EXECUTIVE ENGINEER vs M/S HAIGREEVA INFRATECH PROJECTS LTD
- Court
- Karnataka High Court
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COMAP No.131 of 2024
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
TH
DATED THIS THE 11 DAY OF NOVEMBER, 2026
PRESENT
THE HON'BLE MRS. JUSTICE ANU SIVARAMAN
AND
THE HON'BLE MR. JUSTICE K.S.BHARATH KUMAR
COMMERCIAL APPEAL NO.131 OF 2024
BETWEEN:
1. EXECUTIVE ENGINEER
PWD AND IWTD DEPARTMENT,
RAICHUR,
DIST. RAICHUR - 584 101.
…APPELLANT
(BY SRI. MANU K., ADVOCATE)
AND:
1. M/S. HAIGREEVA INFRATECH PROJECTS LTD.,
Digitally
signed by
RAKSHA
Location:
high court
of
karnataka
TH
NO.101, 4 MAIN, NGEF LAYOUT,
SANJAYA NAGARA,
BANGALORE - 560 094.
REPRESENTED BY ITS AUTHORISED SIGNATORY.
2. SRI. B.N. CHANDRASHEKHARAIAH
ENGINEER-IN-CHIEF (RETD.),
KARNATAKA PWD,
TH TH
NO.651, 12 CROSS, 5 MAIN,
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COMAP No.131 of 2024
M.C. LAYOUT, VIJYANAGAR,
BANGALORE - 560 040.
…RESPONDENTS
(BY SRI. HARISHCHANDRA REDDY, ADVOCATE FOR C/R1,
V.O.D. 01-07-2026, NOTICE TO R2 D/W.)
THIS COMMERCIAL APPEAL IS FILED UNDER SECTION
13(1-A) OF THE COMMERCIAL COURTS ACT, 2015 R/W
SECTION 37(1)(C) OF THE ARBITRATION AND CONCILIATION
ACT, 1996, PRAYING TO CALL FOR RECORDS FROM THE FILE
OF THE HON'BLE LXXXIX ADDITIONAL CITY CIVIL AND
SESSIONS JUDGE AT BENGALURU (CCH-90) IN COM.
A.P.122/2022 ALONG WITH THE ARBITRATION RECORDS OF
THE ARBITRAL TRIBUNAL WHICH HAVE BEEN RECEIVED ON
THE FILE OF THE HON'BLE LXXXIX ADDITIONAL CITY CIVIL
AND SESSIONS JUDGE AT BENGALURU (CCH-90) IN COM.
A.P.122/2022 AND ETC.,
THIS COMMERCIAL APPEAL HAVING BEEN HEARD AND
RESERVED FOR JUDGMENT ON 05.10.2026 AND COMING ON
FOR PRONOUNCEMENT OF JUDGMENT THIS DAY,
K.S.BHARATH KUMAR, J., PRONOUNCED THE FOLLOWING :
CORAM: HON'BLE MRS. JUSTICE ANU SIVARAMAN
and
HON'BLE MR. JUSTICE K.S.BHARATH KUMAR
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COMAP No.131 of 2024
CAV JUDGMENT
(PER: HON'BLE MR. JUSTICE K.S.BHARATH KUMAR)
The appellant has preferred the instant Commercial
Appeal under Section 13 (1-A) of the Commercial Courts
Act, 2015 read with Section 37(1)(c) of the Arbitration and
Conciliation Act, 1996, (hereinafter referred to as
`Arbitration and Conciliation Act'), impugning the
judgment dated 30.01.2024, passed by the learned
LXXXIX Addl.City Civil & Sessions Judge, Bengaluru (CCH-
90), in Com.A.P.No.122/2022, whereby the Commercial
Court dismissed the petition filed by the appellant herein
under Section 34 of the Arbitration and Conciliation Act
and the Arbitral Award dated 23.11.2021 was confirmed.
2. We have heard Sri Manu K., learned counsel
appearing on behalf of the appellant and Sri Harishchandra
Reddy, learned counsel appearing on behalf of respondent
No.1/claimant.
