Decided On: 06.05.2025 vs M/S B.S. Ranbir And Co
2025 Latest Caselaw 507 HP

Himachal Pradesh High Court

Decided On: 06.05.2025 vs M/S B.S. Ranbir And Co on 6 May, 2025

Author: Jyotsna Rewal Dua

Bench: Jyotsna Rewal Dua

2025:HHC:12713

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA Arbitration Appeal No.114 of 2024 Decided on: 06.05.2025

-------------------------------------------------------------------------------------

Union of India & Anr.                                     .....Appellants

                                                   Versus

M/s B.S. Ranbir and Co.                                        .....Respondent

------------------------------------------------------------------------------------- Coram

Ms. Justice Jyotsna Rewal Dua

Whether approved for reporting?1

For the Appellants: Mr. Balram Sharma, Deputy Solicitor General of India with Mr. Rajiv Sharma, Advocate.

For the Respondent: Mr. Shubham Sood, Advocate.

------------------------------------------------------------------------------------ Jyotsna Rewal Dua, Judge

Arbitral award passed in favour of respondent No.

1 on 15.10.2015 was upheld by the learned District Judge,

Kangra at Dharamshala on 08.12.2023. Objections preferred

against the award under Section of 34 of the Arbitration and

Conciliation Act, 1996 (in short 'the Act') were dismissed.

Feeling aggrieved, the appellants have now taken recourse to

Section 37 of the Act and have assailed the order passed by

the learned District Judge Kangra at Dharamshala dated

Whether reporters of print and electronic media may be allowed to see the order? Yes.

                                   -2-               2025:HHC:12713



08.12.2023     and     Arbitral     Award   dated    15.10.2015,

whereunder, claim preferred by respondent No.1 was allowed

to the extent indicated therein.

2. The case

2(i) A Contract agreement was executed between the

appellants and respondent No.1 for 'Provision of OTM

accommodation for Postal Unit at Palampur, District Kangra'

for an amount of Rs.3,94,96,923.36/-. Stipulated period of

completion of work was 18 months with given date of

completion as 16.07.2015. The work extended beyond the

period of 18 months. Clause No.48 of the Contract

Agreement provided mechanism of reimbursement/refund on

variation in prices. Respondent No.1 claimed escalation

amounting to Rs. 2,25,498.00/- in Running Account Receipt

(RAR) dated 03.03.2014. Officials of the appellants submitted

it to the Audit Branch. The concerned authority disallowed

payment of escalation on the ground that stipulated period of

completion of the contract was 18 months and as per the

Government policy, provision for escalation is not to be

included in the tenders having completion period of 24

months or less. The escalation was denied to respondent

-3- 2025:HHC:12713

No.1. The dispute, ultimately reached the learned Arbitrator.

Respondent No.1 submitted that both the parties were bound

by the contract provisions and not by the departmental

instructions; That it was obligatory on part of the appellants

to make payment of escalation as per the provisions of the

contract; That he had quoted rates considering contract

provisions including provisions for escalation.

2(ii) Respondent No.1 also submitted that he had

continued to claim escalation payment in subsequent

RARs also. His legitimate payment of escalation was denied

in the subsequent RARs as well. The Physical Date of

Completion of the project was 36 months and hence,

inclusion of escalation clause was in order. Despite

respondent No.1's representation, escalation was not paid to

him. The claim filed by respondent No.1 gave details of

different RARs for different amounts claimed by him, which

were not paid to him on due dates on account of alleged

departmental instructions.

2(iii) From the award, it appears that during hearing of

the claim before the learned Arbitrator, appellants agreed to

the contention of respondent No.1 that it was incumbent

-4- 2025:HHC:12713

upon both the parties to abide by the contractual obligations

and not the departmental instructions; That the departmental

instructions would not override the contractual provisions

agreed to between the parties. The appellants also furnished

calculations in terms of Clause 48 for the escalation

admissible to respondent No.1.

2(iv) Learned Arbitrator held that the contract had

stipulated completion period of 18 months from the date of

commencement. As per the contract, variations in price was

to be reimbursed/refunded on quarterly bases, based on

formula commencing from the date of receipt of quoted

tenders and the claim preferred on account of work done by

respondent No.1 at an interval of not less than 30 days.

Condition No.64, pertaining to advances on account, was also

considered, which stipulated that RARs payment so made

shall be regarded as payments by way of advance for work

done and material delivered at site. The advances were to be

adjusted against the final bills submitted by respondent No.1

on completion of work.

