ARKA BRITTON SERVICES PRIVATE LTD. Vs CNH INDUSTRIAL (INDIA) PRIVATE LTD.

%

IN THE HIGH COURT OF DELHI AT NEW DELHI

Judgment reserved on: 14.08.2026

Judgment pronounced on: 19.08.2026

CNR No. DLHC011315482018

O.M.P. (COMM) 268/2018

ARKA BRITTON SERVICES PRIVATE LTD. .....Petitioner

Through: Mr. Abhik Kumar & Mr. Dipak

Girdhar, Advs.

versus

CNH INDUSTRIAL (INDIA) PRIVATE LTD. .....Respondent

Through: Mr. Yamandeep Kumar & Ms.

Samiksha Goel, Advs.

CORAM:

HON'BLE MR. JUSTICE AVNEESH JHINGAN

J U D G M E N T

The present petition is filed under Section 34 of the Arbitration

and Conciliation Act, 1996 (for short 'the Act') challenging the arbitral

award dated 14.02.2018 (for brevity 'the impugned award').

Brief facts are that the petitioner is a service provider, rendering

outsourced manpower and related services to the respondent since

year 2011. The respondent is engaged in the business of manufacture

and sale of tractors, other agriculture implements and machinery.

2.1 On 21.03.2014, the parties to the lis entered into two contracts,

namely WC/REV/146/14 (for short „146‟) for salary of outsource

services and WC/REV/147/14 (for short „147‟) for reimbursement of

outsource service expenses (collectively referred to as the „contracts‟).

As per clause 2 of both contracts, the duration of the contract was from 01.04.2014 to 31.03.2015, extendable on mutually agreed terms

in writing. Clause 11 of contract 146 and Clause 9 of contract 147

provided for termination/cession where under the contract could be

terminated by either party by giving thirty days written notice and if

not extended it would deemed to have expired after expiry of three

months.

2.2 The contract was set to expire on 31.03.2015 and vide e-mail

dated 16.03.2015, the respondent called upon the petitioner to submit

the proposal for the year 2015-16. Negotiations for execution of fresh

contracts continued during March-April, 2015. The respondent by an

email dated 05.05.2015 communicated the decision that both the

contracts are terminated.

2.3 The petitioner alleging that the termination is abrupt and illegal,

invoked arbitration by issuing notice dated 01.09.2015 as per clause

15 of both contracts. The respondent appointed the sole arbitrator vide

letter dated 11.09.2015.

2.4 Before the arbitrator, the petitioner raised thirteen claims

aggregating to Rs.5,48,04,402/-. The respondent raised a counter

claim of Rs.27,79,818/-. The arbitrator vide impugned award

concluded that the contract did not automatically expire on 31.03.2015

and stood extended by three months i.e., upto 30.06.2015. The

termination letter dated 05.05.2015 was held to be in breach of the

terms of the contract. The arbitrator awarded a sum of Rs.11,21,810/-

to the petitioner and a sum of Rs.27,40,066/- to the respondent. After

adjustments a net sum of Rs.16,18,256/- was awarded in favour of the respondent along with interest @ 12% per annum from the date of

award till the realization. Aggrieved of the award this petition is filed.

Learned counsel for the petitioner contends that the

appointment of the arbitrator is in violation of Section 12(5) of the Act

as amended vide Arbitration and Conciliation (Amendment) Act, 2015

(for short „2015 Amendment Act‟).

3.1 It is argued that the arbitrator failed to appreciate that the claims

towards salary and telephone/travel expenses pertained to

reimbursement for the period of April, 2015 to June, 2015. The

material on record was not properly appreciated, particularly that there

was no evidence adduced to establish that the employees were paid

through other agencies. The argument is that the findings recorded are

based on conjectures and surmises.

3.2 The contention is that the arbitrator erred in concluding that the

claims for recruitment cost and loss of credibility were non-arbitrable

and do not arise from the contract.

3.3 Lastly, the submission is that it was wrongly concluded that the

petitioner suffered no loss of business whereas the petitioner was

acting as ancillary to the respondent and had the employees not left,

the petitioner could have entered into other contractual engagements.

