KONKAN RAILWAY CORPORATION LIMITEDversusCHENAB BRIDGE PROJECT UNDERTAKING

                   [2023] 11 S.C.R. 215 : 2023 INSC 742



                              CASE DETAILS

           KONKAN RAILWAY CORPORATION LIMITED
                                        v.
            CHENAB BRIDGE PROJECT UNDERTAKING
                       (Civil Appeal No. 2903 of 2023)
                              AUGUST 17, 2023
           [DR. DHANANJAYA Y CHANDRACHUD, CJI,
            PAMIDIGHANTAM SRI NARASIMHA AND
                    J. B. PARDIWALA, JJ.]

                                HEADNOTES

        Issue for consideration : In the instant appeal, the legality of the order
passed by the Division Bench of the High Court in an appeal u/s. 37 of the
Arbitration and Conciliation Act, 1996 by which the concurrent findings of the
arbitral tribunal and that of the Single Judge of the High Court u/s. 34 of the Act
rejecting all claims were set aside and certain claims were allowed, is challenged.
       Arbitration and Conciliation Act, 1996 – ss. 34 and 37 – Arbitral
award – Concurrent interpretations of the contractual clause pertaining
to the disputes, by the arbitral tribunal and the Single Judge of the High
Court u/s. 34 – Interference with, by the Division Bench in an appeal u/s.
37 – Justification:
       Held : Principle of interpretation of contracts adopted by the Division
Bench of the High Court that when two constructions are possible, then courts
must prefer the one which gives effect and voice to all clauses, does not have
absolute application – Said interpretation is subject to the jurisdiction which
a court is called upon to exercise – While exercising jurisdiction u/s. 37, the
Court is concerned about the jurisdiction that the s. 34 Court exercised while
considering the challenge to the Arbitral Award – Jurisdiction u/s. 34 is exercised
only to see if the arbitral tribunal’s view is perverse or manifestly arbitrary –
Reinterpretation of the contract on an alternative view does not arise – Division
Bench exercising jurisdiction u/s. 37 cannot reverse an Award, much less the
decision of a Single Judge – On facts, the Division Bench of the High Court
erred in re-interpreting a contractual clause while exercising jurisdiction u/s. 37

                                       215
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and setting aside the concurrent findings of the arbitral tribunal and the Single
Judge of the High Court – Award of the arbitral tribunal and the decision of the
Single Judge of the High Court u/s. 34 cannot be termed as perverse or patently
illegal – Decision of the arbitral tribunal is a plausible view, and the Single
Judge refrained from interfering with it u/s. 34 – Division Bench should not
have interfered with these orders – Thus, the judgment of the Division Bench
of the High Court is set aside and that of the Single Judge is restored. [Paras
20, 22, 24 and 25]
       Arbitration and Conciliation Act, 1996 – ss. 34 and 37 – Scope of
jurisdiction under :
       Held : Jurisdiction of the court u/s. 37 is akin to the jurisdiction of the
court u/s. 34 – Scope of interference by a court in an appeal u/s. 37, in examining
an order, setting aside or refusing to set aside an award, is restricted and subject
to the same grounds as the challenge u/s. 34 – Thus, the scope of jurisdiction
u/s. 34 and s.37 is not akin to normal appellate jurisdiction – Courts ought not
to interfere with the arbitral award in a casual and cavalier manner – Mere
possibility of an alternative view on facts or interpretation of the contract does
not entitle courts to reverse the findings of the arbitral tribunal. [Paras 14 and 15]

        LIST OF CITATIONS AND OTHER REFERENCES

       Radha Sundar Dutta v. Mohd Jahadur Rahim & Ors AIR 1959
SC 24 : [1959] SCR 1309; UHL Power Company Limited v. State
of Himachal Pradesh (2022) 4 SCC 116; South East Asia Marine
Engineering and Constructions Limited v. Oil India Limited (2020)
5 SCC 164 : [2020] 4 SCR 254; Adani Power (Mudra) Limited v.
Gujarat Electricity Regulatory Commission and Ors. (2019) 19 SCC
9; Satyanarayana Construction Company v. Union of India and Ors.
(2011) 15 SCC 101; Delhi Development Authority v. R.S. Sharma and
Company, New Delhi (2008) 13 SCC 80 : [2008] 12 SCR 785; MMTC
Ltd. v. Vedanta Ltd. (2019) 4 SCC 163 : [2019] 3 SCR 1023; UHL Power
Company Ltd. v. State of Himachal Pradesh (2022) 2 SCC (Civ) 401;
Dyna Technologies Pvt Ltd v. Crompton Greaves Limited (2019) 20 SCC
1; Ssangyong Engineering. & Construction Company Ltd. v. National
Highways Authority of India (NHAI) (2019) 15 SCC 131 : [2019] 7 SCR
522; Parsa Kente Collieries Ltd. v. Rajasthan Rajya Vidyut Utpadan
Nigam Ltd., (2019) 7 SCC 236 : [2019] 8 SCR 728; Patel Engineering
      KONKAN RAILWAY CORP. LTD v. CHENAB BRIDGE PROJECT 217
                       UNDERTAKING


Limited v. North Eastern Electric Power Corporation Limited (2020) 7
SCC 167 : [2020] 4 SCR 156; Vidya Drolia and Ors. v. Durga Trading
Corporation (2021) 2 SCC 1 : [2020] 11 SCR 1001; Associate Builders
v. Delhi Development Authority (2015) 3 SCC 49 : [2014] 13 SCR 895
– referred to.

