JAY BHARAT CONSTRUCTION vs UNION OF INDIA

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IN THE HIGH COURT AT CALCUTTA
CIVIL APPELLATE JURISDICTION
ORIGINAL SIDE
Present:
The Hon’ble Justice Debangsu Basak
And
The Hon’ble Justice Aryak Dutt



APOT 10 of 2025
WITH
AP 780 OF 2012
GA 1 of 2025
GA 6 of 2026

Jay Bharat Construction
Vs.
Union of India

For the Appellant : Mr. Sarosij Dasgupta, Adv.
Ms. Suranjana Chatterjee, Adv.

For the Respondent : Mr. Sukanta Ghosh, Adv.


Hearing Concluded on : August 24, 2026
Judgement on : September 2, 2026

DEBANGSU BASAK, J.:-

1. Appellant has assailed the judgment and order dated
September 10, 2024 passed in AP 780 of 2012 and EC No. 3
of 2024 by the learned Single judge.
2. By the impugned judgment and order, learned Single
Judge has allowed AP 780 of 2012 which was challenged
under Section 34 of the Arbitration and Conciliation Act, 1996
SACHIN
KAHAR
Digitally signed by
SACHIN KAHAR
Date: 2026.09.02
13:37:31 +05'30'

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directed against the award dated May 24, 2012 and dismissed
the Execution Petition being EC No. 3 of 2024.
3. Learned advocate appearing for the appellant has
contended that, appellant participated in a tender issued by
the South Eastern Railway. He has contended that, a contract
dated May 5, 2005 was entered into for construction of RCC
Shed, heavy duty flooring, apron, inspection pit, Gantry
Girder, etc., in connection with the construction of Electric
Loco Shed to home 100 Locos at Bokaro Steel City Station of
South Eastern Railway.
4. Learned advocate appearing for the appellant has
contended that, the appellant sought extension of time to
execute the contract. The respondent had granted such
extension on December 8, 2006 without imposing any
liquidity damages. He has contended that, consequent upon
the extension granted on December 08, 2006, the contract
stood extended till June 30, 2007.

5. Learned advocate appearing for the appellant has
contended that, during the validity period of the contract, the
respondent issued a notice dated April 17, 2007 requiring the
appellant to restart the work under the contract. Respondent

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had issued a letter dated May 03, 2007 purporting to give
seven days’ notice. Thereafter, respondent had issued a letter
dated May 23, 2007 allowing 48 hours to the appellant to
show cause. Thereafter, respondent had issued the notice of
termination dated May 29, 2007.
6. Learned advocate appearing for the appellant has
submitted that, disputes and differences arose between the
parties with regard to the contract. Appellant had submitted a
statement of claim. Appellant had submitted a revised
statement of claim. Thereafter, the respondent had filed a
statement of defence before the Arbitrator.
7. Learned advocate appearing for the appellant had
drawn the attention of the Court to the award dated May 24,
2012. He has contended that, the award contains appropriate
and adequate reasons for dealing with every claim of the
respective parties. He has pointed out that learned Arbitrator
did not allow all the claims made by the appellant.

8. Learned advocate appearing for the appellant has
drawn the attention of the Court to the impugned judgment
and order. He has contended that, the impugned judgment
and order proceeds on the basis of the alleged failure of the

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learned Arbitration in not framing issues with regard to the
2019 (15)
termination of the contract. He has relied upon
SCC 131 (Ssangyong Engineering and Construction
Company Limited vs. National Highways Authority of
India (NHAI)) , 2025 (7) SCC 1 (Gayatri Balasamy vs. ISG
Novasoft Technologies Limited) , 2021 (9) SCC 1 (Project
Director, National Highways No. 45 E and 220 National
Highways Authority of India vs. M. Hakeem and Another)
on such aspect. Relying upon 2021 (9) SCC 1 (Project
Director, National Highways No. 45 E and 220 National
Highways Authority of India vs. M. Hakeem and Another)
learned advocate appearing for the appellant has contended
that, Court exercising powers under Section 34 of the Act of
1996 cannot modify the award.
9. Learned advocate appearing for the appellant has
relied upon 2019 (7) SCC 236 (Parsa Kente Collieries
Limited vs. Rajasthan Rajya Vidyut Utpadan Nigam
Limited) on the proposition that, error of fact allegedly
committed by the Arbitrator cannot be looked into by a Court
exercising jurisdiction under Section 34 of the Act of 1996.
Relying upon 2022 (1) SCC 131 (Delhi Airport Metro

