Rajasthan High Court – Jaipur
State Of Rajasthan vs Shri I.J. Mamtani, … on 4 March, 2026
[2026:RJ-JP:9499-DB]
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
D.B. Civil Miscellaneous Appeal No. 2530/2024
1. State Of Rajasthan, Through Administrative Secretary,
Public Works Department, Rajasthan, Jaipur.
2. Chief Engineer(N.h.)., Public Works Department,
Rajasthan, Jaipur.
3. Superintending Engineer, Public Works Department, Circle
Sikar, Rajasthan.
----Appellants
Versus
1. Shri I.J. Mamtani, Chairman, Arbitration Committee, Chief
Engineer Road Retired Most 111 G/58, Lajpat Nagar-3,
New Delhi-110024 (Fax No. 01129832256).
2. Gammon India Limited, Gammon House, Veer Sarvarkar
Marg, Prabha Devi Marg, Varli, Mumbai-400025.
----Respondents
For Appellant(s) : Mr. Vigyan Shah, AAG
For Respondent(s) : Mr. A.K. Sharma, Sr. Adv. assisted by
Mr. Rachit Sharma&
Mr. Madhav Dadich
HON’BLE THE ACTING CHIEF JUSTICE MR. SANJEEV PRAKASH SHARMA
HON’BLE MRS. JUSTICE SHUBHA MEHTA
Judgment
REPORTABLE
05/03/2026
1. The State in this appeal assails the order passed by the
learned Commercial Court No.2, Jaipur Metropolitan-II dated
20.03.2024, whereby the Commercial Court has rejected the
objections raised by the appellant under Section 34 of the
Arbitration & Conciliation Act, 1996 (for short ‘the Act of 1996’)
and has affirmed the award passed by the Arbitral Tribunal (for
short ‘Tribunal’).
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2. Mr. Vigyan Shah, learned Additional Advocate General has
vehemently submitted that the learned Arbitrator failed to take
into consideration the provisions enumerated in the contract and
has passed an award without appreciating the facts and
circumstances. It is his submission that the concerned Tribunal
has failed to take into consideration that the entire contract was
time related and if the same would not have been completed
within the time frame, the State had full right to determine the
contract.
3. He submits that the finding of the Tribunal of the contract
not being time bound related is perverse. He also submits that the
concerned Engineer had no power to extend the time period of the
contract and a wrong presumption has been drawn by the
Arbitrator that it can be assumed there must be some obstacles in
construction of the road for 98 Kms.
4 Learned counsel has painstakingly taken us to the various
provisions of the contract agreement and also to the view taken
by the Tribunal.
5. Learned counsel submits that the findings of the Tribunal
with regards to the duties of the Engineer being Executive and
quasi judicial is wholly erroneous. The Engineer being employed
by the employer, i.e., State of Rajasthan, was bound by the
instructions issued by the State and its Chief Engineer.
6. The learned counsel has further taken us to the order passed
by the Commercial Court No. 2, Jaipur. While deciding the
objections under Section 34 of the Act of 1996 to submit that so
far as Clauses 44 and 47 regarding power to extend the time
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limitation and imposing of liquidated damages are concerned, the
same were not applicable as the contract was by the World Bank
Project and the World Bank directions were required to be
followed.
7. In view of the fact that the contractor had failed to perform
within the time limit prescribed, the determination of the contract
cannot be said to be unjustified.
8. We have considered the submissions.
9. In this case, a Tribunal was appointed consisting of three
members. The claimant nominated one Mr. M.D. Deshmukh, as the
Arbitrator, while the IRC nominated one Shri I.J. Mamtani and the
State named one Mr. J.M. Malhotra, as Arbitrator.
10. The Tribunal commenced its hearing from 07.07.1997 and
passed an award on 14.01.2008, further the award was corrected
by issuing a corrigendum award on 01.03.2008. The summary of
the award is noted as below:
6. Further Direction by the AT
The Respondent Employer are permitted the time of 90
days from the date of publishing and signing the award
for payment by the Respondents Employer to the
Claimants Contractor. In case the Respondents do not
pay the amount to the Claimants, the Claimants shall
be paid the interest @14% on the gross amount which
includes the awarded amount for the claims and the
interest upto the date of the award, thereafter,SUMMARY OF AWARD
Claim Brief Description of the Amount of claim Amount of
No. Claim in rupees Award
Contractors Claimant’s Claims (Rs. Lakhs)
1 Reimbursement of 8,09,46,000/0 Nil
Additional and/or extra
expenses incurred during
execution of the work due
to breach of contract on
the part of the(Uploaded on 23/03/2026 at 12:01:35 PM)
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[2026:RJ-JP:9499-DB] (4 of 17) [CMA-2530/2024]Respondents.
