MCGM Arbitration Awards Upheld, Rs 37.7 Lakh Confirmed

Authority: High Court of Judicature at Bombay

Order Date: 11 September 2026 (Reserved on 28 August 2026)

Case Overview

Parties: Municipal Corporation of Greater Mumbai (Petitioner) vs. Bucon Engineers & Infrastructure Pvt. Ltd (Respondent/Claimant) in Arbitration Petition No. 1158 of 2014 and Arbitration Petition No. 256 of 2015.
Nature of proceedings: Petitioners challenged arbitral awards dated 24 April 2014 and 10 October 2014 under Section 34 of the Arbitration and Conciliation Act, 1996.
Background: MCGM invited a tender for planning, designing and constructing 20 community toilet blocks (each 20 seats) in slums of R‑Central Ward, Lot‑7, Mumbai. The contract was for 21 months (25 Jan 2001 – 31 Oct 2002) but was extended repeatedly, finally operating until 31 Dec 2005 without further site availability.
Claims raised by the Respondent included excavation, masonry walls, individual taps, rate revisions, loss of interest, compensation for idle labour, retention money, extra electricity supply costs, loss of profit, miscellaneous expenses, arbitrator fees and arbitration costs.
The arbitral tribunal awarded a total of Rs 37,69,666.07 (plus 12 % interest from 28 Feb 2008 to 24 Apr 2014) as detailed below:

| Claim No. | Particulars | Award (Rs.) |

| 1(ii) | Construction of UCR masonry wall – Shantidoot Site | 45,883.00 |

| 1(iii) | Individual taps for each W.C. | 1,78,500.00 |

| 2 | Compensation for revision of rates (Nov 2002 – Dec 2005) | 13,92,853.47 |

| 3 | Loss of interest due to delayed payment | 3,49,998.00 |

| 4 | Compensation (idle labour, staff, machinery, establishment) | 14,69,388.00 |

| 5 | Infructuous expenditure (NGO appointment) | 1,82,500.00 |

| 6 | Interest on delayed retention money | 41,252.80 |

| 7 | Extra cost for electricity supply (B.S.E.S. Ltd.) | 56,111.00 |

| 8 | Loss of profit and overheads | 1,27,33,000.00 |

| 10 | Appointment of sole arbitrator | 50,000.00 |

| 11 | Interest on awarded amounts (12 % p.a.) | – (awarded on all claims) |

| Total | | 37,69,666.07 |

Claims rejected by the tribunal: excavation of hard rock (Rs 94,597.20), Claims 9, 11, 12 (miscellaneous expenses, interest on due amounts, cost of arbitration), and certain other items.

Legal Reasoning

The Court reiterated the limited scope of judicial interference under Section 34, citing Hindustan Construction Co. Ltd. v. NHAI (2024 SCC 613) and PSA Sical Terminals Pvt. Ltd. v. V.O. Chidambaranar Port Trust (2023 SCC 781), emphasizing that courts cannot re‑appraise evidence and may intervene only on grounds of patent illegality or violation of public policy.
The Court also referred to Associate Builders v. Delhi Development Authority (2015 SCC 49) to underscore that an award not perverse, not violating public policy, and free of patent illegality cannot be set aside.
Applying these principles, the Court found no patent illegality in the tribunal’s findings on the masonry wall, individual taps, rate revisions, idle‑labour compensation, interest calculations, and other awarded amounts.
The Court accepted the tribunal’s methodology for computing interest at 12 % per annum and upheld the award of interest on all claims from 28 Feb 2008 to 24 Apr 2014.

Final Outcome

Topics: Arbitration, Municipal Infrastructure