CONSOLIDATED CONSTRUCTION CONSORTIUM LIMITEDversusSOFTWARE TECHNOLOGY PARKS OF INDIA

                 [2025] 4 S.C.R. 1846 : 2025 INSC 574

           Consolidated Construction Consortium Limited
                                v.
                Software Technology Parks of India
                       (Civil Appeal No. 5383 of 2024)
                                 28 April 2025
               [Abhay S. Oka and Ujjal Bhuyan,* JJ.]


                            Issue for Consideration
       Issue arose as regards the correctness of the order passed by
       the Division Bench of High Court upholding the arbitral award.

                                   Headnotes†
       Arbitration and Conciliation Act, 1996 – ss.34 and 37 –
       Application for setting aside arbitral awards – Dispute
       between the parties regarding delay in completion of the
       construction contract – Respondent-contracting authority
       deducted liquidated damages from the contractual dues of
       the appellant-contractor, along with other deduction and paid
       balance amount to appellant – Initiation of arbitral proceedings
       by the appellant challenging deduction of liquidated damages –
       Arbitral award by the arbitrator upholding the deduction of
       liquidated damages – Petition u/s.34 by the appellant to set
       aside the arbitral award – Allowed by the Single Judge of the
       High Court setting aside the award holding that the appellant
       had completed the work during the extended time granted
       by the respondent, thus there was no delay – However, the
       Division Bench set aside the judgment of the Single Judge –
       Correctness:
       Held: An arbitral award is not liable to be interfered with only on
       the ground that the award is illegal or is erroneous in law which
       would require re-appraisal of the evidence adduced before the
       arbitral tribunal – If two views are possible, no scope for the court
       to re-appraise the evidence and to take the view other than the
       one taken by the arbitrator – View taken by the arbitral tribunal
       is ordinarily to be accepted and allowed to prevail – Scope of
       interference in arbitral matters is only confined to the extent



* Author
[2025] 4 S.C.R.                                                              1847

           Consolidated Construction Consortium Limited v.
                 Software Technology Parks of India

     envisaged u/s.34 – Proceedings u/s.34 are summary in nature and
     not like a full-fledged civil suit or a civil appeal – Award cannot be
     touched unless it is contrary to the substantive provisions of law
     or s.34 or the terms of the agreement – Role of the court u/s.34
     is a restrictive jurisdiction and has to be invoked in a conservative
     manner – Arbitral autonomy must be respected and judicial
     interference should remain minimal otherwise it will defeat the very
     object of the 1996 Act – There was an ex post facto approval on
     the part of the respondent – Appellant continued with the contract
     work even after the extended period had expired – All throughout
     respondent had put the appellant to notice that notwithstanding
     extension of time it reserved the right to levy liquidated damages –
     Single Judge went beyond the grounds provided in s.34 to set aside
     the arbitral award and exceeded jurisdiction – No justification for
     setting aside the arbitral award by taking a different view which is
     certainly a possible and plausible view – Different interpretation
     of the clause of the contract other than the one taken by the
     arbitral tribunal is possible but that will not bring the challenge to
     the arbitral award within the four corners of s.34 – Division Bench
     justified in reversing the order of Single Judge u/s.37 – Contract
     Act, 1872 – ss.55, 73, 74. [Paras 22-24, 28]

                                 List of Acts
     Arbitration and Conciliation Act, 1996, Contract Act, 1872.

                              List of Keywords
     Arbitral award; Challenge to arbitral award; Delay in completion
     of construction project; Liquidated damages; Deduction of
     liquidated damages; Scope of interference u/s.37 of Arbitration
     and Conciliation Act; Scope of interference u/s.34 of Arbitration
     and Conciliation Act; Extension of time; Ex post facto approval;
     Consequences of breach of contract; Appellate provision; Award
     illegal or erroneous in law; Restrictive jurisdiction; Invoked in
     conservative manner; Minimal judicial interference; Judge exceeded
     jurisdiction; Arbitral autonomy.

