The Commercial Court, South District, Saket, New Delhi, has set aside an arbitral award passed in favour of the New Delhi Municipal Council (NDMC) in a billing dispute with M/s Planet Advertising Pvt. Ltd., holding that the award suffered from patent illegality and ignored material evidence.
District Judge Savita Rao observed that while judicial interference with arbitral awards is limited, it is warranted where findings are perverse, unreasoned, and contrary to record. The Court noted that the arbitrator’s conclusions were “sans reasons,” overlooked NDMC’s own admissions of error, and failed to address crucial issues central to the dispute.
The case arose from a 2015 concession agreement under which Planet Advertising was to construct and maintain public toilet utilities (PTUs) within NDMC areas in exchange for advertising rights. Disputes surfaced after NDMC issued irregular and inflated water bills, despite multiple meter replacements. The first bill—raised eight months after installation—demanded ₹2.63 lakh but was subsequently reduced by NDMC to ₹70,610 in an internal communication acknowledging a billing error. The petitioner alleged that despite this correction, NDMC continued to levy exorbitant charges, penalties, and surcharges, while refusing to accept payment of the revised amount.
The sole arbitrator dismissed the company’s claims, holding that the water meters were tested and found accurate, and that the petitioner’s selective acceptance of certain bills undermined its credibility. Challenging the award under Section 34 of the Arbitration and Conciliation Act, 1996, the petitioner contended that the award violated Section 28(3) by disregarding contractual obligations and resulted in unjust enrichment of a public authority. Reliance was placed on Associate Builders v. DDA (2015) 3 SCC 49, ONGC v. Saw Pipes (2003) 5 SCC 705, Ssangyong Engineering v. NHAI (2019) 15 SCC 131, and DMRC v. DAMEPL (2024) 6 SCC 357.
Upon review, the Court held that the arbitrator failed to consider NDMC’s written acknowledgment reducing the demand, ignored the erratic consumption pattern that coincided with meter replacements, and offered no reasoning for rejecting this vital evidence. Citing the Supreme Court’s ruling in Gayatri Balasamy v. ISG Novasoft Technologies Ltd. (2025 INSC 605), the Court concluded that the illegality was inseparable from the award’s reasoning and that modification was impermissible.
Accordingly, the arbitral award was set aside in entirety, with both parties left at liberty to pursue their claims afresh in accordance with law.