3. It is submitted by the learned counsel appearing
on behalf of the appellant that, during the year 2011, the
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COMAP No.131 of 2024
Railway authorities proposed to construct a road Over
Bridge No.107-A, at railway KM 568/6-7 on Raichur Bachi
(Lingasugur Road) SH-20 in KM 1.3500, near
Basaweshwara Circle. The construction of the said
approach road to new railway over bridge was entrusted to
the respondent No.1 by inviting tenders. Respondent No.1
participated in the tender process and on being a
successful bidder, was awarded the work in terms of the
letter dated 17.05.2011. Subsequently, an Agreement
dated 18.06.2011 was entered into between the parties
for a contract value of Rs.4,96,75,052/- and work order
was issued on 28.06.2011. The original period for
completion of the work was nine months, ending on
28.03.2012. However, the mark-out was furnished only on
12.12.2012 and, on that basis, the revised completion
date was treated as 11.09.2013. The work was completed
on 05.02.2014.
4. During the execution of the said contract, the
design and specifications underwent certain changes,
including enhancement of the carriageway width and
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COMAP No.131 of 2024
alteration of the specifications of the retaining walls,
resulting in revision of the project cost. Thereafter, a
Supplementary Agreement dated 20.11.2014 was
subsequently executed between the parties.
5. Thereafter, disputes arose between the parties
with regard to the amounts claimed by respondent No.1.
Hence, respondent No.1 sought appointment of an
Arbitrator and filed C.M.P.No.200003/2019 before this
Court. By order dated 22.10.2019, this Court appointed
Sri.Β.Ν.Chandrashekharaiah as the sole Arbitrator to
adjudicate the disputes arising out of the agreement.
Respondent No.1 filed its statement of claim before the
learned Arbitrator raising nine claims. After conclusion of
the proceedings, by the Award dated 23.11.2021, the
Arbitral Tribunal allowed six claims and an aggregate sum
of Rs.4,54,89,696/- was awarded together with interest.
Being aggrieved by the said Award dated 23.11.2021
passed by the learned Arbitrator, the appellant instituted
Com.A.P.No.122/2022 under Section 34 of the Arbitration
and Conciliation Act.
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COMAP No.131 of 2024
6. The Commercial Court, after hearing both parties,
noticing the limited scope of interference under Section 34
of the Arbitration and Conciliation Act, held that the award
could not be interfered with merely because another view
was possible. It further rejected the objections regarding
constitution and jurisdiction of the Arbitral Tribunal by
holding that the appointment made by this Court in
C.M.P.No.200003/2019 was valid and that no prejudice
has been demonstrated by the appellant. Further on the
question of limitation, the Commercial Court held that the
claims made were within time having regard to the
extension of time granted on 07.07.2015, the subsequent
price variation bill and the invocation notice dated
15.02.2018.
7. The Commercial Court further upheld the award on
the final bill and price adjustment, holding that the
appellant had failed to finalise the accounts and that the
contractual provisions permitted price adjustment during
the extended period. The partial award towards idling of
machinery and labour were sustained on the ground that
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COMAP No.131 of 2024
the delay in handing over the site and changes in design
had prolonged the work. The award towards overhead
charges based on Emden's Formula, as also legal expenses
and interest, was also upheld. It was consequently held
that no ground under Section 34 of the Arbitration and
Conciliation Act had been made out and the petition was
dismissed with costs.
8. It is contended by the learned counsel appearing
on behalf of the appellant that the Commercial Court,
while exercising jurisdiction under Section 34 of the
Arbitration and Conciliation Act, traveled beyond the
reasons contained in the award, re-appreciated the
material on record and supplemented the reasoning of the
Arbitrator without independently considering the grounds
urged by the appellant for setting aside the award.
9. It is further contended that the constitution of the
Arbitral Tribunal was contrary to Clause 4(a) of the Special
Conditions of Contract and that the appellant's objection
under Section 16 of the Arbitration and Conciliation Act
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COMAP No.131 of 2024
regarding jurisdiction of the Tribunal was rejected without
assigning any reasons and on an erroneous factual
premise.