                             Case Arising From
     CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5383 of 2024
     From the Judgment and Order dated 08.08.2019 of the High Court
     of Judicature at Madras in OSA No. 157 of 2019
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                        Appearances for Parties
     Advs. for the Appellant:
     S.S. Rajesh, K.S. Mahadevan, Ms. Swati Bansal, Rangarajan R.,
     Aravind Gopinathan, Rajesh Kumar.
     Advs. for the Respondent:
     Vinay Mohan Sharma, Ravinder Kumar Yadav, Mrs. Arti Anupriya,
     Kartikey, Paras Juneja, Vineet Yadav, Amir Yadav, Vinay Kumar
     Sharma, Ms. Bhawana Gadpandey.

               Judgment / Order of the Supreme Court

                               Judgment

     Ujjal Bhuyan, J.

     This appeal by special leave is directed against the judgment and
     order dated 08.08.2019 passed by the High Court of Judicature at
     Madras in O.S.A. No. 157 of 2019.
2.   Be it stated that by the judgment and order dated 08.08.2019
     (‘impugned judgment’ hereinafter), Division Bench of the High Court
     of Judicature at Madras (briefly ‘the High Court’ hereinafter) allowed
     the appeal of the respondent filed under Section 37 of the Arbitration
     and Conciliation Act, 1996 (briefly ‘the 1996 Act’ hereinafter) by
     setting aside the judgment and order dated 02.01.2019 passed by
     the learned Single Judge of the High Court in O.P. No. 433 of 2010
     which was filed by the appellant under Section 34 of the 1996 Act
     setting aside the arbitral award dated 05.01.2010.
3.   Relevant facts may be briefly noted.
4.   Software Technology Parks of India i.e. the respondent following
     a tender process had awarded a contract to M/s Consolidated
     Construction Consortium Ltd. i.e. the appellant for construction of
     office building, incubation centre etc. of the respondent. As per the
     Letter of Intent dated 09.03.2006 issued by the respondent, the
     total cost of the project was Rs. 16,48,69,970.00. The scheduled
     date for completion of construction was 15.01.2007. Appellant could
     complete the construction only by 30.11.2007. There was thus a
     delay of about 10 months.
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     4.1. Appellant after handing over the project site to the respondent
          claimed a sum of Rs. 1,40,12,786.00 including retention
          money and interest thereon. However, because of the delay
          in completion, respondent levied and deducted liquidated
          damages to the tune of Rs. 82,43,499.00 by invoking clause
          26 of the contract agreement entered into between the parties.
          Respondent also made other deductions. After such deductions,
          balance amount of Rs. 3,70,992.00 was paid to the appellant
          by the respondent.
     4.2. Aggrieved appellant invoked the arbitration clause of the
          contract agreement and initiated arbitral proceedings challenging
          deduction of liquidated damages by the respondent and also
          lodged other claims. Respondent also lodged counter claims.
     4.3. Learned arbitrator vide the award dated 10.05.2010 upheld the
          deduction of liquidated damages by the respondent. That apart,
          learned arbitrator dismissed the claims and counter claims of
          the parties. Learned arbitrator held that he did not find any of
          the claims or counter claims to have been established and,
          therefore, declared the award as nil against all the claims and
          counter claims.
5.   Appellant filed a petition before the High Court under Section 34 of
     the 1996 Act to set aside the award which was registered as Original
     Petition (O.P.) No. 433 of 2010. A learned Single Judge of the High
     Court vide the judgment and order dated 02.01.2019 held that there
     was extension of the work period. Appellant had completed the work
     during the extended period of time. Therefore, deduction of liquidated
     damages was not justified. Consequently, the arbitral award dated
     10.05.2010 was set aside.
6.   Aggrieved by the aforesaid judgment and order dated 02.01.2019,
     respondent preferred an appeal before the High Court under Section
     37 of the 1996 Act which was registered as O.S.A. No. 157 of 2019.
     A Division Bench of the High Court vide the impugned judgment and
     order dated 08.08.2019 opined that learned Single Judge was not
     justified in setting aside the award. The award was set aside purely on
     assumptions and surmises. Grounds on which the award was set aside
     were beyond the scope of Section 34 of the 1996 Act. Accordingly,
     the judgment and order of the learned Single Judge dated 02.01.2019
     was set aside, thereby allowing the appeal of the respondent.
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7.   Aggrieved thereby appellant had filed the related special leave petition
     on which notice was issued on 05.02.2021. When the matter was
     heard on 23.04.2024, leave was granted.
8.   Learned counsel for the appellant submits that Division Bench of the
     High Court was not at all justified in exercising power under Section
     37 of the 1996 Act by reversing the decision of the learned Single
     Judge passed under Section 34 of the 1996 Act. He submits that
     scope of interference under Section 37 is extremely limited and,
     therefore, the Division Bench committed a manifest error in setting
     aside the order passed under Section 34 of the 1996 Act. In the
     process, the Division Bench committed a further error by restoring
     the award which had upheld deduction of liquidated damages by
     the respondent.
     8.1. Learned Single Judge had rightly exercised power within the
          broad parameters of Section 34 of the 1996 Act while setting
          aside the award in question. It is the Division Bench which acted
          like an appellate court beyond the scope of Section 37 of the
          1996 Act while setting aside the order passed under Section
          34 of the 1996 Act and restoring the award.
     8.2. Learned counsel submits that the respondent had extended
          the time for completion of the contractual work. Appellant had
          completed the construction within the extended period. Therefore,
          there was no delay in the contractual performance. Extension of
          time and levy of liquidated damages cannot go hand-in-hand.
          In the circumstances, respondent was not justified in deducting
          liquidated damages from the contractual dues of the appellant.
     8.3. He submits that the instant contract between the appellant and
          the respondent was a contract relating to construction. In such
          a contract, time is never of the essence. Such a contract is
          governed by the principles laid down in Sections 55, 73 and 74
          of the Indian Contract Act, 1872. In any view of the matter, the
          employer would be entitled to liquidated damages to compensate
          for the delay provided the delay had caused loss or damage
          to the employer. No such deduction can be made if the delay
          does not cause any loss or damage.
     8.4. Division Bench had ignored the letter dated 26.09.2008 issued by
          the respondent to the appellant extending the time to complete
          the contract upto 30.11.2007. This letter of extension was written
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           Consolidated Construction Consortium Limited v.
                 Software Technology Parks of India

