27 March vs Yukti Construction Pvt. Ltd
2026 Latest Caselaw 2426 UK

Uttarakhand High Court

27 March vs Yukti Construction Pvt. Ltd on 27 March, 2026

                                                          2026:UHC:2274-DB
 IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL
THE HON'BLE CHIEF JUSTICE MR. MANOJ KUMAR GUPTA
                                  AND
   THE HON'BLE JUSTICE MR. SUBHASH UPADHYAY
                 Appeal from Order No.80 of 2026
                             27 March, 2026

  Asha Sharma and Another                                 -----Appellants

                                  Versus

  Yukti Construction Pvt. Ltd.                          ----Respondents
  --------------------------------------------------------------------------
  Presence:-
  Mr. B.D. Pande, Mr. Ravi Joshi and Mr. Gaurav Kandpal, learned
  counsel for the appellant.
  Mr. Deepak Dhingra, learned counsel (through V.C.) along with Mr.
  B.S. Kathayat, learned counsel for the caveator.
  --------------------------------------------------------------------------
  JUDGMENT :

(per Mr. Subhash Upadhyay, J.)

1. The present appeal from order under Section 37

of The Arbitration and Conciliation Act (hereinafter

referred to as "Arbitration Act") has been preferred by the

appellants against the order dated 12.02.2026 passed by

the learned Additional District Judge, Commercial Court,

Dehradun in Arbitration Case No.25 of 2024 whereby the

application under Section 34 of the Arbitration Act filed by

the appellants was dismissed and the award passed by the

sole arbitrator in claim petition filed by the respondents

was affirmed.

2. The respondents claimed specific performance of

an Agreement to Sale dated 05.01.2026 along with

compensation /damages to the tune of Rs.3,00,00,000 for

the purported willful breach of the contractual obligations

2026:UHC:2274-DB by the appellants, or alternatively, the refund of the

principal sum of Rs.1,10,00,000 purportedly paid by the

respondents to the appellants under the term of the

Agreement along with interest.

3. The agreement to sale dated 05.01.2016 was

executed between the respondents and the appellants in

reference to the plots of land being Khasra Nos. 52, 57

and 2045 in Khewat No.65, admeasuring 9.65 bigas out of

13.36 acres, on which a two-storey building was built,

situated at Village Kyarkulil, Bhatta, Pargana -

Kendriyandun, Tehsil and District Dehradun.

4. The appellants expressed their desire to sell the

property to the respondents for a total sale consideration

of ₹1,50,00,000/-(Rupees One Crore Fifty Lakh). As per

the terms and conditions of the agreement the

respondents paid a sum of ₹1 Crore vide account payee

cheque on 05.01.2016 which was duly enchased and the

remaining amount of ₹50 lakh was to be paid at the time

of execution of the sale deed on 31.03.2016.

5. The appellants, however, informed the

respondents that there is a ban imposed on the execution

of the sale deed in the Village Kyarkulil, Bhatta, Pargana -

Kendriyandun, Tehsil and District Dehradun on the suit

property by the District Magistrate, Dehradun as such a

request was made for extension of time which was

2026:UHC:2274-DB extended till 31.08.2016. The appellants, however, further

demanded an amount of ₹10 lakhs and the respondents

paid an amount of ₹9,90,000/- after deducting TDS vide

cheque dated 27.04.2016 which was also encashed by the

appellants.

6. As the appellants did not execute the sale deed,

as such, a legal notice dated 20.08.2018 was sent by

respondents calling upon the appellants to either refund

the amount of Rs.1 Crore along with 12% interest or to

obtain the requisite permission for the execution of the

sale deed. In absence of any response from the appellants

to the said legal notice the respondents invoked

arbitration clause whereby a retired Judge of the High

Court could be appointed as an Arbitrator.

7. The said letter for appointment of an arbitrator

was also not responded by the appellants and the

respondents filed an Arbitration Application No.70/2018

under Section 11(6) of the Arbitration Act before the High

Court of Uttarakhand for appointment of an Arbitrator.

8. In the interregnum, the respondents filed a

petition under Section 9 of the Arbitration Act before the

Civil Judge/ Senior Division, Dehradun wherein vide order

dated 24.07.2019, the learned Judge directed the

appellants to maintain status quo with respect to the suit

property.

2026:UHC:2274-DB

9. Vide order dated 09.09.2022 passed in

Arbitration Application No.70 of 2018, the High Court of

Uttarakhand appointed Shri Justice V.K. Bist, (Retired High

Court Chief Justice) as sole arbitrator.

10. The sole arbitrator vide order dated 24.04.2024

allowed the claim petition filed by the respondents and

directed the appellants to refund the sum of Rs.1 Crore

along with interest @ 9% per annum from 05.01.2016

and sum of Rs.10 Lacs with an interest @9% per annum

from 29.04.2016 till the date the actual recovery is made

and further directed the appellants to pay a sum of Rs.10

Lacs as damages.

