Rs 13.92 crore claim fails: Delhi HC backs tribunal that refused late emails on fee approvals

A Division Bench held that refusing 2011 correspondence tendered after the other side had finished its evidence did not deny a fair hearing, and that approval of invoices did not prove approval of revised rates. It dismissed Viceroy Engineering appeal against an award rejecting all its counterclaims.

Viceroy Engineering claimed Rs 13.92 crore for technicians it supplied to Smiths Detection Veecon Systems, and told the Delhi High Court that 2011 e-mails showed the revised fee rates had been approved. The arbitral tribunal had refused to take those e-mails on record.

On 4 November 2026 a Division Bench held that refusing them, after Smiths had finished its evidence, did not deny Viceroy a fair hearing. It dismissed Viceroy’s appeal against an award that rejected all four of its counterclaims.

Justice Anil Kshetarpal wrote the judgment for the bench with Justice Shail Jain.

A five-year contract and a fee left blank

On 12 August 2010 the two companies signed an Outsourcing Agreement for five years. Viceroy was to supply technicians to install and commission Smiths’ equipment and to provide after-sales support and maintenance for its customers.

Clause 4.3 allowed the service fee to be revised only if the revised fee was agreed and approved by Smiths’ Vice President Service, Finance Director and Managing Director. The original Annexure II, the fee schedule, left the fee to be agreed later.

Viceroy relied on an amendment dated 1 April 2011 that set rates for categories of personnel, valid from 1 April 2011 to 31 July 2012. It said those rates governed its invoices until July 2015.

On 24 July 2015 Smiths said the agreement would not be renewed, and it expired on 11 August 2015.

Four counterclaims and a rejected award

The counterclaim at the centre of the dispute was for unpaid invoices, first Rs 14,25,52,798 and reduced to Rs 13,92,35,909 after credit for extra tax deducted at source. It also claimed Rs 17.40 crore for breach of a non-solicitation clause, Rs 10 lakh for loss of reputation, and Rs 63,02,752 for services after expiry.

The sole arbitrator rejected Smiths’ claims and all of Viceroy’s counterclaims in an award of 15 March 2019. Smiths did not challenge the award.

A Single Judge dismissed Viceroy’s petition under Section 34 of the Arbitration and Conciliation Act, 1996 on 17 October 2025. Viceroy appealed under Section 37, FAO(OS)(COMM) 45/2026, and the bench reserved judgment on 14 September 2026.

What Viceroy argued

Mr Murari Tiwari, Senior Advocate, said Viceroy served throughout and that Smiths approved invoices without objection. He relied on e-mails of 16 July, 25 July and 3 August 2015, on Smiths’ reply and on its witness’s answers, as admitted liability. Admitted facts, he said, need no proof.

He also pointed to tax records. Form 26AS showed transactions of Rs 98,83,94,246 against payments of Rs 89,70,10,723, leaving, on that unadjusted count, Rs 9,13,83,523 acknowledged.

He called the award internally inconsistent, since the tribunal rejected Smiths’ overcharging claim yet refused the invoice counterclaim. He also said excluding the correspondence denied Viceroy a fair opportunity, while Smiths was allowed to call for Viceroy’s records.

What Smiths answered

Ms Payal Chawla appeared for Smiths. She said the appeal sought a fresh look at the merits, which Section 37 does not allow, and that nothing in the e-mails or evidence admitted the debt.

Tax deducted at source, she said, does not prove an admitted debt, and failing on its own claims did not relieve Viceroy of proving its counterclaims. The correspondence was tendered after Smiths’ evidence ended, without being pleaded or put to Smiths’ witness.

She opposed partial setting aside of the award, relying on Gayatri Balasamy v. ISG Novasoft Technologies Ltd, (2025) 7 SCC 1.

The narrow ground of a Section 37 appeal

The bench described the question before it in its opening paragraphs:

“The question is whether these objections justify interference under Sections 34 and 37 of the Act.” (para 2)

Section 37, it said, is confined to the grounds available under Section 34. The court asks whether the Single Judge applied those grounds correctly and does not decide the claims afresh. It cited Prakash Atlanta (JV) v. National Highways Authority of India, 2026 INSC 76, on deference to a possible reading of a contract.

Under Ssangyong Engineering, patent illegality must go to the root of the matter. A finding based on no evidence, or one that ignores vital evidence, may justify interference, but disagreement with the appreciation of evidence does not.

Smiths losing its claim did not help Viceroy

Viceroy said that, having rejected Smiths’ overcharging claim, the tribunal could not reject the counterclaim built on the same invoices. The bench called this a flawed premise. Smiths sought recovery of overpayment, while Viceroy sought an outstanding balance, and each had to prove its own entitlement.

The tribunal had rejected Smiths’ claim because it did not prove the quantum of overcharging or the invoices concerned, and because another provider’s lower rates were no benchmark. Those findings, the bench said, did not decide what, if anything, remained payable to Viceroy.

The e-mails that stayed out

By an order of 9 January 2018 the tribunal admitted the amended Annexure II but declined the correspondence, since it had not been filed, was not in the statement of defence and had not been put to Smiths’ witness. The award later held that the approvals Clause 4.3 requires had not been proved.

