Supreme Court of India

BATLIBOI ENVIRONMENTAL ENGINEERS LIMITEDversusHINDUSTAN PETROLEUM CORPORATION LIMITED AND ANOTHER

Citation: 2023 INSC 850
Decided: 21 September 2023
Disposal: Dismissed
Bench: SANJIV KHANNA

Holding

The arbitral award was unsustainable due to patent flaws, lack of reasoning and disproportionate damage computation, and was rightly set aside under Section 34 read with Section 37 of the Arbitration and Conciliation Act, 1996.

Summary

Batliboi Environmental Engineers Ltd (BEEL) entered into a turnkey contract with Hindustan Petroleum Corporation Ltd (HPCL) to construct a sewage water reclamation plant. The project was delayed, work was 80% complete and BEEL abandoned it, later claiming damages for overheads, profit, idle machinery and other losses. An arbitrator awarded substantial sums to BEEL and dismissed HPCL's claim for liquidated damages. The Bombay High Court set aside the award under Section 37 of the Arbitration and Conciliation Act, 1996, finding the award lacked reasoning and the damage computation was arbitrary and excessive. On appeal, the Supreme Court examined the scope of Section 34/37, the requirement of reasoned awards, and the propriety of using formulae such as Hudson’s without proper factual basis. It held that the award was patently illegal, irrational and contrary to public policy, and therefore could be set aside. The Court dismissed BEEL's appeal, upholding the High Court's decision.

Issues considered

The award can be set aside under Section 34/37 of the Arbitration and Conciliation Act, 1996 on grounds of patent illegality and lack of reasoning.
Whether the arbitrator's method of computing damages (overheads and profit) using a percentage formula without proper justification is permissible.
The scope of judicial intervention in arbitral awards, particularly the public‑policy test and the requirement of a reasoned award.
Whether the award is perverse, irrational or in conflict with the fundamental policy of Indian law.

Legislation cited

Arbitration and Conciliation Act, 1996s. 2-A, s. 31, s. 34, s. 37
Indian Contract Act, 1872s. 55, s. 73

Subjects

ArbitrationSection 34Section 37Public policyPatent illegalityDamages computationOverheads and profitTurnkey contractLiquidated damagesHudson formulaEmden formulaEichleay formulaContract breach

Judgment

[2023] 12 S.C.R. 441 : 2023 INSC 850

CASE DETAILS

BATLIBOI ENVIRONMENTAL ENGINEERS LIMITED
v.
HINDUSTAN PETROLEUM CORPORATION LIMITED AND
ANOTHER
(Civil Appeal No. 1968 of 2012)
SEPTEMBER 21, 2023
[SANJIV KHANNA AND M.M. SUNDRESH, JJ.]

HEADNOTES

Issue for consideration: Whether the Division Bench of the High
Court was justiﬁed in allowing the appeal ﬁled by the respondents u/s. 37
of the Arbitration and Conciliation Act, 1996, and thereby setting aside the
arbitral award.
Arbitration and Conciliation Act, 1996 – s. 37 – Arbitral award
– Interference with – Award of turnkey contract to the appellant by
the respondents for a contract value to be completed within stipulated
period – Delay in project completion which was extended, and thereafter
the appellant abandoned the work, only 80% of the work was completed
– Matter proceeded for arbitration – Arbitral award dismissed the
respondent’s claim for liquidated damages on the ground that the
delay was caused by respondent’s omissions and commissions and its
other claim also rejected since they related to future works – Appeal
thereagainst allowed by the Division Bench setting aside the arbitral
award – Justiﬁcation of:
Held: Computation depends upon attendant facts and circumstances
and methods to compute damages – Determination of the quantum is a
matter which would fall within the domain and decision of the arbitrator –
However, the computation of damages should not be whimsical and absurd
resulting in a windfall and bounty for one party at the expense of the other
– Computation of damages should not be disingenuous – Damages should
commensurate with the loss sustained – Arbitral tribunal gave a complete go
441
442 SUPREME COURT REPORTS [2023] 12 S.C.R.

by to the principles well in place, overlooked care and caution required and
took a one-sided view, grossly and abnormally inﬂated the damages – No
justiﬁcation for computation of the loss is elucidated or can be expounded
– Even if one were to rely upon the chart given by the appellant, and ignore
the contradictions in ﬁndings, the amount awarded is highly disproportionate
and exorbitant – Patent ﬂaws and illegalities emanate from the award,
like the manifest lack of reasoning in arriving at the conclusions and the
calculation of amounts awarded, which, in fact, amount to double or part-
double payments, besides being contradictory – Thus, the award rightly held
to be unsustainable and set aside by the Division Bench of the High Court
exercising power and jurisdiction u/s. 37 rw s. 34. [Paras 15, 16, 27 and 45]
s. 34 – Post award interference – Scope and ambit of court’s power:
Held: Foundation of arbitration is party autonomy – Parties have the
freedom to enter into an agreement to settle their disputes/claims by an arbitral
tribunal, whose decision is binding on the parties – Court must exercise its
powers when the award is unfair, arbitrary, perverse, or otherwise inﬁrm in
law – While arbitration is a private form of dispute resolution, the conduct of
arbitral proceedings must meet the juristic requirements of due process and
procedural fairness and reasonableness, to achieve a ‘judicially’ sound and
objective outcome – If these requirements, which are equally fundamental to all
forms of adjudication including arbitration, are not suﬃciently accommodated
in the arbitral proceedings and the outcome is marred, then the award should
invite intervention by the court. [Paras 31and 32]
Contract – Computation of damages – Method for – Usage
of formulae such as Hudson’s, Emden’s, or Eichleay’s formulae to
ascertain the loss of overheads and proﬁts:
Held: Three formulae deal with theoretical mathematical equations,
but are based on factual assumptions, and thus, can produce three diﬀerent
and unrelated compensation/damages – Thus, while applying a particular
equation or method, the assumptions should be examined, and the satisfaction
of the assumption(s) ascertained in the facts and circumstances – Hudson’s
formula like other formulae, which are only rough approximations of the
cost impact of unabsorbed overhead, should be applied with great care and
caution to ensure fair and just computation. s. 34 – Public policy test to
BATLIBOI ENVIRONMENTAL ENGINEERS LTD v. 443
HINDUSTAN PETROLEUM CORP. LTD.

an arbitral award - Expression ‘public policy’ u/s. 34 – Interpretation of –
Elucidated. [Para 21, 25, and 38]

LIST OF CITATIONS AND OTHER REFERENCES

McDermott International Inc. v. Burn Standard Company Limited and
Others (2006) 11 SCC 181:[2006] 2 Suppl. SCR 409; Associate Builders
v. Delhi Development Authority (2015) 3 SCC 49:[2014] 13 SCR 895; A.T
Brij Paul Singh and Others v. State of Gujarat (1984) 4 SCC 59; Vidya
Drolia and Others v. Durga Trading Corporation and Others, (2021) 2 SCC
1:[2020] 11 SCR 1001; ONGC Limited. v. Saw Pipes Limited. (2003) 5 SCC
705:[2003] 3 SCR 691; Hindustan Zinc Ltd. v. Friends Coal Carbonisation
(2006) 4 SCC 445; Centrotrade Minerals and Metals Inc. v. Hindustan
Copper Limited (2006) 11 SCC 245; Delhi Development Authority v. R.S.
Sharma and Co (2008) 13 SCC 80:[2008] 12 SCR 785; J.G. Engineers (P)
Ltd. v. Union of India and Another (2011) 5 SCC 758:[2011] 8 SCR 486;
Union of India v. L.S.N. Murthy (2012) 1 SCC 718:[2011] 13 SCR 295;
Renusagar Power Co. Limited v. General Electric Co 1994 Supp (1) SCC
644:[1993] 3 Suppl. SCR 22; Rashtriya Ispat Nigam Ltd. v. Dewan Chand
Ram Saran (2012) 5 SCC 306:[2012] 4 SCR 1; ONGC Ltd. v. Western Geco
International Ltd., (2014) 9 SCC 263:[2014] 12 SCR 1; Excise and Taxation
Oﬃcer-cum-Assessing Authority v. Gopi Nath & Sons 1992 Supp (2) SCC
312; Kuldeep Singh v. Commissioner of Police (1999) 2 SCC 10:[1998] 3
Suppl. SCR 594; MMTC Ltd. v. Vedanta Ltd. (2019) 4 SCC 163:[2019] 3
SCR 1023; Ssangyong Engg. & Construction Co. Ltd. v. National Highways
Authority of India (2019) 15 SCC 131:[2019] 7 SCR 522 – referred to.
Robinson v. Harman (1848) 1 Ex 850 at 855; Livingstone v. Rawyards
Coal Co (1879-80) L.R. 5880 cases 25; Peak Construction (Liverpool) Ltd
v. McKinney Foundations Limited (1970) 1 BLR 114; Whittal Builders v.
Chesterle-Street District Council (1987) 40 BLR 82; JF Finnegan Ltd v.
Sheﬃeld City Council (1988) 43 BLR 124; Ellis- Don v. Parking Authority
of Toronto (1978) 28 BLR 98; Property and Land Contractors Ltd v. Alfred
McAlpine Homes North Ltd. (1995) 76 BLR 59; Associated Provincial
Picture Houses Ltd. v. Wednesbury Corporation., (1948) 1 KB 223: (1947)
2 All ER 680 (CA); Eichleay Corporation case, ASBCA No. 5183, 60-2
BCA – referred to.
444 SUPREME COURT REPORTS [2023] 12 S.C.R.

