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IN THE HIGH COURT AT CALCUTTA

CIVIL APPELLATE JURISDICTION

COMMERCIAL DIVISION

APPELLATE SIDE

Present:

The Hon’ble Justice Debangsu Basak

And

The Hon’ble Justice Aryak Dutt

FMAT (ARBAWARD) 35 of 2022

State of West Bengal

Vs.

M/s. A.J. Sarkar & Co.

For the Appellant : Mr. Abhishek Banerjee, Adv.

For Respondent : Mr. Priyankar Saha, Adv.

Ms. Srijani Mukherjee, Adv.

Hearing Concluded on : August 27, 2026

Judgment on : September 22, 2026

DEBANGSU BASAK, J.: -

1. Appellant has assailed the judgment and order dated

March 30, 2022 passed by the learned Commercial Court at

Asansol in Misc. Arbitration Case No. 1 of 2019.

2. By the impugned judgment and order, learned Judge

has dismissed the challenge under Section 34 of the

Arbitration and Conciliation Act, 1996 directed against the

award dated February 18, 2019.

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3. Learned Advocate appearing for the appellant has

contended that, the learned Arbitrator erred in granting some

of the claims made by the respondent.

4. Referring to the impugned award, learned Advocate

appearing for the appellant has contended that, learned

Arbitrator relied upon documents which were not proved in

accordance with the law. He has contended that, the appellant

was denied any opportunity to inspect the original documents

relied upon by the respondent. The appellant had denied the

genuineness, factum, validity and contents of the documents

as such documents were third party document s. He has

contended that, the respondent was called upon to prove such

documents by adducing cogent evidence as they were third

party documents. He has pointed out that, in absence of

examination of the authors of such documents, none of such

documents were admissible in evidence.

5. Learned Advocate for the appellant has submitted that

the learned Arbitrator had recorded submissions of the

respective parties made in every sitting of the arbitration

proceeding in extenso. He has pointed out that the basis of

the claims of the respondent, being Annexure C-21 of the

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statement of claim, is essentially a cost analysis and nothing

more. He has contended that, cost analysis amounts to

nothing and cannot be a substitute of actual proof. In support

of his contention he has relied upon 1994 Volume 1

Arbitration Law Reporter 269 (Kochar Construction

Versus Union of India and Another)

6. Relying upon 2015 (2) Bom CR 697 (Rashmi Housing

Private Limited Versus Pan India Infraprojects Private

Limited) learned advocate appearing for the appellant has

contended that, although, Evidence Act has no application

before any arbitration nonetheless the principles thereto are

applicable.

7. Learned Advocate appearing for the appellant has

contended that, although a document can be proved by

examining the person who has seen the original nonetheless

the contents of such documents has to be proved by the

author of such document. In support of such contention he

has relied upon AIR 54 Bom 305 (Madholal Sindhu Versus

Asian Assurance Co. Ltd and Others )

8. Relying upon 2011 (2) SCC 532 (Kalyan Kumar

Gogoi Versus Ashutosh Agnihotri and Another ) learned

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advocate appearing for the appellant has contended that,

evidence which is hearsay in nature is to be ignored and

discarded outright.

9. Learned Advocate appearing for the appellant has

contended that, events occurring subsequent to the contract

had made the execution of the project impossible. He has

pointed out there were litigations regarding the land and of

there were problems with regard to the availability of the site.

He has relied upon 1953 (2) SCC 437 (Satyabrata Ghose

Versus Mugneeram Bangur and Company and Another ) for

the proposition that, the contract stood terminated by reason

of frustration of the contract and/or impossibility in execution

of the contract.

10. Relying upon 2025 SCC OnLine SC 2857 (Ramesh

Kumar Jain Versus Bharat Aluminium Company Limited)

learned Advocate appearing for the appellant has contended

that, the learned Arbitrator ignored binding precedents and

therefore, the award stands vitiated by reason of patent

illegality.

11. Learned Advocate appearing for the appellant has

contended that, while allowing claims No. 1 and 2 made by

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the appellant, learned Arbitrator reproduced the arguments

made by the respondent in the 21

st sitting.

