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* IN THE HIGH COURT OF DELHI AT NEW DELHI

% Judgment pronounced on: 26.11.2025

+ O.M.P (COMM) 255/2020

BHARAT HEAVY ELECTRICAL LIMITED & ANR .....Petitioners

Through: Mr. Sanjeev Anand, Sr. Advocate along with Mr. Pallav Kumar, Mr. Dibya Nishant, Ms. Khushbu Dwivedi and Ms. Farheen Pensale, Advocates.

versus

M/S KONERU CONSTRUCTIONS .....Respondent

Through: Ms. Monika Arora (CGSC) along with Mr. Subrodeep Saha and Ms. Radhika Kurduka, Advocates.

Mr. Dharmesh Misra, Sr. Advocate along with Mr. Raghav Tiwari and Mr. Prateek Gupta, Advocates.

CORAM:

HON'BLE MR. JUSTICE SACHIN DATTA

JUDGMENT

FACTUAL BACKGROUND

1. The present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter ‘the A&C Act’) assails an arbitral award dated 21.01.2014 (hereinafter ‘the impugned arbitral award’) to the limited extent that the respondent has been held entitled to damages for loss suffered due to escalation of rates amounting to Rs. 72,90,719/- along with interest at the rate of 18 % per annum from the date of the award, if the award amount is not paid within a period of 8 weeks from the date of the award.

2. The arbitral proceedings took place in the backdrop of a tender issued by the petitioner in connection with the execution of the civil works for the Power Grid Corporation of India Ltd., 400/220KV substation at Arasur in Tamil Nadu as per approved specification, drawings and quality plan.

3. The petitioner accepted the offer of the respondent and awarded the work to the respondent vide letter of intent bearing No. TBSM/ARASUR/CIVIL/017/06 dated 17.10.2006. Thereafter, a detailed Work Order bearing No. TBSM/ARASUR/CIVIL/WO/06-07, dated 21.12.2006 came to be issued by the petitioner in favour of the respondent, in terms of which, the work was scheduled to be completed by 16.12.2007.

4. However, it is submitted that the work was eventually completed by the respondent on 30.06.2010, i.e. after a delay of more than 30 months from the scheduled date of completion. Even thereafter, no liquidated damages for delay in completion of the works were imposed by the petitioner on the respondent.

5. Upon the completion of the work, the respondent prepared and raised the final bill on 30.06.2010 for a sum of Rs. 58,93,917/- payable by the petitioner.

6. Thereafter the petitioner vide its letter dated 23.05.2011 informed the respondent that the final bill submitted by the respondent had been checked; and that certain compliances, namely, submission of the performance bank guarantee, sales tax assessment documents, and, upon freezing the net payable amount, a clear no dues certificate in full and final settlement of the work order, were required before the final payment could be released.

7. Following the petitioner’s letter dated 23.05.2011, the respondent, vide letters dated 12.08.2011 and 02.09.2011, informed the petitioner that the performance period of the contract had expired on 30.06.2011 and, therefore, the requirement of submitting a performance bank guarantee thereafter did not arise. The respondent further stated that the requisite Sales Tax Assessment documents had already been furnished. It is submitted that in both communications, the respondent asserted that its contractual obligations stood fully discharged and sought release of payment under the contract.

8. Vide letter dated 19.09.2011, the petitioner informed the respondent that the net amount payable under the contract came to Rs. 53,76,147/-. The respondent was further requested to submit a no dues certificate, in full and final settlement of the work order, mentioning the net amount payable.

9. Pursuant thereto, on 21.09.2011, a no dues certificate was prepared by the respondent and furnished to the petitioner, the same reads as under:-

“SPEED POST WITH A/D

To

Shri. B. RAMESH,

Manager (Finance),

M/s, BHEL,

Transmission Business Southern Sector,

Corporate Re