The General Manager, East Central Railway, vs Praphull Infrastructure Pvt. Ltd. Sidharth Construction and Trading Pvt. Ltd. (J.V.),

IN THE HIGH COURT OF JUDICATURE AT PATNA
COMMERCIAL APPEAL No.10 of 2026
======================================================
1. The General Manager, East Central Railway, Hajipur.
2. The Divisional Railway Manager (Work), East Central Railway, Danapur.
3. The Chief Engineer (Construction), East Central railway, Mahendrughat,
Patna.
4. The Deputy Chief Engineer, Construction, East Central Railway,
Chiriyatand, Patna currently, the office of Dy. CE, situated Danapur, DRM
campus, District-Patna.
5. The Senior Section Engineer (Works), Construction, East Central Railway,
Patna.
... ... Appellant/s
Versus
Praphull Infrastructure Pvt. Ltd. Sidharth Construction and Trading Pvt. Ltd.
(J.V.), Through its Director Praphull Kumar Tiwary Son of Siya Ram Tiwary
Road, No. 9, B. Phase, Rajiv Nagar, Patna-800024.
... ... Respondent/s
======================================================
Appearance :
For the Appellant/s : Mr. Anand Kumar Ojha, Sr. CGC
Mr. Apurva Kumar, CGC
For the Respondent/s : Mr. Dudh Nath Singh, Advocate
======================================================
CORAM: HONOURABLE MR. JUSTICE RAJEEV RANJAN PRASAD
and
HONOURABLE MR. JUSTICE SUNIL DUTTA MISHRA
ORAL JUDGMENT
(Per: HONOURABLE MR. JUSTICE RAJEEV RANJAN PRASAD)
Date : 11-09-2026

This commercial appeal is listed under the heading 'For
Judgment' today. This Court has once again heard learned counsel
for the parties as well as perused the records of the learned Arbitral
Tribunal and that of the Misc. (Arbitration) Case No.66 of 2023.
2. The present appeal has been preferred for setting aside
the order dated 20.02.2026 passed by the learned Principal District

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Judge-cum-Commercial Court, Patna (hereinafter referred to as the
'learned Commercial Court') in Miscellaneous (Arbitration) Case
No.66 of 2023 whereby and whereunder the learned Commercial
Court has dismissed the application preferred by the present
appellants under Section 34 of the Arbitration and Conciliation
Act, 1996 (hereinafter referred to as the 'Act of 1996') and upheld
the arbitral award dated 18.03.2023 passed by the sole arbitrator in
Arbitration Case No.01 of 2022.
Brief facts of the case
3. For purpose of the present appeal, suffice it to record
that a tender notice bearing no.28 of 2008-09 was issued under the
signature of the Dy. Chief Engineer Construction, East Central
Railway, Patna. Pursuant to the publication of the said tender,
respondent participated in the tender and ultimately came out as a
successful tenderer. The respondent had to perform the earth work
in filling construction of minor bridges and other miscellaneous
works in between Athmalgola and Barh in connection with 3rd line
from Bakhtiyarpur to Barh. The Letter of Acceptance (LOA) was
issued on 27.04.2009 with the terms and conditions stipulated
therein. The work was to be completed in all respect within 12
(twelve) months from the date of issuance of the LOA or the date
of commencement of work.

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4. It is the case of the Railways (appellants) that the
respondent was supposed to submit a performance guarantee of
RS.34,79,000/- in form of irrevocable bank guarantee in favour of
FA & CAO (CON) EC Rly. MAX, Patna in addition to security
deposit in token to complete the work successfully. The
performance guarantee was to be submitted within 15 days from
the date of issue of acceptance letter as per clause no.24 of
Chapter-III of tender documents. It is submitted that the
respondent had neither submitted the performance guarantee nor
even deputed any site engineer/representative to take initial level
for executing the earth work.
5. It is the case of the Railways that the respondent was
not abiding by the instruction of the Railways and was not doing
the construction work at site, after lapse of sixteen month's time
absolutely no work had been undertaken by the respondent despite
full availability of the work site and repeated verbal request. The
Railways invoked clause 62 of the General condition of contract
i.e. to terminate the contract and complete the balance work
without respondent's participation. A 7 day's notice was served
upon the respondent. Thereafter, 48 hour notice was also served on
the respondent. It is stated that the respondent was so careless that

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even formal agreement was not executed between the parties and
the respondent had not deposited the performance guarantee.
6. It is the case of the Railways (appellants) that they had
no option but to prepare the 1st and final bill for the work done to
the tune of Rs.69,772/- after deducting necessary taxes, BST etc.
The detail measurement of the work taken by SSE were recorded
in the measurement book and thereafter the final bill was prepared
on 11.02.2011. The respondent did not turn up to receive the
amount from the Railways. The Railways thereafter filed a request
letter to the General Manager, E.C. Rly. Hajipur for appointment
of an Arbitrator for payment and adjudication of respondent's
demand. In these circumstances, it is submitted that since no
agreement was executed between the parties, thus, the letter of
acceptance and the provisions of general conditions of contract and
the laws relating to contract shall prevail.
7. Be that as it may, ultimately the dispute between the
parties went to the learned sole arbitrator by virtue of an order
dated 19.12.2021 passed in Request Case No.05 of 2014. It is
stated that in fact the arbitration proceeding originated pursuant to
the order dated 19.12.2014 passed in the Request Case No.05/2014
but during the on going arbitration proceeding, the learned sole
arbitrator was appointed as Chairperson of the institution of

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Lokayukta, Bihar and the record of the proceedings were returned
to the respondent-claimant.
8. The learned sole arbitrator published an award of
Rs.16,64,34,132/- (sixteen crore sixty four lakhs thirty four
thousand one hundred thirty two) along with simple interest at the
rate of 12% per annum in favour of the claimant on 18.03.2023. It
is this arbitration award which was challenged by the Railways
before the Commercial Court and prayer was made for setting
aside the same.
9. The learned Commercial Court refused to set aside the
award. The order dated 20.02.2026 passed by learned Commercial
Court, Patna is under challenge in the present appeal.
Summary of the Award
10. Learned Arbitrator while deciding the disputes
between the parties framed following issues:-
“1) Whether the claim of the claimant in the instant arbitration
proceeding is maintainable ?
(2) Whether the claim of the claimant in this arbitration
proceeding is barred by limitation?
(3) Whether the work in question was validly allotted by the
opposite parties to the claimant ?
(4) Whether the claimant has performed his part of duty in
executing the work allotted to him by the opposite parties
within time?
(5) Whether there was non-discharge of contractual
obligations on the part of either of the parties?

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(6) Whether the opposite parties have extended the required
assistance and help to the claimant to see that the work in
question is completed within time?
(7) Whether the rescindment of the contract is legal, valid and
tenable in the eye of law ?
(8) Whether the amount as claimed by the claimant in the
claim petition is payable to him in the light of the contract
arrived at between the parties?
(9) Whether the claimant has suffered undue loss due to non-
co-operation of the opposite parties ?
(10) Whether the claimant has suffered pecuniary loss despite
of his having committed no fault ?
(11) Whether the claimant is entitled to any loss or damages or
interest due to non-execution of the work?”
11. Regarding Issue No. 1, the Claimant relies on Clause
64 of the General Conditions of Contract issued under the
signature of General Manager and Chief Engineer of East Central
Railways. On the contrary, Railways asserted that performance
guarantee against the work was never produced as a result of
which formal contract was never executed between the parties.
Therefore, any arbitration clause cannot be invoked by the
claimant. The learned Arbitrator considering the submissions of
both the parties decided this issue in favour of the claimant i.e.
the arbitration proceeding is maintainable.
12. Regarding Issue No. 2, learned Arbitrator held that the
arbitration proceeding is not barred by limitation considering the
submission of the claimant that Section 43 and 21 of the

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Arbitration Act prescribe period for cause of action either to make
request for appointment of arbitrator or redressal of dispute
arising out of an agreement.
13. Regarding Issue no. 3 which was relating to the work
in question validly allotted to the opposite party to the claimant,
learned Arbitrator held that the process of selection and allotment
of tender in favour of the claimant were never challenged by the
respondent-Railways accordingly it was decided in favour of the
claimant.
14. Regarding Issue No. 4, Claimant claims that he had
given information to the competent authorities of the Railways if
clear site was made available and all obstructions on site were
removed by the Railway. It was the stand of the claimant that
mixed design, soil, sand, stone chips, iron and useful material test
report from NIT, Patna were submitted on 17.08.2009 with proper
information to the Railway authority concerned contrary to that
the Railways asserted that claimant failed to initiate work even
after month of August rather he gave a letter dated 24.08.2009
stating that sufficient labour and tools, machinery were being
arranged to carry out the work, the claimant was asked to submit
performance guarantee and questioned about non-deputation of

