Can an arbitral tribunal award payment for services a party has not yet rendered, simply to head off a second round of litigation down the line? The Delhi High Court answered this in National Highways Authority of India v. The Louis Berger Group Inc. JV with M/s COWI A/S1, partly setting aside a nearly two decade old consultancy dispute’s arbitration award. Justice Avneesh Jhingan held that granting relief for a period running past the award’s own date, for services on which no payment obligation had yet arisen, travels beyond the scope of the dispute actually referred to arbitration, and separately held that relying on financial information shared with the tribunal without giving the other side a chance to respond breaches the equal-treatment guarantee under Section 18 of the Arbitration and Conciliation Act, 19962. For practitioners handling long-running consultancy and infrastructure disputes, the order is a sharp reminder that convenience for the tribunal is not a substitute for staying within what the parties actually asked it to decide.
National Highways Authority of India (NHAI) engaged the Louis Berger-COWI joint venture in 2006 for design, construction supervision, and operation and maintenance consultancy on a cable-stayed bridge across the Chambal River in Rajasthan. After an accident damaged the partly built bridge in 2009, NHAI considered debarring the joint venture but never followed through, instead continuing to use its services under the original contract terms while a proposed supplementary agreement carrying revised financial conditions went unexecuted, the joint venture having refused to accept it. NHAI eventually approved an extension of the operation and maintenance period in 2020 but withheld payment until the supplementary agreement was signed. The joint venture invoked arbitration in 2021, and the tribunal awarded roughly Rs. 5.39 crore and USD 12.74 lakhs for the construction period claim, plus a separate USD 60,769 and Rs 5.16 crore for operation and maintenance charges running all the way to 19.11.2023, several months after the award itself was passed on 4.05.2023. NHAI’s challenge rested on three grounds: that the tribunal never decided who was responsible for the 2009 accident, that it granted relief beyond what was actually claimed, and that the claims were time-barred.
NHAI’s Own Conduct Undercut Its First Argument
The Court rejected this argument quickly. Who caused the 2009 accident would only have mattered if NHAI had actually acted on it, by terminating the contract, imposing a penalty, or holding the joint venture to the revised terms it proposed. Since NHAI did none of these and simply let the joint venture complete the work under the original contract, the Court held that “the contention that fixing of responsibility was the core issue is ill-founded,” distinguishing an earlier Division Bench decision NHAI relied on, National Highways Authority of India v. IRB Pathankot Amritsar Toll Road Ltd,3 where a tribunal had granted compensation without first deciding a default question that actually determined the outcome. Here, NHAI’s own inaction meant the responsibility question never became operative to what the tribunal was actually asked to decide.
Relief Beyond the Prayer
The Court’s central finding concerned the operation and maintenance claim. Comparing the relief the joint venture had actually prayed for, payment up to a stated cut-off date, against what the tribunal awarded, payment running to 19.11.2023, the Court found a clear mismatch: “It is evident from the perusal of the prayer and the award that relief beyond the prayer made was granted. Even the amount for the services yet to be rendered was awarded.” The Court rejected the joint venture’s argument that this was done merely to avoid future litigation, holding plainly that “relief cannot be granted on an apprehension and for services yet to be rendered for which no amount was due on the date of passing of the award.” Because the award granted relief for a dispute not properly falling within what was submitted to arbitration, the Court held it fell within Section 34(2)(a)(iv)4, which allows an award to be set aside where it “contains decisions on matters beyond the scope of the submission to arbitration.”
The Court found a second, independent defect in how this same claim was quantified. The tribunal had asked for financial details on the qualifications of the joint venture’s operation and maintenance expert, and received them from the joint venture’s counsel by email, information the Court found was never put to NHAI for a response. Citing Section 18’s guarantee that parties be treated equally and given a full opportunity to present their case, and the Supreme Court’s holding in Ssangyong Engineering & Constructions v. NHAI5 that relying on material obtained behind a party’s back without a chance to rebut it is itself a ground to challenge an award, the Court held NHAI “was denied an opportunity to reasonably defend the case.”
Severing the Award
Having found the operation and maintenance claim unsustainable on two independent grounds, the Court considered whether the award could be partly set aside rather than struck down entirely. It relied on Gayatri Balasamy v. ISG Novasoft Technologies,6 which held that the proviso to Section 34(2)(a)(iv) allows courts to sever unsustainable portions of an award, since the power to set aside an award necessarily includes the lesser power to set it aside only in part. Although the construction-period and operation and maintenance claims arose from the same contract, the Court found “they are not inextricably connected,” and set aside only the operation and maintenance award, leaving the construction-period award and the joint venture’s costs award undisturbed. It also rejected NHAI’s limitation argument: since NHAI only finally rejected the claim in April 2020 and arbitration followed within a year, the claim was well within time.
The Broader Significance
It draws a precise line for tribunals awarding relief tied to ongoing or future performance: a claim can be quantified right up to the date the tribunal decides it, but it cannot reach past the award’s own date to cover services that have not yet been rendered and for which no payment obligation has yet arisen, however tempting it might be to close out the whole relationship in one sweep and spare the parties a second dispute later. The order is equally a reminder that procedure is not a formality that yields to a sound outcome: even where a tribunal’s underlying reasoning might otherwise hold up, the way supporting material reaches it matters in its own right, and information shared with one side but never put to the other can undo an award regardless of how defensible its conclusion might have looked on properly tested evidence. And the case is a clean illustration of severability doing real work rather than sitting as a footnote: a single award can rest on claims that are analytically distinct even when they arise from the same contract, so a defect confined to one need not touch a claim standing on its own footing.
Citations
Expositor(s): Adv. Pratistha Dahiya
