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Legal Case Shots

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Legal Case Shots is a searchable database of Supreme Court of India judgments, each broken down into the case type, the court's key holding, and a practical lesson learnt, with the full judgment available as a PDF for citation or deeper reading.

Arbitration & Commercial LawSupreme Court of India

M/S Hindustan Construction Company Limited vs. M/S National Highways Authority of India

Not available · 2023 INSC 768Decided 24 Aug 2023
Not available
S. Ravindra Bhat · Aravind Kumar

Background

Highway construction contractors (including Hindustan Construction Company) and the National Highways Authority of India (NHAI) disputed how to measure and pay for embankment work built using a mix of soil and pond ash: the contractors said the entire cross-section should be measured together as one composite unit, while NHAI's engineer measured soil and pond ash separately. An arbitral tribunal largely ruled in the contractors' favour, a single judge upheld that award, but the Delhi High Court's Division Bench reversed it, holding the tribunal's interpretation was implausible. Several appeals with the same underlying contract-interpretation question reached the Supreme Court together.

Decision Breakdown

The Supreme Court held that under Section 34/37 of the Arbitration Act, courts have an extremely narrow scope to interfere with an arbitral award and cannot substitute their own interpretation of a contract clause just because another view is possible: interference is permitted only where the tribunal's view is one no fair-minded person could reasonably take. Since the embankment was in fact built as a single compacted composite structure and the tribunal's interpretation of the technical specification was a plausible reading of the contract, the High Court's Division Bench had overstepped by re-appraising the merits like an ordinary appeal. The Court also clarified, as a broader point of arbitration law, that a dissenting arbitrator's opinion cannot be elevated into the award itself if the majority award is set aside, since the dissent was never subjected to the same adversarial scrutiny. All the appeals were allowed, the arbitral awards restored, with only the interest rate on amounts due modified to a uniform 12%.

Lesson Learnt

Courts reviewing an arbitration award must resist the temptation to re-decide the underlying contractual dispute themselves; as long as the arbitrator's interpretation of the contract is a reasonable and plausible one, it must stand even if a court might have read the clause differently.

M/S Hindustan Construction Company Limited vs. M/S National Highways Authority of India – Legal Case Shots | LegalAware