Supreme Court: Arbitration award set aside for breaching contract terms

The Supreme Court, comprising Justice Sanjay Kumar and Justice Sanjeev Sachdeva, delivered its judgment on 29 October 2026 in Shreeram Builders versus Upendra Kantilal Thanawala (2026 INSC 1176). The Court held that the arbitral award issued in the dispute must be set aside. Accordingly, the respondents were ordered to refund all amounts paid by the appellant with simple interest at nine per cent per annum, and each party was to bear its own costs.

The dispute arose from a 2003 agreement in which the appellant was granted development rights over the respondent’s two‑ninths share of a property. The arbitration tribunal treated the agreement as a sale, directing specific performance and payment of the purchase price. The High Court later set aside that award, finding procedural and substantive irregularities, and the appellant appealed the High Court’s decision before the Supreme Court.

The central issue was whether the arbitral award contravened Section 28(3) of the Arbitration and Conciliation Act, 1996 by failing to adhere to the express terms of the contract. The Court observed that the tribunal rewrote the contract, ignored the stipulated payment schedule, excluded certain portions of the property, and granted relief not contemplated in the agreement. By doing so, the tribunal breached the statutory requirement that an award be based on the parties’ contract, leading the Court to vacate the award and order restitution with interest.

Read the judgment and its head note on DLJ: Shreeram Builders vs Upendra Kantilal Thanawala (2026 INSC 1176).