IN THE HIGH COURT OF MADHYA PRADESH AT JABALPUR BEFORE HON'BLE SHRI JUSTICE VIVEK JAIN

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ON THE 12 OF FEBRUARY, 2026 ARBITRATION APPEAL No. 50 of 2015 M/S SETH MOHANLAL HIRALAL Versus THE STATE OF MADHYA PRADESH Appearance:

Shri R.C.Sobhani - Advocate for the appellant.

Shri Mukund Agrawal Government Advocate for the respondent-State.

ORDER The present appeal is filed under Section 39(1) of the Arbitration Act, 1940 arising out of the order dated 29.03.2008 passed by the District Court under Section 30 and 31 of the Arbitration Act, 1940 whereby the District Court has refused to make the award of the Arbitrator as Rule of the Court.

2. The necessary facts in brief for the purpose of disposal of present petition are that an agreement was executed between the present appellant and the State of Madhya Pradesh in its Department of Water Resources relating to the work of construction of Suka Aquaduct in the year 1978-79 and certain disputes arose between the parties. The present appellant contractor firstly filed a suit before the district court at Hoshangabad (MP) which was an application under Section 8 read with Section 20 of Arbitration Act 1940 (for short Act of 1940) and in which the request was made to hand over the dispute arising between the parties to one Shri K.L. Handa, retired Chief Engineer. The matter related to the claim of the present appellant being rejected by the Superintending Engineer vide his letters dated 2-8-1978 and 12-7-1979 and being aggrieved by the adjudication of the Superintending Engineer the present appellant had moved the district court seeking reference of the case to arbitration. From a perusal of the aforesaid order, passed by the II ADJ, Hoshangabad dated 6-5-1982, the court directed that Shri K.L. Handa, retired Chief Engineer, Arera Colony Bhopal be appointed as sole arbitrator to adjudicate the disputes arising between the parties.

3. Thereafter, another application was filed by the appellant under Section 8 and 20 of Act of 1940 before the District Court and in the said application, the present appellant had made a prayer that Shri V.K. Gupta, retired Chief Engineer MES, be appointed as sole Arbitrator. The said application was entertained by the District court and was registered as CS No.2B/1986 and in the intervening time, the earlier appointed arbitrator, namely Shri K. L. Handa, entered into the reference but did not render any award and the said proceedings had rendered infructuous and Arbitrator lost his mandate by sheer efflux of time and ultimately, the District court passed an order dated 17-8-1998 whereby the District court appointed Shri V.K. Gupta, retired Chief Engineer, Military Engineering Service, New Delhi as sole Arbitrator to adjudicate upon the dispute arising between the parties.

4. Thereafter, Shri V.K. Gupta entered into the reference and passed the award on 17-1-2000 whereby the sole arbitrator decided to allow claims of the present appellant amounting to total Rs. 10,48,569/- along with interest @ 6% per annum from September 1984 to December 1999 and future interest from the date of award to date of payment @ 15% per annum.

5. The said award was filed before the District court and the District court by its initial order dated 28.07.2003 held that the mandate of the arbitrator had come to an end upon expiry of 4 months from date of appointment in view of provisions of Act of 1940 and therefore, set aside the award.

6. The appellant approached this court in MA. No. 2548/2003 and the said appeal was allowed by this court, directing the District court to decide the proceedings on merits and this court condoned the entire delay in passing the award by the arbitrator.

7. Upon remand, the district court again took up the matter and now has again refused to make the award as rule of the court vide impugned order dated 29.03.2008 which is under challenge before this court.

8. The district court has referred to the following grounds in holding the award to be Contrary to public poli