In a closely followed corporate dispute, the Supreme Court of India has delivered its verdict in the long-running arbitration battle between Chinese contractor SEPCO Electric Power Construction Corporation and GMR Kamalanga Energy Ltd. The case, tied to the Kamalanga thermal power project in Odisha, had already seen rounds of arbitration, challenges before the Orissa High Court, and sharp arguments on contractual interpretation.
Background
The project, launched in 2008, was meant to build three 350 MW coal-fired units with a proposed fourth unit added later. SEPCO was hired under multiple EPC (Engineering, Procurement, and Construction) agreements. However, disagreements over delays, site access, supply of fuel, and financial claims soon derailed the partnership. SEPCO eventually demobilised from the site in 2015 and sought arbitration.
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In 2020, an arbitral tribunal awarded nearly ₹995 crore in SEPCO’s favour, while also holding it responsible for certain defects and damages. The Orissa High Court’s Single Judge upheld the award, but later a Division Bench set it aside, calling parts of it factually mistaken and beyond jurisdiction. This triggered SEPCO’s appeal to the Supreme Court SEPCO ELECTRIC POWER.
Court’s Observations
During hearings, the bench, led by Justice Augustine George Masih, noted the delicate balance between respecting arbitral decisions and ensuring justice when awards “shock the conscience of the court.”
The judges examined whether the tribunal wrongly rewrote the contract by waiving notice requirements and whether it misapplied doctrines like waiver and estoppel. GMR argued that the award relied on a stray email from 2012 to waive contractual notices, despite explicit “no oral modification” clauses. SEPCO countered that estoppel principles applied, citing global precedents.
On mistaken facts, the Court looked closely at how the tribunal recorded coal quality standards incorrectly and whether such errors had unjustly shifted liability. “An arbitral award cannot survive if based on factual errors that go to the root of liability,” the bench observed.
At the same time, the Court emphasised the limited scope of judicial interference: “Courts must resist the temptation to sit in appeal over arbitral awards. Reappreciation of evidence is not our role under Section 34 or Section 37 of the Arbitration Act,” the bench said.
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Decision
The Supreme Court set aside the Orissa High Court Division Bench ruling and partially restored the arbitral award. It held that while tribunals may interpret commercial contracts broadly, their findings cannot be interfered with merely because another view is possible. However, it also trimmed portions of the award where factual mistakes were undeniable.
In short, SEPCO retained a significant portion of its claims, though not the entire ₹995 crore originally awarded. The judgment sends a strong message on respecting arbitral autonomy while carving space for correction only when justice is clearly at stake.
Case: SEPCO Electric Power Construction Corporation vs. GMR Kamalanga Energy Ltd.
Citation: 2025 INSC 1171
Case No.: Civil Appeal @ SLP (C) No. 2706 of 2024
Date of Judgment: September 26, 2025
