GUJARAT HOUSING BOARD vs M/S. CUBE CONSTRUCTION ENGINEERING LIMITED
- Court
- Gujarat High Court
C/FA/4171/2026 (GJHC240664642026) JUDGMENT DATED: 18/09/2026
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 4171 of 2026
FOR APPROVAL AND SIGNATURE:
HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE SUNITA AGARWAL
and
HONOURABLE MR.JUSTICE D.N.RAY
==========================================================
Approved for Reporting Yes No
==========================================================
GUJARAT HOUSING BOARD
Versus
M/S. CUBE CONSTRUCTION ENGINEERING LIMITED
==========================================================
Appearance:
MR YN RAVANI(718) for the Appellant(s) No. 1
MR. MANISH BHATT, SENIOR ADVOCATE with MR. NISARG DAVE with
MUNJAAL M BHATT(8283) for the Defendant(s) No. 1
==========================================================
CORAM: HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE
SUNITA AGARWAL
and
HONOURABLE MR.JUSTICE D.N.RAY
Date : 18/09/2026
ORAL JUDGMENT
(PER : HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE SUNITA
AGARWAL)
1. Having heard learned counsels for the parties and
perused the record, we may note that the present appeal
under Section 37 of the Arbitration and Conciliation Act,
1996 has been filed by the Gujarat Housing Board
challenging the judgment and order dated 18.04.2026
passed by the Judge, Commercial Court, in dismissing the
Page 1 of 28
Uploaded by VARSHA DESAI(HC01393) on Wed Sep 23 2026 Downloaded on : Wed Sep 23 23:33:10 IST 2026
C/FA/4171/2026 (GJHC240664642026) JUDGMENT DATED: 18/09/2026
application under Section 34 of the Arbitration and
Conciliation Act, 1996 namely the Commercial Civil
Application No. 12 of 2024 which was directed against the
award dated 11.08.2023 rendered by three members
arbitral tribunal panel.
2. A bare reading of the judgment impugned indicates
that all the submissions made by the learned counsel for
the appellant before the Court under Section 34 were
directed on the merits of the award. It was argued by the
learned counsel for the applicant therein, in the
proceedings under Section 37 of the Act, 1996 that the
Arbitral Tribunal had lost sight qua the fact that the site of
work was situated at Bhuj, which is under seismic Zone-5
and all the responsibilities qua preparation of drawings,
designs, approvals from the competent authority and all the
statutory permissions were on the shoulder of the
contractor. The work was to be completed within 15
months commenced from 13.02.2014, as per the work
order issued on 12.02.2014.
3. It was also contended therein that the periodical
Page 2 of 28
Uploaded by VARSHA DESAI(HC01393) on Wed Sep 23 2026 Downloaded on : Wed Sep 23 23:33:10 IST 2026
C/FA/4171/2026 (GJHC240664642026) JUDGMENT DATED: 18/09/2026
extensions sought by the contractor/claimant were granted
by the appellant herein. However, since there was a huge
delay in completion of the work, the appellant sent a letter
dated 03.05.2017 to complete the work, otherwise it shall
impose penalty thereon. Ultimately, the work was
completed on 24.08.2017 and the project was physically
handed over to the respondent.
4. It was argued that there was a clear delay of nearly
two years which was attributed to the opponent -
contractor, as it was beyond the reasonable extension of
120 days permitted, out of delay of 823 days. It was also
argued that because of the delay in completion of the work,
the reputation of the appellant - Gujarat Housing Board
was severely affected and the counter claim to realize the
liquidated damages as per clause 2 of the tender was,
therefore, put forth. No issues, however, have been framed
on the counter claim of the appellant herein.
5. It was also argued that as against the total claim of
Rs. 12 Crore and odd, the arbitral tribunal had partially
awarded claim of Rs. 3,97,13,669/- which would itself mean
Page 3 of 28
Uploaded by VARSHA DESAI(HC01393) on Wed Sep 23 2026 Downloaded on : Wed Sep 23 23:33:10 IST 2026
C/FA/4171/2026 (GJHC240664642026) JUDGMENT DATED: 18/09/2026
that the whole claim of the contractor was unjustified. The
arbitration cost imposed upon the appellant was also
assailed before the Court under section 34 of the Act. It
was also argued that the arbitral tribunal had committed an
error of law in awarding interest at the rate of 10% p.a. on
the awarded amount. The award of claim of extra work and
extra cost was challenged on the premise that they were
outside the scope of agreement.
6. All these arguments were considered by the Court
under Section 34 and exhaustive findings in paragraph nos.
9 to 37 are:-
9. I have considered the submissions made by both the
sides and perused the entire material produced on record.
Also considered the relevant citations.
10. First of all, before entering into the merits and de-
merits of the case, it is to be seen for what purpose the
A&C Act has been enacted. An aim of A&C Act is to have
expeditious and effective resolution of dispute between the
parties by their nominated or chosen or appointed
arbitrators as judge and by keeping as much as far the
intervention of the Courts.
11. Further, as per section 28(3) of the A&C Act, the duty
is cast upon Ld. AT who shall decide the case in
accordance with the terms of the contract and shall take
into consideration the usage of the trade applicable to the
transactions.
Page 4 of 28
Uploaded by VARSHA DESAI(HC01393) on Wed Sep 23 2026 Downloaded on : Wed Sep 23 23:33:10 IST 2026
C/FA/4171/2026 (GJHC240664642026) JUDGMENT DATED: 18/09/2026
12. Further, in this particular case, it is also undisputed
fact that the present applicant appointed the panel of 03
Learned Arbitrators comprising of Mr. Ashok B. Desai
(Former Chief Engineer, Sardar Sarovar [Narmada]
Project, Govt. of Gujarat), Presiding Arbitrator and Mr.
