The High Court of Delhi has held that an arbitrator cannot decide the claims of a party based on mathematical calculation/derivations without any actual evidence supporting such claims by showing the actual amount incurred by the party claiming damages before the tribunal.
Summary:
- The Delhi High Court has set aside an arbitral award that relied on mathematical derivations without substantial evidence.
- The case involved a contract for the construction of civil works related to a hydro-electric project.
- The respondent claimed an increase in minimum wages payable to labor during the contract execution.
- The arbitral tribunal awarded the respondent a total of Rs. 26.90 crores, based on their calculations.
- The court found that the respondent’s mathematical derivation lacked a reasonable basis and was similar to their earlier rejected formula.
- The court also criticized the arbitrary reduction of the actual amount paid towards labor escalation.
- The court emphasized the need for proper foundation and cogent evidence when entertaining financial claims based on mathematical derivations.
- The arbitral award was deemed perverse, ex-facie arbitrary, and lacking in merits.
The case details are as follows: Satluj Vidyut Nigam Ltd v. Iaiprakash Hyundai Consortium, OMP(COMM) 170 of 2017. The order was issued on 12.07.2023.
The petitioner was represented by Mr. Sanjay Jain, ASG, Mr. Uttam Datt, Ms. Sonakshi Singh, Ms. Tanya Aggarwal, Mr. K. K. Upadhiya, and Mr. Kumar Bhaskar. The respondent was represented by Mr. A. S. Chandhiok, Sr. Adv., Mr. Lovkesh Sawhney, Sr. Adv., Ms. Simran Kohli, Ms. Vidushi Keshan, Mr. Durgesh Kr. Pandey, and Mr. Rohit Kumar.
To read/download the full order, click here.
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