Jammu & Kashmir High Court
Reserved On: 24.04.2026 vs M/S Sew Engineering Works on 22 May, 2026
Bench: Rajnesh Oswal, Rahul Bharti
2026:JKLHC-JMU:1626-DB
HIGH COURT OF JAMMU & KASHMIR AND LADAKH
AT JAMMU
AA No. 7/2023
Reserved on: 24.04.2026
Pronounced on: 22.05.2026
Uploaded on: 26.05.2026
Whether the operative part or full
judgment is pronounced: Full
judgment.
Union of India
Th. Chief Engineer Udhampur
Zone, Udhampur
Garrison Engineer (South) .....Appellant(s)/Petitioner(s)
Udhampur
Through: Mr. Sumant Sudan, Advocate vice
Mr. Vishal Sharma, DSGI.
Vs
M/S Sew Engineering Works
Pvt. Ltd. L-333, Sarita Vihar
New Delhi-110076 ..... Respondent(s)
Through: Mr. M. K. Raina, Advocate.
Coram: HON‟BLE MR. JUSTICE RAJNESH OSWAL, JUDGE
HON‟BLE MR. JUSTICE RAHUL BHARTI, JUDGE
JUDGMENT
(Oswal-J)
1. Present appeal under Section 37 of the Arbitration and
Conciliation Act, 1997 (for short ‘the Act of 1997’), is aimed
against an order dated 11.01.2023 passed by the court of
learned Principal District Judge, Udhampur, whereby an
application filed by the appellant for setting aside an
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arbitration award dated 08.09.2014 passed by the sole
arbitrator-Sh. Satish Chander, Chief Engineer (Contracts) has
been dismissed.
2. In the memo of appeal, the appellant is coming forward with
grounds of challenge to the order dated 11.01.2023 as
under:-
a. that the impugned order dated 11.01.2023 suffers from
patent illegality, as Court of the learned Principal District
Judge, Udhampur failed to appreciate that the underlying
arbitral award was passed in blatant disregard of express
provisions of the contract;
b. that the court of learned Principal District Judge, Udhampur
missed to consider a specific ground raised in the appellant’s
petition under Section 34 of the Act of 1997 that the award is
entirely non-speaking. Such an omission directly violates the
statutory mandate of Section 31(3) of the Act of 1997 and is,
ex-facie, opposed to Public Policy;
c. that the court of learned Principal District Judge, Udhampur
resorted to an irregular exercise of jurisdiction by dismissing
the appellant’s petition by exploit of very general observations
and mechanical recitation of judicial precedents bearing no
relevance to the actual controversy at hand.
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3. Mr. Sumant Sudan, Advocate appearing vice Mr. Vishal
Sharma, learned DSGI, has submitted that the court of
learned Principal District Judge, Udhampur has not
considered in a right and correct perspective the petition filed
by the appellant under Section 34 of the Act of 1997, as such,
the order impugned deserves to be set-aside.
4. Mr. M. K. Raina, learned counsel for the respondent on the
other hand has submitted that the scope of interference in an
appeal under Section 37 of the Act of 1997 before this court is
tightly circumscribed. He has argued that the essential
conditions envisaged under Section 34 of the Act of 1997 for
setting aside an arbitral award were completely lacking in the
instant case and, thus, the court of learned Principal District
Judge, Udhampur deservingly dismissed the appellant’s
challenge and the petition. He further contends that the court
of learned Principal District Judge, Udhampur actively
applied its judicial mind to the matter in issue which aspect
is clearly demonstrated by the fact that the court modified
and reduced awarded interest rate from 12% p.a for entire
period to 6% p.a for the pre-arbitration and pendente lite
periods
5. Heard thoroughly learned counsel for the parties and perused
the record.
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6. A perusal of the record depicts that contract agreement No.
CEUZ-03/2000-2001 for work of “Provision of OTM Accn.
For HQ Northern Command (Phase-III) at Udhampur” was
executed between the appellant through Chief Engineer,
Udhampur Zone, and the respondent herein M/s Sew
Engineer Works Pvt. Ltd., on 26.07.2000. Upon emergence of
certain disputes between the parties to the contract, the
matters were referred to the arbitral tribunal of Arbitrator-Sh.
Baljit Singh, Chief Engineer but following his resignation from
the appointment, Sh. Satish Chander, Chief Engineer
(Contracts), was appointed as the substituted arbitrator.
