IN THE HIGH COURT OF MADHYA PRADESH AT JABALPUR BEFORE HON'BLE SMT. JUSTICE ANURADHA SHUKLA

nd

ON THE 22 OF JANUARY, 2026 MISC. APPEAL No. 2786 of 2003 M.P.ELECTRICITY BOARD, JABALPUR Versus M/S QUALITY BELTING & ORS AND OTHERS Appearance:

Shri R.S. Jaiswal - Senior Advocate with Shri Rajmani Sharma - Advocate for the appellant.

None for the respondent. Heard on : 08.01.2026 Pronounced on :22.01.2026 ORDER The award passed by Arbitrator on 28.11.1998 under Section 34 of Arbitration & Reconciliation Act, 1996 validating the forfeiture of earnest money of Rs.90,000/- deposited by the respondent no. 1 was challenged in Civil Suit No.1-A/2003 and by deciding that civil suit on 12.09.2003, the Eleventh Additional District Judge, Jabalpur passed the impugned order and set aside the award passed in favour of appellant .

2. Necessary facts to understand the dispute are that appellant-M.P. Power Generating Company Limited, Jabalpur (for short, "the Company") floated a tender for sale of scrap and unserviceable materials, including the scrap of Nylon Conveyer Belt identified as Lot No.69(i); the quantity of this scrap was shown as 18.87 MT; respondent's tender was of highest rate and along with it he had deposited earnest money of Rs.90,000/-; this tender was valid for 90 days; on 20.10.1997 respondent received a telegram informing that his tender for a quantity of 47.45 MT for a total value of Rs.21,92,142.55 p. was accepted and he was required to deposit the balance earnest money in the light of increased quantity of scrap; respondents replied this telegram by expressing their inability to purchase this significantly increased quantity of scrap but appellant failed to make any communication on this request; respondents again sent a letter of 04.12.1997 contending that 90 days timeline of accepting the tender had lapsed on 11.11.1997 and for his tender being not accepted till that date, his earnest money be now refunded; on 08.12.1997 appellant rejected this request under a written communication. In this backdrop of facts, a dispute about refund of earnest money arose between the parties.

3. Under the terms of agreement between the parties there was an arbitration clause, therefore the matter was referred for arbitration which was decided by respondent no.2 holding that the forfeiture of earnest money was legal and justified. That award was challenged in the Court of Additional District Judge and the impugned order setting aside the award was passed.

4. The grounds set out in this miscellaneous appeal are that the Letter of Intent (LoI) was issued by appellant-Company within a timeframe of 90 days. Further, the quantity of scrap to be sold under the agreement was flexible as it could be increased and even decreased. It was submitted that under the settled legal position, the Court had to refrain from interfering in the arbitration award unless it was found to be erroneous on facts or in law. The point further argued was that under the terms of contract, respondent no.1 had consented to the forfeiture of earnest money on failing to enter into contract after the acceptance of tender offer. It is also very strongly argued that Arbitrator did not commit any breach of public policy nor acted in connivance with respondent no.1. A request was, therefore, made to set aside the impugned order of the Court below.

5. Counsel for the appellant has been heard at length while none appeared on behalf of respondents. Record of the court below has been examined.

6. Record of the court below reveals that some written communications were exchanged between the Arbitrator and the two parties of arbitration proceeding. The record further reflects that respondent no. 1 had submitted tender for more than one kind of scrap material and the letters of correspondences suggest that by writing these letters, the Arbitrator was requesting both the sides to answer the queries, clarify the doubts and submit the relevant documents.

7. Paragraph no.9 of impugned award makes a r