Som Datt Builders-NCC-NEC (JV) v. National Highways Authority of India & Ors.
Background
A construction joint venture was contracted by the National Highways Authority of India (NHAI) to build a highway stretch, including a wall requiring a material called "geogrid." The actual quantity of geogrid needed turned out to be far higher than originally estimated in the contract's Bill of Quantities. NHAI wanted to renegotiate the rate for the excess quantity; the contractor said the original rate should apply since there was no change in design, only an increase in quantity. A technical Dispute Review Board and then a three-member Arbitral Tribunal both sided with the contractor. A single judge of the Delhi High Court upheld the award, but a Division Bench of the same High Court later overturned it, prompting this appeal.
Decision Breakdown
The Supreme Court restored the arbitral award, holding that the Division Bench had exceeded its very limited power of review under Section 37. Courts reviewing arbitration awards cannot re-interpret contract clauses simply because they might have read a "variation" clause differently; they can only step in if the award is arbitrary, perverse, or shocks the conscience of the court. Here, three technical bodies (the Dispute Review Board, the Arbitral Tribunal, and the single judge) had all reasonably concluded that an increase in quantity without any actual design change was not a "variation" requiring renegotiated rates, since the contract itself anticipated that estimated quantities might turn out to be wrong. The Division Bench's contrary reading, based on dictionary definitions rather than the contract's own scheme, was an overreach.
Lesson Learnt
Once a technical dispute has been decided by an arbitrator or expert tribunal and upheld once in court, appellate courts have very narrow room to second-guess that interpretation, disagreeing with a "plausible" reading of a contract is not enough to overturn an arbitration award.