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site Engineer and thereafter seven days issued on 09.09.2010 and
lastly termination notice was issued on 27.10.2010.
15. Learned Arbitrator observed that claimant has not
claimed that he has performed his duty in executing the work
within time but he has given explanation which appears to be
satisfactory and cannot be ignored and accordingly held this issue
in favour of the claimant.
16. Regarding Issue No. 5 which was relating to non-
discharge of contractual obligations on the part of either of the
parties, learned Arbitrator held that admittedly, there was non-
discharge of contractual obligations on the part of both the
parties. One party cannot be blamed for the entire fiasco, rather
both were responsible and in that view of the matter it can be
safely held that the work was not completed within time due to
negligence of both the sides.
17. Regarding Issue No. 6 which was relating to the
required assistance and help extended by the Railways to the
claimant in timely completion of the work, on this issue claimant
claimed before the learned Arbitrator that the documents as per
the list submitted by the Railways are not legal and proper on
account of they being not signed by competent authority and the
contractor as per Clause 9 of the GCC whereas the site order

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book, labour and daily progress register and OGL issued on
12.05.2009 are genuine and legal. Whereas the Railways asserted
that by giving extension of work vide letter dated 27.04.2009 to
25.04.2011 required assistance was given to the claimant but the
slow progress of the work led to termination.
18. Learned Arbitrator observed that the Railways were
expected to do more and its assistance was not up to mark and this
caused serious impediment for the claimant to complete the work
within time. The claimant was not expected to ask the general
public to vacate the land, rather it was only the Railways which
could have done it. Accordingly learned Arbitrator held that the
required assistance/help was not made available to the claimant,
which resulted in non-completion of the work in question.
19. Regarding Issue No. 7 which was relating to
rescindment of the contract whether it is legal, valid and tenable
in the eye of law, the stand of the claimant is that the rescindment
of the contract is not valid and legal but a blame which was
fastened by the Railways on them only to justify their illegal and
arbitrary action and no termination letter has been provided to
him. Whereas the Railways asserted that before rescindment of
the contract, law was followed by giving him a show cause notice
which is mentioned in the list of documents furnished by the

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Railways and the registered notice as per stipulation 14 of the
tender document is enough to acknowledge delivery of
letter/notice. Accordingly learned Arbitrator held that there is no
direct rebuttal by the Railways to the claim of the claimant that no
termination letter was given to him. In that view, rescindment of
the contract cannot be said to be proper.
20. Regarding Issue No. 8: Whether the amount as
claimed by the claimant in the claim petition is payable to him in
the light of the contract arrived at between the parties, the stand of
the claimant is that the Railways have given him extension of
time under Section 17 B of GCC and the claimant is entitled to
the same because he discharged his duty properly. Clause 17 'A'
'iii' of GCC prescribes that if the Railways failed to hand over
lands and provide drawings, necessary for execution of work, the
contractor is entitled to damages or compensation. Whereas, the
Railways stated that the claimant had not furnished any bill to
justify his claim and has not suffered any loss or damages.
Railways states that if claimant had purchased any machinery it
could have been used at the site on rental basis. Learned
Arbitrator held that claimant has performed his part of the
contract and the claimant is entitled to receive the amounts as
claimed by the claimant.

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21. Regarding Issue No. 9: Whether the claimant has
suffered undue loss due to non-co-operation of the opposite
parties, the stand of the claimant is that neither the Railways
provided free site for execution of work nor provided drawing
despite proper request made by him. He showed due diligence
and willingness to execute the work hence, he suffered undue loss
on account of non-co-operation by opposite party-Railways.
Whereas, the Railways asserted that 600 meter patch was offered
to take joint levels but the same could not be completed due to
non-availability of of Site Engineer. CRS sanction was never
required for earth filling and the claimant had not completed earth
filling for whole work allotted. Delay in work because of
stoppage by Junior Engineer and local Assistant Engineer was
only for two days and that too due to non-availability of drawing
with them and not due to non-availability of CRs sanction.
Drawings were regularly issued to contractor with the progress of
work. CRs. sanction is only required when wing-wall or any other
portion of existing bridge is dismantled. There was objection by
the farmers in adjacent site, which was done by other agency.
Since no work was started by the contractor, the question of
objection did not arise.

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22. On this issue, learned Arbitrator observed that the
claimant has suffered undue loss due to non-co-operation and
inaction of the Railways.
23. Issue Nos. 10 and 11 were taken together which were
relating to pecuniary loss suffered by the claimant having
committed no fault. Regarding entitlement of loss or damages or
interest, it was the stand of the claimant that entire materials were
delivered on the site, machinery was available on site and the
claimant paid the remuneration of technical, non-technical staff,
skilled and unskilled labour engaged throughout the work which
caused pecuniary loss to him. The Railways asserted that the
claimant himself is claiming that he could not arrange for the
tools to perform the work and on the other hand he claimed that
all materials and machinery were lying on the site itself. It was
the stand of the Railways that before calculating the loss or
damages the claimant was under onus to prove that breach of
contract was attributable to the Railways.
24. Learned Arbitrator, considering the submission of the
parties held that the claimant had arranged heavy machines and
other equipment at the site besides arranging materials and labour
force but he could not perform the work due to hostile mob of the

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locality and non-co-operation of the Railways which caused
pecuniary loss to the claimant.
25. Learned Arbitrator further awarded amounts to the
claimant item wise by rejecting claims on four items and awarded
total Rs. 16,64,34,132/- in favour of the claimant, to be paid by
the Railways with simple interest at the rate of 12% per annum
from the date of the award to the realization of the same. Besides
this the Railways was directed to pay Rs. 16,41,780/- as arbitrator
fee and Rs. 45,000/- as secretarial charge to the claimant of his
share.
Summary of the order of the Commercial Court
26. Learned Commercial Court proceeded to decide the
application for setting aside the award keeping in mind the several
judicial pronouncements on the fact that judicial interference must
be kept to the bare minimum, restricted only to cases where the
award is patently illegal, perverse, or violative of the fundamental
policy of Indian law, or is in conflict with most basic notions of
morality or justice.
27. Learned Commercial Court took note of the history of
the case in the matter of referring the dispute before the learned
Arbitrator and found that plea of limitation of the petitioner-
Railways is misconceived one as the learned Arbitrator was

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appointed by the order of the Hon'ble Patna High Court vide order
dated 03.08.2022 and the same was not challenged before any
superior authority hence it attains finality and the award was
rendered on 18.03.2023 well within the time as per the provisions
of the Arbitration and Conciliation Act, 1996.
28. On the point of re-appreciation of the evidence and
contractual interpretation learned Commercial Court observed that
the Arbitrator is the sole judge of the quality and the quantity of
the evidence and relied on the judgment of the Hon'ble Supreme
Court Rashtriya Ispat Nigam Ltd. v. Dewan Chand Ram Saran
(2012) 5 SCC 306 wherein it was held that the Arbitral Tribunal is
the master of the evidence and of the determination of disputes.
The Court cannot re-appreciate evidence or substitute its own
interpretation of the contract for that of the Arbitrator.
29. Learned Commercial Court found that the learned
Arbitrator after examining the pleadings, documents, and evidence
tendered by both parties, arrived at factual findings that the delays
were attributable to the petitioners' failure to hand oveer the site
and provide necessary facilities. These findings are based on
appreciation of evidence and interpretation of contractual terms.
The award records specific reasons and references to documentary
evidence in support of these conclusions.

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30. Learned Commercial Court found that the learned
Arbitrator's interpretation of Clauses 17A(iii) and 61(1)(2), and his
factual findings regarding the Railways' failure to hand over the
site, represent a plausible and legally tenable view and the award
does not suffer from any perversity or patent illegality apparent on
its face. The quantum awarded is the result of detailed assessment
of the respondent-claimant's expenditure incurred in mobilization,
demobilization, overheads, and establishment costs, all of which
are within the contemplation of Clause 61(1)(2).
31. Learned Commercial Court observed that the mere
fact that the quantum awarded exceeds the value of work actually
executed does not, ipso facto, render the award illegal in view of
the fact that the contractual regime explicitly provides for
compensation beyond executed work where the contract is
determined due to causes attributable to the employer. Regarding
the interest, learned Commercial Court found that rate of 12% per
annum is well within the permissible range recognized in arbitral
jurisprudence.
32. Learned Commercial Court found that the learned
Arbitrator has applied the terms of the GCC, particularly Clauses
17A(iii) and 61(1)(2), which form part of the contract between the
parties.