10. It is further contended that the claims were
barred by limitation and that the Arbitrator failed to
properly adjudicate the issue framed in that regard. It is
submitted that the notice invoking arbitration dated
15.02.2018 was beyond three years from the accrual of
the respective causes of action. It is also contended that
disputed documents and calculations were relied upon
without the claimant's witness being subjected to cross-
examination, thereby violating principles of natural justice.
11. As regards the final bill, it is submitted that the
same was produced for the first time along with the
statement of claim dated 09.01.2020, contrary to Clause
47 of the conditions of contract, remained uncertified and
was also barred by limitation.
12. As regards price adjustment, it is contended that
the contract did not confer such entitlement and that the
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COMAP No.131 of 2024
Government Orders relied upon had neither been pleaded
nor produced. Particular exception is taken to the reliance
placed on the Government Order dated 26.02.2016, which
was neither part of the pleadings nor evidence and had
been issued after completion of the contract.
13. It is further contended that the Supplementary
Agreement superseded the earlier agreement and, in the
absence of any reservation of claims towards the final bill,
price escalation, idling or overhead charges, no such
claims could thereafter be maintained under the original
agreement. The claims towards idling of machinery and
labour are stated to be barred by limitation and
unsupported by reliable evidence of mobilisation or
expenditure. It is also contended that, when the site had
not been handed over during the relevant period, the
assumption that machinery and labour remained idle at
site, was untenable.
14. It is further contended that the respondent No.1
failed to mitigate the alleged loss and produce any
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COMAP No.131 of 2024
material to show that the machinery could not have been
deployed elsewhere. With regard to overhead charges, it is
contended that no actual expenditure was proved and that
application of Emden's Formula without foundational
evidence was impermissible.
15. Learned counsel appearing for the appellant
placed reliance on the following decisions:-
(i) Ssangyong Engineering & Construction
Co. Ltd. Vs. National Highways
Authority of India, reported in (2019)
15 SCC 131;
(ii) Hindustan Petroleum Corporation Ltd.
Vs. Banu Constructions & Anr. reported
in 2021 SCC OnLine Mad 724;
(iii) Chennai Water Desalination Ltd. Vs.
Chennai Metropolitan Water Supply and
Sewerage Board, reported in
MANU/TN/5922/2022;
(iv) State of Gujarat Vs. M/s Kothari &
Associates, reported in (2016) 14 SCC
761;
(v) Unibros Vs. All India Radio, reported in
2023 SCC OnLine SC 1366;
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COMAP No.131 of 2024
(vi) Batliboi Environmental Engineers Ltd.
Vs. Hindustan Petroleum Corporation
Ltd., reported in 2023 SCC OnLine SC
1208;
(vii) Board of Control for Cricket in India Vs.
Deccan Chronicle Holding Ltd., reported
in 2021 SCC OnLine Bom 834;
(viii) Anheuser Busch InBev India Ltd. Vs.
Scarpe Marketing Pvt. Ltd., reported in
ILR 2022 KAR 544;
(ix) Hindustan Construction Company Ltd.
Vs. Bihar Rajya Pul Nirman Nigam Ltd.
& Ors, reported in (2026) 3 SCC 264;
(x) Adavya Projects Pvt. Ltd. Vs. Vishal
Structurals Pvt. Ltd. & Ors, reported in
(2025) 9 SCC 686;
(xi) Power Grid Corporation of India Ltd. Vs.
Siemens Ltd, reported in 2013 SCC
OnLine Del 843;
(xii) Oil and Natural Gas Corporation Ltd. Vs.
Interocean Shipping (India) Pvt. Ltd.,
reported in 2017 SCC OnLine Bom
10032;
(xiii) Hindustan Cables Ltd. Vs. M/s Joy Maa
Santoshi Saw Mill, reported in 2025 SCC
OnLine Cal 9716, and
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COMAP No.131 of 2024
(xiv) Bentwood Seating System Pvt. Ltd. Vs.
