Facts of the Case

This is a large commercial arbitration dispute between NTPC Ltd and L&T entities arising from a thermal power project EPC contract — it has no connection to GST law. NTPC filed two connected appeals, FAO(OS) (COMM) 45/2022 (against L&T-MHPS Boilers Pvt Ltd) and FAO(OS) (COMM) 46/2022 (against Larsen and Toubro Limited), under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996, challenging judgments of a Single Judge of the Delhi High Court which had partly upheld two arbitral awards in favour of the respondents.

The dispute arose from a tender awarded to L&T for setting up a Steam Generator at the Tanda Thermal Power Project, Stage-II (2x660 MW), Uttar Pradesh, with three contracts executed on 07.10.2014 covering different work packages. A dispute arose specifically over the third package — inland transportation, port clearance and related charges, and installation services for the Steam Generator. The disputes were referred to arbitration, resulting in awards dated 12.06.2020 and 25.06.2020 (OMP (COMM) 560/2020 and 567/2020), which NTPC challenged under Section 34 of the Arbitration Act; a Single Judge partly allowed NTPC's Section 34 applications but largely upheld the Tribunals' awards, prompting these Section 37 appeals.

Issues Involved

  1. Whether the arbitral awards, as partly upheld by the Single Judge under Section 34 of the Arbitration and Conciliation Act, warranted further interference by the Division Bench in appeal under Section 37.
  2. Whether the Tribunals' findings on the contractual claims relating to the Tanda Thermal Power Project's third work package were perverse or suffered from patent illegality justifying appellate interference.

Petitioner's Arguments

  • NTPC argued that the Single Judge erred in only partly setting aside the arbitral awards, and that the Tribunals' findings in favour of L&T on the disputed claims should be set aside in their entirety, contending the claims stood rejected.

Respondent's Arguments

  • L&T-MHPS Boilers and Larsen & Toubro defended the arbitral awards and the Single Judge's partial confirmation of them, relying on precedent limiting the scope of interference under Sections 34 and 37 of the Arbitration Act.

Court Order / Findings

  • The Court reiterated that the scope of judicial scrutiny under Section 37 is even more restricted than under Section 34, and that an appellate court does not sit as a regular court of appeal over an arbitral tribunal's findings.
  • It held that the Tribunals' inferences from the evidence were not perverse, and that the Single Judge had correctly held that the Indian Evidence Act does not strictly apply to arbitral proceedings, only its underlying principles.
  • The Court dismissed NTPC's appeals, along with all pending applications, upholding the arbitral awards to the extent they had already been confirmed by the Single Judge.

Important Clarification

This is a pure commercial arbitration and contract-interpretation dispute concerning a power-plant EPC contract; there is no GST assessment, credit, or compliance question anywhere in the judgment. It is of interest only to readers tracking arbitration law (the narrow scope of Sections 34/37 interference), not GST law.

Sections Involved

  • Arbitration and Conciliation Act, 1996 – Sections 34 and 37(1)(c)
  • Commercial Courts Act, 2015 – Section 13
  • Indian Evidence Act, 1872 (discussed regarding applicability to arbitral proceedings)

Decision – In Favour of

Decided in favour of the respondents, L&T-MHPS Boilers Pvt Ltd and Larsen & Toubro Limited — NTPC's appeals were dismissed, and the arbitral awards (as partly confirmed by the Single Judge) stood.

Case Details

  • Court: High Court of Delhi at New Delhi
  • Case Nos.: FAO(OS) (COMM) 45/2022 with CM APPL. 9296/2022, and FAO(OS) (COMM) 46/2022 with CM APPL. 9300/2022
  • Coram: Hon'ble the Chief Justice Satish Chandra Sharma and Hon'ble Mr. Justice Subramonium Prasad
  • Date of Order: 18th July, 2023

Link to Download the Order

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