The court affirmed that the scope of interference under Section 34 of the Arbitration and Conciliation Act is limited, and an arbitral award can only be set aside on specific grounds, not on broader interpretations.

JUDGMENT :

UJJAL BHUYAN, J.

This appeal by special leave is directed against the judgment and order dated 08.08.2019 passed by the High Court of Judicature at Madras in O.S.A. No. 157 of 2019.

2. Be it stated that by the judgment and order dated 08.08.2019 (‘impugned judgment’ hereinafter), Division Bench of the High Court of Judicature at Madras (briefly ‘the High Court’ hereinafter) allowed the appeal of the respondent filed under Section 37 of the Arbitration and Conciliation Act, 1996 (briefly ‘the 1996 Act’ hereinafter) by setting aside the judgment and order dated 02.01.2019 passed by the learned Single Judge of the High Court in O.P. No. 433 of 2010 which was filed by the appellant under Section 34 of the 1996 Act setting aside the arbitral award dated 05.01.2010.

3. Relevant facts may be briefly noted.

4. Software Technology Parks of India i.e. the respondent following a tender process had awarded a contract to M/s Consolidated Construction Consortium Ltd. i.e. the appellant for construction of office building, incubation centre etc. of the respondent. As per the Letter of Intent dated 09.03.2006 issued by the respondent, the total cost of the project was Rs. 16,48,69,970.00. The scheduled date for completion of construction was 15.01.2007. Appellant could complete the construction only by 30.11.2007. There was thus a delay of about 10 months.

4.1. Appellant after handing over the project site to the respondent claimed a sum of Rs. 1,40,12,786.00 including retention money and interest thereon. However, because of the delay in completion, respondent levied and deducted liquidated damages to the tune of Rs. 82,43,499.00 by invoking clause 26 of the contract agreement entered into between the parties. Respondent also made other deductions. After such deductions, balance amount of Rs. 3,70,992.00 was paid to the appellant by the respondent.

4.2. Aggrieved appellant invoked the arbitration clause of the contract agreement and initiated arbitral proceedings challenging deduction of liquidated damages by the respondent and also lodged other claims. Respondent also lodged counter claims.

4.3. Learned arbitrator vide the award dated 10.05.2010 upheld the deduction of liquidated damages by the respondent. That apart, learned arbitrator dismissed the claims and counter claims of the parties. Learned arbitrator held that he did not find any of the claims or counter claims to have been established and, therefore, declared the award as nil against all the claims and counter claims.

5. Appellant filed a petition before the High Court under Section 34 of the 1996 Act to set aside the award which was registered as Original Petition (O.P.) No. 433 of 2010. A learned Single Judge of the High Court vide the judgment and order dated 02.01.2019 held that there was extension of the work period. Appellant had completed the work during the extended period of time. Therefore, deduction of liquidated damages was not justified. Consequently, the arbitral award dated 10.05.2010 was set aside.

6. Aggrieved by the aforesaid judgment and order dated 02.01.2019, respondent preferred an appeal before the High Court under Section 37 of the 1996 Act which was registered as O.S.A. No. 157 of 2019. A Division Bench of the High Court vide the impugned judgment and order dated 08.08.2019 opined that learned Single Judge was not justified in setting aside the award. The award was set aside purely on assumptions and surmises. Grounds on which the award was set aside were beyond the scope of Section 34 of the 1996 Act. Accordingly, the judgment and order of the learned Single Judge dated 02.01.2019 was set aside, thereby allowing the appeal of the respondent.

7. Aggrieved thereby appellant had filed the related special leave petition on which notice was issued on 05.02.2021. When the matter was heard on 23.04.2024, leave was granted.

8. Learned counsel for the appellant submits that Division Bench of the High Court was not at all justified in exercising power under Section