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33. Learned Commercial Court observed that none of the
grounds enumerated under Section 34(2) or Section 34(2A) have
been established to justify interference with the impugned Arbitral
award dated 18.03.2023 or the findings of the learned Arbitrator.
Accordingly the application of the Railways-appellant herein filed
under Section 34 of the Arbitration and Conciliation Act, 1996 was
dismissed by the Commercial Court.
Submissions on behalf of the appellants
34. While assailing the impugned order of the learned
Commercial Court and the impugned award, Mr. Ojha, learned
senior counsel assisted by Mr. Apurva Kumar has made
submissions which this Court has recorded in its order dated
25.08.2026. A written submissions has also been filed.
35. According to the appellants, the Award dated
18.03.2023 is vitiated for violation of General Principles
governing an Award inasmuch as the Award violated fair
opportunity to the appellants; it proceeded without any pleading
and without any evidence, ignoring the documents and plea on
record. No oral evidence was recorded, and no agreement between
the parties to exempt oral hearing is mentioned in the Award, apart
from the fact that the procedure of admission and denial of the
documents or contents thereof is not evident from the Award.

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Similarly, there is an absence of any deliberation before deciding
any of the 11 issues framed by the Learned Arbitrator at Para-5 of
the Award.
36. It is submitted that the damage was allowed against
the appellants not only without evidence of the Claimants but in
the teeth of the submissions noticed and recorded by the Learned
Arbitrator. The statement on non-deployment of
machinery/manpower, the jointly signed documents admitted in
the records at Para-22, and the plea that the Contractor was
working at different places other than the site in question and did
not produce any bills to justify the claim of loss and damage, were
all disregarded. The Learned Arbitrator himself asked for
production of various records by order dated 16.12.2020 (P/53 of
Supp. Aff.), admitted at Para-22 of the Award, but the admission of
no entry of heavy vehicle at the site, jointly signed by the claimant
and Railways, had not been dispelled by any evidence or
deliberation refuting those records mentioned in Para-22.
37. It is further submitted that even during the course of
hearing, upon being asked by the Hon'ble Court, the Learned
Counsel for the Respondent, appearing through virtual mode,
admitted having not filed any bills or invoice to support the
damage claim. Finally, and shockingly, the claim reproduced at

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Para-2/Page-3 & 4 of the Award was escalated. The true arithmetic
sum of the claims comes to Rs. 3.55 Cr., but the claim was totaled
as Rs. 17.18 Cr., showing an unexplained gap of Rs. 13.63 Cr. This
is without any note or explanation. More shocking is that the
claimant attempted a retrofitting exercise in the written submission
to match the unsupported gross figure of the Claim: Claim No. XV
of the Statement of Claim (in short 'SOC') (machinery hire,
renumbered Claim No. XIV in the claimant's own written
submission reproduced at Para-7 of the Award), which alone
constitutes over 80% of the amount ultimately awarded, was raised
from Rs.13,77,000/- in the Statement of Claim to
Rs.14,58,00,000/- in the written submission an escalation
exceeding a hundredfold, made without amendment or notice to
the Railways carrying the claimant's revised grand total, per Para-7
of the Award, to Rs.18,15,66,766.74 (approximately Rs. 18.16 Cr.).
The Written Submission made changes in the description and
quantum of the SOC, which was the pleading, and the claim was
escalated without amendment and opportunity to the Railways.
The appellants may be permitted to indicate the major illegality in
the Award, to hold and declare the same as in gross violation of
fundamental principles of law and vitiated with patent illegality.

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38. It is also submitted that the Award is vitiated as no
reason is assigned either for claim escalation or for the award of
damage. Since reasons are an essential attribute of a valid Award, it
is liable to be set aside for violation of Section 31(3) of the Act of
1996. The submissions of the parties were followed by a return of
findings without any reasoning connecting the material on record.
The appellants rely on the judgment of the Hon’ble Supreme Court
on the point that reasons are mandatory and not an empty
formality, citing Som Datt Builders Ltd. v. State of Kerala,
(2009) 10 SCC 259 , (Paras 20, 25).
39. It is submitted that the learned Arbitrator did not
mention any evidence to hold that the claimants had suffered loss
of profit/loss of opportunities. No evidence, much less credible
evidence, was adduced. On the contrary, the Railways had
produced documents admitted/noticed in Para-22 of the Award
objecting to the claim of damage, but the same was only recorded,
not deliberated, disputed, or scrutinized. The evidentiary burden
for damage as per Section 73 of the Contract Act, 1872 was
missing, hence the Award is patently illegal and in conflict with
public policy. This is contrary to the law laid down by the Hon'ble
Supreme Court in Unibros v. All India Radio, 2023 SCC OnLine
SC 1366 , (Paras 18, 19 & 20).

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40. It is submitted that the Award suffers from non-
application of mind inasmuch as the obvious escalation of Claim
No. XV of the SOC (renumbered Claim No. XIV in the claimant's
own written submission reproduced at Para-7 of the Award), and
the mismatch in the total sum of the Claim amount, were ignored
by the Learned Arbitrator. It is evident that the Learned Arbitrator
did not appreciate the massive and unamended raise in the amount
quoted against this claim from Rs. 13,77,000/- in the Claim to
Rs.14,58,00,000/- in the written submission. It is stated that the
gross figure of Rs.17,17,79,886.74 pleaded at Para-2 does not
match the sum of the Claimant's own itemized claims. Para 2 of
the Award (pp.3-4) sets out eighteen itemized heads of claim, (i) to
(xviii). Adding these items exactly as tabulated in the Award
produces a true sum of Rs.3,54,56,885.95 (approximately Rs.3.55
crore).
41. It is further submitted that it is also obvious and
evident that Item (xv) (Machinery Hire) was retrofitted in the
Written Submission to match the prefixed, unsupported gross
figure, and the claim clearly got escalated without amendment,
denying Railways fair opportunity. The appellants rely upon the
judgment in State of Goa v. Praveen Enterprises, (2012) 12 SCC
581 , (Para 12) to submit that the scope of arbitration cannot be

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enlarged, and that Section 18 mandates equality and fair
opportunity, as held in Narinder Singh & Sons v. Union of India,
(2022) 18 SCC 690 , (Para 9).
42. Learned senior counsel for the appellants submitted
that no bills, no oral testimony, and no admission/denial of
documents are evident from the records, as the Railways in Para-
25 mentioned that no bill was ever produced to justify the claim
for machine deployment for 18 months, and at no stage was oral
evidence recorded. The appellants rely on the judgment of this
Hon'ble Court in Narayan Prasad v. State of Bihar, Commercial
Appeal No. 1 of 2024, Patna High Court (30.03.2026) , (Para 40).
43. Learned senior counsel further submits that Para 22
(Issue No. 5, p.24) records: "As directed, MB books, Site Books
etc. were produced, wherefrom it could be seen that no entry of
heavy machines was present in progress books, rather only mixer
and small machine are there, which have been used, and these
documents bear signatures of both parties." This is a jointly-signed
admission. binding on the claimant equally with Railways,
produced pursuant to the Tribunal's own order-yet never carried
forward to, or distinguished at, the point where Rs. 14,58,00,000 is
awarded for hire of exactly the heavy machinery the Register
records as absent (pp.30-33). The appellants rely on Ssangyong

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Engg. & Construction Co. Ltd. v. National Highways
Authority of India (NHAI) (2019) 15 SCC 131 (Para 51 & 52).
44. Learned senior counsel further submits that the
ground of patent illegality survives, notwithstanding dilution of the
"Judicial Approach" ground, to declare an award without reason,
evidence, or oral hearing to be bad in law. The appellants rest its
submission on the judgment of the Hon'ble Supreme Court in
Ssangyong Engg. & Construction Co. Ltd. (supra) (Para 23 &
41).
45. It is lastly submitted that in the facts and
circumstances mentioned above, the Award violates Sections 18,
23 and 31(3) of the Act on the face of the Award, and hence the
same is liable to be struck down for violation of Section 34(2A) of
the Act of 1996.
46. Learned senior counsel has relied upon the judgments
of the Hon'ble Supreme Court in the case of Som Datt Builders
Pvt. Ltd Vs. State of Kerala, (2009) 10 SCC 259 (para-20,25) ,
Unibros vs. All India Radio, 2023 SCC OnLine SC 1366 (para-
18,19,20) , State of Goa vs. Praveen Enterprises, (2012) 12 SCC
581 (para-12) , Narinder Singh & Sons vs. Union of India,
(2022) 18 SCC 690 (para-9) , Narayan Prasad vs. State of Bihar,
Commercial Appeal No.1 of 2024, Patna High Court judgment

