* IN THE HIGH COURT OF DELHI AT NEW DELHI % Judgment reserved on: 12 January 2026 Judgment pronounced on: 16 January 2026 + O.M.P. (COMM) 242/2024 ESI CORPORATION .....Petitioner Through: Mr. Vikrant Pachnanada with Mr. Mukul Katyal & Ms. Bhavya Sheetal, Advocates. versus M/S DESIGN ASSOCIATES .....Respondent Through: Mr. Rajshekhar Rao, Senior Advocate Mr. Arjun Dewan, Mr. Arjun Mukherjee, Mr. Akash Arora and Mr. A.D. Narang, Advocates. CORAM: HON'BLE MR. JUSTICE AVNEESH JHINGAN J U D G M E N T 1. This petition under Section 34 of the Arbitration and Conciliation Act, 1996 (for short ‘the Act’) is filed aggrieved of the arbitral award dated 29.01.2024 (hereinafter ‘the award’). 2. The facts in brief are that the respondent/claimant is engaged in the business of providing Architectural, Designing and ancillary services. On 29.05.2008, the parties entered into a contract for face-lifting, modernization, extension and up-gradation of the ESIC Hospital building at Andheri, Mumbai (hereinafter ‘Contract I’). The parties entered into another contract on 12.11.2010 for construction of a Post-Graduate Hostel/Nursing College at ESIC Hospital, Andheri, Mumbai (hereinafter ‘Contract II’). The duration of Contract I and Contract II was thirty-six months and thirty months respectively. The respondent was entitled to a fee of 3% of the contract value. 2.1 The original estimated cost of Contract I and Contract II was Rs.142.50 crores and Rs.47.11 crores respectively. The respondent furnished two performance guarantees. Disputes arose between the parties with regard to the prolongation of the project and revision of the scope of work. The arbitration was initiated at the instance of the respondent. 2.2 The respondent raised six claims. Claim A with regard to the outstanding amount due for 85% of the work done and Claim B relating to additional work were allowed. Claim C for interest on outstanding payments was partially allowed. Claim D for additional expenses incurred in maintaining the performance bank guarantee due to the prolongation of the project and Claim E for damages on account of excessive prolongation were rejected. Claim F relating to the costs of litigation was allowed and the petitioner was directed to bear it. 3. The learned counsel for the petitioner with respect to Claim A contended that in paragraph 155 of the award the arbitrator wrongly recorded that the contract was terminated. Further that the documents produced by the respondent in support of the claim were not pertaining to the two contracts in question. 3.1 With regard to Claim B, the learned counsel for the petitioner submitted that in paragraph 204 of the award it is noted that with the revision of work the cost of the project reduced and yet it was held that the respondent carried out additional work. It is argued that the contract was for a seven-hundred bedded hospital which was later reduced to a five-hundred bedded hospital, the respondent submitted the designs/drawings for the five-hundred bedded hospital and there was no question of doing additional work. The contention is that the arbitrator had not considered all the letters relied upon by the parties and after selectively reading some of the letters formed an impression that additional work was carried out by the respondent. 3.2 The awarding of interest is stated by learned counsel to be consequential to the outcome of Claims A and B. 3.3 Lastly, grievance is that the arbitrator erred in awarding litigation costs in favour of the respondent. 3.4 No other issue has been raised. 4. Per contra, the scope of interference under Section 34 of the Act is limited. None of the grounds raised by the petitioner fall within the grounds of challenge available under Section 34 of the Act. The contention is that the payment claimed was only for stage I and II as the project was not complete. No objection under Clause 6.4(b) of the General Conditions of Contracts (for short ‘GCC’) was raised by the petitioner within seven days of submission of the invoices and the invoiced amount was admitted. No dispute with regard to the quantification of the amount was raised either before the arbitrator or before this Court. 4.1 It is refuted that there is factual error in the award in recording that the contract was terminated. Reliance is placed upon paragraph 272 of the award wherein it is mentioned that the two contracts in question were subsisting and another contract which is not in question for the case in hand was terminated. 4.2 It is argued that in paragraph 184 of the award the arbitrator has taken note that there were a number of contracts between the parties and some of the documents relating to other contracts were inadvertently attached but the arbitrator considered only the relevant documents. 