Bank Of India vs Vadan Interiors Private Limited

Bank of India ...Petitioner

Versus

Vadan Interiors Private Limited ...Respondent Mr. Karl Shroff a/w Rishikesh Soni, Shailesh Poria, Dinesh Pednekar, Nistha Gupta, i/b Economic Laws Practice, for the

Petitioner.

Mr. Simil Purohit, Senior Advocate a/w Amrut Joshi, Yezad, Akshay Zantye, N.K. Sharma, Priya Rao & Sunil Sooden, i/b

Ashish Suryavanshi, for Respondent.

CORAM : SOMASEKHAR SUNDARESAN, J.

RESERVED ON : March 18, 2025

PRONOUNCED ON : November 3, 2025

JUDGEMENT:

Context and Factual Background:

1. This is a Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 ("the Act") challenging an arbitral award dated

ASHWINI

JANARDAN January 7, 2019 ("Impugned Award") allowing certain claims made by

VALLAKATI

Digitally signed by

ASHWINI JANARDAN

VALLAKATI

Date: 2025.11.03 15:02:50 +0530

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the Respondent, Vadan Interiors Pvt. Ltd. ("Vadan") against the Petitioner, Bank of India ("BOI").

2. On March 9, 2012, BOI invited bids for the Interior and Furnishing Works of its Corporate Office Building at the Bandra-Kurla Complex ("Project"). The envisaged period of the contract was three months in terms of the notice inviting bids and the General Conditions of Contract ("GCC") governing the Project. However, the Special Instructions to Bidders had indicated a timeframe of six months.

3. BOI awarded a Work Order to Vadan on March 30, 2012, which provided that time was of the essence and work was to be completed in three months. The parties executed an agreement dated April 11, 2012 ("Agreement"), which provided at Clause 10 that Vadan would complete the work within 22 months from the date of the Work Order.

4. The actual agreed length of time for completing the work became the core issue in the disputes between the parties. Vadan would claim that the agreed position between the parties and all activity including the bidding and planning was on the basis of a three-month work period and that the reference to 22 months in the Agreement was evidently an inadvertent error. BOI would contend that the Agreement contained a specific provision and that could not be ignored. Therefore, whether the

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timeframe was three months or 22 months was the foundation of the controversy before the Learned Arbitral Tribunal.

5. Had it been a three-month period, the Completion Date would have been June 30, 2012. Had it been a 22-month period, the Completion Date would have been January 31, 2014. Work actually commenced on or about April 11, 2012 and was completed on August 31, 2014. The claims of cost over-runs are related to whether there has been a time over-run and if so, to what extent.

6. Vadan would point to multiple facets of delay on the part of BOI - delay in handing over the work front; changes in designs; varying instructions on specific floors; delay in interface with other contractors; piecemeal work; additional work etc. Vadan led evidence by witnesses while BOI did not lead evidence. The Learned Arbitral Tribunal heard the parties, reviewed the record, appreciated the evidence, and rendered the Impugned Award.

7. The claims awarded are summarised below:

(a) Additional overhead cost for the extended period of

25 months beyond June 30, 2012 (the contract completion

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deadline) and until August 31, 2014, when it was actually

concluded: Rs. ~1.95 crores;

(b) Additional cost due to increase in material: Rs.

~49.23 lakhs;

(c) Additional cost due to increase in cost of labour --

Rs. ~32.82 lakhs;

(d) Additional expenditure by way of finance charges --

Rs. ~32.27 lakhs;

(e) Loss of profit and earning capacity - Rs. ~5.60

crores;

(f) Interest at 12% per annum pre-award award and at

9% per annum post-award; and

(g) Costs - Rs. 12 lakhs.

8. The challenge to the Impugned Award is premised on the ground that it is not a product of a judicial approach; suffers from non- application of mind; is based on no evidence or reasons; and runs contrary to contractual prohibitions on the grant of claims awarded.

Contentions Against the Impugned Award:

9. I have heard Mr. Karl Shroff, Learned Advocate on behalf of BOI and Mr. Simil Purohit, Learned Senior Advocate on behalf of Vadan.

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10. At the threshold, it may be stated that the Learned Arbitral Tribunal has examined what would have been the precise period contemplated by the parties as the period for completing the work. The Learned Arbitral Tribunal noted that the notice inviting tender had indicated a period of three months from the issue of the work order or the first day when Vadan is handed over possession, whichever is later.