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dated 30.03.2026 (para-40) , Ssangyong Engg. & Construction
Co. Ltd. vs. NHAI, (2019) 15 SCC 131 (para-41,51 and 52) and
Associate Builders vs. DDA, (2015) 3 SCC 49 (para-30 and 31).
Submissions on behalf of the respondent
47. Mr. Dudh Nath Singh, learned counsel for the
respondent submits that as per clause 6 of the LOA, the work had
to start within ten days after receipt of the LOA otherwise the full
value of earnest money was liable to be forfeited. It is the case of
the respondent that the respondent proceeded at site in full swing
with all equipment, skill and unskilled labour and required
materials but on arrival of the respondent the local people created
hindrance in execution of work at site. In this regard, the
respondent claims to have given information to the Railways in
oral as well as in writing. It is stated that as per general condition
of the contract, it was the duty of the Railways authority to provide
free site for the work as per clause 1 'O' of part II of the GCC. The
respondent claimed that they had submitted a bar chart in which it
was mentioned that the work will be completed as per bar chart, if
clear site will be available and all obstructions at site will also be
removed by the Railways. It is submitted that ultimately the
dispute went into arbitration. During course of arbitral proceeding,
the learned sole arbitrator asked to furnish item wise loss under

Patna High Court COMMERCIAL APP No.10 of 2026 dt.11-09-2026
24/50
claimed item no.XV, in pursuant to that the respondent furnished
the same as quoted in paragraph 7, page-12 of the award in details
description of item wise claim chart along with written submission
which is within the purview of the claim amount under different
head. It is stated that claim no. XV is for 17 months after
curtailment of one month loss of Rs.81 lakhs, it would be
Rs.13,77,00,000/- (Thirteen crore seventy seven lakhs) as claimed
in original statement of claim. Hence, award of Rs.14,58,00,000/-
=13,77,00,000/-+81 lakhs for one month.
48. It is submitted that the learned sole arbitrator, after
completion of pleadings, framed 11 issues and called for a list of
documents which were furnished by the parties. The Railways
counsel as well as the authority did not object the contents of
exhibited (Annexures) documents although the respondent
objected the documents furnished by the Railways as after the
award the Railways cannot object as per Section 4 of the Act of
1996.
49. It is submitted that as per direction of the learned sole
arbitrator the Railways produced MB books which was not related
with respondent contract. The MB books contained the name of
another company. It is submitted that once the person agreed to
proceed on the basis of documentary evidence produced by the

Patna High Court COMMERCIAL APP No.10 of 2026 dt.11-09-2026
25/50
parties without an objection of its contents he waives his right to
object, therefore, in this case the Railways cannot take any
exceptions to the award.
50. The respondent has relied upon the judgments of the
Hon'ble Supreme Court in the case of Jan De Nul Dredging India
Pvt. Ltd. Vs. Tuticorin Port Trust 2026 INSC 34, Ramesh
Kumar Jain Vs. Bharat Aluminium Company Limited
(BALCO) 2025 INSC 1457, Kishorilal (D) Through LRS &
Ors. Vs. Gopal and Others 2026 INSC 48 and B.S. Lalitha and
Others Vs. Bhuvanesh and Others 2026 INSC 499 .
51. It is submitted that jurisdiction of the court under
Section 34 of the Act of 1996 is limited and extremely
circumscribed jurisdiction, permits the court to interfere with an
award, shall be grounds of patent illegality. It is submitted that the
learned Commercial Court has rightly not disturbed the arbitral
award by taking a different view of the matter. The award of the
learned tribunal is to be accepted.
Consideration
52. We have heard learned counsel for the parties and also
perused the records of the learned sole arbitrator as well as the
learned Commercial Court.

Patna High Court COMMERCIAL APP No.10 of 2026 dt.11-09-2026
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53. It would be important to take note of the sequence of
dates which would be relevant for the purpose of the present
appeal. On record, the orders passed by the learned Arbitral
Tribunal beginning from 22.08.2022 to 18.03.2023 are available.
A bare reading of the orders passed by the learned tribunal would
show that the procedures to be followed in the matter of conduct of
arbitral proceeding was not decided earlier. The claimant filed a
claim petition with some annexures. The annexures attached to the
claim petition are the copies of the correspondences made by the
Railways and the copies of the letters written by and on behalf of
the respondent in the matter of extension of time for completion of
work and by way of response to 48 hours notice and 7 days notice.
It is important to note that the total value of allotted work under
the LOA is Rs.6,95,79,446.35/- (Six crore ninety five lacs seventy
nine thousand four hundred forty six and thirty paise only). The
claimant had submitted earnest money along with tender
documents of Rs.4,75,060/-. There is no statement that the
claimant had deposited any performance guarantee or that it was
not liable to deposit performance guarantee. We would not go into
that aspect of the matter. In paragraph '8' of the statement of claim,
the claimant had made statements and provided its claim under

Patna High Court COMMERCIAL APP No.10 of 2026 dt.11-09-2026
27/50
different heads. We reproduce paragraph '8' and the claims by the
claimant in its claim petition as under:-
"8. That the claimant/petitioner is entitled
for damage or loss sustained from wrong full
rescind/termination of contract and non providing
free site for execution of work under contract as
well as amount of work done with interest are
given below:-
i) Claim for cutting of jungle, soil
and earth filling and bush
clearance on site at the distance
covered 625 meter
Rs. 2,40,000=00
ii) 625 tree guard from 30 meters
left side of railway Line as per
direction of authority from
Athmal Gola Station to Barh
Station
Rs. 16,87,500=00
iii) Caution board Rs. 1,75,000=00
iv) Computer Rs. 72,000=00
v) Computer operator Rs. 98,000=00
vi) Material onsite (30mm stone
chips+ 20mm stone chips +
10mm stone chips Rs.
17,50,000 + 17,50,000
+8,40,000

Rs. 43,40,000=00
vii) 100 Track sand Rs. 36,00,000=00
viii) Iron Rs. 48,55,000=00
ix) Cement Rs. 45,00,000=00
x) Bridge culvert no. 20, 21, 23,
24, 27, 28 Trench Cutting Rs. 1,00,000=00
xi) Bed clearance Rs. 72,000=00
xii) Soil Test expenses at the cost of
contractor
Rs. 3,60,000=00
xiii) Sand stone chips and still rode
testing
Rs. 72,000=00
xiv) Lost of anticipated profit due to
wrongful
reshipment/termination of work
under contract at the rate of Rs.
15 % on the value of balance
Rs.1,04,36,916=95

Patna High Court COMMERCIAL APP No.10 of 2026 dt.11-09-2026
28/50
work which could not
executed
xv) claim for loss of hire charges
of Machinery, Centering
material, purchase machine on
loan etc. engage for execution
of the work for the prescribe
period and beyond the extended
period.
Rs. 13,77,000=00
xvi) Claim for compensation for
the performance of full value of
work at the rate of 3 %

Rs. 20,87,383=39
xvii) claim for the refund of earnest
money with interest at the rate
of 18 % per annum till the date
of realization
Rs. 6,84,086=40
xviii) cost of litigation and
arbitration cost
Rs. 7,00,000=00
Rs. 17, 17, 79,
Total Claim
886.74
54. In fact, on perusal of the award of the learned Arbitral
Tribunal, it will appear that the same amount has been mentioned
in paragraph '2' of the award in a tabular chart.
55. It is evident that in the claim petition, the total claim
shown in the tabular form is Rs.17,17,79,886.74/- whereas the
correct total of the amount shown in the tabular form would come
to Rs. 3.55 crores only.
56. The Railways filed a statement of defence. In it's
statement of defence, the Railways denied the claims. It is stated in
paragraph '22' of the statement of defence as under:-
"22. That with regard to the statement made
in para 8 of statement of claim, it is submitted that the
contractor is not entitled to any damages in light of the

Patna High Court COMMERCIAL APP No.10 of 2026 dt.11-09-2026
29/50
facts mentioned hereinabove. Despite availability of
clear site and handing over the entire drawings, the
contractor even failed to execute the earthwork on the
pretext of one and other. The contract right from
beginning was not interested in the work because after
much chasing he took joint level of 600 mete only,
while he had to take level of 13500 mete. He did not
start the construction of any minor bridges. He even
did not deploy the adequate machinery and staff."
57. The railways specifically stated that the claims raised
by the claimant are frivolous and hypothetical. The claims were
not supported by any documents. It was submitted that mere
statement does not substantiate the case unless it is supported by
any documentary proof. In the statement of defence, the Railways
denied the claims made under the various head in the statement of
claim.
58. On record, we find that the claimant filed a reply to
the statement of defence. On behalf of the claimant, a list of
documents was filed. The documents enclosed with the list of
documents are as under:-
"1. A photocopy of Tender Notice 15 of 2008-09 (open)
published in Hindustan Daily Newspaper dated
15.10.2008 in respect of Tender No. 28 of 2008-09
(Open).
2. A photocopy of abstract of start of tender will be
document (Details submitted at the time of hearing on
issues).
3. A photocopy of acceptance letter. dated 27.04.2009 after
award of contract.

