Himachal Pradesh High Court
Reserved On 4.12.2025 vs M/S Tenzin Constructions Co. Pvt. Ltd on 10 December, 2025
Author: Sandeep Sharma
Bench: Sandeep Sharma
2025:HHC:42876
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
CARBC No. 72 of 2025
.
Reserved on 4.12.2025
Date of Decision: 10.12.2025
_____________________________________________________________________
State of Himachal Pradesh and Anr.
.........Petitioners
Versus
M/s Tenzin Constructions Co. Pvt. Ltd.
.......Respondent
of
Coram
Hon'ble Mr. Justice Sandeep Sharma, Judge.
rt
Whether approved for reporting?
For the Petitioners: Mr. Rupinder Singh Thakur, Additional
Advocate General with Ms. Ayushi Negi and
Ms. Swati Draik, Deputy Advocates General.
For the respondents: Mr. J.S. Bhogal, Senior Advocate with Ms.
Srishti Verma, Ms. Swati Verma and Mr. T.S.
Bhogal, Advocate.
___________________________________________________________________________
Sandeep Sharma, J.
Instant petition filed under Section 34 of Arbitration and Conciliation Act (herein after referred to as the "Act"), lays challenge to award dated 29.5.2023, passed by the learned Arbitrator, awarding therein sum of Rs. 4,97,49, 382/- with interest @ 6% per annum w.e.f.
1.4.2022, till the date of payment.
2. Explicitly, facts of the case, relevant for adjudication of the case at hand, as emerge from pleadings adduced on record by the respective parties are that work of construction of Civil Hospital at Rohru (Sh: C/O Building Portion including WS and SI, rain water ::: Downloaded on - 11/12/2025 20:34:28 :::CIS 2025:HHC:42876 -2- harvesting tank and septic tank) came to be awarded to the .
respondent/claimant vide letter dated 5.10.2016 amounting to Rs.
10,73,25,888/-, which was to be completed within two years and time was to be reckoned from 15th day of the issuance of letter of award dated 5.10.2016. It is claimed by the respondent/claimant that work was commenced at the site well within time, but since petitioner-
of department failed to provide hindrance free site and required drawings/designs, delay was caused in completion of the work.
rt Allegedly, petitioner-department failed to supply the requisite material required for the execution of the work, as a result thereof, machinery of the respondent-claimant as well as manpower brought on the site, rendered idle and the work was delayed.
3. Besides above, work of lifts and electrification, which was executed by another contractor, was not completed in time, rendering the infrastructure of the respondent-claimant idle for more than six months. Allegedly, petitioner-department failed to make the timely payments, as a result thereof, work on the site was delayed and prices of material and POL were increased under Clause 10CC of the Contract and respondent-claimant was entitled to price escalation.
Since petitioner-department failed to pay price escalation admissible to the respondent-claimant under Clause 10CC, coupled with the fact that GST, which was liable to be reimbursed was not reimbursed, dispute arose inter-se parties, respondent filed Arbitration Case No. 48 ::: Downloaded on - 11/12/2025 20:34:28 :::CIS 2025:HHC:42876 -3- of 2021, praying therein for appointment of the Arbitrator. Pursuant .
to directions issued by this Court in afore case, Mr. Justice Kuldeep Singh Kanwar (Retd.) Judge, came to be appointed as an Arbitrator.
4. Learned Arbitrator on the basis of pleadings as well as evidence adduced on record by the respective parties passed impugned award, thereby awarding amount of Rs. 4,97,49,382/-, along with of interest @ 6% p.a. w.e.f. 1.4.2022 till payment in favour of respondent-
claimant. Besides above, learned Arbitrator also awarded sum of Rs.
rt 9,54,277/- in favour of the respondent-claimant on account of cost of proceedings. In the afore background, petitioner-department has approached this Court in the instant proceedings, praying therein to set-aside afore award on various grounds.
5. Precisely, the grouse of the petitioner, as has been highlighted in the petition and further canvassed by Mr. Rupinder Singh Thakur, learned Additional Advocate General, is that award passed by the learned Arbitrator is in conflict with basic notion of law and fundamental policy of Indian law and as such, deserves to be set-
aside. While making this Court peruse record, learned Additional Advocate General attempted to argue that learned Arbitrator has not properly appreciated the pleadings of the parties and terms of agreement, as a result thereof, learned Arbitrator has wrongly allowed claims No. A, B, C, D, E, F, G, H and I. He submitted that once it was not proved on record that work was delayed due to negligence of the ::: Downloaded on - 11/12/2025 20:34:28 :::CIS 2025:HHC:42876 -4- petitioner-department, there was no question of price escalation as .
claimed by respondent-claimant under clause 10 CC of the agreement.