Ashwin P. Bhavsar (Former Secretary, Irrigation, Govt. of
Gujarat) & Mr. Subhash I. Patel (Former Secretary, R&B,
Govt. of Gujarat). That means, all the 03 members of the
Learned AT were no alien, but belong to the same
fraternity of various departments of Govt. of Gujarat and
are having equipped with giant experience in the same
field and having expertise in their technical world. Here,
not a single finger of suspicion has been raised by the
applicant against the Learned AT. At this juncture, the
judgment of our own Hon’ble Gujarat High Court, in the
case of Kheda Nagar Palika Vs. Shri Brahmani
Construction , delivered in R/Firstppeal No.4116 of
2023 , decided on 16.04.2024, wherein it was inter-alia,
observed that “the Award passed by the Ld. AT cannot be
scrutinized in the same manner as of prepared by the
legally trained mind. Unless the same is based on patent
illegality or interpretation of facts and terms are perverse,
it cannot be interfered with.”
13. Now, it is also undisputed that by detailed discussions,
observations, analysis and findings by the Learned AT in its
Award, the method of submission of tender, scope of work
under the contract number of stories (floors) envisaged
under the contract, introduction of PMC (Project
Management Consultant) and qua various prayers, the
conclusion arrived at and thereby, out of
Rs.12,00,55,671/-, only a sum of Rs.3,97,13,669/- was
awarded. At this juncture, it was the argument of the
Learned Advocate for the applicant that the Learned AT
has not believed the huge claim amount of
Rs.12,00,55,671/- and which would not be believed
justified. But, mere the claim was made for huge amount
and only certain amount came to be awarded, is not a sole
ground to interfere with the Award, which ultimately sound
and in consonance with the substantive law. In other
words, it is the duty of the applicant to show the Award is
Page 5 of 28
Uploaded by VARSHA DESAI(HC01393) on Wed Sep 23 2026 Downloaded on : Wed Sep 23 23:33:10 IST 2026
C/FA/4171/2026 (GJHC240664642026) JUDGMENT DATED: 18/09/2026
vitiated or suffered from patent illegality, against
substantive laws, against the public policy and outside the
scope of the agreement between the parties.
14. In the present Award, following four claims were partly
allowed by the Learned AT. Naturally, the applicant’s
grievance qua these four reliefs. It is also important to note
that the applicant filed Counter Claim to the tune of
Rs.2,99,10,000/- before the Learned AT, but the same was
dismissed, but those findings have not been challenged by
the applicant nor filed separately.
Claim Nos. and its
Claimed Amount
Awarded
Amount (Rs.)
particulars
(Rs.)
Prayer (b) –
Respondent was not
entitled to deduct any
amount under RA Bills
1,15,94,296/- 62,54,467/-
& Claim No.1
Prayer (e) On account
9,96,78,313/- 3,35,09,202
of extra works done
by the claimant &
Claim No.3
prayer (g): 18%
@ 8% 1,84,74,645/-
interest on the
amounts claimed and
also GST Interest
Prayer (g): 18%
33,22,500/-
interest on the
amounts claimed and
also GST Interest
15. So far as the prayer (b) by which an amount of
Page 6 of 28
Uploaded by VARSHA DESAI(HC01393) on Wed Sep 23 2026 Downloaded on : Wed Sep 23 23:33:10 IST 2026
C/FA/4171/2026 (GJHC240664642026) JUDGMENT DATED: 18/09/2026
Rs.62,54,467/- which was deducted towards RA Bill is
concerned, it is stated in the written submissions, at page
No.9, para (iii) by the applicant that, there was no
sufficient material to show that such amount was pending.
Now, this aspect is also made clear from para-38.7 at page
No.65 of the Award, wherein Engineer in-charge addressed
a letter dated 24.2.2021, wherein it is mentioned that an
amount of Rs.47,83,521/- is reported, but in case, time
limit is approved without imposing penalty by the
competent authority, an amount of Rs.62,54,467/- will be
required to be paid to the contractor. Now, on that
admission of the concerned Engineer in-charge of the
applicant Board, the Learned AT awarded the said
amount, which is not required to be interfered with
or held to be erroneous. Therefore, this Court is not in
agreement with the arguments advanced by the Learned
Advocate for the applicant that without sufficient material,
the Learned AT has partly allowed the claimant’s prayer
(b).
16. Now, other prayer (e), by which, Rs.9,96,78,313/-
towards the extra work was claimed and against the same,
Rs.3,35,09,202/- was awarded by the Learned AT. Now,
this claim contains the following heads:-
Claim Nos. Claimed Amount in
Awarded Amount
(Rs.)
in (Rs.)
3.1 2,88,14,695.55ps 2,49,60,195/-
3.2 85,49,007/- 85,49,007/
3.3. 10,02,668.50ps. Rejected
3.4 38,56,785.88ps Rejected
3.5 5,74,55,156.55 Rejected
Hence, the applicant has raised grievance qua the awarded
amount i.e. 3.1 and 3.2, and therefore, that would be
required to be discussed herein.
Page 7 of 28
Uploaded by VARSHA DESAI(HC01393) on Wed Sep 23 2026 Downloaded on : Wed Sep 23 23:33:10 IST 2026
C/FA/4171/2026 (GJHC240664642026) JUDGMENT DATED: 18/09/2026
17. The claimant has asked for extra work which was not
only limited, but included structural change due to
curtailment of work and idling of manpower and machinery
charges due to delay in completion of work. Here, two
main impediments for the claimant i.e. in the beginning,
G+3 design was given, but the same was not approved due
to site was situated in Seismic Zone, and therefore, the
project was curtailed to G+2 only. Of course, due to
change of the design and delay, which were solely
attributed to the applicant-GHB. How much difficulty,
hardships were caused, it can only the Learned AT would
feel and which would be reflected in the whole Award. The
Learned AT belongs to the same fraternity and has
consumed remarkable years of their life in such field. Now,
under that various heads, only two claims were
allowed..Hence, the applicant has raised grievance qua the
awarded amount i.e. 3.1 and 3.2, and therefore, that would
be required to be discussed herein.