2(v) Learned Arbitrator further held that contract is a

legal document within the ambit of Indian Contract Act. It

-5- 2025:HHC:12713

was obligatory on both the parties to follow it holistically

without any deviation. Disallowance and delay in payment by

the appellants, which were admittedly due to respondent

No.1, citing their internal procedure was not justified and

contrary to contract. The internal procedure of the appellants

did not form part of the contract agreement. Appellants'

denial of payment, due to respondent No.1, was in breach of

the contract. Interpretation/ clarification/ departmental

procedure cannot override express terms and conditions of

the contract agreement. Accordingly, learned Arbitrator

awarded a sum of Rs. 4,299,00.85/- including simple interest

@ 12 % per annum up to 08.09.2015. Learned Arbitrator also

awarded simple interest @12% per annum on escalation

amount of Rs. 4,04,531.32/- w.e.f. 09.09.2015 till the date of

actual payment.

2(vi) In similar manner, interest on delayed payment

for 4th and 5th RARs was also allowed under Claim No.2 in

the sum of Rs.78,543.95/-, computed as simple interest

@12% per annum for the delay for a period of 54 days and 24

days respectively. As Claim No.3, learned Arbitrator also held

that in case the payment of awarded amount was not made

-6- 2025:HHC:12713

within two months, interest @12% per annum on Claim No.2

will be payable to respondent No.1. For Claim No.4, costs of

Arbitration were also awarded at Rs.70,000/- in favour of

respondent No.1 payable by the appellants.

2(vii) Counter claim preferred by the appellants was not

allowed.

Objections preferred the appellants under Section

34 of the Act against the aforesaid award were also dismissed

by the learned District Judge.

3. I have heard learned counsel on both sides and

considered the case file.

4. Consideration

4(i)(a). It is by now well-settled that the scope of Appellate

Court exercising jurisdiction under Section 37 of the Act to

review the findings in an award, is narrow/limited, if the

award has been upheld or substantially upheld under Section

34. [Ref. Larsen Air Conditioning and Refrigeration

Company vs. Union of India2]

In Konkan Railway Corporation Ltd. Vs.

Chenab Bridge Project Undertaking 3, it was held that

Civil Appeal No.3798 of 2023, decided on 11.08.2023

2023(9) SCC 85

-7- 2025:HHC:12713

jurisdiction of the Court under Section 37 of the Act is akin to

that under Section 34 of the Act. The Courts ought not to

interfere with arbitral award in a casual and cavalier manner.

Mere possibility of an alternative view on facts or

interpretation of contract does not entitle Courts to reverse

findings of the Arbitral Tribunal. Relevant paragraphs from

the decision are as follows:-

"19. Therefore, the scope of jurisdiction under Section 34 and Section 37 of the Act is not akin to normal appellate jurisdiction.4 It is well-settled that courts ought not to interfere with the arbitral award in a casual and cavalier manner. The mere possibility of an alternative view on facts or interpretation of the contract does not entitle courts to reverse the findings of the Arbitral Tribunal.5 In Dyna Technologies Private Limited v. Crompton Greaves Limited6, this Court held:

"24. There is no dispute that Section 34 of the Arbitration Act limits a challenge to an award only on the grounds provided therein or as interpreted by various courts. We need to be cognizant of the fact that arbitral awards should not be interfered with in a casual and cavalier manner, unless the court comes to a conclusion that the perversity of the award goes to the root of the matter without there being a possibility of alternative interpretation which

UHL Power Company Ltd. v. State of Himachal Pradesh (2022) 2 SCC (Civ) 401, para 15. See also: Dyna Technologies Pvt Ltd v. Crompton Greaves Limited (2019) 20 SCC 1, para 24, 25.

ibid; Ssangyong Engineering. & Construction Company Ltd. v. National Highways Authority of India (NHAI) (2019) 15 SCC 131; Parsa Kente Collieries Ltd. v. Rajasthan Rajya Vidyut Utpadan Nigam Ltd., (2019) 7 SCC 236, para 11.1.

  (2019) 20 SCC 1
                           -8-                      2025:HHC:12713

may sustain the arbitral award. Section 34 is different in its approach and cannot be equated with a normal appellate jurisdiction. The mandate under Section 34 is to respect the finality of the arbitral award and the party autonomy to get their dispute adjudicated by an alternative forum as provided under the law. If the courts were to interfere with the arbitral award in the usual course on factual aspects, then the commercial wisdom behind opting for alternate dispute resolution would stand frustrated.