Learned Additional Advocate General submitted that learned Arbitrator has not taken pain to examine the provision of clause 10 CC vis-à-vis documentary evidence. He submitted that since respondent-claimant abandoned the work and failed to execute and complete the same, of therefore, its claim for price escalation could not have been entertained. He further submitted that learned Arbitrator assumed the rt jurisdiction which was not vested in him under the agreement and law that the issue of price escalation was not adjudicable by way of arbitration, yet learned Arbitrator allowed such claim on account of the fact that claim was recommended by the office of Executive Engineer. He submitted that mere recommendation does not amount to acceptance of the claim especially when final decision on the claim is to be taken by the competent authority. He submitted that claim for GST has been also allowed without proper appreciation of records.
Mr. Thakur, submitted that respondent-claimant claimed an amount of Rs. 2.55 crores and learned Arbitrator has allowed claim for Rs.
2.42 crores. Findings returned by the Arbitrator itself suggest that no effort has been made to show as to how the amount of Rs. 2.421 crores is payable to the claimant on account of GST, but afore amount has been allowed merely on the basis of claims made by the respondent-claimant and there is no reason for allowing the claim. He ::: Downloaded on - 11/12/2025 20:34:28 :::CIS 2025:HHC:42876 -5- submitted that since respondent-claimant was not able to establish .
that he has filed GST returns and satisfied all the requirements as per instructions of the government, there was no occasion for the learned Arbitrator to allow the aforesaid claims. He submitted that claim for extra substituted items has been wrongly allowed without proper examination of the records as learned Arbitrator failed to take notice of of the fact that recommendation does not amount to acceptance of the claim, rather competent authority after examining the recommended rt claim may accept, reject or modify the recommendation, but in the case at hand, learned Arbitrator merely on the recommendations of the Executive Engineer proceeded to allow the aforesaid claim of the petitioner. Learned Additional Advocate General further submitted that learned Arbitrator wrongly and illegally allowed the claims for interest and costs in favour of the respondent-claimant. He submitted that since claims submitted by the respondent-claimant are not applicable, there was no occasion for the Arbitrator to award interest in its favour.
6. To the contrary, Mr. J.S. Bhogal, learned Senior Counsel, duly assisted by Ms. Srishti Verma and Ms. Swati Verma, Advocates, appearing for the respondent-claimant, submitted that there is no scope for interference because the award is founded squarely on the basis of admissions, reconciliations and recommendations made by the petitioner-department itself. While making this Court peruse ::: Downloaded on - 11/12/2025 20:34:28 :::CIS 2025:HHC:42876 -6- documents adduced on record, especially pleadings of the parties as .
well as impugned award, Mr. Bhogal, submitted that on 7.3.2023, parties jointly reconciled all accounts, which were placed before the learned Arbitral Tribunal on 10.3.2023 and marked as Ext. X1, X2 and X3. He submitted that since these documents were prepared jointly by the respondent-claimant and the department's Divisional of Accountant and Executive Engineer, no illegality can be said to have been committed by the learned Arbitrator while allowing the claim of rt the respondent claimant. Mr. Bhogal submitted that jurisdiction conferred under Section 31 of the Act is fairly narrow and while exercising this power, this court does not sit in appeal over arbitral award and may interfere on merits on limited grounds provided under Section 34, Sub-Clause2 (b) (ii).
7. I have heard the learned counsel for the parties and carefully gone through the records.
8. Before ascertaining the correctness of rival claims/submissions made by the parties to the lis, this court finds it necessary to elaborate upon the scope of the Courts exercising jurisdiction under Section 34 to review the findings of an award passed by learned Arbitrator.
9. It is well settled that court while exercising power under Section 34 of the Act, does not sit in appeal over the arbitral award and may interfere on merits on the limited grounds provided under ::: Downloaded on - 11/12/2025 20:34:28 :::CIS 2025:HHC:42876 -7- S.34(2)(b)(ii) i.e. if the award is against the public policy of India. In .
catena of judgments, Hon'ble Apex Court has held that as per legal position clarified through decision of Hon'ble Supreme Court prior to the amendments to the 1996 Act in 2015, a violation of Indian Public Policy, in turn, includes a violation of fundamental policy of Indian law, a violation of interest of India, conflict with justice or morality, of and the existence of patent illegality in the arbitral award. It has been further held by the Hon'ble Apex Court that additionally, the concept rt of the "fundamental policy of Indian Law" would cover compliance with statutes and judicial precedents, adopting a judicial approach, compliance with the principles of natural justice and Wednesbury reasonableness. 'Patent illegality' has been held to mean contravention of the substantive law of India, contravention of the 1996 Act and contravention of the terms of the contract.
