KONKAN RAILWAY CORPORATION LIMITED versus CHENAB BRIDGE PROJECT UNDERTAKING
[2023] 11 S.C.R. 215, Supreme Court of India, 2023
Outcome: Appeal(s) allowed (Granted)
Segment: Issues
[2023] 11 S.C.R. 215 : 2023 INSC 742 
215
CASE DETAILS
KONKAN RAILWAY CORPORATION LIMITED
v.
CHENAB BRIDGE PROJECT UNDERTAKING
(Civil Appeal No. 2903 of 2023)
AUGUST 17, 2023
[DR. DHANANJAYA Y CHANDRACHUD, CJI, 
PAMIDIGHANTAM SRI NARASIMHA AND 
J. B. PARDIWALA, JJ.]
HEADNOTES
Issue for consideration : In the instant appeal, the legality of the order 
passed by the Division Bench of the High Court in an appeal u/s. 37 of the 
Arbitration and Conciliation Act, 1996 by which the concurrent ﬁ ndings of the 
arbitral tribunal and that of the Single Judge of the High Court u/s. 34 of the Act 
rejecting all claims were set aside and certain claims were allowed, is challenged. 
Arbitration and Conciliation Act, 1996 – ss. 34 and 37 – Arbitral 
award – Concurrent interpretations of the contractual clause pertaining 
to the disputes, by the arbitral tribunal and the Single Judge of the High 
Court u/s. 34 – Interference with, by the Division Bench in an appeal u/s. 
37 – Justiﬁ cation: 
Held : Principle of interpretation of contracts adopted by the Division 
Bench of the High Court that when two constructions are possible, then courts 
must prefer the one which gives eﬀ ect and voice to all clauses, does not have 
absolute application – Said interpretation is subject to the jurisdiction which 
a court is called upon to exercise – While exercising jurisdiction u/s. 37, the 
Court is concerned about the jurisdiction that the s. 34 Court exercised while 
considering the challenge to the
Arbitral Award – Jurisdiction u/s. 34 is exercised 
only to see if the arbitral tribunal’s view is perverse or manifestly arbitrary – 
Reinterpretation of the contract on an alternative view does not arise – Division 
Bench exercising jurisdiction u/s. 37 cannot reverse an Award, much less the 
decision of a Single Judge – On facts, the Division Bench of the High Court 
erred in re-interpreting a contractual clause while exercising jurisdiction u/s. 37
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[2023] 11 S.C.R.
and setting aside the concurrent ﬁ ndings of the arbitral tribunal and the Single 
Judge of the High Court – Award of the arbitral tribunal and the decision of the 
Single Judge of the High Court u/s. 34 cannot be termed as perverse or patently 
illegal  – Decision of the arbitral tribunal is a plausible view, and the Single 
Judge refrained from interfering with it u/s. 34 – Division Bench should not 
have interfered with these orders – Thus, the judgment of the Division Bench 
of the High Court is set aside and that of the Single Judge is restored. [Paras 
20, 22, 24 and 25]
Arbitration and Conciliation Act, 1996 – ss. 34 and 37 – Scope of 
jurisdiction under :
Held : Jurisdiction of the court u/s. 37 is akin to the jurisdiction of the 
court u/s. 34 – Scope of interference by a court in an appeal u/s. 37, in examining 
an order, setting aside or refusing to set aside an award, is restricted and subject 
to the same grounds as the challenge u/s. 34 – Thus, the scope of jurisdiction 
u/s. 34 and s.37 is not akin to normal appellate jurisdiction – Courts ought not 
to interfere with the arbitral award in a casual and cavalier manner – Mere 
possibility of an alternative view on facts or interpretation of the contract does 
not entitle courts to reverse the ﬁ ndings of the arbitral tribunal. [Paras 14 and 15]
LIST OF CITATIONS AND OTHER REFERENCES
Radha Sundar Dutta v. Mohd Jahadur Rahim & Ors AIR 1959 
SC 24 : [1959] SCR 1309; UHL
Power Company Limited v. State 
of Himachal Pradesh (2022) 4 SCC 116; South East Asia Marine 
Engineering and Constructions Limited v. Oil India Limited (2020) 
5 SCC 164 : [2020] 4 SCR 254; Adani Power (Mudra) Limited v. 
Gujarat Electricity Regulatory Commission and Ors. (2019) 19 SCC 
9; Satyanarayana Construction Company v. Union of India and Ors.
