Supreme Court of India· 31 January 2025

Can a party contend for the first time before the Supreme Court that such a contractual clause must be tested against Sections 23 and 28 of the Indian Contract Act, 1872?

M/s. C & C Constructions Ltd. v. IRCON International Ltd.

2025 INSC 138 · CIVIL APPEAL NO. 6657 OF 2023
Coram: Abhay S. Oka; Ujjal Bhuyan

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Answer

No. Where that contention was raised neither in the petition under Section 34 nor in the appeal under Section 37 before the High Court, it is not open to the party to raise it in the appeal for the first time.

Headnote

Arbitration and Conciliation Act, 1996 — s.16 — s.34 — s.37 — Indian Contract Act, 1872 — ss.23, 28 — General Conditions of Contract — Clause barring damages for the employer's delay — Estoppel by conduct — New plea in appeal — Scope of interference — General Conditions of Contract — Delay by the employer — Estoppel by conduct — Held: A clause entitling a contractor only to extension of time, and not to damages or compensation, for the employer's delay binds a contractor who acts upon it. Having obtained extensions and undertaken to claim nothing other than escalation, he is estopped by conduct from challenging its validity. (¶19) Indian Contract Act, 1872 — ss.23, 28 — Plea raised for the first time — Held further: A contention that such a clause must be tested against Sections 23 and 28 cannot be raised for the first time in this appeal when it was urged neither in the petition under Section 34 nor in the appeal under Section 37. (¶24) General Conditions of Contract — Waiver — Correspondence on the claim — Held further: A letter requiring the claim for additional financial burden to be dealt with together with the proposal for extension of time is no waiver of the clause, the more so where the detailed claim called for was never submitted. (¶26) Arbitration and Conciliation Act, 1996 — s.37 — Scope of interference — Held further: Interference under Section 37 cannot travel beyond the restrictions laid down under Section 34; the court cannot undertake an independent assessment of the merits of the award. Appeal dismissed. (¶27, 28)

In the Court's own words

Paragraph 24Now, in this appeal, a contention has been raised that the validity of clause 49.5 ought to have been examined in the light of Sections 23 and 28 of the Contract Act, but the High Court has not examined the said issue. Careful perusal of the judgment of the learned Single Judge shows that the contention that the validity of clause 49.5 ought to be decided in the light of Sections 23 and 28 of the Contract Act was not raised before the learned Single Judge in a petition under Section 34. The said contention was not raised even before the Division Bench in appeal under Section 37. Therefore, it is not open to the appellant to raise the said contention in this appeal for the first time.

Acts & Sections

s.37 Arbitration and Conciliation Act, 1996s.34 Arbitration and Conciliation Act, 1996s.16 Arbitration and Conciliation Act, 1996s.23 Indian Contract Act, 1872s.28 Indian Contract Act, 1872

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Also decided in this judgment

Is a clause in the General Conditions of Contract providing that the employer's failure or delay shall not entitle the contractor to damages or compensation, but only to a reasonable extension of time, binding on the contractor?What conduct estops a contractor from challenging the validity of a clause that bars damages for the employer's delay?Under the Arbitration and Conciliation Act, 1996, may a plea that a contractual clause was waived be raised for the first time in an appeal under Section 37?When does an employer's correspondence about a contractor's claim amount to waiver of a clause barring damages for delay?What is the scope of a court's interference in an appeal under Section 37 of the Arbitration and Conciliation Act, 1996?Where claims are barred on the plain reading of a contractual clause, must an Arbitral Tribunal deciding an application under Section 16 of the Arbitration and Conciliation Act, 1996 first permit evidence to be led?

Plain-language answer prepared by the LexStreak Editorial Desk — verify against the judgment. Source: Supreme Court of India. Corrections