1 2026:CGHC:5140-DB NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR ARBA No.24 of 2018 1 - State Of Chhattisgarh Through its Director, Directorate Of Veterinary Services, Indravati Bhawan, Naya Raipur, District Raipur, Chhattisgarh Appellant (s) versus 1 - Swadesh Agrotech Limited Through its Director, Shri Sanjeev Agrawal, C-17, Parijat Commercial Complex, E-5, Arera Colony, Bhopal (M.P.) Respondent(s) For Appellant (s) : Mr. Avinash Singh, GA For Respondent(s) : Mr. Kshitij Sharma and Mr. Kartik Kathuria, Advs Hon’ble Smt. Justice Rajani Dubey Hon’ble Shri Justice Radhakishan Agrawal Judgment on Board Per Rajani Dubey J. 30/01/2026 1. This arbitration appeal has been preferred by the State/appellant against the order dated 14.03.2018 passed by learned Commercial Court (District Level), Naya Raipur, Chhattisgarh in MJC No.20/2017, whereby the application preferred by the Digitally signed by R NIRALA 2 appellant has been dismissed and the award dated 06.05.2017 passed by the learned sole Arbitrator has been affirmed. 2. Brief facts of the case are that the appellant and the respondent had entered into a contract agreement dated 28.06.2005 and supplementary agreement dated 11.11.05 for the Improvement, Design, Construction, Supply, Installation and Commissioning of Dairy Processing Plants at Raigarh, Ambikapur, Korea, Kawardha and Jashpur and Chilling Centres at Bharatpur, Kunkuri and Bagicha on turnkey basis. During the pendency of the contract, certain disputes arose between the parties. The respondent invoked arbitration clause 19 of the contract agreement. The respondent appointed Shri SM Korbu, retired CE, Water Resources Department as the Sole Arbitrator and referred the dispute to him for adjudication. The Sole Arbitrator passed the award on 06.11 2012, the award was challenged by the applicant before the District Judge, Raipur vide arbitration case No. 7A/2013 u/s 34 of the Act, 1996. The District Judge, Raipur set aside the award. The respondent filed application u/s 11(5) of the Act, 1996, before the Hon'ble High Court of Chhatisgarh. The Hon'ble High Court vide order dated 03.12.2014 in Arbitration Appeal No. 17/2014, with a consent of the parties appointed Shri justice N.K Agrawal, retired judge of the Hon'ble High Court for the redressal of the disputes between the parties. The learned Sole Arbitrator started arbitration proceeding and after some proceedings he shown his inability to 3 continue further proceedings and resigned. The respondent again filed a petition No.50/2015 for appointment of a new arbitrator. The High Court vide order dated 28.10.2015 appointed advocate Ms. Sharmila Singhai as a Sole Arbitrator to further arbitrate the disputes between the parties. The learned Sole Arbitrator passed award on 06.05.2017 in the favour of the respondent and against the appellant, wherein the learned Arbitrator awarded a sum of Rs. 7,62,91,445/- (Rs. seven crore sixty two lacs ninety one thousand four hundred forty five only) with antilite interest @ 12% from 22.03.2015 till the date of award i.e. 06.05.2017 amounting to Rs.1,93,88,477.00 and also granted post-lite interest @ 12% per annum from the date of award ie. 06.05.2017 till the realization of whole awarded sum. The said award dated 06.05.2017 was assailed before the learned Commercial Court (District Level), Naya Raipur but the same has been rejected vide impugned order (Annexure-P/1). Hence the present appeal has been filed by the appellant/State. 3. Learned counsel for the appellant/State submits that the Commercial Court and the Learned Sole Arbitrator failed to appreciate the fact that the respondent company has breached the terms and conditions of the agreement (Clause No.24 and 28 (1)) executed between the appellant State and the present respondent company, as after agreement with the State, the said respondent company had executed the agreement on 02.08.2006 with one Shri Saleem Ansari S/o Mohammad Sadiq 4 Ansari, Resident of Mominpara, Mahamaya Road, Ambikapur, District Surguja (C.G.) whereby awarded him execution, completion and maintenance of construction of 1 Dairy Processing Plant, Building and Service Block, 2 Administrative Block, 3 General Godown and Workers' Amenity at Korea and Jashpur and Execution, completion and maintenance of construction of Chilling Centres Building at Bharatpur, Kunkuri and Bagicha, which is against the terms and conditions of the agreement. Before Commercial Court, at the time of argument, it was raised that the terms and conditions of the contract have been violated, but the learned Commercial Court has not given its findings in this point whereas the respondent has sublet the tendered civil work. The Learned Sole Arbitrator and Commercial Court failed to appreciate the fact