Evidentiary Admission Can Be The Basis Of An Arbitral Award: Delhi High Court
The Delhi High Court dismissed a Petition under Section 34 of the A&C Act against an Interim Award by which the Arbitral Tribunal awarded Rs. 115 crores in favour of BHEL.
The Delhi High Court held that an evidentiary admission can be the basis of an Arbitral Award.
The Court held thus in a Petition filed by a company under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act), assailing an Interim Award by which a three-member Arbitral Tribunal awarded Rs. 115 crores in favour of Bharat Heavy Electricals Ltd. (BHEL).
A Single Bench of Justice Prateek Jalan observed, “… I do not read the judgement in Nagindas Ramdas to hold that an evidentiary admission can never be the basis of a decree or award, without leading evidence. Admissions in pleadings are placed on a higher footing, to the extent that they may require nothing more for a decree to follow, whereas admissions outside of pleadings, must be considered contextually. To hold that there is a bar on granting an award of admissions in the case of evidentiary admissions, would be inconsistent with the text of Order XII Rule 6 of the CPC, and the judgements cited above.”
Advocate Tanmaya Mehta appeared for the Petitioner while Senior Advocate Jayant Mehta appeared for the Respondent.
Factual Background
The arbitral proceedings arose from a Letter of Award (LoA) by which the Respondent-BHEL was entrusted with the task of design, engineering, manufacturing, inspection, testing, etc. of a Boiler Turbine Generator (BTG) for the Petitioner’s 5x270 MW Thermal Power Plant at Amravati, Maharashtra. Pursuantly, a supply contract and a services contract were signed by the parties which provided for the supply of material and scope of services respectively. In terms of the said contracts, the Petitioner paid an advance of Rs. 142.5 crores to the Respondent, secured by an advance bank guarantee of the Respondent. The amount paid by way of advance was to be adjusted against supplies.
Disputes arose between the parties because the Respondent claimed that the Petitioner had failed to discharge its payment obligations for plant, machinery, equipment, and services supplied by the Respondent, and became apprehensive of the Petitioner’s financial position. By a communication, the Petitioner unilaterally suspended supplies, which was not accepted by the Respondent. Ultimately, the contract was terminated. The matter went to arbitration in which the Respondent filed a claim. The Petitioner also made a counterclaim and then an award was passed. The Arbitral Tribunal allowed the Respondent’s Application for award upon admission and this was challenged by the Petitioner before the High Court.
Reasoning
The High Court in the above context of the case, noted, “The only ground upon which interference would nevertheless have been justified, is if the Court found the factual assessment to be entirely bereft of evidentiary support or perverse, in the sense that no reasonable tribunal could have reached the same conclusion. Having perused the minutes and the correspondence in question, I am unable to return a finding of such a nature.”
The Court said that there is no perversity in the understanding, that the reconciliation required was with regard to the difference in the amounts claimed by the Respondent, as opposed to the amounts admitted by the Petitioner.
“None of the minutes contained any specific express reference to the dispute regarding sequential supply, which forms the sheet anchor of the petitioner’s defence. In such circumstances, the view of the Tribunal cannot be interdicted in Section 34 proceedings”, it added.
The Court, therefore, concluded that the Tribunal’s decision is not liable for interference and that the Petitioner failed to make out a case for interference under Section 34 of the A&C Act.
Accordingly, the High Court dismissed the Petition and refused to interfere with the Arbitral Tribunal’s Award.
Cause Title- Rattan India Power Ltd. v. Bharat Heavy Electricals Ltd. (Neutral Citation: 2025:DHC:1464)
Appearance:
Petitioner: Advocates Tanmaya Mehta, Divyansh Rathi, Sumedha Rathi, and Yash Gaur.
Respondent: Senior Advocate Jayant Mehta, Advocates Rameezuddin Raja, Namit Suri, Tanya Sharma, Rajat Navet, and Kushagra Pandit.
