[Cites 9, Cited by 0]
Calcutta High Court
West Bengal Housing Board vs The Civcon Construction Pvt. Limited on 2 December, 2025
Author: Debangsu Basak
Bench: Debangsu Basak
2022:CHC-OS:8239-DB
OCD-1
IN THE HIGH COURT AT CALCUTTA
COMMERCIAL APPELLATE DIVISION
ORIGINAL SIDE
APO/71/2020
WITH
AP/810/2010
WEST BENGAL HOUSING BOARD
VS
THE CIVCON CONSTRUCTION PVT. LIMITED
BEFORE:
The Hon'ble JUSTICE DEBANGSU BASAK
-AND-
The Hon'ble JUSTICE MD. SHABBAR RASHIDI
For the Appellant : Mr. Shounak Mukhopadhyay, Adv.
Ms. Shrayashee Das, Adv.
Mr. Paritosh Sinha, Adv.
Mr. Tridibesh Dasgupta, Adv.
Mr. Rohan Kumar Thakur, Adv.
For the Respondent : Mr. Shiv Shankar Banerjee, Adv.
Ms. Arijita Ghose, Adv.
Mr. Siddhartha Chamaria, Adv.
HEARD ON : 02.12.2025
DELIVERED ON : 02.12.2025
DEBANGSU BASAK, J.:-
1. Appeal under Section 37 of the Arbitration and Conciliation Act,
1996, is directed against the judgment and order dated March 17,
2020 passed in AP/810/2010.
2. By the impugned judgment and order, learned Single Judge refused
to set aside the award dated September 30, 2010.
3. Learned advocate appearing for the appellant, draws the attention of
the Court to the terms and conditions of the contract entered into
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between the parties and particularly, the arbitration clause.
According to him, there are certain matters which are excepted in
terms of the arbitration clause.
4. Learned advocate appearing for the appellant draws the attention of
the Court to the statement of claim as also the statement of defence
and counter-claim. He submits that, out of 22 claims, the arbitrator
allowed 11 claims being claim nos.1, 5, 6, 7, 8, 9, 11, 13, 19, 21 and
22.
5. Learned advocate appearing for the appellant refers to discussions
with regard to the claims as made in the award. He contends that,
claim nos.1 and 5 were allowed by the arbitrator ignoring the express
terms of the contract. He submits that, the respondent is not
entitled to any claim under those two heads. In respect of claim
nos.6, 7, 8 and 9, learned advocate appearing for the appellant
submits that, some of the claims were allowed without giving any
reasons and that, claim nos.8 and 9, in particular, were not
arbitrable.
6. Learned advocate appearing for the appellant submits that, the
arbitrator proceeded to award claim nos.11 and 13 without any
evidence. So far as the claim nos.19, 21 and 22 are concerned, he
submits that, they are largely incidental to the earlier claims. If the
earlier claims are disallowed, claim nos.19, 21 and 22 should also be
disallowed.
7. Learned advocate appearing for the appellant submits that, the
formal work order was issued on September 11, 2002. The date of
completion of the contract was October 3, 2003. Work was actually
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completed on May 22, 2004. He submits that there are
correspondence exchanged between the parties where the appellant
called upon the respondent to complete the work within the
stipulated time and in default, inform the respondent that the
appellant will invoke the liquidated damages clause. He refers to the
liquidated damages clause in the contract. He points out that, the
learned arbitrator proceeded to disallow the counter-claim only on
the basis of the arbitrator not allowing one of the claims of the
claimant.
8. Learned advocate appearing for the appellant submits that, since the
contract was of 2002 and the date of completion of the contract was
October 3, 2003 with the work being completed on May 22, 2004, the
arbitration, is governed by the provisions of Section 34 of the Act of
1996 as it stood then without the amendments.