4.3 The submission is that the reduction in the cost of the project is not a relevant factor for determining the additional work done by the respondent. With the reduction in the number of beds in the hospital the designs and drawings prepared by the respondent were rendered useless and the entire exercise was carried out de novo. 4.4 It is contended that the revision of work on at least four occasions was proved by the respondent and admitted by RW1 Mr.Yatesh Kumar Sharma (hereinafter ‘RW1’). Consequent to the revision, the estimated cost of Contract I of Rs.142.50 crores was enhanced to Rs.244 crores approximately. It is submitted that there was a fire incident at the project site and the respondent undertook the repairs to the damage caused yet the claim for renovation expenses was rejected by the arbitrator. 4.5 The challenge to the award of litigation costs is opposed stating that under Section 31A of the Act the arbitrator rightly exercised discretion to award litigation costs. Apart from other considerations the conduct of the petitioner being non-cooperative was taken into account while awarding costs. Further that the fee and administrative expenses of Arbitration Tribunal were discharged by the respondent including the share of the petitioner and the needful was not done by the petitioner despite oral and written requests of the Tribunal. 5. Heard learned counsel for the parties at length and perused the record with their able assistance. Apart from the contentions noted above, no other issue was pressed. 6. The admitted facts are that under both contracts a fee of 3% of the contract value was to be paid to the respondent in a phased manner as per the stages of the work. The project was in progress when the dispute arose between the parties. The invoices issued were for phases I and II of the project and the fee quantified in the invoices is not disputed. The respondent claimed fee for 85% of the work completed. 7. The contention that the contract in question was terminated has been wrongly recorded, is noted to be rejected. It is specifically mentioned in the award that the two contracts in question were subsisting. The factual observation regarding termination of contract recorded in the earlier part of the award had no affect on the conclusion arrived at by the arbitrator allowing Claim A. 8. The challenge that Claim B was allowed without reading all the letters placed before the Tribunal, lacks merit. The arbitrator noted that by mistake some of the letters pertaining to other contracts were placed on record but the relevant letters concerning the contracts in question were taken into account. Another angle to be considered is that no specific letter has been pointed out which was relevant to the issue involved and was not considered. The claim raised by the respondent was for non-payment of the entire amount of the invoices dated 17.06.2021. Under Clause 6.4 (b) of the GCC the petitioner could have raised objections to the invoices within seven days of submission but no such objection was raised. In other words, the amount in invoices was not in issue. RW1 in cross-examination admitted that the entire payment in pursuance of the invoices dated 17.06.2021 was not made as the matter was pending in arbitration. 9. The submission that the arbitrator rather than arriving at a conclusion acted on an impression created upon reading of the letters and allowed the claim, is ill-founded. From the reading of the award it is clear that the claim was allowed after considering the material on record and the evidence adduced. The use of the word ‘impression’ instead of ‘proved’ or ‘concluded’ cannot be the basis for setting aside the award. 9.1 The Supreme Court in Dyna Technologies Private Limited v. Crompton Greaves Limited (2019) 20 SCC 1 held that an arbitral award cannot be equated with a judgment of the Court. The relevant extract of the judgment is as follows: “34. The mandate under Section 31(3) of the Arbitration Act is to have reasoning which is intelligible and adequate and, which can in appropriate cases be even implied by the courts from a fair reading of the award and documents referred to thereunder, if the need be. The aforesaid provision does not require an elaborate judgment to be passed by the arbitrators having regard to the speedy resolution of dispute.” (Emphasis Supplied) 10. The respondent was successful in proving that the revision of work was carried out on at least four occasions and this fact was admitted by RW1 during cross-examination. The arbitrator rightly allowed the fee claimed by the respondent for the additional work done. 11. The contention that the reduction in the project value as a result of revision of work does not come to the rescue of the petitioner to contend that no additional work was done by the respondent. Initially two basements were to be constructed which was later reduced to one basement and the Floor Space Index (FSI) was increased from 0.9 to 1.55. The finding recorded that the respondent had to undertake additional work in preparing new designs in accordance with the revised scope of work calls for no interference in a petition under Section 34 of the Act. 12. Another aspect to be considered is that with the revision of scope of work, change in plans and increase in FSI, the sanctions were not granted in one go and were obtained in a phased manner. This fact lends support to the claim of the respondent that additional work was carried out. 13. This Court has not interfered with Claims A and B allowed by the arbitrator and the award of interest being consequential does not require further deliberation. 