that Respondent/claimant raised his claim without following the general conditions of the agreement. The claim of the Respondent/claimant was rejected by authorities concerned, but the Respondent/claimant should have filed the application before the learned Arbitration Tribunal, not before the Sole Arbitrator. There is no provision in the contract agreement between the parties to allow the loss of overheads, interests, profits, price escalation etc. There is no delay on part of the Appellant State Government in giving the drawing and design was part of the contract agreement and tender document. The Respondent/claimant has been provided with the copy of the drawing and design at the time of execution 5 of the agreement. Therefore, no delay can be attributed to the State Government and the amount awarded by the Arbitrator in this head is against the terms and conditions of the contract agreement and is against the public policy. The learned Sole Arbitrator has totally failed to appreciate the fact that according to the Clause 2 of the tender form, the bank guarantee of the security of the respondent was to be deposited with the department till the completion of the work, which was not done by the respondent and the Bank Guarantee of Security Deposit was not available in the Department during the periods from 27.10.05 to 14.02.06, 14.08.06 to 17.09.06, 14.02.07 to 12.06.07 and from 24.11.07 till today and the appellant State Department wrote several letters to the respondent to deposit the requisite bank guarantee from time to time. But the respondent failed to do so. In such condition it was impossible for the appellant State to make cash transactions. As per the agreement, Respondent/claimant was obliged to complete the work within 90 days excluding rainy season but the respondent failed to complete the work in time and has not completed the work after so many years and despite of that Learned Arbitrator awarded interest @ 12% which is absolutely illegal and without application of mind. The Learned Commercial Court committed grave illegality in not adjudicating all the grounds and issues raised by the Appellant/State in memo of appeal. The learned Commercial Court should have appreciated the fact raised by the appellant as 6 the respondent has suppressed the material fact that this contract was sublet by the respondent to the other person who has no experience of construction as well as supply and erection of plant and machinery in Dairy Plant whereas there is specific provision in the terms and conditions of the contract, the respondent would not sublet this contract to any other person. It was the bounded duty of the respondent to abide all the terms and conditions of the contract. If any of the term violated, the contract agreement becomes vitiated. Even at the time raising objection in the argument and written submission submitted before the learned Commercial Court, the Commercial Court should have appreciate all the facts and grounds and legal arguments in its findings. The only reason assigned by the Commercial Court is that the Learned Sole Arbitrator has passed well reasoned award on the basis of the material fact and has not considered the other aspects of the matter. Therefore, the appeal deserves to be allowed. 4. Learned counsel for the respondents supports the impugned orders passed by the learned Appellate Court as well as learned Sole Arbitrator. As Section 37 of the Arbitration and Conciliation Act, scope of interference by the Appellate Court is very limited. It is sell settled that arbitral award is not liable to be set aside merely on the ground of erroneous or alleged misappropriation of evidence. The re-assessment or re-appropriation of evidence lies outside the contours of judicial review under Sections 34 & 37 of 7 the Act. He further submits that all the objections raised by the appellant have been extensively dealt with by the sole arbitrator and the same have also been extensively assessed by the learned Commercial Court. It is also well settled that any objection regarding jurisdiction has to be raised at the time of or before filing of statement of defence before the Arbitrator. In the present case, the appellant had so many occasions to raise such objections but it has failed to do so. Even otherwise the arbitrator was appointed pursuant to the orders passed by this High Court. He further submits that the in the award, calculation of each claim and its nature has been fully considered individually by the learned Sole Arbitrator and the same is based on verified records and evidence available on record. Therefore, the appeal is liable to be dismissed. Reliance has been placed on the judgments rendered by the Hon’ble Supreme Court in the matters of Ramesh Kumar Jain vs Bharat Aluminium Company Limited (BALCO), reported in 2025 INSC 1457, Shweta Construction vs Chhattisgarh State Power Generation Company Limited, reported in (2024) 4 SCC 722, SBP & Co. vs Patel Engineering Ltd and another, reported in (2005) 8 SCC 618 and in the matter of Gayatri Project Limited vs Madhya Pradesh Road Development Corporation Limited, reported in (2025) 10 SCC 750. 