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Express Private Limited vs. Delhi Metro Rail Corporation
Limited)
learned advocate appearing for the appellant has
contended that, the award cannot be termed as to be patently
illegal.
10. Learned advocate appearing for the appellant has
relied upon 2023 SCC OnLine Del 317 (Uttam Singh
Duggal & Sons vs. Union of India and Others) for the
proposition that, implied termination is a valid termination.
He has relied upon 2015 (4) SCC 136 (Kailash Nath
Associates vs. Delhi Development Authority and Another)
for the proposition that, security deposit cannot be forfeited.
11. Learned advocate appearing for the respondent has
relied upon 2025 (7) SCC 1 Gayatri Balasamy vs. ISG
Novasoft Technologies Limited) for the proposition that, an
award can be severe. According to him, in the facts and
circumstances of the present case, learned Single Judge has
rightly severed the wrong portions from the award.

12. Respondent had floated the tender being T No.
CE/CON/GRC/15/2004 for construction of electric loco shed
to house 100 locos at Bokaro Steel City Station. The
respondent had awarded the contract to the appellant by a

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writing dated October 19, 2004. Parties had executed the
contract agreement on May 5, 2005.
13. The value of the contract with the party had entered
into was Rs. 7,32,91,835/-. The contract had stipulated the
time for completion of the contract to be 24 months from the
date of issue/acceptance of letter.
14. Contract between the parties had reciprocal
obligations. Respondent had to issue a lay out and GAT
drawings for the appellant to make the construction.
15. Appellant had by several letters requested for
drawings. Apparently, respondent had failed to make over all
the drawings. Respondent by several letters had required the
appellant to expedite the work.
16. Appellant had from time to time had obtained
extension of the time to complete the contract. Respondent
had granted such extension without invoking liquidated
damages clause.

17. By letter dated April 19, 2007, respondent had called
upon the appellant to mobilise balance materials and to
commence work immediately. Appellant had replied thereto on

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April 24, 2007 requesting closure of the contract under clause
61 of the General Conditions of Contract.
18. Respondent had issued a seven days’ notice on May 3,
2007 and a 48 hours’ notice on May 23, 2007. On May 29,
2007, respondent had terminated the contract under clause
62 of the General Conditions of Contract.
19. The contract had an arbitration clause. Disputes and
difference having arisen between the parties, the same were
referred to arbitration. Before the Arbitral Tribunal, appellant
had submitted a statement of claims while the respondent had
submitted a statement of defence. Before the Arbitral
Tribunal, appellant had lodged 13 heads of claims while
respondent had lodged 7 heads of counter claims. Out of the
13 heads of claims of the appellant, the Arbitral Tribunal had
allowed the amount due on account of work done, refund of
security deposit and an amount towards price escalation,
price variation. The Arbitral Tribunal had rejected all other
claims of the appellant.
20. Out of the 7 counter claims of the respondent Arbitral
Tribunal had allowed the claim on account of risk and costs,
claims on account of royalty payable to the Jharkhand

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Government and claim on account of value of balance
materials available with the appellant. The Arbitral Tribunal
had rejected all other counter claims of the respondent.
21. Respondent before us had assailed the award dated
May 24, 2012 under Section 34 of the Act of 1996 being AP
No. 780 of 2012 while the appellant had filed for execution of
the award being EC No. 3 of 2024.
22. By the impugned judgment and order, the learned
Single Judge has arrived at a finding that, the respondent
never accepted the unilateral request of the appellant to close
the contract and that, the respondent had validly terminated
the contract. Appellant had failed to resume the balance work
despite the notice. Learned Single Judge has noted that the
Arbitral Tribunal did not hold the termination of the contract
to be bad or contrary to the contract. In such circumstances,
learned Single Judge has held that, since the termination was
valid, respondent was entitled to forfeit and retain the security
deposit.
23. Learned Single Judge after noting that, the termination
being valid and that the Arbitral Tribunal did not arrive on the
issue of the validity of the termination has proceeded to hold