(2011) 15 SCC 101; Delhi Development Authority v. R.S. Sharma and 
Company, New Delhi (2008) 13 SCC 80 : [2008] 12 SCR 785; MMTC 
Ltd. v. Vedanta Ltd. (2019) 4 SCC 163 : [2019] 3 SCR 1023; UHL Power 
Company Ltd. v. State of Himachal Pradesh (2022) 2 SCC (Civ) 401; 
Dyna Technologies Pvt Ltd v. Crompton Greaves Limited (2019) 20 SCC 
1; Ssangyong Engineering. & Construction Company Ltd. v. National 
Highways Authority of India (NHAI) (2019) 15 SCC 131 : [2019] 7 SCR 
522; Parsa Kente Collieries Ltd. v. Rajasthan Rajya Vidyut Utpadan 
Nigam Ltd., (2019) 7 SCC 236 : [2019] 8 SCR 728; Patel Engineering
217
KONKAN RAILWAY CORP. LTD v. CHENAB BRIDGE PROJECT 
UNDERTAKING
Limited v. North Eastern Electric Power Corporation Limited (2020) 7 
SCC 167 : [2020] 4 SCR 156; Vidya Drolia and Ors. v. Durga Trading 
Corporation (2021) 2 SCC 1 : [2020] 11 SCR 1001; Associate Builders 
v. Delhi Development Authority (2015) 3 SCC 49 : [2014] 13 SCR 895 
– referred to.
OTHER CASE DETAILS INCLUDING IMPUGNED 
ORDER AND APPEARANCES
CIVIL APPELLATE JURISDICTION : Civil Appeal No.2903 of 
2023.
From the Judgment and Order dated 23.09.2022 of the High Court 
of Judicature at Bombay in AN No.458 of 2019.
Appearances:
Shyam Divan, Sr. Adv., Amlaan Kumar, Ms. Musharaf Shaikh, Ms. 
Rukhmini Bobde, Ms. Soumya Priyadarshinee, Ankit Ambasta, Amit Kumar 
Shrivastava, Vishal Prasad, Advs. for the Appellant.
Darius Khambata, Sr. Adv., Aveak Ganguly, Manu Seshadri, 
Ms. Pallavi Anand, Abhijit Lal, Mithu Jain, Ms. Soumya, Advs. for the 
Respondent.
JUDGMENT/ORDER OF THE SUPREME COURT
JUDGMENT
PAMIDIGHANTAM SRI NARASIMHA, J.
1. This appeal arises out of the decision of the Division Bench of the 
High Court of Bombay under Section 37 of the Arbitration and Conciliation 
Act 1996,1 by which the concurrent ﬁ ndings of the Arbitral Tribunal and that 
of the Single Judge of the High Court under Section 34 of the Act rejecting all 
claims were set aside and certain claims were allowed. This appeal by Konkan 
Railway Corporation Limited challenges the legality of the order passed by the 
Division Bench of the High
Court while exercising jurisdiction under Section 
37 of the Act.
2. The short facts relevant for the purpose of this appeal are as follows: 
The Respondent’s tender for construction of a bridge at KM 50/800, on the 
1 
Hereinaf er ‘the Act’.
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Katra-Laole section of Udhampur-Srinagar-Baramulla rail link, said to be the 
highest railway bridge in the world, was accepted by the Appellant, leading 
to the execution of the contract on 24.11.2004.
3. While the contract was in execution, disputes arose between the 
parties and through an agreement dated 28.02.2012, a Standing Arbitral 
Tribunal was constituted for resolution of disputes. The respondent raised 
35 claims which were clubbed and classiﬁ ed as twelve disputes. The present 
proceedings arise out of the decision of the Arbitral Tribunal deciding three 
disputes, being Dispute I (relating to Claim 9), Dispute III (relating to Claims 
12, 22 and 28), and Dispute IV (relating to Claims 13, 23 and 29).
4. The Arbitral Tribunal by its award dated 15.11.2014 considered 
the three disputes and rejected all the claims. The Respondent challenged 
the award under Section 34 of the Act. The Single Judge of the High Court 
conﬁ rmed the Award and proceeded to dismiss the challenge under Section 34 
of the Act. The decision of the Single Judge of the High Court was appealed 
by the Respondent under Section 37 of the Act, and the Division Bench of 
the High Court, by the order impugned herein, partly allowed the appeal in 
the following manner. The Division Bench, while dismissing the appeal with 
respect to Dispute I, allowed the appeal with respect to the remaining two 
disputes (Disputes III and IV), and thereby set aside the
concurrent ﬁ ndings 
as regards these disputes. As there is no controversy with respect to Dispute 
I, we are called upon to examine the legality of the order with respect to 
Disputes III and IV. 
5. The facts relevant for Dispute III are as follows: The contract in 
favour of the Respondent was entered into on 24.11.2004. At that time the 
Notiﬁ cation of the Government of Jammu and Kashmir dated 19.12.2003 
exempted Entry Tax on earth-moving instruments. However, during the 
execution of the contract, on 25.01.2008, the Government of Jammu and 
Kashmir withdrew the exemption notiﬁ cation. Consequently, the Respondent 
raised claims for reimbursement of Rs. 1,32,29,771/- incurred on account of 
payment of Entry Tax.
6. In so far as Dispute IV is concerned, it relates to reimbursement of 
Toll Tax on machinery and materials. As per the extant policy in Jammu and 
Kashmir, the Toll Tax as applicable on the date of the submission of tender, 
that is 31.05.2004, was Rs. 400/- per MT. However, through four subsequent 
notiﬁ cations issued under Jammu and Kashmir Levy of Toll Tax Act, 1998,
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KONKAN RAILWAY CORP. LTD v. CHENAB BRIDGE PROJECT 
UNDERTAKING [PAMIDIGHANTAM SRI NARASIMHA, J.]
the taxes were progressively increased to Rs. 650/- per MT. Consequently, the 
Respondent raised a claim of Rs. 5,23,279/-, incurred on account of increase 
in toll tax during the subsistence of the contract.