Patna High Court COMMERCIAL APP No.10 of 2026 dt.11-09-2026
30/50
4. A photocopy of information letter to the Deputy Chief
Engineer, Construction E.C. Railway Chiraiyatand Bridge,
Patna dated 08.05.2009 in respect of public hindrance on
site.
5. A photocopy of bar chart submitted on 10.08.2009 to
the Deputy Chief Engineer, E.C. Railway Chiraiyatand
Bridge Patna.
6. A photocopy of letter dated 17.08.2009 given by the
claimant/ petitioner to the Deputy Chief Engineer/Con.
E.C. Railway Chiraiyatand, Patna with regard to mix
design (M-30), (M-25) against acceptance letter (work
under contract).
7. A photocopy of letter dated 04.09.2009/10.09.2009 to
the Deputy Chief Engineer/Con. E.C Railway
Chiraiyatand, Patna in respect of submission of mix design
(M-30), (M-25) and (M-20) as well as in respect of
submission of mix design against work of earth work in in
filling, construction of minor bridge and other
miscellaneous work in between Athmal Gola to Barh in
connection with 3rd line from Bakhtiyarpur to Barh.
8. A photocopy of letter dated 12.10.2009 to the Deputy
Chief Engineer and Chief Engineer/Con. E.C. Railway,
Patna towards extension of time for further period of six
months.
9. A photocopy of report dated 28.10.2009 containing Test
Result and remark of sample.
10. A photocopy of application dated 21.11.2009 for
submission of Testing Report of coarse aggregate and sand
against the work of earth work in filling, construction of
minor bridges and other miscellaneous work in between
Athmal Gola to Barh in connection with 3rd line from
Bakhtiyarpur to Barh.
11. A photocopy of drawing with details description
handed over the claimant on 25.11.2009.
12. A photocopy of complaint dated 30.11.2009 to the
Deputy Chief Engineer/Cons. E.C. Railway, Chiraiyatand
Patna in respect of restraining the work by the Assistant
Engineer, Mokama, Open the line and threatening for
lodging FIR against the claimant.
13. A photocopy of letter dated 01.12.2009by which the
claimant inform to the Chief Engineer/ Cons. Jharkhand
E.C. Railway, Mahendru Ghat, Patna by submission of bar
chart with design M-20, M-25, M-30 dated 10.09.2009,
Soil sample test to NIT, Patna and requested further that
after receiving the test report same will be submitted in the

Patna High Court COMMERCIAL APP No.10 of 2026 dt.11-09-2026
31/50
office of Deputy Chief Engineer/Cons. Railway
Chiraiyatand Patna.
14. A photocopy of letter dated 30.12.2009 with regard to
submission of soil testing report to the Deputy Chief
Engineer/Cons. E.C. Railway Chiraiyatand, Patna.
15. A photocopy of request letter to the Deputy Chief
Engineer/Cons. Bridge, Patna dated Chiraiyatand
04.02.2010 to make available approved map in respect of
Tender No. -28/2008-09.
16. A photocopy of application dated 07.05.2010 by which
claimant/petitioner made request to the Deputy Chief
Engineer, Construction, E.C. Railway, Chiraiyatand Patna
for extension execution Bridge, for time under of of work
of contract stopped on account public hindrance,
alongwith bar chart also.
17. A photocopy of application to the Deputy Chief
Engineer, Chiraiyatand Patna, E.C. Railway dated
18.06.2010 by which the claimant has inform that due
direction/extension of time, to non-availability of
instruction the agency and sustain financial loss on day-to-
day basis, which were calculated Rs. 81 Lakhs per day.
18. A photocopy of order dated 20.08.2010 issued under
the issued under the signature of Deputy Chief Engineer/
Con., E.C. Railway Chiraiyatand, Patna by which
extension of time for the work under contract was granted
under Clause-17 (B) of GCC, 2001 with Token Penalty of
Rs. 1000/- per day.
19. A photocopy of protest dated 15.09.2010 against
extension of time dated 20.08.2010.
20. A photocopy of seven days' notice dated 09.09.2010
issue by Construction Department, E.C. Railway under the
signature of Deputy Chief Engineer Construction, E.C.
Railway, Patna and its reply of the claimant dated
15.09.2010 and work in progress report submitting by site
incharge engineer to the AEN/ Con./ Patna dated
20.09.2010.
21. A photocopy of application dated 24.09.2010 to the
Deputy Chief Engineer/ Cons. E.C. Railway, Chiraiyatand
Bridge Patna-20 by which claimant had furnished
information restraining the work by the P.w.I of open line
namely Dilip Kumar, Section Engineer, Ρ.Κ. Haldhar and
Assistant Engineer, Mokama (Meenajee).
22. A photocopy of application dated 30.09.2010 to the
Deputy Chief Engineer/Cons. E.C. Chiraiyatand Bridge,
Patna. Railway.

Patna High Court COMMERCIAL APP No.10 of 2026 dt.11-09-2026
32/50
23. A photocopy of letter dated 27.09.2010, 28.09.2010
and 29.09.2010 concerning internal communication under
Construction Department, E.C. Railways, which disclosed
working state, work progress of the work under contract.
24. A photocopy cum. protest dated 02.11.2010 before the
filed by the complainant / petitioner before the CAO and
GM Railway, Mahendru Ghat Patna /E.C. Railway
Hajipur.
25. A photocopy of responding letter dated 13.12.2010
issued by the Deputy Chief Engineer / CONST. Patna
dated 13.12.2010 along with reference letter dated
24.11.2010 as well as report submitted by the Senior
Section Engineer / Work /CONST./ E.C. Railway Patna
dated 13.12.2010.
26. A photocopy of representation dated 21.11.2011 for an
appointment of an arbitrator in connection with tender
no.28/2008-09 letter no. DCE/Con/PNBE/WT/51 dated
27-04-2009.
27. A photocopy of representation cum Reminder dated
23.12.2011."
59. On behalf of the Railways also, a list of documents
was filed enclosing the following documents:-
"1. Letter dated 27/04/2009- Acceptance Letter
(annexure1)
2. Letter dated 27/04/2009- Extension given (annexure 2)
3. Letter dated 18/05/2009- Request for submission of
performance Guarantee (annexure 3)
4. Letter dated 15/07/2009- Asking for submission of
performance guarantee and poor progress of work
(annexure 4)
5. Letter dated 18/08/2009-7 days notice for showing
adequate progress of work (annexure 5)
6. Letter dated 24/08/2009- letter of claimant to Dy. Chief
Engineer expressing his inability to commence the work
due to non-availability of machinery & sufficient labour 9
and claiming that he has been engaging in other site at
Bakhtiyarpur surface triangle (annexure 6)
7. Letter dated 03/09/2009- Asking for submission of mix
design for concrete work & soil sample (annexure 7)
8. Letter dated 24/11/2009- Not submitted of bar chart mix
design (annexure 8)

Patna High Court COMMERCIAL APP No.10 of 2026 dt.11-09-2026
33/50
9. Letter dated 04/09/2009- Submission of mix design by
claimant (annexure 9)
10. Letter dated 07/11/2009- Asking for submission of
performance guarantee (annexure 10)
11. Letter dated 07/05/2010- letter of claimant to Dy. Chief
Engineer (annexure 11)
12. Letter dated 23/08/2010- No submission of
performance guarantee & poor work progress (annexure
12)
13. Letter dated 09/09/2010- 7 days notice to commence
the work (annexure 13)
14. Letter dated 15/09/2010- letter of claimant agitating the
issue which was marked by railway (annexure 14)
15. Letter dated 08/10/2010- letter to asking for
performance guarantee & execution of formal contract
agreement (annexure 15)
16. Letter dated 20/10/2010- 48 hrs notice served
(annexure 16)
17. Letter dated 27/10/2010- Termination notice to the
claimant (annexure 17)
18. Letter dated 03/11/2010- letter for final measurement
(annexure 18)
19. Letter dated 15/11/2010- letter to Dy. Chief Engineer
(annexure 19)
20. Letter dated 03/12/2010- letter of M.P.(Rajya Sabha) to
railway & railway replied on 13/12/2010, 15/12/2010 and
10.02.2011 (annexure 20 series)
21. Letter dated 10/12/2010 and 30/12/2010- Claimant
letter to Railway (annexure 21)
22. Letter dated 30/12/2010 and 19/01/2011- letter for
Final Measurement (annexure 22 series)."
60. At this stage, this Court finds that the hearing in the
matter continued and finally on 05.01.2023, on behalf of the
Railways the required documents with their two photocopies each
as mentioned in the order dated 18.12.2022 were submitted. One
copy of the document was handed over to the claimant. Since the
parties requested for physical hearing of the matter, vide order

