NTPC LTD.versusM/S. DECONAR SERVICES PVT. LTD.

                          [2021] 4 S.C.R. 467                              467


                             NTPC LTD.                                     A
                                   v.
              M/S. DECONAR SERVICES PVT. LTD.
                   (Civil Appeal No. 6483 of 2014)
                          MARCH 04, 2021                                   B
               [N.V. RAMANA, SURYA KANT AND
                     ANIRUDDHA BOSE, JJ.]
       Arbitration Act, 1940: Arbitral award – Objections against –
For the objector/appellant in order to succeed in their challenge
against an arbitral award, they must show that the award of the            C
arbitrator suffered from perversity or an error of law or that the
arbitrator has otherwise misconducted himself – Merely showing
that there is another reasonable interpretation or possible view on
the basis of the material on the record is insufficient to allow for the
interference by the Court.                                                 D
     Judicial review: Arbitral award – Held: Court does not sit in
appeal over an award passed by an arbitrator.
      Dismissing the appeals, the Court
     HELD : 1.1 This Court has consistently held that the Court
does not sit in appeal over an award passed by an arbitrator.              E
[Para 11][473-A-B]
      Kwality Manufacturing Corporation v. Central
      Warehousing Corporation (2009) 5 SCC 142 – relied
      on.
                                                                           F
      1.2 It is also a settled proposition that where the arbitrator
has taken a possible view, although a different view may be
possible on the same evidence, the Court would not interfere
with the award. [Para 12][473-E]
      Arosan Enterprises Ltd. v. Union of India (1999) 9 SCC               G
      449 : [1999] 2 Suppl. SCR 621 – relied on
      2. For the objector/appellant in order to succeed in their
challenge against an arbitral award, they must show that the award

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                                  467
468            SUPREME COURT REPORTS                      [2021] 4 S.C.R.


A     of the arbitrator suffered from perversity or an error of law or
      that the arbitrator has otherwise misconducted himself. Merely
      showing that there is another reasonable interpretation or
      possible view on the basis of the material on the record
      is insufficient to allow for the interference by the Court.
      [Para 13][474-C-D]
B
            State of U.P. v. Allied Constructions (2003) 7 SCC 396
            : [2003] 2 Suppl. SCR 55; Ravindra Kumar Gupta and
            Company v. Union of India (2010) 1 SCC 409 : [2009]
            16 SCR 142; Oswal Woollen Mills Limited v. Oswal Agro
            Mills Limited (2018) 16 SCC 219 : [2018] 3 SCR 1062
C           – relied on.
             3. In the facts at hand, it is an admitted fact that there was
      substantial delay attributable to the appellant in handing over
      the sites for the 68 B, C and D quarters to the respondent. The
      appellant has not contested this finding. With respect to the first
D     issue, viz., on the issue of refund of rebate, the Arbitrator held
      that the rebate of 16% on the price of construction of 100 units
      of A and B quarters was given by the respondent on the condition
      that he would be able to execute both the works simultaneously.
      The Arbitrator interpreted the rebate as a conditional one on
E     analysis of the documents on record, particularly the letter dated
      14.06.1988 sent by the respondent to the appellant subsequent
      to the negotiations held between them, the award of both contracts
      to the respondent on the same date and the works programme
      (L-2) for both the works. The Arbitrator specifically highlighted
      that the appellant had not denied the L-2 programme, which
F     indicated that both the works were to be carried out together.
      From a reading of the above material, the Arbitrator held that
      the intention of the parties was to complete the work together,
      which would have enabled the respondent to reduce its costs
      and optimizing its charges, thereby allowing it to grant the 16%
G     rebate to the appellant. By delaying the handing over of the sites,
      the appellant had therefore breached the condition for the grant
      of rebate, entitling the respondent to a refund of the same.
      [Paras 15, 16][474-F-H; 475-A-C]


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     NTPC LTD. v. M/S. DECONAR SERVICES PVT. LTD.                        469