OTHER CASE DETAILS INCLUDING IMPUGNED
ORDER AND APPEARANCES
CIVIL APPELLATE JURISDICTION : Civil Appeal No.1968 of 2012.
From the Judgment and Order dated 02.11.2007 of the High Court of
Judicature at Bombay in AN No.227 of 2001 in AP No.280 of 1999.
Appearances:
Shyam Divan, Sr. Adv., Amar Dave, Mahesh Agarwal, Ankur Saigal,
Aadil Parsurampuria, Ms. S. Lakshmi Iyer, Ms. Tanvi Manchanda, Nishant
Rao, E. C. Agrawala, Advs. for the Appellant.
N. Venkataraman, A.S.G., Sanjay Kapur, Ms. Megha Karnwal, Surya
Prakash, Arjun Bhatia, Ms. Akshata Joshi, Advs. for the Respondents.
JUDGMENT / ORDER OF THE SUPREME COURT

JUDGMENT

SANJIV KHANNA, J.
This appeal by way of special leave by Batliboi Environmental
Engineers Limited1 takes exception to the judgment dated 02.11.2007,
whereby the Division Bench of the High Court of Judicature at Bombay
allowed the appeal2 ﬁled by Hindustan Petroleum Corporation Limited3
under Section 37 of the Arbitration and Conciliation Act, 19964, and thereby
has set aside the arbitral award dated 23.03.1999.
2. On acceptance of tender and in terms of the letter of intent dated
27.02.1992, HPCL had awarded to BEEL the turnkey contract for detailed
engineering including civil and structural design, supply and erection, testing
and commissioning of 23 MLD capacity Sewage Water Reclamation Plant in
Mahul Reﬁnery area. The contract value was Rs.574.35 lakhs. The contract
period was 18 months from the date of letter of intent, and accordingly the

1 For short, BEEL.
2 Appeal No. 227 of 2001 in Arbitration Petition No. 280 of 1999.
3 For short, HPCL.
4 For short, A&C Act.
BATLIBOI ENVIRONMENTAL ENGINEERS LTD v. 445
HINDUSTAN PETROLEUM CORP. LTD. [SANJIV KHANNA, J.]

work was to be completed by 28.08.1993. There was delay in completion.
On written requests/applications made by BEEL, the time for completion
was extended on two occasions. Three revisions were also issued by HPCL.
The last revision dated 20.09.1994 had extended the period for completion
from 26.09.1994 by 10 months beginning from the date on which approval
of electrical items was accorded by HPCL. BEEL carried on the work till
30.03.1996. Thereafter, BEEL abandoned the work. It is an accepted position
that as on 30.03.1996, 80% of the work was complete.
3. On 04.07.1996, BEEL made a formal claim to HPCL for breach
of contract on account of delay in execution, causing extra expenses and
losses. By the letter dated 16.05.1997, BEEL sought an advance payment of
Rs.50 lakhs to enable them to resume work, and simultaneously expressed its
desire to resolve the dispute through conciliation. BEEL by the same letter
also invoked the arbitration clause in the contract, if the proposal as given
by BEEL was unacceptable to HPCL. HPCL by the letter dated 05.05.1997
refused to make payment, and relying on the terms of the contract had
impressed upon BEEL to resume and complete the remaining work, even
if the matter was to proceed for arbitration. BEEL did not agree and resume
work.
4. The General Manager (Project), Mahul Reﬁnery, HPCL, appointed
Mr. K. Narayanan as the sole arbitrator to adjudicate upon the disputes and
diﬀerences in the execution of the contract. Claim was ﬁled by BEEL and
reply/counter claim was ﬁled by HPCL, to which rejoinder with supporting
documents and sur-rejoinders were ﬁled. In all about 14 hearings were held
before the arbitral tribunal between the period 12.03.1998 and 07.01.1999
and oral arguments were addressed. Ocular evidence was not led. The learned
arbitrator had conducted a site inspection on 24.12.1997.
5. The arbitral award dated 23.03.1999, substantially allows the Claims
Nos. 1,2, and 4 of the BEEL. The relevant portion of the award dealing with
the claims of the BEEL, reads:
“A. Claims of the Claimants:
Claim No.1 – Compensation for loss of Overhead and proﬁt and also
proﬁtability: Rs.3,38,38,460.00
446 SUPREME COURT REPORTS [2023] 12 S.C.R.

The claim is forwards loss of Overheads and proﬁ t/proﬁtability
calculated on the basis of 48 months delay as of 27.08.1997. The
Claimants have considered 10% of the Contract value towards
Overheads and another 10% towards proﬁt/proﬁtability to arrive at
the above ﬁgure, after taking into account the same percentages from
the payments already received by them.
My ﬁnding is that the Owner Respondents are fully responsible for
the huge delay that occurred by not taking proper and timely action
in removing the various impediments and obstacles that stood in the
way of completing the project in the given span of 18 months. The
party had been tied down to a project, which was allowed to drift
aimlessly, with the owner-respondents showing hardly any interest in
completing it in time.
Even the basic approval for the Electrical scheme, with numerous
revisions was kept pending, till the end without any decision. The
Claimants could not have expected to complete the project without
these clearances. The Respondents have thus evaded their own
responsibilities and committed breach of contractual obligations.
As admitted by the Respondents, even the arrangement with MCGB for
the supply of Sewage water for puriﬁcation has not yet been ﬁnalised.
This, as advised by the Respondents, is awaiting the intervention of the
Chief Minister. It is any body’s guess when this arrangement will be
ﬁrmed up the necessary pumping station and underground pipelines
etc. will be ready so that sewage water will ﬂow to the plant being built
for puriﬁcation by the claimant. This is proof that the Respondents
were not serious enough in implementing the project.
For reasons given above, I consider that the claimants are legitimately
entitled for compensation towards both loss of Overheads and
proﬁt/proﬁtability. In arriving at the compensation, the period upto
30.03.1996, when the claimants discontinued the work is being
considered. The total period works out to 49 months. The original
contract period being 18 months, the extended period comes to
31 months. The claimants had stated in their claim statement that
they had provided for 22 months overheads in their estimate. I am
allowing 3 months for internal administrative process of the Owner-
BATLIBOI ENVIRONMENTAL ENGINEERS LTD v. 447
HINDUSTAN PETROLEUM CORP. LTD. [SANJIV KHANNA, J.]

Respondents and for unforeseen delays such as strike, red alerts etc.
I also consider 10% of contract value towards loss of overheads and
10% towards loss of proﬁt/proﬁtability as reasonable. On these (sic)
basis, the Compensation works out to Rs.78,68,833.00 towards loss
of overheads and an equal amount of Rs.78,68,833.00 towards loss of
proﬁt/proﬁtability, the total being Rs.1,57,37,666.00 after taking into
account the same percentage from payments already received by them
for the work done. I award this amount to the Claimants.
While awarding the above compensation, the existence of the means
to mitigate the loss has been considered. According to me, the only
means available to the claimants, was to work on Sundays and
Holidays, to make up for the lost time to some extent, which was
denied by the Respondents except for a brief period at the very end.
This brief relaxation was not of much signiﬁcance in determining the
compensation payable to the claimants.
Claim No.2 – Compensation for idle machinery and equipment:
Rs.84,59,615.00
This claim is for machinery and equipment deployed in the execution of
this contract, but had to idle for large part of the time, due to extended
contract period. I have inspected the site. I am of the opinion that there
is substance in the claim. After due consideration of all aspects, I award
an amount of Rs.50,000.00 per month for a period of 24 months which
comes to Rs.12,00,000.00
Claim No.3 – Compensation for losses incurred due to increased
cost of Materials and Labour: Rs.26,89,638.00
Even though the escalation in cost of material and labour is a normal
feature when Engineering Contracts such as this gets unduly delayed,
since escalation is not permitted as per the contract the claim stands
rejected totally.
Claim No.4 – Compensation for carrying out Extra Work:
Rs.19,00,225.00
The claim consists of the following 4 items:
448 SUPREME COURT REPORTS [2023] 12 S.C.R.

(i) Transportation of excavated earth Rs.12,05,000.00
(ii) Dewatering charges incurred during Rs.5,62,570.00
delayed period
(iii) Shifting charges for material Rs.1,01,405.00
(iv) Shifting charges for Filter media Rs.31,250.00
The above jobs have been carried out in relation to the main
contract, but have ﬁgured as extra items due to certain omissions and
commissions by the owner-respondents. The claimants have compelled
and produced vouchers and documents in support of their claim. I am
not satisﬁed with all the details furnished. Therefore, against the above
claim, I awarded to the extent I am satisﬁed with the documentation,
as under:
Item No.I Rs.1,20,000.00 towards transportation of excavated
earth dumped by other contractors in the work site,
prior to award of contract but after submission of
the oﬀer.
Item No.II Nil amount
Item No. III Rs.50,000.00 towards shifting of materials manually
because of non-availability of approach to site for
vehicle.
Item No.IV Rs.25,000.00 towards charges for shifting the Filter
Media Several times for paucity of space.
Total Claim amount awarded: Rs.1,95,000.00 against Rs.19,00,225.00
Claim No.5 – Cost of repair and rectiﬁcation: Amount to be assessed.
No award on this as this refers to future course of action when project
work is resumed.
INTEREST: The Claimants are also entitled to 18% interest per annum
on all the claims awarded, eﬀective from 16.05.1997, the date on which
the notice invoking Arbitration clause was served on the Respondents
(date on which cause of action arose) till the date of payment.
BANK GUARANTEE: The Claimants have speciﬁcally prayed for
reduction of the performance Bank Guarantee amount by 50%. In
view of the fact that about 80% of the work has been completed, and
BATLIBOI ENVIRONMENTAL ENGINEERS LTD v. 449
HINDUSTAN PETROLEUM CORP. LTD. [SANJIV KHANNA, J.]