Airport Authority of India, reported in
2021 SCC OnLine Del 3989.
16. Per contra, learned counsel appearing for
respondent No.1 sought to justify the impugned judgment
passed by the Commercial Court. It is contended that the
challenge to jurisdiction and constitution of the Arbitral
Tribunal is untenable, particularly in view of the order
dated 22.10.2019, passed by this Court in
C.M.P.No.200003/2019, appointing the sole Arbitrator. It
is contended that the proceedings were conducted on the
basis of documents and submissions after affording full
opportunity to both parties and hence, the appellant
cannot have any grievance with regard to the award
passed by the Arbitral Tribunal and the judgment passed
by the Commercial Court.
17. Further on the point of limitation, it is contended
that the claims were not barred, since the work was
completed on 05.02.2014, the defect-liability period
expired on 05.02.2015, extension of time was granted on
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COMAP No.131 of 2024
07.07.2015 without levy of liquidated damages and the
claimant thereafter submitted its price-adjustment bill and
issued reminders before invoking the arbitration Clause.
It is also contended that the final accounts remained
unsettled and that the disputes therefore continued to
subsist. It is also contended that the appellant had
committed breach of the contract by failing to hand over
the site and furnish the mark-out within the stipulated
time, resulting in delay in commencement and completion
of the work.
18. It is also contended that the subsequent
execution of the Supplementary Agreement and grant of
extension of time without levy of liquidated damages are
relied upon as acknowledging the delay attributable to the
appellant. It is further contended that the subsequent
execution of the Supplementary Agreement and grant of
time without levying liquidated damages are attributable
to the appellant. It is further contended that the
Supplementary Agreement did not extinguish the
claimant's rights under the original contract.
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COMAP No.131 of 2024
19. It is next contended that the claim for price
adjustment was supported by Clause 40 of the General
Conditions of Contract and by the extension of time
granted by the appellant, while the claims towards idling
of machinery and labour arose on account of the delayed
handing over of the site and prolongation of the contract.
It is further contended that the Tribunal has not accepted
the amounts claimed, but had partly allowed the claims
only after considering the material on record and assigning
reasons.
20. Further, with regard to overhead charges, legal
expenses and interest, it is contended that the
prolongation of the contract resulted in additional
recurring expenditure and that the Tribunal had assessed
the claims on recognised principles and the material
placed before it. The award of legal expenses and interest
is also sought to be sustained on the ground that the
claimant was compelled to resort to arbitration for
recovery of its legitimate dues and had incurred financial
liability on account of delayed payment. It is also
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COMAP No.131 of 2024
contended that the award is neither contrary to the
fundamental policy of Indian law nor vitiated by patent
illegality, perversity or violation of natural justice.
21. In support of his contentions, learned counsel
appearing on behalf of respondent No.1 placed reliance on
the following decisions :
(i) M/s Vidyawati Construction Company
Vs. Union of India reported in
MANU/SC/0100/2025;
(ii) Welspun Specialty Solutions Ltd. & Ors.
Vs. Oil and Natural Gas Corporation Ltd.
& Ors reported in
MANU/SC/1059/2021;
(iii) J.G. Engineering Pvt. Ltd. Vs. Union of
India & Anr reported in
MANU/SC/0527/2011;
(iv) McDermott International Inc. Vs. Burn
Standard Co. Ltd. & Ors reported in
MANU/SC/8177/2006;
(v) Dyna Technologies Pvt. Ltd. Vs.
Crompton Greaves Ltd reported in
MANU/SC/1765/2019;
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COMAP No.131 of 2024
(vi) Haryana Tourism Ltd. Vs. M/s Kandhari
Beverages Ltd MANU/SC/0033/2022;
reported in
(vii) Atlanta Ltd. Vs. Union of India reported
in MANU/SC/0059/2022;
(viii) Reliance Infrastructure Ltd. Vs. State of
Goa reported in MANU/SC/0553/2023;
(ix) In Konkan Railway Corporation Ltd. Vs.
