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IN THE HIGH COURT AT CALCUTTA
Arijit Banerjee, Om Narayan Rai, JJ.
State of West Bengal & Anr. – Petitioners
Versus
CAB Engineers Pvt. Ltd.- Respondents
FMA 2795 of 2013
Decided On : 25-08-2025
JUDGMENT :
Om Narayan Rai, J.
1. This appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter ‘the said Act of 1996’) lays challenge to an order dated April 29, 2009 passed by the learned Civil Judge (Senior Division), Purulia, whereby the appellants’ application under Section 34 of the said Act of 1996 (which was registered as Misc. Case No. 05 of 2006) was disposed of by modifying the arbitral award dated January 31, 2006 that had been impugned in the said application under Section 34 of the said Act of 1996.
FACTS:
2. Briefly summed up, the facts of the case, insofar as they are relevant for the present appeal, are as follows:
a. The appellants had floated a tender for completion of “Remaining works of Dam, Dyke and Spillway in connection with the Extension of Bandhu Irrigation Scheme, in P.S. Arsa, District Purulia”.
b. The respondent participated in the tender process and emerged successful. Thereafter the contract for the aforesaid work was awarded to the respondent.
c. Disputes and differences arose between the parties relating to the execution of the aforesaid work awarded to the respondent by the appellants. In terms of the arbitration clause contained in the relevant agreement governing the parties, an Arbitrator was appointed and the disputes that had arisen between the parties were referred to the Arbitrator for adjudication.
d. The respondent herein filed its statement of claim, laying as many as nine distinct claims which are as follows:
| “CLAIM NO. 1 | ||
|---|---|---|
| Amount payable as per final bill prepared by the Department but not yet passed for payment or paid | --Rs.3,90,768/- | |
| CLAIM NO. 2 | ||
| Amount payable against security deposit lying with the department | --Rs.1,00,000/- | |
| CLAIM NO. 3 | ||
| Amount payable due to loss suffered in flush flood during 25th & 26th September, 1992 for being an Act of God. | --Rs.14,82,880/- | |
| CLAIM NO. 4 | ||
| Additional amount payable on A/C of excess/additional works executed beyond (+) 10% of original estimated work provided in the tender (i.e. work beyond normal variation limit) all as per instruction and direction of Engineer-in-Charge. | --Rs.63,45,996/- | |
| CLAIM NO. 5 | ||
| a) | Compensation on account of damages and losses suffered due to various breaches of contract by the department infructuous expenditure incurred due to repeated suspension of work for reasons attributable to the department | Rs. 11,65,005/- |
| b) | Increase in cost of work due to rise in prices of labours and materials for all works executed in the over-run period, for reasons attributable to the department. | Rs. 22,62,190/- |
| c) | Additional/extra On-site expenses incurred due to prolongation of work by more than 13 months. (Claimed 7 months only considering excess work) | Rs. 3,67,850/- |
| d) | Additional/extra cost involved due to detention of heavy plants and machineries due to prolongation of work by more than 13 months. | Rs. 20,35,833/- |
| (Claimed 7 months only considering excess work) | ||
| e) | Additional/Extra Off-site (H.O.) Expenses incurred due to prolongation of work more than 13 months. (Claimed 7 months only) | Rs. 1,00,000/- |
| f) | Additional Guarding expenses incurred to pacify local unrest of land losers-cum-villagers by engagement as extra alleged security staffs all as per approval and knowledge of Engineer-in-Charge. | Rs. 3,60,000/- |
| (16 Guards @ Rs. 750/- P.M. from November ’91 to April ’94) | ||
| g) | Extended stay compensation and/or loss of profit earning capacity being retained longer in the contract without any corresponding monetary benefit and without being free to move elsewhere to earn the normal profit, which he otherwise might do. | Rs. 5,46,700/- |
| CLAIM NO. 6 | ||
| Repair and maintenance of old village Road and approach road, being badly damaged by September, 1992 flood (movement of all vehicles including Govt. vehicles were stopped by the villagers), repaired on instruction of Engineer- in-Charge by supplying, laying & consolidating, boulders (where necessary), 40mm down stone metal and morrum including mechanical compaction. L.S | Rs.8,50,000/- | |
| CLAIM NO. 7 | ||
| Amount payable on A/C of differ | ||
The court confirmed the validity of the Arbitrator's findings regarding excess work claims and the correct application of interest, highlighting that overlapping interest claims were erroneous.
The court affirmed that arbitral awards challenging under Sections 34 and 37 are limited in scope, requiring clear evidence of illegality or perversion; otherwise, the Arbitrator's decision stands.
Courts may only set aside arbitration awards under specific grounds; the presence of reasoning by the arbitrator, while not mandatory, must be assessed for adequacy, but cannot be dismissed purely ba....
The court emphasized the requirement for the arbitrator to assign reasons in support of the award and the limited scope of interference by the court in arbitration awards.
The court emphasized that arbitral awards should not be interfered with solely based on disagreements with findings, affirming the limited grounds for appeal under Section 34 of the Arbitration Act.
The court affirmed the limited scope of review under Section 34 of the Arbitration and Conciliation Act, emphasizing respect for arbitral awards unless stark violations of public policy or procedural....
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