(in) view (of) (sic) the huge delay that has occurred the amount shall
be reduced by 50%.”
6. The award dated 23.03.1999 dismisses the counter claim of HPCL
for liquidated damages of Rs.57.40 lakhs, on the ground that the delay
was caused by omissions and commissions of HPCL. Claims by HPCL for
rectiﬁcation/rehabilitation cost of Rs.102.05 lakhs, costs of balance work of
Rs.160 lakhs and de-watering cost of Rs.9 lakhs were denied on the ground
that they relate to future works and therefore, would not fall within the ambit
of arbitration in question.
7. We have intentionally quoted the entire ﬁndings and reasoning
accorded by the learned arbitrator, while allowing the Claim Nos. 1,2
and 4 of BEEL. The ﬁrst egregious and obvious ﬂaw in the award is, the
omnibus ﬁnding and conclusion that HPCL (referred to as the owner and
the respondent in the quoted portion of the award) was fully responsible
for the inordinate delay that had occurred by not taking proper and timely
action in removal of various impediments and obstacles that stood in the
way of completing the project within the stipulated period of 18 months.
This ﬁnding, in our opinion, is bereft of analysis and examination of facts
and contentions. The relevant and material facts and the respective stances
of the parties are neither decipherable nor evaluated and no reason has been
given for arriving at the conclusion. A conclusion without any discussion
and reasons, is non-compliant and violates the mandate of sub - section (3)
of Section 31 of the A& C Act5, an aspect we would examine subsequently.
8. The second patent error relates to the computation and award of
10% of the contract value towards loss of overheads and another 10%
towards loss of proﬁts/proﬁtability. The two amounts have been quantiﬁed
at Rs.78,68,833/- each. Thus, Rs.1,57,37,666/- has been awarded and held
as payable by HPCL to BEEL. The award is deﬁcient being completely
silent as to the method and the manner in which the arbitral tribunal has
computed the ﬁgures. Therefore, it leaves us and the parties to wonder the

5 Section 31 - Form and contents of arbitral award - (3) The arbitral award shall state
the reasons upon which it is based, unless—
(a) the parties have agreed that no reasons are to be given, or
(b) the award is an arbitral award on agreed terms under section 30.
450 SUPREME COURT REPORTS [2023] 12 S.C.R.

basis for awarding and computing the amounts. We are not commenting
or examining the merits of the computation, but complete absence of any
justiﬁcation and reason to allow the claim and quantiﬁcation of the sum
awarded. We would subsequently examine the chart furnished by BEEL
in support of the said computation, albeit at this stage we would like to
highlight the apparent contradiction in the award, which is the third ground
to uphold the decision of the Division Bench of the High Court.
9. We begin our substantiation of the third ground, by referring to the
ﬁrst paragraph of the award quoted above, under the heading ‘Claim No.
1 - Compensation for loss of overhead and proﬁt and also proﬁtability’.
BEEL had based Claim No.1 for loss on account of overheads and proﬁts/
proﬁtability upon 48 months delay as on 27.08.1997. BEEL for computation
had considered 10% of the contract value towards overheads and other 10%
towards proﬁts/proﬁtability for arriving at the ﬁgure of Rs. 3,38,38,460/-,
after taking into “account the same percentages from the payments already
received by them”. In the subsequent portion of the award, dealing with
Claim No. 1, the learned arbitrator has held that the total contract period
was 49 months. The original contract period being 18 months, the extended
period being 31 months. However, BEEL in the claim statement had accepted
that it had provided for 22 months towards overheads in the estimates.
Further, the learned arbitrator has allowed additional 3 months for internal
administrative process, and for unforeseen delays, such as strikes, red alerts,
and as force majeure events. In other words, the learned arbitrator, for the
purpose of default, had excluded the period of 18 months, i.e., the original
contract period, plus 4 months as provided by BEEL, and another 3 months
on account of internal administrative process and force majeure events.
Thus, the default period for which BEEL as per the award is entitled to claim
damages/compensation towards overheads and loss of proﬁts/proﬁtability
is 24 months.
10. BEEL had, as observed above, accepts the position that the loss
towards overheads and proﬁts/proﬁtability has to be arrived at by applying
the percentage formula, variant with the execution of the work. Thus, in
our opinion, the loss towards overheads and proﬁts/proﬁtability is to be
computed on the payments due for the un-executed work, and should
exclude the payments received/receivable for the work executed. In other
words, based on the value of the work executed by BEEL, the proportionate
BATLIBOI ENVIRONMENTAL ENGINEERS LTD v. 451
HINDUSTAN PETROLEUM CORP. LTD. [SANJIV KHANNA, J.]

amount has to be reduced for computing the damage/compensation as a
percentage of expenditure on overheads, and damages for loss of proﬁt/
proﬁtability. Damages towards expenditure on overheads and loss of proﬁt
are proportionate, and not payable for the work done and paid/payable. Delay
in payment on execution of the work has to be compensated separately.
11. It is an accepted position and speciﬁcally recorded in the award
that the total value of the contract was Rs. 5,74,35,213.00p. In an earlier
paragraph of the award, which has been not reproduced, the learned
arbitrator has referred to R.A. Bill No.4 dated 31.08.1993, as per which
BEEL had completed work of Rs.1,21,95,859.68p. It is also an accepted
and admitted position that as on 30.03.1996, the date on which the work
stopped, as per R.A. Bill No. 37, work valued at Rs. 2,92,07,619.13p had
been executed. In other words, BEEL had executed and received payments
of Rs. 2,92,07,619.13/- from HPCL from time to time, between the period
01.09.1993 and 30.03.1996. Eighty percent of the work was complete.
BEEL has received total payment of Rs.4,14,03,478.81p in terms of running
account bills till R.A. No. 37. The balance work was Rs. 1,14,87,042.00p.
Twenty percent of Rs.1,14,03,478.81 is Rs.22,97,408.40p. In addition,
BEEL is entitled to compensation for the delay in execution of the work
of Rs.2,92,07,619.13/- till the date payments were made, albeit, the award
directs payment of Rs. 18% interest per annum on all claims awarded
eﬀective from 16.05.1997.
12. The award also reduces the performance bank guarantee amount
by 50%, without any discussion, elucidation and reason.
13. In order to justify the computation made in the award and also the
principle or the method adopted by the arbitral tribunal, BEEL has referred to
the Hudson’s formula and relied upon judgments of this Court in McDermott
International Inc. v. Burn Standard Company Limited and Others. 6, and
Associate Builders v. Delhi Development Authority7, in addition to an
earlier decision of this Court in A.T Brij Paul Singh and Others v. State
of Gujarat8, and a few judgments of the High Courts.

6 (2006) 11 SCC 181 (for short, McDermott International Inc.).
7 (2015) 3 SCC 49 (for short, Associate Builders).
8 (1984) 4 SCC 59.
452 SUPREME COURT REPORTS [2023] 12 S.C.R.

14. In McDermott International Inc. this Court has referred to various
methods of computation of damages in paragraphs 102 to 107. In particular,
reference has been made to Hudson’s formula, Emden’s formula, and
Eichleay’s formula in the following terms:
“Method for computation of damages
102. [Ed.: Para 102 corrected vide Oﬃcial Corrigendum No. F.3/
Ed.B.J./52/2006 dated 31-7-2006] . What should, however, be the
method of computation of damages is a question which now arises
for consideration. Before we advert to the rival contentions of the
parties in this behalf, we may notice that in M.N. Gangappa v. Atmakur
Nagabhushanam Setty & Co. [(1973) 3 SCC 406] this Court held that
the method used for computation of damages will depend upon the
facts and circumstances of each case.
102-A. In the assessment of damages, the court must consider only
strict legal obligations, and not the expectations, however reasonable,
of one contractor that the other will do something that he has assumed
no legal obligation to do. (See Lavarack v. Woods of Colchester
Ltd. [(1967) 1 QB 278 : (1966) 3 All ER 683 : (1966) 3 WLR 706
(CA)] , All ER p. 690 G.)
103. The arbitrator quantiﬁed the claim by taking recourse to the
Emden Formula. The learned arbitrator also referred to other
formulae, but, as noticed hereinbefore, opined that the Emden Formula
is a widely accepted one.
104. It is not in dispute that MII had examined one Mr D.J. Parson
to prove the said claim. The said witness calculated the increased
overheads and loss of proﬁt on the basis of the formula laid down in
a manual published by the Mechanical Contractors Association of
America entitled “Change Orders, Overtime, Productivity” commonly
known as the Emden Formula. The said formula is said to be widely
accepted in construction contracts for computing increased overheads
and loss of proﬁt. Mr D.J. Parson is said to have brought out the
additional project management cost at US$ 1,109,500. We may at
this juncture notice the diﬀerent formulas applicable in this behalf.
BATLIBOI ENVIRONMENTAL ENGINEERS LTD v. 453
HINDUSTAN PETROLEUM CORP. LTD. [SANJIV KHANNA, J.]

