In Eco Green Buildtech Pvt. Ltd. v. Vikartan Infrastructure Pvt. Ltd. (O.M.P. (COMM) 293/2023, decided on 10 September 2026), the Delhi High Court set aside an arbitral award — together with an additional award — arising from a construction contract for a Greater Noida housing project valued at about Rs. 53.73 crores. Justice Avneesh Jhingan held the award patently illegal on grounds that go to the fundamentals of arbitral adjudication: the tribunal had relied upon settlement discussions from the conciliation stage, had allowed several claims without substantive evidence, and had substituted its own experience for proof of damages. The judgment is a sharp restatement of the boundaries a tribunal must respect if its award is to survive Section 34 scrutiny.
The Dispute
The parties\' contract concerned construction work for a group housing development in Greater Noida — a project of about Rs. 53.73 crores with a 34-month completion schedule. As often happens in construction relationships, the work ran into disputes over delays, release of payments and responsibility for prolongation. The parties executed a memorandum of understanding in September 2018 in an attempt to reset the relationship, and the disputes ultimately travelled to arbitration: claims aggregating about Rs. 15.07 crores by the contractor were met with counterclaims of about Rs. 4.02 crores by the employer.
The tribunal published its award in February 2023, followed by an additional award in March 2023. The employer challenged both under Section 34 of the Arbitration and Conciliation Act, 1996 before the Delhi High Court.
The Grounds That Succeeded
Justice Avneesh Jhingan held that these defects rendered the award patently illegal and set aside both the award and the additional award.
The provisions in play reached beyond Section 34 itself: the judgment engaged the equal-treatment and procedure provisions of the Act and the damages provisions of the Indian Contract Act, 1872 (Sections 55 and 73) — a reminder that a Section 34 challenge is argued on the architecture of the entire adjudication, not a single section.
Why the Conciliation Point Matters
Commercial parties settle more disputes than they fight, and the law protects the candour that settlement requires. Statements, admissions and proposals made in conciliation are confidential and inadmissible in later proceedings on the same dispute. When a tribunal lets that material seep into its findings, two harms follow: the immediate party is judged on words spoken to buy peace, and every future negotiation is chilled. Treating such reliance as patent illegality gives the protection teeth.
Proving Construction Claims: The Standard Reasserted
| Claim type | What the award needed |
|---|---|
| Delay and prolongation costs | Programme analysis, records attributing delay, proven overheads for the extended stay on site |
| Unpaid work | Measurements, bills, certifications and account reconciliation tendered in evidence |
| Damages for breach | Proof of loss under the Contract Act — not an assessor\'s intuition of what the loss must have been |
Practical Significance
For parties in arbitration, the case is a caution to build the evidentiary record claim by claim: schedules, contemporaneous documents and witness proof aligned to each head of claim. For tribunals, it restates that the freedom from technical rules of procedure is not freedom from evidence. And for award-holders and challengers alike, it shows that Section 34 — narrow as it is — retains real force where an award crosses from evaluation into invention. A well-drafted challenge isolates each finding and asks a simple question: what tendered evidence supports this? Where the honest answer is none, the award is at risk.
This article is for general information only and is not legal advice or a solicitation. The judgment should be read in full from the official record.
Frequently Asked Questions
What is "patent illegality" under Section 34?
Patent illegality is a ground for setting aside a domestic award where the illegality goes to the root of the matter — for example, a decision ignoring the terms of the contract, findings based on no evidence, or a breach of fundamental procedural fairness. Errors of law or fact simpliciter, or a plausible alternative view, do not qualify.
Why can settlement discussions not be used in the award?
Conciliation and settlement negotiations are conducted on the shared understanding that concessions made to buy peace will not be used against a party later. Confidentiality and inadmissibility of such material are built into the statutory scheme, and an award that rests findings on settlement-stage discussions imports material the parties never tendered as evidence.
Can a tribunal assess damages from its own experience?
A tribunal may use expertise to evaluate evidence, but it cannot replace proof with experience. Damages must be established through pleadings and evidence — records, accounts, expert testimony. An award quantifying claims on the arbitrator's personal assessment, without proven foundation, is vulnerable under Section 34.
Does setting aside an award decide the dispute?
No. Setting aside annuls the award; it does not adjudicate the claims. Depending on the circumstances and the agreement, the parties may pursue fresh arbitration of the disputes, and limitation benefits can be available for the period spent in the annulled proceedings.