12. Relying upon 2022 (3) SCC 121 (I-Pay Clearing

Services Private Limited Versus ICICI Bank Limited )

learned Advocate appearing for the appellant has contended

that, non-consideration of the binding precedents cited on

behalf of the appellant constitutes patent illegality.

13. Relying upon 2026 (4) SCC 392 (Lancor Holdings

Limited Versus Prem Kumar Menon and Others ) learned

Advocate appearing for the appellant has contended that, time

in excess of two years elapsed between the date of conclusion

of the hearing and the passing of the award. On that ground

alone, the award should be set aside.

14. Learned Advocate appearing for the respondent has

contended that, the appellant floated the tender for

construction of box sales bridge and both side project over

Gomani Khal in between 6

th Km and 7

th Km of Goas-Goraipur

Road under Murshidabad Highway Division No. 1 in the

district Murshidabad under tender No. 7/B of 2010/2011. He

has contended that, the respondent participated in the tender

and become a successful bidder. Appellant had issued the

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acceptance cum work order by a letter dated November 15,

2010.

15. Learned Advocate appearing for the respondent has

contended that, in terms of the acceptance cum work order

the work was to be completed within ten months that is

September 21, 2011. He has pointed out that immediately

after the receipt of the acceptance cum work order the

respondent mobilised itself and progressed with the work.

16. Learned Advocate appearing for the respondent has

contended that, by a writing dated June 17, 2011 , the

appellant asked the respondent not to execute any further

work till such problem was solved. Thereafter on September 9,

2011 the respondent had requested for extension of time

since, the work could not be completed due to suspension of

the work. By a letter dated September 20, 2011, the appellant

had informed the respondent that the dispute was ongoing,

the work cannot be started and directed the respondent to

wait for a month with the hope that the matter will be resolved

within such time. Thereafter, the respondent had by letters

dated September 11, 2011, November 11, 2011, November 29,

2011, December 7, 2011 and March 23, 201 2 informed the

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appellant of the losses suffered by the respondent due to such

prolonged suspension of the work.

17. Learned Advocate appearing for the respondent has

submitted that, by a letter dated Mar ch 28, 2012 the

appellant asked the respondent to submit the bills for the

works executed before the suspension of the work in terms of

clause 8 of the conditions of contract.

18. Learned Advocate appearing for the respondent has

contended that, his client co-wrote several letters to the

appellant detailing the losses and damages suffered by

prolonged suspension of work and non-payment of the dues.

He has pointed out that, by a letter dated June 24, 2013

respondent had submitted its assessed losses up to June 17,

2013 amounting to ₹ 1, 59, 53, 853 along with interest to the

appellant. By a letter dated December 13, 2016, the appellant

had confirmed that since an arbitrator was appointed, the job

was formerly treated as closed.

19. Learned Advocate for the respondent has contended

that, before the learned arbitrator, the respondent had made 5

heads of claim. He has pointed out that, the first claim related

to amount payable for work done and others used as detailed

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in the letters dated June 24, 2013 and September 13, 2013

amounting ₹ 1, 59, 53, 853. The 2

nd head of claim had been

premised on compensation and/for damages on account of

prevention of the performance of the work which was assessed

at ₹ 8,00,000/- Under the 3

rd head of claim, the respondent

had claimed interest at the rate of 18% per annum from June

24, 2013 till payment. On the 4

th head of claim, the

respondent had claimed any amount which may be found t o

in terms of the contract and/or in law has accrued. On the 5

th

of claim, the respondent had claimed cost of arbitration on

actual basis.

20. Learned Advocate appearing for the respondent had

contended that, parties had adduced evidence before the

learned arbitrator by filing affidavit of evidence. Respondent

had produced a documents in part 1 which has details of the

measurement of the work done by the claimant, bills, money

receipts, quantum of artwork in execution, a apron filling,

dewatering, bamboo piling, wooden plank filing, etc. He has

pointed out that, the witness of the respondent ha d been

cross-examined in details.

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21. Learned Advocate appearing for the respondent has

contended that, the award is dated February 18, 2019.

Learned arbitrator had allowed claim numbers 1, 2 and 5

along with interest at the rate of 9% from June 24, 2013 till

payment, by the award. He has contended that, the award

contains detailed reasons. Learned arbitrator has dealt with

every fact and evidence placed before him.

