In the Realm of Contractual Interpretation, the Tribunal's Perspective Reigns Supreme: Delhi High Court Upholds Tribunal's Decision

In a landmark decision by the High Court of Delhi, the Bench consisting of Justice Vibhu Bakhru and Justice Tara Vitasta Ganju, delivered a comprehensive judgment on April 1, 2024, in the case of M/S PCC Infrastructure Pvt. Ltd. versus Airports Authority of India (FAO (COMM) 11/2024). The case, which hinged on the interpretation of a price variation clause in a construction contract under the Arbitration and Conciliation Act, 1996, witnessed the Court's affirmation of the arbitral tribunal's perspective, highlighting the limited scope of interference in arbitral awards.

The pivotal legal issue revolved around the application of Section 34 and Section 37(1)(c) of the Arbitration and Conciliation Act, 1996. This primarily concerned the dispute over the quantum of price variation as per Clause 10CA of the General Conditions of Contract in the agreement between PCC Infrastructure Pvt. Ltd. and the Airports Authority of India for work at Mangalore International Airport.

PCC Infrastructure Pvt. Ltd. had appealed against the Commercial Court’s decision which upheld an arbitral award denying their claim related to the price variation in the construction contract. The dispute focused on the interpretation and application of the price variation clause, particularly concerning the use of a specific price index for the South Zone. The Appellant argued for a zone-specific price index, while the Tribunal applied an All India Price Index as specified in the contract.

Interpretation of the Price Variation Clause: The Court delved deeply into the interpretation of Clause 10CA, agreeing with the Tribunal's decision that the All India Price Index was correctly applied as per the contractual terms, dismissing the Appellant’s argument for a zone-specific index.

Judicial Review of Arbitral Awards: The Court analyzed the limited scope of interference with arbitral awards under Section 34 of the Act. It was held that unless specific grounds for setting aside an arbitral award are established, the Tribunal's interpretation of contractual clauses and factual findings should remain unchallenged.

Tribunal’s Plausible View: Emphasizing the Tribunal's autonomy in contractual interpretation, the Court deemed its viewpoint as plausible and within the jurisdiction, thus not warranting any interference.

Decision: The High Court, aligning with the Tribunal and Commercial Court’s interpretation, dismissed the appeal and upheld the arbitral award. The Court concluded that the Tribunal’s interpretation of Clause 10CA and the related contractual provisions were plausible, and thus, there was no need for judicial interference.

Date of Decision: April 1, 2024

M/S PCC Infrastructure Pvt. Ltd. versus Airports Authority of India