        OTHER CASE DETAILS INCLUDING IMPUGNED
               ORDER AND APPEARANCES

        CIVIL APPELLATE JURISDICTION : Civil Appeal No.2903 of
2023.
      From the Judgment and Order dated 23.09.2022 of the High Court
of Judicature at Bombay in AN No.458 of 2019.
        Appearances:
      Shyam Divan, Sr. Adv., Amlaan Kumar, Ms. Musharaf Shaikh, Ms.
Rukhmini Bobde, Ms. Soumya Priyadarshinee, Ankit Ambasta, Amit Kumar
Shrivastava, Vishal Prasad, Advs. for the Appellant.
     Darius Khambata, Sr. Adv., Aveak Ganguly, Manu Seshadri,
Ms. Pallavi Anand, Abhijit Lal, Mithu Jain, Ms. Soumya, Advs. for the
Respondent.

         JUDGMENT/ORDER OF THE SUPREME COURT

                               JUDGMENT
        PAMIDIGHANTAM SRI NARASIMHA, J.
       1. This appeal arises out of the decision of the Division Bench of the
High Court of Bombay under Section 37 of the Arbitration and Conciliation
Act 1996,1 by which the concurrent findings of the Arbitral Tribunal and that
of the Single Judge of the High Court under Section 34 of the Act rejecting all
claims were set aside and certain claims were allowed. This appeal by Konkan
Railway Corporation Limited challenges the legality of the order passed by the
Division Bench of the High Court while exercising jurisdiction under Section
37 of the Act.
     2. The short facts relevant for the purpose of this appeal are as follows:
The Respondent’s tender for construction of a bridge at KM 50/800, on the
1   Hereinafter ‘the Act’.
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Katra-Laole section of Udhampur-Srinagar-Baramulla rail link, said to be the
highest railway bridge in the world, was accepted by the Appellant, leading
to the execution of the contract on 24.11.2004.
       3. While the contract was in execution, disputes arose between the
parties and through an agreement dated 28.02.2012, a Standing Arbitral
Tribunal was constituted for resolution of disputes. The respondent raised
35 claims which were clubbed and classified as twelve disputes. The present
proceedings arise out of the decision of the Arbitral Tribunal deciding three
disputes, being Dispute I (relating to Claim 9), Dispute III (relating to Claims
12, 22 and 28), and Dispute IV (relating to Claims 13, 23 and 29).
       4. The Arbitral Tribunal by its award dated 15.11.2014 considered
the three disputes and rejected all the claims. The Respondent challenged
the award under Section 34 of the Act. The Single Judge of the High Court
confirmed the Award and proceeded to dismiss the challenge under Section 34
of the Act. The decision of the Single Judge of the High Court was appealed
by the Respondent under Section 37 of the Act, and the Division Bench of
the High Court, by the order impugned herein, partly allowed the appeal in
the following manner. The Division Bench, while dismissing the appeal with
respect to Dispute I, allowed the appeal with respect to the remaining two
disputes (Disputes III and IV), and thereby set aside the concurrent findings
as regards these disputes. As there is no controversy with respect to Dispute
I, we are called upon to examine the legality of the order with respect to
Disputes III and IV.
       5. The facts relevant for Dispute III are as follows: The contract in
favour of the Respondent was entered into on 24.11.2004. At that time the
Notification of the Government of Jammu and Kashmir dated 19.12.2003
exempted Entry Tax on earth-moving instruments. However, during the
execution of the contract, on 25.01.2008, the Government of Jammu and
Kashmir withdrew the exemption notification. Consequently, the Respondent
raised claims for reimbursement of Rs. 1,32,29,771/- incurred on account of
payment of Entry Tax.
        6. In so far as Dispute IV is concerned, it relates to reimbursement of
Toll Tax on machinery and materials. As per the extant policy in Jammu and
Kashmir, the Toll Tax as applicable on the date of the submission of tender,
that is 31.05.2004, was Rs. 400/- per MT. However, through four subsequent
notifications issued under Jammu and Kashmir Levy of Toll Tax Act, 1998,
     KONKAN RAILWAY CORP. LTD v. CHENAB BRIDGE PROJECT 219
      UNDERTAKING [PAMIDIGHANTAM SRI NARASIMHA, J.]


