Safiya Malik

The High Court of Delhi, Single Bench of Justice Jasmeet Singh, upheld the arbitral award except for the component granting pre-reference and pendente lite interest, reiterating that an arbitrator is the sole judge of the quantity and quality of evidence and that the Court cannot reappraise factual conclusions in proceedings under Section 34. Stating the narrow, supervisory nature of this jurisdiction, the Court affirmed findings that the subcontract was not validly terminated, that delay was not attributable to the sub-contractor, and that the award of refund of security-deposit-related bank guarantees and compensation for extra items was justified. Only the interest component was set aside as contrary to the contractual bar, with all other directions ordered to be enforced within six weeks.

The dispute arose from an arbitral award concerning a subcontract for flooring and cladding works at a railway station project. The petitioner, the principal contractor, asserted that the respondent had delayed execution, which led to termination of the contract. The arbitral proceedings examined correspondence, drawings, letters regarding work fronts, and evidence relating to availability of site access, utilities, and civil works progress. The petitioner contended that incomplete documentation and non-performance justified termination and entitlement to damages.

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The respondent argued that delays stemmed from the civil contractor’s failure to complete prerequisite works, non-availability of work fronts for over a year, and delayed supply of drawings and utilities. Evidence included letters dated 04.02.1992 on water and power supply, communications regarding drawing revisions, and records showing only 7% completion of civil works by the main contractor. The arbitrator considered contractual terms in the GCC, pleadings, witness statements—including CW-1—and documents relating to revised granite specifications. The petitioner also relied on contractual clauses barring interest and on notices issued under Clause 60.1. Statutory provisions invoked included Section 34 of the Arbitration and Conciliation Act, 1996.

The Court stated that “Section 34 is not in the nature of an appellate provision” and that “the scope of interference in arbitral matters is only confined to the extent envisaged under Section 34 of the Act.” It further recorded that “the award as such cannot be touched unless it is contrary to the substantive provisions of law or Section 34 of the 1996 Act or the terms of the agreement.” It also stated that “the role of the court under Section 34 of the 1996 Act is clearly demarcated. It is a restrictive jurisdiction and has to be invoked in a conservative manner.”

The Court observed: “It is a settled proposition of law that while exercising jurisdiction under Section 34 of 1996 Act, this Court does not sit as a Court of appeal over the findings of the learned Arbitrator. The scope of interference is limited to the grounds specifically enumerated under the said provision. The Court is not expected to re-appreciate the evidence, reassess the factual matrix, or embark upon a mini-trial as if it were hearing an appeal on facts.”

It also recorded that “the Arbitrator is the master of both the quantity and quality of evidence, and once the Arbitrator, upon due appreciation of the record, has reached a reasoned conclusion which does not disclose any perversity or illegality no interference is warranted.”

The judgment noted the arbitral finding that “the Claimant could do its work only after the completion of the Civil Work by M/s. Mohinder Singh & Co.” and that “M/s. Mohinder Singh & Co. miserably failed to execute or complete its work.” It cited the conclusion that “the Claimant was not provided space for establishing Site Office for about 1 year” and that “till the termination of the Contract of M/s Mohinder Singh & Co., only about 7% of the Civil Work had been completed.” It further referenced the finding that “the failure of the Claimant to complete the work within the stipulated period was not on account of any lapse on the part of the Claimant.”

Regarding materials and extra works, the Court noted the arbitral statements that “the evidence on record shows that the Granite agreed in the Contract was different” and that the petitioner “deliberately remained silent.”

On the issue of bank guarantees, it cited the finding that “the Claimant is entitled to the Bank Guarantee amount of Rs. 19,01,480/- pertaining to the Security Deposit.”

Concerning interest, the Court quoted: “the award of interest for pendente lite and pre reference period cannot be sustained and is hereby set aside. The Award of interest is severable and does not affect the other claims. However, the post award interest at the rate of 10% is upheld and cannot be interfered with.

Concerning rejection of counter claims the Court observed: “It is a settled principle that the Arbitrator is the master of both the quantity and quality of evidence, and once the Arbitrator, upon due appreciation of the record, has reached a reasoned conclusion which does not disclose any perversity or illegality no interference is warranted. Accordingly, the rejection of the petitioner’s counterclaims by the learned Arbitrator is found to be just, reasoned, and in accordance with law.”

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The Court stated that “the petition is partially allowed to the extent of the pre-reference and pendente lite interest component, and is dismissed for the remaining claims.” It further recorded that “Pending applications if any, stand disposed of.  The enforcement petition is allowed. The Judgment Debtor shall make the payment in terms of the Order passed in OMP (COMM) 215/2022 within six weeks.” It added that the matter is to be listed “before the Joint Registrar on 06.01.2026.”

Advocates Representing the Parties

For the Petitioners: Mr. Gaurav Mitra, Senior Advocate with Mr. Kshitij Kumar, Mr. Jai Sahai Endlaw, Mr. Aakarshi Agarwal, Advocates
For the Respondents: Ms. Anusuya Salwan, Advocate

Case Title: Sharma Enterprises v. IRCON International Ltd. & Connected Enforcement Petition
Neutral Citation: 2025:DHC:10215
Case Number: O.M.P. (COMM) 215/2022 & O.M.P. (ENF) (COMM) 50/2022
Bench: Justice Jasmeet Singh