(a) Hudson Formula: In Hudson’s Building and Engineering Contracts,
Hudson Formula is stated in the following terms:
“Contract head oﬃce overhead × Contract sum × Period of delay”
and proﬁt percentage Contract period
In the Hudson Formula, the head oﬃce overhead percentage is taken
from the contract. Although the Hudson Formula has received judicial
support in many cases, it has been criticised principally because it
adopts the head oﬃce overhead percentage from the contract as the
factor for calculating the costs, and this may bear little or no relation
to the actual head oﬃce costs of the contractor.
(b) Emden Formula: In Emden’s Building Contracts and Practice, the
Emden Formula is stated in the following terms:
“Head oﬃce overhead and proﬁt × Contract sum × Period of delay”
100 Contract period

Using the Emden Formula, the head oﬃce overhead percentage
is arrived at by dividing the total overhead cost and proﬁt of the
contractor’s organisation as a whole by the total turnover. This
formula has the advantage of using the contractor’s actual head
oﬃce overhead and proﬁt percentage rather than those contained in
the contract. This formula has been widely applied and has received
judicial support in a number of cases including Norwest Holst
Construction Ltd. v. Coop. Wholesale Society Ltd. [ Decided on 17-
2-1998, [1998] EWHC Technology 339] , Beechwood Development
Co. (Scotland) Ltd. v. Mitchell [ Decided on 21-2-2001, (2001) CILL
1727] and Harvey Shopﬁtters Ltd. v. Adi Ltd. [ Decided on 6-3-2003,
(2004) 2 All ER 982 : [2003] EWCA Civ 1757] .
(c) Eichleay Formula: The Eichleay Formula was evolved in America
and derives its name from a case heard by the Armed Services Board of
Contract Appeals, Eichleay Corporation. It is applied in the following
manner:
Step 1
454 SUPREME COURT REPORTS [2023] 12 S.C.R.

Contract billings × To t a l o v e r he a d f o r = Overhead allocable
contract period to the contract
Total billings for contract
period

Step 2
Allocable overhead = Daily overhead rate
Total days of contract

Step 3
Daily contract × Number of days = Amount of
overhead rate of delay unabsorbed overhead”

This formula is used where it is not possible to prove loss of opportunity
and the claim is based on actual cost. It can be seen from the formula
that the total head oﬃce overhead during the contract period is
ﬁrst determined by comparing the value of work carried out in the
contract period for the project with the value of work carried out by
the contractor as a whole for the contract period. A share of head
oﬃce overheads for the contractor is allocated in the same ratio
and expressed as a lump sum to the particular contract. The amount
of head oﬃce overhead allocated to the particular contract is then
expressed as a weekly amount by dividing it by the contract period.
The period of delay is then multiplied by the weekly amount to give the
total sum claimed. The Eichleay Formula is regarded by the Federal
Circuit Courts of America as the exclusive means for compensating a
contractor for overhead expenses.
105. Before us several American decisions have been referred to by
Mr Dipankar Gupta in aid of his submission that the Emden Formula
has since been widely accepted by the American courts being Nicon
Inc. v. United States [ Decided on 10-6-2003 (USCA Fed Cir), 331 F.
3d 878 (Fed. Cir. 2003)] , Gladwynne Construction Co. v. Mayor and
City Council of Baltimore [ Decided on 25-9-2002, 807 A. 2d 1141
(2002) : 147 Md. App. 149] and Charles G. William Construction
Inc. v. White [ 271 F 3d 1055 (Fed. Cir. 2001)] .
106. We do not intend to delve deep into the matter as it is an
accepted position that diﬀerent formulae can be applied in diﬀerent
BATLIBOI ENVIRONMENTAL ENGINEERS LTD v. 455
HINDUSTAN PETROLEUM CORP. LTD. [SANJIV KHANNA, J.]

circumstances and the question as to whether damages should be
computed by taking recourse to one or the other formula, having regard
to the facts and circumstances of a particular case, would eminently
fall within the domain of the arbitrator.
107. If the learned arbitrator, therefore, applied the Emden Formula in
assessing the amount of damages, he cannot be said to have committed
an error warranting interference by this Court.”
15. McDermott International Inc. refers to Sections 559 and 7310 of the
Indian Contract Act, 187211, which deal with the eﬀect of failure to perform at

9 Section 55 - Eﬀect of failure to perform at ﬁxed time, in contract in which time is
essential - When a party to a contract promises to do a certain thing at or before a speciﬁed
time, or certain things at or before speciﬁed times, and fails to do any such thing at or
before the speciﬁed time, the contract, or so much of it as has not been performed, becomes
voidable at the option of the promisee, if the intention of the parties was that time should be
of the essence of the contract.
Eﬀect of such failure when time is not essential.—If it was not the intention of the parties
that time should be of the essence of the contract, the contract does not become voidable
by the failure to do such thing at or before the speciﬁed time; but the promisee is entitled to
compensation from the promisor for any loss occasioned to him by such failure.
Eﬀect of acceptance of performance at time other than that agreed upon.—If, in case of
a contract voidable on account of the promisor’s failure to perform his promise at the
time agreed, the promisee accepts performance of such promise at any time other than
that agreed, the promisee cannot claim compensation for any loss occasioned by the non-
performance of the promise at the time agreed, unless, at the time of such acceptance, he
gives notice to the promisor of his intention to do so.
10 Section 73 - Compensation for loss or damage caused by breach of contract. - When
a contract has been broken, the party who suﬀers by such breach is entitled to receive, from
the party who has broken the contract, compensation for any loss or damage caused to him
thereby, which naturally arose in the usual course of things from such breach, or which the
parties knew, when they made the contract, to be likely to result from the breach of it.
Such compensation is not to be given for any remote and indirect loss or damage sustained
by reason of the breach.
Compensation for failure to discharge obligation resembling those created by contract.
When an obligation resembling those created by contract has been incurred and has not
been discharged, any person injured by the failure to discharge it is entitled to receive the
same compensation from the party in default, as if such person had contracted to discharge
it and had broken his contract.
Explanation - In estimating the loss or damage arising from a breach of contract, the means
which existed of remedying the inconvenience caused by the non-performance of the
contract must be taken into account.
11 For short, Contract Act.
456 SUPREME COURT REPORTS [2023] 12 S.C.R.

ﬁxed time in contracts where time is of essence, and computation of damages
caused by breach of contract, respectively, and states that these Sections
neither lay down the mode nor how and in what manner computation of
damages for compensation has to be made. As computation depends upon
attendant facts and circumstances and methods to compute damages, how
the quantum thereof should be determined is a matter which would fall
within the domain and decision of the arbitrator.
16. This is without doubt, a sound legal and correct proposition.
However, the computation of damages should not be whimsical and absurd
resulting in a windfall and bounty for one party at the expense of the other.
The computation of damages should not be disingenuous. The damages
should commensurate with the loss sustained. In a claim for loss on account
of delay in work attributable to the employer, the contractor is entitled to the
loss sustained by the breach of contract to the extent and so far as money
can compensate. The party should to be placed in the same situation, with
the damages, as if the contract had been performed. The principle is that
the sum of money awarded to the party who has suﬀered the injury, should
be the same quantum as s/he would have earned or made, if s/he had not
sustained the wrong for which s/he is getting compensated. 12
17. We shall subsequently catechise the Hudson’s formula, suﬃce at
this stage is to notice that the learned arbitrator does not speciﬁcally refer to
any formula or the method, and the ﬁgures to compute damages under the
head of loss on account of overheads and proﬁts/proﬁtability. The award, as
quoted above, does refer to Sections 55 and 73 of the Contract Act.
18. Having examined the award and the contents, we would now
like to refer to the chart produced by BEEL by way of additional or new
material, which it is claimed, is drawn on the basis of the statement of claims
ﬁled in the arbitration proceedings, to which the column with the heading
“explanation” has been added for the beneﬁt of the court. The chart is as
under:

12 See - Robinson v. Harman (1848) 1 Ex 850 at 855 and Livingstone v. Rawyards Coal
Co (1879-80) L.R. 5880 cases 25
BATLIBOI ENVIRONMENTAL ENGINEERS LTD v. 457
HINDUSTAN PETROLEUM CORP. LTD. [SANJIV KHANNA, J.]

Sr. Particulars Amount (Rs.) Explanation
No.
1. Contract Sum 5,74,35,213.00 Total Contract Value
2. Overheads (10%) and 1,14,87,042.00 20% of Rs.5,74,35,213.00
proﬁts (10%) included (1) i.e. contract value
in the above sum
3. Time limit for completion 22 Months Though the contract
of the work was f or 18 Months,
Petitioner estimated that
the site would have to be
maintained for 22 Months
i.e. 4 months over and
above contract term.
4. Overheads and Proﬁts 5 , 2 2 , 1 3 8 . 2 7 Total Overheads and
per month [(2) divided Per month Proﬁts divided by months
by (3)] of work (22 Months)
5. Value of work done till 1,21,95,859.68 Contract period was up to
R.A. Bill No.4 dated 31.08.1993 i.e. 18 months
31.08.1993 from 22 February 1992
6. Pro-rata overheads and 24,39,171.00 20% of (5). Since the
profits received till Petitioner received payment
31.08.1993 of bill at (5), the overheads
and profits for the work
done covered by bill at (5)
have been deducted by the
Arbitrator in (7).
7. Net loss suﬀered as on 90,47,871.00 As above, for 22 months
01.09.1993 [(2) – (6)] of work, the Petitioner was
to get Rs. 1,14,87,042.00/-
(2) towards overheads and
profits. However, out of
this, the Petitioner received
Rs. 24,39,171.00/- (6), the
same has been deducted.
458 SUPREME COURT REPORTS [2023] 12 S.C.R.