      4. The appellant sought to canvas an alternate interpretation      A
regarding the rebate on the basis of the letter dated 14.06.1988,
stating that the same was granted merely for the awarding of both
sets of contract to the respondent. While such an interpretation
is possible, this is not sufficient to interfere with the award passed
by the Arbitrator. As already highlighted, the Court does not sit
                                                                         B
as an appellate Court over the decision of an arbitrator, and cannot
substitute its views for that of the Arbitrator as long as the
Arbitrator had taken a possible view of the matter. In the present
case, the Arbitrator has given clear reasoning for the possible
view taken by him on the interpretation of the contract between
the parties. As such, the Courts below rightly refused to interfere      C
with the holding of the Arbitrator on the first issue. [Para 17]
[475-C-E]
      5. The second issue pertains to the grant of escalation
charges for work done by the respondent beyond the scheduled
period of the contract. The Arbitrator only allowed a part of the        D
claim made by the respondent under this head. The Arbitrator
took a view on the construction of the clauses of the contract
that the firm price clause operated only with respect to the period
for which the contract subsisted, and would not subsist beyond
the scheduled period of the contract. The Arbitrator also noted
that the appellant accepted the work undertaken by the                   E
respondent beyond the period of the contract without objections.
The Arbitrator also carefully assessed the period of delay
attributable to the appellant and awarded escalation to the
respondent only for the same. With respect to the question of
law as to whether the Arbitrator could order such an escalation,         F
this Court has, in a catena of judgments, upheld the same.
[Paras 18, 19][475-E-H; 476-A]
      Assam State Electricity Board v. Buildworth Private
      Limited (2017) 8 SCC 146 : [2017] 7 SCR 123 – relied
      on.                                                                G
      New India Civil Erectors (P) Ltd. v. Oil & Natural Gas
      Corporation (1997) 11 SCC 75 : [ 1997] 2 SCR 86;
      State of Orissa v. Sudhakar Das (Dead) by Lrs (2000)
      3 SCC 27 : [ 2000] 1 SCR 1136; General Manager,
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470            SUPREME COURT REPORTS                      [2021] 4 S.C.R.


A           Northern Railway v. Sarvesh Chopra (2002) 4 SCC 45
            : [2002] 2 SCR 156 – held inapplicable.
            6. Any decision regarding the issue of whether an arbitrator
      can award a particular claim or not, will revolve on the construction
      of the contract in that case, the evidence placed before the
B     arbitrator and other facts and circumstances of the case. No
      general principle can be evolved as to whether some claim can
      be granted or not. The appellant has neither been able to point
      out any error apparent on the face of the record, nor otherwise
      made out a case for interference with the award by the Arbitrator
      with respect to this issue. [Paras 25, 26][477-F-G; 478-A-B]
C
                             Case Law Reference
      (2009) 5 SCC 142               relied on               Para 11
      [1999] 2 Suppl. SCR 621        relied on               Para 12

D     [2003] 2 Suppl. SCR 55          relied on              Para 13
      [2009] 16 SCR 142              relied on               Para 13
      [2018] 3 SCR 1062              relied on               Para 13
      [2017] 7 SCR 123               relied on               Para 19
E     [1997] 2 SCR 86                held inapplicable       Para 22
      [ 2000] 1 SCR 1136             held inapplicable       Para 23
      [2002] 2 SCR 156               held inapplicable       Para 24
            CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6483
F     of 2014.
            From the Judgment and Order dated 09.04.2010 of the High Court
      of Delhi at New Delhi in FAO(OS) No. 136/2010.
            With
            Civil Appeal No. 6484 Of 2014.
G
            Puneet Taneja, Manmohan Singh, Ms. Laxmi, Advs. for the
      Appellant.
            R. Gowrishankar, S. Rajappa, Advs. for the Respondent.