Patna High Court COMMERCIAL APP No.10 of 2026 dt.11-09-2026
34/50
dated 05.01.2023, the learned arbitrator fixed the arbitral
proceeding on 20.02.2023 at 3.00 PM for further hearing. Both the
parties were directed to file their respective written submissions.
On 20.02.2023, the parties did not file their respective written
submissions, therefore, they were directed to file the written
arguments/submissions by the next date i.e. 21.02.2023, failing
which, the award shall be prepared on the basis of the materials
available on the record.
61. There is no order-sheet on the record showing the date
of filing of the written submissions by the parties, but then there is
an order dated 18.03.2023. On the said date, the award has been
pronounced.
62. We have found that on record the written arguments
of the claimant as well as the written arguments of the respondent
are available, thus, it is evident that after the hearing had
concluded and the parties were given an opportunity to file their
written submissions, at this stage, the claimant enclosed with it's
written submissions the details/description of item wise claim
chart in support of paragraph '8' of the claim petition. In this
regard, paragraph 21 of the written submissions of the claimant are
extracted hereunder for a ready reference:-
"21. That in support of para-8 of claim petition details
description of item wise claim chart attached with this
written argument on separate sheet of paper."

Patna High Court COMMERCIAL APP No.10 of 2026 dt.11-09-2026
35/50
63. It is evident that copy of the written arguments were
not served upon the Railways. For the first time, an explanation
was offered to the claims made in paragraph '8' of the claim
petition. The enclosure to the written submissions are as under:-

ikjkxzkQ & 8
i. taxy dVkbZ NVkbZ] feVVh dfVax fQfyax] lkbZV ij yscj]
e'khujh] gSæksfyd VªsDVj] gSæksfyd Vªd ¼gbZok½]Mkstj] jksyj]
bR;kfn [kpZ VksVy nqjh & 625 ehVj VksVy [kpZ
2]40]000@& ¼nks yk[k pkyhl gtkj #i;k ½
ii
- vFkeyxksyk LVs'ku ls ck<+ LVs'ku ds chp 625 Vªh xkMZ jsyos
ykbu ds 30 ehVj ck, lkbM esa cuokus esa çfr Vªh xkMZ
2700 #i;k [kpZ gS]
x
2700 625¾ 16]87]500 @& ¼ lksyg yk[k lrklh gtkj
ikap lkS #i;k ½
iii. lko/kkuh cksMZ ¼ CAUTION BOARD ½ VksVy 18 fil
9722@& çfr fil lko/kkuh cksMZ cukus esa [kpZ
18 x 9722¾ 1]75]000@& ¼,d yk[k ipgrj gtkj #i;k ½
iv. ,d fil daI;wVj [kjhnus vkSj vlsEcfyax djus esa iqjs lsV ds
lkFk dqy dher 72]000@& ¼cgÙkj gtkj #i;k ½
v - daI;wVj v‚ijsVj dk 18 ekg dk dqy ekfld osru çfr ekg
5450 18 x 5450 ¾ 98]100@& ¼vUBkuos gtkj ,d lkS
#i;k ½
vi. LVksu fpIl ¼30 mm ] 20 mm ] 10 mm ½
• 30 mm LVksu fpIl çfr 100¼ CFT ½¾5000@&
5000 x 7¾35]000@& çfr Vªd 35000 x 50¼Vªd½ ¾
17]50]000@& ¼ l=g yk[k ipkl gtkj #i;k ½
• 20 mm LVksu fpIl çfr 100¼ CFT ½¾5000@&
5000 x 7¾35]000@& çfr Vªd 35000 x 50¼Vªd½¾17]50]000@&
¼ l=g yk[k ipkl gtkj #i;k ½
• 10 mm LVksu fpIl çfr 100 ¼ CFT ½¾2400@& 2400 x 7
¾ 16]800@& çfr Vªd 16800 x 50¼Vªd ½¾8]40]000@& ¼vkB
yk[k pkyhl gtkj ½
dqy [kpZ ¾ 43]40]000@& ¼rSrkfyl yk[k pkyhl gtkj½
vii. 100 Vªd ckyw
CFT x CFT
• çfr 100 3600 @& ¼3600 10 ¾36000@&½
36000 x 100¼Vªd½¾ 36]00]000 ¼Nfrl yk[k #i;k ½
viii- vk;ju ¼LVhy jM½ dqy 100 Vu
•
çfr Vu 48]055@& [kjhnk x;k

Patna High Court COMMERCIAL APP No.10 of 2026 dt.11-09-2026
36/50
48]055 x 100¼Vu½¾ 48]55]000@&¼vM+rkfyl yk[k ipiu
gtkj #i;k½
ix. lhesaV VksVy 13846 cSx [kjhnk x;k çfr cSx 325@&
• 325 x 13846¾ 45]00]000 ¼iSrkyhl yk[k #i;k ½
x.
VksVy iqy iqfy;k dh la[;k 6 fil iqy iqfy;k uå&
20]21]23]24]27]28] Vªsap dfVax yscj ,oa e'khujh }kjk VksVy
[kpZ 1]00]000@& ¼,d yk[k #i;k½
xi.
VksVy iqy iqfy;k dh la[;k 6 fil iqy iqfy;k uå&
20]21]23]24]27]28] dk csM lQkbZ yscj }kjk [kpZ 72]000@&
¼cgÙkj gtkj #i;k ½
xii- NIT PATNA,
feVVh VsLV ,oa jsyos }kjk
APPROVED yksdy yscksjsVjh }kjk djk;k x;k VksVy
VsfLVax [kpZ 3]60]000@& ¼rhu yk[k lkB gtkj #i;k½
xiii. ckyw] LVksu fpIl] LVhy jM] ikuh vkSj vU; mi;ksx esa
vkus okyh oLrq] NIT PATNA ,oa jsyos }kjk
APPROVED yksdy yscksjsVjh }kjk djk;k x;k VksVy
VsfLVax [kpZ 72]000@& ¼cgÙkj gtkj #i;k ½
xiv. fufonk la[;k 28@2008&09 VksVy oSY;w 6]95]79]446-35@&
(Six Crore Ninety Five Lakhs Seventy Nine
Thousand Four Hundred Fourty Six and Thirty
Five Paisa Only)
VksVy oSY;w dk 15% ç‚fQV Rs- 1]04]36]916-95@& (One
Crore Four Lakh Thirty Six Thousand Nine
Hundred Sixteen and Ninety five Paisa Only)
xv. Claim for loss of hire charges of Machinery,
Centering Material, Purchase Machine on loan
etc. engage for execution of the work for the
prescribe period and beyond the extended period-
dqy 40 gkbMªksfyd VªsDVj dk HkkMk çfr ekg 25000@& çfr
VªsDVj 25000 x 40¾10]00]000 ¼nl yk[k #i;k ½ çfr ekg
10]00]000 x 18¾ 1]80-00]000 ¼,d djksM+ vLlh yk[k #i;k½
• dqy 10 gkbMªksfyd Vªd ¼gkbZok½ dk HkkMk çfr ekg
1]80]000@& ¼24 HOURS) 180000 x 10 ¾ 18]00]000
¼vBkjg yk[k #i;k½ çfr ekg
1800000 x 18¾ 3]24]00]000@& ¼rhu djksM+ pkSchl yk[k #i;k ½
• dqy 2 iksDysu e'khu dk HkkMk çfr ?kaVk 2000@&
2000 x 24¾48]000@& çfr fnu çfr iksDysu
x
48000 2¾96]000@& çfr fnu 2 iksDysu e'khu dk
96000 x 30 ¾ 28]80]000 çfr ekg
28]80000 x 18¾ 5]18]40]000 ¼ikap djksM+ vëkjg yk[k pkyhl
gtkj #i;k½
• dqy 2 ts lh ch e'khu dk HkkMk çfr ?kaVk 1000@&
1000 x 24¾24]000@&çfr fnu çfr tslhch
x
24000 2¾48]000@& çfr fnu 2 tslhch dk HkkMk
48]000 x 30¾ 14]40]000@& çfr ekg

