Arbitration Act - NTPC v. M/s Deconar Services Pvt. Ltd

► Appeal Number : 6483/2014 with Civil Appeal No. 6484/2014

► Date : Mar 04, 2021

► Court : Supreme Court of India

► Name of Act : Arbitration Act, 1940

► Section : Sections 30 and 33 of the Arbitration Act, 1940

► In favour of : M/s Deconar Services Pvt. Ltd

► Cases referred : Kwality Manufacturing Corporation v. Central Warehousing Corporation

► Name of Judge : N. V. Ramana, Surya Kant, Aniruddha Bose

► Order:

 Brief/Facts of the Case: NTPC (“the Appellant”) had issued two tenders and M/s Deconar Services Pvt. Ltd (“the Respondent”) had participated and been awarded with both the contracts based on an offer of a 16% rebate on the prices for completing the first project, in the event of being awarded with both the Contracts. There occurred a delay by the Appellant for handling over of the Contract due to which the Contract got delayed altogether. As disputes emerged between the parties, they sought arbitration as a recourse and the arbitrator awarded a sum of INR 23,89,424 with an interest of 18% p.a. pendete lite and 21% future interest to the respondent, for the first contract. Similarly, for the second contract, the arbitrator awarded INR 24,36,532 along with 18% interest p.a. pendente lite and 21% future interest to the respondent.

Aggrieved by the aforementioned awards, the appellant sought to Delhi High Court under Sections 30 and 33 of the Arbitration Act, 1940. The appellant's objections got dismissed with costs except to the extent of modifying the interest rate granted by the arbitrator. The appellant thereafter challenged this decision before the High Court's Division Bench under Section 39 of the Act, which was dismissed with cost.

A challenge to an arbitration award can only be made if the party challenging shows that the arbitrator’s award suffered from perversity; or an error of law; or that the arbitrator had otherwise misconducted himself.

In the present case the arbitrator had taken a possible view considering that the rebate clause won’t be applicable as there was delay on the part of the Appellant and hence the contract got delayed, even if a different view could be possible on the same evidence. Therefore, the court did not interfere in the same. The Appellant had challenged on a basis that a possible view on the same can be taken by considering that the arbitrator considered the delay as a conditional situation and another view can be possible.

Supreme Court’s Order: 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 in an arbitral award. (referred to the decision in Kwality Manufacturing Corporation v. Central Warehousing Corporation)

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