2 Refund of the recovered 1,34,13,100/- 1,34,13,100
amount towards the /-
alleged liquidated
damages
3 Refund of the withheld 63,79,675/- 63,79,675/-
amount towards
escalation on the work
done from time to time
and wrongfully disallowed
in the final bill of the
Claimants.
4 Reimbursement of extra 18,34,565/- Nil
cost of carrying out Profile
Corrective courses
5 Reimbursement of cost of 22,34,565/- 9,44,880/-
work done on surveying
and preparation of Grade
Sheets
6 Reimbursement of extra 28,27,298/- 28,27,298/-
cost of construction of
berms using quarry
rubbish shoulders
7 Claim for compensation 3,39,86,000/- 2,32,05,000
for wrongful cancellation /-
of the contract by the
Respondents when
extension of time was
legitimately due to the
Claimants
8 Reimbursement of 44,51,000/- 37,27,237/-
additional
uncontemplated interest
charges required to be
paid by the Claimants on
the various advances
given to them by the
Respondents due to the
actual progress of work
not being commensurate
with the planned progress
of work due to breaches
of contracts on the part of
the Respondents.
Respondent Employer's Claim
1 Respondent Employer's 367.40 lakhs Nil
Claims
Loss due to deprivation of
financial assistance from
World Bank at lower
interest rates for the work
not done by the
contractor
2 Expenditure incurred by 595.86 lakhs Nil
Respondent on bringing
the road to traffic worthy
condition
3 Cost of balance work after 1360.74 lakhs Nil
the rescinding the
contract (Excess to be
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4 Loss to public 50 lakhs L.S Nil
5 Cost of Arbitration 2.384 lakhs L.S Nil
Contractor Claimants Claims
9 Interest Not qualified Rate of
interest @
12% p.a.
w.e.f.
18.2.1997.
10 Cost of Arbitration Share 14,07,719 = 00 Refund of
of arbitrator's fees and 50%
expenses paid by amount paid
Claimants on behalf of to the
Respondents. Arbitrators
on behalf of
the
Respondent
s.
11. The objections to the said award were filed under Section 34
of the Act of 1996 before the District Court & Sessions Judge on
28.05.2008, which was later on transferred to the Commercial
Court (supra) on 03.02.2018 and, thereafter, the objections were
decided on 20.03.2024.
12. We noticed that more than 25 years have elapsed since the
initial arbitration proceedings commenced. The Act of 1996
essentially was passed with the purpose of deciding disputes in an
effective and quick manner. However, we see and note that in
almost all the cases where arbitration awards are passed, the
same are taken up by way of raising objections under Section 34
of the Act of 1996, as if an appeal has been filed. Section 34 of
the Act of 1996, provides certain conditions wherein the arbitral
award can be set aside and it would be useful to note them for the
purpose of present case. The same has been reproduced below:
“34. Application for setting aside arbitral award.–
(1) Recourse to a Court against an arbitral award may
be made only by an application for setting aside such(Uploaded on 23/03/2026 at 12:01:35 PM)
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[2026:RJ-JP:9499-DB] (6 of 17) [CMA-2530/2024]award in accordance with sub-section (2) and
sub-section (3).