9. Learned advocate appearing for the appellant draws the attention of
the Court to the impugned judgment and order. He submits that, in
paragraphs 15 and 16 of the impugned judgment and order, learned
Single Judge noted the provisions of Section 34(2-A) of the Act of
1996 and proceeded to deal with the challenge under Section 34 of
the Act of 1996 on such basis. He draws the attention of the Court
to the fact that, Section 34(2-A) was introduced to the Act of 1996 by
way of an amendment with retrospective effect from October 23,
2015, even then, since the date of completion of the contract was on
May 22, 2004 and the disputes and differences arising prior to the
introduction of the amended Section 34(2-A) of the Act of 1996,
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learned Trial Judge did not apply the correct provisions of Section 34
of the Act of 1996 for evaluating the challenge.
10. Learned advocate appearing for the appellant draws the attention of
the Court to the various paragraphs of the impugned judgment and
order. He submits that, the authorities considered by the learned
Judge, while exercising powers under Section 34 of the Act of 1996,
were in respect of the amended Section 34 and not the unamended
Section 34 of the Act of 1996. According to him, learned Single
Judge did not apply the correct principles of Section 34 of the Act of
1996.
11. Learned advocate appearing for the appellant relies upon (2003) 5
SCC 705 (Oil & Natural Gas Corporation Ltd. vs. Saw Pipes Ltd.)
for the meaning of public policy of India as used in Section 34 of the
1996 Act. He relies upon (2015) 3 SCC 49 (Associate Builders vs.
Delhi Development Authority) as to what would constitute a
perverse decision.
12. Learned Advocate appearing for the appellant relies upon (2018) 6
SCC 287 (Board of Control for Cricket in India vs. Kochi Cricket
Private Limited & Ors.) for the proposition that, petitions filed prior
to October 23, 2015 and pending as on that date will be governed by
the unamended provisions of Section 34 of the Act of 1996.
13. Learned Advocate appearing for the appellant relies upon (2022) 4
SCC 206 (Ratnam Sudesh Iyer vs. Jackie Kakubhai Shroff) again
for the proposition as to inapplicability of the provisions of the
amended Section 34 to proceedings commencing prior to October 23,
2015.
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14. Learned advocate appearing for the respondent submits that, the
learned Single Judge considered the merits of the claims. He points
out that, the learned Single Judge dealt with the grounds of
challenge canvassed in detail. The impugned judgment and order
contains reasons as to why the challenge under Section 34 of the Act
of 1996 failed.
15. Learned advocate appearing for the respondent relies upon 2024
INSC 742 (Punjab State Civil Supplies Corporation Limited &
Anr. Vs. M/s. Sanman Rice Mills & Ors) on the scope of challenge
under Section 37 of the Act of 1996. He submits that, by the
introduction of Section 34(2-A) to Section 34 of the Act of 1996, the
scope of challenge under Section 34 was enlarged. He places the
entirety of Section 34 as it stood unamended as also after the
amendments. According to him, the learned Judge correctly applied
the principles under Section 34 of the Act of 1996 while deciding the
challenge to the award.
16. Learned advocate appearing for the respondent submits that the
impugned judgment and order should be tested on its substance
rather than the nomenclature used in the body of the impugned
judgment and order. He contends that the learned Judge applied the
unamended provisions of Section 34 while considering the challenge
to the award, by the impugned judgment and order.
17. Appellant floated a tender for construction and installation of piles,
beams etc. up to the ground floor level to a multi-storied building in
Kolkata. The value of the tender was Rs.7.28 crores. The
respondent herein participated in such tender process. The
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respondent became the successful bidder in the tender process. A
formal work order with regard to such tender was issued in favour of
the respondent on September 11, 2002.
18. The work order is to be read with the other terms and conditions of
the contract including the tender conditions. Existence of an
arbitration agreement between the parties is admitted. The scope
and ambit thereof need not be discussed presently.
