Delhi HC Upholds Set-Aside Of ₹9.28 Lakh Contractor Award After Arbitrator Examined Bill Deductions Not Pleaded In Dispute

IRCON engaged CRS to construct corporate office buildings in Saket, New Delhi.

After disputes arose, an arbitral award dated 27 February 2018 partly allowed two of CRS’s claims and awarded costs of ₹5.5 lakh.

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

The Single Judge set aside the award of ₹9,28,205 under Claim No. 1 and the costs.

CRS appealed under Section 37, arguing that the Single Judge exceeded the permissible scope of review.

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 stayed within its jurisdiction and cannot independently reassess the merits or interfere with a reasonable interpretation by the tribunal (*AC Chokshi Share Broker (P) Ltd. v. Jatin Pratap Desai*, as quoted at pp. 4–5; *SEPCO Electric Power Construction Corpn. v. GMR Kamalanga Energy Ltd.*, as quoted at p. 5).

Section 31A(3) requires the tribunal, when determining costs, to consider all relevant circumstances, including the parties’ conduct, partial success, frivolous claims or counterclaims causing delay, and settlement offers.

The Court distinguished *Konkan Railway Corporation Ltd. v. Chenab Bridge Project Undertaking*: the bar on substituting another possible view does not protect an award where the tribunal has acted beyond the dispute referred to it.

On Claim No. 1, the tribunal had found that CRS neither pleaded a challenge to the final bill or its deductions nor disputed the relevant defects, but nevertheless examined the deductions on their merits.

The High Court held that the tribunal thereby went beyond the dispute placed before it; CRS had to prove its own bill or specifically challenge the final bill or deductions.

As to costs, the tribunal reproduced Section 31A but did not address its statutory factors, including that CRS had only partly succeeded and that five of its claims were found frivolous.

The Single Judge therefore acted within Section 34 in setting aside the costs award.

The High Court dismissed CRS’s appeal, leaving in place the Single Judge’s decision setting aside the award on Claim No. 1 and the costs.