11. The appellants assailed the said order under

Section 34 of the Arbitration Act before the Commercial

Court, Dehradun and the said Arbitration Case No.25 of

2024 was dismissed on 12.02.2026 against which the

present appeal from order has been preferred by the

appellants.

12. Learned counsel for the appellants submits that

the security/ advance amount paid by the respondents

was liable to be forfeited in view of Clause 12 of the

Agreement to Sale, as the respondents failed to take steps

to get the sale deed executed during extended time period

of agreement which expired on 31.08.2016 and,

thereafter, did not get the time period extended.

2026:UHC:2274-DB

13. He further submits that the email sent by the

appellants for payment of balance consideration was not

replied by the respondents thereby indicating that the

respondents were neither interested in extension of time

nor were interested for execution of the sale deed.

14. Learned counsel for the appellants thus

contends that the appellants were not at fault and the

security /advance amount deposited by the respondents

was liable to be forfeited and the said fact was not

considered by the sole arbitrator in the right earnest. He

further submits that the learned Commercial Court also

failed to consider the said vital aspect and the application

under Section 34 of the Arbitration Act was dismissed

cursorily.

15. Per contra, learned counsel for the respondent

supports the orders passed by the sole arbitrator and the

learned Commercial Court and submits that the scope of

judicial intervention by the Hon'ble Court under Section 37

of the Arbitration Act is very limited.

16. We have heard learned counsel for the parties

and perused the record.

17. Learned sole arbitrator has framed total 8 issues

and issue no.7 deals with Clause 12 of the Agreement to

Sale which reads as under:

2026:UHC:2274-DB "Issue 7: Whether the advance amount paid by the Claimant has been forfeited in view of Clause 12 of the Agreement to Sell? If not, then whether the Claimant is entitled to its refund along with interest?"

18. Learned sole arbitrator dealt with the said issue

in detail and recorded its finding in paragraph no.85 to 92

of the order which reads as under:

"85. The last issue remaining for consideration by this Tribunal pertains to another defence that has been set up by the Respondents, which has taken the form of issue no. 8. It is whether the advance amount paid by the Claimant has been forfeited in view of Clause 12 of the Agreement to Sell, and if not, then whether the Claimant would be entitled to receive the same along with interest.

86. Clause 12 of the Agreement to Sell, wherein "first party" refers to the Respondents and "second party" refers to the Claimant reads as under:

"12. That if the first party refuses or delays the compliance of this agreement to sell deed then the second party will have the right to receive the earnest money and double of its amount as damages from the first party and institute every type of legal proceedings against her including arbitration in the competent Court and if by the time period fixed the second party does not register the Sale deed in its favour then the earnest money shall be deemed to be forfeited."

87. Pertinently, Clause 12 of the Agreement provides that if the Respondents fails to honour its obligation under the Agreement, then the Claimant will have the right to receive the earnest money and double the amount in damages. Conversely, if the Claimant fails to register the sale deed in their favour in the time fixed, then the earnest money will be deemed to be forfeited.

2026:UHC:2274-DB

88. As for the second part of the clause, it has been contended by the Respondents that the Claimant failed to take steps till 31.08.2016 to get the sale deed executed, and thereafter did not get the time period for the same extended. It is submitted that whereas the Respondents had written an email dated 11.11.2016, requesting the Claimant to pay the balance sale consideration, no positive response was received from them, thereby indicating that the Claimant did not wish to extend the time and nor was it interested in executing the sale deed.

89. The Claimant, on the contrary, stated that there was no occasion for any alleged forfeiture. Besides, notwithstanding various communication including the legal notice, the Respondents never exercised any of their alleged rights of forfeiture. It was argued that this plea was only adopted in the present proceedings as an afterthought and was never adopted earlier. Further, no forfeiture could even otherwise take place since the Claimant was not at fault. The only obligation of the Claimant was to pay balance sale consideration against execution of the sale deed, which could not be executed due to the ban.

90. As has been highlighted above, the Respondents were clearly in the wrong in not making any efforts in getting the ban removed, and thereafter, the Agreement registered and executed. Instead, the Respondents are baselessly attempting to shift the blame on the Claimant by contending that it was incumbent on the Claimant to complete the formalities for the execution or registration of the sale deed, even though the same finds no mention in the Agreement or any of the written correspondence placed on record by the parties. Amidst this, the Respondents have nonetheless made a hollow and frivolous demand to the Claimant vide email dated 11.11.2016 to pay the balance sale consideration for the suit property.