Chenab Bridge Project Undertaking
reported MANU/SC/0900/2023;
(x) M/s Larsen Air Conditioning and
Refrigeration Company Vs. Union of
India & Ors reported in
MANU/SC/0876/2023;
(xi) S.V. Samudram Vs. State of Karnataka
& Another reported in
MANU/SC/0016/2024;
(xii) Bombay Slum Redevelopment
Corporation Pvt. Ltd. Vs. Samir Narain
Bhojwani reported in
MANU/SC/0564/2024;
(xiii) Morgan Securities and Credits Pvt. Ltd.
Vs. Videocon Industries reported in
MANU/SC/1084/2022;
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(xiv) Somdatt Builders-NCC-NEC (JV) Vs.
National Highways Authority of India &
Ors reported in MANU/SC/0109/2025;
(xv) M/s C & C Constructions Ltd. Vs. IRCON
International Ltd., reported in
MANU/SC/0128/2025;
(xvi) A.C. Chokshi Share Broker Pvt. Ltd. Vs.
Jatin Pratap Desai & Another, reported
in MANU/SC/0168/2025;
(xvii) Ramesh Kumar Jain Vs. Bharat
Aluminium Company Ltd. (BALCO),
reported in MANU/SC/1699/2025;
(xviii) Jan De Nul Dredging India Pvt. Ltd. Vs.
Tuticorin Port MANU/SC/0031/2026;
Trust reported in
(xix) Madhya Pradesh Road Development
Corporation Ltd. Vs. M/s Jabalpur
Corridor Pvt. Ltd reported in
MANU/SC/0582/2026, and
(xx) The Executive Engineer Vs. M/s BSR
Infratech India Ltd passed in COMAP
No.478/2025, by order dated
09.01.2026.
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COMAP No.131 of 2024
22. We have heard learned counsel appearing for
appellant and respondent No.1 and perused the materials
on records.
23. It is seen from the records that the appellant had
raised an objection under Section 16 of the Arbitration and
Conciliation Act calling in question the jurisdiction of the
learned sole Arbitrator. The objections regarding
jurisdiction of the learned Arbitrator was filed on
29.02.2020 simultaneously along with the Statement of
Defence and the proceedings dated 30.10.2020 also
record that the jurisdictional objection had been raised
along with the Statement of Defence. Therefore, the said
objections raised by the appellant was within the time
stipulated under Section 16(2) of the Arbitration and
Conciliation Act. Mere raising of the objections within the
stipulated time would not, by itself, contemplate nor
establish that the constitution of the Arbitral Tribunal was
invalid.
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24. It would be relevant to examine Clause 4 of the
Special Conditions of Contract, which deals with
appointment of sole Arbitrator. Clause 4 contemplates
appointment of a sole Arbitrator. Clause 4 of the Special
Conditions of Contract reads as under :
" 4. Arbitration (Clause 24)
4.1. The procedure for arbitration shall be as
follows :
(a) In case of dispute or difference arising
between the Employer and the Contractor relating to
any matter arising out of or connected with this
agreement, it shall be settled in accordance with the
Arbitration and Conciliation Act 1996. The disputes
or differences shall be referred to a Sole Arbitrator.
The Sole Arbitrator shall be appointed by agreement
between the parties, failing such agreement, by the
Appointing Authority (any one of the Organisations
as per list enclosed in Annexure).
(b) Arbitration proceedings shall be held at
………, Karnataka, India.
(c) The cost and expenses of arbitration
proceedings will be paid as determined by the
Arbitrator. However the expenses incurred by each
party in connection with the preparation,
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presentation, etc., shall be borne by each party
itself.
(d) Performance - under the contract shall
continue during the arbitration proceedings and
payments due the Contractor by the Employer shall
not be withheld, unless they are the subject matter
of the arbitration proceedings."
On careful perusal of the said Clause 4 of the Special
Conditions of the Contract ( referred supra), it can be seen
that the same contemplates appointment of a sole
Arbitrator by agreement between the parties and failing
such agreement through one of the designated appointing
authorities.
25. The respondent No.1/claimant had proposed the
name of Sri.B.Ν.Chandrashekharaiah and on the appellant
failing to respond to the said proposal, approached this
Court in C.M.P.No.200003/2019. Pursuant to service of
notice and appearance by the appellant, no objection was
raised to the proposed appointment and, by order dated
22.10.2019, this Court appointed Sri.B.Ν.
