In Brief
Parsa Kente Collieries contracted to supply coal to Rajasthan's power utility. When disputes arose over price escalation, fixed costs, and escrow accounts, the matter went to arbitration. The arbitrator awarded the company enhanced prices (using the original contract date for escalation calculations) plus Rs.78 crores in costs and escrow refund. The High Court set aside all awards on public policy grounds. The Supreme Court held that the arbitrator's interpretation of the price escalation clause—treating the original date despite the extended commencement—was plausible and possible, and courts cannot substitute their own interpretation. The appeal was partly allowed, restoring the price escalation award while confirming the High Court's setting aside of the fixed costs and escrow account awards due to lack of evidence and clear contractual violations."
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