Delhi High Court Dismisses IRCON Appeal Against Railway Construction Arbitral Award

The Delhi High Court has recently dismissed an intra court appeal filed by IRCON International Limited, reiterating that appellate courts have very limited room to interfere in arbitration matters.

The court held that the arbitral tribunal's findings on how the excavation was classified and whether payment was due for tie bolts were purely factual determinations, which cannot be reopened under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996.

A Division Bench of Justice C. Hari Shankar and Justice Om Prakash Shukla upheld a Single Judge's decision that had largely sustained an arbitral award in favour of Cannon Engineering Construction Cannon Cottage. The only interference earlier was with pre-award interest barred by contract.

The dispute arose from a civil works contract for NTPC's Solapur project. The contractor claimed that the excavation involved hard rock. Under CPWD Specifications, hard rock attracts higher rates than ordinary rock. IRCON relied on an internal committee report classifying the material as ordinary rock.

The bench found the report internally inconsistent.

“While the committee opined that the material was ordinary rock, it also recorded that excavation by manual means was not feasible. This contradiction, coupled with the fact that the material could not be excavated manually, led the Tribunal to conclude that the material could not be treated as ordinary rock and therefore fell within the definition of hard rock.”

The Court held that this determination was factual and based on field book entries, a geological report identifying basaltic rock, and site records.

“The determination of whether the material encountered during excavation was ordinary rock or hard rock is essentially a question of fact, lying within the exclusive domain of the Arbitral Tribunal as the final arbiter of facts.”

On payment for tie bolts used in RCC wall shuttering, the Bench held that the Tribunal's conclusion that they were not included in composite shuttering rates was a plausible finding based on evidence.

Rejecting IRCON's argument that payment was barred for want of prior written approval, the Court held that the relevant contractual clauses operated in distinct fields.

“In our considered view, there was neither express approval nor rejection or direction to stop the work by the Appellants in clear terms when the extra work was being executed. Having remained supine while continuing to derive the benefit of the executed work, the Appellants cannot now be permitted to take advantage of their own inaction.”

The appeal was dismissed.