[Cites 1, Cited by 0]
Calcutta High Court
Mbl Infrastructure Limited vs Hooghly River Bridges Commissioners on 12 March, 2026
Author: Debangsu Basak
Bench: Debangsu Basak
1
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IN THE HIGH COURT AT CALCUTTA
COMMERCIAL APPELLATE DIVISION
ORIGINAL SIDE
Present:
The Hon'ble Justice Debangsu Basak
And
The Hon'ble Justice Md. Shabbar Rashidi
AO-COM/26/2025
IA No: GA-COM 1/2025
APOT No. 323/2025
(Arising out of A.P. (COM) No. 187/2024)
Old AP No. 340/2020)
MBL INFRASTRUCTURE LIMITED
VS
HOOGHLY RIVER BRIDGES COMMISSIONERS
For the Appellant : Mr. Ratnanko Banerji, Sr. Adv.
Mr. Shaunak Mitra, Adv.
Ms. Sristi Barman Roy, Adv.
Ms. Pritha Basu, Adv.
Ms. Nairanjana Ghosh, Adv.
Mr. Debartha Chakraborty, Adv.
Mr. Sagar Dutta, Adv.
For the Respondent : Mr. Anirban Ray, Sr. Adv.
Mr. Debanjan Mondal, Adv.
Mr. Sarvapriya Mukherjee, Adv.
Mr. Chayan Gupta, Adv.
Mr. Sandip Dasgupta, Adv.
Mr. Aviroop Mitra, Adv.
Hearing Concluded on : January 30, 2026
Judgement on : March 12, 2026
DEBANGSU BASAK, J.:-
1. Appellant has assailed the judgment and order dated
November 3, 2025 passed in A. P. (Com) No. 187 of 2024. By the
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impugned judgment and order dated November 3, 2025 learned
Single Judge has set aside the award dated June 29, 2020.
2. Learned senior advocate appearing for the appellant has
submitted that, the respondent challenged the unanimous award
dated June 29, 2020 before the learned Single Judge. He has
contended that, disputes arose out of a construction contract
dated 04th December, 2013 for construction of a basement plus
ground plus 5 storied commercial complex compass terminal. He
has pointed out that, out of 15 claims, the Arbitral Tribunal had
allowed claims 1, 3, 4, 12 (in part), 13 and 15 (in part). The
Arbitral Tribunal had rejected the counterclaim of the respondent.
3. Learned senior advocate appearing for the appellant has
submitted that, the Arbitral Tribunal found that the termination of
the contract was illegal. The Arbitral Tribunal had found the
respondent to be in material breach of the contract. The Arbitral
Tribunal had found that the respondent granted extensions of
time to complete the contract without levy of liquidated damages
being conscious of the delay on their part and that, the appellant
was not in breach or at fault.
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4. Learned senior advocate appearing for the appellant has
contended that, the contract contemplated a specific notice to
commence. He has contended that, despite no notice to commence
having been issued, on the instruction of the respondent,
appellant had commenced the work on February 12, 2014. He has
pointed out that, the sanctioned building plan was obtained on
January 19, 2016. As a result, the respondent had delayed several
aspects of the execution of the project including issuance of
drawings. He has contended that, non-obtaining of sanctioned
building plan had material impact and delayed the implementation
of the project. In this regard, he has drawn the attention of the
Court to the pleadings made in the statement of claim as also in
the rejoinder filed before the Arbitral Tribunal.
5. Learned senior advocate appearing for the appellant has
contended that the witness of the respondent was cross-examined
on the issue of the sanctioned plan, it's a delay and the impact of
such a delay as also delay in issuance of drawings and other
aspects.
6. Learned senior advocate appearing for the appellant has
contended that the contention of the respondent that the Arbitral
Tribunal went into the issue of no legal commencement and no
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sanction plan without any issue being raised by the parties is
incorrect on the face of the pleadings as also the arguments that
were advanced before the Arbitral Tribunal. He has contended that
the view taken by the Arbitral Tribunal on the aspect of no
sanction plan and its impact was within the contours of the
disputes submitted to arbitration. He has contended that, the view
taken by the Arbitral Tribunal regarding violation of municipal law
was a plausible view and was permissible to be taken by the
Arbitral Tribunal.
7. Learned senior advocate appearing for the appellant has
referred to the award. He has contended that, all relevant
provisions of the contract as also the legal position were
considered by the Arbitral Tribunal. He has contended that, since
the respondent had extended time for performance without
imposing damages for delay, the respondent was estopped from
blaming the appellant for any breach of delay. The Arbitral
Tribunal had found so by the award. He has referred to the
findings of the Arbitral Tribunal in the award in this regard.
8. Learned senior advocate appearing for the appellant has
referred to clause 27.2 of the contract which allows extension
without imposing liquidated damages in terms of the clause 28
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which can only be given when the contractor is not in fault. He has
contended that, since the appellant was not at fault, time was
extended till June 30, 2017 without imposing any liquidated
damages.