10. A similar view, as stated above, has been taken by this Court in K. Sugumar v. Hindustan Petroleum Corporation Ltd., (2020) 12 SCC 539 where it has been observed that the contours of the power of the Court under Section 34 of the Act are too well established to require any reiteration. Even a bare reading of Section 34 of the Act indicates the highly constricted power of the civil court to interfere with an arbitral award. The reason for this is obvious. When parties have chosen to avail an alternate mechanism for dispute resolution, they must be left to reconcile themselves to the wisdom of the decision ::: Downloaded on - 11/12/2025 20:34:28 :::CIS 2025:HHC:42876 -8- of the arbitrator and the role of the court should be restricted to the .
bare minimum. Interference will be justified only in cases of commission of misconduct by the arbitrator, which can find manifestation in different forms including exercise of legal perversity by the arbitrator. Hon'ble Apex Court held as follows:
"2. The contours of the power of the Court under Section 34 of of the Act are too well established to require any reiteration. Even a bare reading of Section 34 of the Act indicates the highly constricted power of the civil court to interfere with an arbitral rt award. The reason for this is obvious. When parties have chosen to avail an alternate mechanism for dispute resolution, they must be left to reconcile themselves to the wisdom of the decision of the arbitrator and the role of the court should be restricted to the bare minimum. Interference will be justified only in cases of commission of misconduct by the arbitrator which can find manifestation in different forms including exercise of legal perversity by the arbitrator."
11. In Dyna Technologies Private Limited Versus Crompton Greaves Limited, (2019) 20 Supreme Court Cases 1, Hon'ble Supreme Court in Para-24 has been pleased to hold as under:
"24. There is no dispute that Section 34 of the Arbitration Act limits a challenge to an award only on the grounds provided therein or as interpreted by various Courts. We need to be cognizant of the fact that arbitral awards should not be interfered with in a casual and cavalier manner, unless the Court comes to a conclusion that the perversity of the award goes to the root of the matter without there being a possibility of alternative interpretation which may sustain the arbitral award. Section 34 is different in its approach and ::: Downloaded on - 11/12/2025 20:34:28 :::CIS 2025:HHC:42876 -9- cannot be equated with a normal appellate jurisdiction. The mandate under Section 34 is to respect the finality of the .
arbitral award and the party autonomy to get their dispute adjudicated by an alternative forum as provided under the law. If the Courts were to interfere with the arbitral award in the usual course on factual aspects, then the commercial wisdom behind opting for alternate dispute resolution would stand frustrated."
of
12. Similarly, in Parsa Kente Collieries Limited Versus Rajasthan Rajya Vidyut Utpadan Nigam Limited, (2019) 7 Supreme Court reiterated rt Cases 236, Hon'ble Supreme that construction of the terms of a contract is primarily for Court has an arbitrator to decide unless the arbitrator construes the contract in such a way that it could be said to be something that no fair minded or reasonable person could do. Hon'ble Court further held that a possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. Hon'ble Court has also held that an award based on little evidence or no evidence, which does not measure up the quality of trained legal mind would not be held to be invalid on this score.
13. In Dyna Technologies Private Limited (supra), Hon'ble Supreme Court also held that the Court should not interfere with an award merely because an alternative view on facts and interpretation ::: Downloaded on - 11/12/2025 20:34:28 :::CIS 2025:HHC:42876
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of contract exists and the Courts need to be cautious and should defer .
to the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied unless such award portrays perversity unpardonable under Section 34 of the Arbitration Act.
14. The Hon'ble Apex Court in Welspun Specialty Solutions Limited v. Oil and Natural Gas Company Limited, (2022) 2 SCC of 382, has held that the purpose of Section 34 is to strike a balance between Court's appellate powers and integrity of the arbitral process.
