Arbitral Award And DRB Findings – Division Bench erred in setting aside a plausible arbitral interpretation – (Para 28) Clause 51.1 Interpretation – No instructed variation found – (Para 29) Clause 52.2 Analysis – Conditions for renegotiation were not met – (Para 30) Judicial Interference In Arbitration – Arbitral awards must not be set aside unless manifestly perverse – (Para 32) Public Policy Argument Rejected – No grounds of patent illegality were established – (Para 37) Judgment Set Aside – Division Bench’s reasoning was not sustainable under Section 37 – (Para 42) Arbitral Award Restored – Supreme Court allowed the appeal, upheld Single Judge’s order – (Para 43)

Acts and Sections Discussed:

• Constitution of India, 1950 – Article 136
• Arbitration and Conciliation Act, 1996 – Sections 34, 37
• Contract Act, 1872 – Section 62

Subjects:

Arbitral Award – Judicial Review – Variation Clause – BOQ Rate – Public Policy – Patent Illegality – Limited Appellate Jurisdiction – Uninstructed Variations

Question of Law:

• Whether an arbitral award, affirming findings of a Dispute Review Board (DRB) and a Single Judge under Section 34 of the Arbitration and Conciliation Act, 1996, could be interfered with under Section 37 on grounds of erroneous interpretation of contractual clauses?
• Whether the increase in quantity of geogrid material constituted a variation under Clause 51.1, justifying renegotiation of rates by the Engineer?

Nature of the Litigation:

Appeal against Delhi High Court Division Bench’s judgment, which overturned an arbitral award upheld by a Single Judge under Section 34 of the Arbitration and Conciliation Act, 1996.

Relief Sought by Appellant:

Restoration of the arbitral award directing payment for additional geogrid quantities at BOQ rates, as upheld by DRB and the Arbitral Tribunal.

Previous Decisions:

• DRB recommended payment at BOQ rate, finding no change in design.
• Arbitral Tribunal upheld DRB’s findings and rejected NHAI’s claim for rate renegotiation.
• Single Judge dismissed NHAI’s challenge under Section 34, affirming the award.
• Division Bench reversed, holding that variation in quantity justified rate renegotiation under Clause 52.2.

Issues:

a) Whether uninstructed variation in quantity warranted renegotiation of rates?
b) Whether the Division Bench exceeded its jurisdiction under Section 37?
c) Whether the arbitral award was patently illegal or violated public policy?

Submissions:

Appellant:

• No change in design, merely an increase in quantity.
• Arbitral Tribunal’s interpretation was plausible and within jurisdiction.
• Section 37 does not permit re-evaluation of factual findings.

Respondent (NHAI):

• Increase in geogrid quantity by 300% was a substantial variation.
• Engineer had the power under Clause 52.2 to revise rates.
• Arbitral award was perverse and against public policy.

Decision & Ratio:

• Supreme Court held that the Division Bench erred in setting aside a plausible arbitral interpretation.
• DRB, Arbitral Tribunal, and Single Judge all found no instructed variation, negating the Engineer’s power to alter BOQ rates.
• No grounds of patent illegality or public policy violation were established.
• Division Bench’s reliance on dictionary meanings of "variation" was misplaced.
• Limited judicial interference reaffirmed – arbitral awards must not be set aside unless they are manifestly perverse.
• Appeal allowed, Division Bench judgment set aside, arbitral award restored.