14. Under Section 31A of the Act, the arbitrator having regard to the circumstances of the case including the conduct of the parties and the degree of success can award litigation costs. The fact that cost of arbitration could have been divided between the parties does not by itself constitute a ground for interference under Section 34 of the Act. It is a trite law that for interference under Section 34 of the Act the view taken by the arbitrator should be such that no reasonable person could have arrived at. 14.1 The Supreme Court in Punjab State Civil Supplies Corporation Limited & Anr. v M/S Sanman Rice Mills & Ors. 2024 INSC 742 held as under: “13. In paragraph 11 of Bharat Coking Coal Ltd. v. L.K.Ahuja, 4 it has been observed as under: “11. There are limitations upon the scope of interference in awards passed by an arbitrator. When the arbitrator has applied his mind to the pleadings, the evidence adduced before him and the terms of the contract, there is no scope for the court to reappraise the matter as if this were an appeal and even if two views are possible, the view taken by the arbitrator would prevail. So long as an award made by an arbitrator can be said to be one by a reasonable person no interference is called for. However, in cases where an arbitrator exceeds the terms of the agreement or passes an award in the absence of any evidence, which is apparent on the face of the award, the same could be set aside.”” (Emphasis Supplied) 15. It is settled law that the challenge to the arbitral award can only be on the grounds mentioned in Section 34 of the Act. The award should not be interfered with until the conclusion arrived at is perverse. Proceedings under Section 34 cannot be equated with appellate jurisdiction and there can be no reappreciation of evidence. Interference is limited to the grounds specified under the Act, including violation of public policy, fundamental principles of Indian law or patent illegality going to the root of the matter. Errors of law or fact revealed upon reassessment of the evidence shall not justify setting aside an arbitral award unless it falls within the ambit of the grounds mentioned under Section 34 of the Act. Reference be made to the following judgements of the Supreme Court: 15.1 The Supreme Court in Ramesh Kumar Jain vs. Bharat Aluminium Company Limited 2025 SCC OnLine SC 2857 held as under: “28. The bare perusal of section 34 mandates a narrow lens of supervisory jurisdiction to set aside the arbitral award strictly on the grounds and parameters enumerated in sub-section (2) & (3) thereof. The interference is permitted where the award is found to be in contravention to public policy of India; is contrary to the fundamental policy of Indian Law; or offends the most basic notions of morality or justice. Hence, a plain and purposive reading of the section 34 makes it abundantly clear that the scope of interference by a judicial body is extremely narrow. It is a settled proposition of law as has been constantly observed by this court and we reiterate, the courts exercising jurisdiction under section 34 do not sit in appeal over the arbitral award hence they are not expected to examine the legality, reasonableness or correctness of findings on facts or law unless they come under any of grounds mandated in the said provision. In ONGC Limited. v. Saw Pipes Limited14, this court held that an award can be set aside under Section 34 on the following grounds:“(a) contravention of fundamental policy of Indian law; or (b) the interest of India; or (c) justice or morality, or (d) in addition, if it is patently illegal.” 