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2026 Supreme(Online)(Del) 6290
IN THE HIGH COURT OF DELHI AT NEW DELHI
Avneesh Jhingan, J
DELHI JAL BOARD – Appellant
Versus
M/S METRRO WASTE HANDLING PRIVATE LIMITED – Respondent
O.M.P. (COMM)-277/2025
For the Appellants/Petitioners: Jayant Mehta, Tushar Sannu, Malvi Balyan, Fajallu Rehman, Pallav Arora
For the Respondents: Akshay Makhija, Tarang Gupta, Shreya Sharma
Under Sections 73 and 74 of the Indian Contract Act, damages must be proved by actual loss; gross turnover without deducting costs constitutes windfall and cannot be awarded.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 34 - Indian Contract Act, 1872 - Sections 73 and 74 - Scope of interference under Section 34 is narrow; court does not sit in appeal over arbitral award - Interpretation of contract clauses by arbitrator cannot be interfered with unless perverse or contrary to terms - For claiming damages under Sections 73 and 74, actual loss or damage must be proved; genuine pre-estimate of loss applicable only where proof is difficult or impossible - Gross turnover without deducting operating expenses does not represent actual loss and leads to windfall - Award of damages must be reasonable and not disingenuous. (Paras 14, 20, 21, 22, 23)
(B) Contract - Nature - Item rate vs lump sum - Mentioning total contract value and minimum hiring hours does not convert item rate contract into lump sum - Internal departmental communications support plausible interpretation - Possibility of another view not ground for setting aside award. (Paras 8-12)
Facts of the case:
The petitioner (Delhi Jal Board) awarded a contract to the respondent for hiring and O&M of five sewer cleaning machines. The work order dated 06.05.2013 and subsequent extension dated 30.10.2017 stated total contract cost of Rs.59,64,84,000/-, completion period of seven years, and item rate basis. Clause II of Special Conditions of Contract (SCC) assured minimum hiring of 200 hours per month per machine. The respondent completed the assured turnover in four years and seven months; petitioner closed the contract on exhaustion of total cost. Respondent invoked arbitration claiming damages for premature termination. Arbitral tribunal held contract was item rate for seven years, termination illegal, and awarded damages calculated on minimum assured hours for remaining period, plus other claims. Petitioner challenged under Section 34.
Findings of Court:
The High Court upheld the tribunal’s finding that the contract was an item rate contract and termination illegal. However, the award of damages for suspension period (Nov 2022 to Feb 2023) and for remaining tenure (approx 26 months) was set aside because the respondent did not prove actual loss; the gross turnover awarded constituted windfall without deducting operational expenses. Other claims - escalation charges, additional labour deployment, interest on delayed payments, and costs - were upheld as being within contractual terms and supported by evidence.
Issues: The main issues were (i) whether the contract was item rate for seven years or limited to total value; (ii) whether termination was valid; (iii) whether respondent was entitled to damages for suspension and remaining period; (iv) whether other claims (additional labour, interest, escalation, costs) deserved interference under Section 34.
Ratio Decidendi: The court held that under Sections 73 and 74 of the Indian Contract Act, a claimant must prove actual loss or damage. Where it is possible to prove such loss, it is not dispensed with. The contract’s minimum hiring clause was an assurance of business volume, not a pre-estimate of liquidated damages. Awarding gross turnover for unexpired period without deducting expenses puts the respondent in a better position than if the contract had been performed, amounting to a windfall. Therefore, such award is patently illegal and against public policy. (Paras 21-23) Result : Petition partly allowed. The award of damages for the period of suspension and for the remaining tenure of the contract along with interest thereon is set aside. All other claims upheld. Pending application disposed of.