7. Claims under Dispute III as well as Dispute IV were to be 
considered in terms of the relevant clauses of the contract, which 
are Clauses 5.1.2, 7.1.1, 7.1.2, and 11.7. These clauses are extracted 
hereinbelow for ready reference. Relevant part of Clause 5 of Chapter 5, 
titled ‘Sales Tax, Turn Over Tax/Local Tax, Duties etc’, is as under:
“Clause 5.1 Sales Tax/Turn Over Tax/Local Tax, Duties Etc.
...
Clause 5.1.2 Sales Tax including turn over tax on works contract, 
octroi, royalty, toll tax, Duties/Levies as well as services and any 
other tax levied by central govt., state govt. or local bodies, as 
applicable 15 days prior to the date of opening of tender shall be 
considered to be included in the percentage rates quoted by tenderer/s 
in the Schedule of Items, Rates & Quantities. In case of any increase/
decrease in the taxes during the period from 15 days prior to the date 
of opening of tender to the completion of the work, the net increase/
decrease for the balance portion of the work shall be borne/recovered 
by the Corporation.
The prevailing rate of Works Contract Tax (WCT) in J & K states 
to be deducted at source is 4.2% for the registered ﬁ rms with
state 
taxation department from ﬁ rms not having the registration, the rate 
is 8.2%.
Clause 5.1.3 Corporation shall deduct the sales tax/Turn Over Tax 
or any other tax from the Contractor’s bill at the rate as applicable 
as per rules framed by concerned Govt./Local bodies from time to 
time and remit it to concerned department and shall issue a certiﬁ cate 
regarding Tax/levies so deducted on demand by the contractor.”
7.1. Clauses 7.1.1 and 7.1.2 from Chapter 7, titled ‘Price Variation’, 
are as under:
 “Clause 7.1.1 The rates quoted by tenderer and accepted by the 
Corporation shall hold good till the completion of the work and
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no additional, individual claim shall be admissible on account of 
ﬂ uctuation in market rates, increase in taxes/any other levies/tolls 
etc. except the payment/recovery for overall market situation shall 
be made as per price variation clause given below.
Clause 7.1.2 No cognizance shall be given for any sort of ﬂ uctuations 
in taxes and other market conditions etc. for any individual item 
for the purpose of making adjustments in payments. The contract 
shall, however, be governed by the general price variation clause 
as under.”
7.2. Clause 11.7, in Chapter 11, titled ‘Schedule of Items, Rates & 
Quantities - Bill of Quantities’, is as follows:
“Clause 11.7 The rates and prices tendered in the priced Bill of 
Quantities, shall except in so far as it is otherwise provided under the 
contract, include all construction plant, labour, supervision, materials, 
all temporary works, false works, all leads and lifts, erection, speciﬁ ed 
ﬁ nishes, maintenance, establishment and overhead charges, insurance, 
proﬁ ts, foreign taxation and levies, taxes, royalties and duties together 
with all general risks, liabilities and obligations set out or implied in 
the contract and including remedy of any defects during the Defects 
Liability Period.”
8. The Decision of the Arbitral Tribunal: The Arbitral Tribunal 
interpreted the contract and construed Clause 5.1.2 of the contract as limited 
to taxes that could be raised by the
Respondent-Contractor directly on the 
Appellant, as opposed to taxes that formed part of the materials quoted in 
the ‘Schedule of Items of Rates - Bill of Quantities’. For this, the Arbitral 
Tribunal also relied on Clause 11.7 of the Contract. The Arbitral Tribunal 
was of the view that Entry Taxes on earth-moving equipment formed part 
of the cost of the works quoted in the Bill of Quantities. For this reason, 
the Arbitral Tribunal came to the conclusion that the increased liability on 
account of imposition of Entry Tax could not be reimbursed under Clause 
5.1.2, as recoupment for the same could only be governed by the Price 
Variation clauses (clause 7.1.1 and 7.1.2 in Chapter 7).
8.1 Interpreting the Price Variation clauses, the Arbitral Tribunal 
noted that the contract only provided for generic price variation based on
221
a standardised formula. It also found that Clause 7.1.2 speciﬁ cally barred 
cognizance of “any sort of ﬂ uctuations in taxes and other market conditions 
for any individual item for the purpose of making adjustments in payments”. 
Accordingly, the Arbitral Tribunal held that the claim for recouping increased 
tax liability for individual or speciﬁ c items, in this case, the imposition of 
entry tax, could not be reimbursed under Clauses 7.1.1 and 7.1.2. 
8.2 The Tribunal reasoned that the contractor was aware of these 
conditions at the time when the prices were quoted, and therefore, the claim 
could not succeed under Price Variation clauses.
8.3 As regards the claim for Toll Tax which formed part of Dispute 
IV, the Tribunal adopted the same interpretation of the contractual clauses 
and rejected the claim.