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     NTPC LTD. v. M/S. DECONAR SERVICES PVT. LTD.                              471


      The Judgment of the Court was delivered by                               A
      N. V. RAMANA, J.
      1. The present Civil Appeals, by way of Special Leave arise out
of the impugned common judgment dated 09.04.2010 passed by the
Division Bench of the High Court of Delhi, whereby the High Court
dismissed the appeals filed by the present appellant against the dismissal     B
of their objections to an award passed by the Arbitrator under the
Arbitration Act, 1940.
       2. A conspectus of the facts necessary for the disposal of the
present appeal is as follows: the appellant had issued two tenders for the
construction of certain quarters in which the respondent had participated.     C
The first project related to the construction of 100 units of A and B type
quarters. The second, was with respect to construction of 68 units of B,
C and D type quarters. It appears that while the respondent was L-3
with respect to the first project, he was L-2 with respect to the second.
After negotiations between both parties, the appellant decided to award        D
both contracts to the respondent on the basis of an offer by the respondent
of 16% rebate on the prices for completing the first project, in the event
he was awarded both contracts. The two letters of award were issued
on 29.06.1988 to the respondent. It appears from the record that there
was some delay in the handing over of sites by the appellant, which
resulted in a delay in the completion of the construction of quarters in       E
both projects. Since there were disputes between the parties regarding
the final payment due to the respondent-contractor, the respondent sought
arbitration under the dispute resolution clause, and an Arbitrator was
appointed.
        3. The learned Arbitrator, vide awards dated 07.07.2000, granted       F
relief to the respondent under different heads of the contract. With respect
tothe first contract pertaining to the construction of 100 units of A and B
type quarters, the Arbitrator awarded a sum of Rs. 23,89,424/- with
interest at 18% per annum pendente lite and 21% future interest to the
respondent. With respect to the second contract pertaining to the              G
construction of 68 units of B, C and D type quarters, the Arbitrator
awarded Rs. 24,36,532/- at 18% per annum pendente lite and 21%
future interest to the respondent.
      4. Aggrieved by the above awards, the appellant filed objections
against both the awards before the Delhi High Court under Sections 30
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472            SUPREME COURT REPORTS                          [2021] 4 S.C.R.


A     and 33 of the Arbitration Act, 1940. Vide separate orders dated
      16.12.2009, the learned Single Judge of the Delhi High Court dismissed
      the objections of the appellant (except to the extent of modifying the
      interest rate granted by the Arbitrator) with cost of Rs. 50,000/- and
      made the award an order of the Court.
B           5. The appellant challenged the above orders in appeal before the
      Division Bench of the High Court under Section 39, Arbitration Act,
      1940, which was dismissed vide the common impugned judgment dated
      09.04.2010, with cost of Rs. 10,000/-.
           6. Aggrieved by the same, the appellant has filed the present Civil
C     Appeals by way of Special Leave against the impugned judgment.
             7. Heard the learned counsel for the appellant and the respondent
      at length.
             8. The learned counsel for the appellant confined his arguments
      to three main points- the refund of the rebate agreed upon by the parties,
D     the grant of escalation of charges for work done beyond the scheduled
      period and the costs imposed on the appellant by all three forums below.
      Although the first issue of the three arises only in Civil Appeal No. 6484
      of 2014, as the latter two issues are common to both appeals, and the
      facts are connected, all the issues are being taken up together.
E           9. The learned counsel for the appellant submitted that the
      Arbitrator erred in holding that the rebate was a conditional one, as the
      terms of the offer by the respondent and the letter of award do not
      indicate the same. Further, the learned counsel also submitted that the
      Arbitrator erred in granting escalation of prices when the contract
F     expressly indicated that the “quoted price shall remain firm during
      the execution of the contract”. The Courts below should therefore
      have interfered with the award passed by the Arbitrator as the same
      was passed contrary to the terms of the contract between the parties.
             10. On the other hand, the learned counsel for the respondent
      supported the impugned judgment passed by the High Court and stated
G
      that there are concurrent findings against the appellant, who has only
      been prolonging the litigation. The respondent submitted that the scope
      of interference in an arbitral award was limited, as the Court did not sit
      in appeal over an award. As long as the Arbitrator has taken a reasonable
      view, the Court should not interfere in the same.
H
      NTPC LTD. v. M/S. DECONAR SERVICES PVT. LTD.                               473
                    [N. V. RAMANA, J.]