25. Moreover, umpteen number of judgments of this Court have categorically held that the courts should not interfere with an award merely because an alternative view on facts and interpretation of contract exists. The courts need to be cautious and should defer to the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied unless such award portrays perversity unpardonable under Section 34 of the Arbitration Act."

XX XX XX

25. The principle of interpretation of contracts adopted by the Division Bench of the High Court that when two constructions are possible, then courts must prefer the one which gives effect and voice to all clauses, does not have absolute application. The said interpretation is subject to the jurisdiction which a court is called upon to exercise. While exercising jurisdiction under Section 37 of the Act, the Court is concerned about the jurisdiction that the Section 34 Court exercised while considering the challenge to the Arbitral Award. The jurisdiction under Section 34 of the Act is exercised only to see if

-9- 2025:HHC:12713

the Arbitral Tribunal's view is perverse or manifestly arbitrary. Accordingly, the question of reinterpreting the contract on an alternative view does not arise. If this is the principle applicable to exercise of jurisdiction under Section 34 of the Act, a Division Bench exercising jurisdiction under Section 37 of the Act cannot reverse an Award, much less the decision of a Single Judge, on the ground that they have not given effect and voice to all clauses of the contract. This is where the Division Bench of the High Court committed an error, in re-interpreting a contractual clause while exercising jurisdiction under Section 37 of the Act. In any event, the decision in Radha Sundar Dutta (supra), relied on by the High Court was decided in 1959, and it pertains to proceedings arising under the Village Chaukidari Act, 1870 and Bengal Patni Taluks Regulation of 1819. Reliance on this judgment particularly for interfering with the concurrent interpretations of the contractual clause by the Arbitral Tribunal and Single Judge under Section 34 of the Act is not justified."

In Bombay Slum Redevelopment

Corporation Pvt. Ltd. Vs. Samir Barain Bhojwani 7, the

Hon'ble Apex Court emphasized that supervisory role of

Courts is very restricted in dealing with appeals under

Section 37 of the Act. Scope of interference in a petition under

Section 34 of the Act is very narrow. Jurisdiction under

(2024) 7 SCC 218

- 10 - 2025:HHC:12713

Section 37 of the Act is narrower. By their own volition, the

parties choose to go before the Arbitral Tribunal instead of

availing remedy before the traditional Civil Courts. Therefore,

Courts must be very conservative while dealing with arbitral

awards and confine themselves to the grounds strictly

available under Section 34 of the Act.

4(i)(b). In Reliance Infrastructure Ltd. vs. State of

Goa8, Hon'le Apex Court held that 'patent illegality' in the

award calls for interference but a mere illegality is not patent

illegality. It ought to be apparent on the face of the award and

not the one which is culled out by way of a long drawn

analysis of pleadings and evidence. Relevant paragraphs of

the decision relevant to the context are under:-

"57. As noticed, arbitral award is not an ordinary adjudicatory order so as to be lightly interfered with by the Courts under Sections 34 or 37 of the Act of 1996 as if dealing with an appeal or revision against a decision of any subordinate Court. The expression "patent illegality" has been exposited by this Court in the cases referred hereinbefore. The significant aspect to be reiterated is that it is not a mere illegality which would call for interference, but it has to be "a patent illegality", which obviously signifies that it ought to be apparent on the face of the award and not the one which is culled out by way of a long-drawn analysis of the pleadings and evidence.

    (2024) 1 SCC 479
                                          - 11 -                   2025:HHC:12713

58. Of course, when the terms and conditions of the agreement governing the parties are completely ignored, the matter would be different and an award carrying such a shortcoming shall be directly hit by Section 28(3) of the Act, which enjoins upon an Arbitral Tribunal to decide in accordance with the terms of contract while taking into account the usage of trade applicable to the transaction.

As said by this Court in Associate Builders vs. DDA9, if an Arbitrator construes the term of contract in a reasonable manner, the award cannot be set aside with reference to the deduction drawn from construction. The possibility of interference would arise only if the construction of the Arbitrator is such which could not be made by any fair- minded and reasonable person.

