The Delhi High Court, in the case Hindustan Hydraulics Pvt. Ltd. vs. Union of India, dismissed a petition filed under Section 34 of the Arbitration and Conciliation Act, 1996. Justice Manoj Kumar Ohri ruled that minor or inconsequential errors in an arbitral award cannot be used as grounds to challenge a reasoned and judicious decision.
"Even if an award contains small errors or overlooks some points, that cannot alone invalidate it if the reasoning is sound and lawful," the court observed.
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Background of the Case
The case arose from a dispute regarding the supply of a machine by Hindustan Hydraulics Pvt. Ltd. to the Union of India. As per the contract terms, the machine was to be delivered within 10 months from June 21, 2005. However, it was delivered on July 28, 2008—over three years later. The respondent rejected the machine citing quality issues, while the petitioner demanded the remaining balance of ₹14.32 lakh and challenged the rejection.
Following arbitration proceedings, the Arbitral Tribunal ruled in favor of the respondent. The petitioner challenged the award, alleging the Tribunal ignored evidence, misinterpreted contract clauses, and made incorrect conclusions.
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Justice Ohri noted that:
"The Tribunal harmonized the contractual clauses correctly. It was not rewriting the contract but interpreting delivery date in relation to successful commissioning as required."
The petitioner’s main argument was based on Clause 2102, which allowed rejection within 45 days of delivery. The court clarified that the "delivery" here must be read as the date of successful commissioning—not just physical delivery—as the machine was a performance-based product.
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Regarding design deviations, the petitioner had admitted to implementing a flat guiding system instead of the contractually mandated roller guiding system.
"The Tribunal may have overlooked some letters or misinterpreted specific issues, but the fundamental reasoning—that the supplied machine deviated from contract specifications—remains untouched," the court said.
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The Court held that:
- The errors and omissions pointed out by the petitioner were not significant enough to overturn the award.
- The deviation admitted by the petitioner was itself sufficient to uphold the rejection of the machine.
"The petitioner cannot take advantage of apparent inconsequential errors and fumbles to challenge the award," the Court concluded.
The petition under Section 34 was therefore dismissed.
Case Title: Hindustan Hydraulics Pvt. Ltd. vs. Union of India
Case Number: O.M.P. (COMM) 6/2017
Counsel for the Petitioner: Mr. Faisal Zafar, Advocate
Counsel for the Respondent: Mr. Mukul Singh (CGSC), Ms. Ira Singh and Mr. Bharat Singh, Advocates.