9. Decision of the High Court under Section 34 of the Act: The 
Respondent’s challenge to the Arbitral Award under Section 34 of the Act 
was considered and dismissed by the Single Judge of the High Court by 
its order dated 17.01.2019. The High Court concluded that there were two 
possible views with respect to the construction of relevant clauses of the 
contract. However, as the Arbitral Tribunal adopted one interpretation and 
since it was a reasonable interpretation, the Single Judge of the High Court 
held that there was no justiﬁ cation for exercising jurisdiction under Section 
34 of the Act to interfere with the ﬁ ndings of the Arbitral Tribunal. 
10.
Decision of the Division Bench under Section 37 of the Act: The 
Division Bench of the High Court, while considering the appeal under 
Section 37 of the Act, proceeded to reinterpret the contractual clauses and 
arrived at a distinct conclusion. The Division Bench rejected the Arbitral 
Tribunal’s and the Single Judge’s interpretation of Clause 5.1.2 of the 
contract and came to the conclusion that the said clause will also include 
indirect taxes such as service tax, GST, Works Contract Tax, etc. While 
doing so, the Division Bench applied the principle of ejusdem generis to 
include even Entry Tax in Clause 5.1.2. The Division Bench of the High 
Court reversed the conclusion of the Arbitral Tribunal and the Single Judge 
of the High Court on the ground that they had simply assumed that the tax 
liability of items forming part of the Bill of Quantities was ‘inbuilt’ in the 
quoted costs and that no evidence was supplied to substantiate the same. 
The Division Bench also noted that reimbursement on account of increase 
KONKAN RAILWAY CORP. LTD v. CHENAB BRIDGE PROJECT 
UNDERTAKING [PAMIDIGHANTAM SRI NARASIMHA, J.]
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[2023] 11 S.C.R.
in ‘toll taxes’ was speciﬁ cally provided for in Clause 5.1.2 of the contract, 
and hence, claim for the same could not be rejected. In view of its conclusion, 
the Division Bench did not ﬁ nd it necessary to refer to Clauses 7.1.1 and 
7.1.2 relating to price variation clauses, as the claims were justiﬁ ed under 
Clause 5.1.2 itself. Finally, relying on Radha Sundar Dutta v. Mohd Jahadur 
Rahim & Ors,2 the High Court came to the conclusion that it is a “well-settled 
principle that if there are two constructions possible of a contract, then the 
one that gives eﬀ ect and voice to all clauses will be preferred over the other 
that renders one of them otiose or nugatory”. Adopting this approach, the 
Division Bench of the High Court proceeded to hold that the Arbitral Tribunal 
failed to interpret the contractual clauses harmoniously and holistically. It 
ﬁ nally concluded that the approach adopted by the Arbitral Tribunal would 
amount to perversity, and therefore, found it necessary to set aside the Award, 
and allow claims covered under Disputes III and IV. 
11. This judgment of the Division Bench of the Hight Court led to the 
present civil appeal before us. 
12. Submissions on behalf of the Appellant: Mr Shyam Divan, Senior 
Advocate, along with Mr Amlaan Kumar, Mr Musharaf Shaikh, Ms Rukhmini 
Bobde, Ms Soumya Priyadarshinee, Mr Ankit Ambasta, Mr Amit Kumar 
Shrivastava, Advocates, and Mr Vishal Prasad, AOR appeared on behalf
of 
the Appellants. They submitted that the Division Bench of the High Court 
exceeded its limited jurisdiction under Section 37 of the Act by reinterpreting 
the contract and substituting its view for the Arbitral Tribunal’s, assuming 
the role of a court of appeal. They relied on UHL Power Company Limited 
v. State of Himachal Pradesh3 and South East Asia Marine Engineering and 
Constructions Limited v. Oil India Limited4 for this purpose.
12.1 Next, they submitted that the parties agreed to a lump-sum contract 
price payable to the Respondent-Contractor. The Contractor split the agreed 
prices into several components and indicated the division in the ‘Schedule of 
Items and Rates - Bill of Quantities’, which inhered the cost and eﬀ ort involved 
in execution of the items mentioned therein. There is no indication that the 
amount incurred in the execution of the entries therein would be separately 
reimbursed. They added that Clause 11.7 of the contract expressly indicates 
2 
AIR 1959 SC 24.
3 
(2022) 4 SCC 116.
4 
(2020) 5 SCC 164.
223
that the prices mentioned in the Bill of Quantities are inclusive of all costs 
that are liable to be incurred in the execution of the contract. 
12.2 Further, they also submitted that the Arbitral Tribunal holistically 
interpreted Clauses 5.1.2, 7.1.1 and 7.1.2 of the contract to opine that individual 
tax claims would not be reimbursed by the Appellant-Corporation. The Arbitral 
Tribunal held that Clause 5.1.2 operates in a separate ﬁ eld, i.e., it operates in 
the ﬁ eld of taxes directly payable by the Corporation to the Contractor. They 
further added that the mention of toll tax and octroi in Clause 5.1.2 is only 
incidental, and does not render the recovery of taxes by the Contractor implicit. 