      11. Before proceeding further, it is necessary to make note of the         A
scope of interference by Courts in arbitral awards passed under the
Arbitration Act, 1940. This Court has consistently held that the Court
does not sit in appeal over an award passed by an arbitrator. In Kwality
Manufacturing Corporation v. Central Warehousing Corporation,
(2009) 5 SCC 142 this Court held as follows:
                                                                                 B
       “10. At the outset, it should be noted that the scope of interference
       by courts in regard to arbitral awards is limited. A court considering
       an application under Section 30 or 33 of the Act, does not sit in
       appeal over the findings and decision of the arbitrator. Nor can it
       reassess or reappreciate evidence or examine the sufficiency or
       otherwise of the evidence. The award of the arbitrator is final           C
       and the only grounds on which it can be challenged are those
       mentioned in Sections 30 and 33 of the Act. Therefore, on the
       contentions urged, the only question that arose for consideration
       before the High Court was, whether there was any error apparent
       on the face of the awardand whether the arbitrator misconducted           D
       himself or the proceedings.”
                                                      (emphasis supplied)
       12. Further, it is also a settled proposition that where the arbitrator
has taken a possible view, although a different view may be possible on
the same evidence, the Court would not interfere with the award. This            E
Court in Arosan Enterprises Ltd. v. Union of India, (1999) 9 SCC
449 held as follows:
       “36. Be it noted that by reason of a long catena of cases, it is now
       a well-settled principle of law that reappraisal of evidence by the
       court is not permissible and as a matter of fact exercise of power        F
       by the court to reappraise the evidence is unknown to proceedings
       under Section 30 of the Arbitration Act. In the event of there
       being no reasons in the award, question of interference of the
       court would not arise at all. In the event, however, there are
       reasons, the interference would still be not available within the         G
       jurisdiction of the court unless of course, there exist a total
       perversity in the award or the judgment is based on a wrong
       proposition of law. In the event however two views are possible
       on a question of law as well, the court would not be justified in
       interfering with the award.
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474             SUPREME COURT REPORTS                            [2021] 4 S.C.R.


A           37. The common phraseology “error apparent on the face of the
            record” does not itself, however, mean and imply closer scrutiny
            of the merits of documents and materials on record. The court as
            a matter of fact, cannot substitute its evaluation and come to the
            conclusion that the arbitrator had acted contrary to the bargain
            between the parties. If the view of the arbitrator is a possible
B
            view the award or the reasoning contained therein cannot be
            examined...”
             13. From the above pronouncements, and from a catena of other
      judgments of this Court, it is clear that for the objector/appellant in order
      to succeed in their challenge against an arbitral award, they must show
C     that the award of the arbitrator suffered from perversity or an error of
      law or that the arbitrator has otherwise misconducted himself. Merely
      showing that there is another reasonable interpretation or possible view
      on the basis of the material on the record is insufficient to allow for the
      interference by the Court [See State of U.P. v. Allied Constructions,
D     (2003) 7 SCC 396; Ravindra Kumar Gupta and Company v. Union
      of India, (2010) 1 SCC 409; Oswal Woollen Mills Limited v. Oswal
      Agro Mills Limited, (2018) 16 SCC 219].
             14. Keeping in view the above principles, the question before us
      is whether the arbitral awards in question are assailable on any of the
E     available grounds. While deciding this, due regard must also be given to
      the fact that both the learned Single Judge, and subsequently the Division
      Bench, of the Delhi High Court have concurrently held against the
      appellant herein.
             15. Coming to the facts at hand, it is an admitted fact that there
F     was substantial delay attributable to the appellant in handing over the
      sites for the 68 B, C and D quarters to the respondent. The appellant has
      not contested this finding before us.
            16. With respect to the first issue, viz., on the issue of refund of
      rebate,the Arbitrator held that the rebate of 16% on the price of
G     construction of 100 units of A and B quarters was given by the respondent
      on the condition that he would be able to execute both the works
      simultaneously. The Arbitrator interpreted the rebate as a conditional
      one on analysis of the documents on record, particularly the letter dated
      14.06.1988 sent by the respondent to the appellant subsequent to the
      negotiations held between them, the award of both contracts to the
H     respondent on the same date and the works programme (L-2) for both
      NTPC LTD. v. M/S. DECONAR SERVICES PVT. LTD.                              475
                    [N. V. RAMANA, J.]