Per contra the impugned award is well reasoned and calls for

no interference. Reliance is placed upon Delhi Airport Metro Express

Pvt. Ltd. v. Delhi Metro Rail Corporation Ltd., (2022) 1 SCC 131 to

argue that a plausible view is taken in the impugned award and calls for no interference. The decision of the Supreme Court in Dyna

Technologies Pvt. Ltd. v. Crompton Greaves Ltd., (2019) 20 SCC 1 is

pressed into service to argue that the interference is warranted under

Section 34 of the Act only in case of perversity or a patent illegality

and not for existence of another possible view.

4.1 The contention that the appointment of the arbitrator was in

violation of Section 12(5) of the Act is controverted stating that the

arbitrator was appointed on 16.09.2015 and the amended provision is

not applicable.

Heard the learned counsel for the parties and perused the

relevant record with their able assistance.

The issue whether the amended Section 12(5) of the Act added

by the 2015 Amendment Act shall apply to the arbitration proceedings

commenced prior to amendment even though the award is delivered

after the amendment is no longer res integra. The Division Bench of

this court in DV Anand v. Hindustan Petroleum Corporation Ltd,.

2026 SCC OnLine Del 4903 after considering the decision in Ellora

Paper Mills Limited v. The State of Madhya Pradesh, (2022) SCC

OnLine SC 8 and relying upon the earlier Division Bench decision of

this court in Kamal Kumar v. Municipal Corporation of Delhi, 2023

SCC OnLine Del 6515 held that where the arbitral proceedings had

commenced prior to the insertion of Section 12(5) of the Act, the

amended provision shall not apply. The relevant paras read as under:

“62. On the other hand, the Hon‟ble Supreme Court in

Board of Control for Cricket in India (supra) and

Rajasthan Small Industries Corporation Ltd (supra),

clearly proceeded on the principle that where

arbitral proceedings had already commenced before

insertion of Section 12(5), the amended provisions

would not apply by virtue of Section 26 of the 2015

Amendment Act.

We may also note that a Division Bench of this

Court in Kamal Kumar v. Municipal Corporation of

Delhi 2023 SCC OnLine Del 6515 dealt with a

similar situation where arbitral proceedings had

commenced prior to the amendment though the

award itself was rendered subsequently. Relying

upon Rajasthan Small Industries Corporation Ltd

(supra), the challenge to the competence of the

arbitrator was rejected, holding that the 2015

Amendment Act would not invalidate proceedings

which had validly commenced before the

amendment came into force.

Thus, the legal position with respect to the

jurisdiction of the arbitrator being clear, we now

proceed to examine the facts of the present case.”

The arbitrator at the first instance considered the date when the

contracts expired. It was held that the contracts was not expressly

terminated and stood extended by three months i.e. up to 30.06.2015.

The relevant portion is quoted below:-

“19. In view of the above discussions I hold:

(i) That in view of the terms of the contracts in

question the contracts did not automatically

expire on 31.03.2015.

(ii) That the contracts having not been expressly

terminated, the terms (periods) thereof stood

extended by three months i.e. upto

30.06.2015.

(iii) That the closure of the contracts by

communication dated 05.05.2015 and given

effect to from 01.04.2015 is in breach of the

terms of the two contracts and is invalid and

ineffective.

Issues 1, 1a and 1b are answered accordingly.”

This issue is not in dispute in the present petition.

The petitioner claimed salary of the employees from April to

June, 2015 and reimbursement of travel/telephone expenses incurred

by the employees. The arbitrator proceeded under Section 73 of the

Contract Act, 1872 (for short „the Contract Act‟) for dealing with the

claim of damages for breach of contract. It was decided that the

petitioner successfully established breach of contractual terms by the

respondent. Finding of fact was recorded that the petitioner had

suffered no corresponding loss as the salary and telephone/travel

expenses were paid by the respondent to the employees and no

liability remained on the petitioner on this account. To similar effects

were findings with regard to service tax and education cess. The

damages for loss suffered by the petitioner due to non-receipt of

remuneration @8% of the salary component to be paid to the

employees for April to June, 2015 was quantified and granted.