(2) An arbitral award may be set aside by the
Court only if –
(a) the party making the application
[establishes on the basis of the record of the
arbitral tribunal that]–
(i) a party was under some incapacity,
or
(ii) the arbitration agreement is not valid
under the law to which the parties have
subjected it or, failing any indication
thereon, under the law for the time being
in force; or
(iii) the party making the application was
not given proper notice of the
appointment of an arbitrator or of the
arbitral proceedings or was otherwise
unable to present his case; or
(iv) the arbitral award deals with a
dispute not contemplated by or not
falling within the terms of the submission
to arbitration, or it contains decisions on
matters beyond the scope of the
submission to arbitration:
Provided that, if the decisions on matters
submitted to arbitration can be
separated from those not so submitted,
only that part of the arbitral award which
contains decisions on matters not
submitted to arbitration may be set
aside; or
(v) the composition of the arbitral
tribunal or the arbitral procedure
was not in accordance with the
agreement of the parties, unless such
agreement was in conflict with a
provision of this Part from which the
parties cannot derogate, or, failing such
agreement, was not in accordance with
this Part; or
(b) the Court finds that–
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(i) the subject-matter of the dispute is
not capable of settlement by
arbitration under the law for the time
being in force, or
(ii) the arbitral award is in conflict with
the public policy of India.
[(2A) An arbitral award arising out of
arbitrations other than international commercial
arbitrations, may also be set aside by the
Court, if the Court finds that the award is
vitiated by patent illegality appearing on the
face of the award:
Provided that an award shall not be set aside
merely on the ground of an erroneous
application of the law or by reappreciation of
evidence.]
(3) An application for setting aside may not be
made after three months have elapsed from the
date on which the party making that application
had received the arbitral award or, if a request
had been made under section 33, from the date
on which that request had been disposed of by
the arbitral tribunal:
Provided that if the Court is satisfied that the
applicant was prevented by sufficient cause
from making the application within the said
period of three months it may entertain the
application within a further period of thirty
days, but not thereafter.
(4) On receipt of an application under sub-
section (1), the Court may, where it is
appropriate and it is so requested by a party,
adjourn the proceedings for a period of time
determined by it in order to give the arbitral
tribunal an opportunity to resume the arbitral
proceedings or to take such other action as in
the opinion of arbitral tribunal will eliminate the
grounds for setting aside the arbitral award.
[(5) An application under this section shall be
filed by a party only after issuing a prior notice
to the other party and such application shall be
accompanied by an affidavit by the applicant
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endorsing compliance with the said
requirement.]
[(6) An application under this section shall be
disposed of expeditiously, and in any event, within
a period of one year from the date on which the
notice referred to in sub-section (5) is served upon
the other party.]”
13. Although, the award may not fall in any of the categories
under Section 34 of the Act of 1996, however, an interpretation
has been taken by the Hon’ble Apex Court in certain cases where
the Court can interfere with an award, if the same has been
passed arbitrarily or where there is a perversity to the extent that
the award could not have been passed by any reasonable person.
14. Reference may be made to the following judgments:
(a) In the context of arbitrariness, reference can be made to the
decision of the Hon’ble Supreme Court in MMTC Limited vs
Vedanta Limited (2019) 4 SCC 163:
“12. It is only if one of these conditions is met that the
Court may interfere with an arbitral award in terms of
Section 34(2)(b)(ii), but such interference does not
entail a review of the merits of the dispute, and is
limited to situations where the findings of the arbitrator
are arbitrary, capricious or perverse, or when the
conscience of the Court is shocked, or when the
illegality is not trivial but goes to the root of the matter.
An arbitral award may not be interfered with if the view
taken by the arbitrator is a possible view based on
facts. (See Associates Builders v. DDA. Also see ONGC
Ltd. v. Saw Pipes Ltd. ; Hindustan Zinc Ltd. v. Friends
Coal Carbonisation ; and McDermott International Inc.
v. Burn Standard Co. Ltd.)”
(b) In the context of principles surrounding application of the
concept of perversity, reference can be made to the decision of
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the Hon’ble Supreme Court in Associate Builders vs Delhi
Development Authority (2015) 3 SCC 49:
“31. The third juristic principle is that a decision which is
perverse or so irrational that no reasonable person
would have arrived at the same is important and
requires some degree of explanation. It is settled law
that where:
(i) a finding is based on no evidence, or
(ii) an Arbitral Tribunal takes into account something
irrelevant to the decision which it arrives at; or
(iii) ignores vital evidence in arriving at its decision,
such decision would necessarily be perverse.”
(c) The principles enumerated in Associate Builders (supra)
have also been followed in subsequent cases, as also noticed by
the Hon’ble Supreme Court in Anglo American Metallurgical
Coal Pty. Limited vs MMTC Limited (2021) 3 SCC 308:
“47. This judgment has been consistently followed in a
plethora of subsequent judgments, including:
(a) NHAI v. ITD Cementation (India) Ltd. at para
24 (p.38);
(b) Centrotrade Minerals & Metal Inc. v.
