In Brief
SEPCO, an engineering contractor, worked on thermal power plants for GMR Kamalanga Energy Limited. Disputes arose over delays, costs, and contract compliance. An arbitral tribunal awarded SEPCO approximately INR 995 crores. The single judge upheld the award, but the High Court Division Bench set it aside, finding the tribunal had: (1) improperly imposed an oral waiver of mandatory contractual notice requirements contrary to express 'No Waiver' clauses, despite this not being pleaded; (2) discriminatorily applied the waiver to benefit SEPCO's claims while denying GMRKE's counterclaims on the same ground, violating equal treatment principles; and (3) awarded contract milestones despite its own findings that prerequisite tests had failed, effectively rewriting the contract. The Supreme Court upheld the Division Bench, holding that such violations of natural justice, the fundamental policy of Indian law, and Section 28(3) of the Arbitration and Conciliation Act (which mandates decisions in accordance with contract terms) justify setting aside an award under Section 34, despite the narrow scope of judicial review. The appeal was dismissed.
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