Construction arbitration in India turns, more often than not, on a single forensic question: whose delay was it? On 15 September 2026, Justice Manoj Kumar Ohri of the High Court of Delhi answered it against the employer in Delhi Jal Board v. Digvijay Sanitations, FAO 187/2019, dismissing an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 against an award — already sustained under Section 34 — that had attributed 312 of 334 days of delay in a sewer-laying contract to departmental hindrances and compensated the contractor accordingly.
The contract and the dispute
Delhi Jal Board engaged the contractor to lay internal sewer lines for a contract value of about ₹75.42 lakh. Work commenced in November 2001 against a fifteen-month schedule ending January 2003; completion actually came in December 2003, eleven months late. The disputes that followed — over site availability, permissions, withheld payments and the cost of the extended stay — went to arbitration in 2008. The arbitrator held the delay overwhelmingly attributable to the employer and awarded the contractor refund of withheld amounts, prolongation compensation, escalation, interest on delayed payments and costs — a package of roughly ₹20 lakh plus interest. The Section 34 court sustained the award, and the Board appealed under Section 37.
The attribution arithmetic
The arbitrator's timeline, which the High Court found a reasonable reconstruction of the record, attributed 312 of the 334 days of delay to departmental hindrances — delayed permissions, elections, encroachments on the alignment, and the shifting of utilities, none of which lay within the contractor's control. With attribution settled at that ratio, the consequences followed almost mechanically: the contractor could not be penalised for an extension the employer caused, and the costs of remaining mobilised for the extended period were recoverable as damages under Section 73 of the Indian Contract Act.
The High Court emphasised the concurrency of findings: the arbitrator on the evidence, and the Section 34 court on review, had both found the attribution plausible and legally sound. A Section 37 court does not sit as a third fact-finder over that structure.
Where prolongation claims succeed — and where they fail
Claims that fail
Delay attribution asserted in pleadings but unsupported by hindrance records; global claims lumping all costs without linking them to employer-caused periods; quantification by assertion rather than evidence.
Claims that succeed
A day-wise delay analysis anchored in contemporaneous registers and correspondence; costs proved period-wise against the employer-caused delay; extension-of-time applications made and pressed during the contract.
The Delhi High Court has, in other recent matters, set aside prolongation awards rendered without evidence of actual loss — the discipline cuts both ways. What distinguishes the sustained award is not generosity but record: the tribunal could point to documents for both attribution and quantification.
The Section 34/37 architecture
The judgment is also a compact restatement of the review architecture. Section 34 permits interference only for the enumerated grounds — and "patent illegality" does not include mere error in appreciating evidence. Section 37 then reviews the Section 34 decision, not the award afresh. By the time a construction award reaches a Section 37 bench with concurrent findings beneath it, the appellant must show something structural: a finding with no evidence at all, a contract term rewritten, a claim awarded beyond pleadings. An attack that amounts to re-arguing the delay analysis is dead on arrival, as it was here.
Takeaways for employers and contractors
For public employers, the case is an audit prompt: hindrance-free site delivery, timely permissions and prompt decisions are not administrative niceties but financial exposure. For contractors, it validates the unglamorous discipline of writing everything down as it happens — the hindrance register maintained in real time is worth more than the most eloquent submission years later. And for both, it confirms that Delhi's arbitration bench will protect a well-reasoned award through both tiers of review, whichever side it favours.
This article is for general information only and is not legal advice or a solicitation.
Frequently Asked Questions
What are prolongation costs in construction contracts?
They are the contractor's costs of remaining deployed on site beyond the agreed completion period — establishment, machinery, overheads — when the extension of the contract is caused by the employer. Once delay is attributed to the employer, compensation flows under Section 73 of the Contract Act unless the contract validly excludes it.
How narrow is a Section 37 appeal?
Very. It is a second look at an award that has already survived Section 34, and the appellate court does not reappraise the merits. Interference requires the award to be vitiated on the limited Section 34 grounds — patent illegality, perversity, conflict with fundamental policy — and concurrent findings of fact by the arbitrator and the Section 34 court are nearly impregnable.
What evidence decides delay attribution?
Contemporaneous records: hindrance registers, site handover memos, correspondence on permissions and utility shifting, measurement books and extension-of-time applications. Arbitrators reconstruct the delay timeline from these documents; a party without a contemporaneous paper trail almost always loses the attribution battle.
Can government employers resist escalation and interest claims?
Only within the contract and the statute. Where delay is the employer's, tribunals routinely award escalation for the prolonged period and interest on withheld payments, and courts uphold such awards as plausible views of the evidence and contract.