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Arbitration & Commercial LawSupreme Court of India

Consolidated Construction Consortium Limited v. Software Technology Parks of India

Civil Appeal · 2025 INSC 574Decided 28 Apr 2025
Civil Appeal No. 5383 of 2024
Justice Abhay S. Oka · Justice Ujjal Bhuyan

Background

Software Technology Parks of India (STPI) hired Consolidated Construction Consortium Ltd (CCCL) to build an office and incubation centre, with construction to finish by January 2007. CCCL finished about 10 months late, in November 2007, after STPI had granted several extensions of time while repeatedly reserving its right to still claim liquidated damages for the delay. STPI deducted roughly Rs. 82 lakh from CCCL's dues as liquidated damages, CCCL challenged this in arbitration, and the sole arbitrator upheld STPI's deduction and rejected all claims and counter-claims (a "nil" award).

Decision Breakdown

A single judge of the Madras High Court had set aside the arbitral award, reasoning that once time was extended, liquidated damages and extension of time could not go together. The Division Bench of the High Court reversed that, restoring the award, and the Supreme Court agreed with the Division Bench. The Court held that Section 34 of the Arbitration Act only allows an award to be set aside on narrow statutory grounds. It is not an appeal, and courts cannot re-examine evidence or substitute their own view merely because a different view was possible. Since STPI had, at every extension, expressly reserved its right to levy liquidated damages, and the arbitrator's interpretation of the contract clauses was a plausible one, the Single Judge had exceeded the limited jurisdiction under Section 34. The appeal was dismissed with no order as to costs.

Lesson Learnt

Courts will not casually second-guess an arbitrator's decision, under Section 34, an award can only be challenged on very specific legal grounds, not because a different outcome was arguable. Contracting parties should also note that granting time extensions "without prejudice" to a right to claim damages is legally effective and does not waive that right.

Consolidated Construction Consortium Limited v. Software Technology Parks of India – Legal Case Shots | LegalAware