Delhi High Court: An appeal was filed by BSNL under Section 37 of the Arbitration and Conciliation Act, 1996 (‘the Act’), being aggrieved by the judgment dated 03-10-2023 passed by the Single Judge of this Court wherein the petition was dismissed under Section 34 of the Act and upheld the award dated 16-06-2023 whereby the Sole Arbitrator was awarded ₹33.69 plus ₹9.83 crores along with interest in favour of the respondent. A division bench of Vibhu Bhakru and Tejas Karia*, JJ., dismissed the appeal, holding that the arbitral award had taken a plausible and reasonable view after appreciation of material and evidence on record.
The genesis of the dispute lay in the Notice Inviting Tender (NIT) issued on 13-04-2016 by BSNL, acting on behalf of the Universal Services Obligation Fund (USOF), for the establishment and maintenance of 2G GSM BSS Network in remote and insurgency-affected areas of Arunachal Pradesh and Assam. The project involved survey, planning, supply, installation, testing, commissioning, integration with the existing core network, and five years of operation and maintenance, including radio V-SAT backhaul. Vihaan Networks Ltd. (VNL), the respondent, participated in the bidding process and was declared the L1 bidder after pre-bid testing and technical evaluation from October 2016 to March 2017. Following price negotiations, VNL agreed to an 11% discount on all OPEX items.
Given the complex terrain and security challenges, VNL undertook extensive pre-planning. On 01-03-2018, BSNL directed VNL to undertake a three-month field test with live traffic (FTL), which VNL accepted on 15-03-2018. The Advance Purchase Order (APO) was subsequently issued on 21-03-2018 and unconditionally accepted by VNL, who also furnished the required Performance Bank Guarantee (PBG). VNL began deploying resources and initiated project activities. However, the APO was ultimately withdrawn on 10-02-2020, after nearly four years. VNL invoked arbitration under clause 36 of the APO, claiming damages and losses due to this withdrawal.
BSNL contended that the withdrawal followed the decision of the Digital Communication Commission (DCC) to shift to 4G technology, resulting in USOF terminating its agreement with BSNL on 04-12-2019, retrospectively effective from 11-09-2019. Consequently, BSNL claimed the APO was voided and returned the ₹29.73 crore PBG to VNL. On 16-06-2023, the Sole Arbitrator rejected all claims except Claim III(A) and III(B), awarding VNL ₹33.69 crores (salary reimbursement) and ₹9.83 crores (cost of equipment purchases), with interest at 10% p.a. from the invocation of arbitration to payment. The arbitrator held that although no enforceable contract was formed, VNL had undertaken work based on BSNL’s directions and could not be denied compensation.
BSNL filed a petition under Section 34 of the Arbitration Act, which was dismissed at the admission stage. The Single Judge upheld the arbitral award, observing that the award was based on substantial evidence and that the Tribunal’s findings were not open to interference.
The Court began by reiterating the well-settled legal position that the scope of appeal under Section 37 of the Arbitration and Conciliation Act, 1996 is extremely narrow. It emphasized that an appellate court is not to re-evaluate evidence or reassess the merits of the award but only to determine whether the Single Judge, while exercising power under Section 34, acted within its prescribed limits. If the arbitral award reflects a reasonable and possible view based on the evidence presented, then even if an alternative view is conceivable, the court under Sections 34 or 37 cannot interfere. Relying on the decision in Konkan Railway Corporation Ltd. v. Chenab Bridge Project Undertaking, (2023) 9 SCC 85, the Court underscored that where a plausible view is taken by the arbitrator, interference is impermissible.
In the present case, the Arbitral Tribunal had rejected all claims except two—Claim III(A) for salary reimbursement and Claim III(B) for cost of equipment and raw materials—on the basis that Vihaan Networks Ltd. had undertaken work as directed by BSNL, even though no concluded contract existed. The Tribunal applied the principle of quantum meruit under Section 70 of the Contract Act, holding that BSNL could not avoid liability for benefits received. The award was based on substantial documentation including salary slips, appointment letters, proof of payment, invoices, and other procurement records. The Tribunal had allowed only 25% of the salary-related claim (₹33.69 crores) and 50% of the procurement-related claim (₹9.83 crores), which the Court found reasonable. Moreover, the Court noted that BSNL’s own correspondence with USOF acknowledged the expenses incurred and work done by Vihaan Networks Ltd.
Consequently, the Court found no infirmity in the arbitral award or the impugned judgment under Section 34. It affirmed that the award was based on sound reasoning, substantial evidence, and a correct application of law including Section 70 of the Contract Act. The appeal was therefore dismissed, along with all pending applications, with no order as to costs.
[BSNL v. Vihaan Networks Ltd., FAO(OS) (COMM) 269/2023, decided on 28-04-2025]
*Judgment authored by Justice Tejas Karia
Advocates who appeared in this case :
Advocates who appeared in these cases For the Appellant: Mr Dinesh Agnani, Sr Advocate with Ms Leena Tuteja, Advocate.
For the Respondent: Mr Rajeev Nayyar, Sr Advocate with Mr Omar Ahmed, Mr Abhishek Singh, Mr Saad Shervani, Mr J Amal Joshy, Ms Aayushi Mishra, Mr K V Vibhu Prasad, Advocates.
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