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Calcutta High Court
M/S Sankat Mochan Enterprises vs Union Of India on 11 March, 2026
IN THE HIGH COURT AT CALCUTTA
ORDINARY ORIGINAL CIVIL JURISDICTION
ORIGINAL SIDE
RESERVED ON: 04.02.2026
DELIVERED ON: 11.03.2026
PRESENT:
THE HON'BLE MR. JUSTICE GAURANG KANTH
AP 2 OF 2025
M/S SANKAT MOCHAN ENTERPRISES
VERSUS
UNION OF INDIA
Appearance: -
Mr. Pratip Mukherjee, Adv.
........................... for the Petitioner
Mr. Sunil Kr. Singhania, Adv.
Ms. Priti Jain, Adv.
.............. for the Respondent
JUDGMENT
Gaurang Kanth, J. :-
1. The present Petition has been filed under Section 34 of the Arbitration and
Conciliation Act, 1996, challenging the Arbitral Award dated 26.06.2024
and the Corrigendum dated 06.09.2024 passed by the learned Sole
Arbitrator, Mr. Mihir Kumar Das. By the said Award, the learned
Arbitrator rejected the claims preferred by the Petitioner and allowed the
counterclaim filed by the Respondent.
2. The facts giving rise to the present Petition are briefly set out hereinbelow.
3. The Respondent issued E-Tender Notice No. 17/EL/WT/2017-18 dated
08.02.2018 for the work titled: "Part A - Provision of one additional High
Mast Tower at Coaching Yard/TATA (near S/neck at BMPR end); Part B -
Improvement of power supply arrangement at C&W sick line/ADTP." The
Petitioner, having emerged as the L-1 bidder, was awarded the said work
vide Letter of Acceptance No. 17/EL/WT/2017-18/SME dated 09.07.2018.
Thereafter, a formal Agreement being No. 03/2018-19/Agt/SME dated
09.10.2018 was executed between the parties.
4. The Petitioner commenced the work on 10.10.2018. In terms of the
Agreement, the stipulated period for completion was six months, i.e., up to
08.01.2019. Admittedly, the work was not completed within the stipulated
time. The Respondent, however, granted extension of time for completion
of the work up to 30.03.2021 without imposition of penalty. Despite such
extension, the work remained incomplete, and consequently, the
Respondent terminated the contract vide letter dated 06.04.2021.
5. By letter dated 17.05.2021, the Petitioner invoked the arbitration clause
and requested the General Manager of South Eastern Railway to appoint
an Arbitrator. As no steps were taken in this regard, the Petitioner issued a
legal notice dated 27.12.2021 furnishing the details of its alleged
outstanding dues and calling upon the Respondent to make payment
thereof.
6. Owing to the failure of the Respondent's General Manager to appoint an
Arbitrator, the Petitioner filed Arbitration Petition No. 493 of 2022 before
this Hon'ble Court under Section 11 of the Arbitration and Conciliation
Act, 1996. By order dated 12.08.2022, this Hon'ble Court appointed Mr.
Mihir Kumar Das, Advocate, Bar Association Room No. 2, High Court at
Calcutta, as the Sole Arbitrator to adjudicate the disputes between the
parties.
7. The Petitioner filed its Statement of Claim comprising ten claims
aggregating to Rs. 16,09,350/-. The Respondent contested the claims in
entirety and preferred a counterclaim amounting to Rs. 2,59,708.63/-.
8. Upon completion of pleadings, the learned Sole Arbitrator framed the
following issues for determination:
(i) Whether the agreement dated 09.10.2018 executed pursuant to the
e-tender is legal and valid?
(ii) Whether the termination of the contract by the Respondent-Railway
is legal and valid?
(iii) Whether the Claimant is entitled to the claims as prayed for in the
Statement of Claim?
(iv) Whether the Respondent-Railway suffered loss and damages due to
breach committed by the Claimant and, if so, whether it is entitled
to the counterclaim as prayed for?
(v) To what other reliefs, if any, are the parties entitled?
9. Issue No. (i) was not pressed by either party before the learned Arbitrator.
The learned Arbitrator considered the remaining issues together and came
to the finding that the Petitioner had abandoned approximately 5% of the
contractual work and, despite repeated requests from the Respondent,
failed to complete the same. On such finding, the learned Arbitrator held
that the Respondent had validly terminated the contract. Consequently,
the learned Arbitrator rejected all claims of the Petitioner, including claims
for refund of Security Deposit and Performance Bank Guarantee.
10. The learned Arbitrator further recorded that the Respondent had incurred
an additional expenditure of Rs. 2,59,708.63/- towards procurement of an
outdoor type 11/0.4 KV, 500 KVA transformer (relating to Item No. 1 of
Part B of Schedule 1-Supply) under Purchase Order No. GB225047100092
dated 10.08.2022. In view of the Petitioner's failure to complete the
balance 5% of the work, including supply and installation of the
transformer, the learned Arbitrator held that the Respondent was entitled
to recover the said amount by way of counterclaim.
