[Cites 5, Cited by 0]
Sikkim High Court
State Of Sikkim And Ors vs Chhabil Dass Agarwal on 10 December, 2025
Author: Bhaskar Raj Pradhan
Bench: Bhaskar Raj Pradhan
THE HIGH COURT OF SIKKIM: GANGTOK
(Civil Appellate Jurisdiction)
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DIVISION BENCH: THE HON'BLE MR. JUSTICE BISWANATH SOMADDER, CHIEF JUSTICE
THE HON'BLE MR. JUSTICE BHASKAR RAJ PRADHAN, JUDGE
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ARB. A. No. 8 of 2024
1. State of Sikkim,
Represented by and through the PCE-cum-Secretary,
Energy and Power Department,
Government of Sikkim,
Gangtok - 737101.
2. Power Department,
Represented by the Chief Engineer (North),
Government of Sikkim,
Gangtok - 737101.
3. Power Department,
Represented by the Superintending Engineer (North),
Government of Sikkim,
Gangtok - 737101. ..... Appellants
versus
Chhabil Dass Agarwal,
S/o Late Deepchand Agarwal,
Resident of 5/1 Sirwani Road,
Singtam,
P.O. and P.S. Singtam - 737134. ..... Respondent
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Appeal under Section 37 of the Arbitration & Conciliation
Act, 1996.
[ against the impugned judgment dated 30.05.2024 passed by the learned Judge,
Commercial Court at Gangtok in Commercial (Arbitration) Case No. 02 of 2022 in State
of Sikkim & Ors. vs. Chhabil Dass Agarwal]
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Appearance:
Mr. Zangpo Sherpa, Additional Advocate General with Mr. Mohan
Sharma, Advocate and Mr. Sujan Sunwar, Assistant Government
Advocate for the Appellants.
Mr. Rohan Batra, Mr. Dhruv Sethi and Mr. Hemlal Manger, Advocates
for the Respondent.
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2
Arb. A. No. 8 of 2024
State of Sikkim & Ors. vs. Chhabil Dass Agarwal
JUDGMENT
Date of Hearing : 13.08.2025, 22.08.2025, 24.09.2025,
16.10.2025 & 06.11.2025
Judgment reserved : 13.11.2025
Judgment pronounced & uploaded: 10.12.2025
Bhaskar Raj Pradhan, J.
This is an appeal under section 37 of the Arbitration
and Conciliation Act, 1996 (the Arbitration Act).
2. The facts pertinent for disposal of the present
appeal can be briefly summarised as under:
(i) The appellants and the respondent had entered into a
contract agreement dated 12.10.2004 for (i) installation of
additional 66KV bay at 66/11KV Phodong substation
required for connection of Khamdong-Phodong 66KV line; (ii)
drawing of associated new 11KV three phase heavy duty line
on ACSR dog conductor from new 2x5MVA, 66/11KV sub-
station at Mangan; and (iii) renovation/refurbishing of
66/11KV substation at Phodong. The work had to be
completed within seven months but due to several factors, it
could be completed only on 18.02.2008. The cost of work
was Rs.1,60,26,000/- and the respondent was paid a sum of
Rs.1,58,75,669/- by the appellants on 31.03.2017.
State of Sikkim & Ors. vs. Chhabil Dass Agarwal
(ii) Dissatisfied with the amount of payment received for the
contract work, the respondent invoked the arbitration
clause, claimed escalation cost and interest on delayed
payment. Consequently, the sole Arbitrator was appointed
by this Court vide order dated 08.10.2020 in Arb. P. No. 1 of
2020. After completing the proceedings, the impugned
award was passed on 08.11.2021 holding that the
respondent is entitled to both escalation cost of
Rs.25,00,418/- along with interest @10% per annum from
2008 to 2021, which amounted to Rs.2,38,88,914/-. The
total amount payable by the appellants to the respondent
was calculated at Rs.2,63,89,332/-. Aggrieved with the
impugned award, the appellants filed an application under
section 34 of the Arbitration Act, which was rejected by the
learned Commercial Court.
(iii) The respondent, in their claim before the learned
Arbitrator, asserted certain facts which were admitted by the
appellants in their statement of defence. The respondent
asserted that he had completed the work on 18.02.2008 by
raising loans from borrowers, his family business and also
by divesting savings. That, the appellants did not make any
payment to the respondent before completion of the work on
18.02.2008 because of which there was immense delay.
State of Sikkim & Ors. vs. Chhabil Dass Agarwal
That, the respondent had completed the work to the value of
Rs.1,58,75,670/- and payment made to the respondent for
the first time on 31.03.2017 was Rs.1,58,75,670/-, although
the work was already completed on 18.02.2008. That,
during 2004, the respondent had executed two contract
works, one at Mangan and the other at Phodong under two
different contract agreements and both the works got
completed in 2008, however, the appellant failed to make
payment to the respondent. That, for both the works the
respondent had written several common letters for release of
payment but without any result. That, although,
mobilization advance of 25% value of the work was payable,
it was never paid to the respondent. Although, work was
completed in all respects by 18.02.2008, payment was
released after nine years only on 31.03.2017.
(iv) The appellants in their statement of defence replied to
the aforesaid assertions of the respondent stated in
paragraphs 1(vii) to 1(xiii) of the claim petition by admitting
thus, "11. That the contents of paragraph 1(vii) to 1(xii) of the
statement of claim are matters of record and are admitted to
the extent borne by records and anything contrary thereof the
petitioner be put to strict proof thereof."
State of Sikkim & Ors. vs. Chhabil Dass Agarwal
3. The learned Commercial Court on the basis of identical
reasoning in Commercial (Arbitration) Case No. 3 of 2022 did
not interfere with the arbitral award rendered by the learned
Arbitrator and rejected the petition under section 34 of the
Arbitration Act.
4. The present appeal under section 37 of the Arbitration
Act, preferred by the appellants raises identical grounds of
appeal before this Court as in Arbitration Appeal No. 9 of
2024. The learned Additional Advocate General once again
relies upon purported 'clause 4h' of the contract agreement
and the judgment of the Hon'ble Supreme Court in Pam
Developments Private Limited vs. State of West Bengal & Another1,
which have both been dealt with in our judgment rendered in
Arbitration Appeal No. 9 of 2024.
5. In addition, we also notice that the contract agreement
dated 12.10.2004 does not have 'clause 4h' or a similar clause
as in the contract agreement dated 24.02.2004 involved in
Arbitration Appeal No. 9 of 2024. The learned Additional
Advocate General was also not able to point out 'clause 4h' or
a similar clause in the contract agreement dated 12.10.2004.
(2024) 10 SCC 715
State of Sikkim & Ors. vs. Chhabil Dass Agarwal
6. We, therefore, dismiss the present appeal in terms of
the judgment rendered by us in Arbitration Appeal No. 9 of
2024.
(Bhaskar Raj Pradhan) (Biswanath Somadder)
Judge Chief Justice
Approved for reporting : Yes
Internet: Yes
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