Hindustan Copper Ltd. at para 45 (p. 252);
(c) Venture Global Engg. LLC v. Tech Mahindra
Ltd. at para 85 (p. 687);
(d) Sutlej Construction Ltd. v. State (UT of
Chandigarh) at para 11 (p. 722);
(e) Maharashtra State Electricity Distribution Co.
Ltd. v. Datar Switchgear Ltd. at para 51 (p. 169);
(f) HRD Corpn. v. GAIL (India) Ltd. at paras 18-
19 (p. 493);
(g) M.P. Power Generation Co. Ltd. v. ANSALDO
Energia SpA at para 25 (p.679);
(h) Shriram EPC Ltd. v. Rioglass Solar SA at para
34 (p.328);
(i) State of Jharkhand v. HSS Integrated Sdn at
para 7 (p.804); and
(j) SsangYong Engg. & Construction Co. Ltd. v.
NHAI at paras 20, 34-36 (pp. 154, 169-170).”
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(d) Furthermore, the Hon’ble Supreme in Ssangyong
Engineering and Construction Company Limited vs
National Highways Authority of India (NHAI) (2019) 15
SCC 131, while referring to Associate Builders (supra)
opined:
“41. What is important to note is that a decision which
is perverse, as understood in paras 31 and 32 of
Associate Builders, while no longer being a ground for
challenge under “public policy of India”, would
certainly amount to a patent illegality appearing on the
face of the award. Thus, a finding based on no
evidence at all or an award which ignores vital
evidence in arriving at its decision would be perverse
and liable to be set aside on the ground of patent
illegality. Additionally, a finding based on documents
taken behind the back of the parties by the arbitrator
would also qualify as a decision based on no evidence
inasmuch as such decision is not based on evidence
led by the parties, and therefore, would also have tobe characterised as perverse.”
(e) A word of caution was given by the Hon’ble Supreme
Court in Dyna Technologies Private Limited vs
Crompton Greaves Limited (2019) 20 SCC 1:
“24. There is no dispute that Section 34 of the
Arbitration Act limits a challenge to an award only
on the grounds provided therein or as interpreted by
various courts. We need to be cognizant of the fact
that arbitral awards should not be interfered with in
a casual and cavalier manner, unless the courtcomes to a conclusion that the perversity of the
award goes to the root of the matter without there
being a possibility of alternative interpretation which
may sustain the arbitral award. Section 34 is
different in its approach and cannot be equated with
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[2026:RJ-JP:9499-DB] (11 of 17) [CMA-2530/2024]Section 34 is to respect the finality of the arbitral
award and the party autonomy to get their dispute
adjudicated by an alternative forum as provided
under the law. If the courts were to interfere with
the arbitral award in the usual course on factual
aspects, then the commercial wisdom behind opting
for alternate dispute resolution would stand
frustrated.”
(f) More recently, the scope of Section 34 of the Act of
1996 were discussed by the Hon’ble Supreme Court in
Gayatri Balasamy vs ISG Novasoft Technologies
Limited (2025) 7 SCC 1:
“255. The courts exercising power under Section 34
and courts hearing appeals thereunder have no
power to “modify” an award.
256. The power to modify is not a lesser power to
that of the power to set aside, as the two operate in
separate spheres and are not of the same genus.
257. The inherent power under Section 151 CPC
cannot be used to modify awards as it will be
contrary to the express power mentioned in Section
34. Similarly, there is no scope for applying the
doctrine of implied power to modify awards.
259. Interest awarded also cannot be modified in
exercise of powers of setting aside and the course of
action under Section 34(4) will have to be adopted
as discussed in the judgment.
260. Hakeem is not per incuriam insofar as it held
that a Section 34 Court cannot modify the award and
will be read with the only exception made in this
judgment now. On the principle of actus curiae
neminem gravabit (act of court shall prejudice no
one) computation, clerical and typographical errors
or other errors of similar nature is permissible to be
corrected by the Section 34 Court, in terms of the
holding above.