11. Accordingly, by Award dated 26.06.2024, the learned Sole Arbitrator
rejected all claims of the Petitioner and allowed the Respondent's
counterclaim for Rs. 2,59,708.63/-. It was further directed that, in the
event the Petitioner failed to pay the said amount within one month from
the date of the Award, the Respondent would be entitled to interest at the
rate of 12% per annum until realisation.
12. Subsequently, upon an application filed by the Petitioner under Section 33
of the Arbitration and Conciliation Act, 1996 pointing out a typographical
error in the Award dated 26.06.2024, the learned Arbitrator issued a
Corrigendum dated 06.09.2024 rectifying the said error.
13. Being aggrieved by and dissatisfied with the Award dated 26.06.2024 and
the Corrigendum dated 06.09.2024, the Petitioner has preferred the
present Petition under Section 34 of the Arbitration and Conciliation Act,
1996.
Submission on behalf of the Petitioner
14. Mr. Pratip Mukherjee, learned Counsel for the Petitioner submits that the
impugned Award dated 26.06.2024 (as corrected by Corrigendum dated
06.09.2024) is liable to be set aside as the same is ex facie a non-speaking
and unreasoned Award in violation of Section 31(3) of the Arbitration and
Conciliation Act, 1996. The learned Sole Arbitrator has rejected all ten
claims of the Petitioner and allowed the Respondent's counterclaim
without assigning cogent reasons, without analysing the documentary
evidence on record, and without dealing with the contractual provisions
relied upon by the Petitioner. The learned arbitrator has merely recorded
conclusions without disclosing the reasoning process leading thereto
thereby rendering the award patently illegal and unsustainable under
Section 34 of the Act.
15. The finding that the Respondent validly terminated the contract is wholly
erroneous and perverse. The delay in completion of the work was
attributable to the Respondent, who failed to provide the work front and
necessary drawings in timely manner and further failed to release running
bills and legitimate payments within the contractual period. The learned
Arbitrator failed to consider that such breaches on the part of the
Respondent directly impeded execution of the work. In the absence of
consideration of these material facts, the conclusion upholding the
termination is arbitrary and contrary to the evidence on record.
16. Learned Counsel for the Petitioner further argued that the Petitioner failed
to complete 5% of the work is unsustainable, as the alleged non-
completion was a direct consequence of non-payment of legitimate dues by
the Respondent. Despite this, the learned Arbitrator mechanically rejected
all the Petitioner's claims and allowed the Respondent's counterclaim
without examining proof of loss, causation, or mitigation. The Award thus
suffers from non-application of mind, perversity, and patent illegality,
warranting interference by this Court under Section 34 of the Act.
Submission on behalf of the Respondent
17. Mr. Sunil Kr. Singhania, learned counsel for the Respondent submits that
the present Petition under Section 34 is wholly devoid of merit and is liable
to be dismissed. The impugned Award dated 26.06.2024 (as corrected by
Corrigendum dated 06.09.2024) is a detailed and reasoned Award passed
in strict compliance with Section 31(3) of the Arbitration and Conciliation
Act, 1996. The learned Arbitral Tribunal has meticulously examined the
pleadings, contractual provisions, correspondence exchanged between the
parties, extension letters, running account bills, and other documentary
evidence on record. Upon such consideration, the Tribunal has recorded a
categorical finding that the delay in execution of the work was attributable
to the Petitioner and not to the Respondent. The Award clearly reflects due
application of mind and a reasoned analysis of the material before the
tribunal, and therefore cannot be termed as non-speaking or perverse.
18. The record further demonstrates that the Respondent granted as many as
eight extensions of time to enable the Petitioner to complete the work.
Despite such indulgence and repeated opportunities, the Petitioner failed
to complete the project within the extended timelines. The Tribunal, upon
appreciation of the documentary evidence, rightly held that the
termination of the contract was valid and in accordance with the
contractual terms. These findings are pure findings of fact based on
evidence and are not open to reappreciation in proceedings under Section
34 of the Act.
19. Further, the Tribunal rightly allowed the Respondent's counterclaim upon
finding that the Respondent had incurred additional expenditure towards
procurement of the transformer, which the Petitioner was contractually
obliged to supply and install but failed to do so. The direction for refund
was passed on the basis of proved documentary evidence and contractual
liability. The scope of interference under Section 34 being limited, and
there being no patent illegality or perversity in the Award, no interference
by this Hon'ble Court is warranted.
Legal Analysis
20. This Court has heard the arguments advanced by the learned counsel for
the parties and has carefully examined the documents placed on record.
21. At the outset, it is a settled proposition that the jurisdiction of this Court
under Section 34 of the Arbitration and Conciliation Act, 1996 is
circumscribed and supervisory in character. The Court does not exercise
appellate powers over an arbitral award and cannot reassess or reweigh
the evidence as if sitting in appeal. In Dyna Technologies Pvt. Ltd. v.