the taxes were progressively increased to Rs. 650/- per MT. Consequently, the
Respondent raised a claim of Rs. 5,23,279/-, incurred on account of increase
in toll tax during the subsistence of the contract.
        7. Claims under Dispute III as well as Dispute IV were to be
considered in terms of the relevant clauses of the contract, which
are Clauses 5.1.2, 7.1.1, 7.1.2, and 11.7. These clauses are extracted
hereinbelow for ready reference. Relevant part of Clause 5 of Chapter 5,
titled ‘Sales Tax, Turn Over Tax/Local Tax, Duties etc’, is as under:
     “Clause 5.1 Sales Tax/Turn Over Tax/Local Tax, Duties Etc.
     ...
     Clause 5.1.2 Sales Tax including turn over tax on works contract,
     octroi, royalty, toll tax, Duties/Levies as well as services and any
     other tax levied by central govt., state govt. or local bodies, as
     applicable 15 days prior to the date of opening of tender shall be
     considered to be included in the percentage rates quoted by tenderer/s
     in the Schedule of Items, Rates & Quantities. In case of any increase/
     decrease in the taxes during the period from 15 days prior to the date
     of opening of tender to the completion of the work, the net increase/
     decrease for the balance portion of the work shall be borne/recovered
     by the Corporation.
     The prevailing rate of Works Contract Tax (WCT) in J & K states
     to be deducted at source is 4.2% for the registered firms with state
     taxation department from firms not having the registration, the rate
     is 8.2%.
     Clause 5.1.3 Corporation shall deduct the sales tax/Turn Over Tax
     or any other tax from the Contractor’s bill at the rate as applicable
     as per rules framed by concerned Govt./Local bodies from time to
     time and remit it to concerned department and shall issue a certificate
     regarding Tax/levies so deducted on demand by the contractor.”
       7.1. Clauses 7.1.1 and 7.1.2 from Chapter 7, titled ‘Price Variation’,
are as under:
      “Clause 7.1.1 The rates quoted by tenderer and accepted by the
     Corporation shall hold good till the completion of the work and
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      no additional, individual claim shall be admissible on account of
      fluctuation in market rates, increase in taxes/any other levies/tolls
      etc. except the payment/recovery for overall market situation shall
      be made as per price variation clause given below.
      Clause 7.1.2 No cognizance shall be given for any sort of fluctuations
      in taxes and other market conditions etc. for any individual item
      for the purpose of making adjustments in payments. The contract
      shall, however, be governed by the general price variation clause
      as under.”
      7.2. Clause 11.7, in Chapter 11, titled ‘Schedule of Items, Rates &
Quantities - Bill of Quantities’, is as follows:
      “Clause 11.7 The rates and prices tendered in the priced Bill of
      Quantities, shall except in so far as it is otherwise provided under the
      contract, include all construction plant, labour, supervision, materials,
      all temporary works, false works, all leads and lifts, erection, specified
      finishes, maintenance, establishment and overhead charges, insurance,
      profits, foreign taxation and levies, taxes, royalties and duties together
      with all general risks, liabilities and obligations set out or implied in
      the contract and including remedy of any defects during the Defects
      Liability Period.”
       8. The Decision of the Arbitral Tribunal: The Arbitral Tribunal
interpreted the contract and construed Clause 5.1.2 of the contract as limited
to taxes that could be raised by the Respondent-Contractor directly on the
Appellant, as opposed to taxes that formed part of the materials quoted in
the ‘Schedule of Items of Rates - Bill of Quantities’. For this, the Arbitral
Tribunal also relied on Clause 11.7 of the Contract. The Arbitral Tribunal
was of the view that Entry Taxes on earth-moving equipment formed part
of the cost of the works quoted in the Bill of Quantities. For this reason,
the Arbitral Tribunal came to the conclusion that the increased liability on
account of imposition of Entry Tax could not be reimbursed under Clause
5.1.2, as recoupment for the same could only be governed by the Price
Variation clauses (clause 7.1.1 and 7.1.2 in Chapter 7).
      8.1 Interpreting the Price Variation clauses, the Arbitral Tribunal
noted that the contract only provided for generic price variation based on
     KONKAN RAILWAY CORP. LTD v. CHENAB BRIDGE PROJECT 221
      UNDERTAKING [PAMIDIGHANTAM SRI NARASIMHA, J.]