           pursuant to the application of the appellant dated 14.12.2007
           seeking such extension. Thus, appellant had completed the work
           within the extended time granted by the respondent. Therefore,
           there was no delay in executing the contract. Further, no loss
           ensued to the respondent which would justify any deduction
           on account of liquidated damages.
     8.5. That being the position, there was no justification for invoking
          clause 26 of the contract agreement by the respondent.
     8.6. Learned counsel submits that learned Single Judge had rightly
          noted that appellant could not complete the contract work within
          the initial time frame because of reasons which were beyond its
          control. When the respondent had extended the time frame, it was
          obvious that the delay could not be attributed to the appellant.
          Extension of time to complete the contract does not imply a
          delay in execution. No loss was suffered by the respondent.
     8.7. Learned counsel submits that when the respondent recognized
          the difficulties faced by the appellant in executing the contract
          it extended the time limit for completion of the contract till
          30.06.2007. When the appellant was still unable to complete the
          contract by 30.06.2007, respondent had allowed the appellant
          to carry on with the work and to complete the contract by
          30.11.2007 which was accepted by the respondent, of course,
          reserving its right to levy liquidated damages. Learned counsel
          further submits that on the one hand respondent had allowed
          the appellant extended time to complete the construction
          work, but on the other hand levied liquidated damages on the
          appellant by invoking clause 26 of the contract agreement.
          However, no advance notice was issued to the appellant
          indicating any intention on the part of the respondent to levy
          liquidated damages.
     8.8. Lastly, learned counsel submits that in any view of the matter,
          the impugned order is wholly unsustainable in law as well as
          on facts and, is, thus liable to be appropriately interfered with.
9.   On the other hand, learned counsel for the respondent submits that
     liquidated damages were rightly levied by the respondent. Such
     liquidated damages are in conformity with Section 55 of the Indian
     Contract Act, 1872 (briefly ‘the Contract Act’ hereinafter). Respondent
     was presented with such a situation by the appellant that it had no
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    other option but to grant extension of time on account of appellant’s
    admitted inability to complete the work within the stipulated time. In the
    review meeting held on 18.12.2006, just twenty eight days before the
    stipulated date for completion of the work i.e. 15.01.2007, appellant
    expressed its inability to complete the work within the stipulated date.
    Respondent was left with no option other than to fix a revised date
    for completion of the work and grant extension of time.
    9.1. Pursuant to the review meeting dated 18.12.2006, respondent
         vide letter dated 12.01.2007 had granted the first extension
         of time for completion of the contract work upto 28.02.2007.
         However, appellant failed to complete the work within this
         extended period of time. As a result, respondent was compelled
         to grant further extensions of time to the appellant upto
         30.06.2007 in order to have the contract work completed. This
         was because of appellant’s continued failure to meet even the
         revised timelines despite repeated requests and warnings from
         the respondent and its architect.
    9.2. Learned counsel for the respondent submits that in the review
         meeting held on 18.12.2006, appellant was unequivocally
         forewarned that grant of extension of time for completion of
         the contract work would be without prejudice to the right of
         the respondent to recover liquidated damages. Each time
         extension was granted it was made clear to the appellant that
         such extension of time was without prejudice to the right of the
         respondent to recover liquidated damages. Therefore, appellant
         had full prior notice of the respondent’s intention to levy liquidated
         damages. In the circumstances, it is not open to the appellant
         to now contend that the respondent is not entitled to recover
         liquidated damages on the ground that time for performance
         of the contract was extended.
    9.3. Learned counsel has refuted the contention of learned counsel
         for the appellant that time was not the essence of the contract.
         On the contrary, he asserts that time was very much of essence
         for performance of the contract. Because of admitted inability
         of the appellant to complete the contract work within time,
         respondent was compelled to grant multiple extensions of time
         but each time, appellant was forewarned that such extension
         of time was without prejudice to the right of the respondent to
         recover liquidated damages.
[2025] 4 S.C.R.                                                        1853