Chandrashekharaiah as the sole Arbitrator. The
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COMAP No.131 of 2024
appointment was made by this Court in exercise of the
power under Section 11 of the Arbitration and Conciliation
Act and hence, the same cannot be treated as an
unilateral appointment by respondent No.1.
26. The learned Arbitrator pursuant to filing of the
application by the appellant under Section 16 of the
Arbitration and Conciliation Act on 29.02.2020, in the
proceedings held on 30.10.2020, the Arbitral Tribunal has
considered the objections raised by the appellant and
passed a detailed order rejecting the objections raised by
the appellant with regard to jurisdiction of the sole
Arbitrator.
27. Further, the Commercial Court has also examined
the aspect of jurisdiction raised by the appellant as
considered by the sole Arbitrator. The Commercial Court
has categorically held that, in the proceedings initiated by
the respondent No.1 before this Court in
C.M.P.No.200003/2019, the appellant did not choose to
file their statement of objections and this Court vide order
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COMAP No.131 of 2024
dated 22.10.2019, allowed the said
C.M.P.No.200003/2019 and accordingly appointed Sri
B.N.Chandrashekaraiah as the sole Arbitrator as
nominated by the respondent No.1 and kept all issues,
including the issue relating to the constitution of the
Arbitral Tribunal, open for adjudication by the sole
Arbitrator.
28. The Commercial Court has also given a finding
stating that the contention of the appellant that the
learned sole Arbitrator erroneously and without recoding
any reasoning, dismissed the application filed by the
appellant on the sole ground that the appellant had
preferred the said application subsequent to filing the
statement of defence, is wholly contrary as evidenced
from the proceedings dated 29.02.2020 before the learned
sole Arbitrator.
29. The appellant has not denied the letter dated
15.02.2018, issued by the respondent No.1 seeking
consent of the appellant for appointment of the Arbitrator.
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In spite of receipt of the said letter dated 15.02.2018, the
appellant has not communicated its rejection of the
request made by the claimant for appointment of Sri
B.N.Chandrashekaraiah as the sole Arbitrator.
30. Further, pursuant to the appointment of the sole
Arbitrator by this Court in C.M.P.No.200003/2019 and
pursuant to the rejection of the objections filed by the
appellant under Section 16 of the Arbitration and
Conciliation Act, regarding jurisdiction of the Arbitral
Tribunal, the appellant had availed all the opportunities
provided by the Arbitral Tribunal and participated in the
proceedings. Therefore, when the appellant has
participated before the sole Arbitrator in the entire
proceedings, at a belated stage is not entitled to raise
dispute/objections regarding constitution of the Arbitral
Tribunal.
31. The sole Arbitrator has duly considered the
objections raised by the appellant and has rejected the
said objections by assigning valid reasons and further the
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Commercial Court has also considered the said aspect of
the matter and has held that the learned sole Arbitrator
has rightly rejected the objections filed by the appellant
regarding jurisdiction of the Arbitral Tribunal. Since the
learned Arbitrator and the Commercial Court have duly
considered the aspect of jurisdiction raised by the
appellant, this Court does not find any valid reasons to
interfere with the said findings under Section 37 of the
Arbitrator and Conciliation Act.
32. It is next contended by the appellant that the
claims raised by the claimant are barred by limitation. It is
seen from the materials available on record that the work
was completed on 05.02.2014, the defect-liability period
expired on 05.02.2015 and extension of time was granted
on 07.07.2015 without levying any penalty and further the
price-adjustment bill was thereafter submitted and
reminders were issued on 15.02.2018 prior to invoking the
arbitration clause.
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33. It is further seen that the final accounts had also
remained unsettled. The Arbitral Tribunal has duly taken
into consideration the delayed handing over of the site,
changes in the scope of work, extension of time without
levying penalty, subsequent submission of the price
adjustment bill and non-finalisation of the accounts and
has rightly held that the claims raised by the claimant are
not barred by limitation.
