Arbitration Case No. 63 of 2007 · Orissa High Court
Case Details
Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 28-Jul-2025 17:28:24 IN THE HIGH COURT OF ORISSA AT CUTTACK ARBA No.14 of 2020 (From the judgment dated 16.11.2019 passed by the learned District Judge, Khurda at Bhubaneswar in Arbitration Proceeding No.183 of 2010 dismissing the petition filed under Section 34 of the A&C Act.) Chief Engineer (EZ-II), Central Public Works Department, Patna, Bihar & Ors. …. Appellant (s) -versus- Karunakar Mohanty …. Respondent (s) Advocates appeared in the case through Hybrid Mode: For Appellant (s) For Respondent (s) : : Mr. P. K. Parhi, DSGI along with Mr. S.S. Kashyap, Sr. Panel Counsel Mr. K.B. Panda, Sr. Advocate along with Mr. S. K. Panda, Advocate CORAM: DR. JUSTICE S.K. PANIGRAHI DATE OF HEARING:-22.07.2025 DATE OF JUDGMENT: -24.07.2025 Dr. S.K. Panigrahi, J. 1. This Appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “A&C Act”) has been filed against the judgment dated 16.11.2019 passed by the learned District Judge, Khurda at Bhubaneswar in Arbitration Proceeding No.183 of 2010 Page 1 of 22 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 28-Jul-2025 17:28:24 wherein the learned District Judge has dismissed the petition filed under Section 34 of the A&C Act thereby confirming the award dated 12.07.2010 passed by the learned Sole Arbitrator in Arbitration Case No.63 of 2007. I. FACTUAL MATRIX OF THE CASE: 2. That, the brief facts of the case are that a tender was floated by the Central Public Works Department (hereinafter referred to as “the Department” for brevity) in the year 2004 for construction of 115 quarters for CRPF Jawans. The bid of the contractor for a sum of Rs.3,82,98,373/- was accepted. The period for execution was 22 months after calculating 22 days from the date of issue of the letter dated 28.01.2005 issued by the Department. 3. The authority of the said Department issued show cause notice on 21.04.2006 for rescinding the contract on the ground of tardy progress of work. The contractor replied on 01.12.2006. Another notice was also issued to the contractor indicating such slow progress and the contractor also submitted his reply. Ultimately, the contract was rescinded on 17.02.2006 by the employer of the contract. 4. The contractor filed his claim before the learned Arbitrator for a sum of Rs.1,96,45,817/- along with pendent elite and future interest. The Department filed the counter claim for a sum of Rs.35,80,333/- with interest. 5. Seven issues have been framed by the Learned Arbitrator and award has been passed for a sum of Rs.46,77,249/- directing for the payment Page 2 of 22
Facts
Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 28-Jul-2025 17:28:24 of the amount to the contractor within 3 months and failure of payment of the said amount within the time frame shall carry interest @ 15% from the date of award till full realization. 6. The aforesaid award was challenged before the learned District Judge, Khurda at Bhubaneswar under Section 34 of the Arbitration and Conciliation Act, 1996 citing several grounds. After hearing the parties, the learned District Judge, Khurda at Bhubaneswar has been pleased to dismiss the above petition on merits. 7. Being aggrieved by the judgment dated 16.11.2019 passed by the Learned District Judge, Khurda at Bhubaneswar in Arbitration Proceeding No.183 of 2010, the Appellants prefer this appeal. However, there was a delay of 165 days in filing the ARBA. Therefore, the Appellants filed I.A. No.24 of 2020 for condonation of delay in filing the ARBA which was allowed vide this Court’s judgment and order dated 20.4.2023. 8. Now that the facts leading up to the instant Appeal has been laid
Legal Reasoning
16. The Supreme Court and this Court in catena of judgments have held that the powers of appellate court while exercising jurisdiction under Section 37(2)(b) of the 1996 Act against orders passed by the Arbitral Tribunal is very restricted and narrow and the same should be exercised when the orders seems to be perverse, arbitrary and contrary to law. The judgment of Wander Ltd. v. Antox India (P) Ltd.1 passed by the Apex Court, elaborates the ambit and scope of the appeals. Although the aforesaid judgment is not dealing with the arbitration proceedings but the same deals with the power of appellate court in the Civil Procedure Code, 1908 (CPC). Operative paragraphs of the aforesaid judgment are extracted below: fell two into error on “13. On a consideration of the matter, we are afraid, the important Appellate Bench propositions. The first is a misdirection in regard to the very scope and nature of the appeals before it and the limitations on the powers of the appellate court to substitute its own discretion in an appeal preferred against a discretionary order. The second pertains to the infirmities in the ratiocination as to the quality of antox’s alleged user of the trade mark on which the passing-off action is founded. We shall deal with these two separately. 14. The appeals before the Division Bench were against the exercise of discretion by the Single Judge. In such appeals, the appellate court will not interfere with the exercise of discretion of the court of first instance and substitute its own discretion except where the discretion has been shown to have been exercised arbitrarily, or capriciously or 1 1990 Supp SCC 727 Page 6 of 22 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 28-Jul-2025 17:28:24 perversely or where the court had ignored the settled principles of law regulating grant or refusal of interlocutory injunctions. An appeal against exercise of discretion is said to be an appeal on principle. Appellate court will not reassess the material and seek to reach a conclusion different from the one reached by the court below if the one reached by that court was reasonably possible on the material. The in appellate court would normally