State of Rajasthan, through Collector, Jhalawar v. Verma Construction Company, Chomhela
2026-01-31
RAVI CHIRANIA
body2026
DigiLaw.ai
JUDGMENT : RAVI CHIRANIA, J. 1. The present Civil Miscellaneous Appeal has been filed by the appellants under Section 39 of the Arbitration Act, 1940, against the impugned judgment and decree dated 24.03.2004 passed by the learned Additional District Judge, Jhalawar, whereby the application filed by the appellant for setting aside the arbitral award dated 13.06.1994 was rejected. 2. The brief facts of the case are that the respondent filed an application under Sections 8 and 20 of the Arbitration Act, 1940 for appointment of an Arbitrator in respect of disputes arising out of the contract between the parties. The learned trial Court, vide order dated 01.10.1993, appointed Shri Prabhakar Sharma, Retired Chief Engineer (Irrigation), as Arbitrator and directed him to pass an award within four months. 3. The learned Arbitrator, after issuing notices and affording opportunities to the parties, passed an ex-parte award on 13.06.1994 in favour of the respondent. Thereafter, the appellants filed applications under Sections 30 of the Arbitration Act, 1940 for setting aside the said ex-parte award, which were registered as Civil Misc. Applications No. 2/94 and 16/94. 4. The learned trial Court, after considering the pleadings, evidence and submissions of the parties, rejected the objections raised by the appellants and made the award rule of the Court under Section 17 of the Arbitration Act, 1940, vide judgment and decree dated 24.03.2004. 5. Learned counsel for the appellants has contended that the award was passed without affording sufficient opportunity of hearing, as notices were not properly served upon all the appellants, and further the learned Arbitrator acted in a biased manner. 6. Per contra, learned counsel for the respondent has supported the impugned order dated 24.03.2004 and submitted that repeated opportunities were granted to the appellants, who deliberately avoided to participate in the arbitral proceedings and no ground under Section 30 of the Arbitration Act, 1940 was made out before the learned Court below for setting aside the award dated 13.06.1994. 7. Heard learned counsel for the parties and perused the record. 8. At the outset, it is relevant to note that though the Arbitration and Conciliation Act, 1996 has come into force, the present proceedings arise out of arbitral proceedings and court actions initiated prior to the enforcement of the 1996 Act.
7. Heard learned counsel for the parties and perused the record. 8. At the outset, it is relevant to note that though the Arbitration and Conciliation Act, 1996 has come into force, the present proceedings arise out of arbitral proceedings and court actions initiated prior to the enforcement of the 1996 Act. In view of Section 85(2)(a) of the Arbitration and Conciliation Act, 1996, such proceedings are saved and continue to be governed by the provisions of the Arbitration Act, 1940. 9. Before adverting to the merits of the contentions, it is necessary to examine the statutory scope of this appeal. Section 39 of the Arbitration Act, 1940 provides a limited right to appeal, only against the specific orders enumerated therein. The provision does not contemplate a re-appreciation of evidence or a re- examination of the merit of the arbitral award. Section 39 of Arbitration Act of 1940 is reproduce herein under: “ 39. Appealable orders -(1) An appeal shall lie from the following orders passed under this Act (and from no others) to the Court authorised by law to hear appeals from original decrees of the Court passing the order:- An order- (i) superseding an arbitration; (ii) on an award stated in the form of a special case; (iii) modifying or correcting an award; (iv) filing or refusing to file an arbitration agreement; (v) staying or refusing to stay legal proceedings where there is an arbitration agreement; (vi) setting aside or refusing to set aside an award: Provided that the provisions of this section shall not apply to any order passed by a Small Cause Court. (2) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court.” 10. Although the present case is governed by 1940 Act, it is noteworthy that the successor legislation i.e., The Arbitration and Conciliation Act of 1996, which has repealed the Act of 1940, reflects the same legislative provision under Section 37, confining appellant scrutiny only to expressly appealable orders and reinforcing the principle of minimal judicial intervention. The continuity of this provision underscores the intent of the legislature to accord to arbitral award and restrict interference by Courts to exceptional statutory grounds. Section 37 of the Arbitration and Conciliation Act, 1996 is reproduced herein under: “ 37. Appealable orders.
