Kiran Raj

The Bombay High Court Single Bench of Justice Somasekhar Sundaresan  has dismissed a petition filed under Section 34 of the Arbitration and Conciliation Act, 1996, challenging an arbitral award dated September 30, 2014. The Court held that there were no grounds for interference, finding the arbitral award to be a “detailed, rational and eminently plausible judgment” of the issues presented to the arbitral tribunal.

The Court directed that the amounts deposited by the petitioner, Navi Mumbai Municipal Corporation (NMMC), with the Registry of the Court be released to the respondent, Antony Waste Handling Cell Pvt. Ltd. (Antony), along with all accrued interest within four weeks of the judgment. It further recorded, “no useful purpose would be served in holding up the release of money rightfully due to Antony any further.”

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The dispute arose from a series of four contracts entered between NMMC and Antony Waste Handling Cell Pvt. Ltd., covering the collection and transportation of residential garbage in different areas of Navi Mumbai between August 8, 2007, and August 7, 2012. The Ghansoli area, which merged into Parimandal II, became a focal point of contention. Antony’s services extended into this additional area based on rates agreed under the existing contract structure.

Following extensions beyond the initial term, disputes arose regarding the applicability of rates to the Ghansoli area, the calculation of price escalations linked to inflation (based on the Wholesale Price Index - WPI), and deductions made by NMMC. Antony sought arbitration after NMMC withheld amounts claimed by the company.

The impugned arbitral award concluded that the terms of the contract applied to the Ghansoli area and to the extended period beyond the original five-year term. It also found that price escalations were to be calculated annually based on the WPI prevailing at the time the contract was executed, and not by adopting a revised WPI base year introduced later by government authorities.

NMMC challenged the arbitral award on multiple grounds. The petitioner argued that the Ghansoli area was not covered by an arbitration agreement, that the arbitral tribunal incorrectly awarded payments based on rates applicable to wet garbage despite non-segregation, and that the price escalation methodology was flawed due to a change in WPI base year from 1993-94 to 2004-05. The petitioner also argued that a 20% cap on price escalation was meant to apply cumulatively over the five-year contract term, not annually.

The petitioner further contested the tribunal’s rejection of its limitation defense and objected to the interest rate of 15% per annum awarded on the amounts due.

Antony countered that the Ghansoli area had merged into Parimandal II and thus became subject to the terms of the existing contract, including the arbitration clause. Antony also maintained that there was no basis in the contract to apply a 10% penalty on invoices where mixed waste was treated as wet garbage. Antony further argued that the contractual price escalation formula expressly linked price adjustment to WPI values existing at the time of contract execution and did not permit retrospective adjustments based on subsequent changes to the WPI base year.

Justice Sundaresan rejected each of NMMC’s contentions. On the jurisdictional challenge regarding the Ghansoli area, the Court recorded, “there was no need, in my opinion, for a fresh arbitration agreement to be executed to cover it.” The Court found that Ghansoli had been merged into Parimandal II, which was already covered under the contract containing the arbitration clause.

The Court noted that even the so-called "Ad Hoc Agreement" for Ghansoli contained an arbitration provision: “Clause 6 provides for arbitration by the Municipal Commissioner.” It observed that the “Ad Hoc Agreement” made specific reference to the terms and conditions of the original tender documents.

On the issue of mixed waste, the Court recorded, “there was no agreement between the parties about applying a special rate for mixed waste, and that there were no penalty provisions for visiting Antony with financial consequences for purported failure in achieving segregation of waste.” The Court further observed, “The NMMC’s Standing Committee took a view that when wet garbage and dry garbage were mixed, such non-segregated waste would be treated as wet garbage.”

Justice Sundaresan pointed out that the deduction of 10% from Antony’s invoices, over and above the reduced rate, lacked any contractual basis: “There is no basis to impose a 10% penalty in the contract, and the impugned award merely reverses the illegally withheld amount.”

On the matter of price escalation and the WPI, the Court observed that “when the parties executed the contract, the parameters that they adopted for price escalation was the WPI as computed at the time of executing the contract.” The Court dismissed NMMC’s attempt to recompute escalation based on the updated WPI base year as “evidently untenable.”

The Court found the arbitral tribunal’s determination that the 20% cap on price escalation applied annually to be reasonable. It stated, “The 20% escalation too is an annual limit on escalation, cannot, in my opinion, be regarded as a perverse finding.”

Addressing NMMC’s limitation defense, the Court noted that there were no pleadings on limitation in the arbitral proceedings and that disputes remained active between the parties throughout the contract’s duration and beyond: “Sustained efforts to resolve the difference failed, work on the extended contract ceased, and arbitration was initiated well within time.”

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Regarding the interest rate, the Court stated that the tribunal’s award of 15% interest was reasonable, given the statutory context prevailing prior to the 2015 amendment to the Arbitration and Conciliation Act: “The interest rate does not call for any interference. It is not unreasonable to pick an interest rate of 15% when the law at the relevant time had a default benchmark rate of 18%.”

The Court dismissed the petition in its entirety and directed that “the amounts deposited, along with all accruals thereon shall be paid over to Antony within a period of four weeks of this judgment.” The Court also noted that, “since the Impugned Award also awards costs, and such amount too ought to have been deposited, the accruals on the costs too would belong to Antony.” The Court refrained from imposing additional costs for the current litigation round.

Advocates Representing the Parties

For the Petitioner: Mr. Tejesh Dande, with Bharat Gadhavi and Vishal Navale.

For the Respondent: Mr. Navroz Seervai, Senior Advocate, with Ms. Gulnar Mistry and Ms. Shrey Shah, instructed by Vidhii Partners.

Case Title: The Navi Mumbai Municipal Corporation through its Commissioner versus Antony Waste Handling Cell Pvt. Ltd.

Neutral Citation: 2025:BHC-OS:4348

Case No: COMM. Arbitration Petition No. 6 of 2015 with Notice of Motion No. 2153 of 2018 in COMM. Arbitration Petition No. 6 of 2015.

Bench: Justice Somasekhar Sundaresan.

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