34. Hence, appreciating the said reasons assigned by
the learned Arbitrator, the Commercial Court has found
that there are no grounds to interfere with the said
finding regarding limitation. Therefore, the findings
arrived at by the sole Arbitrator and the Commercial
Court, on the basis of the said circumstances, cannot be
characterised as suffering from patent illegality warranting
interference by this Court by exercising the power under
Section 37 of the Arbitration and Conciliation Act.
35. The contention relating to the final bill, price
adjustment, idling charges, overheads, litigation and the
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effect of the Supplementary Agreement essentially
concern interpretation of the contractual terms and
appreciation of the material before the Tribunal. The
learned Arbitrator has not accepted the claims in their
entirety, but partly allowed some claims while rejecting
others. The manner in which the individual claims were
dealt with also indicates that the Tribunal had considered
the respective heads of claim on their merits.
36. The findings recorded by the learned Arbitrator
are solely on the basis of the contractual provisions and
the materials placed before the Tribunal and hence, they
cannot be said to suffer from any perversity, patent
illegality or jurisdictional error.
37. Further the Commercial Court has also examined
at length the challenge to the Arbitral Award with
reference to the grounds available under Section 34 of the
Arbitration and Conciliation Act and has found no patent
illegality, perversity or violation of principles of natural
justice warranting interference. Hence, the contention
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COMAP No.131 of 2024
that the Commercial Court traveled beyond the Award is
unsustainable.
38. The grounds raised in this appeal are those which
have been urged before the learned Arbitrator as well as
the Commercial Court. We find that the grounds raised by
the appellant does not fall within the scope and ambit of
any of the grounds enumerated in Section 34(2) of the
Arbitration and Conciliation Act. Further the said grounds
urged by the appellant also do not amount to patent
illegality appearing on the basis of the record as
contemplated under Section 34 (2-A) of the Arbitration
and Conciliation Act.
39. The scope of interference by this Court in an
appeal under Section 37 of the Arbitration and Conciliation
Act has been categorically laid down by the Hon'ble Apex
Court in MMTC Ltd., Vs. Vedanta Ltd., reported in (2019)
4 SCC 163. The Apex Court held as follows :
" 11 . As far as Section 34 is concerned, the position
is well-settled by now that the Court does not sit in
appeal over the arbitral award and may interfere on
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COMAP No.131 of 2024
merits on the limited ground provided under Section
34(2)(b)(ii) i.e. if the award is against the public
policy of India. As per the legal position clarified
through decisions of this Court prior to the
amendments to the 1996 Act in 2015, a violation of
Indian public policy, in turn, includes a violation of
the fundamental policy of Indian law, a violation of
the interest of India, conflict with justice or morality,
and the existence of patent illegality in the arbitral
award. Additionally, the concept of the "fundamental
policy of Indian law" would cover compliance with
statutes and judicial precedents, adopting a judicial
approach, compliance with the principles of natural
justice, and Wednesbury reasonableness.
Furthermore, "patent illegality" itself has been held
to mean contravention of the substantive law of
India, contravention of the 1996 Act, and
contravention of the terms of the contract.
12. It is only if one of these conditions is met that
the Court may interfere with an arbitral award in
terms of Section 34(2)(b)(ii), but such interference
does not entail a review of the merits of the dispute,
and is limited to situations where the findings of the
arbitrator are arbitrary, capricious or perverse, or
when the conscience of the Court is shocked, or
14. As far as interference with an order made under
Section 34, as per Section 37, is concerned, it cannot
be disputed that such interference under Section 37
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cannot travel beyond the restrictions laid down under
Section 34. In other words, the court cannot
undertake an independent assessment of the merits
of the award, and must only ascertain that the
exercise of power by the court under Section 34 has
not exceeded the scope of the provision. Thus, it is
evident that in case an arbitral award has been
confirmed by the court under Section 34 and by the
court in an appeal under Section 37, this Court must
be extremely cautious and slow to disturb such
concurrent findings."