Sr. Particulars Amount (Rs.) Explanation
No.
Rs.90,47,871.00/- is the
outstanding receivable
by the Petitioner towards
overheads and proﬁts for
the contract period.
8. Delay in months 24 months Total time spent was 49
Months (Pg.56 of SLP)
(22 February 1992 to 31
March 1996).
Out of this, since 22 months
were contemplated by the
Petitioner for the work,
th e s ame have bee n
deducted from 49 months
by the Arbitrator. (Pg.56
of SLP).
A further period of 3
months on account of
Force Majeure has been
deducted by the Arbitrator.
Thus 49 – 22 – 3 = 24
Mo nth s e xt ra w or k.
(Pg.56 of SLP).
9. Overheads and profit 1,25,31,318.48 This is the amount for the
expected during the extra time spent i.e. 24
extra period [(8) * (4)] Months.
244 Months multiplied
by per month overhead
and proﬁt.
24 * Rs.5,22,138.27 =
Rs. 1,25,31,318.48
BATLIBOI ENVIRONMENTAL ENGINEERS LTD v. 459
HINDUSTAN PETROLEUM CORP. LTD. [SANJIV KHANNA, J.]

Sr. Particulars Amount (Rs.) Explanation
No.
10. Value of work executed 2,92,07,619.13 This is the amount received
during the extended for the work done during
period upto 30.03.1996 extended period i.e. August
1993 to March 1996.
(R.A. Bill No.37)
11. Pro-rata overheads and 58,41,523.80 This is 20% of 2,92,07,619.13
proﬁts received during (10).
the extended period.
Since the petitioner received
payment of bill at (10), the
overheads and proﬁts for the
work done covered by bill at
(10), have been deducted by
the Arbitrator in (11)
12. Net loss suﬀered till 66,89,791.68 This is loss of overhead
and proﬁts for the extra
27.08.1997 [(9) – (11)]
period of 24 Months.
As stated in (9), overheads
and profits for extra
time of 24 months was
Rs.1,25,31,318.48.
Since, the Petitioner received
a sum of Rs.58,41,523.80
(11), the same has been
deducted by the Arbitrator.
13. Total loss on overheads 1,57,37,665.68 This amount is the sum of
and proﬁt on this count overhead and proﬁts due
till 27.08.1997 [(7) – during contract period
(12)] plus the overhead and
proﬁts for the extra period
of 24 Months.
Awarded by the Arbitrator
(Pg.56 of SLP)
460 SUPREME COURT REPORTS [2023] 12 S.C.R.

19. The chart and explanations given in the chart, we believe, are
an afterthought and futile ﬁnagle to work backwards to somehow justify
the computation and award of damages. These explanations are ex facie
irrational and eristic for the following reasons:
(i) S.No.7 computes the net loss suﬀered by BEEL as Rs.90,47,871/-
as on 01.09.1993, that is for the period of 18 months. The
computation ignores and does not add the period of 4 months
as mentioned by BEEL in the claim statement. Further, the
arbitrator had added another period of 3 months for internal
administrative process and force majeure events. Thus, the date
01.09.1993 referred to in S.No.7 is incorrect and not the basis
of the computation made in the award. S.No.7 fails to taken into
consideration the seven-month period, which as per the award
has to be added.
(ii) The ﬁ gure of Rs.90,47,871/- would have been relevant, in
absence of work done and in fact payments post 01.09.1993.
However, it is an accepted and admitted position that payment
of Rs.2,92,07,619.13p was made on diﬀerent dates between
01.09.1993 till 30.03.1996 upon completion of the proportionate
value of the work. Claim on account of loss of proﬁts/proﬁtability
and overheads, as has been explained above and also elucidated
herein-after with reference to several judgments and treatise, is
payable if and when there is an increase in cost of oﬀ-site and
on-site overheads due to delay in completion of work post the
agreed or contractual period which is caused by the employer. 13
Further, loss on account of proﬁt earning capacity is paid when
the contractor’s proﬁt earning capacity is aﬀected due to it being
retained longer in the contract in question, without corresponding

13 In this case, as noticed, the contract bars claims for compensation for losses due to
enhancement/escalation of costs etc. We make no comments in this regard. Interpretation
and validity of such clauses is not subject matter of this appeal. When such clauses, which
are apparently one-sided and absolve breach with immunity, are subjected to judicial
scrutiny, the courts/tribunals invariably tend to interpret the clauses in a restrictive manner
to grant just and fair relief. Courts should be slow to interfere, unless the award falls within
the ambit of the parameters set out in Section 34 of the A&C Act.
BATLIBOI ENVIRONMENTAL ENGINEERS LTD v. 461
HINDUSTAN PETROLEUM CORP. LTD. [SANJIV KHANNA, J.]

increase in the monetary beneﬁt earned and without being free
to move elsewhere to earn proﬁt which it might otherwise be
able to do. It is not the case of BEEL that they are entitled to
enhance or increase in cost on account of delay in execution of
the work. Pertinently, Claim No. 3 for compensation of losses
incurred due to increase in cost of material and labour has been
speciﬁcally rejected, as escalation in prices/costs are barred by
the terms of the contract.
(iii) The computation of loss under S.No.7 of Rs.90,47,871/- is,
therefore, unsustainable and cannot be justiﬁed by any calculation
and in terms of the Contract Act.
(iv) As per the chart, in addition to Rs.90,47,871/-, the arbitrator has
awarded at S.No.12, a further amount of Rs.66,89,794.68p. on
account of loss of overheads and proﬁts for the extra period of
24 months, that is, till 27.08.1997. The ﬁgure as per S.No.12 is
arrived at after reducing pro rata overheads and proﬁts during
the extended period as mentioned in S.No.9. The computation
belies and deﬁes logic. It clearly amounts to double payment
towards compensation and damages, as it fails to notice that
the sum mentioned in S.No.7 of Rs. 90,47,871/- is on account
of compensation towards overheads and proﬁts/proﬁtability.
Therefore, 20% of the value of the unﬁnished work had already
been included in the computation and awarded under S.No.7.
The date 27.08.1997 is at best, an assumption of BEEL and not
mentioned anywhere or decipherable from the award.
20. We have briefly referred to the principle applicable for
computing the claim for compensation/damages in case of partial
prevention, i.e., where the breach by the employer is not fundamental
and does not entitle the builder/contractor to cease the work, or, being
fundamental, is not treated as repudiation by the builder/contractor.
Measure of compensation/damages in such cases is the loss of proﬁt
arising from reduced proﬁtability or added expense of the work carried
out. 14 In a given case, where there is a fundamental breach by the

14 See Hudson’s Building Contracts (10th edn) pp 450, 596.
462 SUPREME COURT REPORTS [2023] 12 S.C.R.

employer, albeit, the builder/contractor does not immediately elect to
treat the contract as repudiated, he may still be entitled to raise a claim
for loss of proﬁt on the uncompleted work. Oﬀsite expenses or overheads
are all administrative or executive costs incidental to the management
supervision or capital outlay as distinguished from operating charges.
These charges cannot be fairly charged to one stream of work or job, and
rather be distributed as they relate to the general business or the work
of the contractor/builder being undertaken or to be undertaken, as the
overheads are relatable to the builder/contractor’s business in entirety.
21. The usage of formulae such as Hudson’s, Emden’s, or Eichleay’s
formulae to ascertain the loss of overheads and proﬁts has been judicially
approved in the English cases of Peak Construction (Liverpool) Ltd v.
McKinney Foundations Limited15, Whittal Builders v. Chesterle-Street
District Council16, and JF Finnegan Ltd v. Sheﬃeld City Council17 and in
the Canadian case of Ellis-Don v. Parking Authority of Toronto18. The three
formulae deal with theoretical mathematical equations, but are based on
factual assumptions, and therefore can produce three diﬀerent and unrelated
compensation/damages. Therefore, while applying a particular equation or
method, the assumptions should be examined, and the satisfaction of the
assumption(s) ascertained in the facts and circumstances.
22. The formula suggested by Hudson in his 10th edition of the book
Building and Engineering Contracts for the computation of damages takes
the head oﬃce and proﬁt percentage as a proportion of the contract value.
The formula assumes that the proﬁt judged by the builder/contractor is in
fact capable of being earned by her/him elsewhere had the builder/contractor
been free to leave the contract at the proper time. The formula is couched
on three assumptions. First, that the contractor is not habitually or otherwise
underestimating the cost when pricing; secondly the proﬁt element was
realistic at that time; and lastly, there was no ﬂuctuation in the market
conditions and the work of the same general level of proﬁtability would be
available to her/him at the end of the contract period. Satisfaction of these

15 (1970) 1 BLR 114.
16 (1987) 40 BLR 82.
17 (1988) 43 BLR 124.
18 (1978) 28 BLR 98.
BATLIBOI ENVIRONMENTAL ENGINEERS LTD v. 463
HINDUSTAN PETROLEUM CORP. LTD. [SANJIV KHANNA, J.]

assumptions should be ascertained when we apply Hudson’s formula for
computing the damages. Material should be furnished by the claimant to
justify and assure that the assumptions for applying Hudson’s formula are
met.
23. Ordinarily, when the completion of a contract is delayed and the
contractor claims that s/he has suﬀered a loss arising from depletion of her/
his income from the job and hence turnover of her/his business, and also for
the overheads in the form of workforce expenses which could have been
deployed in other contracts, the claims to bear any persuasion before the
arbitrator or a court of law, the builder/contractor has to prove that there
was other work available that he would have secured if not for the delay,
by producing invitations to tender which was declined due to insuﬃcient
capacity to undertake other work. The same may also be proven from the
books of accounts to demonstrate a drop in turnover and establish that this
result is from the particular delay rather than from extraneous causes. If
loss of turnover resulting from delay is not established, it is merely a delay
in receipt of money, and as such, the builder/ contractor is only entitled to
interest on the capital employed and not the proﬁt, which should be paid. The
High Court of Justice Queen’s Bench Division in the case of Property and
Land Contractors Ltd v. Alfred McAlpine Homes North Ltd.19 succinctly
points the in-exactitude of Hudson’s formulae, by observing:
“Furthermore the Emden formula, in common with the Hudson formula
(see Hudson on Building Contracts, (11th edn, 1995) paras 8–182
et seq) and with its American counterpart the Eichleay formula, is
dependent on various assumptions which are not always present and
which, if not present, will not justify the use of a formula. For example
the Hudson formula makes it clear that an element of constraint is
required (see Hudson para 8.185) ie in relation to proﬁt, that there was
proﬁt capable of being earned elsewhere and there was no change in
the market thereafter aﬀecting proﬁtability of the work. It must also
be established that the contractor was unable to deploy resources
elsewhere and had no possibility of recovering cost of the overheads
from other sources, eg from an increased volume of the work. Thus

