1 2025:HHC:29910 IN THE HIGH COURT OF HIMACHAL PRADESH SHIMLA OMP (M) No. 341 of 2025 & Arb. Appeal No. 406 of 2025 Date of decision: 29.08 .2025 ________________________________________________________ State of Himachal Pradesh & another …..Appellants Versus Gian Chand . .…Respondent _______________________________________________________ Coram: The Hon’ble Mr. Justice G.S. Sandhawalia, Chief Justice. The Hon’ble Mr. Justice Ranjan Sharma, Judge. Whether approved for reporting?1 ________________________________________________________ For the Appellants: Mr. Rupinder Thakur, Additional Advocate General with Mr. Sumit Sood, Deputy Advocate General. G.S. Sandhawalia , Chief Justice ( O ral) OMP (M) No. 341 of 2025 Keeping in view the averments made in the application duly supported by an affidavit, we are of the considered opinion that sufficient cause has been made out to condone the delay. Therefore, the delay of 21 days in filing the appeal is condoned. The application stands disposed of. 1 Whether the reporters of Local Papers may be allowed to see the judgment? 2 Arb. Appeal No. 406 of 2025 The present appeal has been filed under Section 37 of the Arbitration and Conciliation Act, 1996 (for short ‘the Act’) against the order dated 20.09.2024 passed by the learned Single Judge in Arbitration Case No. 78 of 2015, State of Himachal Pradesh & another Vs. Gian Chand, whereby the application filed under Section 34 by the State had been dismissed. 2. Keeping in view the limited scope as such in view of the provisions of Section 37 of the Act, we have to examine whether the appeal is liable to be admitted or not. 3. The learned Single Judge had noticed that the Arbitrator vide his Award dated 11.06.2015 had granted a sum of Rs.11,24,447/- on account of the anticipated profits. Against Claim No. 2, the State had been directed to release the earnest money and bank guarantee in favour of the Contractor and against Claims No. 3 & 4, the amount of Rs. 50,000/- and Rs. 2,40,392/-respectively, had been awarded. Further, the Contractor had been awarded interest at the rate of 3 9% per annum on the amount awarded against Claim No. 1, i.e. the anticipated profits, from the date of entering into the Reference dated 19.12.2014 till the actual payment. Apart from that, costs to the tune of Rs. 50,000/- had been awarded and the Counter-Claim of the State had been rejected. Learned Single Judge had noticed that the Award contained detailed reasons and full opportunity was granted to the parties on both sides. 4. The Issue was regarding the involvement of Forest land and there was no clearance as such of land to the extent of 600 meters qua the State and it was in such circumstances, the benefit had been given at the rate 13% of the amount of the balance work which could not be executed and only an amount of Rs.50,000/- was awarded to the Contractor on account of compensation for idle labour and machinery, by the Arbitrator. 5. The learned Single Judge while placing reliance upon the judgments passed by the Apex Court in Associate Builders Vs. Delhi Development 4 Authority, 2015 (3) SCC 49, Ssangyong Engineering and Construction Company Limited Vs. National Highways Authority of India (NHAI), 2019 (15) SCC 131, Delhi Airport Metro Express Private Limited Vs. Delhi Metro Rail Corporation Limited, 2022 (1) SCC 131 and UHL Power Company Ltd. Vs. State of Himachal Pradesh, 2022 (4) SCC 116 and keeping in view the provisions of Section 34 of the Act, had chosen not to interfere in the Award passed by the learned Arbitrator as such by holding that the view taken by him was a possible view, there was no misconduct regarding the Contract as such. 6. The scope under Section 37 has been held to be further restricted in the judgment of the Apex Court in K. Sugumar vs. Hidustan Petroleum Corporation Ltd. and another, (2020) 12 SCC 539, whereby the appeal had been allowed under Section 37 of the Act by the High Court against the Trial Court’s order, refusing to set aside the same in exercise of the jurisdiction under Section 34 of the Act. Resultantly, the 5 Apex Court came to the conclusion that the jurisdiction would be limited as what has been conferred under Section 34 regarding setting aside or refusing to set aside the award and the evidence as such should not have been re-appreciated to come to a conclusion as the High Court was not sitting in an appeal over the award of the arbitrator. Resultantly, the Civil Appeal was allowed and the order of interference of the High Court under Section 37 was set aside keeping in view the said principles. 