Union of India vs M/s Mahabir Prasad Agarwal

THE HIGH COURT OF SIKKIM: GANGTOK
(Civil Appellate Jurisdiction)

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DIVISION BENCH: THE HON’BLE MR. JUSTICE A. MUHAMED MUSTAQUE, CHIEF JUSTICE
THE HON’BLE MR. JUSTICE BHASKAR RAJ PRADHAN, JUDGE
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ARB. A. No. 11 of 2025

Union of India,
Represented by the Chief Engineer (P)
Swastik C/O. 99 APO
Pin: 931717

Email: [email protected] .... Appellant

versus


M/s Mahabir Prasad Agarwal
1 AA, Government Contractor
Namchi Bazar, South Sikkim,
Sikkim, Pin: 737126
Respondent
Email: [email protected] .....

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Appearance:
Ms. Sangita Pradhan, Deputy Solicitor General of India ( through
V.C. ) with Mr. Amit Kumar Sharma, Advocate, for the Appellant.

Mr. Jorgay Namka, Senior Advocate with Mr. Lahang Limboo,
Advocate for the Respondent.
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Date of Hearing : 24.04.2026
Date of Judgment : 12.05.2026
Date on which uploaded : 12.05.2026
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J U D G M E N T


A. Muhamed Mustaque, C.J.


This is an appeal filed by the Union of India challenging
judgment dated 09.07.2025 passed by the learned Commercial
Court, Gangtok in an application filed under Section 34 of the

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Arb. A. No.11 of 2025
Union of India Vs. M/s Mahabir Prasad Agarwal


Arbitration and Conciliation Act, 1996 (hereinafter referred to as the
Act), refusing to set aside the award of the Arbitral Tribunal.
2. In a matter arising out of a contract between the Appellant
and the Respondent, a dispute arose as to the entitlement of
payment claimed by the Respondent for the disposal of surplus
material beyond 1000 meters lead.
3. Consequent upon appointment of an Arbitrator by this Court,
the dispute was adjudicated by Justice Pranab Kumar
Chattopadhyay, retired Judge of Calcutta High Court as a Sole
Arbitrator. The arbitral award is a sum of ₹7,48,74,932.80 payable
with interest @9% per annum from the date of filing the statement
of claims till the date of the award.
4. Aggrieved by the award, the Appellant filed an application to
set aside the award invoking Section 34 of the Act before the
learned Commercial Court, Gangtok but the learned Commercial
Court declined to interfere.

5. Learned Deputy Solicitor General of India, Ms. Sangita
Pradhan, assailing the Judgment of the learned Commercial Court,
Gangtok, argued that the Sole Arbitrator committed manifest error
in allowing the claim of muck disposal without cogent evidence and
overlooking conditions of contract. Elaborating the argument, the
learned Deputy Solicitor General of India submits that the site for
disposals was identified by the State Government of Sikkim and
further pointed out that by Annexure A3, contractor therein was
intimated that no extra payment shall be made for disposal of muck
other than the specified site identified by the State Government of
Sikkim.

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Union of India Vs. M/s Mahabir Prasad Agarwal


6. On the other hand, learned Senior Counsel Mr. Jorgay Namka
appearing for the Respondent, submits that the Arbitrator awarded
and allowed the claim stating reasons and Annexure A3 was never
produced before the Arbitrator. It is submitted that there was no
dispute about the disposal of muck beyond the last point of the road
beyond 19.35 kilometers and it was measured by the Officers of the
Appellant. It is submitted that the amount was also calculated in
accordance with the Military Engineering Services Standard
(Schedule of Rates), 2010. It is argued that the Appellant failed to
provide a muck dumping yard within the 1000 meters as agreed in
the contract.
7. The question is whether the Arbitral Tribunal passed the award
confining the dispute arose out of contract or not.
8. On going through the award, it can be seen that the
contractor executed the work based on the terms and conditions of
contract. The learned Sole Arbitrator appreciated the evidence based
on the contract entered between the parties. Though, there was an
alleged delay on the part of the Respondent in execution of the
work, the Arbitral Tribunal appreciated the evidence and found that
there was no fault on the part of the Respondent.
9. Though the Respondent raised several claims, the Arbitral
Tribunal allowed claim no.3, which was the claim for additional cost
incurred on muck dumping lead and financial charges. As per the
terms of the contract, the lead for disposal or dumping such soil and
rocks is supposed to be within 1000 meters. The Tribunal relied on
Clause 4.3.8 of the particular specifications of Statement of Claims
and Clause 301.3.11 of MORT&H specifications of road and bridge

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Union of India Vs. M/s Mahabir Prasad Agarwal


works. MORT&H provides for measurement and method of
computing claim of disposal of muck beyond 1000 meters lead. It is
not a dispute that these specifications do not apply. Anyway, as
agreed by the parties, the dumping act shall be within 1000 meters.
If the dumping is beyond 1000 meters, as agreed in the contract,
questions then arise whether specifications prescribed by the
MORT&H as such for dumping beyond 1000 meters would apply or
not.
10. It has come out through the evidence that muck dumping
areas were beyond 19.8 KM, at 20.60 KM, KM 23.50 and KM 23.70,
calculated at average areas of 21.9 KM.
11. We may not have a doubt that even in the absence of
MORT&H specifications, principles of Quantum Meruit would apply
unless specifically excluded by the contract. MORT&H specifications
in fact have to be read along with the other specifications of the
contract unless specifically excluded.

12. An attempt was made by the learned Deputy Solicitor General
of India to rely upon Annexure A3. We find no justification to
consider the same, as it has been produced for the first time
through an application under Section 34 of the Act. Even assuming
that Annexure A3 merely reiterates the contractual terms, it does
not advance the case of the Appellant. The clause of the contract
referred to in the said Annexure stipulates that the contractor shall
utilize materials obtained from excavation for purposes such as
filling road embankments, existing pits, landscaping, etc., for which
no extra payment shall be made. However, the present dispute does
not fall within the ambit of that clause. The issue in question

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Union of India Vs. M/s Mahabir Prasad Agarwal


pertains to the transportation of such materials beyond a lead of
1000 meters, as agreed, for dumping purposes.
13. The scope of dispute before the Arbitral Tribunal cannot be
enlarged by producing certain documents along with the application
under Section 34 of the Act.
14. The Arbitral Tribunal confined the scope of inquiry within the
subject of contract.
15. The learned Commercial Court found in the application under
Section 34 that there was no scope for interference.
16. In an Appeal, our scope of inquiry is limited and we cannot
enter into an exercise for re-appropriation of evidence like a normal
Appellate Court. The question is only that the matter is confined to
the parameters under Section 34.
17. The learned Commercial Court, rightly looking into the Arbitral
Tribunal award found that no case is made out for interference
invoking under Section 34.

18. We affirm the order and dismiss the Appeal.
19. Trial Court records shall be remitted back to the learned
Commercial Court, Gangtok.



(Bhaskar Raj Pradhan) (A. Muhamed Mustaque)
Judge Chief Justice


Approved for Reporting: Yes/No

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