Delhi HC Upholds ₹17.47-Lakh Award Against BHEL, Finding No Proof Its Transport Contractor Subcontracted the Work

Bharat Heavy Electricals Ltd. (BHEL) engaged Sarr Freight Corporation to handle and transport boiler components from Sone Nagar Railway Siding to the Nabinagar project site under a Letter of Intent dated 11 September 2014.

A dispute arose over unpaid transportation charges. BHEL alleged that Sarr had subcontracted the work to Anuj Kumar in breach of Clause 7 of the contract’s General Terms and Conditions; it also asserted that payments made by the project owner, NPGC, to Anuj Kumar had been adjusted against BHEL’s running bills.

The arbitrator found that BHEL had not established subcontracting and awarded Sarr outstanding charges and other amounts, while rejecting BHEL’s counterclaims.

The Commercial Court dismissed BHEL’s objections under Section 34 of the Arbitration and Conciliation Act, 1996. BHEL appealed under Section 37, alleging that material evidence of subcontracting had been ignored.

Sections 34 and 37 of the Arbitration and Conciliation Act, 1996 confine judicial review of arbitral awards: a Section 37 court examines whether the Section 34 court acted within its statutory limits and cannot independently reassess the merits or reappreciate evidence.

A plausible interpretation of contractual terms or the evidence adopted by the arbitrator is not to be replaced merely because another view is possible; the arbitrator is the master of the quality and quantity of evidence.

Interference may be warranted where, among other things, the arbitrator exceeds the contract or makes an award in the absence of evidence.

The Court held that the arbitrator had considered the evidence and reached a reasoned factual finding that the arrangement was not subcontracting, but a limited engagement of Anuj Kumar to provide transportation vehicles.

The documents BHEL relied on did not establish that the entire awarded work had been subcontracted: Anuj Kumar’s letter sought payment for work; the emails concerned an unproduced work order, truck loading, and pending payments; NPGC’s letter addressed non-payment; and BHEL produced only the first page of the work order to Anuj Kumar.

As the arbitrator’s view was plausible and the Commercial Court had properly applied the limits of Section 34 review, Section 37 did not permit the Court to reassess the evidence or substitute a different view.

The appeal was dismissed, the arbitral award dated 28 October 2022 and the Commercial Court’s judgment dated 17 May 2025 were upheld, and the pending application was also dismissed.