In Shreeram Builders v. Upendra Kantilal Thanawala, 2026 INSC 1176 (29 October 2026), a Bench of Justices Sanjay Kumar and Sanjeev Sachdeva declined to restore a 2011 majority award that had directed conveyance of Mumbai property to a developer on terms the parties’ 2003 agreement did not contain. Affirming the Bombay High Court’s Section 37 judgment, the Supreme Court held that the tribunal had supplanted the contract with a bargain of its own making — a course Section 28(3) of the Arbitration and Conciliation Act, 1996 forbids — and, exercising Article 142 powers, directed the landowners to refund everything received with 9% simple interest.
A development agreement, a termination, and an award that went further than both
The dispute began with an “Agreement for Development” dated 6 August 2003 between the Thanawala family and the firm Shreeram Builders. The agreement carried a detailed payment schedule tied to future events — building plan sanction, available floor-space index, basement construction — fixed per-square-foot rates, excluded a bungalow property from its scope, and sequenced the parties’ obligations: instalments first, conveyance on full payment. The owners terminated by notice dated 9 April 2008, and the matter went to a three-member tribunal under the agreement’s arbitration clause.
By a majority award dated 10 December 2011, the tribunal held the termination illegal and granted the developer specific performance: deposit of about Rs 10.91 crore within three months, against conveyance of the owners’ 2/9th share. The dissenting arbitrator would have dismissed claim and counter-claim alike. The Principal District Judge, Thane ultimately upheld the award under Section 34. In appeal under Section 37, however, the Bombay High Court set it aside on 5 March 2024, holding that the tribunal had disregarded the contractual terms and granted relief beyond the parties’ bargain. The developer carried the matter to the Supreme Court in Civil Appeal Nos. 9817–9818 of 2024.
Where the majority award parted company with the contract
The sequence ignored
The agreement fixed a binding order of performance — payment of instalments, then conveyance on full payment. The award ordered conveyance although the balance consideration had never been fully paid and the final price itself depended on events that had not occurred.
A rate invented
The contract stipulated specific per-square-foot rates. The majority applied a figure roughly six times higher — Rs 5,490 against the contractual Rs 915 — without computation or reasoning.
Excluded property included
The award swept in part of a bungalow property the agreement expressly excluded, affecting co-owners who were not even before the tribunal.
Damages without a clause
Alternative damages were granted although the agreement contained no damages clause, and a payment under an earlier, superseded memorandum was credited despite a clause to the contrary.
Section 28(3): the quiet provision with sharp teeth
Section 28(3) requires the tribunal, in every case, to decide in accordance with the terms of the contract and after taking into account the usages of the trade. The Supreme Court’s reasoning treats the provision as the boundary of arbitral power: a tribunal’s authority flows entirely from the parties’ agreement, so it may interpret the bargain, even generously, but it may not replace the bargain with terms of its own. The Court reiterated the settled deference of the Associate Builders standard — a plausible interpretation stands even if the court would read the contract differently — and held that this award was not an interpretation at all. Construing express terms contrary to their wording, inventing a rate, and decreeing conveyance out of sequence crossed from construction into reconstruction.
Notably, the Court declined to be drawn into the question that had occupied the High Court — whether the document was a development agreement or an agreement to sell, and what the 1% stamp duty suggested. Nomenclature, it observed, does not decide a document’s nature; but whatever the label, the agreed order of performance bound the parties, and the award had disregarded it.
The procedural frame: Section 37 is as wide as Section 34
- Appellate depth. The Section 37 court examines the award on the same grounds available under Section 34, so a confirmation by the first court does not immunise the award. The Bombay High Court was entitled to test the award afresh.
- The applicable regime. Because the Section 34 applications were filed before 23 October 2015, the unamended Section 34 applied — the challenge provisions travel with the filing date, not the hearing date.
- No restoration, but restitution. Rather than remit a two-decade-old dispute, the Court invoked Article 142: the terminating owners refund everything received with 9% simple interest from each payment date; the developer’s deposits return with accrued interest; parties bear their own costs.
What the decision means in practice
For parties drafting development agreements and other staged contracts, the judgment is a reminder that sequence clauses, exclusions and rate schedules are not boilerplate — they are the measure against which any future award will be tested. For counsel prosecuting or resisting Section 34 and Section 37 proceedings in Delhi’s commercial courts and the High Court, the case supplies a clean template for the rewriting argument: identify the express term, show the award contradicting rather than construing it, and demonstrate that the relief granted has no contractual source. And for claimants before tribunals, it counsels restraint in the relief sought — an award that travels beyond the contract may win the battle before the arbitrators and lose the war in every court thereafter.
Practice note: When challenging an award as a rewriting of the contract, plead the specific clauses and the specific departures — rate, sequence, excluded property, absent damages clause — rather than a generalised “perversity” ground. Conversely, when defending an award, anchor every finding to a clause the tribunal could plausibly have read that way; the Associate Builders deference protects interpretation, not invention.
Frequently Asked Questions
Does every error about the contract make an award vulnerable?
No. Courts defer to an arbitrator's plausible interpretation of a contract — the Associate Builders line of cases protects awards even where another reading is possible. The ground opens only where the construction is one the contract cannot bear at all: where the tribunal ignores express terms, invents obligations or grants relief the agreement excludes. Shreeram Builders fell on that side of the line because the award replaced agreed terms rather than interpreting them.
Can a Section 37 court set aside an award that the Section 34 court upheld?
Yes. The appellate court under Section 37 examines whether the Section 34 court applied the correct tests, and its jurisdiction for that purpose is as broad as the Section 34 jurisdiction itself. In this case the District Judge had upheld the majority award, yet the Bombay High Court set it aside in appeal, and the Supreme Court affirmed. An initial confirmation under Section 34 is therefore no guarantee of survival.
Why did the pre-amendment Section 34 apply in 2026?
The challenge provisions apply as they stood when the Section 34 application was filed. Both applications here were filed before 23 October 2015, so the unamended Section 34 — with its wider public-policy ground as explained in the earlier case law — governed, even though the appeals were decided a decade later. For applications filed after the 2015 amendment, the narrower patent-illegality ground in Section 34(2A) applies to domestic awards.
What relief follows when a specific performance award is set aside?
Setting aside ordinarily leaves parties to their remedies, but the Supreme Court used Article 142 to settle accounts: the landowners who had terminated the agreement could not retain the developer's money, and were directed to refund all amounts received with simple interest at 9% per annum from the date of each payment, with the developer's court deposits returned with accrued interest.