91. The conduct of the Respondents demonstrates that they want to have the cake and eat it too. On one hand, they are desirous

2026:UHC:2274-DB of the balance sale consideration. On the other hand, they have not taken any effective steps to have the encumbrances/ban removed, The Claimant has even paid a late stamp duty along with penalty amounting to total of Rs. 8,00,000. However, the Respondents have still not taken any constructive steps to perform their obligations under the Agreement. The Respondents have not even taken a small step forward into performing any of the three obligations as promised under the Agreement, i.e., constructing a pathway/road at the suit property to access the property; constructing a water tank; and shifting out the portion of the suit property owned by a third party. In this eventuality, the bad faith of the Respondents is clearly discernible.

92. Therefore, first part of issue no. 7 is answered in negative and second part in favour of claimant. The present case is befitting for directing the refund of the earnest money with interest along with damages and compensation. The Tribunal's view is further fortified by the judgment of the Hon'ble High Court of Allahabad in Vijay Kumar Sharma v. Devesh Behari Saxena (supra), referenced by both the parties, whereby despite finding that the suit for specific performance was not enforceable for want of registration of the agreement to sell, the Hon'ble Court granted refund of the earnest money along with an interest at 12% per annum to the plaintiff. This was specifically so because the Hon'ble Court noted that the legal lacuna in the agreement to sell has deprived the party to get a valuable property in Noida."

19. The power of the Court under Section 37 of the

Arbitration Act is very limited and the scope of power to

be exercised by the Court under Section 37 of the Act has

been dealt with by the Hon'ble Apex Court recently in the

judgment of Jan De Nul Dredging India Pvt. Ltd. Vs.

2026:UHC:2274-DB Tuticorin Port Trust 2026 INSC 34 wherein in paragraph

no.24 to 27, 31 to 37 and 51 it has been held as under:

"24. The primary object of the Act is to provide speedy and inexpensive mode of resolution of disputes through the process of arbitration with the minimum intervention of the law courts. In this context, it would be beneficial to refer and quote Section 5 of the Act which reads as under:-

"5.Extent of judicial intervention Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part."

25. The above Section 5 of the Act contemplates that in matters of arbitration governed by Part-I i.e. in relation to domestic arbitration, minimum intervention of the judicial authority is acceptable unless it is otherwise provided under Part-I of the Act. In other words, in order to speed up the remedial measures under the Act in relation to domestic arbitration, there has to be minimum intervention of the court and, if necessary, it has to be only in strict compliance with the provisions of the Act.

26. The Act provides for the challenge of the arbitral award before the court on limited grounds as contemplated by Section 34 of the Act i.e. where one of the party was under some incapacity; or where the arbitration agreement itself was not valid; or the parties were not given proper notice of the appointment of an arbitrator or the arbitral proceedings; or was unable, for some reason, to present his case before the Arbitrator or Arbitral Tribunal; or if the arbitral award deals with the dispute not contemplated or falling within the terms of the arbitration or deals with the matters beyond the scope of the arbitration; or where the constitution of the Arbitral Tribunal was not in accordance with arbitration agreement; and, or where the court finds the subject matter of the arbitral dispute was incapable of settlement by arbitration or the arbitral award is in conflict with the public policy of India.

2026:UHC:2274-DB

27. In short, apart from the above grounds, the arbitral award is not open for challenge under Section 34 of the Act on any other ground. So, the intervention of the court is limited. Therefore, technicalities apart, the main ground for challenge of the arbitral award in the instant case, which survives is that of the award being in conflict with the public policy of India i.e. whether it is in contravention with the fundamental policy of India or is in conflict with the most basic notions of morality or justice.

31. In MMTC Limited vs. Vedanta Limited5, this Court has very succinctly laid down the powers of Appellate Court under the Act. It held as under :-

"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 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."

32. In Konkan Railway Corpn. Ltd. v.

Chenab Bridge Project6, a three-judge bench of this Hon'ble Court has extensively dealt with the jurisprudence around Sections 34 and 37 of the Arbitration Act. This Court has held that:

"18. At the outset, we may state that the jurisdiction of the court under Section 37 of the Act, as clarified by this Court in MMTC Ltd. v. Vedanta Ltd.7, is akin to the jurisdiction of the court under Section 34 of the Act. Scope of interference by a court in an appeal under Section 37 of the Act, in examining an order, setting aside or refusing to set aside an award, is restricted and subject to the same grounds as the challenge under Section 34 of the Act.

19. Therefore, the scope of jurisdiction under Section 34 and Section 37 of the Act is not akin to normal appellate jurisdiction. It is well-settled

2026:UHC:2274-DB 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."

33. In Punjab State Civil Supplies Corpn. Ltd. v. Sanman Rice Mills8, this Hon'ble Court, while examining the scope of Section 34 and Section 37 of the Arbitration Act, has held that:

"20. 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 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.