During cross-examination on 6 November 2017, Viceroy’s witness was asked for the contractual basis of particular charges. She referred to later correspondence and a 2011 communication, and accepted they were not on the tribunal’s record.

Viceroy sent the documents under a list dated 10 November 2017. The tribunal recorded that they had been filed without being called for or leave being sought, and Viceroy applied for leave on 15 November 2017.

A late case, but evidence still open

The bench accepted that this was not an attempt to introduce evidence at final arguments, because Viceroy’s own evidence was still open. Smiths could have cross-examined on the e-mails, and the tribunal could have allowed time to respond.

The e-mail of 18 August 2011 mattered. It said:

“Ratish, JK and I approve paying the outstanding amounts as per these agreed rates” (para 37)

The bench called the admission of the amendment the strongest point for Viceroy, and said the order would have been clearer had it explained why the two documents were treated differently.

Why the refusal was within discretion

Even so, the bench held, the refusal stayed within the tribunal’s procedural discretion. Viceroy tendered the amendment case after Smiths had completed its evidence and identified no earlier impediment to presenting it. The court said:

“Admission of the instrument did not itself require admission of every connected document.” (para 43)

The order that Viceroy produce its financial and employment records was different. Smiths had pursued interrogatories, a notice for production and questions seeking those documents, and the order recorded earlier refusals based on privilege.

The court drew on Fortuna Skill Management and Sugandhi v. P. Rajkumar, (2020) 10 SCC 706, and said closure of the other side’s evidence is not an automatic bar to later evidence. The ground under Section 34(2)(a)(iii) was not established.

The bench confined this to procedural fairness. The excluded e-mails could bear materially on approval, and rejecting the challenge did not mean they were irrelevant or insufficient.

Admissions that were not admissions

Smiths’ reply described the Rs 14,25,52,798 billed up to 31 July 2015 as specifically admitted to be outstanding, then denied liability in the next sentence. The bench would not swap the one word for the other on an assumed drafting error, or read the sentence apart from the denial.

It still assumed, for testing the award’s other reasons, that the invoiced balance was unpaid and that the witness had acknowledged invoice approval. The e-mails of July and August 2015, the tax deductions of Rs 9,88,39,433 and the Form 26AS figure corroborated recognition of the invoiced transactions without proving recoverability or the final balance.

The Company Court order of 6 May 2019 recorded no undertaking to pay the quantified counterclaim.

Approving invoices is not approving the rates

The tribunal read the original Annexure II as prescribing a charging method, an employee cost plus a 16 per cent administration fee, with the figures blank. The bench held that reading reasonably available. It also held that applying Clause 4.3 to the 2011 amendment was a possible interpretation.

Paragraph 105 of the award noted the Managing Director’s signature but found that the Vice President Service and Finance Director had not approved. It added that no written waiver under Clause 17 was pleaded.

The bench read this as a failure to prove those approvals, not as a rule that all three officers must countersign one document.

Approval can be inferred from conduct, the bench said. But Viceroy moved from acceptance of invoices by Smiths’ officials to enforceability of the revised rates without showing assent by both missing officers.

It disapproved paragraph 106 of the award to the extent that it said conduct may be considered only where terms are ambiguous. That overstatement, however, did not vitiate the finding on approvals.

Rs 20.53 crore cost, Rs 89 crore paid

On the original charging method, paragraph 98 of the award compared Viceroy’s recorded costs, about Rs 20.53 crore in its staff salary statements including reimbursements, with about Rs 89 crore received. It found no further entitlement proved.

Viceroy argued that salary was not the only component, since an administrative fee and other items also applied. The bench said the award recognised those items and that Viceroy identified no cost left out. A missing separate computation did not amount to patent illegality going to the root.

Paragraphs 105 and 98 sustained the rejection, so the bench did not decide whether paragraph 107 independently defeated the claim.

Non-solicitation, reputation and post-expiry work

On the Rs 17.40 crore claim under Clause 13.3, the bench found parts of the Single Judge’s reasoning too broad. Employee e-mails referred to calls from ANI Instruments starting on 20 and 21 July 2015, and ANI’s offer dated 8 August 2015 set a joining date on or before 10 August, all before expiry.

One e-mail also said ANI’s representatives claimed Smiths officials had asked ANI to recruit Viceroy’s experienced staff. Whether that proved Smiths’ participation was a separate question.

These points did not rescue the claim. The tribunal had separately found the Rs 17.40 crore was not quantified by reference to actual loss, and Viceroy identified no overlooked material. The Rs 10 lakh reputation claim failed for want of identified evidence of injury attributable to Smiths.

The Rs 63,02,752 claim for post-expiry services had been held outside the reference. The Single Judge recorded that no argument was advanced on it, and the appeal did not dispute that record. The bench declined to entertain it, citing Daman Singh v. State of Punjab, (1985) 2 SCC 670.

It added that its decision should not be read as endorsing a broad proposition that expiry of a contract excludes arbitration of every dispute over later services.

Order

The Single Judge’s judgment refusing to set aside the award was sustained. Because the challenge failed, the question of partial setting aside did not arise.

The appeal and the pending applications, CM APPL. 13348, 13349 and 13350 of 2026, were dismissed. The judgment records no order on costs.