15.2 In Consolidated Construction Consortium Limited Vs. Software Technology Parks of India (2025) 7 SCC 757 it was held as under: “46. Scope of Section 34 of the 1996 Act is now well crystallized by a plethora of judgments of this Court. Section 34 is not in the nature of an appellate provision. It provides for setting aside an arbitral award that too only on very limited grounds i.e. as those contained in Sub-sections (2) and (2-A) of Section 34. It is the only remedy for setting aside an arbitral award. An arbitral award is not liable to be interfered with only on the ground that the award is illegal or is erroneous in law which would require re-appraisal of the evidence adduced before the arbitral tribunal. If two views are possible, there is no scope for the court to re-appraise the evidence and to take the view other than the one taken by the arbitrator. The view taken by the arbitral tribunal is ordinarily to be accepted and allowed to prevail. Thus, the scope of interference in arbitral matters is only confined to the extent envisaged Under Section 34 of the Act. The court exercising powers Under Section 34 has perforce to limit its jurisdiction within the four corners of Section 34. It cannot travel beyond Section 34. Thus, proceedings Under Section 34 are summary in nature and not like a full-fledged civil suit or a civil appeal. The award as such cannot be touched unless it is contrary to the substantive provisions of law or Section 34 of the 1996 Act or the terms of the agreement.” 15.3 In PSA Sical Terminals Pvt Ltd. vs. The Board of Trustees of V.O. Chidambranar Port Trust Tuticorin And Others (2023) 15 SCC 781 it was held: “38. Before that, it will be apposite to refer to the judgment of this Court in MMTC Ltd. [MMTC Ltd. v. Vedanta Ltd., (2019) 4 SCC 163 : (2019) 2 SCC (Civ) 293] , wherein this Court has revisited the position of law with regard to scope of interference with an arbitral award in India. It will be relevant to refer to the following observations of this Court in MMTC Ltd. [MMTC Ltd. v. Vedanta Ltd., (2019) 4 SCC 163 : (2019) 2 SCC (Civ) 293] : (SCC pp. 166-67, paras 11-14) “11. As far as Section 34 is concerned, the position is well-settled by now that the Court does not sit in appeal over the arbitral award and may interfere on merits on the limited ground provided under Section 34(2)(b)(ii) i.e. if the award is against the public policy of India. As per the legal position clarified through decisions of this Court prior to the amendments to the 1996 Act in 2015, a violation of Indian public policy, in turn, includes a violation of the fundamental policy of Indian law, a violation of the interest of India, conflict with justice or morality, and the existence of patent illegality in the arbitral award. Additionally, the concept of the “fundamental policy of Indian law” would cover compliance with statutes and judicial precedents, adopting a judicial approach, compliance with the principles of natural justice, and Wednesbury [Associated Provincial Picture Houses Ltd. v. Wednesbury Corpn., (1948) 1 KB 223 (CA)] reasonableness. Furthermore, “patent illegality” itself has been held to mean contravention of the substantive law of India, contravention of the 1996 Act, and contravention of the terms of the contract. 12. It is only if one of these conditions is met that the Court may interfere with an arbitral award in terms of Section 34(2)(b)(ii), but such interference does not entail a review of the merits of the dispute, and is limited to situations where the findings of the arbitrator are arbitrary, capricious or perverse, or when the conscience of the Court is shocked, or when the illegality is not trivial but goes to the root of the matter. An arbitral award may not be interfered with if the view taken by the arbitrator is a possible view based on facts. (See Associate Builders v. DDA [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] . Also see ONGC Ltd. v. Saw Pipes Ltd. [ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705] ; Hindustan Zinc Ltd. v. Friends CoalCarbonisation [Hindustan Zinc Ltd. v. Friends Coal Carbonisation, (2006) 4 SCC 445] ; and McDermott International Inc. v. Burn Standard Co. Ltd. [McDermott International Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181] ) 14. As far as interference with an order made under Section 34, as per Section 37, is concerned, it cannot be disputed that such interference under Section 37 cannot travel beyond the restrictions laid down under Section 34. In other words, the court cannot undertake an independent assessment of the merits of the award, and must only ascertain that the exercise of power by the court under Section 34 has not exceeded the scope of the provision. Thus, it is evident that in case an arbitral award has been confirmed by the court under Section 34 and by the court in an appeal under Section 37, this Court must be extremely cautious and slow to disturb such concurrent findings.”” (Emphasis Supplied) 16. The view taken by the arbitrator is a plausible one, not vitiated by patent legality, perversity or conflict in public policy of India and no case is made out for interference by this Court under Section 34 of the Act. 17. The petition is dismissed. All pending applications stand dismissed. AVNEESH JHINGAN, J. JANUARY 16, 2026 ‘ha’ Reportable:- Yes O.M.P. (COMM) 242/2024 Page 12 of 12