Contractual interpretation of "existing ducts" in turnkey projects falls within arbitrator's domain; plausible views preclude Section 34 interference.

The Petitioner (Sterlite) was a successful bidder for a turnkey project involving the laying of Optical Fiber Cable (OFC) for a defense network

During the pre-bid stage, Clarification No. 160 was issued, stating that 25% of the quoted service rate would be paid if cables were laid through "existing ducts"

Following an Advance Purchase Order (APO), a Final Purchase Order (PO) was issued on 24.07.2014, containing Clause 28(iii), which mirrored this 25% payment condition

The dispute arose regarding 547 kms of cables laid in "Multiple Duct Cases" (MDC), where the Petitioner initialy accepted 25% payment but later (in 2018) claimed 100% service cost, arguing that the ducts they installed themselves did not constitute "existing ducts" under Clause 77 of the tender

The Arbitrator rejected the claim, prompting this Section 34 petition

1. Whether the Arbitrator's interpretation of "existing ducts" to include ducts laid by the Petitioner in the same project for subsequent links was perverse or a plausible view

2. Whether the Arbitrator went beyond the contract terms by applying Clarification No. 160 and Clause 28(iii) of the PO

The court applied Section 34 of the Arbitration and Conciliation Act, 1996, which limits judicial interference to grounds of patent illegality or conflict with the public policy of India

It relied on the principle that the interpretation of a contract is primarily the domain of the Arbitrator as established in Associate Builders v. DDA and Parsa Kente Collieries Ltd. v. Rajasthan Rajya Vidyut Utpadan Nigam Limited

The court further referenced Sutlej Construction Ltd. v. Union of India and SSangyong Engineering & Construction Co. Ltd. v. NHAI to affirm that even if a legal or factual reasoning is faulty, courts must refrain from interfering if the view taken is "plausible" and not one that "no fair-minded person" would take

The Court found that while the Petitioner argued Clause 77 (pertaining to government ducts) was inapplicable, the Arbitrator correctly treated Clarification No. 160 and Clause 28(iii) of the PO as independent, binding terms

The Court noted that Clause 28(iii) of the PO—unconditionally accepted by the Petitioner—explicitly limited payment to 25% for existing ducts without making it contingent on Clause 77

The Court observed that the Petitioner’s own conduct, including raising 25% invoices for several years and admitting that no retrenching was required for the additional cables, supported the Arbitrator’s factual finding

The Court reasoned that since the interpretation of "existing duct" as a duct already in the ground (even if placed by the Petitioner) was a reasonable construction of the technical workflow, it constituted a "plausible view"

The Court affirmed that Clause 28(iii) of the PO was fatal to the Petitioner's claim and that judicial interference under Section 34 is not permitted merely to substitute a possible alternate view for that of the Arbitrator