19 (1995) 76 BLR 59.
464 SUPREME COURT REPORTS [2023] 12 S.C.R.

such formulae are likely only to be of value if the event causing delay
is (or has the characteristics of) a breach of contract.”
24. As mentioned in McDermott International Inc., Hudson’s 11th
Edition has referred to Eichleay formula, which gives the resultant ﬁgures
with greater precision and accuracy. This formula, which emerged in 1960s20,
is far more nuanced and rigorous, as it requires the builder/contractor to
itemise and quantify the total ﬁxed overheads during the contract period.
It takes into consideration all the contracts of the contractor/builder during
the contract period with those of the individually delayed contract to
determine the proportionate faction of the total ﬁxed overheads. However,
in both Hudson’s and Eichleay’s formulae, the amount to be recovered is
determined weekly or monthly, which the delay in the contract completion
is expected to earn.
25. Hudson’s formula might result in double recovery as the proﬁt
being added to the proﬁt is already subsumed within the ‘contract sum’. To
avert this double-recovery, it has been suggested that the formula should be
modiﬁed to ‘contract sum less overhead and proﬁt’21. Any increase in the
value of the ﬁnal account for extra works such as variations contain their
own element of overheads and proﬁts. Therefore, Hudson’s formula like
other formulae, which are only rough approximations of the cost impact
of unabsorbed overhead, should be applied with great care and caution to
ensure fair and just computation.22
26. Hudson in his 14th Edition refers to claim for management or
overheads during the period of delay. The author has referred to Hudson’s
formula as well as Eichleay’s formula, and observes that recently limitations
of Hudson’s approach have received greater emphasis as the English courts
have become more generous in their approach and assessment of claims for
time management. The authors accept what has been highlighted above, and
the need to take care in delay cases to avoid any double recovery, overlap
with other claims, or when payments are obtained by the contractor on

20 The formula borrows the name from the Armed Services Board of Contract Appeals
decision in Eichleay Corporation case, ASBCA No. 5183, 60-2 BCA.
21 Ibid.
22 Claims for head oﬃce overheads - alternatives to formulae, John W. Pettet, 1999.
BATLIBOI ENVIRONMENTAL ENGINEERS LTD v. 465
HINDUSTAN PETROLEUM CORP. LTD. [SANJIV KHANNA, J.]

account of variation(s), or any damages for breach have to be concluded
by using contract price. “Thickening”, by adding unreasonable expenses,
should not be accepted. It is observed that in the total cost method, there
is diﬃculty in linking cause and eﬀect convincingly, albeit is more precise
and factually accurate. Thus, Hudson’s method should be taken as the basis
for computation with caution and as a last resort, where no other way to
compute damages is feasible or mathematically accurate. Inaccuracies in
Hudson’s computation should not be overlooked, and should be accounted
and neutralized. Hudson’s formula when applied should be with full care
and caution not to over-award the damages.
27. Arbitral tribunal in the present case has given complete go by to
these principles well in place, overlooked care and caution required and taken
a one-sided view grossly and abnormally inﬂated the damages. The ﬁgures
quoted in paragraph 11 supra show the over-statement and aggrandizement
in awarding Rs. 1,57,37,666/-, towards loss of overheads and loss of proﬁts/
proﬁtability, in a contract of Rs. 5,74,35,213/-. Rs.1,21,95,859.68/- was
paid for the work done within the term. Rs. 2,92,07,619.13 was paid for
the work done post the term. Thus, Rs. 4,14,03,478.81/- was paid for 80%
of the work. The balance was Rs.1,14,87,042.00/. The amount awarded
towards loss of overheads and proﬁts/proﬁtability is Rs.1,57,37,666/-. No
justiﬁcation for computation of the loss is elucidated or can be expounded.
Even if one were to rely upon the chart given by the BEEL, and ignore the
contradictions in ﬁndings, the amount awarded is highly disproportionate
and exorbitant. It is clearly a case of overlapping or at least a part doubling
of the loss/damages.
28. The arbitral tribunal has accepted that principle of mitigation is
applicable but observes that the only way BEEL could have abased the
loss, was to work on Sundays or holidays. This reasoning is again ex facie
fallacious and wrong. The principle of mitigation with regard to overhead
expenses does not mandate working on Sundays or holidays.
29. We would like to refer to Claim No.2 for idle machinery and
equipment. This was on account of extended period of contract. This
claim of more than Rs.84,00,000/- has been accepted for Rs.12,00,000/-,
by simply stating that the learned arbitrator had inspected the site and, in
his opinion, there is substance in the claim. Inspection of the site was post
466 SUPREME COURT REPORTS [2023] 12 S.C.R.

the appointment of the arbitrator after August 1997, whereas BEEL had
abandoned the contract more than a year ago in March 1996. The amount
awarded is merely on ipsi dixit without giving any reasons and basis for
awarding the amount.
30. The scope and ambit of the court’s power to review the awards under
Section 34 of the A&C Act has been contentious viz., on the interpretation
to the expression ‘in conﬂict with the public policy of India’. There have
been legislative interventions as well as judicial pronouncements. In the
context of the present case, we are required to interpret the provisions as
they existed on the date on which the objections to the award were ﬁled i.e.,
on 21.06.1999. Accordingly, the amendment introduced to Section 34 of the
A&C Act vide Act No. 3 of 2016 with retrospective eﬀect from 23.10.2015
and the judgments of this Court examining the amended Section 34 of the
A&C Act need not be examined.
31. Post award interference and the extent of the second look by
the courts under Section 34 of the A&C Act has been a subject matter of
perennial parley. The foundation of arbitration is party autonomy. Parties
have the freedom to enter into an agreement to settle their disputes/claims
by an arbitral tribunal, whose decision is binding on the parties.23 It is argued
that the purpose of arbitration is fast and quick one-stop adjudication as an
alternative to court adjudication, and therefore, post award interference by
the courts is un-warranted, and an anathema that undermines the fundamental
ediﬁce of arbitration, which is consensual and voluntary departure from the
right of a party to have its claim or dispute adjudicated by the judiciary.
The process is informal, and need not be legalistic24. Per contra, it is
argued that party autonomy should not be treated as an absolute defence,
as a party despite agreeing to refer the disputes/claims to a private tribunal
consensually, does not barter away the constitutional and basic human right
to have a fair and just resolution of the disputes. The court must exercise its
powers when the award is unfair, arbitrary, perverse, or otherwise inﬁrm in

23 See Vidya Drolia and Others v. Durga Trading Corporation and Others, (2021) 2
SCC 1, which examines arbitrability and non-arbitrability of subject matters and claims,
which aspect will not be examined in this case.
24 The expression “judicially”, does not equate arbitration with formal/court proceedings,
and would include a just and fair decision.
BATLIBOI ENVIRONMENTAL ENGINEERS LTD v. 467
HINDUSTAN PETROLEUM CORP. LTD. [SANJIV KHANNA, J.]

law. While arbitration is a private form of dispute resolution, the conduct of
arbitral proceedings must meet the juristic requirements of due process and
procedural fairness and reasonableness, to achieve a ‘judicially’ sound and
objective outcome. If these requirements, which are equally fundamental
to all forms of adjudication including arbitration, are not suﬃciently
accommodated in the arbitral proceedings and the outcome is marred, then
the award should invite intervention by the court.
32. To disentangle and balance the competing principles, the degree
and scope of intervention of courts when an award is challenged by one or
both parties needs to be stated. Reconciliation as a statement of law and in
particular application in a particular case has not been an easy exercise. We
begin by ﬁrst referring to the views expressed by this Court in interpreting
the width and scope of the post award interference by the courts under
Section 34 of the A&C Act.
33. Section 34 of the A&C Act, prior to amendment eﬀected vide Act
No. 3 of 2016 with retrospective eﬀect from 23.10.2015, reads as under:
“34. Application for setting aside arbitral award.—(1) Recourse to a
court against an arbitral award may be made only by an application
for setting aside such award in accordance with sub-section (2) and
sub-section (3).
(2) An arbitral award may be set aside by the court only if—
(a) the party making the application furnishes proof that—
(i) a party was under some incapacity; or
(ii) the arbitration agreement is not valid under the law to which the
parties have subjected it or, failing any indication thereon, under the
law for the time being in force; or
(iii) the party making the application was not given proper notice of
the appointment of an arbitrator or of the arbitral proceedings or was
otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not
falling within the terms of the submission to arbitration, or it contains
decisions on matters beyond the scope of the submission to arbitration:
468 SUPREME COURT REPORTS [2023] 12 S.C.R.