262. The power under Section 34(4) can be
exercised by the Court suo motu also under the
circumstances set out hereinabove.
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263. A Court under Section 34 and the courts
hearing appeals thereafter have the power to “sever”
parts of the award in exercise of the powers of
setting aside awards under Section 34. However,
while severing, the parameters set out hereinabove
and flowing from the judicial precedents discussed
therein have to be followed.”
(g) As this case is at the appellate stage, it would also
be apposite to refer to a recent decision of the Hon’ble Supreme
Court in Saisudhir Energy Ltd. vs NTPC Vidyut Vyapar
Nigam Ltd. 2026 SCC Online SC 125 wherein it was held as
under:
“18. In our view, the Division Bench exceeded its
jurisdiction under Section 37 of the Act of 1996 when
it proceeded to re-work and re-calculate the amount
of reasonable compensation to which NVVNL was
entitled. The learned Single Judge having determined
the amount of reasonable compensation by relying
upon Clause 4.6 of the PPA and thereafter awarding
50% of the amount so determined, in the absence of
this determination being shown to be beyond the
terms of Clause 4.6 of the PPA or arbitrary or
perverse, no interference with such determination
was called for in exercise of jurisdiction under
Section 37 of the Act of 1996. In fact, the Division
Bench has not recorded any finding that such
determination of reasonable compensation by the
learned Single Judge suffered from arbitrariness or
that it travelled beyond what was provided by Clause
4.6 of the PPA. Having held in paragraph 28 of the
impugned judgment that it was in agreement with
the view of the learned Single Judge of the need to
balance equities and compute a fair and reasonable
amount of compensation coupled with the fact that
the majority award granting a paltry amount of Rs.
1.2 crores was held to be contrary to the
fundamental policy of Indian law thus requiring
interference, the further exercise undertaken by it in
modifying the amount of reasonable compensation(Uploaded on 23/03/2026 at 12:01:35 PM)
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[2026:RJ-JP:9499-DB] (13 of 17) [CMA-2530/2024]was not justified in the facts of the case. The
modification in the amount of reasonable
compensation by the Division Bench is merely a
substitution of its view in place of the plausible view
taken by the learned Single Judge. Such course of
taking a different view of the same matter from the
one taken under Section 34 of the Act of 1996 would
be beyond the scope of Section 37 of the Act of
1996. As held in AC Chokshi Share Broker Private
Limited v. Jatin Pratap Desai to which one of us (P.S.
Narasimha J) was a party, the Court under Section
37 must only determine whether the Section 34
Court had exercised its jurisdiction properly and
rightly, without exceeding its scope. To that extent,
we find that the Division Bench of the High Court
erred in interfering with the judgment of the learned
Single Judge.”
15. Before proceeding further, we deem it fit to
enumerate the following non-exhaustive principles to aid
in determination of whether to set aside an award on
grounds of arbitrariness or perversity:
a. The finding lacks any or sufficient evidence
b. Conclusion drawn from material available on record
is perverse to the extent that no reasonable person
examining such material would have arrived at such
conclusion
c. Key facts or evidence were not given due
consideration
d. Violation of due legal process or principles of natural
justice, particularly where it has a material effect on
the outcome of the dispute
e. Disregarding the opinion of experts without assigning
sufficient reasons, particularly in technical matters
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[2026:RJ-JP:9499-DB] (14 of 17) [CMA-2530/2024]f. Decision amounted to rewriting of contract
g. Tribunal exceeded its mandate in any manner
h. Arbitrariness or perversity goes to the root of the
matter
While the above-mentioned principles provide useful
guidance, they have to be examined in the context of the
unique facts and circumstances of each case.
16. In light of the aforesaid law, we examine the present case.
We find that the grounds which were taken by the appellant before
the Court below as enumerated in Para 48 were found to be
without any basis. The grounds as raised and examined by the
concerned Commercial Court are not such which may come within
the four corners of Section 34 (2) of the Act of 1996.
17. The main objections which we have enumerated in the
foregoing paras raised by the State have been found on factual
grounds to be incorrect. We also went through the entire award
passed by the learned Arbitrator and find that the objections
raised and the arguments advanced by the State were all dealt
with reference to the provisions of the agreement entered
between the parties. The duties of the Engineer are enumerated in
Clause 2 of the Contract agreement T-1 P:71 where he has been
designated as the first person to examine any dispute which may
arise between the Executive Engineers and the contracting party.