9. Learned senior advocate appearing for the appellant has
contended that, the respondent illegally terminated the contract on
May 17, 2017 before expiry of the extended period. Arbitral
Tribunal has rightly taken such factor into consideration. He has
referred to the relevant portion of the award in this regard.
10. Learned senior advocate appearing for the appellant has
drawn the attention of the Court to the award where the Arbitral
Tribunal has taken into consideration that, the appellant did not
suspend construction and that, the work was slow down due to
the stoppage of the payment of the respondent. The respondent
was in breach of its reciprocal obligations and that the respondent
had accepted that it was in breach of reciprocal obligations.
Arbitral Tribunal had taken into consideration non availability of
sanctioned plan before January 19, 2016 which was a breach of
the municipal law and consequently the termination was bad.
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11. Learned senior advocate appearing for the appellant has
referred to various paragraphs of the impugned award relating to
delay in payment, admission of default committed by the
respondent as also extension of time of the contract without
imposing liquidated damages.
12. Learned senior advocate appearing for the appellant has
contended that, impugned judgment and order dated January 03,
2025 is perverse. He has contended that there are inherent
contradictions in the impugned judgment and award. When the
learned Single Judge has held that the respondent consciously
extended time for performance without imposing delay damages,
there was no ground for the learned Single Judge to interfere as
the same was within the jurisdiction of the learned Arbitral
Tribunal.
13. Learned senior advocate appearing for the appellant has
contended that, in the impugned order the learned Single Judge
incorrectly held that the award does not differentiate and proceeds
on the basis as if there was no commencement, legal or otherwise
and that, there was no discussion or adjudication with regard to
the question of neglect, delay and default of either of the parties.
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He has contended that, the award in several places found the
respondent to be in breach.
14. Learned senior advocate appearing for the appellant has
contended that, learned Single Judge incorrectly held that all
breaches and counter breaches have to be adjudicated upon. He
has contended that, all major and material allegations of breach
/counter breach have been dealt with by the impugned award.
15. Learned senior advocate appearing for the respondent has
contended that, the learned Single Judge acted within the
parameters of Section 34 of the Act of 1996. He has referred to
(2025) Volume 6 Supreme Court Case 757 (Somdatt Builders-
NCC-NEC(JV) vs. National Highways Authority of India and
others) on the issue of scope of Section 37 of the Act of 1996.
16. Learned senior advocate appearing for the respondent has
contended that, the award was contrary to Section 28(3) and
34(2)(b)(ii) read with explanation 1(ii) of the Act of 1996. He has
contended that, liquidated damages were allowed contrary to
clauses 27.1 and 28 of General Condition of Contracts. He has
contended that, the Arbitral Tribunal ignored vital parts of the
letters making request for extension of time and letters granting
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extension. He has contended that, the respondent categorically
recorded its satisfaction and the performance of the appellant in
its letter granting extensions. He has referred to the number of
times where, extensions were granted.
17. Learned senior advocate appearing for the respondent has
contended that, issue of date of commencement of the contract
was never raised. He has contended that, in fact, both the parties
were ad idem, that although notice to commence was not issued,
the contract had commenced on and from February 12, 2014. He
has contended that, a decision on a dispute not falling within the
terms of submission to arbitration was beyond the scope of the
arbitration.
18. Learned senior advocate appearing for the respondent has
contended that, the Arbitral Tribunal proceeded to negate the
various question raised by the parties as to who were really
negligent or in default in course of performance of various items of
works, erroneously.
19. Learned senior advocate appearing for the respondent has
contended that, the finding in the award that, since
implementation of the contract did not commence in terms of the
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contract, there was no obligation of the appellant to complete the
project within the 18 months of the actual start of work is perverse
and patently illegal. He has contended that, commencement of
work did not require any sanctioned building plan and in any
event, the appellant was under obligation to comply with clauses
15, 16, 19 and 32 before obtaining the sanctioned building plan.
According to him, such clauses indicate that the commencement
of work does not mean actual construction work and that,
sanctioned plan was not a sine qua non, for commencement of
work.
20. Learned senior advocate appearing for the respondent has
contended that, the Arbitral Tribunal did not consider the relevant
issue and material evidence placed on record. He has contended
that, the award was beyond the terms of reference and militates
the principle laid down in Section 34(2)(a)(iv) of the Act of 1996.
21. The respondent had issued a notice inviting tender for
construction of a modern bus terminus on Grand Trunk Road near
ESI hospital with multistoried commercial complex comprising of
basement, a ground and five upper floors including sanitary,
plumbing and electrical works under Serampore Municipality,
Hooghly, West Bengal. The appellant had participated in such
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tender process and was successful after technical and financial
evaluation. The respondent had issued a letter of acceptance on
November 19, 2013. Parties had thereafter executed a formal
contract document dated December 04, 2013. The contract
document provided that, the work was to be completed within 18
months from the date of commencement.