On the other hand, the ﬂ uctuations in price of entries in the Bill of Quantities 
(or for mobilisation of construction material and machinery) was recoverable 
only as per the scheme of Price Variation in Clauses 7.1.1 and 7.1.2, which 
expressly exclude cognizance of ﬂ uctuations in price of individual items. 
13. Submissions on behalf of the Respondents: Mr Darius Khambata, 
Senior Advocate, along with Mr Aveak Ganguly, Mr Manu Seshadri, Ms 
Pallavi Anand, Mr Abhijit Lal, Ms Soumya, Advocates and Mr Mithu Jain, 
AOR appeared on behalf of the Contractor-Respondent. They submitted that 
the High Court rightly interfered with the ﬁ ndings of the Arbitral Tribunal as 
it had rewritten the contract. They submitted that every canon of contractual 
interpretation provides for
harmonious construction of seemingly contradictory 
clauses, and constructing contracts such that no clause is rendered otiose. 
13.1 They submitted that undoubtedly, Clauses 5.1.2 and 7.1.1 operate 
in separate ﬁ elds, i.e., Clause 5.1.2 of the Special Conditions of Contract is 
a special clause that deals with taxes and provides for reimbursement on 
account of increase of taxes by the Corporation. Clauses 7.1.1 and 7.1.2, on 
the other hand, prohibit additional and individual claims for price variation, 
apart from the ones already mentioned in Clause 5.1.2. By limiting Clause 
5.1.2 to the taxes that can be billed by the Contractor on the Corporation, the 
Arbitral Tribunal impermissibly rewrote the terms of the contract. Instead 
of harmonising the provisions of the contract, it inserted new terms and 
contradictions to it. 
13.2 The respondents submitted that the Division Bench of the 
High Court was well within its jurisdiction under Section 37 of the Act 
to partially set aside the Award. To substantiate their submissions, they 
KONKAN RAILWAY CORP. LTD v. CHENAB BRIDGE PROJECT 
UNDERTAKING [PAMIDIGHANTAM SRI NARASIMHA, J.]
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[2023] 11 S.C.R.
relied on Adani Power (Mudra) Limited v. Gujarat Electricity Regulatory 
Commission and Ors.,5 Radha Sundar Dutta v. Mohd Jahadur Rahim & 
Ors. (supra), Satyanarayana Construction Company v. Union of India and 
Ors.,6 and Delhi Development Authority v. R.S. Sharma and Company, 
New Delhi.7
14. Analysis: At the outset, we may state that the jurisdiction of the 
Court under Section 37 of the Act, as clariﬁ ed by this Court in MMTC Ltd. 
v. Vedanta Ltd., is akin to the jurisdiction of the court under Section 34 
of the Act.8 Scope of interference by a court in an appeal under Section 
37 of the Act, in examining an order, setting aside or refusing to set aside 
an award, is restricted and subject to the same grounds as the challenge 
under Section 34 of the Act. 
15. Therefore, the scope of jurisdiction under Section 34 and 
Section 37 of the Act is not akin to normal appellate jurisdiction.9 It is 
well-settled that courts ought not to interfere with the arbitral award in a 
casual and cavalier manner. The mere possibility of an alternative view on 
facts or interpretation of the contract does not entitle courts to reverse the 
ﬁ ndings of the Arbitral Tribunal.10 In Dyna Technologies Private Limited 
v. Crompton Greaves Limited (2019) 20 SCC 1, this Court held:
“24. There is no dispute that Section 34 of the Arbitration Act limits 
a challenge to an award only on the grounds provided therein or as 
interpreted by various courts. We
need to be cognizant of the fact 
that arbitral awards should not be interfered with in a casual and 
cavalier manner, unless the court comes to a conclusion that the 
5 
(2019) 19 SCC 9.
6 
(2011) 15 SCC 101.
7 
(2008) 13 SCC 80.
8 
(2019) 4 SCC 163: “para 14. As far as interference with an order made under Section 
34, as per Section 37, is concerned, it cannot be disputed that such interference under 
Section 37 cannot travel beyond the restrictions laid down under Section 34. In other 
words, the court cannot undertake an independent assessment of the merits of the 
award, and must only ascertain that the exercise of power by the court under Section 
34 has not exceeded the scope of the provision.”
9 
UHL Power Company Ltd. v. State of Himachal Pradesh (2022) 2 SCC (Civ) 401, para 
15. See also:Dyna Technologies Pvt Ltd v. Crompton Greaves Limited (2019) 20 SCC 
1, para 24, 25.
10 ibid; Ssangyong Engineering. & Construction Company Ltd. v. National Highways 
Authority of India (NHAI) (2019) 15 SCC 131; Parsa Kente Collieries Ltd. v. Rajasthan 
Rajya Vidyut Utpadan Nigam Ltd., (2019) 7 SCC 236, para 11.1.
225
perversity of the award goes to the root of the matter without there 
being a possibility of alternative interpretation which may sustain 
the arbitral award. Section 34 is diﬀ erent in its approach and cannot 
be equated with a normal appellate jurisdiction. The mandate under 
Section 34 is to respect the ﬁ nality of the arbitral award and the 
party autonomy to get their dispute adjudicated by an alternative 
forum as provided under the law. If the courts were to interfere with 
the arbitral award in the usual course on factual aspects, then the 
commercial wisdom behind opting for alternate dispute resolution 
would stand frustrated.
