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
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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.
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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
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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
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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.
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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.
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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:
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“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.
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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
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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.
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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.
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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-settled10
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 nature11
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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
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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.
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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
Digitally signed by SUKHBANT SINGH
DN: c=IN, o=HIGH COURT OF UTTARAKHAND, ou=HIGH
COURT OF UTTARAKHAND,
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’
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