LexLARSEN AND TOUBRO LIMITED versus PURI CONSTRUCTION PVT. LTD. AND OTHERS
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[2025] 4 S.C.R. 2811 : 2025 INSC 523 Larsen and Toubro Limited v. Puri Construction Pvt. Ltd. and Others (Civil Appeal No(s). 2575-2578 of 2016) 21 April 2025 [Abhay S. Oka* and Pankaj Mithal, JJ.] Issue for Consideration In petition u/s.34, Arbitration and Conciliation Act, 1996, Single Judge had set aside the Arbitral Award. Division Bench in appeal thereagainst u/s.37, Arbitration Act by way of the impugned judgment, inter alia upheld the dismissal of L&T’s counter-claim and agreed with the findings of the Arbitral Tribunal that the Supplementary Agreement was a non-starter as it was vitiated by economic duress; that the Development Agreement was not novated by the Supplementary Agreement; that L&T committed fundamental breach of the Development Agreement. The operative part of the award fixing the monetary liability of L&T was set aside while leaving open the remedy of PCL for the quantification of the monetary claim. The award regarding costs was confirmed however, the Division Bench did not restore any part of the arbitral award and the parties were left to pursue the appropriate course of action. Issue as regards the correctness of the impugned judgment, challenged by both, L&T and PCL; power of the court u/s.34, Arbitration Act of partly setting aside the award; whether in the facts and circumstances of the present case, the Division Bench modified the Award by partly setting aside the judgment u/s.34. Headnotes† Arbitration and Conciliation Act, 1996 – ss.34, 37 – Puri Construction Limited and its sister concerns (‘PCL’) were in possession of certain lands as the owner – PCL had entered into a joint venture with ITC Classic Real Estate Finance Limited (ITCREF) for the development of lands, however, ultimately, ITCREF exited from the business – L&T and PCL entered into an agreement for land development (Development Agreement) – Later, a supplementary agreement was entered into between them on the basis of which a Tripartite Agreement was entered * Author 2812 [2025] 4 S.C.R. Supreme Court Reports into between PCL, L&T and the Bank – Disputes arose – Arbitral Award was passed holding inter alia that L&T jeopardised PCL’s obligations towards ITCREF; it resiled from and went back upon its original contractual obligations and tried to effect sales without sanction under the revised development plan and without making any provision for the responsibility towards ITCREF; L&T abandoned the Development Agreement; Supplementary Agreement was tainted by economic coercion and the signatures of PCL were obtained by fraud – In petition u/s.34, Single Judge set aside the award – By the impugned judgment, Division Bench disagreed with certain findings of the Single Judge, allowing the appeals preferred by PCL to that extent and the appeal by L&T was dismissed – However, the parties were left to pursue the appropriate course of actions under law – Challenge to, by both PCL and L&T: Held: 1.1 Powers of the Appellate Court u/s.37 of the Arbitration Act are not broader than those of the Court u/s.34 of the Arbitration Act – Therefore, what cannot be done in the exercise of the powers u/s.34 cannot be done in an Appeal u/s.37 – An Arbitral Award cannot be modified – In the present case, the Division Bench has not modified the award by partly setting aside the Judgment u/s.34 – The remedy of PCL was kept open to pursue appropriate course of action under law as there cannot be a remand to the Arbitral Tribunal for quantification of monetary claim – As the finding of the Arbitral Tribunal regarding breaches committed by L&T was affirmed, the Division Bench rightly segregated that part of the award by which, cost of arbitration was ordered to be paid to PCL by L&T – As documents of title were deposited with the Registrar, the direction to hand over the same to PCL cannot be faulted with. [Para 56] 1.2 In view of the clauses in the Supplementary Agreement, the finding recorded by the Tribunal that, as the conditions precedent in the relevant clauses were not complied with by L&T, the Supplementary Agreement was a non-starter is a possible finding which could not have been interfered with u/s.34 of the Arbitration Act – Moreover, it is a finding of fact. [Para 46] 1.3 Further, after examining the evidence, the Division Bench held that there was no patent illegality in the findings recorded by the Arbitral Tribunal that the Supplementary Agreement and the Tripartite Agre
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