18. At this juncture, Learned Advocate for the applicant-
GHB has also mentioned in the written submissions at
page No.10, para (iv) that for the purpose of extra work
executed by the claimant, whatever the amount is
awarded, was not part of the agreement and thus, the
Learned AT has traveled beyond the scope of the
agreement. There were main following contentions were
raised:-
(i) Finding on PMC discussed at para-34.2 of the Award
is contrary to the agreement between the parties.
(ii) Finding of delay attributed to the applicant-GHB is
factually incorrect at para-36.2.
(iii) Interpretation of section 46 of the Contract Act,
1872 is incorrect.
iv) Specific time limit of 15 months which is not
appreciated correctly.
Page 8 of 28
Uploaded by VARSHA DESAI(HC01393) on Wed Sep 23 2026 Downloaded on : Wed Sep 23 23:33:10 IST 2026
C/FA/4171/2026 (GJHC240664642026) JUDGMENT DATED: 18/09/2026
(v) Wrong interpretation of clause 13 about the scope of
reduction of work interpreted at para-41.7.
(vi) Failed to interpret clause 2 of the Agreement, even
though there was delay of 820 days which was not
condonable and justified till in completing the work.
(vi) The claim awarded by the Learned AT in using idle
machinery as well as idle manpower due to delay
caused, without any evidence and only guesswork
against ratio laid down by the Hon’ble Apex Court, in
the case of Batliboi (Supra).
(vii) There are GDCR norms, hence no question for
allowing claim for extra work.
(viii)The project was for Turnkey basis. There is a gross
delay of around 835 days.
19. Now, looking to the above contentions in mind as raised
by the Learned Advocate for the applicant-GHB, first of all
it is undisputed that the tender for Bhuj site was accepted
and time limit was for 15 months, the applicant expressed
its intention for construction of DUs having G+3 floor. Even
Engineer in-Charge of the applicant-GHB instructed on
dated 12.3.2015 to keep the work on hold till permission
granted for G+3 floor. The work was commenced on
12.2.2014, but the intention of the applicant-GHB to
construct G+3 floor which was also found by the Learned
AT.
20. The Learned AT has also found that whatever the plea
of the opponent/original claimant that possession of the site
was handed over on dated 15.4.2014 was not believed due
to no evidence. Hence, the Learned AT came to the
conclusion at page No.41 of the Award that the date of
commencement of the project was from 13.2.2014 and
within 15 months, the date of completion shall be
12.5.2015. At this juncture, the contract consists “scope of
the works” which is also narrated in the Award at page
No.41 which is verbatim reproduced here-in-below :-
Page 9 of 28
Uploaded by VARSHA DESAI(HC01393) on Wed Sep 23 2026 Downloaded on : Wed Sep 23 23:33:10 IST 2026
C/FA/4171/2026 (GJHC240664642026) JUDGMENT DATED: 18/09/2026
(i) execution of the works shall be "as per direction
of the Engineer-in-Charge",
(ii) structural drawing shall be approved as specified
by GHB,
(iii) water supply lines shall be laid as per scheme
prepared and submitted by the contractor and
approved as specified by the GHB,
(iv) planning, designing and construction/installation
of underground reservoirs, water gallery pump
houses for water supply, for fire fighting tank
including installing pumps, standby pumps, DG sets,
etc. as per approved drawings/specifications or as
directed by Engineer in Charge,
(v) the landscaping shall be as per specification and
drawing approved by the competent authority of
GHB,
(vi) planning, designing and construction of
boundary wall for the whole scheme area, MS gate,
dustbin, sign boards, guide map, location boards,
numbering of housing etc. all complete as per
drawing approved by GHB.
(vii) the contractor shall be responsible for executing
all the items required for completing the houses in
all respect, to make the dwelling units habitable and
ready for occupation and also all services, make the
environment-fit for habitation with electrical,
horticultural, rainwater harvesting works complete
as per direction of Engineer in charge.
21. Hence, Project Management Committee (PMC) has no
way defined in the tender. At this juncture, Learned
Advocate for the applicant-GHB has taken stand that there
is no proper appreciation of clause 13 of the condition of
contract, Part- II. Therefore, the same is reproduced here-
in-below:
Page 10 of 28
Uploaded by VARSHA DESAI(HC01393) on Wed Sep 23 2026 Downloaded on : Wed Sep 23 23:33:10 IST 2026
C/FA/4171/2026 (GJHC240664642026) JUDGMENT DATED: 18/09/2026
Clause 13 of the Contract
“All work under or in course of execution or executed
in pursuance of the contract shall at all times be open
to the inspection and supervision of the Chief
Engineer, Superintending Engineer, CTE/TE of SVC,
Chief Engineer (Quality Assurance), GHB, or by the
officer of Vigilance of the authority and Executive
Engineer, EE (elect.)/DD (hort.) and their
subordinates including any government or reputed
private institution appointed by the Engineer-in-
Charge as third party quality assurance and the
contractor shall at all times during the usual working
hours and at all other times at which reasonable
notice of the intention of the Executive Engineer or
his Subordinate to visit the works shall be given to
the contractor(s) either himself / themselves be
present to receive orders and instructions or have a
reasonable responsible agent duly accredited in
writing present for that purpose. Orders given to the
contractor(s) agent shall be considered to have the
same force as if they had been given to the
contractor(s) himself/themselves. The Executive
Engineer may require the contractor(s) to dismiss
any person in the contractor(s) employment upon the
works who may be incompetent or misconduct
himself, and the contractor(s) is/are forthwith to
comply with such requirements."