* IN THE HIGH COURTOF DELHI AT NEW DELHI % Judgment reserved on: 02.04.2026 Judgment pronounced on: 20.04.2026 + O.M.P. (COMM) 277/2025 & I.A. 17526/2025 DELHI JAL BOARD .....Petitioner Through: Mr. Jayant Mehta, Sr. Adv.
with Mr. Tushar Sannu, Mr. Malvi Balyan, Mr. Fajallu Rehman & Mr. Pallav Arora, Advs. versus M/S METRRO WASTE HANDLING PRIVATE LIMITED .....Respondent Through: Mr. Akshay Makhija, Sr. Adv.
with Mr. Tarang Gupta & Ms.
Shreya Sharma, Advs.
CORAM:
HON'BLE MR. JUSTICE AVNEESH JHINGAN
J U D G M E N T
1. The petition under section 34 of the Arbitration and Conciliation Act, 1996 (for short ‗the Act‘) is filed challenging the arbitral award dated 08.04.2025.
Brief Facts
2. The brief facts are that on 26.04.2012, the petitioner/Delhi Jal Board (for short ‗DJB‘) issued a Notice Inviting Tender (for short ‗NIT‘) for hiring and O&M of jetting-cum-suction-cum-recycling sewer cleaning machines. The respondent, M/S Metrro Waste Handling Private Limited (for short ‗MWHPL‘) along with M/s City Signature Not Veri O fie Lifeline Travels Private Limited entered into a Joint Venture Agreement dated 30.10.2012 and bidded as a consortium. DJB on 11.04.2013 issued a Letter of Intent (for short ‗LOI‘). On 27.05.2013, the project was awarded for five machines as per the terms and conditions of the Work Order dated 06.05.2013, at the rate of Rs.7101/- per hour plus taxes and for a period of seven years with additional six months for supply of machines. The cost of the work was Rs.59,64,84,000/-.
2.1 On 24.08.2017, MWHPL proposed deployment of five additional machines. DJB issued a LOI dated 09.10.2017 and MWHPL on 12.10.2017 gave a Letter of Acceptance (for short ‗LOA‘). Work Order dated 30.10.2017 was issued and a contract dated 17.11.2017 was executed, adopting the earlier contractual terms. 2.2 MWHPL on 11.05.2022 requested the DJB for enhancement of the budget as the amount stipulated was likely to be exhausted by August-September, 2022. Vide communication dated 01.11.2022, DJB advised MWHPL that the agreed contract price was fully utilized and work be carried out only within the cap. MWHPL suspended operations on 02.11.2022 and requested that the pending dues be cleared.
2.3 On 23.01.2023, MWHPL aggrieved of delay in revision of the allocated budget filed writ petition (W.P. (C) No. 985 of 2023). On 20.02.2023, DJB closed the contract stating that the scope of work was completed and requested for bill. The writ petition was dismissed as withdrawn and the parties were relegated to the Dispute Adjudication Board for amicable resolution. MWHPL issued a notice Signature Not Veri O fie dated 24.02.2023 invoking arbitration. Petition filed by MWHPL under Section 9 of the Act was disposed of on 29.03.2023. The conciliation proceedings failed and were closed on 20.04.2023. On reference, the main issue before the arbitrator was whether the contract was an item rate contract operative for a period of seven years or it was till the exhaustion of the contract price of Rs.59,64,84,000. In view of fact that the tenure of contract had expired during pendency of arbitration proceedings, the declaratory reliefs (Claims No. I – VI (ii)) seeking declaration against DJB were not pressed by MWHPL. DJB aggrieved of the award dated 08.04.2025 allowing the following claims of MWHPL filed the present petition:
Signature Not Veri O fie Submissions of the Petitioner
3. Learned senior counsel for DJB contended that the contract documents, work order, LOI and related records reflect the total contract value of Rs.59,64,84,000/- which was to be paid over seven years and the expression ‗minimum‘ was not in relation to the contract value in the documents. The contention is that clause II of the Special Conditions of the Contract (for short ‗SCC‘) stipulates that the vehicles shall be available for at least twenty five days a month and will be hired for a minimum two hundred hours per month but the condition was not absolute and in case of deployment of the machines for les