The GCC too indicated a period of three months in Clause 41 as well as in an Appendix to the GCC. Minutes of the pre-bid meeting and the Work Order itself also pointed to a three-month period. The work plan submitted by Vadan and agreed upon by the parties also pointed to the three-month period. The requirements for factoring in pricing in the bid also stipulated factoring in a three-month timeline.

11. Going by the conduct of the parties, the work plan, the contemporaneous correspondence, the evidence led, the cross- examination conducted and giving the dichotomy a reconciliation by applying the business efficacy test, and the absence of anything on the record to indicate the basis for the Agreement moving the Completion date from June 30, 2012 to January 31, 2014, the Learned Arbitral Tribunal was pleased to hold that the reference to 22 months in the Agreement was not a negotiated and agreed change of consent of the

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parties, and accepted that it was an inadvertent reference that did not have a consequence for the agreed timeline of three months.

12. There was some reference to BOI having taken a stand that it had opted for adopting "Green Building Measures" and accreditation from the Green Building Council was the cause for the change from three months to 22 months, but this was the first whisper of a ground that was found in a letter dated December 18, 2016, in the course of correspondence between the parties after disputes had broken out, and well after the work had even been completed.

13. The Learned Arbitral Tribunal, which is the master of the quality and quantity of the evidence has returned, in my opinion, a plausible and reasonable finding in this regard and the Section 34 Court cannot fault this finding.

14. However, the core controversy in the contentions between the parties before me, was not so much about whether the agreed period of the work was 22 months or three months, but about the manner in which claims have been assessed and allowed by the Learned Arbitral Tribunal. In fact, Mr. Shroff fairly and candidly stated that he would not expend his allocated time on making submissions about the time period for completing the work but would focus on the manner of appreciation

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of evidence and the non-judicial manner of conduct of the arbitral proceedings, which he would submit, makes it clear that the Impugned Award is patently illegal and arbitrary.

15. The findings under each of the heads of claims allowed and summarised above were addressed separately on behalf of BOI although it must be stated that on a number of claims, the contentions are in the same vein - essentially that the Learned Arbitral Tribunal had simply accepted whatever had been presented by the chartered accountant of Vadan whose report was sought to be relied upon as evidence by Vadan.

Additional Costs Towards Overheads:

16. Mr. Shroff would submit that in the case of additional overheads, the additional costs were certified by the Chartered Accountant. Neither has the basis of the Chartered Accountant having arrived at the average expenses been explained, Mr. Shroff would contend, nor has the Learned Arbitral Tribunal explained why the average cost should be adopted for assessing the additional costs attributable to overheads.

17. Mr. Shroff would also find fault with the underlying bills and vouchers that the Chartered Accountant is said to have studied to file his evidence, have not been brought into evidence. The upshot of this

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contention is that the Learned Arbitral Tribunal has simply adopted the data presented by the Chartered Accountant and therefore, the Impugned Award is not an award based on evidence.

Additional Costs attributable to Materials and Labour:

18. The contentions in relation to additional costs relating to increase in materials used is quite similar. Mr. Shroff would submit that the Impugned Award is based on the Chartered Accountant's certification, without stress-testing the same. He would question the basis on which the increase in material cost is taken at 60% and the increase in manpower cost is taken at 40%. For purposes of increase in labour cost, the Chartered Accountant had taken the Wholesale Price Index for commodities, which is attacked as inappropriate.

19. Under these two heads, it is also contended that the Impugned Award is contrary to the contract inasmuch as Clause 14 of the GCC bars price escalation. Therefore, here too the contention is that the approach of the Learned Arbitral Tribunal has been non-judicial, rendering the Impugned Award liable to be set aside.

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Additional Financing Costs:

20. As regards additional financing costs, Mr. Shroff would again submit that this too is purely purported to be based on audited financial statements. He would submit that this head is capable of specific proof but the Learned Arbitral Tribunal has chosen to simply adopt the computations of the Chartered Accountant, who should have deposed on what the actuals are. He would submit that it was necessary for Vadan to show what the financial arrangements were, how the impact of the delay was felt, and what arrangements had been made. The actual interest costs and financing costs and how they increased has not been proven or explained by any witness. In a nutshell, the line of attack is quite similar under this head too.