a standardised formula. It also found that Clause 7.1.2 specifically barred
cognizance of “any sort of fluctuations in taxes and other market conditions
for any individual item for the purpose of making adjustments in payments”.
Accordingly, the Arbitral Tribunal held that the claim for recouping increased
tax liability for individual or specific items, in this case, the imposition of
entry tax, could not be reimbursed under Clauses 7.1.1 and 7.1.2.
      8.2 The Tribunal reasoned that the contractor was aware of these
conditions at the time when the prices were quoted, and therefore, the claim
could not succeed under Price Variation clauses.
       8.3 As regards the claim for Toll Tax which formed part of Dispute
IV, the Tribunal adopted the same interpretation of the contractual clauses
and rejected the claim.
       9. Decision of the High Court under Section 34 of the Act: The
Respondent’s challenge to the Arbitral Award under Section 34 of the Act
was considered and dismissed by the Single Judge of the High Court by
its order dated 17.01.2019. The High Court concluded that there were two
possible views with respect to the construction of relevant clauses of the
contract. However, as the Arbitral Tribunal adopted one interpretation and
since it was a reasonable interpretation, the Single Judge of the High Court
held that there was no justification for exercising jurisdiction under Section
34 of the Act to interfere with the findings of the Arbitral Tribunal.
        10. Decision of the Division Bench under Section 37 of the Act: The
Division Bench of the High Court, while considering the appeal under
Section 37 of the Act, proceeded to reinterpret the contractual clauses and
arrived at a distinct conclusion. The Division Bench rejected the Arbitral
Tribunal’s and the Single Judge’s interpretation of Clause 5.1.2 of the
contract and came to the conclusion that the said clause will also include
indirect taxes such as service tax, GST, Works Contract Tax, etc. While
doing so, the Division Bench applied the principle of ejusdem generis to
include even Entry Tax in Clause 5.1.2. The Division Bench of the High
Court reversed the conclusion of the Arbitral Tribunal and the Single Judge
of the High Court on the ground that they had simply assumed that the tax
liability of items forming part of the Bill of Quantities was ‘inbuilt’ in the
quoted costs and that no evidence was supplied to substantiate the same.
The Division Bench also noted that reimbursement on account of increase
222           SUPREME COURT REPORTS                          [2023] 11 S.C.R.


in ‘toll taxes’ was specifically provided for in Clause 5.1.2 of the contract,
and hence, claim for the same could not be rejected. In view of its conclusion,
the Division Bench did not find it necessary to refer to Clauses 7.1.1 and
7.1.2 relating to price variation clauses, as the claims were justified under
Clause 5.1.2 itself. Finally, relying on Radha Sundar Dutta v. Mohd Jahadur
Rahim & Ors,2 the High Court came to the conclusion that it is a “well-settled
principle that if there are two constructions possible of a contract, then the
one that gives effect and voice to all clauses will be preferred over the other
that renders one of them otiose or nugatory”. Adopting this approach, the
Division Bench of the High Court proceeded to hold that the Arbitral Tribunal
failed to interpret the contractual clauses harmoniously and holistically. It
finally concluded that the approach adopted by the Arbitral Tribunal would
amount to perversity, and therefore, found it necessary to set aside the Award,
and allow claims covered under Disputes III and IV.
      11. This judgment of the Division Bench of the Hight Court led to the
present civil appeal before us.
        12. Submissions on behalf of the Appellant: Mr Shyam Divan, Senior
Advocate, along with Mr Amlaan Kumar, Mr Musharaf Shaikh, Ms Rukhmini
Bobde, Ms Soumya Priyadarshinee, Mr Ankit Ambasta, Mr Amit Kumar
Shrivastava, Advocates, and Mr Vishal Prasad, AOR appeared on behalf of
the Appellants. They submitted that the Division Bench of the High Court
exceeded its limited jurisdiction under Section 37 of the Act by reinterpreting
the contract and substituting its view for the Arbitral Tribunal’s, assuming
the role of a court of appeal. They relied on UHL Power Company Limited
v. State of Himachal Pradesh3 and South East Asia Marine Engineering and
Constructions Limited v. Oil India Limited4 for this purpose.
       12.1 Next, they submitted that the parties agreed to a lump-sum contract
price payable to the Respondent-Contractor. The Contractor split the agreed
prices into several components and indicated the division in the ‘Schedule of
Items and Rates - Bill of Quantities’, which inhered the cost and effort involved
in execution of the items mentioned therein. There is no indication that the
amount incurred in the execution of the entries therein would be separately
reimbursed. They added that Clause 11.7 of the contract expressly indicates
2   AIR 1959 SC 24.
3   (2022) 4 SCC 116.
4   (2020) 5 SCC 164.
     KONKAN RAILWAY CORP. LTD v. CHENAB BRIDGE PROJECT 223
      UNDERTAKING [PAMIDIGHANTAM SRI NARASIMHA, J.]


