Synopsis

Delhi Metro Rail Corporation (DMRC) awarded a contract to a joint venture for construction of an elevated viaduct and stations. The project was delayed by 19 months. The contractor claimed prolongation costs, gst burden, minimum wage escalation, and environmental compensation charges. The arbitral tribunal (majority) awarded these claims. dmrc filed a petition under section 34 of the arbitration act, arguing that the tribunal had relied on assumptions, adopted inappropriate formulae, and violated contractual clauses that barred adjustment for change in law or minimum wage increases. The delhi high court dismissed the petition, holding that the tribunal’s interpretation of contractual clauses was plausible, quantification of damages using reasonable formulae was within its domain, and the court cannot reappreciate evidence or substitute its own view. The judgment reaffirms the extremely narrow scope of interference under section 34.

Court: High Court of Delhi at New Delhi

Coram: Hon’ble Mr. Justice Subramonium Prasad (Single Judge)

Date of Decision: 4th May 2026

Citation: 2026:DHC:4199

Core Law: Arbitration and Conciliation Act, 1996 – Sections 34 (setting aside arbitral award), 28(3) (arbitral tribunal to decide according to contract); Indian Contract Act, 1872 – Sections 54, 55, 73 (damages for breach).

1. Heading of the judgment

High court of delhi at new delhi

O.m.p. (comm) 202/2021 & i.a. 9690-9692/2021

Delhi metro rail corporation ltd. (petitioner) vs. Gyt tpl joint venture (respondent)

Coram: hon’ble mr. justice subramonium prasad

Date of decision: 4th may, 2026

2. Legal framework

Major laws and provisions involved:

• Arbitration and conciliation act, 1996 – section 34 (application for setting aside arbitral award), section 28(3) (arbitral tribunal to decide in accordance with contract), section 34(2-a) (patent illegality as ground for setting aside domestic award)

• Indian contract act, 1872 – sections 54, 55, 73 (compensation for breach, effect of delay)

• General conditions of contract (gcc) and special conditions of contract (scc) between the parties – clauses 11.1.3 (price variation), 11.1.4 (change in taxes/duty), 6.2 (minimum wages), 17.1 (claims procedure), c2.6(c) (change in taxes during extended period)

Subject matter of the judgment:

Whether an arbitral award granting prolongation costs (overheads, plant & machinery idling charges), gst compensation, minimum wage escalation, and environmental compensation charges can be set aside under section 34 on grounds that the tribunal relied on assumptions, adopted formulae without evidence, or interpreted contractual clauses in a manner contrary to their express language.

Key legal principles applied:

• Limited scope of interference under section 34: The court does not sit in appeal over the arbitral award. Interference is permissible only on grounds under section 34(2) and (2-a) – patent

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