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Associate Builders v. Delhi Development Authority

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 10531 of 2014)Decided 25 Nov 2014
Civil Appeal No. 10531 of 2014
Justice Ranjan Gogoi · Justice Rohinton Fali Nariman

Background

Associate Builders contracted to build housing for the Delhi Development Authority within nine months, but completion took 34 months. An arbitrator found DDA responsible for the delay and awarded compensation for extended establishment and equipment costs and price escalation. A Single Judge upheld the award, but a Division Bench removed several claims and reduced others.

Decision Breakdown

The Supreme Court allowed the contractor's appeal and restored the arbitral award in full. Applying the arbitration law then in force, it explained that public-policy review did not permit courts to retry the facts or replace a reasonable contractual interpretation with their own. The Division Bench had overlooked evidence supporting the contractor's expenses, misunderstood the worksite location and substituted its preferred calculation of compensation. The arbitrator's use of an established overhead formula was within his decision-making role, and the escalation claims did not duplicate the other damages. DDA's reliance on contract clauses also failed because the award concerned avoidable delays attributable to DDA itself.

Lesson Learnt

For parties to this construction dispute, an evidence-based arbitral assessment could not be undone merely because an appellate court preferred another calculation. This report describes the review framework applied in 2014; later changes to arbitration law require separate consideration.

Official source (sci.gov.in)View Judgment (PDF)

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