5. Heard learned counsel for the parties and perused the material available on record. 8 6. It is not disputed that in the present case both the parties entered into agreement of work contract. During pendency of the contract, certain disputes arise between the parties, as such the appellant State invoked arbitration Clause 19 of the contract agreement and the sole arbitrator was appointed. The Sole Arbitrator passed the award on 06.11 2012, the award was challenged by the applicant before the District Judge, Raipur vide arbitration case No. 7A/2013 u/s 34 of the Act, 1996. The District Judge, Raipur set aside the award. The respondent filed application u/s 11(5) of the Act, 1996, before this Court and this Court vide order dated 03.12.2014 in Arbitration Appeal No.17/2014, with a consent of the parties appointed another arbitrator for redressal of the disputes between the parties. The learned Sole Arbitrator started arbitration proceeding and after some proceedings he shown his inability to continue further proceedings and resigned. The respondent again filed a petition No.50/2015 for appointment of a new arbitrator. This Court vide order dated 28.10.2015 appointed a new arbitrator and at that stage, no objection was taken by the appellant State regarding appointment of arbitrator under the Act, 1996. 7. The sole arbitrator passed arbitral award dated 06.05.2017 in favour of the respondent, which was challenged by the State before the learned Commercial Court and the learned Commercial Court after hearing both the parties by the impugned order dated 14.03.2018 dismissed the application filed by the 9 State under Section 34 of the Act, 1996, against which the present appeal has been filed by the appellate/State. 8. It is not disputed that the State/appellant did not raise objection regarding jurisdiction before the sole arbitrator prior to the statement of defence and counter claim. It is also not disputed that the appellant/State did not raise any objection at the time of appointment of arbitrator before this Court and it is clear from order sheets that during hearing before this Court the State authorities consented to the appointment of the arbitrator. 9. The Hon’ble Apex Court in Shweta Construction (supra) held in paras 10 to 18 as under:- “10. In order to complete the sequence in which certain judicial pronouncements have been made, we may notice that prior to the dispute arising but post the award of the contract, a judgment was pronounced in M.P. Rural Road Development Authority & Anr. vs. L.G. Chaudhary Engineers and Contractors2 on 24.01.2012 where there was cleavage of judicial opinion on the question whether an opinion would cover a dispute even after termination of a works contract and the matter was referred to a larger Bench. This had put a law on the applicability of the Adhiniyam in a flux in an interregnum period of time. It is in these proceedings that a judgment was delivered subsequently on 08.03.2018 by a three Judge Bench which settled this cleavage of judicial opinion and which was recorded while issuing notice. 11. If the aforesaid judgment is scrutinized, it was opined that the State law being the Adhiniyam would prevail in terms of Section 2 (4) 2(2012) 3 SCC 495 of the 1996 Act and thus any reference under the State law was valid and could be decided in accordance with the said Adhiniyam. The challenge laid to such reference was thus set aside in various matters. The matter, however, did not end at this as there was a second category of cases where the proceedings were pending before the Arbitrator and in those cases, it was 10 directed that the proceedings would stand transferred to the State Tribunal which may proceed further taking into account the proceedings which have already taken place. The plea that in view of Section 16(2), the objection to jurisdiction could not be raised after the statement of defence was filed, was turned down on the ground that since the special leave petition was filed prior to the filing of statement of defence where the objection was raised. 