rt While interpreting public policy of India in the aforesaid judgment, Hon'ble Apex Court held that it cannot be said that the concept of public policy connotes some matter which concerns public good and the public interest. What is for public good or in public interest or what would be injurious or harmful to the public good or public interest has varied from time to time. However, the award which is, on the face of it, patently in violation of statutory provisions cannot be said to be in public interest. It has been held as under:
"23. The limited grounds provided under Section 34 of the Act, has been interpreted by this Court on numerous occasions. In this case at hand, the challenge of award is based on the fact that the same is against the public policy and patent illegality. Public policy as a ground of challenge has always been met with certain scepticism. The phrase 'public policy' does not indicate 'a catch-all provision' to challenge awards before an appellate forum on infinite grounds. However, the ambit of the same is so diversly interpreted that in some cases, the purpose of limiting the Section 34jurisdiction is lost. This Court's jurisprudence ::: Downloaded on - 11/12/2025 20:34:28 :::CIS 2025:HHC:42876
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also shows that Section 34(2)(b) has undergone a lot of churning and continue to evolve. The purpose of Section 34 is .
to strike a balance between Court's appellate powers and integrity of the arbitral process.
24. The first case, which expounded on the scope of 'public policy' was Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644, which inter alia provided that a foreign award may not be enforced under the said Act, if the court of dealing with the case is satisfied that the enforcement of the award will be contrary to the public policy. After elaborate discussion, the Court arrived at the conclusion that public policy comprehended in Section 7(1)(b)(ii) of the Foreign Awards rt (Recognition and Enforcement) Act, 1961 is the "public policy of India" and does not cover the public policy of any other country.
25.For giving meaning to the term "public policy", the Court observed thus:
"66. Article V(2)(b) of the New York Convention of 1958 and Section 7(1)(b)(ii) of the Foreign Awards Act do not postulate refusal of recognition and enforcement of a foreign award on the ground that it is contrary to the law of the country of enforcement and the ground of challenge is confined to the recognition and enforcement being contrary to the public policy of the country in which the award is set to be enforced. There is nothing to indicate that the expression 'public policy' in Article V(2)(b) of the New York Convention and Section 7(1)(b)(ii) of the Foreign Awards Act is not used in the same sense in which it was used in Article I(c) of the Geneva Convention of 1927 and Section 7(1) of the Protocol and Convention Act of 1937. This would mean that 'public policy' in Section 7(1)(b)(ii)has been used in a narrower sense and in order to attract the bar of public policy the enforcement of the award must invoke something more than the ::: Downloaded on - 11/12/2025 20:34:28 :::CIS 2025:HHC:42876
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violation of the law of India. Since the Foreign Awards Act is concerned with recognition and enforcement of foreign .
awards which are governed by the principles of private international law, the expression 'public policy' in Section 7(1)(b)(ii) of the Foreign Awards Act must necessarily be construed in the sense the doctrine of public policy is applied in the field of private international law. Applying the said criteria it must be held that the enforcement of a of foreign award would be refused on the ground that it is contrary to public policy if such enforcement would be contrary to (i) fundamental policy of Indian law; or (ii) the rtinterests of India; or (iii) justice or morality."
25.In ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705, the scope of Section 34 was expanded to include patent illegality as a ground for challenging the award and held as under :
"31. Therefore, in our view, the phrase 'public policy of India' used in Section 34 in context is required to be given a wider meaning. It can be stated that the concept of public policy connotes some matter which concerns public good and the public interest. What is for public good or in public interest or what would be injurious or harmful to the public good or public interest has varied from time to time. However, the award which is, on the face of it, patently in violation of statutory provisions cannot be said to be in public interest.
Such award/judgment/decision is likely to adversely affect the administration of justice.
Hence, in our view in addition to narrower meaning given to the term 'public policy' in Renusagar case [Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644] it is required to be held that the award could be set aside if it is patently illegal. The result would be--award could be set aside if it is contrary to:::: Downloaded on - 11/12/2025 20:34:28 :::CIS
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(a) fundamental policy of Indian law; or
(b) the interest of India; or .
(c) justice or morality, or
(d) in addition, if it is patently illegal.
Illegality must go to the root of the matter and if the illegality is of trivial nature it cannot be held that award is against the public policy. Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the court. Such of award is opposed to public policy and is required to be adjudged void.
(...)
74. In the result, it is held that:
rt (A)(1) The court can set aside the arbitral award under Section 34(2) of the Act if the party making the application furnishes proof that:
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration.
(2) The court may set aside the award:
(i)(a) if the composition of the Arbitral Tribunal was not in accordance with the agreement of the parties,
(b) failing such agreement, the composition of the Arbitral Tribunal was not in accordance with Part I of the Act,
(ii) if the arbitral procedure was not in accordance with:
(a) the agreement of the parties, or ::: Downloaded on - 11/12/2025 20:34:28 :::CIS 2025:HHC:42876
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(b) failing such agreement, the arbitral procedure was not in accordance with Part I of the Act. However, exception for setting .
aside the award on the ground of composition of Arbitral Tribunal or illegality of arbitral procedure is that the agreement should not be in conflict with the provisions of Part I of the Act from which parties cannot derogate.