22. Learned Advocate appearing for the respondent has

contended that, the learned arbitrator relied upon 1984 (4)

SCC 59 (A.T. Brij Paul Singh Versus State of Gujarat ) for

awarding 10 percent compensation on the proportion of work

which could not be done due to land acquisition problem

under the 2

nd claim.

23. On the scope of judicial intervention in an appeal

under section 37 of the act of 1996, learned Advocate

appearing for the respondent has relied upon 2026 SCC

OnLine SCC 1001 (Madhya Pradesh Road Development

Corporation Versus Jabalpur Corridor Private Lim ited)

and 2026 (3) SCC 186 (Jan De Nul Dredging India Private

Limited Versus Tuticorin Port Trust ).

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24. Learned Advocate appearing for the respondent has

submitted that the arbitrator is the ultimate master of the

quality and quantity of evidence to be relied upon while

passing the award. In support of such contention, he has

relied upon 2015 (3) SCC 49 (Associate Builders Versus

Delhi Development Authority).

25. Relying upon 2026 (4) SCC 392 (Lancor Holdings

Limited Versus Prem Kumar Menon and Others ), learned

Advocate appearing for the respondent has contended that,

delay in passing the award does not per se affect the award.

Moreover, the same is also not a ground under section 34 of

the Act of 1996 to set aside the award.

26. Appellant had floated a tender for cons truction.

Respondent had participated in such tender and became

successful therein. Appellant had issued an Acceptance-cum-

Work order dated November 15, 2010 in favour of the

respondent. Under the Acceptance-cum-work order, the

contract had to be completed within 10 months from

November 22, 2010, that is, till September 21, 2011.

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27. Apparently, execution of the contract had been stalled

due to problems at the site. The parties had gone to

arbitration with regard to the contract and its execution.

28. Parties have raised issues with regard to the delay in

making and publishing the award. It appears from the records

that, the first meeting of the arbitration had been held on

January 30, 2014. In aggregate, there have been 36 sittings of

the arbitration.

29. On the last sitting of the arbitration, that is the 36

th

sitting, held on February 18, 2019, learned arbitrator had

made and published the award and made over signed copies

of the award to the parties.

30. The 35

th sitting of the arbitration had been held on

June 15, 2017 where, the learned Arbitrator has recorded

that, both sides filed their respective notes an argument and

that the same were taken on record. Learned Arbitrator has

recorded that neither of the sides had any further

submissions to make. He has al so recorded that the

respondent submitted non-judicial Stamp paper and that, the

appellant requested for further time to do so. Prayer of the

appellant to put in the non-judicial Stamp paper had been

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allowed. The learned arbitrator has recorded that the

arbitration stands concluded.

31. From the records made available to us therefore,

conclusion of hearing in the arbitration had taken place on

June 15, 2017. Learned arbitrator had passed the award on

February 18, 2019. There has therefore been a gap in excess

of 1 year 8 months from the date when, the hearing in the

arbitration proceedings stood concluded.

32. Lancor Holdings Ltd (supra) has answered the issue

as to what is the effect of undue and unexplained delay in the

pronouncement of an arbitral award upon its validity. It has

held as follows: –

“87.1.1. Delay in the delivery of an arbitral award, by

itself, is not sufficient to set aside that award. However, each

such case would have to be examined on its own individual

facts to ascertain whether that delay had an adverse impact

on the final decision of the Arbitral Tribunal, whereby that

award would stand vitiated due to the lapses committed by

the Arbitral Tribunal owing to such delay. It is only when the

effect of the undue delay in the delivery of an arbitral award

is explicit and adversely reflects on the findings therein, such

delay and, more so, if it remains unexplained, can be

construed to result in the award being in conflict with the

public policy of India, thereby attracting Section 34(2)(b)(ii) of

the 1996 Act or Section 34(2-A) thereof, as it may also be

vitiated by patent illegality. Further, it would not be necessary

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for an aggrieved party to invoke the remedy under Section

14(2) of the 1996 Act as a condition precedent to lay a

challenge to that delayed and tainted award under Section 34

thereof.”

