The Delhi High Court’s decision narrows the scope of judicial interference under Section 34 of the Arbitration Act for international commercial arbitrations, holding that challenges based on patent illegality or alleged waiver of contractual timelines fall outside the court’s jurisdiction and must be left to the arbitrator’s discretion.
Background & Facts
The Dispute
The petitioner, Ratnagiri Gas and Power Private Limited (RGPPL), a joint-venture of NTPC Ltd. and GAIL (India) Ltd., entered into a sale agreement on 02 April 2014 for the sale of approximately 40,000 MT of naphtha from its Dabhol plant to the respondent, Dinowic Pte Ltd., a Singapore-incorporated company. The contract required payment by irrevocable Letter of Credit covering 110 % of the consideration and stipulated strict lifting schedules.
Key Facts
- 19 March 2014: RGPPL floated an e-auction tender for the naphtha sale through MSTC Ltd.
- 25 March 2014: Respondent deposited a pre-bid Earnest Money Deposit (EMD) of USD 833,000.
- 02 April 2014: Sale Order issued for total consideration Rs 160,03,40,000 (USD ≈ 2.67 bn at Rs 59.84/USD).
- 04-07 April 2014: Exchange of emails regarding LC opening and vessel nominations.
- 15 April 2014: Respondent submitted LC for the first lot (20,000 MT, USD 13,369,600).
- 25 April 2014: First lot of 20,090.848 MT lifted.
- 10 May 2014: Second lot of 9,909.152 MT lifted; payment received on 22 May 2014.
- 24 May 2014: Respondent sought post-facto extension of delivery period and refund of security deposit.
- 01 July 2014: Respondent demanded refund of USD 714,975.74 deducted as liquidated damages.
- 08 August 2014: Legal notice issued by respondent for refund with interest @18 % p.a.
- 31 January 2015: Respondent invoked arbitration under Clause 14 of the SCC.
- 03 September 2019: Sole Arbitrator awarded refund of USD 714,760.74 with 6 % simple interest from 17 June 2014, rejecting all counter-claims.
- 14 October 2024: Delhi High Court order in OMP (ENF.) 12/2021 directed release of the security deposit to the respondent.
- 17 August 2026: Present judgment dismissing the petition under Section 34.
Procedural History
- 03 September 2019: Arbitral Award passed in favour of the respondent.
- 14 October 2024: Enforcement application OMP (ENF.) 12/2021; High Court ordered release of the deposit.
- 17 August 2026: Petition under Section 34 filed by RGPPL; judgment delivered dismissing the petition.
Parties' Positions
- Petitioner: Argued that the arbitrator erred by finding a waiver of the contractual timelines, by not granting interest on delayed payment, and by misapplying Sections 55 and 63 of the Contract Act. Sought setting aside of the award on grounds of public policy and patent illegality.
- Respondent: Contended that the award was a proper construction of the contract, that waiver was a factual finding within the arbitrator’s domain, and that patent illegality does not apply to international commercial arbitrations.
Relief Sought
- Petitioner: Set aside the arbitral award, restoration of the deduction of USD 714,960.74, and award of interest on the delayed payment.
- Respondent: Enforcement of the award and release of the security deposit with interest as awarded.
Case Details
RATNAGIRI GAS AND POWER PVT. LTD vs DINOWIC PTE LTD
2026:DHC:6806
Court
Delhi High Court
Date
2026-08-17
Case Number
O.M.P. (COMM)-534/2019
Bench
MINI PUSHKARNA
Counsel
Pet: Puneet Taneja, Manmohan Singh Narula, Amit Yadav
Res: Giriraj Subramanium, Jaisal Baath, Reaa Mehth, Aadhyaa Khanna
Frequently Asked Questions
Section 34 permits setting aside an award only on limited grounds: (a) incapacity of a party, (b) invalid arbitration agreement, (c) lack of proper notice, (d) award dealing with matters beyond the scope of arbitration, (e) procedural irregularities, and (f) violation of public policy of India as defined in Explanation 1 to Section 34(2)(b)(ii).
No. The 2015 amendment to the Arbitration Act introduced sub-section (2-A) for patent illegality, but expressly limited its application to domestic arbitrations. International commercial arbitrations are excluded from this ground.
Section 55 requires that, when a party accepts delayed performance, it must give notice of its intention to claim damages at the time of acceptance; otherwise, the promisee is barred from claiming compensation for the delay.
