Chief Electoral Officer & Anr vs M/S Mahlakshmi Light House

Court
Delhi High Court


* IN THE HIGH COURT OF DELHI AT NEW DELHI

% Judgment reserved on: 13.10.2026
Judgment pronounced on: 28.10.2026

# CNR No. DLHC010640622018
+ FAO(OS) (COMM) 43/2018
CHIEF ELECTORAL OFFICER & ANR .....Appellants
Through: Mr. Dhananjaya Mishra, Mr.
Navneet Dogra & Mr. Bhargav
Verma, Advs.
versus

M/S MAHLAKSHMI LIGHT HOUSE .....Respondent
Through: Mr. Suhail Dutt, Sr. Adv. with
Mr. Saran Suri, Ms. Ruchi Jain,
Mr. Azhar Alam, Ms.
Nagashree N Sharma & Mr.
Aman Yadav, Advs.

CORAM:
HON'BLE MR. JUSTICE AVNEESH JHINGAN
HON'BLE MS. JUSTICE SHAIL JAIN
J U D G M E N T
AVNEESH JHINGAN, J.:
1. This appeal is filed under Section 37 of the Arbitration &
Conciliation Act, 1996 (hereinafter ‘the Act’) against the decision dated
02.05.2017 (for brevity ‘impugned order') passed by the learned Single
Judge dismissing the objection petition under Section 34 of the Act.
2. The facts in brief are that the appellants invited tenders for the
supply of tentage, furniture and electrical items on hire basis during the
General Elections to the Lok Sabha in 1999. The respondent was the
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successful bidder and was awarded the work for the Karol Bagh and Outer
Delhi Parliamentary Constituencies on 09.08.1999. An agreement
containing an arbitration clause was executed between the parties.
2.1 The respondent raised bills of ₹19,98,426/- for the Karol Bagh
Constituency and ₹80,30,654 for the Outer Delhi Constituency. The
appellants alleged that the bills were inflated. Clause 19 of the agreement
provided that the payment was subject to scrutiny, approval of bills and
physical verification of the tentage items before dismantling of the
structure. A show-cause notice dated 31.03.2000 was issued to the
respondent for failure to submit daily challans verified by the Returning
Officers of the two parliamentary constituencies (hereinafter referred to as
‘RO’).
2.2 Dispute arose between parties to the lis and arbitration was invoked
at the instance of the respondent. A sole arbitrator was appointed by this
court. The respondent raised total claims amounting to Rs.1,00,28,788/-.
The appellant admitted an amount of Rs.15,22,772/- payable to the
respondent. The arbitrator allowed the claims of the respondent and
awarded a sum of Rs.1,00,28,788/- along with interest @9% per annum on
Rs.15,22,772/- from February 2000 till payment is made, post-award
interest @9% per annum in case of non-payment within two months and
costs of Rs. 2,00,000/-.
2.3 Aggrieved by the award, objections were filed by the appellants
under Section 34 of the Act. The learned Single Judge vide impugned order
dismissed the objections and upheld the award. Hence, the present appeal.
3. Learned counsel for the appellants contends that under clause 19 of
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the agreement there were three pre-requisites for payment, submission of
challans on day-to-day basis, physical verification of the tentage items by
the RO and by another officer, if so directed in writing by the Chief
Electoral Officer (CEO) and scrutiny and approval of the bills by the
competent authority. The grievance is that though physical verification by
the RO is not disputed, the other two requirements under clause 19 of the
agreement were neither considered by the arbitrator nor while deciding the
objections under Section 34 of the Act.
3.1 The argument is that the arbitrator relied on the disciplinary inquiry
reports against the two officials but failed to consider the objections of the
Finance Department that the bills were inflated. The contention is that non-
consideration of the objections of the Finance Department vitiates the
impugned order of patent illegality and the conclusion arrived at is
perverse. Reliance is placed on the decisions of the Supreme Court in
Associate Builders v. Delhi Development Authority (2015) 3 SCC 49 and
Delhi Airport Metro Express Private Limited v. Delhi Metro Rail
Corporation Ltd. (2022) 1 SCC 131 to fortify the argument that ignoring
vital evidence renders the award patently illegal and that the court should
interfere under Section 34 of the Act if the conclusion arrived at is
perverse.
4. Per contra, the contentions now raised were never pressed while
arguing the objections under Section 34 of the Act. The award is defended
on the ground that reasons for not accepting the objections of the Finance
Department were recorded and the view taken by the arbitrator is plausible
and calls for no interference. Reliance is on the decision of the Supreme
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Court in Jan De Nul Dredging India Private Limited v. Tuticorin Port
Trust (2026) 3 SCC 186.
4.1 It is canvassed that under clause 19 of the agreement, the challans
were to be submitted on a day-to-day basis and not the bills. The
submission is that the challans were submitted and the goods supplied were
physically verified by the RO.