The continuity of this provision underscores the intent of the legislature to accord to arbitral award and restrict interference by Courts to exceptional statutory grounds. Section 37 of the Arbitration and Conciliation Act, 1996 is reproduced herein under: “ 37. Appealable orders. - (1) [Notwithstanding anything contained in any other law for the time being in force, an appeal] [Substituted 'An appeal' by Act No. 33 of 2019, dated 9.8.2019.] shall lie from the following orders (and from no others) to the Court authorised by law to hear appeals from original decrees of the Court passing the order, namely: (a)refusing to refer the parties to arbitration under section 8; [Substituted by Act No. 3 of 2016 dated 31.12.2015.] (b) granting or refusing to grant any measure under section 9; (c) setting aside or refusing to set aside an arbitral award under section 34.] (2) An appeal shall also lie to a Court from an order of the arbitral tribunal (a) accepting the plea referred to in sub-section (2) or sub-section (3) of section 16; or (b) granting or refusing to grant an interim measure under section 17. (3) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court.” 11. This principle has been reaffirmed by the Hon’ble Supreme Court recently in Gayatri Balasamy v ISG Novasoft Technologies Ltd. reported in (2025) 7 SCC 1 wherein it was held that judicial intervention under Section 37 of the Arbitration and Conciliation Act, 1996 is limited and must be exercised within strict statutory confines. Although the present case is governed by the Act of 1940, the underlying ethos of minimal crucial interference remains consistent across both legislatives. The relevant paragraph of the judgment passed in Gayatri Balasamy (supra) is reproduced as under: “85 . Accordingly, the questions of law referred to by Gayatri Balasamy (supra) are answered by stating that the Court has a limited power Under Sections 34 and 37 of the 1996 Act to modify the arbitral award. This limited power may be exercised under the following circumstances: I. when the award is severable, by severing the "in- valid" portion from the "valid" portion of the award, as held in Part II of our Analysis. II.
This limited power may be exercised under the following circumstances: I. when the award is severable, by severing the "in- valid" portion from the "valid" portion of the award, as held in Part II of our Analysis. II. by correcting any clerical, computational or typo- graphical errors which appear erroneous on the face of the record, as held in Part IV and V of our Analysis; III. post award interest may be modified in some circumstances as held in Part IX of our Analysis; and/or IV. Article 142 of the Constitution applies, albeit, the power must be exercised with great care and caution and within the limits of the constitutional power as out-lined in Part XII of our Analysis.” 12. The scope of interference with an arbitral award under Section 39 of the Arbitration Act, 1940 is limited. An award can be set aside only on the grounds of misconduct of the Arbitrator, that the award has been made after the issue of an order by the Court superseding the arbitration, or that the award has been improperly procured or is otherwise invalid. 13. On perusal of the record, it is evident that the learned Arbitrator had issued notices to the appellants and granted several opportunities to file reply and participate in the proceedings. The plea of non-appointment of a Government Advocate and administrative difficulties cannot be a valid ground to stall or frustrate arbitral proceedings indefinitely. 14. The learned trial Court has recorded a categorical finding that the appellants deliberately failed to cooperate in the proceedings before the learned Arbitrator and no material irregularity or legal misconduct on the part of the learned Arbitrator was established or proved. 15. The allegations of biasness or arbitrariness is unsupported by any cogent material. Mere dissatisfaction with the outcome of the award and that too when appellants did not appear in the proceedings, does not constitute a ground for setting aside the same in a case more than 32 years old. 16. The learned trial Court has rightly exercised jurisdiction under Section 17 of the Arbitration Act, 1940 in making the award rule of the Court. The grant of interest @ 12% per annum is also in consonance with the settled principles governing arbitral awards and cannot be said to be excessive or illegal. Further the learned Counsel for the appellant failed to cite any law to interfere in the award. 17.
The grant of interest @ 12% per annum is also in consonance with the settled principles governing arbitral awards and cannot be said to be excessive or illegal. Further the learned Counsel for the appellant failed to cite any law to interfere in the award. 17. This Court, in exercise of appellate jurisdiction under Section 39 of the Arbitration Act, 1940, does not find any perversity, illegality, or jurisdictional error in the impugned judgment warranting interference. 18. In view of the foregoing discussion, the present appeal is dismissed. The judgment and decree dated 24.03.2004 passed by the learned Additional District Judge, Jhalawar, are hereby affirmed. 19. The award dated 13.06.1994 shall remain enforceable in accordance with law. The appellants shall comply with the directions contained in the impugned decree, including payment of interest, within a period of six weeks from today. 20. There shall be no order as to costs. 21. All pending application(s), if any, stands disposed off.