A consultancy dispute tracing back to a bridge collapse in 2009 has produced a fresh ruling on how far an arbitral tribunal can go in compensating a contractor for work it has not yet performed. The National Highways Authority of India had engaged The Louis Berger Group, in joint venture with COWI A/S, for design, construction supervision and operation and maintenance of a cable-stayed bridge across the Chambal river at Kota, Rajasthan. The partly built structure collapsed in December 2009, and NHAI kept the consultant engaged through the aftermath, which eventually produced a dispute over unpaid fees and O&M charges that went to arbitration.
The tribunal awarded the consultant roughly Rs 5.16 crore and USD 60,769 with interest, a sum that included not just amounts already due but a component for future operation and maintenance services the consultant had not yet rendered by the date of the award. NHAI challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996, and the Delhi High Court has now set aside that future O&M component while leaving the rest of the award standing.
Justice Avneesh Jhingan's reasoning turned on a point that recurs often enough in long-running infrastructure contracts to matter well beyond this one bridge: relief cannot be granted for an apprehended future liability when no amount was actually due on the date the award was made. The consultant had argued it would go on providing O&M services and should be paid for that continuing obligation up front, but the Court held that awarding money for services yet to be rendered, where no sum had crystallised as owed, goes beyond the scope of what the parties submitted to arbitration and falls within the specific ground for setting aside an award under Section 34(2)(a)(iv) of the Act.
A second finding, procedural rather than substantive, reinforced the result. The Court found that the tribunal had relied on material obtained from one party without giving NHAI a fair opportunity to respond to it, a defect the Court treated as a ground under Section 34(2)(a)(iii), which protects a party's right to present its case. Rather than set the whole award aside for this flaw, the Court applied the doctrine of severability, drawing on Ssangyong Engineering and the Supreme Court's more recent guidance in Gayatri Balasamy, to excise only the portion of the award tainted by the procedural lapse and the scope overreach, leaving the valid parts intact.
On the claims that survived, NHAI fared worse. The Court upheld the tribunal's finding on the consultant's principal payment claim for work already completed, and it rejected NHAI's separate argument that the entire arbitration was time-barred. Having run that limitation defence and lost, NHAI is left paying the principal sum the tribunal found due on the completed construction supervision work, while avoiding only the open-ended future O&M liability the tribunal had tacked on to the award without any amount having actually fallen due for that continuing service.
The ruling gives NHAI and other public infrastructure authorities a usable precedent for the recurring pattern where a contractor or consultant asks an arbitral tribunal to price in services for the remainder of a contract term rather than confine the award to amounts already accrued. Tribunals asked to make that kind of forward-looking award should expect a reviewing court to treat it as relief beyond the scope of the reference, whatever commercial sense it might make to settle the whole relationship in one proceeding.
For contractors on long-term operation and maintenance arrangements with NHAI or comparable authorities, the practical lesson is to bring successive claims as each O&M obligation period actually falls due and the corresponding payment becomes payable, rather than seeking a single lump-sum valuation of a continuing service relationship inside one arbitration. Severability also means a party resisting an award on a scope-overreach ground should identify precisely which component of the relief exceeds the tribunal's mandate, since a court applying Gayatri Balasamy will cut out only that component rather than discard an otherwise sound award.