An arbitral award granting relief beyond submission and relying on untested material is partly set aside.

NHAI awarded the respondent consultancy services for the design, construction, supervision, and operation and maintenance of a cable-stayed bridge over the Chambal River at Kota under a contract dated 7 December 2006.

During construction, the partly completed bridge suffered extensive damage in an accident on 24 December 2009.

NHAI constituted a Committee of Experts, issued a show-cause notice to the respondent, and its Executive Committee proposed imposing conditions, including freezing price escalation and limiting the final consultancy cost to the original contract value.

The respondent did not accept the proposed supplementary agreement, but NHAI continued to avail its services and extended the construction and O&M periods.

NHAI made only part-payments and, by communication dated 21 April 2020, refused to release the balance payments unless the supplementary agreement was executed.

The respondent invoked arbitration on 26 January 2021.

The majority of the Arbitral Tribunal allowed Claim No. 1 for construction-period payments and partly allowed Claim No. 2 for O&M charges, including amounts up to 19 November 2023, although the claim had been made only up to September 2021.

NHAI challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996.

1. Whether the Tribunal’s failure to determine responsibility for the bridge accident rendered the award unsustainable?

2. Whether the Tribunal exceeded the scope of the arbitration by awarding O&M charges for services to be rendered after the date of the award and beyond the period claimed?

3. Whether the Tribunal violated Section 18 of the Arbitration and Conciliation Act, 1996 by relying on financial information supplied by the respondent without providing NHAI an opportunity to respond?

4. Whether the respondent’s claims were barred by limitation?

5. Whether the impugned award could be severed, so that the valid portions relating to Claim No. 1 would remain undisturbed?

The Court applied Section 34(2)(a)(iii) of the Arbitration and Conciliation Act, 1996, under which an award may be set aside where a party was unable to present its case, including where the tribunal relies on material obtained behind that party’s back; Section 34(2)(a)(iv), which permits setting aside of an award dealing with matters beyond the scope of the submission to arbitration, subject to severability; and Section 18, which requires equality of treatment and a full opportunity to present one’s case.

Since the arbitration was an international commercial arbitration, Section 34(2A), concerning patent illegality, was held inapplicable.

Relying on Ssangyong Engineering & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131, the Court reiterated the limited scope of judicial review under Section 34 and the rule against reliance on material not disclosed to the affected party.

The Court also relied on Gayatri Balasamy v. ISG Novasoft Technologies Ltd., (2025) 7 SCC 1, for the principle that invalid and valid portions of an arbitral award may be severed where they are separable.

The Court held that the issue of responsibility for the bridge accident had not been carried to its logical conclusion by NHAI: although a Committee of Experts was constituted and a show-cause notice was issued, NHAI neither terminated the respondent’s contract nor imposed the proposed penalty, and instead continued to obtain the respondent’s services under the original contractual arrangement.

Accordingly, the Tribunal was entitled to adjudicate the respondent’s payment claims under the original contract.

However, the Tribunal exceeded its jurisdiction by awarding O&M charges up to 19 November 2023, including amounts for services to be rendered after the award dated 4 May 2023 and beyond the period covered by the claim.

That portion fell within Section 34(2)(a)(iv).

The Tribunal also relied on the respondent’s emailed computation of the financial implications concerning the allegedly unqualified O&M expert without giving NHAI an opportunity to rebut it, violating Section 18 and attracting Section 34(2)(a)(iii).

The limitation objection failed because the operative dispute arose when NHAI finally rejected the respondent’s payment claim on 21 April 2020, not when the Executive Committee passed its conditional resolution in 2012 or when partial payment was made in 2016; the arbitration invoked on 26 January 2021 was therefore timely.

Since Claim Nos. 1 and 2 were not inextricably connected, the defective portion concerning Claim No. 2 could be severed without disturbing Claim No. 1.

The Court upheld the Tribunal’s adjudication of Claim No. 1 and rejected NHAI’s objections concerning non-determination of responsibility and limitation.

However, the award relating to Claim No. 2 was set aside because it granted relief beyond the scope of the claim and relied on undisclosed material in violation of Section 18.

The Court treated Claim No. 2 as severable from Claim No. 1 and set aside that portion of the award alone; the pending application was disposed of.