22. Thus, the above-said clause 13 also makes it very much
clear that the work executed or to be executed, could
be inspected and supervised by Engineer In-charge
(EIC) or reputed private institution as appointed by the
EIC as third party quality assurance. Here, the main
thing is “inspection and supervision” for the purpose of
assurance may be by the Government or third party as
appointed by the EIC. But here there is no any
wordings of PMC. On the contrary, PMC’s role was also
for administration of the contract. Even, PMC was not
mentioned in bid, but later on, introduced while
awarding the contract vide Work Order. Therefore,
there is no substance in the argument made by the
Page 11 of 28
Uploaded by VARSHA DESAI(HC01393) on Wed Sep 23 2026 Downloaded on : Wed Sep 23 23:33:10 IST 2026
C/FA/4171/2026 (GJHC240664642026) JUDGMENT DATED: 18/09/2026
Learned Advocate for the applicant-GHB that there was
no proper appreciation of clause 13 of the concerned
rules/contract.
23. Now, for understanding the delay aspect, various
dates are very much important, which are also
mentioned the Award and they are reproduced here-in-
below:-
Bid submitted by the claimant was
accepted and awarded the Work vide
Work Order
…….12.02.2014
Date of commencement of Work …… 13.02.2014
Time for completion of Work …… 15 months
Date of Completion of Work as per
Tender
…… 12.05.2015
Request for Extension of Time (EOT)
by the claimant
…… 26.03.2015
Issue of Notice under clause-2 ……03.05.2017
Building Use Permission by Bhuj
Authority
……
23.08.2017( R-
946)
Physical Completion of the Work …… 24.08.2017
Inauguration of the Project Work …… 26.08.2017
Request for EOT by the claimant …… 13.10.2017
(R-948)
Issuance of Completion Certificate
certifying Completion of Work on
24.08.2017
……24.01.2018
(R-951)
Proposal by Engineer-in-Charge for
EOT
…… 24.01.2018
(R-955)
Decision by Committee on Extension of
Time.
…… 14.05.2018
(R-959)
Invocation of the arbitration …… 08.08.2018
(C-623)
Legal Notice for arbitration ……10.01.2020
Reminders for arbitration ……05.02.2020
& 18.05.2020
Page 12 of 28
Uploaded by VARSHA DESAI(HC01393) on Wed Sep 23 2026 Downloaded on : Wed Sep 23 23:33:10 IST 2026
C/FA/4171/2026 (GJHC240664642026) JUDGMENT DATED: 18/09/2026
Resolution by Respondent on the
proposal of the Claimant for an
Extension of time
…… 26.02.2019
Issue of Notice under clause 2 for
depositing Rs. 299.10 lakh as
compensation for delay
……06.06.2020
(R-968)
24. Thus, it is undisputed that the work was delayed
from 12.5.2015 to 24.8.2017 i.e. for 835 days, but the
applicant, as per its case, calculated the delay of 823
days and considered entitlement of 120 days and for
the rest period, i.e. 703 days’ delay was attributed upon
the opponent/ claimant and thereby, the applicant-GHB
directed to deposit Rs.299.10 lakhs as compensation for
delay.
25. The Learned AT observed clause 5 which was for
“time and extension for delay”. In clause 5.4, there was
verbatim wordings at page No.46 of the Award, which
are as under:-
5.4 In any such case the authority may give a fair
and reasonable extension of time and reschedule
the milestones for completion of work. Such
extension shall be communicated to the
contractor by the authority in writing, within 3
months of the date of receipt of such request. Non
application by the contractor for extension of time
shall not be a bar for giving a fair and reasonable
extension by the authority and this shall be
binding on the contractor."
26. The claimant sought extension of time on dated
26.5.2015 and 1.9.2015. Ultimately, on dated 24.8.2017,
the claimant/opponent completed the work. Even
thereafter also even after completion of work on dated
24.08.2017, extension was sought for on dated
13.10.2017 for the purpose of releasing the amount
which was retained by the applicant. The applicant
issued Completion Certificate on 24.1.2018 and on
Page 13 of 28
Uploaded by VARSHA DESAI(HC01393) on Wed Sep 23 2026 Downloaded on : Wed Sep 23 23:33:10 IST 2026
C/FA/4171/2026 (GJHC240664642026) JUDGMENT DATED: 18/09/2026
dated 6.6.2020, held 703 days not justified. That means,
more than 60 months from requests for extensions and
33 months after completion of work, time was taken by
the applicant-GHB for justifying delay. Hence, under
these circumstances, the Learned AT observed the
following verbatim facts, which emerge from Award and
the same is reproduced here-in-below :
36.4 In any contract work, the contractor would be
required to complete the work within a given target
date for completion and if such target date is going
to be vitiated for certain reasons, the next target
date should be in vogue to enable the contractor to
plan its resources accordingly to complete the work
within such extended date and minimize/mitigate its
losses on account of levy of liquidated damages if
any. In the present case, the claimant came to know
the extension of time which it was entitled to, much
after the completion of the Works. According to the
AT, such grant of extension of time, in the first
place, deprives the claimant to know beforehand,
what is the intended/extended date of completion
due to the delays that have affected the scheduled
completion dates. Further the respondent is
required to determine extended completion date
well in advance to afford the claimant an
opportunity to complete the Work within such
extended time and by specific notice to make such
extended date as of the essence, failing which the
claimant would have been levied upon the Delay
Damages. This is the requirement under the
Contract, as well as law, as it is well established
that the party to suffer is entitled to adequate notice
for his right to mitigate his losses: and at the same
time the party also has an obligation to mitigate its
losses, even if the same are adjudicated in its
favour.
