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2026 Supreme(Online)(Del) 6510
IN THE HIGH COURT OF DELHI AT NEW DELHI
Harish Vaidyanathan Shankar, J
Emr Chowdary – Appellant
Versus
Engineering Projects India Limited – Respondent
O.M.P. (COMM) 400/2017 | O.M.P. (COMM) 408/2017
For the Appellants/Petitioners: Arjun Natarajan, Ayush Kumar, Nakul Gupta, Manish Paliwal, Megha Yadav, Srashti Sahu, Trupti Das
For the Respondents: Manish Paliwal, Megha Yadav, Srashti Sahu, Trupti Das, Arjun Natarajan, Ayush Kumar, Nakul Gupta
A court exercising jurisdiction under Section 34 of the Arbitration and Conciliation Act, 1996, cannot reappreciate evidence or act as an appellate body. Furthermore, Section 33 does not empower an arbitrator to review or adjudicate a claim on merits that was consciously left unadjudicated in the original award.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Sections 33, 34 - Challenge to Arbitral Award - Scope of interference - Court in exercise of jurisdiction under Section 34 of the Act does not sit in appeal over the award - Appellate jurisdiction is limited to grounds of patent illegality, perversity, or conflict with public policy of India - Interference is unwarranted unless decision is so irrational that no reasonable person would have arrived at it or finding is based on no evidence. (Paras 47, 48, 73, 74)
(B) Arbitration and Conciliation Act, 1996 - Section 33 - Correction of award - Arbitral Tribunal cannot review its own award on merits under the guise of an application for correction or interpretation - Non-adjudication of a claim by design in the original award precludes the arbitrator from subsequently deciding the same via modification. (Paras 91, 92, 93)
(C) Contract Law - Performance obligations - Back-to-back arrangement - Liability of a sub-contractor is co-extensive with that of the main contractor - Conditional awards reflecting such back-to-back arrangements are contractually consistent and equitable. (Paras 68, 69, 95)
Facts of the case:
Two petitions were filed challenging a common arbitral award concerning a construction project dispute. The proceedings involved multiple claims and counter-claims, including penalties on unexecuted work, payment for work done, and differential costs. The parties operated under a back-to-back contractual arrangement.
Findings of Court:
The court determined that the arbitration was based on a binding contractual framework. It upheld the arbitrator's original findings on the merits, noting that they were based on a thorough appreciation of evidence. The court confirmed that the arbitrator exceeded their jurisdiction under Section 33 by reviewing a claim that had been consciously left unadjudicated in the original award.
Issues: Whether a binding contract existed between the parties; whether the arbitrator exceeded their jurisdiction under Section 33 by reviewing the award after an initial refusal to adjudicate, and whether the court should interfere under the limited scope of Section 34.
Ratio Decidendi: The court affirmed that the jurisdiction under Section 34 is not an appeal, and findings of fact based on evidence remain final. It clarified that Section 33 does not permit the reversal or subsequent adjudication of a claim where the arbitrator had specifically refused to grant relief in the original award. It further ruled that liability in a back-to-back contractual arrangement may be legally made contingent on the realization of primary liability.
Result: One petition dismissed in its entirety; the second petition partly allowed, with the modification to the award regarding the contested counter-claim being set aside.
| Table of Content |
|---|
| 1. procedural scope and nature of section 34 arbitration petitions. (Para 1 , 21) |
| 2. factual history, tender processes, and arbitral award determination. (Para 3 , 20) |
| 3. parties' contentions regarding contract validity, targets, and tribunal jurisdiction. (Para 22 , 38) |
| 4. parameters of judicial review under section 34 of the a&c act. (Para 46 , 48) |
| 5. establishment of binding contractual framework via conduct and documents. (Para 49 , 57) |
| 6. adherence to contractual performance schedules and liability for non-performance. (Para 58 , 67) |
| 7. evidence-based adjudication of claims, counter-claims, and arbitration costs. (Para 68 , 87) |
| 8. limited scope of section 33 regarding modification of awards versus adjudication on merits. (Para 88 , 93) |
| 9. enforceability of back-to-back contractual liability and conditional awards. (Para 94 , 96) |
| 10. final order dismissing or partly allowing petitions based on section 34 findings. (Para 97 , 100) |
J U D G M E N T
1. The present Petitions, being OMP (COMM) 400/2017 and OMP (COMM) 408/2017, have been filed under Section 34 of the Arbitration and Conciliation Act, 19961A&C Act, challenging various findings and aspects of the common Arbitral Award dated 05.04.2017, as subsequently modified by the additional/modified award dated 19.08.2017. Since both petitions arise out of the same arbitral proceedings and involve interconnected as well as overlapping issues, they are being decided together by way of this common judgment.
2. At the outset, it is noted that both the present Petitions are in the nature of cross-objections under Section 34 of the A&C Act. It is also an undisputed position that Associated Construction Company is the sole proprietorship concern of EMR Chowdary. Accordingly, for the sake of clarity and consistency throughout this judgment, the expressions “Associated Construction Company” and “EMR Chowdary” are used interchangeably, wherever the context so requires.
BRIEF FACTS:
3. The dispute arises out of a contract pertaining to the execution of work for blast hole drilling, blasting, excavation, loading, transportation and dumping of overburden at the Gauthamkhani Open Cast Project of the Singareni Collieries Company Limited2SCCL in the State of Andhra Pradesh.
4. Engineering Projects (India) Limited3EPI, a public sector undertaking, intended to participate in the tender floated by the SCCL.
5. Associated Construction Company4ACC, through its proprietor EMR Chowdary, approached EPI, expressing its willingness to associate in the execution of the project and sought a copy of the Notice Inviting Tender5NIT.
6. Pursuant thereto, a pre-tender meeting was held between EPI and ACC on 03.10.2003, wherein the parties agreed upon various terms and conditions governing their relationship. It was, inter alia, agreed that ACC would undertake the complete execution of the work as per the tender conditions on a back-to-back basis, and that all terms applicable between SCCL and EPI would apply mutatis mutandis between EPI and ACC. These understandings between the parties were reduced to writing in the Minutes of Meeting dated 03.10.20036MoM.
7. ACC submitted its offer to EPI on 06.10.2003, based on which EPI submitted its bid to SCCL. The bid of EPI was accepted by SCCL on 14.01.2004, and EPI, in turn, informed ACC of the acceptance and directed it to commence the work in terms of the understanding between the parties.
8. The SCCL issued a formal work order dated 19.01.2004 in favour of EPI for the execution of approximately 285 Lakh Bench Cum Work7LBCM, followed by a target schedule dated 26.03.2004 prescribing the timelines for execution.
9. Thereafter, a Work Order dated 14.05.20048Work Order was issued by EPI in favour of ACC for execution of the entire scope of work on an item-rate basis, with an estimated value of approximately Rs. 99.21 Crores. The completion period for the said work was stipulated as 36 months in terms of the arrangement between EPI and SCCL, with the execution to
