Associate Builders v. DDA, (2015) 3 SCC 49

ASSOCIATE BUILDERS V. DDA

Whether the Delhi Development Authority (DDA) was legally obligated to compensate the contractor for the significant delay in the construction project that the arbitrators determined?
Whether the division bench of the High Court’s use of the principle of “rough and ready justice” was a suitable criterion for determining compensation amounts in cases of construction project delays.

In circumstances involving construction contracts and delays, courts may apply the idea of “rough and ready justice” to determine the amount of compensation. Based on the facts of the case, this approach helps courts to decide a reasonable and justifiable compensation sum.

The lawsuit involves a contract for building construction between the Delhi Development Authority (DDA) and Associate Builders.
The building project experienced major delays, extending the completion deadline by 25 months.
Arbitrators evaluating the contractor’s claims blamed the delay on the DDA.
As compensation for the delay, the arbitrators awarded the contractor Rs. 23.39 lakhs.
The case was heard by a learned single judge of the High Court and dismissed.
The DDA filed an appeal, appealing the learned single judge’s order.
The division bench overturned the contested order and reduced the claims, describing it as “rough and ready justice.”

The Supreme Court dismissed the appeal and overturned the arbitral award.
Courts should not vacate arbitral verdicts based solely on disagreements with the arbitrator’s interpretations of the agreement under Section 34 of the Arbitration and Conciliation Act.
To set aside an award, you must show that the tribunal’s decisions were based on no or irrelevant evidence.
‘Public Policy’ Justifications:
The Supreme Court established what constitutes ‘public policy.’
Among these grounds are:
Failure to comply with superior court instructions.
Violation of judicial approach principles.
Violation of natural justice principles.
Unreasonableness in the selection of an arbitrator to the degree that no reasonable person would reach a comparable conclusion.
These points provide clarification.