Therefore, the action of the respondent, to grant
extension of time, which should have been given at
least before the scheduled completion of the Works
Page 14 of 28
Uploaded by VARSHA DESAI(HC01393) on Wed Sep 23 2026 Downloaded on : Wed Sep 23 23:33:10 IST 2026
C/FA/4171/2026 (GJHC240664642026) JUDGMENT DATED: 18/09/2026
on 12.05.2015, was in fact given on 06.06.2020 i.e.
more than five (05) years after the completion of
Works. Such action of the respondent is not only in
violation of the terms of the contract, but also defies
the logic.
It is further evident that in spite of the repeated
application/request made by the claimant, before
the scheduled date of completion for an extension of
time, the time for performance of the balance work
was not specified by the respondent or the Engineer
in Charge/PMC, thereby the time for performance
was rendered uncertain, the contract was not
revalidated and the claimant was allowed to
continue to perform the contracted works. As per
Section 46 of the Indian Contract Act, 1872, when
no time for performance is specified, the work
should be performed/completed within reasonable
time. Such situation in construction law comes
when "Time is set at large", i.e. there is no specific
time limit and the Work is expected to be completed
within reasonable time.
27. Hence, in these circumstances, it was held by the
Learned AT that due to introduction of PMC, repeated
requests for extension by the opponent/claimant, due
to halt of the project, there were uncertainty qua
G+2 or G+3 in the mind of opponent/claimant by
surrounding evidence, Learned AT applied section
46 of the Contract Act, 1872 and section 46 of the
Contract Act, is qua performance of the contract
when it is uncertain. In other words, no time limit
was ascertained. Hence, there is no perversity or
patent illegality or any contravention of substantive law
in attributing the delay solely on the applicant-GHB.
Ultimately, the parties to the Contract cannot
adjudicate the delay, albeit in presence of clause
qua the same; that should be also adjudicated on
the basis of surrounding circumstances, which is
not done in the present case. Hence, there is no
any illegality. Further, being the Court hearing
Page 15 of 28
Uploaded by VARSHA DESAI(HC01393) on Wed Sep 23 2026 Downloaded on : Wed Sep 23 23:33:10 IST 2026
C/FA/4171/2026 (GJHC240664642026) JUDGMENT DATED: 18/09/2026
the application under Sec.34 of the A&C Act is not
supposed to enter into the re-appreciation of the
evidence.
28. Now, coming to the quantification qua idle of
machinery charges due to delay to the tune of
Rs.2,88,14,694.55.ps., against which, an amount of
Rs.2,49,60,195/- was awarded. At this juncture, clause
14 of the condition of the contract is very much
important to consider the said claim, which is also
reproduced at page No.72 of the Award, as under:-"
14. The contractor(s) is/are not to vary or deviate
from the approved drawings, specifications or
instructions to execute any extra work of any
kind whatsoever unless the authority of the
Executive Engineer to be sufficiently shown by an
order in writing or by any plan or drawing
expressly given and signed by him as an extra, or
variation, or by subsequent return approval
signed by him. If compliance with the Executive
Engineer's aforesaid said order, plan or drawing,
or approval involves extra work, and/or expenses
beyond that involved in the execution of the
contract works, then unless the same were issued
in consequence of some breach of this contract
on the part of the contractor(s), the later shall be
paid the price of the said work (to be valued as
hereinafter provided) and/or the expense
aforesaid.
29. Thus, the contract itself takes care of compensation
in case variation of extra work. Here, it is undisputed
that the applicant-GHB since the beginning intended
for G+3 project. Even at the relevant time insisted the
opponent/original claimant to keep the work on halt, as
necessary approvals were remained due to location
situated in seismic zone. Ultimately, on non succeeded
to get approval for G+3, variations took place towards
G+2. Here the main thing is that the opponent/original
claimant made several requests to release the amount
Page 16 of 28
Uploaded by VARSHA DESAI(HC01393) on Wed Sep 23 2026 Downloaded on : Wed Sep 23 23:33:10 IST 2026
C/FA/4171/2026 (GJHC240664642026) JUDGMENT DATED: 18/09/2026
of Rs.9,96,78,312/- including the claim under this head
to the applicant-GHB on dated 1.9.2016, 21.12.2026
and even after completion of work too on 5.2.2018.
Even the opponent/original claimant had shown its
willingness to withdraw the same subject to decision of
authority in minutes of the meeting, ultimately, delay
occurred, the opponent/original claimant invoked an
arbitration clause. Hence, on the part of the applicant-
GHB, the delay was occurred solely, no direction of
liquidated damages can be sustainable. Even that
finding has also not been challenged by the applicant-
GHB. Hence, by considering the Work Order value of
Rs.34,90,29,720/- and value of deployment of
machinery of the said work to the tune of
Rs.5,94,36,829/-, the calculation is being made by the
Learned AT, ultimately, who is an expert in their
respective fields, having giant experience. Even the
claimant requested to consider the work on the amount
of Rs.40,23,99,180/-, but the Learned AT believed and
taken the amount which is shown in the Work Order, by
deducting necessary salvage/re-use value of machinery
by considering two months’ time for planning and
design and minimum cost per day came to be concluded
at the rate of Rs.42,557/-. As the work was completed
on 24.8.2017 and Learned AT believed the deployment
of machinery up to June 2017 and by calculating the
time from extended period i.e. 13.5.2015 to 30.6.2017,
there would be 780 days and even 25% towards
mitigation of losses, 585 days were considered and
thereby it cannot be quantified of Rs.2,49,60,195/-. It is
important to note that the datas and details of
deployment of machinery was already submitted to
applicant-GHB at the relevant time which was never be
questioned nor challenged. Even before the Learned
AT, the same situation is there. Nothing is challenged
nor denied qua the deployment of machinery lying at
the site. Hence, at this surrounding evidence, the
Learned AT awarded a sum of Rs.2,49,60,195/- against
the claimed amount of Rs.2,88,14,694.55ps. Hence,
there is no substance in the argument made by the
Learned Advocate for the applicant that the awarded
Page 17 of 28
Uploaded by VARSHA DESAI(HC01393) on Wed Sep 23 2026 Downloaded on : Wed Sep 23 23:33:10 IST 2026
C/FA/4171/2026 (GJHC240664642026) JUDGMENT DATED: 18/09/2026
amount is outside the scope of contract and thereby,
the Learned AT has traveled beyond the ambit of the
agreement.
