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Legal Case Shots

Court judgements broken down into the case type, how the decision played out, and the lesson worth remembering, with the full judgement available as a PDF.

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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

Pam Developments Private Limited vs. The State of West Bengal & Anr.

Not available · 2024 INSC 628Decided 23 Aug 2024
Not available
Justice Pamidighantam Sri Narasimha · Justice Pankaj Mithal

Background

A road-construction contractor completed a widening/strengthening project for the West Bengal government with some delay and raised multiple claims (loss of business, machinery costs, labour charges, interest on delayed payments, escalation, and interest on the award) before an arbitrator. The arbitrator awarded several claims; the District Judge partly upheld this under Section 34 of the Arbitration Act; the Calcutta High Court, under Section 37, further set aside some of the claims and modified the interest awarded.

Decision Breakdown

The Supreme Court held that a court reviewing an arbitral award under Sections 34/37 cannot substitute its own view for a plausible one taken by the arbitrator: interference is permitted only where the award is perverse or against public policy. It restored the arbitrator's award of interest on delayed running-account bill payments (claim 4) and pre-reference interest (claim 6), holding the High Court had wrongly re-appreciated the underlying facts. It upheld the setting aside of the claim for idle-labour/machinery costs (claim 3) since the contract's own "Special Terms and Conditions" expressly barred such claims.

Lesson Learnt

Courts have very limited power to second-guess an arbitrator's factual findings; and unless a contract expressly prohibits it, an arbitrator can award interest for the period before a dispute was formally referred to arbitration (pre-reference interest).

Pam Developments Private Limited vs. The State of West Bengal & Anr. – Legal Case Shots | LegalAware