12. A third position arose as was discussed in paragraph 17 of that judgment which reads as under: 17. “We do not express any opinion on the applicability of the State Act where award has already been made. In such cases if no objection to the jurisdiction of the arbitration was taken at relevant stage, the award may not be annulled only on that ground.” Thus what was opined was that where awards have already been made and if no objection to the jurisdiction was taken at the relevant stage, the award may not be annulled “only” on that ground and the appeals dealing with those aspects were granted a favourable consideration. 13. In the very same judgment while dealing with another appeal, it was recorded that “no objection having been raised by the respondents in terms of Section 16(2) of the Arbitration and Conciliation Act, 1996 at appropriate stage within time stipulated, the award could not have been annulled”. It was however, clarified in the very next paragraph that the order would not debar proceedings under Section 34 of the 1996 Act. 14. The aforesaid view was followed by a two judge Bench on 10.01.2020 in Civil Appeal No. 204/2020 by an order made on that date. 15. However, as pointed by learned counsel for the respondent, there appears to be some lack of clarity on the issue raised in the present petition on account of the same three Judge Bench having opined in another order passed in Lion Engineering Consultants vs. State of Madhya Pradesh And Others3 on 22.03.2018 i.e., about 3(2018) 16 SCC 758 three weeks after that. The issue however, raised was whether there was any bar to the plea of jurisdiction being raised by way of an objection under Section 34 of the 1996 Act even if no objection was raised under Section 16 of that Act. It was opined that public policy of India refers to law enforced in India i.e., both Central law as well as the State law. The respondent State was given liberty to 11 argue before the trial Court its objections that 1996 Act stood excluded by the State Adhiniyam even without formal pleadings being a pure legal plea. This was in the context of an amendment sought being beyond limitation. In that context there is an observation in one sentence, “we do not see any bar to plea of jurisdiction being raised by way of an objection under Section 34 of the Act even if no objection was raised under Section 16 of that Act.” 16. If we appreciate the aforesaid observation and that too emerging from identical Bench in the two matters, we would have to construe as what is meant by this sentence extracted aforesaid. We take note of the fact that this is an order and not a judgment. The controversy before the court was something different as noticed by us aforesaid. In that context, this sentence has been inserted, but that does not take away the law laid down in the substantive judgment dealing with the issue at hand in respect of awards already made where petitions were pending before the competent Court under Section 34 of the said Act. 17. This Court in the context of the 1996 Act and the Adhiniyam, keeping in mind the cleavage of judicial view earlier and expounding on the law in that judgment has in succinct terms set out that the objections under Section 34 of the said Act, where no such plea of jurisdiction was raised in proceedings before the Arbitrator, should not be dealt with “alone” on the plea of jurisdiction i.e., it should be considered on merits. One can say that possibly this part of the order can also be read as one made under Article 142 of the Constitution of India to do substantive justice inter se the parties, more so, when arbitration as an alternative dispute resolution mechanism presupposes an expeditious disposal of commercial disputes and that objective would stand nullified if a contrary view was taken. 18. We are also of the view that in particular facts of the present case, the position is even more gross because when the appellant claimed arbitration, the respondent accepted invocation of arbitration, suggested a panel of Arbitrators, the appellant chose one of the Arbitrators out of the two suggested and the Arbitrator was so appointed as the sole Arbitrator. Thus, the arbitration proceedings commenced in pursuance to the acts of the respondent and it cannot be permitted to get away to say that the whole process was gone through because of some misconception or inappropriate legal 12 advice. Arbitration by consent is always possible. The mode and manner of conduct of arbitration is possible and how those arbitration proceedings would be governed is also a matter of consent. If at all there were any rights of the respondent to have claimed arbitration under the Adhiniyam, that right was never exercised or waived. The respondent cannot be permitted to approbate and reprobate and that too in arbitration proceedings and that too in dispute or resolution through the method of arbitration defeating the very purpose of an alternative dispute resolution to arbitration as an expeditious remedy.” 