that the prices mentioned in the Bill of Quantities are inclusive of all costs
that are liable to be incurred in the execution of the contract.
        12.2 Further, they also submitted that the Arbitral Tribunal holistically
interpreted Clauses 5.1.2, 7.1.1 and 7.1.2 of the contract to opine that individual
tax claims would not be reimbursed by the Appellant-Corporation. The Arbitral
Tribunal held that Clause 5.1.2 operates in a separate field, i.e., it operates in
the field of taxes directly payable by the Corporation to the Contractor. They
further added that the mention of toll tax and octroi in Clause 5.1.2 is only
incidental, and does not render the recovery of taxes by the Contractor implicit.
On the other hand, the fluctuations in price of entries in the Bill of Quantities
(or for mobilisation of construction material and machinery) was recoverable
only as per the scheme of Price Variation in Clauses 7.1.1 and 7.1.2, which
expressly exclude cognizance of fluctuations in price of individual items.
        13. Submissions on behalf of the Respondents: Mr Darius Khambata,
Senior Advocate, along with Mr Aveak Ganguly, Mr Manu Seshadri, Ms
Pallavi Anand, Mr Abhijit Lal, Ms Soumya, Advocates and Mr Mithu Jain,
AOR appeared on behalf of the Contractor-Respondent. They submitted that
the High Court rightly interfered with the findings of the Arbitral Tribunal as
it had rewritten the contract. They submitted that every canon of contractual
interpretation provides for harmonious construction of seemingly contradictory
clauses, and constructing contracts such that no clause is rendered otiose.
       13.1 They submitted that undoubtedly, Clauses 5.1.2 and 7.1.1 operate
in separate fields, i.e., Clause 5.1.2 of the Special Conditions of Contract is
a special clause that deals with taxes and provides for reimbursement on
account of increase of taxes by the Corporation. Clauses 7.1.1 and 7.1.2, on
the other hand, prohibit additional and individual claims for price variation,
apart from the ones already mentioned in Clause 5.1.2. By limiting Clause
5.1.2 to the taxes that can be billed by the Contractor on the Corporation, the
Arbitral Tribunal impermissibly rewrote the terms of the contract. Instead
of harmonising the provisions of the contract, it inserted new terms and
contradictions to it.
       13.2 The respondents submitted that the Division Bench of the
High Court was well within its jurisdiction under Section 37 of the Act
to partially set aside the Award. To substantiate their submissions, they
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relied on Adani Power (Mudra) Limited v. Gujarat Electricity Regulatory
Commission and Ors.,5 Radha Sundar Dutta v. Mohd Jahadur Rahim &
Ors. (supra), Satyanarayana Construction Company v. Union of India and
Ors.,6 and Delhi Development Authority v. R.S. Sharma and Company,
New Delhi.7
       14. Analysis: At the outset, we may state that the jurisdiction of the
Court under Section 37 of the Act, as clarified by this Court in MMTC Ltd.
v. Vedanta Ltd., is akin to the jurisdiction of the court under Section 34
of the Act.8 Scope of interference by a court in an appeal under Section
37 of the Act, in examining an order, setting aside or refusing to set aside
an award, is restricted and subject to the same grounds as the challenge
under Section 34 of the Act.
       15. Therefore, the scope of jurisdiction under Section 34 and
Section 37 of the Act is not akin to normal appellate jurisdiction.9 It is
well-settled that courts ought not to interfere with the arbitral award in a
casual and cavalier manner. The mere possibility of an alternative view on
facts or interpretation of the contract does not entitle courts to reverse the
findings of the Arbitral Tribunal.10 In Dyna Technologies Private Limited
v. Crompton Greaves Limited (2019) 20 SCC 1, this Court held:
      “24. There is no dispute that Section 34 of the Arbitration Act limits
      a challenge to an award only on the grounds provided therein or as
      interpreted by various courts. We need to be cognizant of the fact
      that arbitral awards should not be interfered with in a casual and
      cavalier manner, unless the court comes to a conclusion that the
5  (2019) 19 SCC 9.
6  (2011) 15 SCC 101.
7  (2008) 13 SCC 80.
8  (2019) 4 SCC 163: “para 14. As far as interference with an order made under Section
   34, as per Section 37, is concerned, it cannot be disputed that such interference under
   Section 37 cannot travel beyond the restrictions laid down under Section 34. In other
   words, the court cannot undertake an independent assessment of the merits of the
   award, and must only ascertain that the exercise of power by the court under Section
   34 has not exceeded the scope of the provision.”
9 UHL Power Company Ltd. v. State of Himachal Pradesh (2022) 2 SCC (Civ) 401, para
   15. See also:Dyna Technologies Pvt Ltd v. Crompton Greaves Limited (2019) 20 SCC
   1, para 24, 25.
10 ibid; Ssangyong Engineering. & Construction Company Ltd. v. National Highways
   Authority of India (NHAI) (2019) 15 SCC 131; Parsa Kente Collieries Ltd. v. Rajasthan
   Rajya Vidyut Utpadan Nigam Ltd., (2019) 7 SCC 236, para 11.1.
     KONKAN RAILWAY CORP. LTD v. CHENAB BRIDGE PROJECT 225
      UNDERTAKING [PAMIDIGHANTAM SRI NARASIMHA, J.]