(c) If the award passed by the Arbitral Tribunal is in contravention of the provisions of the Act or any other of substantive law governing the parties or is against the terms of the contract.
(3) The award could be set aside if it is against the public policy of India, that is to say, if it is contrary to:
rt
(a) fundamental policy of Indian law; or
(b) the interest of India; or
(c) justice or morality; or
(d) if it is patently illegal.
(4) It could be challenged:
(a) as provided under Section 13(5); and
(b) Section 16(6) of the Act."
15. Hon'ble Supreme Court in UHL Power Company Limited v. State of Himachal Pradesh, (2022) 4 Supreme Court Cases 116, while reiterating the above mentioned legal position has reiterated that under Section 34 of the Act, the High Court cannot re-
appreciate the findings returned by learned Arbitral Tribunal and take a different view in respect of interpretation of relevant clauses of the agreement governing the parties. Hon'ble Court has observed that the High Court cannot act as a Court of appeal and the powers conferred under Section 34 of the Act are fairly narrow. While placing reliance upon MMTC Limited Versus Vedanta Limited, (2019) 4 ::: Downloaded on - 11/12/2025 20:34:28 :::CIS 2025:HHC:42876
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Supreme Court Cases 163, Hon'ble Apex Court has held that .
jurisdiction conferred upon court under Section 34 of the Act, is squarely narrow.
16. Similarly, in Konkan Railway Corporation Ltd v.
Chenab Bridge Project Undertaking, 2023 (9) SCC 85, the Hon'ble Apex Court has held that jurisdiction of the Court under Section 37 of of the Act is akin to that under Section 34 of the Act, as such, the courts ought not to interfere with arbitral award in a casual and cavalier rt manner. Most importantly, the Hon'ble Apex Court held that mere possibility of an alternative view on facts or interpretation of contract does not entitle Courts to reverse findings of the Arbitral Tribunal.
Relevant paragraphs from the decision are as follows:-
"19. Therefore, the scope of jurisdiction under Section 34 and Section 37 of the Act is not akin to normal appellate jurisdiction (UHL Power Company Ltd. v. State of Himachal Pradesh (2022) 2 SCC (Civ) 401, para 15. See also: Dyna Technologies Pvt Ltd v.
Crompton Greaves Limited (2019) 20 SCC 1, para 24, 25). It is well-settled that courts ought not to interfere with the arbitral award in a casual and cavalier manner. The mere possibility of an alternative view on facts or interpretation of the contract does not entitle courts to reverse the findings of the Arbitral Tribunal (Ssangyong Engineering. & Construction Company Ltd. v. National Highways Authority of India (NHAI) (2019) 15 SCC 131; Parsa Kente Collieries Ltd. v. Rajasthan Rajya Vidyut Utpadan Nigam Ltd., (2019) 7 SCC 236, para 11.1). In Dyna Technologies Private Limited v. Crompton Greaves Limited (2019) 20 SCC 1, this Court held:::: Downloaded on - 11/12/2025 20:34:28 :::CIS
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"24. There is no dispute that Section 34 of the Arbitration Act limits a challenge to an award only on the grounds .
provided therein or as interpreted by various courts. We need to be cognizant of the fact that arbitral awards should not be interfered with in a casual and cavalier manner, unless the court comes to a conclusion that the perversity of the award goes to the root of the matter without there being a possibility of alternative of interpretation which may sustain the arbitral award. Section 34 is different in its approach and cannot be equated with a normal appellate jurisdiction. The mandate rtunder Section 34 is to respect the finality of the arbitral award and the party autonomy to get their dispute adjudicated by an alternative forum as provided under the law. If the courts were to interfere with the arbitral award in the usual course on factual aspects, then the commercial wisdom behind opting for alternate dispute resolution would stand frustrated.
25. Moreover, umpteen number of judgments of this Court have categorically held that the courts should not interfere with an award merely because an alternative view on facts and interpretation of contract exists. The courts need to be cautious and should defer to the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied unless such award portrays perversity unpardonable under Section 34 of the Arbitration Act.
