Section 34 court cannot re-appreciate evidence on attribution of delay where arbitrator's view is plausible: Delhi high court upholds 10% liquidated damages deduction

Delhi High Court Affirms Arbitrator's Decision: Section 34 Court Cannot Re-evaluate Delay Evidence, Upholds 10% Liquidated Damages Deduction.

Geo Miller & Co Pvt. Ltd. v. Indian Oil Corporation Ltd. Citation: (2026) ibclaw.in 4472 HC Court: High Court of Delhi Case No.: O.M.P. (COMM) 494/2016 Decided on: 27-Jul-26 Coram: Mr. Justice Om Prakash Shukla

The Delhi High Court has upheld an arbitral award which found a contractor responsible for delay in completing an EPC project and permitted the employer to deduct 10% of the contract value as liquidated damages, holding that reappreciation of evidence on the question of who caused the delay falls outside the limited scope of interference available under Section 34 of the Arbitration and Conciliation Act, 1996.

A Single Bench of Justice Om Prakash Shukla was dealing with a petition filed by Geo Miller & Co Pvt. Ltd. challenging an arbitral award arising out of an EPC contract for construction of a wastewater treatment plant awarded by Indian Oil Corporation Ltd. The stipulated completion period was nine months, but the work was delayed, following which the employer withheld 10% of the contract value by invoking the liquidated damages clause. The contractor invoked arbitration, disputing the deduction and claiming additional compensation for prolonged stay at site.

The Arbitrator held the contractor responsible for the delay, finding that time was of the essence, that the contractor failed to follow the contractual procedure under Clause 4.3.6.0 for seeking extension of time, and that the plea of adverse weather did not survive since the rainfall relied upon occurred after the scheduled completion date. The Arbitrator also rejected the contention that only the employer, and not its Power of Attorney holder, could decide on extension of time.

Before the Court, the contractor argued that the Arbitrator failed to appreciate correspondence showing the employer was responsible for the delay, that time ceased to be of the essence once work continued beyond the stipulated date, and that the deduction did not reflect reasonable compensation under Section 74 of the Indian Contract Act, 1872, relying on Kailash Nath Associates v. Delhi Development Authority and J.G. Engineers Private Limited v. Union of India.

The Court held that adjudicating who caused the delay would require fresh appraisal of evidence, which is beyond the supervisory jurisdiction under Section 34. Relying on Associate Builders v. DDA, it reiterated that a court exercising Section 34 jurisdiction does not sit in appeal and cannot interfere with a plausible view taken by the Arbitrator on facts, unless the finding is based on no evidence or is perverse. The Court noted that the Arbitrator had examined the correspondence and contractual clauses in detail before recording the finding on delay, distinguishing the case from J.G. Engineers.

On the question of quantum, the Court observed that Clause 4.4.0.0 prescribed a graded reduction of 0.5% per week of delay capped at 10%, linking compensation to the duration of breach, and therefore did not suffer from the vice considered in Kailash Nath Associates, which concerned forfeiture unconnected to actual loss.

Holding that the arbitral award reflected a plausible and reasoned view, the Court dismissed the petition challenging the award, with no order as to costs.