Loss of Profit and Earning Capacity:

21. Vadan has claimed that it had suffered a loss of profit and loss of interest on profit due to the time over-run. The very fact that only a portion of overheads has been taken into consideration indicates that there were other projects underway and there was no constraint in engaging in other projects and investing time and resources in them.

Therefore, he would contend that allowing the claim under loss of profit and earning capacity is unsustainable.

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22. A mere listing of tenders that Vadan could have bid in and could not achieve is no way of proving loss of opportunity, Mr. Shroff would contend. There is no explanation of what similar projects were available on hand and which projects could have been billed to earn Rs. 43 lakh per month, which is the basis of the claim under this head. More importantly, he would contend that once escalation for labour and material has been compensated for, a further claim for loss of profits should not be granted inasmuch as the damages awarded does compensate for the time over-run. There was a clear need to prove how the amount receivable under the Agreement could have been utilised on another project, which could have earned profit.

Analysis and Findings:

23. I have examined the record and the Impugned Award from the perspective of the challenge mounted to its validity, bearing in mind the grounds of challenge pressed on behalf of BOI. With the benefit of their submissions made by Learned Advocates for both parties, including their written arguments, I have examined the record to see if the Impugned Order deserves interference, bearing in mind the scope of review involved under Section 34 of the Act.

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24. What becomes clear is that the three-month period envisaged for the Project was a foundational feature of the framework in which the contract was negotiated and arrived at between the parties. It appears as a matter of finding on the record that Vadan mobilised at the site and remained mobilised at the site throughout the period that the work eventually took. That the non-availability of the work fronts was to enable a smooth and complete implementation of Vadan's role has evidently been well established to the satisfaction of the Learned Arbitral Tribunal.

25. It is also evident that the causes for the same stood clearly and plausibly established - delay in issuance of drawings; changes in design to the ground, first, eighth, nineth and tenth floor; delay relating to the interface with other contractors involved in the work, all stand established. It has been reasonably and plausibly concluded by the Learned Arbitral Tribunal that the causes for the delay are attributable solely to BOI.

26. Now the real issue is what the compensation for the delay should be. The core contention before the Learned Arbitral Tribunal in this regard was that the tender was based on an item rate calculation and both sides were responsible for their own calculations. The Project

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Management Consultant ("PMC"), whose contemporaneous correspondence otherwise supported the contention of Vadan in relation to the envisaged timeline being three months, had also contemporaneously questioned the ability to claim compensation for additional costs due to the time over-run. The issue then is about whether there could be any claim at all for compensation for the excessive time spent - it must be remembered that the scale of the time over-run was about nine times (29 months) the envisaged time (three months).

27. In this context, the Learned Arbitral Tribunal examined Section 55 of the Indian Contract Act, 1872 and imported the principles stipulated for the implied promise held out by BOI to Vadan about the time outlay within which the deployment of men and materials of Vadan were meant to be contracted. The Learned Arbitral Tribunal, on review of the multiple provisions of the contract-forming documentation, has taken a plausible view that time was not of the essence of the contract.

Therefore, it was found that Vadan as such a promisee, was not expected to work on deployment of resources beyond three months, and was entitled to be compensated.

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28. The Learned Arbitral Tribunal found that Vadan did not accept the delay without demur and had constantly been reminding BOI about the delay leading to incurring of further expense. It is in response to such correspondence that the PMC wondered which provision of contract enabled such a claim. This gap is what has been sought to be filled by the Learned Arbitral Tribunal, which found the claims for potential compensation due to the delay between September 2012 and April 2013. Therefore, the Learned Arbitral Tribunal took the view that the absence of a provision indicating the compensation payable in such a situation would not denude the power to assess damage and award compensation when adjudicating the dispute, among others, in reliance of the judgement of the Supreme Court in K. Satyapalan1 where the Supreme Court reversed the setting aside of an arbitral award, which had been done on the premise that the contract had not provided for compensation. The sheer scale of the delay is stark in these proceedings and in the aforesaid judgement, the scale of the delay is what had weighed with the Supreme Court in upholding the arbitral award and setting aside the intervention by the High Court.