It would be relevant to quote the following decisions of the

Supreme Court dealing with the principles governing award of

damages under section 73 of the Contract Act:-

9.1 The Supreme Court in Kailash Nath Associates v. DDA, (2015)

4 SCC 136 held:

“43.1. Where a sum is named in a contract as a

liquidated amount payable by way of damages, the

party complaining of a breach can receive as

reasonable compensation such liquidated amount only

if it is a genuine pre-estimate of damages fixed by both

parties and found to be such by the court. In other

cases, where a sum is named in a contract as a

liquidated amount payable by way of damages, only

reasonable compensation can be awarded not

exceeding the amount so stated. Similarly, in cases

where the amount fixed is in the nature of penalty, only

reasonable compensation can be awarded not

exceeding the penalty so stated. In both cases, the

liquidated amount or penalty is the upper limit beyond

which the court cannot grant reasonable compensation.

43.2. Reasonable compensation will be fixed on wellknown principles that are applicable to the law of

contract, which are to be found inter alia in Section 73

of the Contract Act.

43.3. Since Section 74 awards reasonable

compensation for damage or loss caused by a breach of

contract, damage or loss caused is a sine qua non for

the applicability of the section.

43.4. The section applies whether a person is a plaintiff

or a defendant in a suit.

43.5. The sum spoken of may already be paid or be

payable in future.

43.6. The expression “whether or not actual damage or

loss is proved to have been caused thereby” means that

where it is possible to prove actual damage or loss,

such proof is not dispensed with. It is only in cases

where damage or loss is difficult or impossible to

prove that the liquidated amount named in the contract,

if a genuine pre-estimate of damage or loss, can be

awarded.”

9.2 The Supreme Court in State of Rajasthan v. Ferro Concrete

Construction (P) Ltd. , (2009) 12 SCC 1 held:

“55.While the quantum of evidence required to accept

a claim may be a matter within the exclusive

jurisdiction of the arbitrator to decide, if there was no

evidence at all and if the arbitrator makes an award of

the amount claimed in the claim statement, merely on

the basis of the claim statement without anything more,

it has to be held that the award on that account would

be invalid. Suffice it to say that the entire award under

this head is wholly illegal and beyond the jurisdiction

of the arbitrator, and wholly unsustainable.”

From the above decision, the picture emerges is of the twin

conditions required to be fulfilled for awarding liquidated damages

under Section 73 of the Contract Act. First, breach of the contractual

conditions and second, the actual loss or damage suffered or the proof

that it is not possible to prove the actual damage suffered. In the case

in hand, the actual loss suffered was not proved by the petitioner

rather the finding recorded is that the salary and telephone/travel

expenses were not borne by the petitioner, as a natural consequence

the claim was rightly rejected.

The contention of learned counsel for the petitioner that it was

not proved that the respondent had actually paid the salary and

telephone/travel expenses to the employee is misconceived. The

petitioner had to prove the loss suffered due to breach of contract by

the respondent and the petitioner failed to discharge the onus.

The challenge to the rejection of the claims on account of loss of recruitment fee, damage for loss of creditability and loss of

business lacks merit in view of the undisputed findings recorded by

the arbitrator. It is recorded that there was no pleading of claims made

in the statement of claim and clauses of both the contracts had no

mention of recruitment fee. The arbitrator rightly held that the claims

did not arise from the contract and were non-arbitrable. It was

concluded that the contractual arrangement operated on „collect and

pay‟ basis whereby the respondent had to at the first instance pay the

estimated salary and telephone/travel expenses and the petitioner had

to disburse the dues to the employees. After the payment of salary,

telephone/travel expenses by respondent to the employees there was

no monetary loss to the petitioner more so, when the 8%

remuneration/mark-up had already been granted to the petitioner. No

evidence was led by the petitioner to prove the loss suffered for

making a claim of damages of rupees one crore. There was no

pleading in the statement of claim for damage of loss of business. The

affidavit filed by the witness of the petitioner stated that the petitioner

had no other client and hence there was no issue of loss occasioned by

termination of the contracts.

