The Supreme Court in the case of SEPCO Electric Power Construction Corporation Versus GMR Kamalanga Energy Ltd. sets a lesson that never underestimate one line in a contract.
The bench of Chief Justice of India B. R. Gavai and Justice Augustine George Masih has observed that Arbitrators cannot rewrite contracts. They must decide disputes strictly as per the contract terms and accepted business practices. Section 28(3) of the Arbitration Act makes this duty explicit.
The bench observed that the arbitral tribunal overstepped its mandate by using a 2012 email to create a case of waiver that was never pleaded by SEPCO.
In 2008, SEPCO, a Chinese contractor, signed on to build thermal power units for GMR in Odisha.
SEPCO left the Odisha project site in 2015 amid ongoing delays and disputes with GMR. Arbitration followed, and in 2020, SEPCO won an award worth ₹995 crore.
The arbitration tribunal believed GMR Kamalanga had waived notice requirements via a 2012 email. But the EPC contract had a strict “No Oral Modification” clause.
The Orissa High Court’s Single Judge upheld the award. The Division Bench struck it down.
The Apex court held that despite the limited scope of interference, the Division Bench was obligated to have interfered with the Arbitral Award owing to fulfilment of conditions mandating a re-appreciation of the merits of the award under Section 34 of the 1996 Act. Non- interference and non-setting aside of the award would have hampered upon the fundamental policy of Indian law as well as the public policy of India. The Arbitral Tribunal, itself being a creature of the EPC Agreements, could not have travelled beyond its mandate to rewrite the constitution of its own existence through observing the condition of notice having been waived. It further discriminated between the parties, showcasing violation of the provisions of the 1996 Act. As this Arbitral Award could not have been severed owing to the reasons, thereby it is apt to set aside the whole Arbitral Award.
Case Details
Case Title: SEPCO Electric Power Construction Corporation Versus GMR Kamalanga Energy Ltd
Case No.: SLP (C) NO. 2706 OF 2024
Date: 26/09/2025
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