the works. The Arbitrator specifically highlighted that the appellant had       A
not denied the L-2 programme, which indicated that both the works
were to be carried out together. From a reading of the above material,
the Arbitrator held that the intention of the parties was to complete the
work together, which would have enabled the respondent to reduce its
costs and optimizing its charges, thereby allowing it to grant the 16%
                                                                                B
rebate to the appellant. By delaying the handing over of the sites, the
appellant had therefore breached the condition for the grant of rebate,
entitling the respondent to a refund of the same.
       17. The learned counsel for the appellant sought to canvas an
alternate interpretation regarding the rebate on the basis of the letter
dated 14.06.1988, stating that the same was granted merely for the              C
awarding of both sets of contract to the respondent. While we are in
agreement with the appellant that such an interpretation is possible, we
are of the opinion that this is not sufficient to interfere with the award
passed by the Arbitrator. As already highlighted, the Court does not sit
as an appellate Court over the decision of an arbitrator, and cannot            D
substitute its views for that of the Arbitrator as long as the Arbitrator
had taken a possible view of the matter. We are of the considered opinion
that in the present case, the Arbitrator has given clear reasoning for the
possible view taken by him on the interpretation of the contract between
the parties. As such, the Courts below rightly refused to interfere with
the holding of the Arbitrator on the first issue.                               E

       18. The second issue pertains to the grant of escalation charges
for work done by the respondent beyond the scheduled period of the
contract. It is significant to note herein that the Arbitrator only allowed a
part of the claim made by the respondent under this head. In Civil Appeal
No. 6483 of 2014, the Arbitrator awarded a sum of Rs. 17,86,212/- against       F
a claim of Rs. 66,98,773/-, while in Civil Appeal No. 6484 of 2014, the
Arbitrator awarded a sum of Rs. 3,03,419/- as against a claim of Rs.
42,20,261/-. The Arbitrator took a view on the construction of the clauses
of the contract that the firm price clause operated only with respect to
the period for which the contract subsisted, and would not subsist beyond       G
the scheduled period of the contract. The Arbitrator also noted that the
appellant accepted the work undertaken by the respondent beyond the
period of the contract without objections. The Arbitrator also carefully
assessed the period of delay attributable to the appellant and awarded
escalation to the respondent only for the same.
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476             SUPREME COURT REPORTS                           [2021] 4 S.C.R.


A           19. With respect to the question of law as to whether the Arbitrator
      could order such an escalation, this Court has, in a catena of judgments,
      upheld the same. A three-Judge Bench of this Court in Assam State
      Electricity Board v. Buildworth Private Limited, (2017) 8 SCC 146,
      was faced with almost identical circumstances. In that case, the Arbitrator
      granted escalation charges beyond what was permissible under the
B
      contract between the parties, which prescribed a cap on the same.
      Upholding such an award, the Court in that case held as follows:
            “13.The arbitrator has taken the view that the provision for price
            escalation would not bind the claimant beyond the scheduled date
            of completion. This view of the arbitrator is based on a construction
C           of the provisions of the contract, the correspondence between
            the parties and the conduct of the Board in allowing the completion
            of the contract even beyond the formal extended date of 6-9-
            1983 up to 31-1-1986. Matters relating to the construction of a
            contract lie within the province of the Arbitral Tribunal. Moreover,
D           in the present case, the view which has been adopted by the
            arbitrator is based on evidentiary material which was relevant to
            the decision. There is no error apparent on the face of the record
            which could have warranted the interference of the court within
            the parameters available under the Arbitration Act, 1940. The
            arbitrator has neither misconducted himself in the proceedings
E           nor is the award otherwise invalid.”
                                                           (emphasis supplied)
             20. We are of the opinion that the above holding of this Court is
      directly applicable to the present case. The Arbitrator in the present
F     case has constructed the present contract, and the fixed price clause, in
      the same manner. This construction was on the basis of the evidence on
      record and the submissions of the counsel before him. The Arbitrator
      has carefully delineated the period of delay attributable to the appellant,
      and has granted the claim of the respondent only to that limited extent.