21. It must also be remembered that proceedings under Section 34 of the Act are summary in nature and are not like a fullfledged regular civil suit. Therefore, the scope of Section 37 of the Act is much more summary in nature

2026:UHC:2274-DB and not like an ordinary civil appeal. The award as such cannot be touched unless it is contrary to the substantive provision of law; any provision of the Act or the terms of the agreement."

34. In UHL Power Company Limited vs. State of Himachal Pradesh9, a three judges Bench of this Court observed as under:-

"The jurisdiction conferred on the 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 the Appellate Court in examining an order, setting aside or refusing to set aside an order, is all the more circumscribed."

35. In a recent case of Bombay Slum Redevelopment Corporation Private Limited vs. Samir Narain Bhojwani10, a Bench of this Court, of which one of us (P. Mithal, J.) was a member, had held that the jurisdiction of the Appellate Court dealing with an appeal under Section 37 of the Act against the judgment in a petition under Section 34 of the Act is more constrained than the jurisdiction of the court dealing with a petition under Section 34 of the Act.

36. The gist of the aforesaid decisions is that the jurisdiction of the court under Section 37 of the Act is akin to the jurisdiction of the court under Section 34 of the Act, and, therefore, the scope of interference by the court in appeal under Section 37 cannot go beyond the grounds on which challenge can be made to the award under Section 34 of the Act. Moreover, the courts exercising powers under Sections 34 and 37, do not act as a normal court, and therefore, ought not to interfere with the arbitral award on a mere possibility of an alternative view.

37. In other words, the scope of interference of the court with the arbitral matters is virtually prohibited, if not absolutely barred. The powers of the Appellate Court are even more restricted than the powers conferred by Section 34 of the Act. The appellate power under Section 37 of the Act 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

2026:UHC:2274-DB or failed to exercise the power so conferred. The Appellate Court exercising powers under Section 37 of the Act has no authority of law to consider the matter in dispute before the Arbitral Tribunal on merits so as to hold as to whether the award of the Arbitral Tribunal is right or wrong. The Appellate Court in exercise of such power cannot sit as an ordinary court of appeal and reappraise the evidence to record a contrary finding. The award of the Arbitral Tribunal cannot be touched by the court unless it is contrary to the substantive provision of law or any provision of the Act or the terms of the agreement.

51. Before parting, we consider it proper to note that the Act is a special enactment which aims to resolve contractual/commercial disputes through arbitration with the minimum intervention of the court, if not without the intervention of the court. In the event, the courts are allowed to step in at every stage and the arbitral awards are subjected to challenge before the courts in hierarchy before court of first instance, through regular appeals and finally by means of SLP/Civil Appeal before the Supreme Court, it would obviate/frustrate and defeat the very purpose of the Act. It is therefore, necessary to accept the arbitral award if it is not patently illegal or does not fall within the scope of intervention under Section 34 of the Act. The appeal thereof has a much narrower scope of intervention particularly when the arbitral award has been upheld under Section 34 of the Act. The appellate jurisdiction acquires little significance only when the arbitral award has been erroneously upheld or set aside by the court in exercise of its power under Section 34 of the Act as discussed earlier, but has no authority of law to consider the matter which was before the Arbitral Tribunal on merits."

20. In the present case, the appellants have

challenged the finding of the sole arbitrator and the order

passed by the learned Commercial Court under Section 34

of the Arbitration Act and have tried to re-argue the

matter on merits.

2026:UHC:2274-DB

21. The Court under Section 37 of the Arbitration

Act cannot sit as an appellate authority and re-appreciate

the evidence. In the present case, the arbitration award is

a speaking award and the learned Commercial Court has

also recorded the finding that there is no violation of the

fundamental policy of any Indian law or the basic notion of

morality and justice, for interfering with the award.

22. In view of the above discussion, we are of the

considered view that the orders passed by the learned

Arbitrator and the learned Commercial Court does not

suffer from any infirmity and there is no scope for

interference under Section 37 of the Arbitration Act,

therefore, the appeal from order is liable to be dismissed

and, as such, the same is dismissed.

23. Pending application, if any, also stands disposed

of.

(MANOJ KUMAR GUPTA, C. J.)

(SUBHASH UPADHYAY, J.) Dated: 27.03.2026 SS

SUKHBANT

DN: c=IN, o=HIGH COURT OF UTTARAKHAND, ou=HIGH

2.5.4.20=71978f9c61bfde0ba69967c787b1764ea7bc7dd129a 8a6380d49b1885e628615, postalCode=263001,

SINGH st=UTTARAKHAND, serialNumber=2D8B71B8D8E345F6B7F95B1DD4FB4BEBD2B7 D72C42261361AED33172F152148D, cn=SUKHBANT SINGH Date: 2026.04.02 14:39:27 +05'30'