Synopsis

Naval Dockyard, Mumbai awarded a construction contract to NBCC, which sub‑contracted the work to Richa Construction Company (RCC). Disputes arose regarding final bill payment, rebate on deviation, work contract tax refund, underutilization of labour/machinery/overheads, and interest. The sole arbitrator passed an award dated 28.06.2018, partially allowing some claims (balance payment, interest on security deposit, underutilization of labour and overheads) and rejecting others. Both parties filed objections under Section 34 of the Arbitration Act. The Delhi High Court set aside the entire award, holding that (i) the arbitrator’s reasoning was cryptic and failed to satisfy Section 31(3), particularly on the disputed rebate of 1.35% where the original document was not produced; and (ii) the arbitrator awarded damages for underutilization of labour and overheads without proof of actual loss, contrary to Section 73 of the Contract Act as interpreted by the Supreme Court in Unibros v. All India Radio. The court left the parties to avail fresh arbitration in accordance with law.

Court: High Court of Delhi

Coram: Hon’ble Mr. Justice Avneesh Jhingan (Single Judge)

Date of Judgment: 4th May, 2026

Citation: O.M.P. (COMM) 481/2018 & O.M.P. (COMM) 355/2019 (2026:DHC:3802)

Core Law: Arbitration and Conciliation Act, 1996 – Sections 34 (setting aside award), 31(3) (reasoned award), 28(3) (decision according to law); Indian Contract Act, 1872 – Section 73 (compensation for loss or damage)

1. Heading of the judgment

High court of delhi

O.m.p. (comm) 481/2018 and o.m.p. (comm) 355/2019

M/s richa construction co. (petitioner in o.m.p. 481/2018) vs. M/s n.b.c.c. (i) ltd. (respondent in o.m.p. 481/2018) and nbcc india ltd. (petitioner in o.m.p. 355/2019) vs. richa construction ltd. (respondent in o.m.p. 355/2019)

Coram: hon’ble mr. justice avneesh jhingan

Date of decision: 4th may, 2026

Reportable: yes

2. Legal framework

Major laws and provisions involved:

Arbitration and conciliation act, 1996 – section 34 (petition for setting aside arbitral award), section 31(3) (contents of arbitral award – reasoned award), section 28(3) (arbitral tribunal to decide in accordance with law)

Indian contract act, 1872 – section 73 (compensation for loss or damage caused by breach of contract – actual loss to be proved)

Code of civil procedure, 1908 – principles of evidence and proof of damages (impliedly referenced)

Subject matter of the judgment:

Whether an arbitral award can be set aside under Section 34 of the Arbitration Act when (i) the arbitrator fails to give adequate reasoning on a material disputed issue (e.g., whether a further rebate was agreed upon), thereby violating Section 31(3); and (ii) the arbitrator awards

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