At this juncture, Learned Advocate for the
applicant has heavily placed reliance on the judgment
in the case of Batliboi Environmental Engineers
Ltd. (supra) , but in that case, the contractor was
restrained from further executing the contract on
termination the agreement and on that ground, it was
held that for loss of profitability, evidence or proof
thereof is mandatory requirement. But in the present
case, no such case is. Hence, it is not applicable.
30. So far as Claim No.3.2 is concerned, it is asked for
idling manpower and fixed overheads additionally
expenses for Rs.85,49,007/-. At this juncture, the finding
of Learned AT at page para-41.3.2 of the Award is very
much important which is reproduced as under:-
41.3.2 It is a Trade Practice that the total overhead
cost is spread over the Prime Cost (i.e. direct cost) of
the contract and therefore are expressed in terms of
percentage of the Prime Costs, and therefore is
spread uniformly, at that said rate of percentage, over
all items of the works. The contractor would incur this
cost while executing the work, and will get it
recouped, at the same rate of percentage, in
proportion of work done from the receipt of payment
against that work done. Thus, when whole of the work
under the contract gets completed within the time
limit stipulated for that contract, the contractor also
would have recovered the total element of the
overhead expenses by the said period. But when the
whole of the works does not get completed within the
stipulated time limit and the time gets prolonged, the
same quantum of the work get executed in that longer
period of time, requiring additional cost of overheads.
However, the quantum of whole of the work
remaining same, the recovery of the overhead cost
from the execution of whole of the work would remain
same as per that received on completion of work
within the time limit. This additional time related cost
Page 18 of 28
Uploaded by VARSHA DESAI(HC01393) on Wed Sep 23 2026 Downloaded on : Wed Sep 23 23:33:10 IST 2026
C/FA/4171/2026 (GJHC240664642026) JUDGMENT DATED: 18/09/2026
has been claimed by the claimant.
31. Now, coming to the quantification, Learned AT has
considered the value of Work Order to the tune of
Rs.34,90,29,720/- which includes the profit of 10% and 8%
towards the overheads which is as per the trade practice.
Here, it is not the case of the applicant-GHB that no such
trade practice is being prevailed, on the contrary, the
Learned AT cannot lost sight towards the usage and trade
practice as per section 28(3) of the A&C Act. By
calculating the same, the Learned AT arrived at a
conclusion that there would be 750 days of over stay.
Hence, there would be Rs.3,26,43,750/-, but the claimant
claimed much lesser amount of Rs.85,49, 007/-, hence the
same was awarded. Now, in doing so, there is no any
contravention or perversity or any patent illegality for
awarding the same. On the contrary, whatever least was
asked for, even there would be remarkable difference in
actual amount, but whatever was prayed, it came to be
awarded.
32. Now for prayer (h), by which, the cost of arbitration
was charged from the applicant-GHB only. Now, it is
regime and domain of the Learned AT, ultimately, which is
based on the specific circumstances of the present case.
Now, the Award itself contains specific observations and
findings of the Learned AT that there was a delay solely
attributed on the shoulder of the applicant-GHB and even
after completion of work on 24.8.2017, whatever the
request for extension came to be adjudicated on 6.6.2020
and during such long time, the amount of the final bill was
withheld by the applicant-GHB. By keeping all the
surrounding aspects, the Learned AT felt that the cost of
arbitration to be borne by the applicant- GHB. Even this
Court has very much limitation and even not expected to
re-appreciate or re-evaluate the finding. Hence, on the
basis of the facts, the said decision does not require any
interference on the part of this Court.
33. Lastly, the interest prayer (g) is concerned, the
claimant claimed 18% interest pre-reference as well as
Page 19 of 28
Uploaded by VARSHA DESAI(HC01393) on Wed Sep 23 2026 Downloaded on : Wed Sep 23 23:33:10 IST 2026
C/FA/4171/2026 (GJHC240664642026) JUDGMENT DATED: 18/09/2026
post-reference interest from 8.8.2018 to 11.8.2023. Now,
the applicant- GST has not shown any existence of negative
clause in the agreement. Ultimately, the aspect of interest
emanates from the contract itself and it is the discretion of
the Learned AT. In the present case, looking to the
circumstances, by keeping the ratio laid down in the case
of Rajasthan Vs. FFRRO Construction Private Limited ,
the Ld. AT also cited paras-34 and 35 in the Award,
wherein it is held that claim for damages, interest can be
granted prior to the date of ascertainment or
quantification, if written demand is made. Hence, in the
present case, from the written demand, the Learned AT
has awarded interest 10% which is just and reasonable and
not requires to be interfered with by this Court from any
angles. Hence, whatever the pre-reference interest of
Rs.1,84,74,645/- awarded does not seem to be illegal or
suffered with any patent illegality.