25. Moreover, umpteen number of judgments of this Court have 
categorically held that the courts should not interfere with an award 
merely because an alternative view on facts and interpretation of 
contract exists. The courts need to be cautious and should defer to 
the view taken by the Arbitral Tribunal even if the reasoning provided 
in the award is implied unless such award portrays perversity 
unpardonable under Section 34 of the Arbitration Act.”
16. In the present case, the Arbitral Tribunal interpreted the contractual 
clauses and rejected the Respondent’s claims pertaining to Disputes I, III and 
IV. The ﬁ ndings were aﬃ  rmed by the Single Judge of the High Court in a 
challenge under Section 34 of the Act, who concluded that the interpretation 
of the Arbitral Tribunal was clearly a possible view, that was reasonable 
and
fair-minded in approach. 
17. It is important to extract the relevant portion of the Award, where 
the Tribunal considered and interpreted the contractual clauses pertaining 
to Disputes III and IV:
“40. A careful reading of the relevant provisions of the contract shows 
that claimant will not be entitled to reimbursement of Entry Tax paid 
by it. Clause 5.1.2 of Special Conditions provides that sales tax or 
turnover tax on works contract or other tax on the amount billed to 
respondent, levied or increased during the execution of the work; shall 
be borne by the respondent. For example, if the price of goods sold 
is Rs. 2000/- and at the time of contract, the goods were not subject 
to Sales Tax, but subsequently during the execution of the work, the 
State subjected such sale of goods to Sales Tax, at the rate of 5%, the 
KONKAN RAILWAY CORP. LTD v. CHENAB BRIDGE PROJECT 
UNDERTAKING [PAMIDIGHANTAM SRI NARASIMHA, J.]
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[2023] 11 S.C.R.
contractor will be entitled to receive under clause 5.1.2, the Sales 
Tax at 5% on the price of Rs. 2000/-. Similarly, if Works Contract 
Tax is increased from the rate of 4.2% prevailing at the time of 
making the contract, the contractor will be entitled to the higher 
rate, by claiming the difference. Therefore, what clause 5.1.2 deals 
with is taxes “chargeable” by the contractor on the bills raised on 
the respondent. It does not deal with or provide for reimbursement 
of increase in taxes which may indirectly be a component of the 
price or rate quoted and which is be governed only by the price 
variation clause. This is obviously because when a contractor 
quotes a rate for an item of work, such rate will have various 
components like material cost, labour cost, fuel cost, overheads 
and profits. The contractor does not indicate the break-up of the 
various components that make up the quoted price. Obviously the 
rates so quoted, if it involves use of a material, will include the 
cost of the material plus any tax paid thereon; and if it involves 
use of some machinery/equipment, it will include the hire charges 
in respect of the machinery/equipment and any taxes thereon. 
It is clear from the contract that in regard to such components 
of a rate, claimant is not entitled to seek reimbursement of any 
increase in price or taxes and all that it will be entitled to, will be 
an increase that is permitted in accordance with
the formula in the 
price variation clause. The price variation clause only provides 
for price variation in a general manner in accordance with a 
standardized price variation formula, and not reimbursement of 
the actual increases. That is why clause 11.7 of BoQ provides that 
the rates/prices shall include all taxes and clauses 7.1.1 and 7.1.2 
clearly provide that rates quoted by the tenderer and accepted 
by the KRCL, shall hold good till the completion of the work and 
no additional individual claim shall be admissible on account of 
increases in tax or other levies except for the provision made by 
way of price variation clause.
...
43. ... As noticed above, the contract does not contemplate 
reimbursement of indirect cost, taxes incurred by the claimant
227
for executing the work. The contract contemplates the contractor 
quoting a price for executing a work by taking all circumstances 
into account and all increase that may take place. The contractor 
knew when it quoted, that it is entitled to only the price quoted and 
only variation in price as permitted by the price variation clause. 
The contract does not provide for payment or reimbursement of 
each and every increase in the price of material or tax thereon, 
which may go into the execution of a work.”
(emphasis supplied)
18. The Single Judge of the High Court aﬃ  rmed the ﬁ ndings of the 
Arbitral Tribunal. The reason for upholding the decision of the Tribunal is 
not that the Single Judge exercising jurisdiction under Section 34 of the Act 
is in complete agreement with the interpretation of the contractual clauses 
by the Arbitral Tribunal. The Learned Judge exercising jurisdiction under 
Section 34 of the Act kept in mind the scope of challenge to an Arbitral 
Award as elucidated by a number of decisions of this Court. Section 34 
jurisdiction will not be exercised merely because an alternative view on 
facts and interpretation of contract exists. In its own words, the conclusion 
of the Single Judge Bench of the High Court is as follows:
“10. … The ambiguity does not come from clause 5.1.1, but from the 
fact that there are other clauses in the contract, such as clauses 7.1.1 
and 7.1.2. One way to look at the co-existence of these clauses is to 
treat clauses
7.1.1 and 7.1.2 merely as an exclusion for working out 
price variation, since it is speciﬁ cally provided for in clause 5.1.2. 
