Clause 5.2 hindrance extensions count when determining entitlement to an early-completion bonus.

The dispute arose from a 30 July 2018 agreement for construction of 76 multi-storeyed flats at Dr. B.D. Marg, New Delhi.

The parties agreed that the arbitral claims and counterclaims would be decided on the pleadings and documents, without oral evidence.

The contractor was awarded ₹7,46,53,850 as an early-completion bonus under Claim 1.

The Tribunal included 138 days of hindrance allowed under clause 5.2 when determining entitlement to the bonus, in addition to other justified extensions.

The Union’s Section 34 petition challenged Claims 1, 4 and 7.

The Court also found that, under Claim 4, the Tribunal had awarded interest on Claim 2 despite the contractor not having sought such interest.

Whether hindrance days allowed under clause 5.2 could be counted in determining the contractor’s entitlement to an early-completion bonus under clause 2A, despite clause 2A expressly referring to extensions under clauses 5.3, 12 and 15.

Whether the Tribunal’s award of interest on Claim 2, when no such interest had been sought, was beyond the scope of the arbitration and could be set aside as a severable part of the award.

Whether the direction to reimburse GST, where payable on the awarded amount, warranted interference under Section 34.

Section 34 of the Arbitration and Conciliation Act, 1996 permits only limited judicial review of an arbitral award; the court is not an appellate forum and may not reappraise the merits merely because another interpretation is possible.

Contractual interpretation lies primarily within the arbitral tribunal’s domain, subject to the award not being wholly unreasonable or contrary to the agreement (Ssangyong Engineering & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131).

Under clause 2A of the agreement, a bonus is payable for completion ahead of the stipulated or justified extended completion date; clause 5.2 bars claims for damages arising from specified delays but does not expressly bar a bonus.

Under the majority decision in Gayatri Balasamy v. ISG Novasoft Technologies Ltd., 2025 SCC OnLine SC 986, a court’s limited power to modify an award includes severing an invalid portion where it is separable.

The Court also noted that GST treatment may differ according to the nature of each component of an award, including whether it represents consideration for a supply or compensation for breach or loss.

The Court held that the Tribunal’s interpretation of clause 2A was a permissible construction of the contract.

Although clause 2A specifically referred to extensions under clauses 5.3, 12 and 15, clause 5.2 did not prohibit a bonus; it only precluded damages for the specified delays.

The Tribunal could therefore take the 138 days allowed under clause 5.2 into account in assessing whether the contractor completed the work ahead of the applicable completion date, and the Court found no ground under Section 34 to disturb that interpretation.

By contrast, interest on Claim 2 had not been claimed, so the Tribunal exceeded the scope of the proceedings in awarding it.

Since that interest component was separable, it could be set aside without disturbing the rest of the award.

The GST direction required reimbursement only where GST was actually payable and did not warrant interference.

The Court declined to interfere with the bonus awarded under Claim 1 or the GST direction under Claim 7.

It set aside only the award of interest on Claim 2, as that relief had not been sought and was severable from the remainder of the award.

Pending applications were also disposed of.