     perversity of the award goes to the root of the matter without there
     being a possibility of alternative interpretation which may sustain
     the arbitral award. Section 34 is different in its approach and cannot
     be equated with a normal appellate jurisdiction. The mandate under
     Section 34 is to respect the finality of the arbitral award and the
     party autonomy to get their dispute adjudicated by an alternative
     forum as provided under the law. If the courts were to interfere with
     the arbitral award in the usual course on factual aspects, then the
     commercial wisdom behind opting for alternate dispute resolution
     would stand frustrated.
     25. Moreover, umpteen number of judgments of this Court have
     categorically held that the courts should not interfere with an award
     merely because an alternative view on facts and interpretation of
     contract exists. The courts need to be cautious and should defer to
     the view taken by the Arbitral Tribunal even if the reasoning provided
     in the award is implied unless such award portrays perversity
     unpardonable under Section 34 of the Arbitration Act.”
       16. In the present case, the Arbitral Tribunal interpreted the contractual
clauses and rejected the Respondent’s claims pertaining to Disputes I, III and
IV. The findings were affirmed by the Single Judge of the High Court in a
challenge under Section 34 of the Act, who concluded that the interpretation
of the Arbitral Tribunal was clearly a possible view, that was reasonable
and fair-minded in approach.
       17. It is important to extract the relevant portion of the Award, where
the Tribunal considered and interpreted the contractual clauses pertaining
to Disputes III and IV:
     “40. A careful reading of the relevant provisions of the contract shows
     that claimant will not be entitled to reimbursement of Entry Tax paid
     by it. Clause 5.1.2 of Special Conditions provides that sales tax or
     turnover tax on works contract or other tax on the amount billed to
     respondent, levied or increased during the execution of the work; shall
     be borne by the respondent. For example, if the price of goods sold
     is Rs. 2000/- and at the time of contract, the goods were not subject
     to Sales Tax, but subsequently during the execution of the work, the
     State subjected such sale of goods to Sales Tax, at the rate of 5%, the
226          SUPREME COURT REPORTS                        [2023] 11 S.C.R.


      contractor will be entitled to receive under clause 5.1.2, the Sales
      Tax at 5% on the price of Rs. 2000/-. Similarly, if Works Contract
      Tax is increased from the rate of 4.2% prevailing at the time of
      making the contract, the contractor will be entitled to the higher
      rate, by claiming the difference. Therefore, what clause 5.1.2 deals
      with is taxes “chargeable” by the contractor on the bills raised on
      the respondent. It does not deal with or provide for reimbursement
      of increase in taxes which may indirectly be a component of the
      price or rate quoted and which is be governed only by the price
      variation clause. This is obviously because when a contractor
      quotes a rate for an item of work, such rate will have various
      components like material cost, labour cost, fuel cost, overheads
      and profits. The contractor does not indicate the break-up of the
      various components that make up the quoted price. Obviously the
      rates so quoted, if it involves use of a material, will include the
      cost of the material plus any tax paid thereon; and if it involves
      use of some machinery/equipment, it will include the hire charges
      in respect of the machinery/equipment and any taxes thereon.
      It is clear from the contract that in regard to such components
      of a rate, claimant is not entitled to seek reimbursement of any
      increase in price or taxes and all that it will be entitled to, will be
      an increase that is permitted in accordance with the formula in the
      price variation clause. The price variation clause only provides
      for price variation in a general manner in accordance with a
      standardized price variation formula, and not reimbursement of
      the actual increases. That is why clause 11.7 of BoQ provides that
      the rates/prices shall include all taxes and clauses 7.1.1 and 7.1.2
      clearly provide that rates quoted by the tenderer and accepted
      by the KRCL, shall hold good till the completion of the work and
      no additional individual claim shall be admissible on account of
      increases in tax or other levies except for the provision made by
      way of price variation clause.
      ...
      43. ... As noticed above, the contract does not contemplate
      reimbursement of indirect cost, taxes incurred by the claimant
     KONKAN RAILWAY CORP. LTD v. CHENAB BRIDGE PROJECT 227
      UNDERTAKING [PAMIDIGHANTAM SRI NARASIMHA, J.]


     for executing the work. The contract contemplates the contractor
     quoting a price for executing a work by taking all circumstances
     into account and all increase that may take place. The contractor
     knew when it quoted, that it is entitled to only the price quoted and
     only variation in price as permitted by the price variation clause.
     The contract does not provide for payment or reimbursement of
     each and every increase in the price of material or tax thereon,
     which may go into the execution of a work.”
                                                        (emphasis supplied)
       18. The Single Judge of the High Court affirmed the findings of the
Arbitral Tribunal. The reason for upholding the decision of the Tribunal is
not that the Single Judge exercising jurisdiction under Section 34 of the Act
is in complete agreement with the interpretation of the contractual clauses
by the Arbitral Tribunal. The Learned Judge exercising jurisdiction under
Section 34 of the Act kept in mind the scope of challenge to an Arbitral
Award as elucidated by a number of decisions of this Court. Section 34
jurisdiction will not be exercised merely because an alternative view on
facts and interpretation of contract exists. In its own words, the conclusion
of the Single Judge Bench of the High Court is as follows:
     “10. … The ambiguity does not come from clause 5.1.1, but from the
     fact that there are other clauses in the contract, such as clauses 7.1.1
     and 7.1.2. One way to look at the co-existence of these clauses is to
     treat clauses 7.1.1 and 7.1.2 merely as an exclusion for working out
     price variation, since it is specifically provided for in clause 5.1.2.
     Equally, there is another way of looking at these three clauses, and
     that is : clauses 7.1.1 and 7.1.2 make it clear that no increase in tax
     in the case of any component forming part of BoQ rates, which was
     considered by the contractor for quoting his rates for any particular
     item, should be allowed to the contractor; it is only when particular
     taxes were actually to be paid on the deliveries of the contractor, these
     would be included for reimbursement by the employer under clause
     5.1.2. The arbitrator adopted the latter view. It cannot be said either
     that it is an unreasonable view or a view which is either impossible
     or which no fair and judiciously minded person would have taken.
     The award on this dispute, thus, does not merit any interference under
228          SUPREME COURT REPORTS                        [2023] 11 S.C.R.


