Tribunal's Failure to Adjudicate Key Dispute and Contradictory Awards Lead to Remand for Fresh Adjudication
In a significant decision, the Delhi High Court has set aside an arbitral award favoring Ssangyong Engineering and Construction Co. Ltd. against the National Highways Authority of India (NHAI). The judgment, dated August 14, 2026, was delivered by a division bench comprising Justices V. Kameswar Rao and Manmeet Pritam Singh Arora. The bench found that the arbitral tribunal failed to adjudicate on critical disputes submitted to it, leading to the remand of the case for fresh adjudication.
The dispute arose from a contract awarded to Ssangyong for the construction of a highway section in Madhya Pradesh. The core issue revolved around the arbitral tribunal's handling of a certificate dated August 31, 2014, issued by the Engineer, which was contested by NHAI. The tribunal's decision to disregard NHAI's objections to this certificate was deemed a violation of natural justice principles.
The High Court criticized the tribunal's finding that the certificate had not been challenged, noting that the record clearly showed NHAI had raised substantial objections. This failure to consider NHAI's defense was held to violate Section 34 of the Arbitration and Conciliation Act, 1996, which governs the setting aside of arbitral awards in India.
Moreover, the High Court highlighted irreconcilable contradictions between the award in question and a previous award involving similar contractual terms and parties. Two common arbitrators in both cases delivered inconsistent findings on identical issues, without providing adequate justification for the departure.
The judgment emphasized the importance of consistency in arbitral awards, especially when common members are involved in related disputes. Such inconsistencies, without explanation, undermine the basic notions of justice and shock the conscience of the court, the bench remarked.
The High Court's decision underscores the judiciary's role in ensuring arbitral tribunals adhere to principles of fairness and justice, while also maintaining consistency in their rulings. The case has been remanded to the arbitral tribunal for a fresh adjudication, directing it to address the issues overlooked in the initial proceedings.
Bottom Line :
Arbitration - Arbitral tribunal's failure to adjudicate a material dispute and irreconcilable contradictions in separate arbitral awards by common members render the award unsustainable under Section 34 of the Arbitration and Conciliation Act, 1996.
Statutory provision(s): Arbitration and Conciliation Act, 1996, Section 34