Provided that, if the decisions on matters submitted to arbitration
can be separated from those not so submitted, only that part of the
arbitral award which contains decisions on matters not submitted to
arbitration may be set aside; or
(v) the composition of the Arbitral Tribunal or the arbitral procedure
was not in accordance with the agreement of the parties, unless such
agreement was in conﬂict with a provision of this Part from which
the parties cannot derogate, or, failing such agreement, was not in
accordance with this Part; or
(b) the court ﬁnds that—
(i) the subject-matter of the dispute is not capable of settlement by
arbitration under the law for the time being in force, or
(ii) the arbitral award is in conﬂict with the public policy of India.
Explanation.—Without prejudice to the generality of sub-clause (ii),
it is hereby declared, for the avoidance of any doubt, that an award is
in conﬂict with the public policy of India if the making of the award
was induced or aﬀected by fraud or corruption or was in violation of
Section 75 or Section 81.
(3) An application for setting aside may not be made after three months
have elapsed from the date on which the party making that application
had received the arbitral award or, if a request had been made under
Section 33, from the date on which that request had been disposed of
by the Arbitral Tribunal:
Provided that if the court is satisﬁed that the applicant was prevented
by suﬃcient cause from making the application within the said period
of three months it may entertain the application within a further period
of thirty days, but not thereafter.
(4) On receipt of an application under sub-section (1), the court may,
where it is appropriate and it is so requested by a party, adjourn the
proceedings for a period of time determined by it in order to give the
Arbitral Tribunal an opportunity to resume the arbitral proceedings
or to take such other action as in the opinion of Arbitral Tribunal will
eliminate the grounds for setting aside the arbitral award.”
BATLIBOI ENVIRONMENTAL ENGINEERS LTD v. 469
HINDUSTAN PETROLEUM CORP. LTD. [SANJIV KHANNA, J.]

34. Sub-section (1) to Section 34 of the A&C Act requires that the
recourse to a court against an arbitral award is to be made by a party ﬁling
an application for setting aside of an award in accordance with sub-sections
(2) and (3) of Section 34. Sub-section (2) to Section 34 of the A&C Act
stipulates seven grounds on which a court may set aside an arbitral award.
Sub-section (2) consists of two clauses, (a) and (b). Clause (b) consists of
two sub-clauses, namely, sub-clause (i) which states that when the subject
matter of the dispute is not capable of settlement by arbitration under the law
for the time being in force, and sub-clause (ii), which states that the court
can set aside an arbitral award when the award is ‘in conﬂict with public
policy of India’. We shall subsequently examine the decisions of this Court
interpreting ‘in conﬂict with public policy of India’ and the explanation.
35. Under sub-clause (a) to sub-section (2) to Section 34 of the A&C
Act, a court can set aside an award on the grounds in sub-clauses (i) to (v)
namely, when a party being under some incapacity; arbitration agreement is
not valid under the law for the time being in force; when the party making
an application under Section 34 is not given a proper notice of appointment
of the arbitrator or the arbitration proceedings, or was unable to present
its case; and when the composition of the arbitral tribunal or the arbitral
procedure was not in accordance with the agreement between the parties,
unless such agreement was in conﬂict with the mandatory and binding
non-derogable provision, or was not in accordance with Part I of the A&C
Act. Sub-clause (iv) states that the arbitral award can be set aside when it
deals with a dispute not contemplated by, or not falling within the terms
of submission of arbitration, or it contains a decision on matters beyond
the scope of submission to arbitration. However, the proviso states that the
decision in the matters submitted to arbitration can be separated from those
not submitted, then that part of the arbitral award which contains the decision
on the matter not submitted to arbitration can be set aside. In the present
case, we are not required to examine sub-clauses to clause (a) to sub-section
(2) to Section 34 of the A&C Act in detail. Hence, this decision should not
be read as making any observation, even as obiter dicta on the said clauses.
36. Explanation to sub-clause (ii) to clause (b) to Section 34(2) of the
A&C Act, as quoted above and before its substitution by Act No.3 of 2016,
had postulated and declared for avoidance of doubt that an award is ‘in
470 SUPREME COURT REPORTS [2023] 12 S.C.R.

conﬂict with the public policy of India’, if the making of the award is induced
or aﬀected by fraud or corruption, or was in violation of Sections 75 or 81
of the A&C Act. Both Sections 75 and 81 of the A&C Act fall under Part III
of the A&C Act, which deal with conciliation proceedings. Section 75 of the
A&C Act relates to conﬁdentiality of the settlement proceedings and Section
81 deals with admissibility of evidence in conciliation proceedings. Suﬃce
it is to note at this stage that while ‘fraud’ and ‘corruption’ are two speciﬁc
grounds under ‘public policy’, these are not the sole and only grounds on
which an award can be set aside on the ground of ‘public policy’.
37. Act No. 3 of 2016 with retrospective eﬀect from 23.10.2015 has
substituted the explanation referred to above, by two new explanations that
are diﬀerently worded.25 Sub-section (2-A) to Section 34 of the A&C Act,
which was instituted by Act No. 3 of 2016 with retrospective eﬀect from
23.10.2015, states that the arbitral award arising out of arbitrations other
than international commercial arbitrations can be set aside by the court, if
it is vitiated by patent illegality appearing on the face of the award. The
proviso to sub-section (2-A) to Section 34 of the A&C Act also states that the
award shall not be set aside merely on the ground of erroneous application
of law or by reappreciation of evidence. The aforesaid sub-section need
not be examined in the facts of the present case, as we are not required to

25 Explanations 1 and 2 to sub-clause (ii) to clause (b) to Section 34(2) of the A&C Act
substituted vide Act No. 3 of 2016 read as under:
Explanation 1.—For the avoidance of any doubt, it is clariﬁed that an award is in conﬂict
with the public policy of India, only if,—
(i) the making of the award was induced or aﬀected by fraud or corruption or was in
violation of Section 75 or Section 81; or
(ii) it is in contravention with the fundamental policy of Indian law; or
(iii) it is in conﬂict with the most basic notions of morality or justice.
Explanation 2.—For the avoidance of doubt, the test as to whether there is a contravention
with the fundamental policy of Indian law shall not entail a review on the merits of the
dispute.

Sub-section 2A to Section 34(2) of the A&C Act inserted vide Act No. 3 of 2016 reads as
under:
(2-A) An arbitral award arising out of arbitrations other than international commercial
arbitrations, may also be set aside by the court, if the court ﬁnds that the award is vitiated
by patent illegality appearing on the face of the award:
Provided that an award shall not be set aside merely on the ground of an erroneous
application of the law or by reappreciation of evidence.
BATLIBOI ENVIRONMENTAL ENGINEERS LTD v. 471
HINDUSTAN PETROLEUM CORP. LTD. [SANJIV KHANNA, J.]

interpret and apply the substituted explanations to (ii) to sub-clause (b) to
34(2) of the A & C Act in the present case.
38. The expression ‘public policy’ under Section 34 of the A&C
Act is capable of both wide and narrow interpretation. Taking a broader
interpretation, this Court in ONGC Limited. v. Saw Pipes Limited.,26 held
that the legislative intent was not to uphold an award if it is in contravention
of provisions of an enactment, since it would be contrary to the basic concept
of justice. The concept of ‘public policy’ connotes a matter which concerns
public good and public interest. An award which is patently in violation of
statutory provisions cannot be held to be in public interest. Thus, expanding
on the scope and expanse of the jurisdiction of the court under Section 34 of
the A&C Act, it was held that an award can be set aside if it is contrary to:
(a) fundamental policy of Indian law; or
(b) the interest of India; or
(c) justice or morality, or
(d) in addition, if it is patently illegal.
Nevertheless, the decision holds that mere error of fact or law in
reaching the conclusion on the disputed question will not give jurisdiction to
the court to interfere. However, this will depend on three aspects: (a) whether
the reference was made in general terms for deciding the contractual dispute,
in which case the award can be set aside if the award is based upon erroneous
legal position; (b) this proposition will also hold good in case of a reasoned
award, which on the face of it is erroneous on the legal proposition of law
and/or its application; and (c) where a speciﬁc question of law is submitted
to an arbitrator, erroneous decision on the point of law does not make the
award bad, unless the court is satisﬁed that arbitrator had proceeded illegally.
In the said case, the court set aside the award on the ground that the award
had not taken into consideration the terms of the contract before arriving at
the conclusion as to whether the party claiming the damages is entitled to
the same. Reference was made to the provisions of Sections 73 and 74 of
the Contract Act, which relate to liquidated damages, general damages and
penalty stipulations. This view had held the ﬁeld for a long time and was

26 (2003) 5 SCC 705 (for short, Saw Pipes Limited).
472 SUPREME COURT REPORTS [2023] 12 S.C.R.

applied in subsequent judgments of this Court in Hindustan Zinc Ltd. v.
Friends Coal Carbonisation27, Centrotrade Minerals and Metals Inc. v.
Hindustan Copper Limited28, Delhi Development Authority v. R.S. Sharma
and Co29., J.G. Engineers (P) Ltd. v. Union of India and Another30, and
Union of India v. L.S.N. Murthy.31
39. In 2006, this Court in McDermott International Inc. despite
following the ratio of Saw Pipes Limited, made succinct observations
regarding the restrictive role of courts in the post-award interference. In
addition to the three grounds introduced in Renusagar Power Co. Limited
v. General Electric Co32, as noticed above, an additional ground of ‘patent
illegality’ was introduced Saw Pipes Limited, for exercise of the court’s
jurisdiction in setting aside an arbitral award. This Court, in McDermott
International Inc, held that patent illegality, must be such which goes to
the root of the matter. The public policy violation should be so unfair and
unreasonable as to shock the conscience of the court. Arbitrator where s/
he acts contrary to or beyond the express law of contract or grants relief,
such awards fall within the purview of Section 34 of the A&C Act. Further,
what would constitute public policy is a matter dependent upon the nature
of transaction and the statute. Pleadings of the party and material brought
before the court would be relevant to enable the court to judge what is in
public good or public interest, or what would otherwise be injurious to
public good and interest at a relevant point. So, this must be distinguished
from public policy of a particular government.
40. A similar view was expressed in Rashtriya Ispat Nigam Ltd. v.
Dewan Chand Ram Saran33 with the clariﬁcation that where a term of
the contract is capable of two interpretations and the view taken by the
arbitrator is a plausible one, it cannot be said that the arbitrator travelled
outside the jurisdiction or the view taken the arbitrator is against the terms
of the contract. The court cannot interfere with the award and substitute its