XX XX XXX
25. The principle of interpretation of contracts adopted by the Division Bench of the High Court that when two constructions are possible, then courts must prefer the one which gives effect and voice to all clauses, does not have absolute application. The said interpretation is subject to the jurisdiction which a court is called upon to exercise. While exercising jurisdiction under ::: Downloaded on - 11/12/2025 20:34:28 :::CIS 2025:HHC:42876
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Section 37 of the Act, the Court is concerned about the jurisdiction that the Section 34 Court exercised while .
considering the challenge to the Arbitral Award. The jurisdiction under Section 34 of the Act is exercised only to see if the Arbitral Tribunal's view is perverse or manifestly arbitrary.
Accordingly, the question of reinterpreting the contract on an alternative view does not arise. If this is the principle applicable to exercise of jurisdiction under Section 34 of the Act, a Division of Bench exercising jurisdiction under Section 37 of the Act cannot reverse an Award, much less the decision of a Single Judge, on the ground that they have not given effect and voice to all clauses of the contract. This is where the Division Bench rt of the High Court committed an error, in re-interpreting a contractual clause while exercising jurisdiction under Section 37 of the Act. In any event, the decision in Radha Sundar Dutta (supra), relied on by the High Court was decided in 1959, and it pertains to proceedings arising under the Village Chaukidari Act, 1870 and Bengal Patni Taluks Regulation of 1819. Reliance on this judgment particularly for interfering with the concurrent interpretations of the contractual clause by the Arbitral Tribunal and Single Judge under Section 34 of the Act is not justified."
17. In Bombay Slum Redevelopment Corporation Pvt. Ltd.
Vs. Samir Barain Bhojwani (2024) 7 SCC 218, the Hon'ble Apex Court reiterated that supervisory role of Courts is very restricted in dealing with appeals under Section 37 of the Act. Hon'ble Apex Court has further held that scope of interference in a petition under Section 34 of the Act is very narrow and jurisdiction under Section 37 of the Act is very narrower. Hon'ble Apex Court further held that since parties to the lis themselves chose to go before the Arbitral Tribunal ::: Downloaded on - 11/12/2025 20:34:28 :::CIS 2025:HHC:42876
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instead of availing remedy before the traditional Civil Courts, Courts .
must be very conservative while dealing with arbitral awards and confine themselves to the grounds strictly available under Section 34 of the Act.
18. In Reliance Infrastructure Ltd. vs. State of Goa (2024) 1 SCC 479, Hon'ble Apex Court interpreting expression 'patent of illegality' held that mere a mere illegality is not a patent illegality, rather to infer patent illegality, illegality must be apparent on the face rt of the award and not the one which is culled out by way of a long drawn analysis of pleadings and evidence. Relevant paragraphs of the afore judgment are being reproduced as under:
"57. As noticed, arbitral award is not an ordinary adjudicatory order so as to be lightly interfered with by the Courts under Sections 34 or 37 of the Act of 1996 as if dealing with an appeal or revision against a decision of any subordinate Court. The expression "patent illegality" has been exposited by this Court in the cases referred hereinbefore. The significant aspect to be reiterated is that it is not a mere illegality which would call for interference, but it has to be "a patent illegality", which obviously signifies that it ought to be apparent on the face of the award and not the one which is culled out by way of a long- drawn analysis of the pleadings and evidence.
58. Of course, when the terms and conditions of the agreement governing the parties are completely ignored, the matter would be different and an award carrying such a shortcoming shall be directly hit by Section 28(3) of the Act, which enjoins upon an Arbitral Tribunal to decide in accordance with the terms of contract while taking into account the usage of trade applicable ::: Downloaded on - 11/12/2025 20:34:28 :::CIS 2025:HHC:42876
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to the transaction. As said by this Court in Associate Builders vs. DDA9, if an Arbitrator construes the term of contract in a .
reasonable manner, the award cannot be set aside with reference to the deduction drawn from construction. The possibility of interference would arise only if the construction of the Arbitrator is such which could not be made by any fairminded and reasonable person.
95. The narrow scope of "patent illegality" cannot be breached of by mere use of different expressions which nevertheless refer only to "error" and not to "patent illegality". We are impelled to reiterate what has been stated and underscored by this Court in rt Delhi Airport Metro Express (P) Ltd. Vs. DMRC10 that restraint is required to be shown while examining the validity of arbitral award by the Courts, else interference with the award after reassessing the factual aspects would be defeating the object of the Act of 1996. This is apart from the fact that such an approach would render several judicial pronouncements of this Court redundant if the arbitral awards are set aside by categorizing them as "perverse" or "patently illegal" without appreciating the contours of these expressions."
