GANGTOK, India, June 15 -- Sikkim High Court issued the following judgment/order on May 12:

1. This is an appeal filed by the Union of India challenging judgment dated 09.07.2025 passed by the learned Commercial Court, Gangtok in an application filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act), refusing to set aside the award of the Arbitral Tribunal.

2. In a matter arising out of a contract between the Appellant and the Respondent, a dispute arose as to the entitlement of payment claimed by the Respondent for the disposal of surplus material beyond 1000 meters lead.

3. Consequent upon appointment of an Arbitrator by this Court, the dispute was adjudicated by Justice Pranab Kumar Chattopadhyay, retired Judge of Calcutta High Court as a Sole Arbitrator. The arbitral award is a sum of Rs. 7,48,74,932.80 payable with interest @9% per annum from the date of filing the statement of claims till the date of the award.

4. Aggrieved by the award, the Appellant filed an application to set aside the award invoking Section 34 of the Act before the learned Commercial Court, Gangtok but the learned Commercial Court declined to interfere.

5. Learned Deputy Solicitor General of India, Ms. Sangita Pradhan, assailing the Judgment of the learned Commercial Court, Gangtok, argued that the Sole Arbitrator committed manifest error in allowing the claim of muck disposal without cogent evidence and overlooking conditions of contract. Elaborating the argument, the learned Deputy Solicitor General of India submits that the site for disposals was identified by the State Government of Sikkim and further pointed out that by Annexure A3, contractor therein was intimated that no extra payment shall be made for disposal of muck other than the specified site identified by the State Government of Sikkim.

6. On the other hand, learned Senior Counsel Mr. Jorgay Namka appearing for the Respondent, submits that the Arbitrator awarded and allowed the claim stating reasons and Annexure A3 was never produced before the Arbitrator. It is submitted that there was no dispute about the disposal of muck beyond the last point of the road beyond 19.35 kilometers and it was measured by the Officers of the Appellant. It is submitted that the amount was also calculated in accordance with the Military Engineering Services Standard (Schedule of Rates), 2010. It is argued that the Appellant failed to provide a muck dumping yard within the 1000 meters as agreed in the contract.

7. The question is whether the Arbitral Tribunal passed the award confining the dispute arose out of contract or not.

8. On going through the award, it can be seen that the contractor executed the work based on the terms and conditions of contract. The learned Sole Arbitrator appreciated the evidence based on the contract entered between the parties. Though, there was an alleged delay on the part of the Respondent in execution of the work, the Arbitral Tribunal appreciated the evidence and found that there was no fault on the part of the Respondent.

*Rest of the document can be viewed at: (https://hcs.gov.in/hcs/hg_orders/201600000112025_9.pdf)

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