Bombay High Court Upholds Arbitral Award of Rs. 27.43 Crore Against ONGC
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TL;DR
- Bombay High Court upheld an arbitral award of Rs. 27.43 crore against ONGC.
- ONGC's appeal was dismissed under Section 37 of the Arbitration Act.
- The dispute involved alleged wrongful termination of a contract for modernization works.
- Court confirmed the limited scope for judicial interference with arbitral awards.
Overview
On April 30, 2026, the Bombay High Court dismissed an appeal by Oil and Natural Gas Corporation Ltd. (ONGC) and upheld a Rs. 27.43 crore arbitral award in favor of Newton Engineering & Chemicals Ltd. The court reaffirmed that under Sections 34 and 37 of the Arbitration and Conciliation Act, judicial review of arbitral awards is limited and courts should not re-evaluate evidence where the tribunal has adopted a plausible view.
What Happened
A turnkey contract was awarded by ONGC to Newton Engineering & Chemicals Ltd. in May 2015 for modernization of an Effluent Treatment Plant at Uran, with UEM India Pvt. Ltd. as technical collaborator.
Disputes emerged regarding delayed project execution and ONGC terminated the contract in June 2017, citing slow progress and unresolved issues.
The contractor attributed delays chiefly to lack of clarity from ONGC, delayed payments, and unnecessary demands for technical collaborator approvals.
A three-member arbitral tribunal found ONGC's termination wrongful, attributed delays to ONGC's own actions, and rejected ONGC's counterclaims.
The tribunal awarded approximately Rs. 27.43 crore to Newton Engineering under various heads, including refunds, work done, loss of revenue and profit, with interest and costs.
ONGC's challenge to the award under Section 34 was rejected by a single judge. In appeal under Section 37, ONGC alleged the award was perverse and unsupported by evidence.
The Bombay High Court Division Bench dismissed ONGC's appeal, affirming the tribunal's detailed factual findings and rejecting arguments of patent illegality or perversity.
Context
Section 34 and Section 37 of India's Arbitration and Conciliation Act restrict court intervention after an arbitral award, limiting review to cases of patent illegality, perversity, or lack of reasoning.
The Court emphasized that factual determinations and assessment of evidence are within the arbitral tribunal's domain, and courts cannot substitute their own interpretation.
Why It Matters
- The decision reinforces judicial deference to arbitral tribunals' factual findings.
- Clarifies the narrow scope for setting aside arbitral awards under Sections 34 and 37, providing certainty for parties and strengthening the arbitration process in India.
- Highlights circumstances where wrongful termination of contract can result in significant damages and restitution.