Crompton Greaves Ltd., reported as (2019) 20 SCC 1, the Hon'ble
Supreme Court cautioned that while examining an arbitral award, Courts
must not adopt a hyper-technical or excessively critical approach. The
award is required to be read as a whole and in a reasonable manner. So
long as the reasoning discloses application of mind and the conclusions
are founded on material available on record, minor deficiencies in
expression or elaboration would not render the award vulnerable. The
position has been further reiterated in Gayatri Balasamy v. ISG
Novasoft Technologies Ltd., reported as (2025) 7 SCC 1, wherein the
Hon'ble Supreme Court underscored that Section 34 is not designed to
function as an appellate forum. The arbitral regime is founded upon party
autonomy and finality of adjudication. Courts are not permitted to
reappreciate evidence, revisit factual findings, or interfere merely because
a different interpretation of the material on record may also be possible.
Judicial intervention is warranted only where the award is tainted by
patent illegality, perversity, jurisdictional infirmity, or contravention of the
fundamental policy of Indian law. It is equally well established that,
particularly after the 2015 amendment, the ground of "patent illegality" is
confined to errors that strike at the root of the award and does not
encompass erroneous application of law or re-evaluation of evidence.
Where the view taken by the Arbitral Tribunal is a plausible and
reasonable one arising from the evidence on record and the contractual
terms between the parties, this Court must defer to such determination
and refrain from substituting its own interpretation.
22. Examining the Award in the light of the aforesaid settled principles, this
Court finds that the learned Arbitral Tribunal has rendered a detailed and
reasoned Award after considering the pleadings, documentary evidence,
and the relevant contractual provisions. The Tribunal specifically noted
that the Petitioner completed 95% of the contractual work, excluding
installation of the transformer which was essential to complete the power
supply arrangement at ADTP. The Tribunal took into consideration the
letters dated 05.11.2020 and 16.11.2020 extending the time for conclusion
up to 28.02.2021, as well as the communication dated 23.02.2021
informing that the third running bill (CC-3) had already been processed for
payment, and the repeated requests made to the petitioner to supply and
install the transformer. The Tribunal further recorded the issuance of a 7
days' notice dated 25.02.2021 under Clause 62 of the General Conditions
of Contract and a further 48 hours' notice calling upon the Petitioner to
complete the work. The Petitioner's own admission vide letter dated
23.10.2020 that 5% of the work remained incomplete was also duly noted.
Upon appreciation of these aforesaid documents, the Tribunal concluded
that despite eight extensions of time and repeated opportunities, the
Petitioner failed to complete the remaining work and effectively abandoned
the same. Consequently, termination of the contract vide letter dated
06.04.2021 was held to be in accordance with the contractual terms. The
forfeiture of Security Deposit, encashment of Performance Guarantee, and
denial of price variation were found to be strictly in terms of Clause 5 of
the Letter of Acceptance dated 09.07.2018 and applicable GCC provisions.
These are findings of fact based on evidence and contractual
interpretation, and in view of the law laid down by the Hon'ble Supreme
Court in Dyna Technologies Pvt. Ltd (supra) and Gayatri Balasamy
(supra), the said findings cannot be interfered with merely because another
view is possible.
23. With respect to the counterclaim, the Arbitral Tribunal found, on the basis
of documentary proof, that the Respondent had incurred an additional
expenditure of Rs. 2,59,708.63/- towards procurement of the outdoor type
11/0.4 KV, 500 KVA transformer under Purchase Order dated 10.08.2022,
necessitated by the Petitioner's failure to supply and install the same. The
Tribunal, after examining the evidence, held the Petitioner liable to refund
the said amount.
24. This Court finds no perversity in the impugned Award, nor any disregard of
the contractual provisions, nor any infraction of the fundamental policy of
Indian law or public policy. The Hon'ble Supreme Court has consistently
cautioned that judicial interference with arbitral awards must be exercised
with extreme circumspection and only in cases where the illegality is
patent, apparent on the face of the Award, and goes to the root of the
matter. An award cannot be set aside merely because another view is
possible or because the Court may have arrived at a different conclusion
on the same material.
25. Applying the aforesaid settled principles, this Court is satisfied that the
impugned Award is a well-reasoned determination rendered upon due
consideration of the evidence on record and the relevant contractual
clauses. The findings recorded by the learned Arbitral Tribunal are
plausible and fall squarely within its domain of appreciation of facts. The
present Petition, in substance, seeks a re-evaluation of evidence and
substitution of this Court's view for that of the Tribunal, which is clearly
impermissible under Section 34 of the Act. No case for interference is made
out.
26. The Petition is accordingly liable to be dismissed.
(Gaurang Kanth, J.)
SAKIL AMED (P.A)