            Consolidated Construction Consortium Limited v.
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     9.4. Learned counsel has also denied the contention of learned
          counsel for the appellant that respondent could not furnish or
          show any loss or damage suffered by it because of the delay
          in execution of the contract. He submits that the arbitral tribunal
          had minutely examined this aspect of the matter and after
          considering the evidence on record rejected such contention
          of the appellant. Arbitral tribunal held that liquidated damages
          were validly deducted; the quantum was fair and reasonable.
     9.5. Learned counsel for the respondent, therefore, submits that
          the appellate court i.e. Division Bench of the High Court had
          rightly set aside the order of the learned Single Judge thereby
          restoring the award. Learned Single Judge had set aside the
          award in complete disregard to Section 34 of the 1996 Act. He
          submits that there is no merit in the appeal. Consequently, the
          appeal should be dismissed.
10. Submissions made by learned counsel for the parties have received
    the due consideration of the Court.
11. Let us first deal with the award. In this case, the arbitral tribunal
    comprised of a sole arbitrator Shri K. Srinivasan. He was appointed as
    the arbitrator on 05.01.2009. In the arbitral proceedings, as many as
    five claims were made on behalf of the appellant. On the other hand,
    the respondent made three counter claims. In so far the appellant is
    concerned, the major claim was relating to refund of Rs. 82,43,499.00
    deducted by the respondent as liquidated damages. This claim was
    framed as issue No. 3 by the arbitral tribunal. In so far respondent
    is concerned, it raised counter claims relating to reimbursement of
    rent paid by it for the period of delay in completion of the contract
    work as well as for loss of rent in the new complex due to delayed
    construction. As alluded to hereinabove, issue No. 3 pertains to
    claim of the appellant for refund of Rs. 82,43,499.00 deducted by the
    respondent as liquidated damages i.e. as compensation for the delay
    in execution of the contract. Both appellant and the respondent had
    submitted their relied upon documents and advanced their respective
    contentions. Arbitral tribunal had framed two questions:
           (i)    Whether the delay had occurred due to default on
                  the part of the claimant(appellant)? and
           (ii)   Whether the respondent was entitled in terms of the
                  contract to levy liquidated damages for the delay?
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    11.1. After going through the materials on record, arbitral tribunal
          held that respondent had produced documents to show that
          the delay in moving to the new premises had caused them
          direct financial loss in two ways:
         (i)    in having to continue to pay rent for ten and half
                 months in the old premises; and
         (ii)   in having lost ten and half months in letting out
                 portions of the new premises on rent.
    11.2. Such a loss was on account of the breach of contract by the
          appellant. Respondent had established that the loss suffered
          by it indeed occurred due to delay in handing over the new
          premises. Clause 26 of the contract agreement permitted the
          respondent to levy liquidated damages. It also provided as
          to how the quantum of liquidated damages should be arrived
          at. According to the arbitral tribunal, the quantum was at the
          rate of 0.5% per week of delay. Delay in this case was more
          than ten months. Bulk of the delay was for reasons within
          the control of the appellant. The figure of Rs. 82,43,499.00
          was correctly quantified and deducted as liquidated damages
          by the respondent. Therefore, the arbitral tribunal held that
          the liquidated damages were legally and contractually valid.
          It was reasonable compared to the loss occasioned to the
          respondent due to default by the appellant. Therefore, arbitral
          tribunal held as under:
                 In view of all that has been stated above I conclude
                 that recovery of LD was valid contractually and
                 legally. It was levied by a competent authority and the
                 levied amount was fair and reasonable. I therefore
                 award Nil amount against this claim.
    11.3. Thereafter, the arbitral tribunal rejected the other claims of
          the appellant as well as the counter claims of the respondent.
          Summary of the award dated 10.05.2010 reads as under:
                 In sum therefore I do not find that any of the claims
                 by the claimant or counter claims by the respondents
                 have been established and the award is NIL against
                 all the claims and counter-claims.
[2025] 4 S.C.R.                                                        1855