      Section 34 of the Act, having regard to the law stated by the Supreme
      Court in the case of Associate Builders (supra).”
      19. In appeal under Section 37 of the Act, the Division Bench of
the High Court took a different position. It opined that the construction
of the clauses by the Arbitral Tribunal was not even a possible view,
and observed as follows:
      “30. ... What is more appropriate is the well-settled principle that
      if there are two constructions possible of a contract, then the one
      that gives effect and voice to all clauses will be preferred over
      the other that renders one of them otiose or nugatory [Radha
      Sundar Dutta v Mohd Jahadur Rahim & Ors, AIR 1959 SC 24].
      There is some law to suggest that if an Award does not construe
      the contract as a whole then it is not a possible view and it is
      perverse [South East Asia Marine Engineering and Constructions
      Ltd v Oil India Ltd, (2020) 5 SCC 164; Patel Engineering Ltd
      v North Eastern Electric Power Corporation Ltd, (2020) 7 SCC
      167]. As regards the dispute for reimbursement on account of toll
      tax effected by the Government of Jammu and Kashmir through
      various Notifications, Chenab Bridge’s case stands on an even
      stronger footing. This is because toll tax is specifically mentioned
      in Clause 5.1.2 and the arbitral view amounts to an entire deletion
      of those two words. This is clearly impermissible.”
       20. The principle of interpretation of contracts adopted by the
Division Bench of the High Court that when two constructions are
possible, then courts must prefer the one which gives effect and voice to
all clauses, does not have absolute application. The said interpretation
is subject to the jurisdiction which a court is called upon to exercise.
While exercising jurisdiction under Section 37 of the Act, the Court
is concerned about the jurisdiction that the Section 34 Court exercised
while considering the challenge to the Arbitral Award. The jurisdiction
under Section 34 of the Act is exercised only to see if the Arbitral
Tribunal’s view is perverse or manifestly arbitrary. Accordingly, the
question of reinterpreting the contract on an alternative view does not
arise. If this is the principle applicable to exercise of jurisdiction under
Section 34 of the Act, a Division Bench exercising jurisdiction under
     KONKAN RAILWAY CORP. LTD v. CHENAB BRIDGE PROJECT 229
      UNDERTAKING [PAMIDIGHANTAM SRI NARASIMHA, J.]


Section 37 of the Act cannot reverse an Award, much less the decision of a
Single Judge, on the ground that they have not given effect and voice to all
clauses of the contract. This is where the Division Bench of the High Court
committed an error, in re-interpreting a contractual clause while exercising
jurisdiction under Section 37 of the Act. In any event, the decision in Radha
Sundar Dutta (supra), relied on by the High Court was decided in 1959, and
it pertains to proceedings arising under the Village Chaukidari Act, 1870 and
Bengal Patni Taluks Regulation of 1819. Reliance on this judgment particularly
for interfering with the concurrent interpretations of the contractual clause
by the Arbitral Tribunal and Single Judge under Section 34 of the Act is not
justified.
       21. As far as the decisions in South East Asia Marine Engineering and
Constructions Limited (supra) and Patel Engineering Limited v. North Eastern
Electric Power Corporation Limited11 are concerned, in both the cases, this
Court affirmed the interference by a court exercising jurisdiction under Section
37 of the Act, with the concurrent findings of the Arbitral Tribunal as well as
the court under Section 34 of the Act, for good and valid reasons. In South East
Asia Marine Engineering and Constructions Limited (supra),the Section 37
Court interfered with the Award as the Arbitral Tribunal allowed the claim for
price escalation for High-Speed Diesel under the ‘Change in Law’ clause, by
construing the circular increasing the HSD price as having “force of law”. The
‘Change in Law’ clause therein provided for reimbursement of any additional
costs on account of “change in or enactment of any law or interpretation of
existing law”. The High Court, exercising jurisdiction under Section 37 of
the Act, and this Court, found that the Arbitral Tribunal incorrectly construed
the ‘Change in Law’ clause as akin to a force majeure clause and allowed the
claims. This was held to not be a possible interpretation of the contract and
hence, the Award was set aside. Similarly, in Patel Engineering Ltd.(supra),
the Arbitral Award was found to be based on irrelevant facts and the outcome
was found to result in unjust enrichment, the latter being in violation of public
policy of India under Section 34(2) of the Act. Therefore, in both these cases,
this Court was convinced that the view of the Arbitral Tribunal was not even
a possible view, and hence, perverse in nature.
       22. In the present case, we have examined the appreciation of evidence
by the Arbitral Tribunal as well as the Single Judge of the High Court. We
11 (2020) 7 SCC 167.
230            SUPREME COURT REPORTS                                [2023] 11 S.C.R.