19. In S.V. Samudram vs. State of Karnataka (2024) 3 SCC 623, the Hon'ble Apex Court has concluded that though jurisdiction of Court under Section 34 of the Act, is fairly narrow and moreover, when it comes to jurisdiction under Section 37 of the Act, it is all the more circumscribed. The relevant paras of the afore judgment read as under:-
"46. It has been observed by this Court in MMTC Ltd. v. Vedanta Ltd. (2019) 4 SCC 163.
"14. As far as interference with an order made under Section 34, as per Section 37, is concerned, it cannot be ::: Downloaded on - 11/12/2025 20:34:28 :::CIS 2025:HHC:42876
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disputed that such interference under Section 37 cannot travel beyond the restrictions laid down under Section 34.
.
In other words, the court cannot undertake an independent assessment of the merits of the award, and must only ascertain that the exercise of power by the court under Section 34 has not exceeded the scope of the provision. Thus, it is evident that in case an arbitral award has been confirmed by the court under Section 34 and by of the court in an appeal under Section 37, this Court must be extremely cautious and slow to disturb such concurrent findings." (Emphasis Supplied) rt
47. This view has been referred to with approval by a bench of three learned Judges in UHL Power Company Ltd v. State of Himachal Pradesh (2022) 4 SCC 116. In respect of Section 37, this court observed:-
"16. As it is, the jurisdiction conferred on courts under Section 34 of the Arbitration Act is fairly narrow, when it comes to the scope of an appeal under Section 37 of the Arbitration Act, the jurisdiction of an appellate court in examining an order, setting aside or refusing to set aside an award, is all the more circumscribed."
xx xx xx
49. We may also notice that the circumscribed nature of the exercise of power under Sections 34 and 37 i.e., interference with an arbitral award, is clearly demonstrated by legislative intent. The Arbitration Act of 1940 had a provision (Section 15) which allowed for a court to interfere in awards, however, under the current legislation, that provision has been omitted (Larsen Air Conditioning and Refrigeration Company v. Union of India and Ors. 2023 SCC OnLine 982 (2-Judge Bench).
50. The learned Single Judge, similar to the learned Civil Judge under Section 34, appears to have not concerned themselves ::: Downloaded on - 11/12/2025 20:34:28 :::CIS 2025:HHC:42876
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with the contours of Section 37 of the A&C Act. The impugned judgment (S.V. Samudram v. State of Karnataka, 2017 SCC .
OnLine Kar 6559) reads like a judgment rendered by an appellate court, for whom reexamination of merits is open to be taken as the course of action."
20. Bare perusal of aforesaid exposition of law laid down by the Hon'ble Apex Court , clearly reveals that scope of interference by of this Court while exercising power under Section 34 of the Act is very limited. Courts should not interfere with an award merely because an rt alternative view on facts and interpretation of contract exists, rather courts need to be cautious and should defer to the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied unless such award portrays perversity unpardonable under Section 34 of the Act.
21. Now being guided by aforesaid law on the subject, this Court shall make an endeavour to ascertain the correctness of the claim put forth at the behest of the petitioner that award is vitiated by the patent illegality on the face of it or not?
22. Having carefully perused reasoning in the award vis-à-vis pleadings and evidence led on record by the respective parties, this court is persuaded to agree with Mr. J.S. Bhogal, learned Senior Counsel, appearing for the respondent-claimant that there is no scope of interference, rather impugned award passed on the basis of admissions by officials of the petitioner department, needs to be ::: Downloaded on - 11/12/2025 20:34:28 :::CIS 2025:HHC:42876
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upheld. Award is based upon admissions, reconciliations and .
recommendations made by the petitioner-department. Before learned Arbitrator entered upon reference, parties jointly reconciled all the accounts and same came to be placed on record before the learned Arbitrator on 10.3.2023 (Ext.X1, X2 and X3). These documents were prepared jointly by the respondent-claimant and department's of Divisional Accountant and Executive Engineer. If the evidence led on record by the respective parties is read in its entirety, it clearly reveals that Divisional rt Accountant and Executive Engineer, repeatedly admitted and verified Ext.X1, X2 and X3 by department witnesses.
Since claims allowed by the learned Arbitrator are squarely based upon the admissions of the representative of the department, there is no scope of interference.
23. Qua claim A, learned Arbitrator concluded that earlier evidence was unclear, however subsequent joint verification (Ext.X1 X2 and X3 conducted between both the parties, wherein the parties sat together, prepared their statements and reconciled the matter, confirming the payable amount. Department's representatives including Divisional Accountant and Executive Engineer, admitted and jointly certified sum of Rs. 71,71,098/- as payable which was accordingly, awarded.
