Union of India vs M/s Nar Bahadur Dahal (NBD)
- Court
- High Court of Sikkim
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. 12 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 Nar Bahadur Dahal (NBD)
P.O – Gyalshing Bazar,
District-Gyalshing
Sikkim, Pin: 737111
Email: [email protected]
[email protected] ..... Respondent
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Appearance:
Ms. Sangita Pradhan, Deputy Solicitor General of India with Ms. Sittal
Balmiki and Mr. Amit Kumar Sharma, Advocates, for the Appellant.
Mr. Jorgay Namka, Senior Advocate with Mr. Lahang Limboo and Mr.
Sawal Rai, Advocates for the Respondent.
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Date of Hearing : 12.05.2026 & 14.05.2026
Date of Judgment : 26.05.2026
Date on which uploaded : 26.05.2026
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Page 2 of 7
Arb. A. No.12 of 2025
Union of India Vs. M/s Nar Bahadur Dahal (NBD)
J U D G M E N T
A. Muhamed Mustaque, C.J.
This appeal was preferred by the Union of India under Section
37(1) of the Arbitration and Conciliation Act, 1996 (hereinafter
referred to as the Act).
2. In an arbitral award passed by the Hon’ble Justice Pranab
Kumar Chattopadhyay, Former Judge of the Calcutta High Court, as
the Sole Arbitrator, the Union of India was directed to pay a sum of
₹23,21,54,534/- ( Rupees Twenty-Three Crores Twenty-One Lakhs
Fifty-Four Thousand Five Hundred and Thirty-Four only ).
3. The Arbitral Tribunal allowed a counterclaim filed by the
Respondent herein, who was the contractor engaged by the Union of
India for the work of road improvement from Gangtok to Nathula.
The contract was entered in the year 2009-10, and the terms of the
st
contract were extended up to 31 March, 2015. While the
counterclaims of the Respondent were allowed, the Tribunal rejected
the claims raised by the Union of India.
4. We are not narrating the facts in this appeal, as we propose to
remand the matter for fresh consideration by the learned
Commercial Court, Gangtok, for reconsideration of the application
under section 34 of the Act.
5. The plea of limitation though not taken by the Union
Government before the Tribunal, was nevertheless raised before the
Tribunal at the time of hearing, as seen from the impugned award of
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Arb. A. No.12 of 2025
Union of India Vs. M/s Nar Bahadur Dahal (NBD)
the Tribunal before the learned Commercial Court, Gangtok.
6. In an application under Section 34 before the learned
Commercial Court, the ground was specifically raised as follows:-
“..........
X. For that the Ld. Sole Arbitrator had failed to take
into consideration that the Respondent had filed time
barred counter claims filed by the respondent. The
th
respondent has preferred the counter claim on 14
September 2022. Admittedly, the respondent had
st
worked till 31 March 2015. Therefore, cause of
st
action starts from 31 March 2015 for three years.
th
Also on 28 March 2017 the respondent writes to
the Department that he does not have any claim,
meaning thereby there is no dispute contrary to
what has been claimed in the counter claim.
Therefore, the Ld. Sole Arbitrator has allowed the
counter claims which is not only barred by law of
limitation but also allowed the counter claim without
any disputes as per the letter of Respondent dated
th
28 March 2017.
....................”
7. There are reasons stated by the Arbitral Tribunal for overruling
the objection on the question of limitation upon appreciating the
materials and records available.
8. It is admitted before us that the impugned judgment was
passed by the Commercial Court, Gangtok, under section 34 without
calling for records from the Arbitrator. We note that an Arbitrator
had earlier been appointed; however, the proceedings before the
said Arbitrator were not taken to a logical conclusion before the
present arbitral award came to be passed by the subsequent
Arbitrator. The question is whether the Commercial Court, Gangtok,
was justified in overruling the objection on the ground of limitation
without calling for the records.
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Arb. A. No.12 of 2025
Union of India Vs. M/s Nar Bahadur Dahal (NBD)
9. There may not be much dispute on the fact that the question
of limitation is not required to be expressly pleaded as a defense. If,
on the face of the records, the Court can take note of the plea of
limitation and if it can arrive at a conclusion that it is barred by
limitation, it can very well reject such a claim.
10. The question of limitation is the question of facts and law. The
law of limitation is very clear from Section 3 of The Limitation Act,
1963, and it is based on public policy.
11. But we are also mindful of an issue relating to waiver of plea
of limitation in the context of arbitration. Unlike a Court established
as a public forum by the State, whose policy is to encourage
litigation by litigants who are alert and vigilant about their rights, a
question may arise before the Arbitral Tribunal as to whether a plea
of limitation can be waived without raising such a plea, since such a
forum is a private forum.
12. Anyway, first of all, the Court under Section 34, on the face of
the record, will have to address the issue of whether the claim is
barred by limitation or not. It is only when it arrives at a finding that
the claim is barred by limitation that, perhaps in the context of
arbitration, a plea of waiver can be considered.