not be interfering with the exercise of discretion under appeal solely on the ground that if it had considered the matter at the trial stage it would have come to a contrary conclusion. If the discretion has been exercised by the trial court reasonably and in a judicial manner the fact that the appellate court would have taken a different view may not justify interference with the trial court’s exercise of principles discretion. After Gajendragadkar, J. in Printers (Mysore) (P) Ltd. v. Pothan Joseph (SCC OnLine SC para 9) referring justified these to ‘9. …These principles are well established, but as has been observed by Viscount Simon in Charles Osenton & Co. v. Johnston “the law as to the reversal by a court of appeal of an order made by a Judge below in the exercise of his discretion is well established and any difficulty that arises is due only to the application of well-settled principles in an individual case.”’ The appellate judgment does not seem to defer to this principle.” 17. The said judgment is consistently followed in adjudicating petitions pertaining to the A&C Act by Courts across the Country in Green Infra Wind Energy Ltd. v. Regen Powertech (P) Ltd.2; Sona Corpn. India (P) Ltd. v. Ingram Micro India (P) Ltd.3; Manish Aggarwal 2 2018 SCC OnLine Del 8273 3 2020 SCC OnLine Del 300 Page 7 of 22 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 28-Jul-2025 17:28:24 v. RCI Industries & Technologies Ltd.4; Tahal Consulting Engineers India (P) Ltd. v. Promax Power Ltd.5 and Handicraft & Handlooms Exports Co. of India v. SMC Comtrade Ltd.6. 18. In Reliance Infrastructure Ltd. v. State of Goa7, the Supreme Court of India noticing its previous decision in MMTC Ltd. v. Vedanta Ltd.8 has noted the limited scope of interference under Section 34 and further narrower scope of appeal under Section 37 of the Act particularly when dealing with the concurrent findings of the arbitrator and that of the Court. Relevant paragraph ‘14’ of MMTC Ltd.(supra) as noted in paragraph ‘26’ in Reliance Infrastructure Ltd.(supra) is to be extracted hereinunder:— as far interference with an order made “14. As under Section 34, as per Section 37, is concerned, it cannot be disputed that such interference under Section 37 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 Section34 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.”
Arguments
down, this Court shall endeavour to summarise the contentions of the Parties and the broad grounds that have been raised to seek the exercise of this Court’s limited jurisdiction available under S. 37 of the A&C Act. II. APPELLANTS’ SUBMISSIONS: 9. During course of hearing, learned counsel for the Appellants submitted that the contract was rescinded because of the slow and poor quality of the work. The learned Arbitrator recorded a finding Page 3 of 22 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 28-Jul-2025 17:28:24 that the completion of the work occurred due to laches of the Respondent, but contradicting the said findings, the learned Arbitrator also held that the Appellants contributed to the delay, too. Such contradictory findings are wholly unsustainable. 10. Furthermore, it was submitted that the Respondent, knowing fully well the nature of the work and the place of execution, accepted the contract; but subsequently, failed to execute the work, as he was supposed to. In such a scenario, the Appellants were fully within their jurisdiction to rescind the contract, which was a time-bound one. So, there was no illegality in the rescission of the contract. 11. It was also contended that the learned Arbitrator, without considering the facts of the case and the evidence on record, has passed the award, and as such the same is patently illegal. III. RESPONDENT’S SUBMISSIONS: 12. On the contrary, learned counsel for the Respondent contends that while considering an application under Section 37 of the Act, the Court is not to act as an Appellate Court. The Court is to see only whether challenge to the award comes within the grounds contained in sub-Section (2) of Section 34 of the Act. According to the learned counsel, the contentions advanced on behalf of the Appellants for challenging the award are factual in nature and, more or less, are pure surmises. None of such contentions come within the purview of Section 34(2) of the Act. Therefore, the award may not be interfered with. Page 4 of 22 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 28-Jul-2025 17:28:24 13. It was earnestly contended that there is absolutely no illegality in the award for which the Court may feel inclined to interfere with the same. IV. ISSUE FOR CONSIDERATION: 14. Having heard the parties and perused the materials available on record, this court here has identified the following solitary issue to be determined: A. Whether the order of the Ld. District Judge warrants interference keeping in mind the limitations of this court’s powers under Section 37 of the A&C Act? V. ISSUE A: WHETHER THE ORDER OF THE LD. DISTRICT JUDGE WARRANTS ANY INTERFERENCE KEEPING IN MIND THE LIMITATIONS OF THIS COURT’S POWERS UNDER SECTION 37 OF THE A&C ACT? 15. Before going into the merits of the contentions, it is necessary to outline the ambit and scope of Section 37(2)(b) of the 1996 Act. The said section is extracted below: “37. Appealable orders.—(1)[Notwithstanding anything contained in any other law for the time being in force, an appeal] shall lie from the following orders (and from no others) to the court authorised by law to hear appeals from original decrees of the court passing the order, namely: ∗∗∗ (2) Appeal shall also lie to a court from an order of the Arbitral Tribunal— (a) accepting the plea referred to in sub-section (2) or sub- section (3) of Section 16; or Page 5 of 22 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 28-Jul-2025 17:28:24 (b) granting or refusing to grant an interim measure under Section 17.”