33. In Lancor Holdings Limited (supra) learned

Arbitrator had reserved the arbitral award on July 28, 2012

and pronounced it on March 16, 2016 , that is, nearly three

years and eight months after reserving the decision. Moreover

no explanation had been offered for the delay. Supreme Court

has held that, the award did not resolve the disputes between

the parties. Supreme Court has invoked Article 142 of the

Constitution of India to grant reliefs to the parties.

34. A Court exercising jurisdiction under Section 34 of the

Act of 1996 would necessarily have to evaluate whether there

was delay in making and publishing the award and whether

such delay remained unexplained. The Court will also have to

evaluate whether the delay has an adverse impact on the final

decision of the Arbitral Tribunal thereby vitiating the award

owing to such delay or not.

35. In the facts and circumstances of the present case,

there is a delay of more than 1 year 8 months from the date of

conclusion of the hearing of the arbitration proceeding till the

date of making and publishing the award which has not been

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explained. We now have to evaluate as to whether such

unexplained delay in making and publishing the award had

an adverse impact on the final decision of the arbitrator or

not.

36. Records disclosed before us have established that, the

learned Arbitrator made elaborate notes of the proceedings on

each day. Respective submissions of the Advocates appearing

for the respective parties have been recorded in the minutes

by the learned Arbitrator.

37. Jan De Nul Dredging India Private Limited (supra)

has noticed the limited scope of the interference with the

award of Court exercising powers under Sections 34 and 37 of

the Act of 1996. It has held that, powers of a Court under

Section 37 of the Act of 1996 are even more restricted than

the powers under Section 34. Appellate powers under Section

37 of the Act of 1996 has been held to be exercisable only to

find out if the Court exercising powers under Section 34 of the

Act of 1996 has acted within its limits as prescribed

thereunder or has exceeded or failed to exercise the powers so

conferred. The Appellate Court exercising powers under

Section 37 of the Act of 1996 has no authority of law to

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consider the matter in dispute before the Arbitral Tribunal on

merits so as to hold as to whether the award is right or wrong.

Appellate Court has no power as a court of appeal to re-

appreciate the evidence and record a contrary finding.

38. Madhya Pradesh Road Development Corporation

(supra) has held that, the architecture of appeal under

Section 37 of the Act of 1996 is restrictive. It has observed

that, jurisdiction under Sections 34 and 37 of the Act of 1996

cannot be equated with mandatory appellate jurisdiction. The

Appellate Court under Section 37 of the Act of 1996 does not

sit as a Court of Appeal on the merits of the Arbitral Tribunal.

Its role is confined to examine whether the Court under

Section 34 of the Act of 1996 has acted within the limits

prescribed by law or not. Interference is permissible only

where the Section 34 Court has exceeded its jurisdiction or

failed to exercise it within the confines of Section 34 and not

merely because another view of the facts or interpretation of

the contract may appear preferable.

39. Having noted the periphery of the jurisdiction under

Section 37 of the Act of 1996 as enunciated in Madhya

Pradesh Road Development Corporation (supra) and Jan

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De Nul Dredging India Private Limited (sup ra) the

contentions of the respective parties have to be assessed on

the merits of the matter.

40. Associate Builders (supra) has held that, the

Arbitrator is the sole Judge of the quantity and quality of

evidence when he delivers the Arbitral Award. Powers under

Section 34 of the Act of 1996 cannot be exercised to set aside

an award merely because the award is based on little evidence

or on evidence which does not measure up in quality to a

trained legal mind. In the event, it is established that, the

approach of the Arbitrator to the issues is neither arbitrary

nor capricious then no interference is called for on facts.

41. In Kochar Construction (supra) Supreme Court

however has disallowed claim for escalation on the ground

that no evidence had been led in support of such claim. It has

noted that, no evidence at all was led by the claimant on the

point except filing of the chart containing cost analysis. This

chart containing cost analysis has been held to be of no

evidence at all.

42. In Madholal Sindhu (supra) the Single Bench of the

Bombay High Court has held that, mere proof of the

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signatures or the handwriting of the persons who signed or

wrote the various documents without calling the persons who

could depose as to the correctness of the contents of such

documents, amounts to no evidence at all.