34. So far as whatever judgments as relied upon by the
Learned Advocate for the applicant are concerned, they
are totally on different footings and as such the Award is
passed in accordance with law, they are not applicable to
the facts of the present case.
35. So far as the judgments as relied upon by the
opponent, wherein the ratio laid down that when delay is
attributed to the employer, then compensation is required
to be awarded which is done by the Learned AT. In the
present case, on the basis of the evidence and with four
corners of agreement by considering the trade practice
and usage.
36. It is pertinent to note here that as discussed in
paragraph No.3 of this judgment, that one Execution
Petition No.30 of 2024 filed under section 36 of the A&C
Act is also tagged with the present application, which is
now required to be detached, for onwards proceedings.
37. In sum and substance, whatever points raised by the
applicant’s side are not such, so that the conscience of this
Court is shocked qua the Ld. AT’s Award. On the contrary,
Page 20 of 28
Uploaded by VARSHA DESAI(HC01393) on Wed Sep 23 2026 Downloaded on : Wed Sep 23 23:33:10 IST 2026
C/FA/4171/2026 (GJHC240664642026) JUDGMENT DATED: 18/09/2026
it came to be passed precisely in accordance with law. I do
not find any contradiction in the observations and findings
given by the Ld. AT. The impugned Award does not suffer
from vice of irrationality and perversity. None of the
grounds raised by the applicant attract section 34 of the
A&C Act. Therefore, there is no patent illegality or error
apparent on the face of the impugned Award. Hence, in
absence of any arbitrariness, perversity or against the
public policy, this Court is not in agreement with the
arguments advanced by the Ld. Advocate for the applicant.
Therefore, the impugned Award is not required to be
interfered with by this Court in view of Section 34 of the
A&C Act and hence, in view of the aforesaid discussions,
the present application is liable to be dismissed.
7. We may note that there is an admission of the
concerned Engineer in-charge of the appellant – Board with
regard to the dues of contractor and hence, the award
towards the amount of Rs. 62,54,467/- which was deducted
towards RA bill, was not interfered with. As regards the
claim of extra work awarded to the tune of
Rs.3,35,09,202/-, it was noted by the Court under Section
34 that the claimant contractor was asked for extra work
which was not only limited but included structural change
due to curtailment of work and idling of manpower and
machinery charges due to delay in completion of work. In
the beginning, G+3 designs were given to the claimant but
the same was not approved due to the site being situated in
Page 21 of 28
Uploaded by VARSHA DESAI(HC01393) on Wed Sep 23 2026 Downloaded on : Wed Sep 23 23:33:10 IST 2026
C/FA/4171/2026 (GJHC240664642026) JUDGMENT DATED: 18/09/2026
Seismic Zone, and therefore, the project was curtailed to
G+2 only. Due to change of the design and delay, which
were solely attributed to the appellant – Board herein, the
contractor had faced hardships. The dispute was raised
with regard to the award for extra work on the premise
that the claim was beyond the scope of the contract.
8. It was noted that there is absolutely no dispute about
the work done by the contractor on the instructions of the
Engineer in-charge. As regards the delay, it was noted that
the arbitral tribunal has returned a finding of fact that the
plea of the appellant that possession of the site was handed
over on 15.04.2014 was unbelievable due to absence of any
evidence. Due to halt of the project and there being
uncertainty qua G+2 or G+3 in the mind of the claimant
proved by the surrounding evidence, the claimant sought
for extension of time which was duly granted. The appellant
had even issued a completion certificate on 24.01.2018 and
on 06.06.2020 deductions made while holding that the
delay of 703 days was not justified.
9. The findings returned by the Arbitral Tribunal as
noted in the judgment impugned of the Court under Section
Page 22 of 28
Uploaded by VARSHA DESAI(HC01393) on Wed Sep 23 2026 Downloaded on : Wed Sep 23 23:33:10 IST 2026
C/FA/4171/2026 (GJHC240664642026) JUDGMENT DATED: 18/09/2026
34 could not be assailed before us, on any of the
permissible grounds of patent illegality or perversity from
the standard of a reasonable man. Within the limited scope
of Section 37, we can not examine the findings of the
learned Arbitral Tribunal on the issue of delay and merits
of the claim, independently.
10. As regards the challenge to the quantification qua idle
of machinery charges due to delay to the tune of Rs.
2,49,60,195/- awarded by the Arbitral Tribunal, the findings
in paragraph no. ‘72’ of the award as noted in paragraph
nos. ‘28’ and ‘29’ of the judgment impugned are sufficient
to reject the arguments of the learned counsel for the
appellant herein about the correctness of the said findings,
which are essentially on the merits of the arbitral award.
11. In the totality of the facts and circumstances of the
present case, having gone through the reasoning given by
the Court under section 34 of the Act 1996 and the arbitral
award dated 11.08.2023 passed by the three member
Arbitral Tribunal, we do not find any good ground to
entertain this appeal under Section 37 of the Arbitration
and Conciliation Act, 1996, so as to attach any illegality to
Page 23 of 28
Uploaded by VARSHA DESAI(HC01393) on Wed Sep 23 2026 Downloaded on : Wed Sep 23 23:33:10 IST 2026
C/FA/4171/2026 (GJHC240664642026) JUDGMENT DATED: 18/09/2026
the concurrent findings returned by the Arbitral Tribunal
and the Court under Section 34 of the Act, 1996. None of
the grounds agitated during the course of arguments by the
learned counsel for the appellant herein would demonstrate
even a semblance of perversity in the arbitral award, much
less patent illegality. We also think that the word “First
Appeal” as a cause title in the appeals filed under Section
37 in this Court is a misnomer as the learned advocate tend
to argue on the merits of the arbitral award as if we are of
the first Court of appeal. We are informed that the
amendments in the High Court Rules is yet to be notified.