24. Similarly, qua claim B, this Court finds that under Clause 10CC of the agreement, learned Arbitral Tribunal relied upon the ::: Downloaded on - 11/12/2025 20:34:28 :::CIS 2025:HHC:42876
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petitioner/department's own recommendations, where both the .
Divisional Accountant and Executive Engineer, had expressly endorsed payment of Rs. 93,24,007/-, towards escalation. As the delay was not attributable to the claimant and extension of time had been duly approved, Tribunal rightly granted the amount as recommended by the department officials.
of
25. (Claim C) GST liability was verified and admitted by the department in its own reconciliation (Ext.X1 and X2). Since officials of the petitioner rt department acknowledged total GST of Rs.
2,42,96,266/- payable to the claimant, learned Tribunal rightly observed that department had already verified the GST figures and thus, could not resile from its own admissions. Learned Arbitrator allowed the claim to the extent of Rs. 2, 42,96,266/-.
26. Similarly, this court finds that qua claim D i.e. amount for extra and substituted items, Department witness (RW1) confirmed execution and measurement of extra time. Tribunal relied upon such admitted and verified measurements allowing Rs. 45,48, 258/- in favour of the respondent-claimant.
27. Similarly, qua claim E i.e. Sales Tax deducted but not deposited, departmental documents (Ext.X1, X2 and X3) and witness testimony admitted that sum of Rs. 6,54,270/- was wrongly deducted as Sales Tax post-GST implementation. If it is so, no illegality can be ::: Downloaded on - 11/12/2025 20:34:28 :::CIS 2025:HHC:42876
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said to have been committed by the learned Arbitrator while directing .
the respondents to refund the aforesaid admitted amount.
28. Claims F and G i.e. prolongation and idling of Machinery were rightly rejected due to lack of supporting evidence.
29. The Executive Engineer candidly admitted in his evidence that sum of Rs. 37,55,483/-, was refundable as the work stood of completed within no subsisting conditions and as such, no illegality can be said to have been committed by the learned Arbitrator while rt allowing the claim H i.e. security deposit, as per admitted figures.
30. Since amounts on various grounds as detailed in claims A B, C, D, E, F, G and H were wrongly not allowed by the petitioner/department, no illegality can be said to have been committed by the learned Arbitrator in awarding interest @ 6% per annum qua Claim I, for the reason that though afore amount was duly admitted and verified by its department, but yet for no cogent and convincing reasons payment qua the same was being not made by the petitioner-department. Since department failed to remit the admitted dues, respondent-claimant was compelled to refer the matter to arbitration, wherein he was represented by battery of lawyers. If it is so, cost of Rs. 9,54,277/- (claim J) awarded towards arbitral fees and expenses being wholly justifiable cannot be interfered with.
31. This court is fully convinced that award has been determined on the basis of departmental admissions and ::: Downloaded on - 11/12/2025 20:34:28 :::CIS 2025:HHC:42876
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reconciliations duly signed and approved by the competent authority, .
which was neither disputed before the Tribunal nor contradicted in evidence and as such, no interference is called for. The findings are based upon documented acknowledgments of liability rather than any unilateral assertions by the claimant, accordingly, award being fair, reasoned and based upon department's own records and of recommendations calls for no interference under Section 34 of the Arbitration and conciliation Act.
32. rt Having scanned the award laid challenge in the instant proceedings vis-à-vis various claims put forth by the respective parties, this Court sees no reason to interfere with the same, especially when nothing has been adduced on record by the petitioner to demonstrate that amount awarded qua the claims is/was outside the ambit of agreement. Learned Additional Advocate General failed to demonstrate that how award passed by the learned Arbitrator is in contravention of Section 34 of the Act and as such, award being strictly in conformity with substantive law in force deserves to be upheld. Needless to say, an arbitral award is not liable to be interfered with only on the ground that award is illegal or erroneous in law that too upon reappraisal of the evidence adduced before the learned Arbitrator, meaning thereby, award which may not be reasonable or is non-speaking to some extent, cannot be ordinarily interfered with by the courts. Save and except, grounds as have been dealt with ::: Downloaded on - 11/12/2025 20:34:28 :::CIS 2025:HHC:42876
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hereinabove, no further grounds have been raised. Careful perusal of .
impugned award reveals that grounds raised in the present case have been already elaborately dealt with by the learned Arbitrator while passing impugned award.
33. Consequently, in view of the detailed discussion made herein above and law taken into consideration, this Court finds no of merit in the present case and as such, same is dismissed being devoid of any merit.
December 10, 2025
rt (Sandeep Sharma),
Judge
(manjit)
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