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12. Clause 26 of the contract agreement deals with liquidated damages.
    Clause 26 reads thus:
           26. Liquidated damages
           If the contractor fails to complete the work by the date
           stated in the Appendix or within any extended time under
           clause 28 hereof the contractor shall pay or allow the
           employer to deduct the sum named in the Appendix as
           “Liquidated Damages” for the period during which the
           said works shall remain incomplete and the employer may
           deduct such damages from any money due or that may
           become due to the contractor.
     12.1. Thus, what clause 26 says is that if the contractor fails to
           complete the work within the stipulated period or within the
           extended time as provided under clause 28 then the employer
           shall be entitled to deduct the sum named in the Appendix as
           liquidated damages for the period during which the contract
           work remained incomplete. The employer may deduct such
           liquidated damages from any money due or that may become
           due to the contractor.
     12.2. In the Appendix, the time for completion was provided as 10
           months from the 10th day of the written order to commence
           work or after the date on which the site was handed over to
           the contractor whichever was later. In so far determination
           of liquidated damages is concerned, it was mentioned in the
           Appendix that the same would be calculated at the rate of
           Rs. 0.5 percent of the contract value per week subject to a
           maximum of 5 percent of the value of the contract.
13. Clause 27 provides for extension of time. Clause 27 reads as under:
           27. Extension of time
           If the contractor shall desire an extension of time for
           completion of the work on the grounds of his having been
           unavoidably hindered (a) by force majeure or (b) by reason
           of any exceptional inclement weather or (c) reason of
           any proceedings taken or threatened by or dispute with
           adjoining or neighbouring employers or public authorities
           arising otherwise than through the contractor’s own
           defaults or (d) by the work or delays of other contractors
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         or tradesmen engaged or nominated by the employer
         or the architect and not referred to in the Schedule of
         Quantities and/or specifications or (e) by strikes or lockout
         affecting any of the building trades or (f) by reason of
         delays in the supply of materials stipulated to be supplied
         by the employer he shall apply in writing to the architect/
         employer within 15 days of such hindrance on account
         of which he desires such extension as aforesaid and the
         architect/employer, if in his opinion reasonable grounds
         have been shown therefor, may make a fair and reasonable
         extension of time for completion of the contract works,
         but the contractor shall nevertheless constantly use his
         endeavours to prevent delay and shall do all that may
         reasonably be required of him to proceed with the work
         expeditiously provided.
         (a)    that the contractor shall have no claim other than
                extension of time for the delay in completion of the
                work due to such hindrance and nothing else and
         (b)    that the contractor shall suspend the works whenever
                called upon to do so in writing by the architect/
                employer and shall be allowed reasonable extension
                of time for completion of work due to such suspension
                of work and nothing else.
    13.1. What clause 27 provides for is that if the contractor wants an
          extension of time for completion of the work on the ground
          that the work has been unavoidably hindered:
         (i)    by force majeure; or
         (ii)   by reason of any exceptional inclement weather; or
         (iii) by reason of any proceedings taken or dispute etc. with
               neighbours otherwise then the contractor’s own default; or
         (iv) due to the work or delay of other contractors or tradesmen
              engaged or nominated by the employer or the architect; or
         (v)    by strike or lock out affecting any of the building trades; or
         (vi) by reason of delay in supply of materials stipulated to be
              supplied by the employer; or
[2025] 4 S.C.R.                                                          1857