The Registrar General is directed to do the needful at the
earliest.
12. We also find it improper on the part of the appellant,
a statutory authority in challenging the award both by
drawing proceedings under section 34 and 37 of the Act
1996. It must be kept in mind that a contract awarded by a
statutory authority will not, ipso facto become a statutory
contract. The same still remains in the realm of a private
agreement between a statutory authority and the
contractor. The casual filing of applications under Sections
Page 24 of 28
Uploaded by VARSHA DESAI(HC01393) on Wed Sep 23 2026 Downloaded on : Wed Sep 23 23:33:10 IST 2026
C/FA/4171/2026 (GJHC240664642026) JUDGMENT DATED: 18/09/2026
34 and 37 of the Act, 1996 burdening the Courts with
unnecessary and frivolous litigation, needs to be curbed
forthwith. The only deterrent which comes in our mind is
imposition of costs by Courts under Section 34 as well as in
37 proceedings, at par with the arbitration costs which is
imposed upon the losing party in accordance with the
provisions of 31A of Act, 1996.
13. A perusal of section 31A of the Act, 1996 indicates
that the both the Courts or Arbitral Tribunal have been
conferred with discretion to determine the costs payable by
one party to another in relation to any arbitration
proceedings or a proceeding under any of the provisions of
the Act pertaining to the arbitration, which would obviously
include the proceedings under Sections 34 and 37 of the
Act, 1996. Three clauses (a) to (c) of Section 31A (1)
provides that the Court shall have discretion to determine
(a) whether costs are payable by one party to another; (b) the
amount of such costs; and (c) when such costs are to be
paid. The Explanation to Section 31A (1) further provides
as to what would be the reasonable costs, falling within the
meaning of “costs” as incurring in clauses (a) to (c) of
Page 25 of 28
Uploaded by VARSHA DESAI(HC01393) on Wed Sep 23 2026 Downloaded on : Wed Sep 23 23:33:10 IST 2026
C/FA/4171/2026 (GJHC240664642026) JUDGMENT DATED: 18/09/2026
Section 31A (1) therein.
14. The reasonable cost relating to arbitration
proceedings or a proceedings under any of the provisions
of the Act pertaining to the arbitration, as provided in the
Explanation would be (i) fees and expenses of the
arbitrators, Courts and witnesses; (ii) legal fees and
expenses; any other expenses incurred in connection with
the arbitral or Court proceedings and the arbitral award.
15. Sub-section (2) of Section 31A further provides that
the if the Court or arbitral tribunal decides to make an
order as to payment of costs, the general rule is that the
unsuccessful party shall be ordered to pay the costs of the
successful party; or the Court or arbitral tribunal may make
a different order for reasons to be recorded in writing. The
costs of successful party has to be paid by unsuccessful
party as a general rule.
16. Sub-section (3) of Section 31A further provides the
circumstances which shall have to be taken into account by
the Court in determining the costs which are:-
(a) the conduct of all the parties;
Page 26 of 28
Uploaded by VARSHA DESAI(HC01393) on Wed Sep 23 2026 Downloaded on : Wed Sep 23 23:33:10 IST 2026
C/FA/4171/2026 (GJHC240664642026) JUDGMENT DATED: 18/09/2026
(b) whether a party has succeeded partly in
the case;
(c) whether the party had made a frivolous
counter claim leading to delay in the disposal
of the arbitral proceedings; and
(d) whether any reasonable offer to settle the
dispute is made by a party and refused by the
other party.
Clauses (c) and (d) of Section 31A (3) are not
relevant for our purposes in the present case.
17. Taking into account the provisions of Section 31A of
the Act, 1996 in extenso and on consideration of the
conduct of the appellant herein in raising the challenge to
an arbitral award in a casual manner, when no ground for
interference in the award on the ground of patent illegality
is made out and thereby dragged the respondent in
litigations both the Courts under Sections 34 and 37 of the
Act, 1996, we are of the view that the present appeal filed
under Section 37 of the Act, 1996, bereft of any of the
ground of challenge to the arbitral award within the scope
of Section 34/37 of the Act, 1996, is liable to be dismissed
Page 27 of 28
Uploaded by VARSHA DESAI(HC01393) on Wed Sep 23 2026 Downloaded on : Wed Sep 23 23:33:10 IST 2026
C/FA/4171/2026 (GJHC240664642026) JUDGMENT DATED: 18/09/2026
with costs of Rs. 3,00,000/-, out of which Rs. 2,00,000/-
shall to be paid to the respondent/claimant towards the
advocate’s fees and legal expenses incurred by it in
litigating before the Court under Section 34 as well as
before this Court under Section 37 of the Act, 1996. The
remaining Rs. 1,00,000/- shall be deposited in this
Court towards the costs of litigation in a frivolous matter
and burdening the docket of this Court with unnecessary
litigation resulting in wastage of its precious judicial time.
18. The cost of Rs. 1,00,000/- as such shall have to be
deposited before the Registrar General of this High Court
within a period of three weeks from today. The amount of
Rs. 2,00,000/- of costs shall be paid to the respondent –
contractor within a period of four weeks from today, failing
which, the entire cost amount shall be recoverable as an
arrears of land revenue.
19. Subject to the above, the present appeal stands
dismissed.
(SUNITA AGARWAL, CJ )
(D.N.RAY,J)
VARSHA DESAI
Page 28 of 28
Uploaded by VARSHA DESAI(HC01393) on Wed Sep 23 2026 Downloaded on : Wed Sep 23 23:33:10 IST 2026