29. It was apparent that the Chartered Accountant had relied upon audited financial statements that were underlying the evidence led by 1 KN Sathyapalan vs. State of Kerala - (2007) 13 SCC 43

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the chartered accountant and his certifications that were pressed into evidence. The audited financial statements were made available. BOI is itself a banking and financial services provider and is financially literate and is sophisticated enough to have countered and confronted such evidence. BOI could have led evidence or any expert just to dispel the conclusions drawn in the evidence led by Vadan. BOI could have sought summoning of documentary evidence underlying the financial certifications made by the Chartered Accountant witness. There had been no specific disputed denial of any certification by BOI apart from the general denial of anything not admitted. The Chartered Accountant was available for cross examination. The Learned Arbitral Tribunal has articulated its approach and thought process as to why the certificates issued by the Chartered Accountant were acceptable.

30. When Vadan sought to file a fresh affidavit asking for enhancement of the profit margin to 7% from 5% at the fag end of the proceedings, the Learned Arbitral Tribunal disallowed it. The Learned Arbitral Tribunal found that BOI did not counter the contents of the certifications. Such countering is being done now, but BOI's time to challenge the certification was during the arbitral proceedings. I am afraid that while it is very tempting to examine the facets of review ably canvassed by Mr. Shroff, the Section 34 Court must have the discipline

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to remember that this jurisdiction is not an appellate jurisdiction and it is not open to this Court to substitute one plausible view with another plausible view. The approach that Mr. Shroff would cancel would constitute another plausible approach to the appreciation of evidence.

The question to ask really is whether what the Learned Arbitral Tribunal has done is so implausible or so perverse that the Impugned Award is rendered manifestly arbitrary and untenable. I am unable to bring myself to agree that such standard has been met.

31. On reflection, I am of the view that the contentions now being raised on behalf of BOI seek to raise doubt about the approach of the Learned Arbitral Tribunal but they do not add up to the standard stipulated for the Section 34 Court when assessing whether an arbitral award is vulnerable to be set aside. An arbitral award does not have to be proven beyond reasonable doubt for a Section 34 Court to uphold it.

On the contrary, an arbitral award cannot be disturbed unless it is so manifestly perverse and implausible that no reasonable person could have ever come to the view returned by the Learned Arbitral Tribunal.

That standard has not been met.

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32. The following extract from the Supreme Court's articulation of the

framework in Konkan Railway2, which in turn extracts from the

Supreme Court judgement in Dyna3 would be appropriate to quote:

15. Therefore, the scope of jurisdiction under Section 34 and Sec-

tion 37 of the Act is not akin to normal appellate jurisdiction. It is well- settled that courts ought not to interfere with the arbitral award in a casual and cavalier manner. The mere possibility of an alternative view on facts or interpretation of the contract does not entitle courts to reverse the findings of the Arbitral Tribunal. In Dyna Technologies Private Limited v. Crompton Greaves Limited (2019) 20 SCC 1, this Court held:

"24. There is no dispute that Section 34 of the Arbitration Act limits a challenge to an award only on the grounds provided therein or as interpreted by various courts. We need to be cognizant of the fact that arbitral awards should not be interfered with in a casual and cavalier manner, unless the court comes to a conclusion that the perversity of the award goes to the root of the matter without there being a possibility of alternative interpretation which may sustain the arbitral award. Section 34 is different in its approach and cannot be equated with a normal appellate jurisdiction. The mandate un- der Section 34 is to respect the finality of the arbitral award and the party autonomy to get their dispute adjudicated by an alternative forum as provided under the law. If the courts were to interfere with the arbitral award in the usual course on fac-

2 Konkan Railway Corporation Ltd. Vs. Chenab Bridge Project Undertaking - (2023) 11 SCR 215 3 Dyna Technologies Private Limited v. Crompton Greaves Ltd - (2019) 20 SCC 1 November 3, 2025 Ashwini Vallakati

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tual aspects, then the commercial wisdom behind opting for al- ternate dispute resolution would stand frustrated.

25. Moreover, umpteen number of judgments of this Court have categorically held that the courts should not interfere with an award merely because an alternative view on facts and interpretation of contract exists. The courts need to be cautious and should defer to the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied unless such award portrays perversity unpardonable under Section 34 of the Arbitration Act."