Patna High Court COMMERCIAL APP No.10 of 2026 dt.11-09-2026
37/50
14]40]000 x 18 ¾ 2]59]20]000@& ¼nks djksM+ mUlB yk[k
chl gtkj #i;k½
• Mkstj e'khus dk HkkMk çfr ekg 2]40]000@&
2]40]000 x 18 ¾ 43]20]000 ¼rSrkfyl yk[k chl gtkj #i;k½
• jksyj e'khu ,oa xzsMj e'khu çfr ekg dk HkkMk 2]40]000@&
2]40]000 x 18 ¾ 43]20]000 ¼rSrkfyl yk[k chl gtkj #i;k½
• jsyos ds ifj;kstuk dk;Z esa lkbZV ij dk;Z dj jgs lHkh
deZpkfj;ksa dk osru ,oa Hkkstu ukLrk ,oa vU; [kpZ çfr ekg
5]00]000@&
5]00]000 x 18 ¾ 90]00]000@& ¼uCcs yk[k #i;k ½
VksVy [kpZ & 14]58]00]000@& ¼pkSng djksM+ vUBkou yk[k
#i;k½
xv. Claim for compensation for the performance of
full value of work at the rate of 3% = Rs-
20,87,383,39/-
xvii. Claim for refund of earnest money with
interest rate of 18% per annum till date of
realization = Rs. 6, 84, 086, .40/-
xviii- Cost of litigation and arbitration Cost =Rs-
7,00,000/-
Secretary Charge = Rs. 45,000/-
Arbitration fees = Rs. 15,31,780/-
= Rs. 1,10,000/-
Total- = Rs. 23,86,780/-
Total Amount =18,15,66,766.74 (Eighteen Crore
Fifteen Lakh Sixty Six Thousand Seven Hundred
Sixty six and Seventy four Paisa)
64. It is evident that, this time, the claimant raised a total
claim of Rs. 18, 15, 66, 766.74 (Eighteen crore fifteen lacs sixty
six thousand seven hundred sixty six and seventy four paisa).
Surprisingly, the written submissions has, though, been signed by
the learned counsel for the claimant but no date has been
mentioned thereon. This Court has already recorded that in the
order-sheet of the learned Arbitral Tribunal no order has been
maintained showing the date on which the written submissions

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were filed on behalf of the claimant or the Railways. In any case,
those written submissions have come on the record only after the
hearing had concluded on 20.02.2023.
65. In the aforementioned backgrounds appearing from
the records, this Court has taken note of the award made by the
learned sole arbitrator. In paragraph '2' of the award, the learned
arbitrator has reproduced the claims stated in paragraph '8' of the
statement of claim. This Court finds that the learned tribunal
proceeded to assume on its own that it was a case of termination of
contract. The tribunal could not appreciate that, in this case, the
contract was not executed after issuance of LOA. The Arbitral
Tribunal framed as many as 11 issues in paragraph '5' of its award
which we have reproduced herein-above under the heading
"Summary of the Award".
66. This Court finds that in paragraph '7' of the award, the
learned tribunal proceeded to consider the claims explained by the
claimant in its written submissions. The tribunal took note of the
written submissions and the detail description of item-wise claim
chart which was filed along with the written submissions.
According to this detail description, the claimant made a claim for
hiring of ten hydrolic truck (Hywa) at the rate of Rs.1,80,000/- for
24 hours. He has multiplied Rs.1,80,000/- by 10 and claimed

Patna High Court COMMERCIAL APP No.10 of 2026 dt.11-09-2026
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Rs.18,00,000/- per month. He multiplied Rs.1,80,000/- by 18 and
thereby claimed Rs. 3,24,00,000/-. Like-wise, the claimant raised a
claim of dozer machine at the rate of Rs.2,40,000/- per month and
multiplied the same by 18, thereby raising a claim on this account
as Rs.43,20,000/-. On account of salary, lunch, breakfast etc. for
the employees working at the site the claimant raised Rs.5,00,000/-
per month and multiplied it by 18, thereby claiming Rs.90,00,000/-
on this account. In this manner, the claims were provided in detail
with the written submissions. No document showing hiring of the
machines, purchase of machine on loan or payment on account of
hiring or purchase of the machines, equipment could be placed on
the record. No document by way of evidence was placed showing
that the claimant was incurring expenses of Rs.5,00,000/- per
month on account of salary, breakfast, lunch and other expenses of
the employees. Even the number of the employees deputed at the
site is not disclosed.
67. We have noticed that the learned tribunal proceeded to
consider the issues framed and while answering issue no.4, the
learned tribunal has concluded at one stage that the work in
question was not performed by the claimant within time but then
the learned tribunal has taken a view that the claimant has
explained the same which appears to be satisfactory and cannot be

Patna High Court COMMERCIAL APP No.10 of 2026 dt.11-09-2026
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ignored. Before the learned Arbitral Tribunal there was no oral or
documentary statement to prove any of the claims. The learned
tribunal has considered the description/detail claim submitted by
the claimant in its written submissions and allowed a claim for
Rs.14,58,00,000/- under item no.XV. This detail claim and figure
of amount of claim were taken from the enclosures to the written
submissions filed on behalf of the claimant after the hearing was
concluded. The learned tribunal held that the claimant is entitled to
be paid Rs. 16,64,34,132/- with simple interest at the rate of 12%
per annum from the date of the award to the realization of the
same. The claimant was also held entitled to be paid
Rs.16,41,780/- (Rs.15,31,780+Rs.1,10,000/-) by the respondent
Railways as arbitration fee and Rs.45,000/- as secretarial charge,
which amount be paid as a share. The respondent-Railways was
directed to pay the entire amount to the claimant within a period of
four months from today.
68. On a bare perusal of the impugned award, it is evident
that the learned arbitrator proceeded to consider the claims which
were described by enclosing an annexure to the written
submissions after hearing in the arbitration matter was concluded
on 20.02.2023. The various claims made by the claimant either in
the claim petition or in the enclosure to the written submissions

Patna High Court COMMERCIAL APP No.10 of 2026 dt.11-09-2026
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filed by them were not supported by any oral or documentary
evidences. Moreover, it is difficult to understand as to how the
claimant could raise and explain his claims in the written
submissions after conclusion of hearing.
A glance over the judicial pronouncements
69. Learned Senior counsel for the appellants has heavily
relied upon the judgment of the Hon’ble Supreme Court in the case
of Som Datt Builders (supra). In this case, the Hon’ble Supreme
Court held that it is obligatory on the part of the Arbitral Tribunal
to state reasons in support of its award. Lack of reasons would
make the award legally flawed. Referring to Section 31(3) of the
Act of 1996, it has been held that the Act mandates that reasons
must be stated by the Arbitral Tribunal upon which the award is
based. In the facts of the said case, however, it was found that the
High Court ought to have given Arbitral Tribunal an opportunity to
give reasons. In the present case, we find that in fact, the claimant
has only made bald statements raising his claim before the learned
Tribunal. No evidence at all has been brought on record by the
claimant to support his claims. Since, no evidence is there on the
record, this Court finds no reason to remit the matter to the learned
Arbitral Tribunal. We keep in mind that the dispute is about 16-17
years old.

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70. In the case of Ssangyong Engineering (supra), the
Hon’ble Supreme Court has considered the meaning of the
expression “public policy of India” as elucidated by the Courts
prior to the Arbitration and Conciliation (Amendment) Act, 2015.
It has been held that there are permissibility of interference on
specific sub-grounds of: (1) arbitrator not adopting “judicial
approach”; (2) breach of principles of natural justice; (3)
contravention of statute not linked to public policy or public
interest, as being a patent illegality under Section 34(2-A); and (4)
“most basic notions of justice”. Paragraphs ‘50’ and ‘51’ of the
said judgment are being reproduced hereunder for a ready
reference:-
“ 50. Section 24(3) is a verbatim reproduction of
Article 24(3) of the U NCITRAL Model Law on
International Commercial Arbitration (the U NCITRAL
Model Law). Similarly, Sections 26(1) and (2) are a
verbatim reproduction of Article 26 of the U NCITRAL
Model Law. Sub-section (3) of Section 26 has been
added by the Indian Parliament in enacting the 1996
Act.
51. Sections 18, 24(3) and 26 are important pointers
to what is contained in the ground of challenge
mentioned in Section 34(2)( a )( iii ). Under Section
18, each party is to be given a full opportunity to
present its case. Under Section 24(3), all statements,
documents, or other information supplied by one
party to the Arbitral Tribunal shall be communicated
to the other party, and any expert report or document