The said clause is reproduced below:
“ENGINEER AND ENGINEER’S REPRESENTATIVE
2. (1) The Engineer shall carry out such duties in
issuing decisions, certificates a orders as are specified
in the contract. In the event of the Engineer being
required in terms of his appointment by the Employer
to obtain the specific approval of the Employer for the(Uploaded on 23/03/2026 at 12:01:35 PM)
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[2026:RJ-JP:9499-DB] (15 of 17) [CMA-2530/2024]execution of any part of these duties, this shall be set
out in Part second of these Conditions.
(2) The Engineer’s Representative shall be responsible
to the Engineer and his duties are to watch and
supervise the works and to test and examine any
materials to be used or workmanship employed in
connection with the works. He shall have no authority
to relieve the Contractor of any of his duties or
obligations under the Contract nor, except as expressly
provided hereunder or elsewhere in the Contract, to
order any work involving delay or any extra payment
by the Employer, not to make any variation of or in the
works.
The Engineer may from time to time in writing
delegate to the Engineer’s Representative any of the
powers and authorities wasted in the Engineer and
shall furnish to the Contractor and to the Employer a
copy of all such written delegations of powers and
authorities. Any written instruction or approval given
by the Engineer’s Representatives to the contractor
within the terms of such delegation, but not otherwise,
shall bind the Contractor and the Employer as though it
had been given by the Engineer. Provided always as
follows:-
(a) Failure of the Engineer’s Representative to
disapprove any work or materials shall not prejudice
the power of the Engineer thereafter to disapprove
such work or materials and to order the pulling down,
removal or breaking up thereof.
(b) If the Contractor shall be dissatisfied by reason of
any decision of the Engineer’s Representative he shall
be entitled to refer the matter to the Engineer, who
shall thereupon confirm, reverse or vary such decision.”
However, the Engineer did not apply his mind independently.
Applications were moved to him for extension of time. On the
basis of the opinion received from the World Bank, the learned
Arbitrator has reached to the conclusion that the Engineer was
totally dominated by the employer and in partial working of the
Engineer has been vitiated. We also notice that while time could
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be extended and even there was even a provision for imposing
liquidated damages the termination of the contract was done mid
way. The Tribunal has given the following findings:
“5.0 Decision of the AT
1. The AT is of the view that unilateral termination
of the contract without considering the Extension of
Time at an appropriate time on expiry of completion of
the milestones and overall completion made the
contract at large on 4.1.1994 virtually it become non-
existent. Any action, thereafter is out of the contract
provision hence is considered as void. The decision of
granting few days Extension of Time, when the ground
based Engineer (Executive Engineer) and the
Superintending Engineer recommended larger time
period, this action was not as per the contract since no
reasons were conveyed on these rejections. The
decision to terminate the contract was based on the
instructions of the Deptt Of Economic Affairs, Govt. of
India, Ministry of Finance and recommendations of the
World Bank. A fair and reasonable chance was denied
to the contractor when other contracts in the same
package were granted larger Extension of Time.
2. The AT based on the submissions, oral presentation,
arguments as well as legal citations by both parties and
after application of mind decides that the action of the
Employer Respondents was not as per the contract,
hence the termination was improper. The
Claimant/contractor is therefore entitled to the
payment for consequential costs:
The Claimants have worked out the claim for Rs.809.46
lakhs. Annexu. 140A p 251 (a) and (b) of C2.
The Claim has been repeated under claim No.7. Hence
this is not considered by the AT.”
18. We do not find the award to be in any manner to be perverse
or against public policy. In view thereto, the award passed by the
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[2026:RJ-JP:9499-DB] (17 of 17) [CMA-2530/2024]
learned Arbitrator and as affirmed by the Commercial Court does
not warrant any interference in this appeal by us.
19. The scope of appeal being wholly limited as noted above, we
affirm the award as well as the order passed by the Commercial
Court on 20.03.2024. The appeal is dismissed accordingly.
20. All pending applications also stand disposed of.
(SHUBHA MEHTA),J (SANJEEV PRAKASH SHARMA),ACTING CJ
Riya/70
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