19. Disputes and differences arose between the parties with regard to the
contract. Disputes were referred to the sole arbitration of the
arbitrator. Respondent submitted a statement of claim containing 22
heads of claim. Appellant filed a statement of defence containing a
counter-claim.
20. Learned arbitrator passed an award dated September 30, 2010
allowing 11 claims being claim nos.1, 5, 6, 7, 8, 9, 11, 13, 19, 21 and
22, out of the 22 claims of the respondent. Learned arbitrator
disallowed the counter-claim of the appellant.
21. Appellant filed an application under Section 34 of the Act of 1996
challenging the award dated September 30, 2010 which was
registered as AP/810/2010.
22. By the impugned judgment and order, learned Single Judge
dismissed AP/810/2010.
23. Scope of Section 37 of the Act of 1996 is explained in Punjab State
Civil Supplies Corporation Limited (supra), which is as follows:
"In view of the above position in law on the subject, the scope
of the intervention of the court in arbitral matters is virtually
prohibited, if not absolutely barred and that the interference is
confined only to the extent envisaged under Section 34 of the
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Act. The appellate power of Section 37 of the Act is limited
within the domain of Section 34 of the Act. It is exercisable only
to find out if the court, exercising power under Section 34 of the
Act, has acted within its limits as prescribed thereunder or has
exceeded or failed to exercise the power so conferred. The
Appellate Court has no authority of law to consider the matter
in dispute before the arbitral tribunal on merits so as to find out
as to whether the decision of the arbitral tribunal is right or
wrong upon reappraisal of evidence as if it is sitting in an
ordinary court of appeal. It is only where the court exercising
power under Section 34 has failed to exercise its jurisdiction
vested in it by Section 34 or has travelled beyond its
jurisdiction that the appellate court can step in and set aside
the order passed under Section 34 of the Act. Its power is more
akin to that superintendence as is vested in civil courts while
exercising revisionary powers. The arbitral award is not liable
to be interfered unless a case for interference as set out in the
earlier part of the decision, is made out. It cannot be disturbed
only for the reason that instead of the view taken by the
arbitral tribunal, the other view which is also a possible view is
a better view according to the appellate court."
24. Therefore, as a Court exercising powers under Section 37 of the Act
of 1996, we are to find out, as to whether or not, the Court exercising
powers under Section 34 of the Act of 1996 acted within its limits as
prescribed thereunder or exceeded or failed to exercise the power so
conferred.
25. The work order being of September 11, 2002, award being dated
September 30, 2010 and the challenge to the award being of 2010,
the principles to evaluate such challenge were to be adjudged on the
parameters of the provisions of Section 34 of the Act of 1996 as it
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obtained then. Sub-Section (2-A) of Section 34 of the Act of 1996
was introduced later.
26. Essentially, the challenge to the award dated September 30, 2010
was required to be evaluated on the anvil as to whether or not the
award in conflict with the public policy of India as laid down in Saw
Pipes (supra) or perverse as held in Associates Builders (supra).
27. In the facts and circumstances of the present case, the learned
Single Judge proceeded to evaluate the challenge under Section 34 of
the Act of 1996 to the award dated September 30, 2010 on the basis
of the amendments introduced to Section 34, in particular, Section
34(2-A) of the Act of 1996.
28. That, the learned Single Judge, proceeded on the basis of Section
34(2-A) of the Act of 1996 appears on the face of the impugned
judgment and order, and in particular, in paragraphs 15 and 16
thereof. The learned Single Judge, therefore, after applying such
principles, did not find any merits in the challenge thrown to the
award.
29. Contention of the respondent before us, is that, Section 34(2-A) of
the Act of 1996 rather than restricting the scope of a challenge to an
award, actually enlarges it. With respect, we are not in a position to
accept such a contention, in view of the categorical finding in
Ratnam Sudesh Iyer (supra). It would be apposite to refer to
paragraph 12 of the Ratnam Sudesh Iyer (supra) in this regard,
which is as follows:
"12. The admitted position is that the appellant is a party
based in Singapore and thus, in terms of the aforesaid
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definition the arbitration although carried out within the
country, would be an "international commercial arbitration".
