingly fails. Paragraph 105 of the Award, read with the
assessment under the original charging arrangement in Paragraph 98,
supplies the existing reasons sustaining rejection. Since those reasons
survive the challenge, it is unnecessary to decide whether Paragraph
107 independently defeats the demand. The learned Single Judge‟s
refusal to set aside this part of the Award is sustained for these
reasons.
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COUNTERCLAIM FOR BREACH OF NON-SOLICITATION
80. The counterclaim for ₹17,40,00,000/- arises from the alleged
breach of Clause 13.3 of the Outsourcing Agreement. That clause
prohibited Smiths from soliciting or employing Viceroy‟s employees,
directly or indirectly, during the subsistence of the Agreement, unless
otherwise mutually agreed. Viceroy‟s case was that ANI Instruments
Private Limited had solicited its employees with the knowledge and
active involvement of Smiths, thereby disabling Viceroy from
servicing other contracts and pursuing further business.
81. The learned Tribunal in Paragraph 111 of the Award rejected
the non-solicitation counterclaim for failure to establish recruitment
during the contractual period, Smiths‟ involvement, and the damages
claimed by reference to actual loss.
82. The first of these considerations requires closer examination.
The dates on which the employees reported the alleged approaches
cannot be treated as the dates on which those approaches occurred.
Arun Chauhan‟s email dated 23.08.2015 referred to calls commencing
on 21.07.2015. Jaspal Singh‟s email dated 22.08.2015 similarly
referred to an approach on 21.07.2015. Prashant Chaudhary‟s
communication dated 25.08.2015 referred to calls commencing on
20.07.2015. The documents also included an offer from ANI dated
08.08.2015, stipulating a joining date on or before 10.08.2015. These
communications could not all be characterised as relating to
recruitment initiated after the Agreement expired on 11.08.2015.
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83. The observation in Paragraph 36 of the Impugned Judgment
that the emails pertained to offers made after the contractual
relationship ended is, therefore, too broad. So is the statement that the
communications contained nothing suggesting Smiths‟ involvement.
Arun Chauhan‟s email attributed to ANI‟s representatives a statement
that Smiths‟ officials had asked ANI to recruit Viceroy‟s experienced
employees. That attribution formed part of the material relied upon by
Viceroy. Whether it sufficiently proved Smiths‟ participation was a
distinct question. Likewise, ANI‟s existence since 1984 answered the
allegation that it had been created for the purpose alleged. It did not
answer whether ANI subsequently acted in concert with Smiths.
84. These qualifications do not, however, dispose of the learned
Tribunal‟s separate finding on damages. Paragraph 111 records that
the sum of ₹17,40,00,000/- had not been quantified by reference to the
loss caused. Viceroy asserted that the recruitment paralysed its
operations and deprived it of business opportunities. The challenge
does not identify material establishing the resulting loss, or a basis for
assessing it, which the Tribunal overlooked. The recruitment
communications bear upon the alleged breach. They do not establish
the financial consequences asserted in support of this counterclaim.
85. Business loss need not always admit of exact calculation. The
question before this Court is whether the challenge demonstrates an
infirmity in the learned Tribunal‟s finding that the damages sought
had no established foundation in actual loss. It does not.
Consequently, even taking the recruitment material at its highest for
the purpose of examining the challenge, the separate basis on which
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the monetary counterclaim was rejected remains undisturbed. The
inaccuracies identified above do not warrant setting aside that
rejection.
REMAINING COUNTERCLAIMS
86. The counterclaim for ₹10,00,000/- towards loss of reputation
requires a similar distinction between the presentation of a claim and
its proof. Paragraph 109 of the Award states that Viceroy neither
advanced arguments nor demonstrated reputational loss attributable to
Smiths. Viceroy‟s written submissions before the Tribunal did contain
a section addressing this counterclaim.
87. That section, however, reiterated the allegation that Smiths‟
conduct at the expiry of the Agreement injured Viceroy‟s reputation
with airport operators, the Government and the industry. The learned
Tribunal separately found that the alleged injury had not been
demonstrated. The learned Single Judge addressed that failure in
Paragraph 38 of the Impugned Judgment. Viceroy has not identified
evidence of reputational injury, attributable to Smiths, which renders
that finding untenable. Describing ₹10,00,000/- as a nominal amount
in comparison with the asserted injury does not supply the missing
factual foundation. The rejection of this counterclaim accordingly
calls for no interference.
88. The remaining counterclaim is for ₹63,02,752/- towards
services allegedly continued at the airports after expiry of the
Agreement. In Paragraph 44 of the Award, the learned Tribunal held
that this claim fell outside the scope of the reference. It referred to the
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absence of an agreed extension under Clause 2.2, Smiths‟ notice of
non-renewal, and Viceroy‟s pleaded case that it continued the services
at the airports‟ request. This was a ruling on the maintainability of the
counterclaim in the reference, rather than an adjudication of the
amount recoverable for those services.
89. Viceroy challenged that ruling in its Petition under Section 34.
Paragraph 39 of the Impugned Judgment records that arguments were
not advanced on this counterclaim. The present appeal does not
challenge the correctness of that record. Ground H in the
memorandum of appeal generally questions the rejection of the
remaining counterclaims, and Paragraph 11 adopts the submissions
made below. Neither addresses the recorded failure to argue this
challenge before the learned Single Judge or explains why it should
now be entertained.
12
90. In Daman Singh v. State of Punjab , the Supreme Court
distinguished grounds contained in a pleading from grounds pursued
in argument, and explained that a party cannot complain of the Court‟s
failure to consider a ground which was not argued.
91. Applying that principle, the general reiteration of the
counterclaim in this appeal does not provide a basis for reopening the
challenge which, according to the unchallenged record of the
proceedings, was not argued below. We therefore decline to entertain
a contention which had not been argued and pressed before the Court
12
(1985) 2 SCC 670
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exercising jurisdiction under Section 34.
92. It is consequently unnecessary to determine in this appeal
whether the learned Tribunal correctly construed the scope of the
arbitration agreement in relation to the post-expiry services. We
clarify, however, that our decision should not be understood as
endorsing a broad proposition that the expiry of a substantive contract
necessarily excludes arbitration over every dispute arising from
subsequent services. We decline to reopen it in the appeal as presented
and express no fresh view on the merits of the underlying monetary
demand.
CONCLUSION
93. For these reasons, the grounds urged do not establish a basis for
setting aside the Award. The Impugned Judgment refusing
interference with the Award is accordingly sustained for the reasons
stated above. In view of that conclusion, the objection regarding
severability and partial setting aside does not arise.
94. The present Appeal, along with the pending applications, is
accordingly dismissed.
ANIL KSHETARPAL, J.
SHAIL JAIN, J.
NOVEMBER 04, 2026
sp/ad
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