Himachal Pradesh High Court Partially Sets Aside Arbitral Award in Infrastructure Dispute

Court finds lack of evidence for certain overhead claims; reduces award amount in favor of Himachal Pradesh Road Infrastructure Development Corp. Ltd.

In a significant ruling, the Himachal Pradesh High Court has partially set aside an arbitral award involving a contractual dispute between Himachal Pradesh Road Infrastructure Development Corp. Ltd (HPRIDC) and M/s C & C Construction Ltd. The court found that certain claims made by the construction company lacked sufficient evidential support.

The dispute arose from a contract awarded in 2008 for the widening and strengthening of the Una-Barsar-Jahu-Kalkhar-Nerchowk Road. Delays in the project led to arbitration, with C & C Construction claiming additional costs due to the extended duration of the contract.

The arbitral tribunal had awarded a sum of approximately Rs. 13.06 crore under Claim No. 2, which included Rs. 3.82 crore for Head Office expenses and Rs. 33.02 lakh as lease money. The High Court, however, found that these amounts were not substantiated by adequate evidence. The court noted the absence of corroboration from the Chartered Accountant who had certified the expenses and criticized the lack of detailed evidence supporting these claims.

While upholding other parts of the arbitral award, the court emphasized the limited scope of interference under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996. It reiterated that awards could only be set aside in cases of patent illegality or when they shock the conscience of the court.

The decision highlights the judiciary's cautious approach in reviewing arbitral awards, underscoring the need for claimants to provide comprehensive evidence to support their claims.

Bottom Line:

Arbitration - Scope of interference under Section 37 of the Arbitration and Conciliation Act, 1996 is limited - Award can be set aside only in cases of patent illegality, perversity, or if it shocks the conscience of the Court.

Statutory provision(s): Arbitration and Conciliation Act, 1996 Sections 34, 37

Himachal Pradesh Road Infrastructure Development Corp. Ltd v. M/s C & C Construction Ltd., (Himachal Pradesh)(DB) : Law Finder Doc Id # 2802160