95. The narrow scope of "patent illegality" cannot be breached by mere use of different expressions which nevertheless refer only to "error" and not to "patent illegality". We are impelled to reiterate what has been stated and underscored by this Court in Delhi Airport Metro Express (P) Ltd. Vs. DMRC10 that restraint is required to be shown while examining the validity of arbitral award by the Courts, else interference with the award after reassessing the factual aspects would be defeating the object of the Act of 1996. This is apart from the fact that such an approach would render several judicial pronouncements of this Court redundant if the arbitral awards are set aside by categorizing them as "perverse" or "patently illegal"

without appreciating the contours of these expressions."

In Larsen Air Conditioning and Refrigeration

Company's2 case, Hon'ble Apex Court held that Section 34 of

(2015) 3 SCC 49

(2022) 1 SCC 131

- 12 - 2025:HHC:12713

the Act, permits the Court to interfere with an award, sans

the grounds of patent illegality, i.e., that illegality must go to

the root of the matter and cannot be of a trivial nature.

Relevant paragraphs from the decision reads as under:-

"15. The limited and extremely circumscribed jurisdiction of the court under Section 34 of the Act, permits the court to interfere with an award, sans the grounds of patent illegality, i.e., that "illegality must go to the root of the matter and cannot be of a trivial nature"; and that the tribunal "must decide in accordance with the terms of the contract, but if an arbitrator construes a term of the contract in a reasonable manner, it will not mean that the award can be set aside on this ground" [ref: Associate Builders (supra)]. The other ground would be denial of natural justice. In appeal, Section 37 of the Act grants narrower scope to the appellate court to review the findings in an award, if it has been upheld, or substantially upheld under Section 34. It is important to notice that the old Act contained a provision 11 which enabled the court to modify an award. However, that power has been consciously omitted by Parliament, while enacting the Act of 1996. This means that the Parliamentary intent was to exclude power to modify an award, in any manner, to the court. This position has been iterated decisively by this Court in Project Director, National Highways No. 45E and 220 National Highways

"15. Power of court to modify award.--The court may by order modify or correct an award--

(a) where it appears that a part of the award is upon a matter not referred to arbitration and such part can be separated from the other part and does not affect the decision on the matter referred; or

(b) where the award is imperfect in form, or contains any obvious error which can be amended without affecting such decision; or

(c) where the award contains a clerical mistake or an error arising from an accidental slip or omission."

- 13 - 2025:HHC:12713

Authority of India v M. Hakeem12:

"42. It can therefore be said that this question has now been settled finally by at least 3 decisions [McDermott International Inc. v. Burn Standard Co. Ltd.13], [Kinnari Mullick v. Ghanshyam Das Damani14], [Dakshin Haryana Bijli Vitran Nigam Ltd. v. Navigant Technologies (P) Ltd.15] of this Court. Even otherwise, to state that the judicial trend appears to favour an interpretation that would read into Section 34 a power to modify, revise or vary the award would be to ignore the previous law contained in the 1940 Act; as also to ignore the fact that the 1996 Act was enacted based on the Uncitral Model Law on International Commercial Arbitration, 1985 which, as has been pointed out in Redfern and Hunter on International Arbitration, makes it clear that, given the limited judicial interference on extremely limited grounds not dealing with the merits of an award, the "limited remedy"

under Section 34 is coterminous with the "limited right", namely, either to set aside an award or remand the matter under the circumstances mentioned in Section 34 of the Arbitration Act, 1996."

In S.V. Samudram vs. State of Karnataka16,

the Hon'ble Apex Court held that jurisdiction of Court under

Section 34 is fairly narrow and moreover, when it comes to

jurisdiction under Section 37 it is all the more circumscribed.

The relevant paragraphs from the decision reads as under:-

"46. It has been observed by this Court in MMTC Ltd. v.

Vedanta Ltd.17 "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 cannot travel beyond the restrictions laid down under Section 34. In other words, the court

(2021) 5 SCR 368

(2006) 11 SCC 181

(2018) 11 SCC 328 : (2018) 5 SCC (Civ) 106

(2021) 7 SCC 657

(2024) 3 SCC 623

(2019) 4 SCC 163

- 14 - 2025:HHC:12713

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."

