Delhi High Court upholds Arbitral Award on supply contract dispute.

Headnote:

The Delhi High Court, in O.M.P. (COMM) 363/2020, upheld the arbitral award dated 25 June 2013, wherein Murli Industries Ltd. was partially awarded Rs. 2,04,33,368/- with interest at 12% per annum. The Court found that the arbitrator had jurisdiction under the arbitration clause of the contract and that the award was neither perverse nor contrary to public policy.

Background:

In July 2010, NCERT invited a tender for the supply of 16,845 MTs of Maplitho Paper. Murli Industries Ltd. emerged as the successful bidder. The contract executed on 1 December 2010 stipulated the supply of 10,000 MTs of paper, with 75% to be delivered within 105 days and the remaining 25% after quality inspection.

Murli Industries Ltd. furnished a Performance Security in the form of a Bank Guarantee amounting to Rs. 2,04,33,368/-. Due to delays in processing and quality issues, the respondent requested an extension for the first lot's delivery. However, the samples failed the quality test, leading to disputes over performance and delivery timelines.

The arbitration clause in the contract mandated that disputes be referred to a sole arbitrator appointed by the Director, NCERT. The arbitrator partially allowed the respondent's claims, awarding Rs. 2,04,33,368/- with interest at 12% per annum.

Court Opinion/Analyses:

The Delhi High Court examined the petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging the arbitral award. The Court reviewed the jurisdiction of the arbitrator, the scope of the arbitration clause, and the merits of the award.

The Court found that the arbitrator had jurisdiction as per the agreed arbitration clause and that the award was made after considering the contractual terms and the evidence presented. The Court held that the award was not perverse and did not violate public policy.

Outcome:

The Delhi High Court dismissed the petition filed under Section 34 of the Arbitration and Conciliation Act, 1996, thereby upholding the arbitral award dated 25 June 2013. The Court found no grounds to interfere with the award, affirming the decision of the sole arbitrator.

Legal Provision Concerned:

Arbitration and Conciliation Act, 1996

Section 34: Grounds for setting aside arbitral awards.

Section 37: Appeal against orders refusing to set aside an arbitral award.

Contract Law

Interpretation of arbitration clauses in contracts.

Case Details:

Parties:

Petitioner: National Council of Education Research & Training (NCERT)

Respondent: M/s Murli Industries Ltd.

Date of Judgment: 10 October 2025

Arbitral Award Date: 25 June 2013

Arbitration Act Invoked: Section 34 of the Arbitration and Conciliation Act, 1996

Arbitrator: Sole Arbitrator appointed by the Director, NCERT