Contractual interpretation upheld for cenvatable service tax reimbursement tied to Form SP2 and actual documentary proof.

The arbitral award construing the purchase order to cap reimbursement of cenvatable service tax by reference to Form SP2 was upheld as a permissible reading of the contract. Clause 1.1 required reimbursement at actuals only against documentary proof and tied that entitlement to Clause 3.2.2 and the service-tax particulars in Form SP2; read together, the stated amount in Form SP2 could not be treated as a mere guideline without rendering the reference to that form ineffective. The tribunal adopted one plausible contractual interpretation, and no perversity or disregard of relevant clauses was shown. The clarificatory email did not change the contractual position, so no interference with the award was warranted.

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Issues: Whether the arbitral award construing the contract to cap reimbursement of cenvatable service tax by reference to the amount stated in Form SP2, and the refusal to interfere under Section 34, were legally sustainable.

Analysis: Clause 1.1 of the purchase order required reimbursement of service tax at actuals only against documentary evidence and expressly linked that reimbursement to Clause 3.2.2 and to the service-tax details furnished in Form SP2. Clause 3.2.2 required bidders to quote cenvatable service tax in Form SP2 and contemplated reimbursement at actuals against cenvatable documents. Reading these provisions together, the stated amount in Form SP2 could not be treated as a mere guideline, since that construction would make the express reference to Form SP2 otiose. The arbitral tribunal adopted one permissible construction of the contract, and under Section 28(3) it was bound to decide in accordance with the contractual terms. The award did not ignore the relevant clauses and did not disclose perversity. The clarificatory email did not alter the contractual position.

Conclusion: The arbitral award was a possible and non-perverse interpretation of the contract, and no ground for interference under Section 34 was made out; the appeal failed.

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