Shimla, Oct. 31 - A slightly tense atmosphere hung in Courtroom No. 1 on Thursday morning as the Himachal Pradesh High Court pronounced its judgment in the arbitration appeal filed by the state infrastructure corporation. The bench, headed by Chief Justice G.S. Sandhawalia and Justice Ranjan Sharma, delivered a mixed ruling: partly upholding the arbitral award, partly tearing it down.
One of the judges remarked during the hearing,
"The law does not permit us to interfere with everything, but where an award travels beyond evidence, we must act."
Background
The case traces its roots to 2008, when the Himachal Pradesh Road and Other Infrastructure Development Corporation awarded C&C Constructions a major contract to widen and strengthen the Una–Barsar–Jahu–Kalkhar–Nerchowk road. The project, initially meant to finish in 33 months, crawled on for years due to frequent delays. The contractor ultimately claimed massive financial losses extra equipment detention, on-site manpower, and what they described as
"off-site overheads" including head-office expenses.
The arbitral tribunal, a three-member panel led by former Chief Justice Devinder Gupta, sided with the contractor and granted more than ₹35 crore including interest. A Single Judge later upheld the award, prompting an appeal by the corporation.
Court's Observations
The division bench took a methodical walk through the record. The judges reiterated the limited scope of interference under Section 37 of the Arbitration and Conciliation Act.
"We cannot behave as an appellate court. But if the award shocks judicial conscience, that is another matter," one of the judges remarked during the arguments.
And most claims did pass the court’s scrutiny. The bench accepted that the contractor faced prolonged delays not attributable to them—tree clearing, land acquisition hiccups, shifting of utilities, repeated alignment changes. The tribunal’s reasoning for compensating on-site supervision, machinery retention and other direct time-related costs seemed "plausible enough," the court hinted.
But the mood changed when the bench reached the contentious item: the head-office overheads amounting to ₹3.82 crore, claimed on the basis of percentages calculated by a Chartered Accountant. The judges grew visibly skeptical. The CA had not appeared before the tribunal; the witness presented by C&C admitted he had “not personally seen the relevant records,” and only gathered information second-hand.
The bench observed,
"Where such a huge amount is pushed on the respondent, the claimant must bring material beyond mathematical charts. A certificate without its author is not proof."
The court also noted that the tribunal accepted the computation without cross-verification or meaningful legal scrutiny, something it called “a patent illegality.” Citing a range of Supreme Court precedents Metal Box, Unibros, and Parsa Kente Collieries the court emphasised that claims for overheads cannot be awarded in the absence of direct evidence.
Decision
The High Court finally drew a clear line: it upheld the rest of the tribunal’s award but struck down the portion granting ₹3.82 crore toward head-office expenses, along with the linked lease-money component and consequential interest. The court concluded that the contractor failed to prove these particular expenses, and the tribunal improperly accepted unsupported calculations.
With this, the appeal succeeded only in part. The court left the remainder of the award untouched, respecting arbitration autonomy.
The decision ended abruptly with the bench saying the order under Section 34 should have been interfered with "to this limited extent only," and nothing more.
Case Title: Himachal Pradesh Road & Other Infrastructure Development Corporation Ltd. vs. M/s C&C Construction Ltd.
Case Number: Civil Arbitration Appeal No. 01 of 2023
Date of Decision
- Pronounced on: 31.10.2025
- Reserved on: 21.08.2025
