Termination does not bar payment for work completed within the extended period absent a refund clause.

The parties entered into an agreement dated 20 November 2006 under which MSV International Inc. was engaged to provide consultancy services for preparation of a Master Plan, feasibility study, RFP and pilot-plan implementation for dairy-farm waste management in Delhi.

Although the work was initially to be completed within nine months, the completion period was extended up to 31 January 2011. The respondent submitted its final report on 28 January 2011. The appellant thereafter terminated the agreement and blacklisted the respondent on 29 April 2011, alleging delay and contending that the project had been scrapped.

In arbitration, the arbitrator found that the work had been completed within the extended period and awarded the respondent the balance amount due, while rejecting the appellant’s claim that amounts already paid should be refunded. The respondent’s counterclaim was held time-barred. The appellant’s challenge under Section 34 of the Arbitration and Conciliation Act, 1996 was dismissed by the learned Single Judge, leading to the present appeal under Section 37.

1. Whether the arbitral award directing payment of the balance amount for work completed within the extended contractual period warranted interference under Section 37 of the Arbitration and Conciliation Act, 1996.

2. Whether termination of the agreement and the alleged scrapping of the project disentitled the respondent from receiving payment for the work performed or required refund of amounts already paid.

3. Whether the appellant established that the final report was delayed, deficient, or had caused compensable loss to the appellant.

The Court applied Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, under which judicial interference with an arbitral award—particularly in an appeal under Section 37—is limited and is not warranted merely because another view is possible, where the arbitrator has adopted a plausible and evidence-based view.

The Court also applied the contractual terms, particularly Clause 6.4(d) of the General Conditions of Contract, which provided that the final report and services would be deemed completed and accepted, and the report deemed satisfactory, ninety days after receipt unless the employer issued a written notice specifying deficiencies within that period.

A party seeking refund or damages must establish a contractual or legal basis for such relief and prove the alleged loss; termination by itself does not extinguish the right to payment for work completed or create an automatic right to restitution.

The Court found that the arbitrator had reasonably concluded that the final report, dated 27 January 2011 and submitted with the covering letter dated 28 January 2011, was received by the appellant. The appellant had not specifically denied receipt in its affidavit of admission and denial and had not questioned the respondent’s witness on the submission of the report.

The appellant also failed to produce evidence that the project was scrapped because of any delay attributable to the respondent or that it had suffered actual loss.

Its position was further undermined by the fact that, although it claimed the project had been scrapped on 26 August 2010, it extended the completion period until 31 January 2011 by its letter dated 5 January 2011.

No contractual clause authorising refund of payments merely because the project was scrapped was identified.

Since the finding that the work was completed within the extended period remained unchallenged, the basis for awarding the balance payment remained intact.

The termination had been considered in the arbitral award and by the learned Single Judge, but it did not materially affect the respondent’s entitlement to payment for work completed.

Further, the appellant had not raised any specific objection to the final report within the period contemplated by Clause 6.4(d).

The arbitral finding that the respondent completed the work within the extended period and was entitled to the balance payment was upheld.

Termination of the agreement and the alleged scrapping of the project did not justify withholding or recovering payment for work completed, particularly in the absence of contractual authority or proof of loss.

The appeal was dismissed, the pending applications were disposed of, and the money deposited pursuant to the order dated 18 July 2018 was directed to be released to the respondent.