7. Conspectus of the contract in reference between the parties
hereto is set out as under:-
a) Contract Agreement No. : CEUZ-03 of 2000-01
b) Name of work : Provision of OTM Accn for HQ
Northern Command (Phase-III) at
Udhampur.
c) Date of acceptance of Tender : 26 Jul 2000
d) Amount of contract : Rs. 2, 46, 56, 178.24
e) Date of commencement of work : Sample Quarter-23 Aug 2000
Phase-I (a)- 23 Aug 2000
Phase-I (b)- 23 Aug 2000
Phase-II – 07 Sep 2001
f) Original date of completion : Sample Quarter-22 Apr 2001
Phase-I (a)- 22 Aug 2001
Phase-I (b)- 22 Jun 2002
Phase-II – 22 Jun 2002
g) Extended date of completion : Sample Quarter-07 Feb 2004
Phase-I (a)- 28 Feb 2005
Phase-I (b)- 31 Oct 2005
Phase-II – 31 Dec 2005
h) Date of cancellation contract (First) : 05 Aug 2002
Date of revocation of cancellation : 12 Jul 2003
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i) Date of cancellation (2nd time) : 08 Nov 2005 wef 25 Nov 2005
8. Before the learned Arbitrator, the appellant raised four claims
while the respondent preferred nine claims. Vide award dated
08.09.2014, the learned Arbitrator rejected all four claims of
the appellant; out of the respondent’s nine claims, four were
rejected altogether, while the remaining five were allowed in
part. Both sides’ i.e., the appellant and the respondent’s
respective statement of claims are set out herein as under
and the decision against each claim returned by the learned
arbitrator:
CLAIMS OF APPELLANT-UNION OF INDIA (CLAIMANT)
CLAIM No. 1: EXTRA EXPENDITURE INCURRED TO GET THE BALANCE WORK
COMPLETED THROUGH OTHER AGENCY.
Amount of claim: Rs. 1,00,19,424.64
This claim was held and declared nil.
CLAIM No. 2: COMPENSATION FOR DELAY.
Amount of claim: Rs. 12,32,808.92
This claim was held and declared nil.
CLAIM No. 3: COST OF REFERENCE TO ARBITRATION.
Amount of claim: Rs. 2,00,000.00
This claim was held and declared nil.
CLAIM No. 4: INTEREST @ 12% PER ANNUM
This claim was held and declared nil.
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9. CLAIMS OF RESPONDENT-M/S SEW ENGINEERING WORKS PVT.
LTD.
CLAIM No. 1: PAYMENT OF FINAL BILL INCLUDING RELEASE OF BANK
GUARANTEES AND LOSS DUE TO EXTENSION OF BGBs
Amount of claim: Rs. 78,56,066.00
Claim No. 1 was awarded for Rs. 27,22,679/-
Claim: Further the UOI shall also release the BGBs No. SEW/G/8/01/F dated
16 Jul 2001 for Rs. 2,20,000.00 and No. SWE/G/8/01/F dated 09 May 2001
for Rs. 1,58,300.00 within 30 days of date of publication of award.
CLAIM No. 2: LOSS OF PROFIT DUE TO WRONG CANCELLATION OF THE
CONTRACT.
Amount of claim: Rs. 14,56,000.00
Claim No. 2 awarded for Rs. 7,28,000/-
CLAIM No. 3: LOSS DUE TO UNDERPAYMENT OF WORK OF INTERNAL
ELECTRIFICATION (SCH „A‟ PART-IV) AND EXCESS RECOVERY OF
CREDIT
Amount of claim: Rs. 5,21,608.00
This claim was held nil.
CLAIM No. 4: NON PAYMENT OF WORKS OVER AND ABOVE CONTRACT
PROVISION AND REIMBURSEMENT OF AMOUNT WRONGFULLY
DEDUCTED.
Amount of claim: Rs. 21,07,000.00
This claim was awarded nil.
CLAIM No. 5: LOSSES DUE TO DELAY/NON PAYMENT OF RARs.
Amount of claim: Rs. 18,72,000.00
This claim was awarded to Rs. 2,60,000/-
CLAIM No. 6: LOSS ON ACCOUNT OF VARIOUS BREACHES ON THE PART OF THE
RESPONDENTS.
Amount of claim: Rs. 36,98,000.00
This claim was held nil.
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CLAIM No. 7: LOSS OF REPUTATION AND LOSS DUE TO NON ISSUE OF
TENDERS.
Amount of claim: Rs. 1,00,00,000.00
This claim was held nil.
CLAIM No. 8: PAST, PENDENTE LITE AND FUTURE INTEREST @18%.
