The Delhi High Court in Calcom Cement India Ltd. v. Binod Kumar Bawri held the Arbitral Award to be patently illegal within Section 34(2A) of the Arbitration and Conciliation Act, 1996 and stated that where the parties agree to enter into a mutual consultation in the future, the same would only constitute as an ‘agreement to agree’ and not a contract.

The parties, Calcom Cement India Ltd., Dalmia Cement (Bharat) Ltd. and Saroj SunrisePvt. Ltd. (Bawri Group) executed various agreements, including a Share Pledge Agreement and a Share Holders Agreement. Later on, the parties executed an ‘Amendment to the Share Holders Agreement’. As per this amendment, Dalmia Cement allegedly failed to make the payment of additional consideration.

Due to certain disputes, the Bawri Group initiated arbitral proceedings against Calcom and Dalmia Cement. Dalmia Cement alleged that Bawri Group had failed to comply with the project conditions, as stipulated in the original SHA. Therefore, the amounts they claimed were not payable. In turn, the Bawri Group contended that the original SHA had been rendered unenforceable and ineffective by the ‘Amendment to the SHA’. The Arbitral Tribunal passed an award in favour of the Bawri Group. This Award was challenged by the parties under Section 34 of the Arbitration and Conciliation Act, 1996.

The Delhi High Court held that rewriting of a contract between two parties, especially a commercial contract, is impermissible in law. It was only possible if the parties chose to do so with consensus ad idem. The Court referred to the judgments of the Apex Court – NHAI v. Bhumihiway and P.S.A Sical Terminals Pvt. Ltd. v. Board of Trustees, where it was held that rewriting of the contract between the parties by an arbitral tribunal is against the law of the land.

The Court held that the findings of the Arbitral Tribunal were patently illegal under Section 34(2A). It is supposed to arbitrate within the four walls of the contract and an Award which does otherwise is bound to be set aside. The Court also referred to Section 62 of the Indian Contract Act and ruled that there is no difference between ‘alteration’ and ‘amendment’.