The proceedings under Section 34 of the Act are not akin to the

first appeal. There cannot be re-appreciation of evidence; plausible

view calls for no interference; every factual or legal error cannot be a

ground for challenge. The interference is to be made only on the

grounds available in Section 34 of the Act. Reference is made to the

following decisions:

13.1 In Prakash Atlanta (JV) v. National Highways Authority of India,2026 INSC 76 it was held as under:-

“59. (vi) If an arbitral tribunal‟s view is found to be a

possible and plausible one, it cannot be substituted

merely because an alternate view is possible.

Construction and interpretation of a contract and its

terms is a matter for the arbitral tribunal to determine.

Unless the same is found to be one that no fair-minded

or reasonable person would arrive at, it cannot be

interfered with. If there are two plausible

interpretations of the terms of a contract, then no fault

can be found if the arbitrator accepts one such

interpretation as against the other. To be in conflict

with the public policy of India, the award must

contravene the fundamental policy of Indian law,

which makes it narrower in its application.”

13.2 In Ramesh Kumar Jain v. Bharat Aluminium Company Limited (BALCO),2025 INSC 1457 held as under:-

“28. The bare perusal of section 34 mandates a

narrow lens of supervisory jurisdiction to set aside the

arbitral award strictly on the grounds and parameters

enumerated in sub-section (2) & (3) thereof. The

interference is permitted where the award is found to

be in contravention to public policy of India; is

contrary to the fundamental policy of Indian Law; or

offends the most basic notions of morality or justice.

Hence, a plain and purposive reading of the section 34

makes it abundantly clear that the scope of interference

by a judicial body is extremely narrow. It is a settled

proposition of law as has been constantly observed by

this court and we reiterate, the courts exercising

jurisdiction under section 34 do not sit in appeal over

the arbitral award hence they are not expected to

examine the legality, reasonableness or correctness of

findings on facts or law unless they come under any of

grounds mandated in the said provision. In ONGC

14

Limited. v. Saw Pipes Limited, this court held that an

award can be set aside under Section 34 on the

following grounds: “(a) contravention of fundamental

policy of Indian law; or (b) the interest of India; or (c)

justice or morality, or (d) in addition, if it is patently

illegal.”

13.3 In Consolidated Construction Consortium Limited Vs.

Software Technology Parks of India, (2025) 7 SCC 757 it was held

as under:

“46. Scope of Section 34 of the 1996 Act is now well

crystallized by a plethora of judgments of this Court.

Section 34 is not in the nature of an appellate

provision. It provides for setting aside an arbitral award

that too only on very limited grounds i.e. as those

contained in Sub-sections (2) and (2-A) of Section 34.

It is the only remedy for setting aside an arbitral award.

An arbitral award is not liable to be interfered with

only on the ground that the award is illegal or is

erroneous in law which would require re-appraisal of

the evidence adduced before the arbitral tribunal. If

two views are possible, there is no scope for the court

to re-appraise the evidence and to take the view other

than the one taken by the arbitrator. The view taken by

the arbitral tribunal is ordinarily to be accepted and

allowed to prevail. Thus, the scope of interference in

arbitral matters is only confined to the extent envisaged

Under Section 34 of the Act. The court exercising

powers Under Section 34 has perforce to limit its

jurisdiction within the four corners of Section 34. It

cannot travel beyond Section 34. Thus, proceedings

Under Section 34 are summary in nature and not like a

full-fledged civil suit or a civil appeal. The award as

such cannot be touched unless it is contrary to the

substantive provisions of law or Section 34 of the 1996

Act or the terms of the agreement.”

13.4 In The Supreme Court in Sepco Electric Power Construction

Corporation Vs. GMR Kamalanga Energy Ltd., 2025 INSC 1171 held:

“97……..Therefore, it appears that even if the

arbitrator‟s legal or factual reasoning is faulty, the

courts ought to ideally refrain from interfering with an

award until an error of law is evident from the award

itself or in a document that forms an integral

component thereof.”

(emphasis supplied)

The impugned award suffers from no legal or factual error

much less perversity or patent illegality and is not against the public

policy. No case is made out for interference under Section 34 of the

Act. The impugned award is upheld.

The petition is dismissed.

AUGUST 19, 2026

Ch

AVNEESH JHINGAN, J

Reportable: Yes