REPORTABLE

2026 INSC 203 IN THE SUPREME COURT OF INDIA (CIVIL APPELLATE JURISDICTION) CIVIL APPEAL NO. _______ OF 2026 (@ SPECIAL LEAVE PETITION (CIVIL) NO. 14989 OF 2023)

UNION OF INDIA & ORS. …APPELLANTS VERSUS LARSEN & TUBRO LIMITED (L&T) …RESPONDENT J U D G M E N T VIPUL M. PANCHOLI, J.

1. Leave granted.

2. This is an appeal challenging the final judgment and order dated 25.05.2023 passed by the High Court of Judicature at Allahabad in Appeal No. 433 of 2023 under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act”) titled as “Union of India and 2 others v. Larsen &

Tubro Limited (L and T)”.

Signature Not Verified Digitally signed by ASHA SUNDRIYAL Date: 2026.02.27 Reason:

appeal filed by the appellants herein and upheld the Order dated 15.09.2022 passed by the Commercial Court, Jhansi, and thereby upheld the Arbitral Award dated 25.12.2018 passed by the learned Arbitral Tribunal.

FACTUAL MATRIX

4. The brief facts of the case are that the underlying dispute originates from the Agreement dated 27.01.2011, bearing No. CME/NCR/JHSW/MOD/2010 (Turnkey), executed between the appellants (Union of India & North Central Railway Administration) and the respondent (Larsen & Tubro Limited [L&T]).

5. The contract stipulated the execution of work related to the modernization of Jhansi Workshop of North Central Railways, valued at a negotiated rate of Rs. 93,08,07,696/-. The original date for the completion of the work was 18.07.2012 (a period of 18 months). However, the same was extended by the appellants 10 times until 30.11.2015. This resulted in a total delay of 40 months beyond the original deadline.

6. During this course, disputes concerning the execution of the work and outstanding payments arose between the parties. The General Conditions of Contract (hereinafter referred to as “the GCC”) provided for the arbitration agreement, being Clause 64.

The respondent submitted an application on 04.09.2017 for the appointment of an Arbitral Tribunal. As per Clause 64(3) of the GCC, the three-member Arbitral Tribunal was formally constituted. The learned Arbitral Tribunal (hereinafter referred to as “the AT”) entered into reference on 10.01.2018, with L&T as claimant (respondent herein) and North Central Railway as respondent (appellants herein).

7. L&T submitted a statement of claim, subsequently revised, raising claims, inter alia, for Financing Charges towards Inordinate Delay in release of payments against running account bills (Claim No. 1), Cost incurred due to Variations in Foreign Exchange Currency Component beyond original contract period (Claim No. 2), Non-payment of Price Variation Component (PVC) (Claim No. 3), Indirect Costs incurred during extended stay in the project (Claim No. 4), Refund of the amount recovered as token liquidated damages (Claim No. 5), Payment due against the final bill / variation for the additional works as per the contract (Claim No. 6), Interest on the claim amount (Claim No. 7), and Costs of Arbitration (Claim No. 8). North Central Railway made a counter claim for Losses to Railway due to late commissioning of CNC Portal Wheel Lathe, MOD.

8. After perusing the material available on record, the AT passed the Arbitral Award on 25.12.2018. The operative part of the Arbitral Award is reproduced as under:-

“5.0 Summary of the Claims / Counter-claim and award declared:

Claims:

Counter Claim:

Net Award sum payable to the Claimant is Rs.5,53,57,597/-

6.0 Costs of Arbitration:

The costs of arbitration worked out are as under:

In terms of Section 31A of the Act, Costs mean reasonable costs relating to-

i) The fees & expenses of arbitrators etc.

ii) Legal fees & expenses iii) Any other expenses incurred in connection with the arbitral proceedings and the arbitral award.

i) Fees, incidental & travel expenses of Arbitrators.:

Entire sum towards fees & incidental expenses of three Members of the Tribunal were deposited by the Claimant in tranches under the provision of Section 38(2) of the Act as