Tribunal’s View on Composite Fly Ash Embankment Is Plausible, Binding and Beyond Judicial Interference: Delhi High Court Dismisses NHAI's Section 34 Challenge

“Once a Dispute Is Referred, Tribunal Has Full Authority to Interpret All Its Components”,  In a detailed and firmly reasoned verdict Delhi High Court dismissed a petition filed by the National Highways Authority of India (NHAI) under Section 34 of the Arbitration and Conciliation Act, 1996, upholding an arbitral award in favour of M/s Hindustan Construction Co. Ltd. (HCC) on the issue of measurement and payment for fly ash embankment construction under BOQ Item 2.08.

The Court, sitting through Justice Jasmeet Singh, rejected the NHAI's contention that the arbitral tribunal had travelled beyond its jurisdiction or adopted an impermissible interpretation of contract terms. Observing that the tribunal’s findings were not only within jurisdiction but supported by contractual clauses and binding precedent, the Court reiterated the limited scope of interference under Section 34 and held:

“The Tribunal’s finding that Item 2.08 of BOQ is a composite, finished work item and that the entire fly ash embankment cross-section, including soil cover, is to be measured and paid under Item 2.08, is not only a possible view but one now specifically endorsed by binding precedent.”

“Court Cannot Substitute Its Interpretation with That of the Tribunal When View Is Plausible” – Reappreciation of Evidence Barred Under Section 34

The dispute related to Claim No. 2 under the contract between NHAI and HCC for 4-laning of the Lucknow-Ayodhya section of NH-28, awarded in 2005. The arbitral award dated 22.07.2014 had allowed HCC's claims concerning construction of fly ash embankments, measuring it as a composite unit and awarding compensation accordingly. While a Single Judge initially upheld the award, the Division Bench remanded the matter for reconsideration only on Claim No. 2, leading to the current judgment.

Rejecting NHAI's argument that the Tribunal had gone beyond its jurisdiction by directing that the top one metre of the embankment, forming part of the subgrade, be included under BOQ Item 2.08 (fly ash), the Court held:

“Once Claim No. 2 was referred concerning embankment with fly ash, the Tribunal was empowered to decide all components forming part of Item 2.08.”

Justice Singh also observed that the Tribunal had not rewritten the contract, but interpreted it in line with the relevant MoRTH specifications, including Clause A-8, Clause 305.8, and Clause 114.1, all of which together envisaged a composite measurement methodology for embankments.

“Composite Cross-Section Measurement Is the Contractual Norm”: Court Upholds Interpretation That Soil and Fly Ash Cannot Be Segregated for Payment

The core dispute involved whether the top one metre of soil, which acts as subgrade, could be measured and paid separately under BOQ Item 2.04 or must be included within Item 2.08 as part of the fly ash embankment.

NHAI insisted that embankment and subgrade are distinct layers executed under different BOQ items. However, the Tribunal, reading the technical specifications holistically, concluded that the entire embankment, including the top one metre of soil, was part of the finished fly ash embankment under Item 2.08.

The Court upheld this finding, citing earlier decisions from both Division Bench of Delhi High Court and the Supreme Court, which had affirmed the composite nature of embankment construction:

“The method of measurement adopted by the Engineer—wherein the cross-section was bifurcated into soil and fly ash portions—is contrary to the technical specifications and contract.”

The Tribunal’s conclusion that “the whole trapezium section has to be measured as one and paid under BOQ Item 2.08” was found to be not only contractually plausible but expressly endorsed by the Supreme Court in Hindustan Construction Co. Ltd. v. NHAI, (2023).

“Award of Compound Interest at 12% Under Clause 60.8 Is Contractual and Not Arbitrary”: Delhi High Court Declines to Modify Interest Component

Apart from contesting the measurement method, NHAI also challenged the interest awarded by the Tribunal under Clause 60.8 of the contract, contending that compound monthly interest at 12% was not applicable since the amounts had not been certified by the Engineer in any Interim Payment Certificate (IPC).

The Court, however, found no merit in the objection, noting that Clause 60.8 explicitly provides for compound interest where payments are delayed. It further held:

“The term ‘sums payable’ under Clause 60.8 includes the sums found due and payable by the Tribunal. The Court cannot interfere with a plausible view taken by the Tribunal merely because another interpretation is possible.”

NHAI’s reliance on the Supreme Court’s modification of compound interest in other cases was dismissed, with the Court clarifying that such relief was granted under Article 142 and did not invalidate the Tribunal’s award under Section 34:

“The modification of interest by the Hon’ble Supreme Court was in the exercise of power under Article 142. The Tribunal’s award in the present case remains within the four corners of the contract.”

Section 34 Petition Dismissed – Tribunal’s Interpretation Is Consistent with Contract and Judicial Precedent

The Delhi High Court concluded that none of the grounds raised by NHAI fell within the permissible ambit of Section 34. The Tribunal’s view was found to be legally sound, supported by expert findings, contractual clauses, and binding precedent, and thus not liable to be disturbed:

“The challenge to the Award with respect to Claim No. 2 has no merit. Thus, the present petition is dismissed.”

Pending applications, if any, were also disposed of.

Date of Decision: 8 January 2026