Kiran Raj

The Supreme Court of India Division Bench of Justice P.S. Narasimha and Justice Pankaj Mithal allowed an appeal, set aside a Madras High Court judgment, and restored a Single Judge order declining to annul an arbitral award under a dredging contract between a port authority and a contractor. The contractor sought unpaid amounts, including idling charges for a backhoe dredger that remained unused due to late site access. The High Court had removed this part of the award after preferring a different reading of the contract and treating the tribunal’s approach as contrary to law. The Supreme Court held that an award cannot be set aside under Section 34, or altered in a Section 37 appeal, only because another interpretation is possible or considered preferable.

The dispute arose out of a contract awarded for a major dredging project undertaken to deepen the channel and basin of a port to accommodate vessels of higher draught. The contract was awarded pursuant to a notice inviting tender and was governed by a licence agreement executed between the contracting company and the port trust. The agreement stipulated the nature of equipment to be deployed, the time schedule for completion, and provisions relating to stoppage of work, possession of site, and idle time compensation.

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The contractor commenced work within the agreed timeframe and deployed multiple dredgers, including a Backhoe Dredger, completing the project ahead of schedule. Upon completion, a final bill was submitted, which was not settled in full, giving rise to disputes regarding alleged non-payment and under-payment. Arbitration was invoked in terms of the agreement.

Before the arbitral tribunal, multiple claims were raised, including a claim seeking compensation for idle time of the Backhoe Dredger due to failure of the port trust to provide timely access to the site. The arbitral tribunal awarded compensation for this claim. The award was upheld by a Single Judge of the High Court under Section 34 of the Arbitration and Conciliation Act, 1996. However, in an appeal under Section 37, the Division Bench interfered with the award insofar as it related to idle time compensation for the Backhoe Dredger, leading to the present appeal before the Supreme Court.

The Supreme Court examined the scope of interference permissible under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996. The Court observed that “the primary object of the Act is to provide speedy and inexpensive mode of resolution of disputes through the process of arbitration with the minimum intervention of the law courts.” Referring to Section 5 of the Act, the Bench stated that “in matters governed by Part I of the Act, no judicial authority shall intervene except where so provided.”

While analysing the statutory framework, the Court recorded that “the Act provides for the challenge of the arbitral award before the court on limited grounds as contemplated by Section 34 of the Act” and that “apart from the above grounds, the arbitral award is not open for challenge under Section 34 of the Act on any other ground.” Consequently, it was noted that “the intervention of the court is limited.”

On the scope of appellate jurisdiction, the Court stated that “it is settled in law that the appellate powers under Section 37 are limited to the scope of Section 34 and cannot exceed beyond it.” The Bench further recorded that “if an award is not liable to be disturbed under Section 34 of the Act, the same could not have been interfered with in exercise of powers under Section 37 of the Act.”

With respect to contractual interpretation, the Court observed that “the Arbitral Tribunal, in making the award, has interpreted the various clauses of the Licence Agreement” and that such interpretation had been accepted by the Single Judge. The Court stated that “ordinarily, the interpretation given by the Arbitral Tribunal, as affirmed by the court in exercise of powers under Section 34 of the Act, ought to have been accepted.”

Addressing the contention regarding idle time compensation, the Court recorded that “Clause 38 though speaks about stoppage of works and idle time charges for major dredgers, it nowhere prohibits the contractor from claiming compensation in respect of any other equipment.” It further observed that “on a conjoint reading of Clauses 41.1, 41.2 and 51.1, idle time compensation is available even if any equipment is kept idle on account of delay or non-providing of the site within time.”

The Bench concluded that “the interpretation given by the Arbitral Tribunal was a plausible view” and that “the Appellate Court was not vested with jurisdiction to substitute its own interpretation.”

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The Supreme Court directed that “the impugned judgment and order dated 15.03.2021 passed by the Division Bench of the High Court under Section 37 of the Act is unsustainable in law.” The said judgment “is accordingly set aside. The appeal is allowed,” and “no order as to costs.”

Advocates Representing the Parties

For the Appellants: Shri Chander U. Singh, Senior Advocate
For the Respondents: Shri S. Nagamuthu, Senior Advocate

Case Title: Jan De Nul Dredging India Pvt. Ltd. v. Tuticorin Port Trust
Neutral Citation: 2026 INSC 34
Case Number: Civil Appeal arising out of SLP (C) No. 8803 of 2021
Bench: Justice Pamidighantam Sri Narasimha, Justice Pankaj Mithal