Renewal coat thickness during O&M period governed by performance standards, not original construction specifications.

The Petitioner (NHAI) entered into a Concession Agreement (CA) with the Respondent on 05.09.2007 for the design and maintenance of a portion of NH-75 on a Build-Operate-Transfer Annuity basis

The CA mandated a "renewal coat" every five years

During the second renewal cycle (2020-2021), the Respondent proposed a 30mm thick Bituminous Concrete (BC) layer based on MoRTH specifications, as technical tests (BBD and Bump Integrator) showed no structural deficiency

NHAI insisted on a 40mm thick layer, citing Schedule B and IRC standards

The Respondent executed the 40mm layer under protest and filed for arbitration to claim the cost of the additional 10mm thickness and to challenge delay damages

The Majority Arbitral Award allowed the Respondent's claim for extra costs and reduced the delay damages; NHAI challenged this under Section 34 of the Arbitration and Conciliation Act, 1996

1. Whether the thickness of Bituminous Concrete required for the second renewal coat was mandated to be 40mm under the Concession Agreement.

2. Whether the Respondent was liable to pay damages for delay at the higher rate of 0.1% of the repair cost or a fixed sum of Rs. 10,000 per day under Clause 18.13.

3. Whether the Arbitral Award was vitiated by patent illegality or conflicted with the public policy of India.

The court applied Section 34 of the Arbitration and Conciliation Act, 1996, which limits judicial interference to cases of "patent illegality" or conflict with "public policy," as interpreted in OPG Power Generation (P) Ltd. v. Enexio Power Cooling Solutions and Ssangyong Engg. Construction Co. Ltd. v. NHAI

Under Section 74 of the Indian Contract Act, 1872, the court applied the principle that only "reasonable compensation" (not penalties) can be recovered for breach of contract

The court also relied on the principle that if an arbitrator’s interpretation is a "plausible view," the court shall not substitute its own opinion (Rashtriya Ispat Nigam Ltd. v. Dewan Chand Ram Saran)

The court found that the Majority Award correctly distinguished between "periodic maintenance" (Schedule L) and "structural strengthening" (Schedule B). Since technical reports (BBD test results 1.2mm) proved the road was structurally sound, the 40mm requirement in Schedule B—reserved for strengthening—did not apply

The Arbitrators correctly looked to MoRTH guidelines via Clause 1.6 of Schedule D, which permits 30mm for simple renewal

Regarding damages, the court upheld the Tribunal’s finding that Clause 18.13, which demanded the "higher of" two amounts (fixed sum vs. 0.1% cost), acted as a penalty rather than a genuine pre-estimate of loss

The court noted that because "renewal" is distinct from "repair" in the CA’s terminology, the 0.1% repair cost metric was inapplicable

The court concluded that the Tribunal's interpretation was a plausible one and did not meet the high threshold for "patent illegality"

The Petitioner’s claim for damages at 0.1% was a penalty, and the Tribunal rightly restricted damages to the reasonable liquidated sum of Rs. 10,000 per day

The court dismissed the Section 34 petition and upheld the Arbitral Award; all pending applications were dismissed without costs