5. Heard learned counsel for the parties at length. Perused the relevant
record with their able assistance. Albeit, written submissions have been
filed by the parties but no other issue than those noted above was pressed.
6. Before proceeding further, it would be apposite to reproduce clause
19 of the agreement:-
“19. Payment terms for the tent contractor require bills to
be scrutinized and approved by the competent authority
following approval by the Returning Officer. The contractor
must daily submit challan copies of supplied items to the
Chief Electoral Officer's office in Delhi for record-keeping.
Furthermore, physical verification of the tentage by the
Returning Officer and a representative of the Chief Electoral
Officer (if ordered in writing) is mandatory prior to
dismantling structures in order for payment to be
considered.”
7. Clause 19 of the agreement provides that the contractor for record
and scrutiny shall submit copies of the challans of the supplied items in the
office of the CEO on a day-to-day basis, before dismantling the structures
the tentage items were to be physically verified by the RO and another
representative of the CEO, if so ordered in writing. The payment was to be
made after due scrutiny and approval of the bills by the RO and the
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competent authority.
8. It is an admitted case that no other representative was appointed by
the CEO, the verification was to be done by the concerned RO and the
orders for supplying of tentage were oral and not in writing. The arbitrator
concluded that there was no material on record to show that the challans
were not submitted on a day-to-day basis. Reliance was on the statements
of officials of the parliamentary constituencies that the challans were
verified by these officials.
9. The grievance is that neither it was not taken into account that the
payment under clause 19 of the agreement was subject to scrutiny by the
competent authority nor were the objections of the Finance Department
were considered that the bills were inflated.
10. Before dealing with the contentions of learned counsel for the
appellants, it would be apposite to note that while arguing the objections
under Section 34 of the Act, the appellants had pressed only ground ‘E’ of
the objection petition stating that the bills raised were inflated, the bill of
Rs.80,30,654/- was not examined and the ROs could have recommended
payment of Rs.8,19,567/-. It was submitted that the inquiry committee
found the two electoral officers guilty of passing bogus bills and that the
award was liable to be set aside. No other issue was pressed. The ground
‘E’ of the objection petition is quoted:
“E. BECAUSE the learned Arbitrator did not appreciate that
the inquiry was conducted by the department on the
objections raised by the Finance Department. The learned
arbitrator has wrongly rejected or ignored the inquiry
reports of the Department and present award is contrary to
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the inquiry reports of the department.”

11. It is not the pleaded case of the appellants that the issues pressed
were not dealt by the Court while passing the impugned order. The issues
not raised under Section 34 of the Act cannot be permitted to be raised in
the appeal under Section 37 of the Act.
12. Be that as it may, the contention that the arbitrator ignored the
objections of the Finance Department is misconceived. The arbitrator
rightly took into account that the tentages were supplied during the last
quarter of 1999 and the bills were physically verified by the RO. Sh. Rajiv
Yaduvanshi, the RO of Outer Delhi constituency and Sh. Dharampal of
Karol Bagh constituency deposed in support of the claim of the respondent
and stated that the bills were signed after physical verification.
Sh. Dharampal further testified that after physical verification no objections
were raised with regard to the challans. The statement of Sh. Lall Singh and
Sh. R.K Sharma, officials connected with Karol Bagh constituency fortified
the deposition of Sh. Dharampal.
13. The objections raised by the Finance Department were not found
reliable in the factual background that the tentage was physically verified
by RO before dismantling of the structure whereas the scrutiny started in
July, 2000 when Sh. Rajiv Verma sent the bills to Sh. O.P. Arora and Sh.
K.S. Meena for examination. The joint note prepared by them was
forwarded to the CEO. Before the arbitrator, Sh. Rajiv Verma stated that he
was not aware of the action taken on the joint note. The second report,
dated 24.10.2001, recommended a deduction of Rs. 12,95,221/- for the
Karol Bagh constituency, the arbitrator noted that the comments on the
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report stated, ‘I hope the calculations are correct.’
14. The arbitrator considering the facts and evidence held that the
verification by the RO and the statements supporting the correctness of the
bills were more reliable. The verification by RO was carried out before the
structures were dismantled whereas the inquiry reports were prepared much
later, after dismantling of the structure. The law is well settled that the
determination of quantum of evidence falls within with exclusive domain
of the arbitrator. Reference in this regard be made to the decision of the
Supreme Court in State of Rajasthan v. Ferro Concrete Construction (P)
Ltd. (2009) 12 SCC 1:
“55.While the quantum of evidence required to accept a
claim may be a matter within the exclusive jurisdiction of
the arbitrator to decide, if there was no evidence at all and if
the arbitrator makes an award of the amount claimed in the
claim statement, merely on the basis of the claim statement
without anything more, it has to be held that the award on
that account would be invalid. Suffice it to say that the
entire award under this head is wholly illegal and beyond
the jurisdiction of the arbitrator, and wholly unsustainable.”
15. Another angle to be considered is that the learned Single Judge
rejected the reliance of learned counsel for the appellants on the inquiry
reports dated 24.01.2006 and 15.02.2006 conducted against Sh. H.K. Mann
and Sh. J.S. Jolly respectively. The case against Sh. H.K. Mann was not
proved and the report against Sh. J.S. Jolly was not placed before the
arbitrator. Further, the reports were not pertaining to the RO who had
physically verified the challans and bills.
16. There is no quarrel with the proposition that patent illegality and
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perversity are grounds for setting aside the award under Section 34 of the
Act for which learned counsel for the appellants relied on the decisions of
the Supreme Court in Associate Builders (supra) and Delhi Airport Metro
Express Private Limited (supra). Suffice to say that the view taken by the
arbitrator is plausible, suffers from no factual or legal error, much less
perversity and calls for no interference.

17. In view of the above, the appeal is dismissed.

AVNEESH JHINGAN, J

SHAIL JAIN, J
OCTOBER 28, 2026
Ch

Reportable:- Yes
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