22. According to him, the date of commencement of the contract
was February 12, 2014 with the date of completion being August
11, 2015. According to the respondent, the appellant had sought
extension of time to complete the contract without prejudice and
that, the respondent granted such extension again without
prejudice. According to the respondent, it had never waived the
claim for liquidated damages due to the delay occasioned in
completion of the contract.
23. According to the respondent, there was inordinate delay in
performance of the contract and that, the respondent was
compelled to terminate the contract on May 17, 2017 during the
pendency of fourth extension. According to the respondent, the
appellant had performed only 60% of the contract if value is taken
into consideration and 62% of the contract if quantity is taken into
consideration.
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24. The contract document dated December 04, 2013 had an
arbitration clause. Disputes and differences between the parties
had been referred to arbitration to an Arbitral Tribunal, consisting
of three arbitrators. The Arbitral Tribunal had entered into
reference and held 65 meetings between July 27, 2018 and March
13, 2020.
25. In the arbitration proceedings, the appellant had filed
statement of claim, respondent's statement of defence with counter
claim and the appellant a rejoinder. Parties had disclosed
documents.
26. In the arbitration, appellant had examined one witness while,
the respondent examined two witnesses.
27. The Arbitral Tribunal had made and published an award
dated June 29, 2019. By such award the Arbitral Tribunal had
rejected the entire counter claim of the respondent. Arbitral
Tribunal had allowed a portion of the claim of the respondent and
rejected the other portion.
28. The respondent had filed a petition under Section 34 of the
Act of 1996 assailing such part of the award by which, the counter
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claim of the respondent was rejected and the claims of the
appellant was allowed.
29. By the impugned judgment and order dated November 3,
2025, learned Single Judge has allowed the challenge under
Section 34 of the Act of 1996.
30. Somdatt Builders-NCC-NEC(JV) (supra) has held that, the
scope of interference under Section 37 of the Act of 1996 is
limited. Given the limited scope of interference with an Arbitral
Tribunal under Section 34 of the Act of 1996, a court exercising
jurisdiction under Section 37 of the Act of 1996, is confined to
adjudicating as to whether or not the Court acting under Section
34 of the Act of 1996 acted within limited scope of its power.
31. In the facts of the present case, disputes and differences
arose between the parties with regard to a building contract. The
pleadings of the parties did not raise any issue with regard to the
date of commencement of the contract as, in the arbitration
proceedings, both parties had accepted that, the work commenced
on February 12, 2014. It is the case of the respondent before the
Arbitral Tribunal that, it had commenced the work on February
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12, 2014, raised and submitted running account bills some of
which were paid.
32. The nature of the contract is for construction of a building on
an identified land. The appellant was well aware of the situation
obtaining at land in question having participated in the tender
process. The nature of work under the contract required the
appellant to carry out various other works apart from purely
constructing the building. In fact, the respondent had commenced
work under the contract on February 12, 2014 without the
sanctioned building plan.
33. Sanction of the building plan had happened later than the
actual commencement of work. In absence of the sanctioned
building plan, the appellant had commenced work on February 12,
2014 and as noted above, raised and submitted running account
bills. Preparatory work leading to the construction of the building
in terms of the sanctioned building plan did not require a
sanctioned building plan to commence the same. Parties did not
understand the contract to be that the work can only be
commenced with the obtaining of the sanctioned building plan.
Both parties had worked under the contract prior to the
sanctioned building plan being obtained.
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34. Learned Arbitral Tribunal had therefore, erred in holding that
the date of commencement of the contract was the date of
sanctioned building plan and cannot taken as earlier date of
February 12, 2014. Such finding of the Arbitral Tribunal is
perverse and contrary to the evidence on record. Such finding
cannot be sustained by the materials placed on record as no
reasonable person can draw such inference from the materials
placed on record.
35. Admittedly, there had been delay in execution of the contract.
Four extensions had been prayed for and granted. The respondent
had sought extension without prejudice and the same were
granted also without prejudice. The net effect of the prayers of
extension and grant thereof, both without prejudice ought to have
been decided upon by the Arbitral Tribunal before fixing the
liability inter se, between the parties.
36. Arbitral Tribunal had premised the fixation of the
responsibility on completely wrong pedestals. The first wrong
pedestal is the date of commencement of contract. The other wrong
pedestal is the extension of time to complete the contract being
done unconditionally. Findings on both such aspect, as discussed
by the learned Single Judge are perverse and not drawn out from
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the materials placed before the Arbitral Tribunal with no
reasonable person being able to draw the inference as recorded by
the Arbitral Tribunal.
37. In such circumstances, we find that the learned Single Judge
has rightly exercised jurisdiction under section 34 of the Act of
1996. Learned Single Judge has correctly held that the impugned
award was vitiated by patent illegality.
38. AO-COM/26/2025 is dismissed, without any order as to
costs.
[DEBANGSU BASAK, J.]
39. I agree.
[MD. SHABBAR RASHIDI, J.]
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Later:-
Prayer for stay made on behalf of the appellant is
considered and refused.
[DEBANGSU BASAK, J.]
I agree.
[MD. SHABBAR RASHIDI, J.]