7. Reliance can be placed upon the decision in Haryana Tourism Ltd. Vs. Kandhari Beverages Ltd. (2022) 3 SCC 237, wherein it was held for exercise of jurisdiction under Sections 34 and 37, the exceptions provided for interference of the award were contrary to the fundamental policy of Indian Law; the interest of India; justice or morality; or patently illegality and interference on the merits of the claim was not permissible in exercise of the power under Section 37 of the Act. 6 8. In Reliance Infrastructure Ltd. Vs. State of Goa, AIR 2023 SC 2280, the same issue arose, whereby the award which had been set aside under Section 37, wherein in principal, the application under Section 34 had been dismissed. Resultantly, it was held that while keeping in mind the principles of interference under the provisions of the Arbitration and Conciliation Act, when the conscience of the Court is shocked, or when the illegality is not trivial but goes to the root of the matter and the findings are arbitrary, capricious or perverse, there can be interference and an independent assessment not to be undertaken under Section 37 of the Act and the Court has to be extremely cautious and slow to disturb such concurrent findings. 9. Similarly, while referring to the observations of a Three-Judge Bench judgment in Uhl Power Company Ltd. vs The State Of Himachal Pradesh, (2022) 4 SCC 116, it is to be noticed that the scope of the appeal under Section 37 and jurisdiction of the Appellate Court examining 7 the order is all the more circumscribed and it cannot act as the Court of Appeal in the said proceedings. 10. Thus, what has to be examined is whether- there is any patent illegality in the award as such or the judgment of the learned Single Judge, which would warrant interference, once the limitation of interference has been laid down and the principle that whether the award was by a fair mind and a reasonable person and that it was apparent on the face of the award. Thus, this Court cannot, but uphold the order of the learned Single Judge as nothing has been shown that the award as such, which the learned Single Judge was dealing with, was suffering from any patent illegality. 11. In Somdatt Builders-NCC-NEC(JV) Vs. National Highways Authority of India & others, MANU/SC/0109/2025, similar observations arose that only where there is a patent illegality going to the root of the matter, interference would be permitted and re- appreciation of evidence cannot be done. Resultantly, the exercise of powers by the Division Bench of the 8 High Could was held without any justification while allowing the appeal and restoring the order of the arbitral award, by observing that great deal of restraint was required to be shown and frequent interference with arbitral awards would defeat the very purpose of the 1996 Act. 12. We have also gone through the Award dated 11.06.2015, passed by the learned Arbitrator, from the perusal of which, it is apparent that the unexecuted work was to the tune of Rs. 86,49,594/- out of the actual awarded amount of the contract value of Rs.1,88,72,618/-. Thus, the factual matrix as such is that the length of the road was 7 kilometers 405 meters and there was a dispute regarding a stretch of 600 meters on account of the forest land. Even in the Grounds of Appeal now filed, the State’s stand as such is that ‘No Objection Certificate’ had not been granted on account of the litigation pending before this Court in COPC Nos. 302 & 303, N.D Naik Vs. E.E. Sundernagar Division. 9 13. Thus, the factual matrix is clear that the site was not clear as such from dispute and the Contractor as such could not execute the work for actual amount of award, which had been given to him and it was in such circumstances, that the percentage of anticipated profits at the rate of 13% had been awarded to the tune of Rs. 11,24,447/-. The balance amount as such is only regarding the refund of earnest money, security deposit, bank guarantee etc. which was the right as such of the Contractor keeping in view the fact that the Arbitrator had been appointed by this Court to resolve the issue inter-se the parties in view of Clause 25 of the Agreement executed on 06.09.2012. 14. The parties had chosen as such to settle the dispute by way of Arbitral proceedings and it was on that account that the Arbitrator had entered into the Reference and had given detailed reasonings, as noticed in the Award and had taken into account various claims and decided the same separately by a reasoned and speaking order. The interest thus had been granted at the rate of 10% per annum from the 10 date of entering into the Reference on 19.12.2014 after the date of the payment and, therefore, it cannot be said the learned Arbitrator had misconducted himself in any manner. On account of the fact that it was a commercial dispute inter-se the Contractor and the Government for the construction of the road and, therefore, the compensation has to be duly paid in the form of interest on the amount, which has not been paid for almost a decade since the Award as such is of the year 2015 and apparently, the matter had been referred way back on 01.12.2014 for the appointment of the Arbitrator by this Court. 15. Resultantly, we do not find any plausible reason to interfere with the well reasoned order passed by the learned Single Judge, who has kept the principles in mind while dismissing the application under Section 34 of the Act. 16. Pending application(s), if any also stands disposed of. (G.S. Sandhawalia) Chief Justice. 11 August 29, 2025 (Ranjan Sharma) (hemlata) Judge.