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2026 Supreme(Del) 855
IN THE HIGH COURT OF DELHI AT NEW DELHI
AVNEESH JHINGAN, J.
Sterlite Technologies Ltd. - Petitioner
Versus
Bharat Sanchar Nigam Limited - Respondent
O.M.P. (COMM) 261 of 2023
Decided On : 11-05-2026
For the Petitioner: Mr. Amit Dhingra, Mr. Rohit Mahajan & Mr. Siddharth Agrawal, Advs.
For the Respondent: Mr. Dinesh Agnani, Sr. Adv. with Ms. Leena Tuteja & Ms. Ishita Kadyan, Advs.
Courts exercising supervisory jurisdiction over arbitral awards cannot interfere with a plausible interpretation of contractual terms by the arbitrator. The judicial scope is narrow, limited to instances of manifest perversity, and does not permit the substitution of the court's view for that of the tribunal.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 34 - Scope of judicial interference - Limited scope of supervisory jurisdiction - If an arbitral tribunal’s view is found to be possible and plausible, it cannot be substituted merely because an alternate view is possible - Construction and interpretation of contract terms is primarily for the arbitral tribunal. (Paras 16.2, 16.4)
(B) Arbitral Award - Challenge on grounds of perversity - Unless an interpretation is found to be one that no fair-minded or reasonable person would arrive at, it cannot be interfered with - Courts do not sit in appeal to examine the correctness of findings on facts or law unless the award contravenes fundamental policy or is patently illegal. (Paras 16.3, 16.4)
Facts of the case:
The petitioner was awarded a contract for procurement, laying, and maintenance of cables for an infrastructure project. A dispute arose regarding the methodology for calculating payments for multiple cables laid through identical trenches. The petitioner claimed full service costs for all cables laid, whereas the respondent contended that the contract limited payment to a reduced percentage for subsequent cables laid in conduits previously installed in the same trench. An arbitrator was appointed, who rejected the claim for full service costs, leading the petitioner to challenge the award.
Findings of Court:
The court observed that the arbitrator had interpreted the contract by considering the project documents, pre-bid clarifications, and the subsequent conduct of the parties. The conclusion that laying additional cables through ducts already present within a common trench constituted utilization of existing conduits was deemed a plausible and reasonable interpretation of the contractual terms.
Issues: The main issue was whether the interpretation of the contractual clauses by the arbitrator was perverse, beyond the scope of the contract, or failed to account for the mutual understanding of the parties, thereby justifying judicial interference under the governing legislation.
Ratio Decidendi: The court maintained that construction of contractual terms lies within the domain of the arbitrator. As the arbitrator acted reasonably in evaluating evidence and interpreting the agreement without exceeding their authority or rewriting the contract, the court held that it could not interfere under its narrow supervisory jurisdiction. Plausible findings on facts and evidence are not subject to reappraisal by the court.
Result: Petition dismissed.
| Table of Content |
|---|
| 1. overview of tender process, dispute, and contract clauses. (Para 1 , 2 , 5) |
| 2. parties' contentions regarding contract interpretation and payment for mdc. (Para 3 , 4) |
| 3. arbitrator's interpretation of 'existing duct' and payment entitlement. (Para 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15) |
| 4. limited scope of judicial interference under section 34 of the act. (Para 17 , 18 , 19 , 20 , 21 , 22) |
| 5. final confirmation of the arbitral award validity. (Para 23 , 24) |
JUDGMENT :
AVNEESH JHINGAN, J.
1. This petition is filed under Section 34 of the Arbitration and Conciliation Act, 1996 (for short ‘the Act’) against the arbitral award dated 09.05.2023 (for brevity ‘award’).
2. The facts shorn of unnecessary detail are that the respondent invited tender for procurement, supply, trenching, laying, installation, testing and maintenance of optical fiber cable (OFC), PLB duct and accessories for construction of Exclusive Optical National Long Distance (NLD) backbone and optical access routes on turnkey basis for defence network. The Notice Inviting Tender (NIT) was for seven packages. The petitioner was successful bidder for package ‘A’ for the State of Jammu and Kashmir of the NTP region and consisted of laying 9,495 kms of cable. The work was to be executed link-wise with each link to be installed and commissioned separately.
2.1 The dispute in the present case is only with regard to 547 kms of cables laid in a common trench having multiple ducts (hereinafter referred to as ‘MDC’).
2.2 On a pre-bid query clarification no.160 was issued by the respondent stating that twenty-five percent of the quoted rate for services shall be paid for the cable laid through existing ducts with the permission of BSNL/PICG.
2.3 On 30.06.2014, an Advance Purchase Order (APO) was issued. Final Purchase Order (PO) dated 24.07.2014, was issued after unconditional acceptance by the petitioner on 01.07.2014. The petitioner by letter dated 10.01.2018, claimed hundred percent service cost for MDC. Vide communication dated 01.08.2018, the committee constituted by the respondent recommended that twenty five percent of the service cost portion is payable for MDC cases initially captured as per survey planned and approved.
2.4 On 16.06.2020, the petitioner issued notice under Section 21 of the Act. The arbitrator was appointed by this court. The arbitrator after considering the clauses of the contract and the clarification no. 160 rejected the claim of the petitioner for hundred percent service cost for MDC hence, the present petition.
3. Learned counsel for the petitioner argued that the arbitrator read sub-clause 28(iii) of the PO in isolation and not in conjunction with the other clauses and the conclusion arrived at is perverse. The submission is that the arbitrator erred in holding that pre-bid clarification no.160 was not related to clause 77 of the tender which was not applicable to the issued involved. The argument is that claim cannot be rejected by relying on the clarification. The arbitrator has gone beyond the clauses of the contract and has re-written the clauses, violating Section 28(3) of the Act.
3.1 It is emphasised that clause 77 of the tender is not applicable to MDC and pre-bid clarification no.160 was cut, copied and pasted in clause 27 of the APO and clause 28 of the PO and the award is passed without appreciating the facts on record. The grievance is that arbitrator adopted an interpretation contrary to the pleadings and arguments of the parties. The arbitrator failed to appreciate that the clarifications in the APO were duly mentioned in a bracket wherever required and against clause 27 (iii) of APO clarification no.160 was mentioned in the bracket. The contention is that the conclusion of the arbitrator that the clarification was not under clause 77 of the tender is not plausible.
3.2 It is contended that there is no specific pricing for MDC in the tender and the PO but it is common case of parties that payment for the cables laid was t