Equally, there is another way of looking at these three clauses, and 
that is : clauses 7.1.1 and 7.1.2 make it clear that no increase in tax 
in the case of any component forming part of BoQ rates, which was 
considered by the contractor for quoting his rates for any particular 
item, should be allowed to the contractor; it is only when particular 
taxes were actually to be paid on the deliveries of the contractor, these 
would be included for reimbursement by the employer under clause 
5.1.2. The arbitrator adopted the latter view. It cannot be said either 
that it is an unreasonable view or a view which is either impossible 
or which no fair and judiciously minded person would have taken. 
The award on this dispute, thus, does not merit any interference under 
KONKAN RAILWAY CORP. LTD v. CHENAB BRIDGE PROJECT 
UNDERTAKING [PAMIDIGHANTAM SRI NARASIMHA, J.]
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SUPREME COURT REPORTS 
[2023] 11 S.C.R.
Section 34 of the Act, having regard to the law stated by the Supreme 
Court in the case of Associate Builders (supra).”
19. In appeal under Section 37 of the Act, the Division Bench of 
the High Court took a different position. It opined that the construction 
of the clauses by the Arbitral Tribunal was not even a possible view, 
and observed as follows: 
“30. ... What is more appropriate is the well-settled principle that 
if there are two constructions possible of a contract, then the one 
that gives effect and voice to all clauses will be preferred over 
the other that renders one of them otiose or nugatory [Radha 
Sundar Dutta v Mohd Jahadur Rahim & Ors, AIR 1959 SC 24]. 
There is some law to suggest that if an Award does not construe 
the contract as a whole then it is not a possible view and it is 
perverse [South East Asia Marine Engineering and Constructions 
Ltd v Oil India Ltd, (2020) 5 SCC 164; Patel Engineering Ltd 
v North Eastern Electric Power Corporation Ltd, (2020) 7 SCC 
167]. As regards the dispute for reimbursement on account of toll 
tax effected by the Government of Jammu and Kashmir through 
various Notifications, Chenab Bridge’s case stands on an even 
stronger footing. This is because toll tax is specifically mentioned 
in Clause 5.1.2 and the arbitral view amounts to an entire deletion 
of those two words. This is clearly impermissible.”
20. The principle of interpretation of contracts adopted by the
Division Bench of the High Court that when two constructions are 
possible, then courts must prefer the one which gives effect and voice to 
all clauses, does not have absolute application. The said interpretation 
is subject to the jurisdiction which a court is called upon to exercise. 
While exercising jurisdiction under Section 37 of the Act, the Court 
is concerned about the jurisdiction that the Section 34 Court exercised 
while considering the challenge to the Arbitral Award. The jurisdiction 
under Section 34 of the Act is exercised only to see if the Arbitral 
Tribunal’s view is perverse or manifestly arbitrary. Accordingly, the 
question of reinterpreting the contract on an alternative view does not 
arise. If this is the principle applicable to exercise of jurisdiction under 
Section 34 of the Act, a Division Bench exercising jurisdiction under
229
Section 37 of the Act cannot reverse an Award, much less the decision of a 
Single Judge, on the ground that they have not given eﬀ ect and voice to all 
clauses of the contract. This is where the Division Bench of the High Court 
committed an error, in re-interpreting a contractual clause while exercising 
jurisdiction under Section 37 of the Act. In any event, the decision in Radha 
Sundar Dutta (supra), relied on by the High Court was decided in 1959, and 
it pertains to proceedings arising under the Village Chaukidari Act, 1870 and 
Bengal Patni Taluks Regulation of 1819. Reliance on this judgment particularly 
for interfering with the concurrent interpretations of the contractual clause 
by the Arbitral Tribunal and Single Judge under Section 34 of the Act is not 
justiﬁ ed. 
21. As far as the decisions in South East Asia Marine Engineering and 
Constructions Limited (supra) and Patel Engineering Limited v. North Eastern 
Electric Power Corporation Limited11 are concerned, in both the cases, this 
Court aﬃ  rmed the interference by a court exercising jurisdiction under Section 
37 of the Act, with the concurrent ﬁ ndings of the Arbitral Tribunal as well as 
the court under Section 34 of the Act, for good and valid reasons. In South East 
Asia Marine Engineering and Constructions Limited (supra),the Section 37 
Court interfered with the Award as the Arbitral Tribunal allowed the claim for 
price escalation for High-Speed Diesel under the ‘Change in Law’ clause, by
construing the circular increasing the HSD price as having “force of law”. The 
‘Change in Law’ clause therein provided for reimbursement of any additional 
costs on account of “change in or enactment of any law or interpretation of 
existing law”. The High Court, exercising jurisdiction under Section 37 of 
the Act, and this Court, found that the Arbitral Tribunal incorrectly construed 
the ‘Change in Law’ clause as akin to a force majeure clause and allowed the 
claims. This was held to not be a possible interpretation of the contract and 
hence, the Award was set aside. Similarly, in Patel Engineering Ltd.(supra), 
the Arbitral Award was found to be based on irrelevant facts and the outcome 
was found to result in unjust enrichment, the latter being in violation of public 
policy of India under Section 34(2) of the Act. Therefore, in both these cases, 
this Court was convinced that the view of the Arbitral Tribunal was not even 
a possible view, and hence, perverse in nature. 