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on which the Arbitral Tribunal relies in making its
decision shall be communicated to the parties.
Section 26 is an important pointer to the fact that
when an expert's report is relied upon by an Arbitral
Tribunal, the said report, and all documents, goods,
or other property in the possession of the expert,
with which he was provided in order to prepare his
report, must first be made available to any party who
requests for these things. Secondly, once the report is
arrived at, if requested, parties have to be given an
opportunity to put questions to him and to present
their own expert witnesses in order to testify on the
points at issue. ”
71. In case of Associate Builders (supra), the Hon’ble
Supreme Court has dealt with the Fundamental Policy of Indian
Law which would mean (i) compliance with statutes and judicial
precedents; (ii) Need for judicial approach; (iii) Natural justice
compliance; (iv) Wednesbury reasonableness. The Hon’ble
Supreme Court has held that interference with an arbitral award is
permissible only when findings of the Arbitrator are arbitrary,
capricious or perverse, or when conscience of court is shocked, or
when illegality is not trivial or goes to the root of the matter. It
should not be a case of merely another view being possible.
72. In the case of Unibros (supra), the Hon’ble Supreme
Court was considering a challenge to the judgment and order of a
th
learned Single Judge dated 25 February, 2010, whereby an
objection of the All India Radio (respondent) under Section 34 of

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the Act was allowed resulting in setting aside of an arbitral award
th
dated 15 July, 2002 to the extent it awarded loss of profit to the
appellant. The Hon’ble Supreme Court took note of the
submissions advanced on behalf of the parties and discussed the
principles governing the claim of loss of profit in paragraphs ‘15’
to ‘20’ which we extract hereunder for a ready reference:-
15. Considering the aforesaid reasons, even
“
though little else remains to be decided, we would
like to briefly address the appellant’s claim of loss
of profit. In Bharat Cooking Coal (supra), this
Court reaffirmed the principle that a claim for such
loss of profit will only be considered when
supported by adequate evidence. It was observed:
“24. … It is not unusual for the contractors to
claim loss of profit arising out of diminution in
turnover on account of delay in the matter of
completion of the work. What he should
establish in such a situation is that had he
received the amount due under the contract, he
could have utilised the same for some other
business in which he could have earned profit.
Unless such a plea is raised and established,
claim for loss of profits could not have been
granted. In this case, no such material is
available on record. In the absence of any
evidence, the arbitrator could not have awarded
the same.”
16. To support a claim for loss of profit arising
from a delayed contract or missed opportunities
from other available contracts that the appellant
could have earned elsewhere by taking up any, it

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becomes imperative for the claimant to substantiate
the presence of a viable opportunity through
compelling evidence. This evidence should
convincingly demonstrate that had the contract
been executed promptly, the contractor could have
secured supplementary profits utilizing its existing
resources elsewhere.
17. One might ask, what would be the nature and
quality of such evidence? In our opinion, it will be
contingent upon the facts and circumstances of
each case. However, it may generally include
independent contemporaneous evidence such as
other potential projects that the contractor had in
the pipeline that could have been undertaken if not
for the delays, the total number of tendering
opportunities that the contractor received and
declined owing to the prolongation of the contract,
financial statements, or any clauses in the contract
related to delays, extensions of time, and
compensation for loss of profit. While this list is
not exhaustive and may include any other piece of
evidence that the court may find relevant, what is
cut and dried is that in adjudging a claim towards
loss of profits, the court may not make a guess in
the dark; the credibility of the evidence, therefore,
is the evidence of the credibility of such claim.
18. Hudson's formula, while attained acceptability
and is well understood in trade, does not, however,
apply in a vacuum. Hudson's formula, as well as
other methods used to calculate claims for loss of
off-site overheads and profit, do not directly
measure the contractor's exact costs. Instead, they
provide an estimate of the losses the contractor may
have suffered. While these formulae are helpful
when needed, they alone cannot prove the

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contractor's loss of profit. They are useful in
assessing losses, but only if the contractor has
shown with evidence the loss of profits and
opportunities it suffered owing to the prolongation.
19. The law, as it should stand thus, is that for
claims related to loss of profit, profitability or
opportunities to succeed, one would be required to
establish the following conditions : first, there was
a delay in the completion of the contract; second,
such delay is not attributable to the claimant; third,
the claimant's status as an established contractor,
handling substantial projects; and fourth, credible
evidence to substantiate the claim of loss of
profitability. On perusal of the records, we are
satisfied that the fourth condition, namely, the
evidence to substantiate the claim of loss of
profitability remains unfulfilled in the present case.
20. The First Award was interfered with by the
High Court for the reasons noted above. The
Arbitrator, in view of such previous determination
made by the High Court, could have granted
damages to the appellant based on the evidence on
record. There was, so to say, none which on proof
could have translated into an award for damages
towards loss of profit. A claim for damages,
whether general or special, cannot as a matter of
course result in an award without proof of the
claimant having suffered injury. The arbitral award
in question, in our opinion, is patently illegal in that
it is based on no evidence and is, thus, outrightly
perverse; therefore, again, it is in conflict with the
“public policy of India” as contemplated by section
34(2)(b) of the Act. ”

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73. This Court had occasion to consider almost an
identical matter in the case of Narayan Prasad (supra) in
Commercial Appeal No. 1 of 2024. In its judgment, this Court
found that the learned sole Arbitrator had not followed the
principles of natural justice and the findings recorded by the
learned Arbitrator were not based on evidence, rather, those were
based on the pleadings alone. This Court, therefore, held that the
impugned order suffered from vice of non-observance of principles
of natural justice and the fundamental policy of the Indian law. The
procedure adopted by the Arbitral Tribunal was found in conflict
with most basic notion of justice.
74. Keeping in view the discussions made hereinabove, as
we reach to a conclusion that in this case, in fact, no evidence is
there on the record to allow any one of the claims of the contractor
(the respondent), the learned Arbitral Tribunal has committed gross
error in taking into consideration the claims described/detailed in
the annexures to the written submissions filed on behalf of the
respondent after the arguments of the parties were over on
20.02.2023. The award, therefore, suffers from perversity of
findings, legal infirmities and in violation of principles of natural
justice.

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75. At this stage, we have also considered the impugned
th
judgment/order of the learned Commercial Court rendered on 20
February, 2026 in Miscellaneous (Arbitration) Case No. 66 of
2023. It is, by this judgment, the learned Commercial Court had
rejected the application of the appellants preferred under Section
34 of the Act of 2015 for setting aside of the award. We have
noticed that the learned Commercial Court has basically extracted
pleadings of the parties and thereafter proceeded to take note of
Sections 19 and 28 of the Act of 1996. Nothing is stated about the
application of Sections 19 and 28 in the facts of the present case.
76. We have further noticed that the learned Commercial
Court has taken note of the judgment of the Hon’ble Supreme
Court in the case of Gayatri Balasamy vs. M/s. Isg Novasoft
Technologies Limited reported in 2025 INSC 605 (SLP (Civil)
No. 15336-15337 of 2021) disposed of on 30.04.2025, wherein it
has been held that the scope of judicial intervention under Section
34 is confined to the limited grounds expressly provided therein.
The Court does not possess the power to correct errors of fact,
reconsider costs, or engage in a review of the merits of the arbitral
award.
77. The learned Commercial Court has though proceeded
to analyze the scope of judicial review in the impugned judgment

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but we did not find any analysis of the materials available on the
record of the learned Arbitral Tribunal. The learned Commercial
Court took it as if the applicants were seeking to re-agitate the
same factual and interpretative issues which were adjudicated by
the learned Arbitrator. The learned Commercial Court has
completely missed out on the submissions of the applicant that the
claims raised by the contractor (respondent) were not proved by
adducing any oral or documentary evidence.
78. The learned Commercial Court further failed to
appreciate that once the arguments were over and the parties were
given an opportunity to file their written submissions, the claimant
could not have attached annexures with the written submissions
giving a different claim and describing and detailing its claim in
the statement of claim in a completely different manner. Claim in
paragraph '8' of the statement of claim under item no. XV for a
sum of Rs. 13,77,000/- was raised to Rs. 14,58,00,000/- in the
annexure to the written submissions.
79. We are of the considered opinion that neither the
impugned judgment of the learned Commercial Court nor the
impugned award can survive on the touchstone of the principles
governing equal treatment to the parties. The impugned award
suffers from patent illegality on the face of it. The finding based on

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no evidence at all or an award which ignores vital evidence in
arriving at its decision would be perversed and liable to be set
aside on the ground of patent illegality.
80. We, therefore, set aside the impugned judgment of the
learned Commercial Court and allow the application for setting
aside of the award of the learned Arbitral Tribunal in
Miscellaneous (Arbitration) Case No. 66 of 2023. The impugned
award is, accordingly, set aside.
81. This appeal is allowed.
(Rajeev Ranjan Prasad, J)
(Sunil Dutta Mishra, J)
arvind/Rishi-
AFR/NAFR
AFR
CAV DATE
Uploading Date 17.09.2026
Transmission Date 17.09.2026