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that the award directing release of the security deposit was
patently illegal and contrary to Section 28(3) of the Act of 1996
as being de hors.
24. With regard to the award on account of risk and costs
in favour of the appellant learned Single Judge has held that,
the award is perverse to such extent. In arriving at the finding
or perversity, learned Single Judge has held that, since the
claim on account of risk and costs made by the appellant was
sought to be substantiated on the basis of Annexures A and B
and since, Annexure B indicated that the work could have
been done even without drawings, according to the learned
Single Judge, the Arbitral Tribunal had acted with patently
illegality and perversity in overlooking such documents and
awarding risk and costs in favour of the appellant. The
learned Single Judge has allowed counter claims of the
respondent on account of risk and costs.
25. Ssangyong Engineering and Construction
Company Limited (supra) has explained the expression
“public policy of India” contained in Section 34 and 48 of the
Act of 1996. It has held that, the expression “public policy of
India” would mean the “fundamental policy of Indian Law” as

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explained in paragraphs 18 and 27 of 2025 3 SCC 49
(Associate Builders Vs. Delhi Development Authority).
It
has held that, it was no longer permissible to interfere with
award on the ground that the arbitrator did not adopt a
“judicial approach”. It has held that, what is not subsumed
within the fundamental policy of Indian Law, namely the
contravention of a statute not linked to public policy or public
interest, the same cannot be brought in by the backdoor when
it comes to setting aside the award on the ground of patent
illegality. Ground of most basic notions of justice qua
contravention of the public policy of India can be attracted
only in very exceptional circumstances when the conscience of
the Court is shocked by infraction of fundamental notion or
the principles of justice.
26. Gayatri Balasamy (supra) has held that, the
modification award of the Arbitral Tribunal by Court is
permissible on limited ground. It has held that, Arbitral
Tribunal can be modified when the award is severable by
severing invalid portion from the valid award, by correcting
any clerical, computational or typographical errors which
appears erroneous on the face of the record as well as other

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manifest errors provided such modification does not
necessitate merit-based evaluation post award interest.
27. Project Director, National Highways No. 45 E and
220 National Highways Authority of India (supra) has
held that Section 34 of the Act of 1996 does not vest the Court
with the jurisdiction to modify an Arbitral award. It has held
that, power of the Court under Section 34 of the Act of 1996
to set aside the award does not include the power to modify
such an award.
28. Parsa Kente Collieries Limited (supra) has held
that, when Section 34 of the Act of 1996 applies the test of
public policy to an Arbitration Award it does not act as a
Court of Appeal and consequently errors of fact cannot be
corrected.
29. Delhi Airport Metro Express Private Limited (supra)
has held that, while deciding application under Section 34 of
the Act of 1996, the Court is mandated to act in accordance
with and within the confines of Section 34 of the Act of 1996
refraining from appreciation or re-appreciation on matters of
fact as well as law.

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30. The Delhi High Court in Uttam Singh Duggal & Sons
(supra)
has considered the necessity of the Arbitral Tribunal
giving reasons when, the party agreed to arbitration to
arbitrator who shall indicate his finding along with the sums
awarded separately on each of the dispute. While construing
the arbitration clause therein, the Delhi High Court held that,
Arbitral Tribunal should not be set aside the patently on the
ground of no reason having regard to the nature of the
arbitration clause.
31. Kailash Nath Associates (supra) has dwelt upon the
law of compensation for breach of contract under Section 34
of the Indian Contract Act.
32. It is trite law that, a Court exercising jurisdiction
under Section 37 of the Act of 1996 is required to evaluate as
to whether or not, the Court disposing of a petition under
Section 34 of the Act of 1996 applied the correct parameters
to test the challenge to the award. Section 34 of the Act of
1996 does not permit a Court to re-evaluate the evidence and
to arrive at a different finding than that of the Arbitral
Tribunal. Section 34 Court cannot act as a Court of Appeal
and substitute the findings of the Arbitral Tribunal.