are convinced that their appreciation of the facts and interpretation of
the contract is reasonable, and comprises a possible view. Keeping in
mind the mandate of Section 5 of the Act 1996,12 we note the observation
of this Court in Vidya Drolia and Ors. v. Durga Trading Corporation13:
      “Arbitration is a private dispute resolution mechanism whereby two
      or more parties agree to resolve their current or future disputes by
      an Arbitral Tribunal, as an alternative to adjudication by the courts
      or a public forum established by law. Parties by mutual agreement
      forgo their right in law to have their disputes adjudicated in the
      courts/public forum. Arbitration agreement gives contractual
      authority to the Arbitral Tribunal to adjudicate the disputes and
      bind the parties.”
       23. The conclusion of the Division Bench of the High Court that
the Award is liable to be set aside on the ground of perversity is incorrect,
as it overlooks the principle laid down in Associate Builders v. Delhi
Development Authority,14 where this Court held:
      “32. A good working test of perversity is contained in two
      judgments. In Excise and Taxation Officer-cum-Assessing Authority
      v. Gopi Nath & Sons [1992 Supp (2) SCC 312] , it was held: (SCC
      p. 317, para 7)
      “7. … It is, no doubt, true that if a finding of fact is arrived at
      by ignoring or excluding relevant material or by taking into
      consideration irrelevant material or if the finding so outrageously
      defies logic as to suffer from the vice of irrationality incurring the
      blame of being perverse, then, the finding is rendered infirm in law.”
      In Kuldeep Singh v. Commr. of Police [(1999) 2 SCC 10 : 1999
      SCC (L&S) 429] , it was held: (SCC p. 14, para 10)
             “10. A broad distinction has, therefore, to be maintained
             between the decisions which are perverse and those which

12 Arbitration and Conciliation Act, 1996, section 5:
      “5. Extent of judicial intervention.—Notwithstanding anything contained in any
     other law for the time being in force, in matters governed by this Part, no judicial
     authority shall intervene except where so provided in this Part.”
13 (2021) 2 SCC 1, para 18.
14 (2015) 3 SCC 49.
      KONKAN RAILWAY CORP. LTD v. CHENAB BRIDGE PROJECT 231
       UNDERTAKING [PAMIDIGHANTAM SRI NARASIMHA, J.]


            are not. If a decision is arrived at on no evidence or evidence
            which is thoroughly unreliable and no reasonable person
            would act upon it, the order would be perverse. But if there
            is some evidence on record which is acceptable and which
            could be relied upon, howsoever compendious it may be, the
            conclusions would not be treated as perverse and the findings
            would not be interfered with.
      33. It must clearly be understood that when a court is applying
      the “public policy” test to an arbitration award, it does not act
      as a court of appeal and consequently errors of fact cannot be
      corrected. A possible view by the arbitrator on facts has necessarily
      to pass muster as the arbitrator is the ultimate master of the quantity
      and quality of evidence to be relied upon when he delivers his arbitral
      award. Thus an award based on little evidence or on evidence which
      does not measure up in quality to a trained legal mind would not be
      held to be invalid on this score.”
                                                       (emphasis supplied)
       24. Having considered the matter in detail, we are of the opinion
that the Division Bench of the High Court committed an error in setting
aside the concurrent fi ndings of the Arbitral Tribunal and the Single
Judge of the High Court. The Award of the Arbitral Tribunal and the
decision of the Single Judge of the High Court under Section 34 of the
Act cannot be termed as perverse or patently illegal as concluded by the
Division Bench of the High Court. The decision of the Arbitral Tribunal
is a plausible view, and the Single Judge refrained from interfering with
it under Section 34 of the Act. We are of the opinion that the Division
Bench should not have interfered with these orders.
       25. For the reasons stated above, we allow Civil Appeal No.
2903 of 2023 and set aside the judgment of the Division Bench of the
High Court of Judicature at Bombay in Appeal No. 458 of 2019 dated
23.09.2022, and restore the judgment and order of the Single Judge in
Arbitration Petition No. 546 of 2015 dated 17.01.2019. No order as to
costs.

Headnotes prepared by:                                          Appeal allowed.
Nidhi Jain