[Emphasis Supplied]

33. To adopt the aforesaid principle, to my mind the Impugned

Award does not betray any unpardonable perversity for it to be

interfered with.

34. One argument of Mr. Shroff that was quite appealing was that,

when compensation for escalation of materials and labour deployed is

already provided, it need not be appropriate to award compensation for

loss of opportunity and profits. Towards this end, I have closely

examined the decision of the Supreme Court in Bharat Coking Coal4 that

has been invoked by him on behalf of BOI. The following extract is

noteworthy:

4

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24. Here when claim for escalation of wage bills and price for materials compensation has been paid and compensation for delay in the payment of the amount payable under the contract or for other extra works is to be paid with interest thereon, it is rather difficult for us to accept the proposition that in addition 15% of the total profit should be computed under the heading "Loss or Profit'. It is not unusual for the contractors to claim loss of profit arising out of diminution in turnover on account of delay in the matter of completion of the work. What he should establish in such a situation is that had he received the amount due under the contract, he could have utilised the same for some other business in which he could have earned profit.

Unless such a plea is raised and established, claim for loss of profits could not have been granted. In this case, no such material is available on record. In the absence of any evidence, the arbitrator could not have awarded the same. 'This aspect was very well settled in Sunley (B) & Co. Lid. v. Cunard White Star Ltd. By the Court of Appeal in England. Therefore, we have no hesitation in deleting a sum of Rs 6,00,000 awarded to the claimant.

[Emphasis Supplied]

35. From the foregoing, it will be seen that the Supreme Court did not

lay down an absolute proposition in Bharat Coking Coal that there can

never be a claim permitted for loss of profits when compensation for

deployment of men and material is permitted for an inordinate delay.

In the facts of that case, there had been no material on record to

establish that had the contractor received money in time, he could have

deployed it elsewhere. In the facts of this case, a list of other tenders in

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which Vadan could have participated was indeed provided and

appreciated by the Learned Arbitral Tribunal.

36. The financial statements based on which the Chartered

Accountant certified his computations were available and whatever was

not available could have been summoned. The reasoning adopted by

the Learned Arbitral Tribunal being a plausible one, and taking into

account the sheer scale of the delay and the cogent articulation of how

the delay was attributable to BOI, the standard necessary for me to

interfere on this facet of the Impugned Award, in my opinion, has not

been met.

37. In these circumstances, having considered the clearly articulated

opposition and objection to the Impugned Award presented by Mr.

Shroff, I am unable to find in his favour that the standard stipulated in

law for my intervention has been attracted. The Learned Arbitral

Tribunal is the master of the evidence and is the best arbiter of the

quality and quantity of the evidence. I am not satisfied that he has

abandoned judiciousness in his approach to the matter and has blindly

adopted whatever has been given to him by the Chartered Accountant.

BOI had a full opportunity to deal with all the material that was part of

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the mix before the Learned Arbitral Tribunal. The Impugned Award is a

product of such due process followed by the Learned Arbitral Tribunal.

38. There is one other element that Mr. Shroff mentions as betraying

non-application of mind - the Learned Arbitral Tribunal has stated that

three questions need to be considered (in internal page 79 of the

Impugned Award - Page 132 of the Paperbook) and has not answered

them. I have carefully examined this contention and note that it can be

said that the discussion preceding this portion would be indicative of the

fact that the Learned Arbitral Tribunal meant to state these as rhetorical

questions having explained his position on why he approves of the

claim. While this can be put to drafting inelegance, to my mind it is not

reflective of such a fundamental and gross analytical error as to betray

abandonment of a judicial mind and utter non-application of mind.

39. Therefore, while the facets where Mr. Shroff had initially made a

dent in mind were attractive to examine, on reflection, I am not

persuaded to intervene and disturb the Impugned Order.

40. In the result, I am not satisfied that any interference is called for

with the Impugned Award. Therefore, the Petition is dismissed.

Interim Applications, if any are pending, would also stand accordingly

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in connection with these proceedings shall stand released to Vadan

within a week of the expiry of four weeks from the upload of this

judgement on the website of this Court.

41. All actions required to be taken pursuant to this order shall be

taken upon receipt of a downloaded copy as available on this Court's

website.

[SOMASEKHAR SUNDARESAN, J.]

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