The has set aside an of approximately ₹8.15 crore granted in favour of against , concluding that the arbitrator’s findings regarding and were fundamentally unsupported by the . A Division Bench comprising Justice Avneesh Jhingan and Justice Shail Jain observed that the arbitral tribunal had arrived at conclusions—specifically regarding an alleged of for tower structures—that ignored vital evidence and lacked any , thus amounting to under the .
The dispute stemmed from a purchase order issued by to Skipper Limited for the manufacture and supply of structural material intended for a project undertaken by the . The project encompassed a wide range of fabricated and hot-dip galvanised tower parts, stubs, and templates. Following the issuance of the purchase order in , operational difficulties arose concerning the timely submission and approval of technical drawings, leading to a breakdown in the contractual relationship.
The central point of contention in the proceedings revolved around whether had provided the necessary manufacturing clearances and whether it had waived the mandatory requirement for for the transmission towers. The arbitrator had initially found that the appellant, , had granted a for through its email correspondence, which in turn permitted and established a liability for the advance payments.
In its appeal before the High Court, the Division Bench conducted a meticulous examination of the communication trail between the parties. The Court noted that while had indeed granted a "go-ahead" for the of stubs and templates for five specific transmission line locations, this authorisation did not extend to the tower structures themselves. The judges emphasised that the arbitrator’s conclusion was not merely a matter of evidence appreciation but a significant of the correspondence provided in the records.
"The language of the email dated
is clear that a ‘go-ahead’ for
of stubs and templates for five locations was given and stamps and signatures were provided to start
of stubs and templates only and not of towers,"
the Court recorded in its judgment.
The Bench further highlighted that the arbitrator’s findings contained internal contradictions. The tribunal had correctly identified that could not logically commence without a , which in turn was predicated upon a successful and the receipt of an advance payment. However, by concluding that the for towers was waived despite evidence to the contrary—including emails from Skipper Limited indicating that the prototypes were still under production—the arbitrator adopted a view that the High Court deemed "irrational."
Examining The Limits Of
The respondent, Skipper Limited, had argued that the High Court, in its capacity as an appellate body under , should refrain from . Counsel for the respondent leaned on established precedents to suggest that a " " taken by an arbitrator, even if erroneous in its application of law, does not meet the threshold for . However, the Division Bench clarified that the scope of judicial review under the , while limited, specifically permits interference when an award is found to be perverse or based on " ."
The High Court drew support from the legal principle established by the , which dictates that an award becomes susceptible to being set aside if it ignores vital evidence or if no reasonable person would have arrived at the same conclusion based on the same facts. The Court noted: “A ‘finding’ based on at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside under the head of ‘ ’.”
The Bench pointed out that the arbitrator’s reliance on as proof that the goods were fully manufactured and ready for delivery was problematic. Specifically, the Court noted that the arbitrator failed to reconcile the respondent’s contradictory stances: in one instance, claiming the goods were custom-manufactured for and therefore required mitigation by selling as scrap, and in another, claiming the goods were interchangeable with other projects and thus required no further .
Procedural Context And Final Order
The legal battle had undergone an extensive procedural history, including a previous remand by a Division Bench and a subsequent intervention by the , which directed the Delhi High Court to adjudicate the appeal on its own merits rather than remanding the matter back to the Single Judge. This restoration ensured that the Division Bench focused squarely on the sustainability of the based on the material available at the time of the dispute.
Throughout the arbitration, the respondent had claimed a total of over ₹11.68 crore, covering the principal value of manufactured goods, interest, and losses stemming from the cancellation of the purchase order. The appellant, , had filed a substantial of over ₹26.45 crore, citing losses due to penalties charged by the JUSNL project owners and other operational damages caused by the failure to perform . The arbitrator had dismissed the while partially allowing the respondent's claim.
By setting aside the award, the High Court has effectively nullified the financial liability imposed upon . The Court’s decision underscores the necessity for arbitral tribunals to ensure that their findings are firmly rooted in the evidence presented during the proceedings, particularly when interpreting contractual waivers or "go-aheads" in complex industrial manufacturing agreements. The ruling serves as a reminder that while the judiciary is cautious about disturbing arbitral awards, it will not remain a silent spectator when the underlying logic of a decision contradicts the foundational facts of the agreement between the parties. The appeal filed by was thus allowed, with all pending applications disposed of accordingly.
contractual breach - arbitration award