43. Another Single Bench of the Bombay High Court in

Rashmi Housing Private Limited (supra) has held that,

although, Evidence Act, 1872 is not applicable in an

arbitration proceedings, nonetheless, an Arbitral Tribunal is

bound to consider the principles of the Evidence Act, 1872.

44. Kalyan Kumar Gogoi (supra) has dealt with the

Evidence Act, 1872 in the context of hearsay evidence. It has

held that, idea of best evidence is implicit in the Evidence Act,

1872. It has noted that, in the case of oral evidence, only that

person who has actually perceived something by senses

through which he is capable of perception who should make

the statement about it and no one else. If it is documentary

evidence, then, ordinarily the original thereof be produced

because a copy may contain commission of mistake of a

deliberate or accidental nature.

45. Satyabrata Ghose (supra) has noted the distinction

between frustration of a contract and repudiation thereof. It

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has noted that, frustration of a contract occurs automatically.

It has noted that, termination of a contract on the ground of

repudiation or breach is dependent upon choice or election of

either of the parties to the contract.

46. Ramesh Kumar Jain (supra) has explained the

phrase patent illegality appearing in Section 34 of the Act of

1996. It has noted various authorities on the subject and held

that, patent illegality goes to the root of the award and

includes an award deciding matters outside the scope of the

arbitration, an award contradicting the substantive law of

India or the Act of 1996 itself, an award against the terms of

the contract and award so unreasoned or irrational that it

manifest an error on its face.

47. I-Pay Clearing Services Private Limited (supra) has

considered the scope and ambit of Section 34(4) of the Act of

1996. It has held that, powers under Section 34(4) of the Act

of 1996 are discretionary and may be exercised where there is

inadequate reasoning in the award or to fill up the gaps in the

reasoning in support of the findings which are already

recorded in the award.

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48. A.T. Brij Paul Singh (supra) has considered claims

on account of damages in the context of Section 73 of the Act

of 1872. It has held that, where, a contractor claimed

damages on the Government committing breach by improperly

rescinding the contract, the Court should make a broad

evaluation instead of entering into minute details.

49. Respondent had filed the statement of claim containing

five heads of claim which are as follows:-

List of Claims/Disputes

Sl. No.

Due

Description of Item Amount

1. Amount payable for works done and

other dues as detailed in my Client’s

letter dated 24

th

June, 2013 and also

Letter dated 13

th

September, 2013

Rs. 1,59,53,853.00

2. Compensation and/or damages on

account of prevention of our

performance by the Department for

which the work could not be completed

depriving us from the expected profit

which remained unexecuted. Assessed

10% of the value of work which

remained unexecuted.

Rs. 8,00,000.00

3. Interest @ 18% p.a from 24.06.2013 till

payment.

As accrued.

4. Any other claim and/or amounts

which may be found due to us in terms

of the Contract and/or in law.

As may be found due.

5. Cost of Arbitration On actual.

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50. Learned Arbitrator in his Award has noted that claim

no. 1 comprised of amounts payable for work done and other

dues as detailed in the letters dated June 24, 2013 and

September 16, 2013 of the respondent herein.

51. In the body of the Award, Learned Arbitrator has noted

the Assessment of Claims which has 19 heads. Head numbers

1 to 11 under the Assessment of Claims had added upto Rs.

28,67,812/-. Respondent had added compound interest

@1.5% per month for 24 months aggregating to Rs.

40,99,545/-. Likewise, respondent has added compound

interest for 24 months @1.5% per month to head no.

13,14,15,16,17,18,19. Significantly, by adding interest at the

compound rate of 1.5% for 24 months for such heads under

claim no. 1, interest component has exceeded the principal

claim on each of the heads.

52. Respondent has claimed a sum of Rs. 1,59,53,853/-

under claim no. 1 which included the compound rate of

interest. Learned Arbitrator has allowed it in its entirety.

53. Our attention has not been drawn to any agreement

for interest far less in position of interest at the compound

rate.