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           (vii) if the contractor wanted extension of time, he was required
                 to apply to the employer/architect for such extension
                 within the period specified and if the employer/architect
                 was of the opinion that reasonable grounds were shown,
                 it would make a fair and reasonable extension of time for
                 completion of the contract work.
14. Since, there is a reference to clause 28 in clause 26, we may as
    well consider clause 28. It deals with consequence of failure of the
    contractor to comply with the instructions of the architect or the
    employer. Clause 28 reads thus:
           28. Failure of contractor to comply with Architect’s/
           Employer’s Instructions
           If the contractor after receipt of written notice from the
           architect/employer requiring compliance within ten days
           fails to comply with such further drawings and/or architect/
           employer’s instructions the employer may employ and pay
           other persons to execute any such work whatsoever that
           may be necessary to give effect thereto, and all costs
           incurred in connection therewith shall be recoverable from
           the contractor by the employer on the certificate of the
           architect as a debt or may be deducted by him from any
           money due to or become due to the contractor.
15. From a conjoint analysis of clauses 26, 27 and 28 it is evident that if
    the contractor fails to complete the work within the stipulated period
    or within the extended time as may be provided, he would be liable
    to pay liquidated damages which may be deducted by the employer
    from any due to be paid by the employer to the contractor. How the
    liquidated damages is to be determined is provided in the Appendix
    as noted above. If the contract work is hindered beyond the control
    of the contractor such as the examples given in clause 27, the
    contractor may seek extension of time and if the same is found to be
    reasonable, the employer may make a fair and reasonable extension
    of time. On a combined reading of the above clauses, a plausible
    view may be taken that clause 26 is not controlled by clause 27.
16. What the arbitrator noted in this case is that on a number of occasions,
    appellant had sought for time. On each occasion respondent was
    compelled to allow the appellant to carry on with the work beyond
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     the extended time period by granting further extension, reserving its
     right to levy liquidated damages. It has come on record that in the
     review meeting held on 18.12.2006, respondent had put the appellant
     to notice that grant of extension of time for completion of the contract
     work would be without prejudice to the right of the respondent to
     recover liquidated damages. Though the first extended time limit was
     till 28.02.2007, further time had to be granted by the respondent on
     a number of occasions thereafter till 30.06.2007, on each occasion
     reserving the right to levy liquidated damages.
17. At this stage we may mention that appellant had continued execution
    of the work beyond 30.06.2007 and completed the same only
    on 30.11.2007 though the last extended period had expired on
    30.06.2007. It was only after completion of the contract work that the
    appellant wrote letter dated 14.12.2007 to the respondent seeking
    extension of time. Respondent issued letter dated 26.09.2008 granting
    extension of time. So it was an ex post facto approval on the part
    of the respondent. Thus, appellant had continued with the contract
    work even after the extended period had expired on 30.06.2007.
    Be it stated that all throughout respondent had put the appellant to
    notice that notwithstanding extension of time it reserved the right to
    levy liquidated damages.
18. Section 55 of the Indian Contract Act says that when a party to a
    contract promises to do a certain thing within a specified time but fails
    to do so, 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.
    If time is not the essence of the contract, the contract does not
    become voidable by the failure to do such thing on or before the
    specified time but the promisee is entitled to compensation from the
    promisor for any loss occasioned to him by such failure. Further, if
    in case of a contract voidable on account of the promisor’s failure to
    perform his promise within the time agreed and 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.
19. Sections 73 and 74 deal with consequences of breach of contract.
    Heading of Section 73 is compensation for loss or damage caused
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     by breach of contract. When a contract is 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. On the other hand, Section
     74 deals with compensation for breach of contract where penalty
     is stipulated for. When a contract is broken, if a sum is mentioned
     in the contract as the amount to be paid in case of such breach or
     if the contract contains any other stipulation by way of penalty, the
     party complaining of the breach is entitled whether or not actually
     damage or loss is proved to have been caused thereby, to receive
     from the party who has broken the contract reasonable compensation
     not exceeding the amount so named or the penalty stipulated for.
20. A conjoint reading of Sections 55, 73 and 74 would indicate that in
    a contract whether time is of the essence or not, if the contractor
    fails to execute the contract within the specified time, the contract
    becomes voidable at the option of the promisee and the promisee
    would be entitled to compensation from the promisor for any loss
    occasioned to him by such failure. However, in case of a contract
    where time is of the essence, the contract becomes voidable on
    account of the contractor’s failure to execute the contract within the
    agreed time. The promisee cannot claim compensation for any loss
    occasioned by such breach of the contract unless he gives notice
    to the promisor of his intention to claim compensation. This is made
    more specific in Section 73. Section 74 contemplates a situation where
    penalty is provided for and quantified as compensation for breach
    of contract. In such a case, the party complaining of the breach is
    entitled to compensation whether or not actual damage or loss is
    proved to have been caused thereby but such compensation shall
    not exceed the quantum of penalty stipulated.
21. Before we deal with the order of the learned Single Judge dated
    02.01.2019 passed under Section 34 of the 1996 Act, it would be
    apposite to advert to Section 34 of the 1996 Act which is as follows:
           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).
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        (2) An arbitral award may be set aside by the court only if—
        (a) the party making the application [establishes on the
        basis of the record of the arbitral tribunal 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:
                  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.
[2025] 4 S.C.R.                                                             1861