27 (2006) 4 SCC 445.
28 (2006) 11 SCC 245.
29 (2008) 13 SCC 80.
30 (2011) 5 SCC 758.
31 (2012) 1 SCC 718.
32 1994 Supp (1) SCC 644.
33 (2012) 5 SCC 306.
BATLIBOI ENVIRONMENTAL ENGINEERS LTD v. 473
HINDUSTAN PETROLEUM CORP. LTD. [SANJIV KHANNA, J.]

view with the award and interpretation accepted by the arbitrator, the reason
being the court does not sit in appeal over the ﬁndings and decision of the
arbitrator, while deciding an application under Section 34 of the A&C Act.
The arbitrator is legitimately entitled to take a view after considering the
material before him/her and interpret the agreement. The judgment should
be accepted as ﬁnal and binding.
41. Subsequently, in ONGC Ltd. v. Western Geco International
34
Ltd., a three Judge Bench of this Court observed that the Court, in Saw
Pipes Ltd., did not examine what would constitute ‘fundamental policy
of Indian law’. The expression ‘fundamental policy of Indian law’ in
the opinion of this Court includes all fundamental principles providing
as basis for administration of justice and enforcement of law in this
country. There were three distinct and fundamental juristic principles
which form a part and parcel of ‘fundamental policy of Indian law’.
The ﬁ rst and the foremost principle is that in every determination by
a court or an authority that aﬀects rights of a citizen or leads to civil
consequences, the court or authority must adopt a judicial approach.
Fidelity to judicial approach entails that the court or authority should
not act in an arbitrary, capricious or whimsical manner. The court or
authority should act in a bona ﬁde manner and deal with the subject in
a fair, reasonable and objective manner. Decision should not be actuated
by extraneous considerations. Secondly, the principles of natural justice
should be followed. This would include the requirement that the arbitral
tribunal must apply its mind to the attending facts and circumstances
while taking the view one way or the other. Non- application of mind
is a defect that is fatal to any adjudication. Application of mind is best
done by recording reasons in support of the decision. As noticed above,
Section 31(3)(a) of the A&C35 states that the arbitral award shall state
the reasons on which it is based, unless the parties have agreed that no
reasons are to be given. Sub-clauses (i) and (iii) to Section 34(2) also
refer to diﬀerent facets of natural justice. In a given case sub-clause
to Section 34(2) and sub-clause (ii) to clause (b) to Section 34(2) may
equally apply. Lastly, is the need to ensure that the decision is not perverse

34 (2014) 9 SCC 263, (for short, Western Geco)
35 Supra footnote 5.
474 SUPREME COURT REPORTS [2023] 12 S.C.R.

or irrational that no reasonable person would have arrived at the same or
be sustained in a court of law. Perversity or irrationality of a decision is
tested on the touchstone of Wednesbury principle of reasonableness 36.
At the same time, it was cautioned that this Court was not attempting an
exhaustive enumeration of what would constitute ‘fundamental policy
of Indian law’, as a straightjacket deﬁnition is not possible. If on facts
proved before them, the arbitrators fail to draw an inference which
ought to have been drawn or if they have drawn an inference which on
the face of it, is untenable resulting in injustice, the adjudication made
by an arbitral tribunal that enjoys considerable latitude and play at the
joints in making awards, may be challenged and set aside.
42. The decision of this Court in Associate Builders elaborately
examined the question of public policy in the context of Section 34 of the
A&C Act, speciﬁcally under the head ‘fundamental policy of Indian law’.
It was ﬁrstly held that the principle of judicial approach demands a decision
to be fair, reasonable and objective. On the obverse side, anything arbitrary
and whimsical would not satisfy the said requirement.
43. Referring to the third principle in Western Geco, it was explained
that the decision would be irrational and perverse if (a) it is based on no
evidence; (b) if the arbitral tribunal takes into account something irrelevant
to the decision which it arrives at; or (c) ignores vital evidence in arriving
at its decision. The standards prescribed in Excise and Taxation Oﬃcer-
cum-Assessing Authority v. Gopi Nath & Sons37 and Kuldeep Singh v.
Commissioner of Police38 should be applied and relied upon, as good
working tests of perversity. In Gopi Nath & Sons it has been held that apart
from the cases where a ﬁnding of fact is arrived at by ignoring or excluding
relevant materials or taking into consideration irrelevant material, the ﬁnding
is perverse and inﬁrm in law when it outrageously deﬁes logic as to suﬀer
from vice of irrationality. Kuldeep Singh clariﬁes that a ﬁnding is perverse
when it is based on no evidence or evidence which is thoroughly unreliable
and no reasonable person would act upon it. If there is some evidence which

36 As expounded in the case of Associated Provincial Picture Houses Ltd. v. Wednesbury
Corporation., (1948) 1 KB 223: (1947) 2 All ER 680 (CA).
37 1992 Supp (2) SCC 312, (for short, Gopi Nath & Sons).
38 (1999) 2 SCC 10.
BATLIBOI ENVIRONMENTAL ENGINEERS LTD v. 475
HINDUSTAN PETROLEUM CORP. LTD. [SANJIV KHANNA, J.]

can be acted and can be relied upon, however compendious it may be,
the conclusion should not be treated as perverse. This Court in Associate
Builders emphasised that the public policy test to an arbitral award does not
give jurisdiction to the court to act as a court of appeal and consequently
errors of fact cannot be corrected. Arbitral tribunal is the ultimate master of
quality and quantity of evidence. An award based on little evidence or no
evidence, which does not measure up in quality to a trained legal mind would
not be held to be invalid on this score. Every arbitrator need not necessarily
be a person trained in law as a Judge. At times, decisions are taken acting
on equity and such decisions can be just and fair should not be overturned
under Section 34 of the A&C Act on the ground that the arbitrator’s approach
was arbitrary or capricious. Referring to the third ground of public policy,
justice or morality, it is observed that these are two diﬀerent concepts. An
award is against justice when it shocks the conscience of the court, as in an
example where the claimant has restricted his claim but the arbitral tribunal
has awarded a higher amount without any reasonable ground of justiﬁcation.
Morality would necessarily cover agreements that are illegal and also those
which cannot be enforced given the prevailing mores of the day. Here again
interference would be only if something shocks the court’s conscience.
Further, ‘patent illegality’ refers to three sub-heads: (a) contravention of
substantive law of India, which must be restricted and limited such that
the illegality must go to the root of the matter and should not be of a trivial
nature. Reference in this regard was made to clause (a) to Section 28(1) of
the A&C Act, which states that the dispute submitted to arbitration under
Part I shall be in accordance with the substantive law for the time being in
force. The second sub-head would be when the arbitrator gives no reasons
in the award in contravention with Section 31(3) of the A&C Act. The
third sub-head deals with contravention of Section 28(3) of the A&C Act
which states that the arbitral tribunal shall decide all cases in accordance
with the terms of the contract and shall take into account the usage of the
trade applicable to the transaction. This last sub-head should be understood
with a caveat that the arbitrator has the right to construe and interpret the
terms of the contract in a reasonable manner. Such interpretation should
not be a ground to set aside the award, as the construction of the terms of
the contract is ﬁnally for the arbitrator to decide. The award can be only
set aside under this sub-head if the arbitrator construes the award in a way
that no fair-minded or reasonable person would do.
476 SUPREME COURT REPORTS [2023] 12 S.C.R.

44. As observed previously, we need not examine the amendment
made to the A&C Act vide Act No. 3 of 2016 with retrospective eﬀect from
23.10.2015 and the judgments that deal with the amended Section 34 of
the A&C Act. Pertinently, the amendment to Section 34 of the A&C Act
was eﬀected, pursuant to the observations of the Supplementary Report to
Report No. 246 on Amendments to Arbitration and Conciliation Act, 1996
by the Law Commission of India, titled ‘Public Policy – Developments
post-Report No. 246’ published in February 2015. This Supplementary
Report observed that the power to review an arbitral award on merits under
Section 34 of the A&C Act, as elucidated in the case of Western Geco,
subsequently followed in Associate Builders, is contrary to the object of the
A&C Act and international practice on minimization of judicial intervention.
A reference can also be conveniently made to MMTC Ltd. v. Vedanta Ltd.,39
and Ssangyong Engg. & Construction Co. Ltd. v. National Highways
Authority of India40, which examine the scope of intervention of courts under
Section 34 of the A&C Act as amended by Act No. 3 of 2016. MMTC Ltd.
and Ssangyong Engg., and other judgments which deal with the amended
Section 34 of the A&C Act that are not applicable in the present case.
45. We have extensively analysed the award, its patent ﬂaws and
illegalities which emanate from it, like the manifest lack of reasoning
in arriving at the conclusions and the calculation of amounts awarded,
which, in fact, amount to double or part-double payments, besides being
contradictory etc. In view of our aforesaid reasoning, the award has been
rightly held to be unsustainable and set aside by the division bench of the
High Court exercising power and jurisdiction under Section 37 read with
Section 34 of the A & C Act.
46. In view of the aforesaid discussion, the appeal is dismissed without
any order as to costs.

Headnotes prepared by: Appeal dismissed.
Nidhi Jain

39 (2019) 4 SCC 163 (for short, MMTC Ltd.).
40 (2019) 15 SCC 131(for short, Ssangyong Engg).

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