Background
The case arose out of a Contract executed in 2010 between Jan De Nul Dredging India Private Limited (“Appellant”) and Tuticorin Port Trust (“Respondent”) for a major dredging project, valued at Rs. 465 crores. The said project was stipulated to be completed within a period of 14 months i.e. by 28.06.2012. While the Contract set out certain indicative machinery and equipment to be deployed for the Project, the Appellant was permitted such additional machinery and equipment as it deemed necessary. By deploying machinery and equipment in excess of the indicative machinery/equipment, the work was completed eight months before the stipulated completion date i.e. by 30.08.2011.
Upon completion of the work, the Appellant submitted its final bill. However, the Respondent failed to settle the bill in full, giving rise to disputes between the Parties. Consequently, the Appellant invoked arbitration and raised eleven claims before the Arbitral Tribunal. One of these claims pertained to idling of Backhoe Dredger due to Respondent’s failure to provide possession of site (“Claim No. 7”). Under Claim No. 7, the Arbitral Tribunal awarded an amount of approximately Rs. 14 crores towards idling charges of Backhoe Dredger.
The Respondent challenged the award under Section 34 of Arbitration & Conciliation Act, 1996 (“A&C Act”) in respect of various claims, but subsequently confined its challenge solely to Claim No. 7. The Respondent contended that under Clause 38 of the Contract, the idle time charges were payable only for major dredgers, and since Backhoe Dredger is a minor dredger, no such idle charges could have been awarded. The challenge under Section 34 of the A&C Act, 1996 was dismissed by the Single Judge Bench of Madras High Court observing that Clause 38 of the Agreement did not restrict the payment of idle charges to Major Dredgers and the Contract permitted the Appellant deploy dredgers without specifying them as major or minor, and accordingly upheld the arbitral award.
The Respondent, thereafter, preferred an appeal under Section 37 of the A&C Act. The Division Bench of Madras High Court allowed the appeal and directed deletion of the amount awarded under Claim No. 7 by the Arbitral Tribunal (“Impugned Judgment”).
Aggrieved by the impugned judgment, the Appellant filed an appeal before the Supreme Court.
Issues and Decision
Whether an arbitral award is liable to be set aside on the ground that it awarded idle time charges for a machinery/equipment not expressly mentioned in the clause of the Contract?
The Appellant contended that the scope of interference under Section 37 of the A&C Act, 1996 is extremely limited, and the appellate court lacked jurisdiction to interpret the clauses of the Contract in different manner [¶ 20].
On the contrary, the Respondent argued that no compensation could be granted for idling of Backhoe Dredger, which was admittedly a minor dredger and therefore not covered under Clause 38 of the Contract. It further contended that the delay in handing over of site was governed by Clauses 41.1 and 41.2 of the Contract, and hence the Arbitral Tribunal could not have awarded idle time charges under Clause 51.1, which deals with the interruption of work due to port traffic and other reasons [¶ 21].
The Hon’ble Supreme Court observed that the challenge to arbitral award was not based on grounds enumerated in Section 34 of the A&C Act, 1996 but was essentially on the merits of the claim. Thus, the arbitral award was not liable to be set aside either under Section 34 of the A&C Act, 1996 or in Section 37 [¶28-29].
Interpreting Clause 38 of the Contract, the Hon’ble Supreme Court held that the said clause cannot be read as prohibiting idle time charges for other equipment other than major dredgers [¶ 43].
Addressing the Respondent’s contention that the claim fell under Clauses 41.1 and 41.2 and not under Clause 51.1, the Hon’ble Supreme Court observed that Clauses 41.1 and 41.2 do not bar payment of idle time charges for reasons otherwise covered under the Contract. When read together with Clause 51.1, it is evident that compensation is payable where equipment remains idle due to delay or non-availability of the site. The Court further held that where the power to grant relief exists under the contract, it is immaterial under which clause the claim is claimed [¶ 44-45].
In view of the above observations, the Supreme Court held that it is insignificant whether the Backhoe Dredger was a major or minor dredger and accordingly set aside the impugned judgement [¶ 49 and 52].
Case Details
Case Name: Jan De Nul Dredging India Pvt Ltd vs Tuticorin Port Trust
Citation Code: 2026 INSC 34
Date of Judgement: 07.01.2026
Court: Supreme Court of India
Coram: Justice Pamidighantam Sri Narasimha, Justice Pankaj Mittal