10. The Hon’ble Apex Court in SBP & Co. (supra) held in para 31 as under:- 31. With great respect, it is seen that the court did not really consider the nature of the rights of the parties involved when the Chief Justice exercised the power of constituting the arbitral tribunal. The court also did not consider whether it was not necessary for the Chief Justice to satisfy himself of the existence of the facts which alone would entitle him or enable him to accede to the request for appointment of an arbitrator and what was the nature of that process by which he came to the conclusion that an arbitral tribunal was liable to be constituted. When, for example, a dispute which no more survives as a dispute, was referred to an arbitral tribunal or when an arbitral tribunal was constituted even in the absence of an arbitration agreement as understood by the Act, how could the rights of the objecting party be said to be not affected, was not considered in that perspective. In other words, the Constitution Bench proceeded on the basis that while exercising power under Section 11(6) of the Act there was nothing for the Chief Justice to decide. With respect, the very question that fell for decision was whether there had to be an adjudication on the preliminary matters involved and when the result had to depend on that adjudication, what was the nature of that adjudication. It is in that context that a reconsideration of the said decision is sought for in this case. The ground of ensuring minimum judicial intervention by itself is not a ground to hold that the power exercised by the Chief Justice is only an administrative function. As pointed out in the order of reference to that Bench, the conclusion that it is only an 13 administrative act is the opening of the gates for an approach to the High Court under Article 226 of the Constitution, for an appeal under the Letters Patent or the concerned High Court Act to a Division Bench and a further appeal to this Court under Article 136 of the Constitution of India.“ 11. Recently the Hon’ble Apex Court in Gayatri Project Limited (supra) held in para 49 as under:- “49. In Sweta Construction v. Chhattisgarh State Power Generation Company Ltd. reported in (2022) SCC OnLine SC 1447, while dealing with an issue pertaining to the applicability of the Chhattisgarh Madhyastham Adhikaran Adhiniyam, 1983, which is pari materia to the MP Act, 1983, this Court followed the ratio laid down in L.G. Chaudhary (II) (supra), and reiterated that where awards have already been made and if no objection to the jurisdiction was taken at the relevant stage, then the award may not be annulled “only” on that ground. The relevant observations read as under: - 12……... Thus what was opined was that where awards have already been made and if no objection to the jurisdiction was taken at the relevant stage, the award may not be annulled “only” on that ground and the appeals dealing with those aspects were granted a favourable consideration. 13.... It was however, clarified in the very next paragraph that the order would not debar proceedings under Section 34 of the 1996 Act.” 12. In light of the above, it is clear that in the present case, the learned Commercial Court considered all objections of the State/appellant and rightly dismissed the application of the appellant. It has been held in para 28 as under:- “28. This Court is of the view that the arbitrator has not, in any manner, exceeded the jurisdiction under the Act, 1996 and the arbitrator has not violated the terms of the contract and the other laws of the land. This Court has right to examine the validity of an arbitral award u/s 34 of the Act, 1996, in its exercise of supervisory role and 14 not appellate jurisdiction over the award of an arbitral tribunal. The Court u/s 34 of the Act, 1996 does not sit in appeal and therefore, cannot look into "factual aspects" of the matter and cannot review or re- appreciate the evidence on merits. The Hon'ble High Court in the matter of M/S LANCO AMARKANTAK POWER LIMITED VERSUS SECL, ARBITRATION APPEAL NO. 57 OF 2013 ORDER DATED 21.11.2017, held that an arbitral award can be interfered with only on the grounds enumerated u/s 34(2) of the Act, 1996 and merits of the award can be assailed only when it is in conflict with the public policy of India and it cannot re- appreciate and re-assess the evidence to interfere with the finding of fact reached by the arbitral tribunal.” 13. In light of the above and considering the guidelines of the Hon’ble Apex Court and as well as facts and circumstances of the case and all the grounds of appeal raised by the appellant, we are not inclined to entertain the appeal. 14. The appeal is without any merit and is liable to be and is hereby dismissed accordingly. Sd/- Sd/- Rajani Dubey Radhakishan Agrawal Judge Judge Nirala