           Consolidated Construction Consortium Limited v.
                 Software Technology Parks of India

           [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.]
           [(2-A) An arbitral award arising out of arbitration other than
           international commercial arbitration, 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.]
           (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
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                          Supreme Court Reports


           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.
           [(5) An application under this section shall be filed by a
           party only after issuing a prior notice to the other party and
           such application shall be accompanied by an affidavit by the
           applicant endorsing compliance with the said requirement.
           (6) An application under this section shall be disposed
           of expeditiously, and in any event, within a period of one
           year from the date on which the notice referred to in sub-
           section (5) is served upon the other party.]
22. Sub-section (1) of Section 34 provides that an application may be
    made to the competent court for setting aside an arbitral award. This
    is the only remedy available for setting aside an arbitral award. The
    conditions for setting aside an arbitral award are mentioned in sub-
    sections (2) and (2A). Sub-section (2) provides for situations such
    as the agreed party was under some incapacity or the arbitration
    agreement is not valid under the law or the aggrieved party did not
    receive proper notice regarding appointment of arbitrator or of the
    arbitral proceedings which prevented it from presenting its case
    or the arbitral award deals with a dispute not contemplated by or
    not falling within the terms of arbitration or the composition of the
    arbitral tribunal or the procedure adopted in arbitration were not in
    accordance with the agreement of the parties or the subject matter
    of dispute is not capable of settlement by arbitration or the arbitral
    award is in conflict within the public policy of India. In terms of sub-
    section (2A), an arbitral award may also be set aside on the ground
    of patent illegality appearing on the face of the award. Sub-section (3)
    provides for the time limit for filing of an application for setting aside
    arbitral award. Therefore, the grounds on which an arbitral award
    can be set aside are clearly mentioned in Sections 34(2) and 34(2A)
    of the 1996 Act. An arbitral award cannot be set aside on a ground
    which is beyond the grounds mentioned in sub-sections (2) and (2A)
    of Section 34.
23. Scope of Section 34 of the 1996 Act is now well crystallized by a
    plethora of judgments of this Court. Section 34 is not in the nature of
[2025] 4 S.C.R.                                                         1863