(Emphasis Supplied)

47. This view has been referred to with approval by a bench of three learned Judges in UHL Power Company Ltd v. State of Himachal Pradesh18. In respect of Section 37, this court observed:-

"16. As it is, the jurisdiction conferred on courts under Section 34 of the Arbitration Act is fairly narrow, when it comes to the scope of an appeal under Section 37 of the Arbitration Act, the jurisdiction of an appellate court in examining an order, setting aside or refusing to set aside an award, is all the more circumscribed."

xx xx xx

49. We may also notice that the circumscribed nature of the exercise of power under Sections 34 and 37 i.e., interference with an arbitral award, is clearly demonstrated by legislative intent. The Arbitration Act of 1940 had a provision (Section 15) which allowed for a court to interfere in awards, however, under the current legislation, that provision has been omitted.19

50. The learned Single Judge, similar to the learned Civil Judge under Section 34, appears to have not concerned themselves with the contours of Section 37 of the A&C Act. The impugned judgment20 reads like a judgment rendered by an appellate court, for whom re-examination of merits is open to be taken as the course of action."

4(ii) In the instant case, it has not been disputed by

(2022) 4 SCC 116

Larsen Air Conditioning and Refrigeration Company v. Union of India and Others 2023 SCC OnLine 982 (2-Judge Bench)

S.V. Samudram v. State of Karnataka, 2017 SCC OnLine Kar 6559

- 15 - 2025:HHC:12713

learned Deputy Solicitor General of India that contract

agreement executed between the parties provided for

escalation. It is also not in dispute that respondent No.1 was

denied the benefits of escalation only on the ground of some

departmental instructions on the subject. The view taken by

the learned Arbitrator that departmental instructions will not

override the contractual provisions is sound and legal view

requiring no interference. Since the appellants had denied

due payment to respondent No.1 and kept his payments on

hold, the award of interest by learned Arbitrator for the delay

in payment is also justified.

In this regard, reference can also be made to

Section 31(7) of the Act, which reads as under:-

"31(7) (a) Unless otherwise agreed by the parties, where and in so far as an arbitral award is for the payment of money, the arbitral tribunal may include in the sum for which the award is made interest, at such rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made.

(b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of two per cent. higher than the current rate of interest prevalent on the date of award, from the date of award to the date of payment.

- 16 - 2025:HHC:12713

Explanation.-The expression "current rate of interest"

shall have the same meaning as assigned to it under clause (b) of section 2 of the Interest Act, 1978 (14 of 1978).]"

It is not in dispute that the agreement executed

between the parties was silent on award of interest. Award of

interest in the given facts is justified. While awarding costs of

Rs.70,000/-, learned Arbitrator had exercised the discretion

in a judicious manner. The appellants had themselves

conceded before the learned Arbitrator that contract

agreement executed by them with respondent No.1 provided

for an escalation clause, which entitled respondent No.1 to

claim variation in prices. Despite this, the appellants did not

adhere to the contractual provisions and took shelter behind

departmental instructions for denying the payments

legitimately due to respondent No.1.

It has not been demonstrated by the appellant

as how the judgment passed by the learned Court below is

in contravention to Section 28(1)(a) of the Act. The judgment

is in conformity with substantive law in force.

"An arbitral award is not liable to be interfered

with only on the ground that the award is illegal or is

- 17 - 2025:HHC:12713

erroneous in law that too upon reappraisal of the evidence

adduced before the arbitral trial. 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 that has been taken by the arbitrator. The

view taken by the arbitrator is normally acceptable and ought

to be allowed to prevail". (Reference: Punjab State Civil

Supplies Corporation Limited and another Versus

Sanman Rice Mills and others21)

The award does not suffer from any patent

illegality. The view taken by the learned Arbitrator is

reasoned, justified and plausible. Learned counsel for the

appellants has not been able to dispute and disprove the

findings of the learned Arbitrator, as affirmed by the learned

District Judge. Learned District Judge has examined the

award in accordance with law vis-à-vis the contentions urged

by the appellants and did not find any ground in exercise of

jurisdiction under Section 34 of the Act for interfering with it.

Having considered the impugned judgment, the award and

SLP(C) No.27699 of 2018, decided on 27.09.2024

- 18 - 2025:HHC:12713

the contentions now urged, I do not find it a case to interfere

in exercise of limited jurisdiction under Section 37 of the Act.

5. In view of above discussion, no case is made out

for interference with the impugned judgment dated

08.12.2023, whereby application moved by the appellant

under Section 34 of the Act was dismissed and the award

passed by the learned Arbitrator was affirmed. Accordingly,

the present appeal under Section 37 of the Act is dismissed.

Pending miscellaneous application(s), if any, also stand

disposed of.

                                           Jyotsna Rewal Dua
May 06, 2025                                     Judge
      (R.Atal)