Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(Del) 35

IN THE HIGH COURT OF DELHI AT NEW DELHI
Jasmeet Singh, J
National Highways Authority Of India – Appellant
Versus
Hindustan Construction Co Ltd – Respondent
O.M.P. 1556/2014

Advocates:
For the Appellants/Petitioners: A P Singh, Naman, Saraswat, Varnit Vashishth
For the Respondents: Anirudh Bakhru, Rishi Agrawala, Shruti Arora, Vasundhara Bakhru, Tarini Khurana

Under Section 34, courts cannot act as appellate bodies. Judicial interference is restricted to cases of patent illegality or policy violation. If a tribunal adopts a plausible interpretation of contractual provisions regarding work measurement and interest, such findings are binding and beyond judicial review.

Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 34 - Powers of Court in challenge to Arbitral Award - Scope of judicial review is limited - Court cannot act as an appellate authority to re-appreciate evidence or substitute findings of the tribunal - Scope of interference is confined to grounds such as patent illegality or violation of fundamental policy - If two views are possible, the view of the tribunal must prevail (Paras 20, 21).

(B) Contractual Interpretation - Composite items of work - Where the tribunal interprets contractual clauses based on technical expert input and arrives at a plausible conclusion regarding the composite measurement of work, the court should not replace such interpretation - Rates for finished works include all constituent parts in the absence of contrary specifications (Paras 28, 30).

(C) Interest - Award of compensatory interest - Clauses providing for interest on unpaid sums extend to amounts legally determined as due by the tribunal - Discretion in awarding interest based on contractual interpretation, if plausible, does not warrant interference (Paras 38, 39).

Facts of the case:
A dispute arose regarding the measurement and payment methodology for the construction of an embankment involving coal combustion waste material. The contract provided specific rates for internal soil work and integrated embankment work. The contractor contended that the entire embankment cross-section constituted a composite item of work, while the project authority argued that certain layers should be measured and paid separately under different categories.

Findings of Court:
The court determined that the tribunal’s interpretation of the contract as defining a composite item of work was supported by technical specifications and established precedents. The court affirmed that the tribunal's methodology for measuring the embankment as a whole was a plausible approach, derived from expert understanding, and thus not susceptible to interference.

Issues: Whether the tribunal exceeded its jurisdiction in defining the scope of work for items and whether the award of compound interest was legally sustainable under the contract terms.

Ratio Decidendi: The court maintained that it lacks authority to review findings of fact or substitute its own interpretation for the tribunal's, provided the view taken is plausible. Methodology for measurement must be derived from contractual specifications for finished works, and interpretations derived from technical expertise are not perverse provided they strictly adhere to the agreement's logic.

Result: Petition dismissed.

Table of Content
1. procedural history and factual background of the dispute. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 22)
2. competing claims on contractual rates and measurement methods. (Para 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19)
3. limited scope of judicial review under section 34. (Para 20 , 21)
4. interpretation of composite work items for fly ash embankments. (Para 23 , 24 , 25 , 26 , 27 , 28)
5. compliance with binding precedent regarding composite measurement. (Para 29 , 30 , 31)
6. validity of tribunal jurisdiction and interest award methodology. (Para 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39)
7. final adjudication dismissing the petition. (Para 40 , 41)

JUDGMENT

1. This is a petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 (“1996 Act”) seeking to challenge the Arbitral Award dated 22.07.2014 passed by the learned Arbitral Tribunal (“Tribunal”) in the matter of “Hindustan Construction Co. Ltd. v. M/s. National Highways Authority of India‖.

2. The petitioner (respondent before the Tribunal) is a statutory body constituted under Section 3 of the National Highways Authority of India Act, 1998 , for the purpose of developing, maintaining, and managing the National Highways entrusted to it by the Central Government. The respondent (claimant before the Tribunal) is an entity engaged in the business of providing various services on contractual basis.

3. The petitioner vide Agreement dated 21.10.2005, awarded the respondent the contract package titled “4-Laning from Km. 92.00 to Km. 135.00 of the Lucknow to Ayodhya Section of NH-28 in Uttar Pradesh Contract Package LMNHP EX-II (WB)-3” for a total contract value of Rs. 249,95,04,940/-. The Conditions of Particular Application (“CoPA”) has Arbitration clause being Clause No. 67.3.

4. Since there were disputes between the parties, disputes were referred to Dispute Resolution Board (“DRB”). The respondent was not satisfied with the resolution by the DRB therefore the disputes were referred to the Tribunal for the following claims:

―Claim No.1: Fixing of appropriate rates for the new/varied works of construction of embankment at Faizabad bypass with earth in place fly ash embankment as provided for in the contract.

Claim No.2: Payment for construction of embankment with fly ash as per additional Technical Specification Clause A-8.

Claim No. 3: Reimbursement of additional cost incurred by the Contractor on account of subsequent legislation in respect of imposition of levy of Cess in the State of UP w.e.f. 04.02.2009.

Claim No. 4: Withholding the part payment due to Price Adjustment on foreign currency portion from interim payment certificate.‖

5. The Tribunal vide Award dated 22.07.2014 allowed all the claims of the respondent. Aggrieved thereby, the petitioner filed a petition under Section 34 of the 1996 Act challenging the said Award.

6. This Court vide order dated 20.04.2017 in National Highway Authority of India v. Hindustan Construction Co. Ltd.¹OMP Nos. 1165/2014; 1556/2014 & OMP (Comm.) No. 156/2016., rejected the objections raised by the petitioner and upheld the Award. Aggrieved by the said order, the petitioner preferred an Appeal under Section 37 of the 1996 Act before the Division Bench of this Court. The Division Bench, vide judgment dated 23.03.2018 in National Highway Authority of India v. Hindustan Construction Co. Ltd.²FAO (OS) 192/2017. upheld Claim Nos. 1, 3, and 4, and remanded the matter to the Single Bench for fresh consideration only with respect to Claim No. 2. The said finding of the Division bench is reproduced below:

―10.6 Accordingly, we are constrained to set aside the finding of the learned Single Judge Claim No.2 of the respondent and remand the matter to the learned Single Judge for reconsideration thereof.‖

7. Accordingly, the present petition survives only qua Claim No. 2, and the parties have addressed their submissions limited to the said claim.

SUBMISSIONS ON BEHALF OF PETITIONER

8. Mr. Singh, learned counsel fo

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2026 Supreme(Online)(Del) 35

IN THE HIGH COURT OF DELHI AT NEW DELHIJasmeet Singh, JNational Highways Authority Of India – AppellantVersusHindustan Construction Co Ltd – RespondentO.M.P. 1556/2014

Cases Referred (1)

IN THE HIGH COURT OF DELHI AT NEW DELHI
Jasmeet Singh, J
National Highways Authority Of India – Appellant
Versus
Hindustan Construction Co Ltd – Respondent
O.M.P. 1556/2014