(a) Past interest is awarded on amount awarded under Claim No. 1
minus amount awarded against Claim No. 1 (e) and the interest shall
be simple interest at the rate of 9% (Nine Percent) per annum and
shall be calculated from 26 Aug 2006 to 20 Apr 2010.
(b) Past and Pendente lite interest is awarded on amount awarded
under Claim No. 1 minus amount awarded against Claim No. 1 (e)
and the interest shall be simple interest at the rate of 6% (Six
percent) per annum and shall be calculated from 21 Apr 2010 to date
of award.
(c) Future interest: A period of three months from the date of award is
allowed to the UOI for making payments in terms of this award. If
the payment is not made by this date, then the awarded amount
shall carry simple interest at 12% (Twelve percent) per annum from
10 Dec 2014 to date of actual payment. There shall be no future
interest on the amount of past and pendente lite interest calculated
as per Para (a) and (b) above.
CLAIM No. 9: COST OF REFERENCE TO ARBITRATION
Amount of claim: Rs. 3,00,000.00
Rs. 50,000/- to contractor/respondent.
10. The appellant then preferred a petition under Section 34 of
the Act of 1997 seeking to set aside arbitral award dated
08.09.2014. It was contended that the learned Arbitrator
erroneously disallowed the appellant’s claims by failing to
properly appreciate both the evidence and the supporting
submissions and in doing so the learned Arbitrator
overlooked a vital aspect of the dispute that the respondent
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had committed breach of fundamental contractual provisions,
constraining not only cancellation of the contract but given
the time-sensitive nature and urgency of the project, the
remaining work had to be re-allotted to a 3rd party contractor
for timely completion. By misinterpreting the appellant’s
arguments, the learned Arbitrator wrongfully rejected the
appellant’s claims while erroneously awarding claims in
favour of the respondent.
11. After considering the rival contentions of the parties, the
learned Principal District Judge, Udhampur arrived at the
following conclusion:
“12. Nevertheless, a careful perusal of the award
passed by the Arbitrator would leave in no manner
any doubt that Arbitrator has acted well within the
limits of terms of reference and has given sufficient
reasons for allowing/disallowing the claims/counter-
claims in part or full after taking into consideration
the documents produced by both the parties as well
as arguments advanced in support of each of the
individual claims/counter-claims.”
12. It is now a well established position of law that an arbitral
award can be set aside upon being challenged only within the
narrow confines of the grounds stipulated under Section 34 of
the Act of 1997. Even before this Court, the appellant has
fallen short of submissions, legal as well as factual, to
demonstrate any such basis and grounds that would warrant
judicial intervention from our end.
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13. In „Ramesh Kumar Jain vs. Bharat Aluminum Company
Ltd.(Balco)‟, 2025 INSC 1457, the Hon’ble Supreme Court of
India has held that “It is a settled proposition of law as has
been constantly observed by this court and we reiterate, the
courts exercising jurisdiction under section 34 do not sit in
appeal over the arbitral award hence they are not expected to
examine the legality, reasonableness or correctness of findings
on facts or law unless they come under any of grounds
mandated in the said provision.”
14. We find ourselves in cordial and in complete agreement with
the court of learned Principal District Judge, Udhampur that
the appellant failed to plead and point much less prove any
perversity and perforation in the arbitral award.
15. The submissions made vehemently before us lack legal
substance and sagacity and fail to align with the stringent
statutory parameters of Section 34 of the Act of 1997.
16. In Ramesh Kumar Jain‟s case ibid, the Hon’ble Supreme
Court of India has reinforced that “When it comes to Section
37 of the A&C Act, it provides for a limited appellate remedy
against an order either setting aside or refusing to set aside an
arbitral award passed by civil court in exercise of its power
under section 34. This court in MMTC Ltd. v. Vedanta Ltd.15, at
Paragraph 14 observed that interference with an order made
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under section 37 cannot travel beyond the restrictions laid
down in section 34“.
17. Having perused the order passed by the court of learned
Principal District Judge, Udhampur, we find it to be well-
reasoned and self-sustainable in law. Consequently, we find
no ground to interfere.
18. The present appeal is dismissed as misconceived, along with
all connected applications.
19. Amount deposited by the appellant be released in favour of
the respondent after due verification and in accordance and
compliance with rules.
(RAHUL BHARTI) (RAJNESH OSWAL)
JUDGE JUDGE
Jammu
22.05.2026
Sahil Padha
Whether the order is speaking: Yes.
Whether the order is reportable: Yes.
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