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33. In the facts and circumstances of the present case, the
Arbitral Tribunal has discussed every claim and counter
claims of the parties in the award. Arbitral Tribunal has given
reasons as to its decision on every claim and counter claims
put forward before it. The views that the Arbitral Tribunal has
expressed and recorded in the award are plausible views and
cannot be termed as perverse.
34. Arbitral Tribunal has allowed claim no. 1 being the
amount due on final bill. Respondent had confirmed the
amount of the final bill pending as per final measurement.
Arbitral Tribunal has noted clause 2.17 of the agreement.
Arbitral Tribunal has therefore allowed such claim primarily
on the basis of the confirmation of the pending final bill made
by the respondent on the final bill of the claim.
35. Arbitral Tribunal has awarded refund of the two
security deposits. Arbitral Tribunal has given reasons for this.
Arbitral Tribunal has noted that security deposit amounting to
Rs. 36,97,936/- had been deposited in two tranches. Arbitral
Tribunal has noted the contention of the respondent that the
security deposit stood forfeited. However, Arbitral Tribunal
has held that, though the appellant should have completed

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the part of the work for which drawings were available in a
time bound manner before leaving the work site but at the
same time the respondent cannot shy away from the
responsibility of providing of drawings to the appellant well in
advance so that the appellant could have planned its
resources to complete the contract within the stipulated
period. Arbitral Tribunal has returned the finding that, there
was no delay on the part of the appellant in the first 24
months.
36. The reasoning given by the Arbitral Tribunal in
allowing the claim on account of refund of security deposit
has not been established to be perverse or not plausible.
Essentially, the Arbitral Tribunal has held that, the fault of
the project remaining incomplete lay on both the parties
namely the appellant and the respondent. Arbitral Tribunal
has found that, the quantum of fault of the appellant did not
permit the respondent to forfeit the security deposit and
therefore awarded such claim. View taken by the Arbitral
Tribunal being a plausible Court should not have interfered
under Section 34 of the Act of 1996.

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37. Arbitral Tribunal has allowed the claim of Rs.
3,20,016/- on account of price escalation of PVC. Arbitral
Tribunal has found that the PVC was included in the contract
and that, there was an escalation in price from October 19,
2004 to June 30, 2007. Arbitral Tribunal has therefore passed
an award with regard to the same.
38. Arbitral Tribunal has disallowed other claims of the
claimant. Arbitral Tribunal has disallowed claim Nos. 1, 4, 6
and 7 of the counter claims of the respondent. So far as the
counter-claim no. 2 is concerned, Arbitral Tribunal has held
that, the respondent undertook completion of the project and
that the risk and costs for such completion should be borne
by the appellant. Arbitral Tribunal has allowed counter claim
no. 3 with regard to the payment of royalty to the Jharkhand
Government. Arbitral Tribunal has however held that, such
amount of royalty recovered from the appellant must be
refunded to the appellant on the appellant submitting
documents confirming payment of royalty to Jharkhand
Government.
39. So far as the counter claim no. 5 is concerned, Arbitral
Tribunal has held that, materials belonging to the respondent

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and handed over to the appellant was returned by the
appellant to the respondent. It has held that it was the
responsibility of the appellant to return such materials before
leaving from the site which the appellant did not do. In such
circumstances, Arbitral Tribunal has awarded the cost for
such materials at Rs. 1,46,284/-.
40. So far as the counter claims are concerned which was
allowed as also disallowed the Arbitral Tribunal has given
cogent reasons for the same.
41. The award of the Arbitral Tribunal therefore, has
cogent reasons for the reliefs granted to the respective parties.
Learned Trial Judge however has embarked upon an exercise
of re-evaluating the evidence and substituting the findings of
the Arbitral Tribunal which is not permissible under Section
34 of the Act of 1996.
42. Contract between the parties was one of construction.
Contract required discharge of reciprocal obligations for its
successful implementation. Arbitral Tribunal found the parties
to be in breach of their reciprocal obligations. Arbitral
Tribunal while dealing with the respective claims and counter
claims evaluated the respective performances and breaches to

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allow or disallow a claim or a counter claim. Views expressed
and decision taken by the Arbitral Tribunal being plausible
and reasoned were not required to be interfered with under
Section 34 of the Act of 1996.
43. In view of the discussions above, impugned judgment
and order dated September 10, 2024 passed in AP 780 of
2012 is set aside. AP 780 of 2012 is dismissed. Execution
petition being EC No. 3 of 2024 is restored to its original file
and number.
44. APOT 10 of 2025 along with all connected applications
are disposed of without any order as to costs.

[DEBANGSU BASAK, J.]
45. I agree.
[ARYAK DUTT, J.]