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54. On Claim No. 1, learned Arbitrator has held as

follows:-

“The Claim No. 1 is subject matter in both during

examination in chief and also Cross-examination. It is

a fit case when the Claimant is entitled to full Award in

respect of Claim No. 1. There has been no defence at

all by the Respondent against Claim No. 1 either in

their Statement of Defence or during cross-examination

of the Claimant’s witness. The Claim No. 1, the

Claimant is entitled to full Award, which I decide

unhesitatingly and the same is decided on

consideration of evidence.”

55. No document in support of the work that the

respondent had actually executed at the site was tendered in

evidence. What had been tendered in evidence by t he

respondent in support of the claim of the quantum of work are

statements unilaterally noted by an engineer appointed at the

behest of the respondent. Appellant did not accept such

measurements. The quantum work claimed to have been done

has not been corroborated by any other evidence apart from

the unilateral measurement of the engineer of the respondent.

56. Learned Arbitrator did not give any reason as to why

he was relying upon such measurement details and why he

did not call for the measurement book which is required to be

maintained in a construction work of this nature.

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57. Associate Builders (supra) and Kochar

Construction (supra) have laid down that, although, the

Arbitrator is the sole Judge of the quantity and quality of

evidence, nonetheless, if the award is based on no evidence at

all, then, a Court exercising jurisdiction under Section 34 of

the Act of 1996 is obliged to set aside such award, on the

ground of patent illegality.

58. By the award, the learned Arbitrator has i ncluded

component of compound rate of interest of every heads of

claim under Claim No. 1. He has proceeded to award the

interest independently while allowing interest at the rate of 9%

under claim no. 3. Essentially, the learned Arbitrator has

awarded compound interest up to a given stage and thereafter

simple interest on the sum waived at after adding interest at

the compound rate. Learned Arbitrator has not ascribed any

reason as to why compound rate of interest has been allowed

by him for a period of time while simple interest has been

allowed subsequently.

59. The award as it stands today contains interest at

compound rate. The amount arrived after calculating interest

at compound rate will carry further interest at the rate of 9%

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per annum. In effect the appellant has to pay interest on

compound rate of interest.

60. The nature of the contract is a social welfare measure

which a State is required to discharge. The contract is of

construction of a bridge. It is not a project from which the

appellant is expected to earn or generate revenue. Award of

interest at compound rate and thereafter interest on interest

would render the award as shocking to the conscience of the

Court.

61. An inference that the, passage of time between the

date when the learned Arbitrator reserved the award for

decision and its ultimate publication affected the decision on

such an aspect is plausible.

62. Significantly, claim no. 1 has sub heading which

relates to the claim on account of refund of security deposit.

On such sub heading also, claim no. 1 included compound

interest as also alleged loss of business for withholding such

security deposit. Learned Arbitrator has however allowed

refund of security deposit as an independent claim under the

heading claim no. 2. The award therefore suffers from non-

application of mind.

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63. Under the contract, the date of commencement had

been fixed at November 22, 2010 with completion being fixed

at September 21, 2011. By a letter dated June 17, 2011

appellant had called upon the respondent not to execute

further work till the land problem issue was solved. Records

made available have established the respondent was aware of

the land acquisition problem.

64. By a letter dated September 9, 2011 the respondent

had requested for extension of time to complete the contract.

By letter dated September 20, 2011 appellant had requested

the respondent to wait for a month.

65. Respondent had not taken any steps to mitigate the

loses to be recovered or claimed, at least none has been

pleaded or established before the learned Arbitrator. Arbitral

Tribunal has also failed to take into consideration the issue of

frustration of the contract due to supervening impossibility.

The contract was for construction of a bridge. The requisite

land for such construction was not available. This factor had

to be taken into consideration by the learned Arbitrator which

he did not do.

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66. In such circumstances, learned Judge erred in

correctly evaluating the award in terms of Section 34 of the

Act of 1996 and failed to exercise jurisdiction vested upon to

in law.

67. Consequently, the impugned judgment and order

dated March 30, 2022 is set aside. The award dated February

18, 2019 is set aside. FMAT (ARBAWARD) 35 of 2022 is

disposed of without any order as to costs.

[DEBANGSU BASAK, J.]

68. I agree.

[ARYAK DUTT, J.]