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On 27 May 2025, the Hon'ble High Court of Delhi delivered it judgment in M/s Jaiprakash Hyundai Consortium (hereinafter referred as JHC) v. M/s SJVN Limited1 (Satluj Jal Vidyut Nigam Limited), examining whether a Dispute Review Board's (DRB) recommendation could be treated as an Arbitral Award and whether the same can be enforced under Section 36 of the Arbitration and Conciliation Act, 1996. The dispute in the current case arose out of the development of Nathpa Jhankari Hydro Electric Project undertaken by SJVN. To execute the hydroelectric power projects, SJVN entered into a contract with JHC.
Under the terms of the contract, the parties had agreed to a structured dispute resolution mechanism involving a Dispute Review Board (DRB) to address project-related disagreements. As per the Clause 67 of General Conditions of Contract of the signed contract, any dispute involving claims of less than Rs. 5 crores would be referred to the DRB, and its decision would be final and binding unless either party intends to refer the dispute to arbitration within 15 days of passing of the recommendation by DRB.
During the execution of the project, JHC claimed for reimbursement of extra expenses incurred by them for generating electricity through Diesel Generator sets (DG sets) during project development. In an attempt to resolve the dispute, the same was referred to the DRB as per Clause 67 of GCC of the contract. Thereafter, DRB issued its recommendation on 27 June 2007, in favor of JHC, holding that their claim amounting to Rs. 1,83,10,703 plus 10% per annum was valid and that SJVN was liable to reimburse the same.
SJVN, however, did not act upon the DRB's recommendation, disputing its enforceability. Parallelly, JHC approached the Hon'ble High Court of Delhi, filing a petition under Section 36 of the Arbitration and Conciliation Act, 1996, seeking enforcement of the DRB's recommendation. SJVN contended that the DRB's decision was simply advisory in nature and could not be treated as a 'binding Arbitral Award' that could be executed. In an attempt to reach a decision, the Hon'ble Bench took reference to the decision of the Hon'ble High Court of Himachal Pradesh in Satluj Jal Vidyut Nigam Limited v. M/s Nathpa Jhakri Joint Venture2 wherein it was provided that the DRB recommendation will constitute an 'Arbitral Award' under the Arbitration and Conciliation Act, 1996. In pursuance of the same, if the parties to the contract agree to the submission of DRB, then its decision will be final & binding similar to that of Arbitral Award especially in matters below Rs.5 crores as per Clause 67 of GCC.
Issue at Hand
The dispute centered around the legality of DRB's recommendation and whether the same can be enforced as an Arbitral Award under Section 36 of the Arbitration and Conciliation Act, 1996. The Appellant, JHC argued that the DRB was constituted in accordance with the Clause 67 of GCC of the contract and followed the due procedure prescribed therein. It was also contended before the Hon'ble Bench that the DRB heard both parties, examined the claims and issued a reasoned recommendation directing SJVN to reimburse the costs incurred during the project. JHC maintained that since contract described DRB's decisions as 'final and binding', the recommendation should have the same effect as an Arbitral Award.
On the other hand, the respondent, SJVN, disputed the maintainability of the petition. It argued that even if the DRB's recommendation was considered binding, the present execution petition at hand was barred by limitation. It was humbly submitted that the DRB had made its recommendation on 27 June 2007, and the Appellant had approached the Hon'ble Court after the limitation period i.e. more than twelve years after the passing of the decision by DRB. Relying on the Limitation Act, 1963, SJVN also argued that the application for enforcement of an award or decree must be filed within twelve years of it becoming enforceable. Henceforth, it was contended that since no steps were taken by JHC within that period, the right to enforce the DRB's recommendation had become time-barred.
The respondent also relied on the Court's earlier observation in SJVN Ltd. v. Jaiprakash Hyundai Consortium3 to argue that although the DRB mechanism was a valid contractual process agreed between the parties, it is necessary that the enforcement of its recommendation must comply with statutory limitation requirements prescribed within the Act.
Understanding the Nature of DRB Recommendations
The Hon'ble High Court of Delhi began its analysis regarding the question at hand by examining whether the DRB recommendation could be treated as an Arbitral Award under Section 36 of the Arbitration and Conciliation Act, 1996. The Hon'ble Court revisited the contractual terms and observed that the agreement between JHC and SJVN expressly stated that any DRB decision on disputes valued below Rs. 5 crores would be final and binding on both parties.
To interpret the legal status of such recommendation, the Hon'ble Court took reference of the decision in Satluj Jal Vidyut Nigam Limited v. M/s Nathpa Jhakri Joint Venture4, where it had clarified that a DRB's recommendation, when final and binding under the contract, may be treated as an Arbitral Award for the purposes of enforcement. The decision recognized that parties are bound by their contractual commitment to accept and comply with such determinations.
Applying the same reasoning, the Hon'ble Court observed that the binding nature of the DRB's recommendation in the present case had a binding effect and could, in principle, be enforced in the same manner as an Arbitral Award. However, the Hon'ble Court also underscored that the enforceability must operate within the statutory limits, and contractual finality cannot override procedural law.
The Hon'ble Court then turned to the issue of limitation, which became central to the outcome of the case. The DRB had issued its recommendation on 27 June, 2007, and no enforcement steps were initiated within the statutory period. As per the Limitation Act, 1963, the time limit for enforcing an award or decree is twelve years from the date on which it becomes enforceable. The Hon'ble Court emphasized that the limitation period begins to run from the date of recommendation itself, not from any subsequent communication or later clarification of its legal character, if disputed. Importantly, the Hon'ble Court rejected the contention of the Appellants that any uncertainty regarding the DRB's status could extend or postpone the limitation period. It observed that once the recommendation was declared final and binding by contract, JHC had a clear cause of action to seek enforcement.
Consequently, the Hon'ble Court held that the petition, filed more than twelve years after the DRB's recommendation, was clearly barred by limitation. The Hon'ble Bench reaffirmed that a DRB's final and binding recommendation can be enforced like an Arbitral Award, however, it dismissed the petition as being time-barred as was filed beyond the permissible time limit.
Reflections on the Way Forward
The Hon'ble Court's decision in the current case offers valuable clarity on the enforceability of DRB recommendations in contractual disputes. The Hon'ble Court acknowledged that where a contract clearly states that a DRB's findings are final and binding, those recommendations can, in principle, be enforced like Arbitral Awards. At the same time, the judgment serves as a practical reminder that even binding contractual mechanisms must align with statutory procedure. The petition in this case was dismissed not because the DRB's authority was questioned, but because enforcement had been sought after the limitation period had expired. The decision strengthens both contractual certainty and procedural discipline, offering much-needed guidance for similar infrastructure and project-related contracts in the future.
Footnotes
1 M/s Jaiprakash Hyundai Consortium v. M/s SJVN Limited, 2025 SCC OnLine Del 4061
2 Satluj Jal Vidyut Nigam Limited v. M/s Nathpa Jhakri Joint Venture, OMP No.113/2005 in Civil Suit No.56/2004, before the High Court of Himachal Pradesh
3 SJVN Ltd. v. Jaiprakash Hyundai Consortium, 2018 SCC OnLine Del 10861
4 Satluj Jal Case (supra)
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