We may notice at this stage that it is nobody's case that the
award in question is a foreign award within the meaning of
Part II Section 44 of the said Act. For domestic awards, Chapter
7 of the said Act provides recourse against the arbitral award.
Section 34 of the said Chapter provides for application for
setting aside an arbitral award and specifies the ground
available for the same. The Arbitration and Conciliation
(Amendment) Act, 2015 (for short '2015 Amendment Act')
amended the said Act w.e.f. 23.10.2015; inter alia by inserting
Explanations to Section 34(2) of the said Act as well as by
inserting Sub-Section 2-A to Section 34. There is no doubt that
the scope of interference by the Court became more restrictive
with the amendments coming into force. The pre-amendment
position with respect to expression "in conflict with public policy
of India" was enunciated by this Court in Ssangyong Engg. &
Construction Co. Ltd. v. NHAI, which referred to the judgment
of this Court in Associated Builders v. DDA."
30. The next contention of the respondent is that, the impugned
judgment and order, if read as a whole, would demonstrate that, the
correct principles under the unamended Section 34 of the Act of
1996 were applied. Again, we are not in a position to accept such
contention in view of the categorical findings returned by the learned
Single Judge in the impugned judgment and order. Learned Single
Judge not only referred to the provisions of Section 34(2-A) of the Act
of 1996 but also proceeded to apply authorities of the Supreme Court
based on Section 34 (2-A) of the Act of 1996, relied upon on behalf of
the respondent at that stage.
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31. There is no material on record to suggest, let alone establish that, the
challenge to the award was evaluated on the principles of Saw Pipes
(supra) or Associates Builders (supra). Impugned judgment and
order does not speak of assessment of the award dated September
30, 2010 on the basis of the unamended provisions of Section 34 of
the Act of 1996. Materials on record does not prompt us to infer
that, learned Single Judge assessed the validity and legality of the
award or the challenge thrown to it, on the anvil of the unamended
provisions of Section 34 of the Act of 1996. There is therefore, a
failure on the part of the learned Single Judge in exercising
jurisdiction vested upon it in law.
32. On the touchstone of Punjab State Civil Supplies Corporation
Limited (supra), we are not in a position to return a finding that, the
learned Trial Judge exercising powers under Section 34 of the Act of
1996 acted within its limits as prescribed. In fact, the learned Single
Judge, failed to exercise such powers and exceeded in applying the
rigours of Section 34(2-A) of the Act of 1996 in not interfering with
the award.
33. In view of the discussions above, we set aside the impugned
judgment and order. We remand AP/810/2010 for fresh
consideration. We clarify that we did not enter into the merits of the
rival claims of the parties before the learned arbitrator or before this
Court considering the challenge under Section 34 of the Act of 1996.
Our observations so far as the merits are concerned, are limited for
the purpose of evaluating whether, the Court exercising powers
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under Section 34 of the Act of 1996 exercised it in accordance with
law or not.
34. APO/71/2020 along with applications, if any, stands disposed of
without any order as to costs.
35. At this stage, learned advocate appearing for the respondent informs
the Court to issue directions for expeditious disposal of
AP/810/2010 in view of the period of time that such proceedings are
pending.
36. Request of the respondent being reasonable is accepted. Learned
Trial Judge is requested to hear and dispose of AP/810/2010 as
expeditiously as possible without affording any unnecessary
adjournments to any of the parties.
37. In view of the appeal being allowed, interim order requiring the
appellant to furnish security is recalled. The appellant is at liberty to
withdraw the renewable bank guarantee furnished with the learned
Registrar, Original Side.
(DEBANGSU BASAK, J.)
38. I agree.
(MD. SHABBAR RASHIDI, J.)
bp.
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