22. In the present case, we have examined the appreciation of evidence 
by the Arbitral Tribunal as well as the Single Judge of the High Court. We 
11 (2020) 7 SCC 167.
KONKAN RAILWAY CORP. LTD v. CHENAB BRIDGE PROJECT 
UNDERTAKING [PAMIDIGHANTAM SRI NARASIMHA, J.]
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SUPREME COURT REPORTS 
[2023] 11 S.C.R.
are convinced that their appreciation of the facts and interpretation of 
the contract is reasonable, and comprises a possible view. Keeping in 
mind the mandate of Section 5 of the Act 1996,12 we note the observation 
of this Court in Vidya Drolia and Ors. v. Durga Trading Corporation13:
“Arbitration is a private dispute resolution mechanism whereby two 
or more parties agree to resolve their current or future disputes by 
an Arbitral Tribunal, as an alternative to adjudication by the courts 
or a public forum established by law. Parties by mutual agreement 
forgo their right in law to have their disputes adjudicated in the 
courts/public forum. Arbitration agreement gives contractual 
authority to the Arbitral Tribunal to adjudicate the disputes and 
bind the parties.”
23. The conclusion of the Division Bench of the High Court that 
the Award is liable to be set aside on the ground of perversity is incorrect, 
as it overlooks the principle laid down in Associate Builders v. Delhi 
Development Authority,14 where this Court held:
“32. A good working test of perversity is contained in two 
judgments. In Excise and Taxation Oﬃ  cer-cum-Assessing Authority 
v. Gopi Nath & Sons [1992 Supp (2) SCC 312] , it was held: (SCC 
p. 317, para 7)
“7. … It is, no doubt, true that if a ﬁ nding of fact is arrived at 
by ignoring or excluding relevant material or by taking into 
consideration irrelevant material or if the ﬁ nding so outrageously
deﬁ es logic as to suﬀ er from the vice of irrationality incurring the 
blame of being perverse, then, the ﬁ nding is rendered inﬁ rm in law.”
In Kuldeep Singh v. Commr. of Police [(1999) 2 SCC 10 : 1999 
SCC (L&S) 429] , it was held: (SCC p. 14, para 10)
“10. A broad distinction has, therefore, to be maintained 
between the decisions which are perverse and those which 
12 Arbitration and Conciliation Act, 1996, section 5:
 “5. Extent of judicial intervention.—Notwithstanding anything contained in any 
other law for the time being in force, in matters governed by this Part, no judicial 
authority shall intervene except where so provided in this Part.”
13 (2021) 2 SCC 1, para 18.
14 (2015) 3 SCC 49.
231
are not. If a decision is arrived at on no evidence or evidence 
which is thoroughly unreliable and no reasonable person 
would act upon it, the order would be perverse. But if there 
is some evidence on record which is acceptable and which 
could be relied upon, howsoever compendious it may be, the 
conclusions would not be treated as perverse and the ﬁ ndings 
would not be interfered with.
33. It must clearly be understood that when a court is applying 
the “public policy” test to an arbitration award, it does not act 
as a court of appeal and consequently errors of fact cannot be 
corrected. A possible view by the arbitrator on facts has necessarily 
to pass muster as the arbitrator is the ultimate master of the quantity 
and quality of evidence to be relied upon when he delivers his arbitral 
award. Thus an award based on little evidence or on evidence which 
does not measure up in quality to a trained legal mind would not be 
held to be invalid on this score.”
(emphasis supplied)
24. Having considered the matter in detail, we are of the opinion 
that the Division Bench of the High Court committed an error in setting 
aside the concurrent ﬁ ndings of the Arbitral Tribunal and the Single 
Judge of the High Court. The Award of the Arbitral Tribunal and the 
decision of the Single Judge of the High Court under Section 34 of the 
Act cannot be termed as perverse or patently illegal as concluded by the 
Division Bench of the High Court. The decision of the Arbitral
Tribunal 
is a plausible view, and the Single Judge refrained from interfering with 
it under Section 34 of the Act. We are of the opinion that the Division 
Bench should not have interfered with these orders.
25. For the reasons stated above, we allow Civil Appeal No. 
2903 of 2023 and set aside the judgment of the Division Bench of the 
High Court of Judicature at Bombay in Appeal No. 458 of 2019 dated 
23.09.2022, and restore the judgment and order of the Single Judge in 
Arbitration Petition No. 546 of 2015 dated 17.01.2019. No order as to 
costs.
Headnotes prepared by:  
Appeal allowed.
Nidhi Jain  
KONKAN RAILWAY CORP. LTD v. CHENAB BRIDGE PROJECT 
UNDERTAKING [PAMIDIGHANTAM SRI NARASIMHA, J.]