The Supreme Court on Thursday stepped in to restore a decade-old arbitral award in favour of mining contractor Ramesh Kumar Jain, holding that the Chhattisgarh High Court had crossed the line while interfering with the award under arbitration law. Sitting in a packed courtroom, the Bench made it clear that courts cannot behave like appellate authorities over arbitral findings just because another view is possible.
Background
The dispute traces back to the late 1990s, when Bharat Aluminium Company Limited (BALCO) awarded Jain a contract to mine and transport bauxite from Mainpat mines to its Korba plant. While the initial contract fixed rates and quantities, problems began after the agreed quantity was exhausted.
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BALCO asked Jain to continue mining and transportation, but the price for this additional work was left undecided. Jain carried on regardless, supplying nearly 1.95 lakh metric tonnes of bauxite. Payments followed, but disputes soon erupted over extra costs, idle machinery during strikes, and delayed bills.
With talks going nowhere, arbitration was invoked. In 2012, the sole arbitrator awarded Jain about ₹3.71 crore, including interest. The Commercial Court upheld the award in 2017. However, in 2023, the High Court set it aside, terming parts of it “patently illegal”.
Court’s Observations
The Supreme Court was visibly unimpressed with the High Court’s approach. The Bench noted that arbitration law allows only limited judicial interference. “Section 37 does not give a free hand to reappreciate evidence,” the court observed, stressing that appellate scrutiny is even narrower once an award has already survived a challenge under Section 34 of the Arbitration Act.
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On the High Court’s criticism that the arbitrator had relied on guesswork, the Bench disagreed. It pointed out that arbitrators are not bound by strict rules of evidence and may adopt a “rough and ready” method where precise figures are difficult to establish, so long as there is some material on record.
Addressing the issue of extra payment fixed at ₹10 per metric tonne, the court said this was not a case of rewriting the contract. The additional work had been done at BALCO’s request, without any agreed rate. In such situations, the principle of quantum meruit - payment for work done - was rightly applied. “This was filling a contractual vacuum, not creating a new bargain,” the Bench remarked.
The judges also clarified that “patent illegality” does not mean every error or alternative interpretation. It applies only where findings are absurd, based on no evidence, or directly contrary to law or the contract.
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Decision
Allowing Jain’s appeal, the Supreme Court set aside the Chhattisgarh High Court’s judgment and restored the Commercial Court’s order, along with the original arbitral award dated July 15, 2012. The contractor’s compensation against BALCO now stands revived, bringing a long-running dispute to a close at the highest level.
Case Title: Ramesh Kumar Jain v. Bharat Aluminium Company Limited (BALCO)
Case No.: Civil Appeal of 2025 (arising out of SLP (C) No. 14529 of 2023)
Case Type: Civil Appeal (Arbitration Matter under Arbitration and Conciliation Act, 1996)
Decision Date: 18 December 2025