13. We are not addressing any of these issues for now, for the
simple reason that the present order passed by the Commercial
Court, Gangtok, is contrary to the statutory provisions. The Court
entertaining the application under Section 34 is required,
imperatively, to look into the records of the Arbitral Tribunal to
satisfy whether any grounds under Section 34 have been made out
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Arb. A. No.12 of 2025
Union of India Vs. M/s Nar Bahadur Dahal (NBD)
or not. Without calling for records, and merely on the basis of the
arbitral award and upon hearing the parties, the Court cannot arrive
at a conclusion with regard to any of the grounds raised under
Section 34. As discussed in the case of Oil and Natural Gas
Corporation Limited, through its General Manager
(Production) Vs. H.N. Roy, through its proprietor Mr.
1
Haribansh Narayan Roy :-
“...............
6. Sub-section 2 of Section 34 of Arbitration and
Conciliation Act, 1996 clearly reveals that the Court
may set aside the award if the party making the
application establishes on the basis of the record of
arbitral tribunal meaning thereby that the Court
certainly requires the record to establish the case of
the parties. In view of that the arbitral record is
necessary to decide the lis and to ascertain exact
nature of dispute that can be through the record of the
arbitral proceeding. This aspect of the matter has already
been settled by Hon'ble Supreme Court in the case of Alpine
Housing Development Corporation Pvt. Ltd. v. Ashok S.
Dhariwal, 2023 SCC OnLine SC 55, wherein at paragraph No.
24 it has been held as under:
24. The ratio of the aforesaid three decisions on the
scope and ambit of section 34(2)(a) pre-amendment
would be that applications under sections 34 of the Act
are summary proceedings; an award can be set aside
only on the grounds set out in section 34(2)(a) and
section 34(2)(b); speedy resolution of the arbitral
disputes has been the reason for enactment of 1996 Act
and continues to be a reason for adding amendments to
the said Act to strengthen the aforesaid object; therefore
in the proceedings under section 34 of the Arbitration
Act, the issues are not required to be framed, otherwise
if the issues are to be framed and oral evidence is taken
in a summary proceedings, the said object will be
defeated; an application for setting aside the
arbitral award will not ordinarily require anything
beyond the record that was before the arbitrator,
however, if there are matters not containing such
records and the relevant determination to the issues
arising under section 34(2)(a), they may be brought to
the notice of the Court by way of affidavits filed by both
the parties; the cross-examination of the persons
1
2025 SCC OnLine Jhar 1994.
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Arb. A. No.12 of 2025
Union of India Vs. M/s Nar Bahadur Dahal (NBD)
swearing in to the affidavits should not be allowed unless
absolutely necessary as the truth will emerge on the
reading of the affidavits filed by both the parties.
Therefore, in an exceptional case being made out and if
it is brought to the court on the matters not containing
the record of the arbitrator that certain things are
relevant to the determination of the issues arising under
section 34(2)(a), then the party who has assailed the
award on the grounds set out in section 34(2)(a) can be
permitted to file affidavit in the form of evidence.
However, the same shall be allowed unless absolutely
necessary.
7. In view of the above judgment of Hon'ble Supreme Court
and further reading Sub-section 2 of Section 34 of Arbitration
and Conciliation Act, 1996, it is crystal clear for deciding
the dispute under Section 34 the record is necessary
and the statute is very much clear.
......................” (emphasis supplied)
14. Thereafter, the Hon’ble Supreme Court in Emkay Global
2
Financial Services Limited v. Girdhar Sondhi and Canara
3
Nidhi Limited v. M. Shashikala and Others has clarified that an
application under Section 34 will not ordinarily require anything
beyond the record that was before the arbitrator. This itself makes it
abundantly clear that calling for the arbitral record is an essential
requirement under Section 34 of the Act.
15. That being so, the present matter has to go back to the
Commercial Court, Gangtok, for reconsideration of the matter afresh
after calling for the records from the Arbitral Tribunal.
16. Accordingly, the impugned judgment of the Commercial Court,
Gangtok, is set aside and a direction is issued to reconsider the
matter afresh on all issues raised within two months from the
receipt of the records from the Arbitral Tribunal.
2
(2018) 9 Supreme Court Cases 49.
3
(2019) 9 Supreme Court Cases 462.
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Arb. A. No.12 of 2025
Union of India Vs. M/s Nar Bahadur Dahal (NBD)
17. The parties are directed to appear before the Commercial
st
Court, Gangtok, on 01 June, 2026. Thereafter, the Court shall call
for the records from the Tribunal and proceed with the matter afresh
by hearing all the issues raised.
18. Ordered accordingly.
19. Trial Court records shall be remitted back to the Commercial
Court, Gangtok.
(Bhaskar Raj Pradhan) (A. Muhamed Mustaque)
Judge Chief Justice
Approved for Reporting: Yes/No
ami