           Consolidated Construction Consortium Limited v.
                 Software Technology Parks of India

     an appellate provision. It provides for setting aside an arbitral award
     that too only on very limited grounds i.e. as those contained in sub-
     sections (2) and (2A) of Section 34. It is the only remedy for setting
     aside an arbitral award. An arbitral award is not liable to be interfered
     with only on the ground that the award is illegal or is erroneous in
     law which would require re-appraisal of the evidence adduced before
     the arbitral tribunal. If two views are possible, there is no scope for
     the court to re-appraise the evidence and to take the view other
     than the one taken by the arbitrator. The view taken by the arbitral
     tribunal is ordinarily to be accepted and allowed to prevail. Thus,
     the scope of interference in arbitral matters is only confined to the
     extent envisaged under Section 34 of the Act. The court exercising
     powers under Section 34 has perforce to limit its jurisdiction within
     the four corners of Section 34. It cannot travel beyond Section 34.
     Thus, proceedings under Section 34 are summary in nature and
     not like a full-fledged civil suit or a civil appeal. 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.
24. Therefore, 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 reason is that arbitral autonomy
    must be respected and judicial interference should remain minimal
    otherwise it will defeat the very object of the 1996 Act.
25. Keeping the above in view, let us now deal with the order of the
    learned Single Judge dated 02.01.2019 passed under Section 34
    of the 1996 Act.
26. In the aforesaid order, learned Single Judge noted that the contract
    work was required to be executed within a period of 10 months.
    Appellant could not complete the work within the contract period
    due to land slides and rains. Ultimately, appellant could complete the
    work on 30.11.2007 by seeking extension of time which was granted
    by the respondent. There is no complaint about the construction.
    Learned Single Judge also noted that there were rains and land
    slides during the contract period which is not in dispute. Thereafter,
    learned Single Judge observed as under:
           If the building had been erected and there were landslides,
           it would affect the building constructed and there would
           not only have been loss of money, but also loss of lives
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                             Supreme Court Reports


             and that the 1st respondent should thank the stars that no
             untoward event took place.
27. Learned Single Judge also observed that clause 26 of the contract
    agreement could not be read in isolation without reference to clause
    27. The fact that appellant was allowed to carry on the contract work
    and to subsequently complete the same cannot be denied. Once there
    is extension of time, there cannot be a narrow interpretation to clause
    26. Purpose of extension of time was only for completion of work.
    Extension of time and levy of liquidated damages cannot go hand
    in hand. Contention of the respondent would have been acceptable
    had there been no extension in time or the work remained incomplete
    even after the extended period. In such an event, respondent would
    have been justified to levy and recover liquidated damages. Once
    the appellant had completed the work during the extended period
    of time, claim of liquidated damages by the respondent could not
    be accepted. Therefore, the arbitral award dated 10.05.2010 was
    set aside.
28. We are afraid learned Single Judge had clearly gone beyond the
    grounds provided in Section 34 of the 1996 Act to set aside the
    arbitral award. Learned Single Judge exceeded the jurisdiction under
    Section 34 of the 1996 Act. There was no justification for setting
    aside the arbitral award by taking a different view. View taken by the
    arbitral tribunal is certainly a possible and plausible view. A different
    interpretation of clause 26 other than the one taken by the arbitral
    tribunal is possible but that will not bring the challenge to the arbitral
    award within the four corners of Section 34. In any view of the matter,
    mere setting aside of the arbitral award did not confer any benefit to
    the appellant. In the circumstances, the Division Bench was justified
    in reversing the order of the learned Single Judge under Section 37
    of the 1996 Act.
29. That being the position, we do not find any merit in this appeal.
    Consequently, the appeal is dismissed. However, there shall be no
    order as to cost.

     Result of the case: Appeal dismissed.




     †
         Headnotes prepared by: Nidhi Jain