G           21. The counsel for the appellant has placed on record certain
      judgments of this Court, which according to him mandate a different
      view. As such, it would be necessary to analyze the same.
             22. In New India Civil Erectors (P) Ltd. v. Oil & Natural Gas
      Corporation, (1997) 11 SCC 75, this Court rejected the claim for
      escalation of prices during the period of delay on the basis of the specific
H
      NTPC LTD. v. M/S. DECONAR SERVICES PVT. LTD.                              477
                    [N. V. RAMANA, J.]

stipulation in the contract therein, which specifically excluded price          A
escalation “till the completion of work”. On the other hand, in the
present case, the contractual clause stipulates only that the price would
be firm during the “period of execution of the contract”, which the
Arbitrator took to refer only to the 12 month period originally stipulated
for the execution of the contract. This may appear to be a technical
                                                                                B
distinction, but it must be remembered that construction of a contract is
in the domain of the Arbitrator, and as long as the interpretation given is
a possible view, the Court may not interfere with the same. In the New
India Civil Erectors case (supra), this Court was of the opinion that, in
view of the specific clause of the contract in that case, the granting of
escalation prices was not a possible view. This is not the case in the          C
present matter. As we have already held above, we are of the opinion
that in the facts and circumstances of the present case, the view taken
by the Arbitrator was a possible one, and cannot therefore be interfered
with by the Courts.
       23. In State of Orissa v. Sudhakar Das (Dead) by Lrs, (2000)             D
3 SCC 27, this Court was not seized of the issue of grant of escalation
charges beyond the period of the contract or with respect to delay. As
such, it has limited applicability to the present case.
       24. In General Manager, Northern Railway v. Sarvesh Chopra,
(2002) 4 SCC 45, the Court was seized of a matter pertaining to a               E
reference to arbitration. The considerations of a Court in such a matter
are distinct from those of a Court in appeal over the final award of an
Arbitrator. Be that as it may, in that case, a contractual clause between
the parties specifically excluded any claims of the contractor arising out
of delays attributable to the opposite party, which is not the case in the
present matter.                                                                 F

        25. It is clear from the above analysis that any decision regarding
the issue of whether an arbitrator can award a particular claim or not,
will revolve on the construction of the contract in that case, the evidence
placed before the arbitrator and other facts and circumstances of the
case. No general principle can be evolved as to whether some claim can          G
be granted or not. The judgments placed on record by the appellant,
wherein claim for escalation was denied, have to therefore be read in
the context of their facts, and cannot be read in isolation. It is clear that
all the judgments cited by the appellant can be distinguished on facts.
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478              SUPREME COURT REPORTS                           [2021] 4 S.C.R.


A            26. In these circumstances, we are of the opinion that the appellant
      has neither been able to point out any error apparent on the face of the
      record, nor otherwise made out a case for interference with the award
      by the Arbitrator with respect to this issue.
             27. With respect to the final issue, pertaining to imposition of costs
B     on the appellant by the forums below, we are not inclined to interfere
      with the same, in view of the fact that the counsel for the appellant has
      not pressed the same and looking to the quantum involved.
           28. In view of the above, we see no reason to interfere with the
      impugned judgment passed by the High Court.
C           29. Accordingly, the Civil Appeals filed by the appellant are
      dismissed. The appellant is directed to pay the pending amounts to the
      respondent within a period of 6 months from the date of this judgment.
             30. Pending applications, if any, are accordingly disposed of.

D     Devika Gujral                                                Appeals dismissed.




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