40. Further these principles were reaffirmed in
Konkan Railway Corpn. Ltd. Vs. Chenab Bridge Project
reported in (2023) 9 SCC 85, wherein the Apex Court held
that the jurisdiction of the court under Section 37 of the
Arbitration Act is akin to its jurisdiction under Section 34
of the Arbitration Act, and that the scope of interference in
an appeal under Section 37 of the Arbitration Act, while
examining an order setting aside or refusing to set aside
an award, is restricted to and subject to the same grounds
as a challenge under Section 34 the Arbitration Act. It was
also held that the jurisdiction under Sections 34 and 37
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the Arbitration and Conciliation Act is not in the nature of
normal appellate jurisdiction.
41. The narrow jurisdiction under Section 37 of the
Arbitration Act was also laid down in UHL Power Company
Ltd. Vs. State of Himachal Pradesh, reported in (2022) 4
SCC 116. This line of reasoning was further affirmed in
Larsen Air Conditioning & Refrigeration Co. Vs. Union of
India, reported in (2023) 15 SCC 472, wherein the Apex
Court held that the jurisdiction of the court under Section
34 of the Arbitration Act is limited and extremely
circumscribed, permitting interference only on the ground
of patent illegality which goes to the root of the matter
and is not of a trivial nature.
42. The Apex Court in Delhi Airport Metro Express
Private Limited Vs. Delhi Metro Rail Corporation Limited
reported in (2022) 1 SCC 131, held that a Court exercising
jurisdiction under Section 34 of the Arbitration Act cannot
re-appreciate evidence or reassess the factual findings of
the arbitral Tribunal. Mere erroneous application of law or
erroneous appreciation of evidence is insufficient. A finding
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of fact by the Arbitral Tribunal, even if another view is
possible, cannot be interfered with so long as the view
taken by the Tribunal is a plausible one.
43. The Apex Court in Punjab State Civil Suppliers
Corporation Limited and Another, Vs. M/s Sanman Rice
Mills and Others, reported in 2024 INSC 742, held that an
Arbitral Award is not liable to be interfered with only on
the ground that the award is illegal or is erroneous in law,
that too upon reappraisal of the evidence adduced before
the Arbitral Tribunal. Even an award which may not be
reasonable or is non-speaking to some extent cannot
ordinarily be interfered with by the Courts. It is also well
settled that even if two views are possible, there is no
scope for the Court to reappraise the evidence and to take
the different view other than what has been taken by the
arbitrator.
44. Further, in Somdatt Builders-NCC-NEC(JV) Vs.
National Highways Authority of India and Ors., reported
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in 2025 INSC 113, the Apex Court after considering the
case law on the point, held as under :
" 42. As already discussed above, the Arbitral
Tribunal had interpreted Clause 51 in a reasonable
manner based on the evidence on record. This
interpretation was affirmed by the learned Single
Judge exercising jurisdiction under Section 34 of the
1996 Act. Therefore, Division Bench of the High
Court was not at all justified in setting aside the
arbitral award exercising extremely limited
jurisdiction under Section 37 of the 1996 Act by
merely using expressions like 'opposed to the public
policy of India', 'patent illegality' and 'shocking the
conscience of the court'. As reiterated by this Court
in Reliance Infrastructure Ltd. (supra), it is necessary
to remind the courts that a great deal of restraint is
required to be shown while examining the validity of
an arbitral award when such an award has been
upheld, wholly oг substantially, under Section 34 of
the 1996 Act. Frequent interference with arbitral
awards would defeat the very purpose of the 1996
Act."
45. In the instant case, the grounds raised are not
that as specifically referable to Section 34(2) or Section
34(2-A) of the Arbitration and Conciliation Act. Therefore,
no error can be found in the findings, reasoning and
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conclusions arrived by the Commercial Court. Since the
appeal is devoid of merits, we do not find any good
grounds to interfere with the impugned judgment.
Accordingly, the appeal is dismissed.
Pending interlocutory applications, if any, shall stand
disposed of .
Sd/-
(ANU SIVARAMAN)
JUDGE
Sd/-
(K.S.BHARATH KUMAR)
JUDGE
bk/