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State Bank of India vs. K R Anand

Original Miscellaneous Petition (Commercial) · 2026:DHC:7793Decided 15 Sept 2026New Delhi Bench
O.M.P. (COMM) 69/2024CNR: DLHC010035702024
Justice Avneesh Jhingan

Background

SBI had engaged a contractor to build 76 officer flats in Noida; the work was delayed well beyond the contract period and completed only after three time extensions. After completion, the contractor claimed several kinds of compensation through arbitration for the delay (allegedly caused by SBI), including overhead costs, price adjustment for inflation, and interest on delayed payments. The arbitrator awarded the contractor about Rs. 1.43 crore, and SBI challenged four specific parts of that award in court.

Decision Breakdown

The Court set aside the arbitrator's award of "overhead expenses" for delay, because the contractor had never actually proven its real financial loss: the arbitrator had simply applied a standard formula (the "Emden formula") without the evidence Indian law requires to justify such damages. It also struck down the price-adjustment award for the contract's third time extension, since the record showed that extension was expressly granted without any price benefit, and the arbitrator's reasoning for awarding it anyway did not hold up. However, the Court upheld the parts of the award granting interest for SBI's delay in paying running bills/final bill and in returning the contractor's security deposit, finding the arbitrator's view on those points reasonable and unchallengeable.

Lesson Learnt

Even in arbitration, a party claiming financial losses (like "overhead costs" from project delay) must actually prove those losses with evidence: a mathematical formula alone is not a substitute for proof, and courts will strike down arbitration awards that skip this step.

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