The Gujarat High Court has dismissed an appeal filed by the Gujarat Housing Board (GHB) under Section 37 of the Arbitration and Conciliation Act, 1996, challenging an arbitral award, and imposed costs of Rs 3 lakh on the Board.
A Division Bench comprising Chief Justice Sunita Agarwal and Justice D.N. Ray held that the challenge was essentially an attempt to re-agitate the merits of the arbitral award, which was impermissible within the limited scope of interference under Sections 34 and 37 of the Arbitration Act. The Court found no perversity or patent illegality warranting interference.
The dispute arose from a construction contract at Bhuj, where the arbitral tribunal had awarded Rs 3.97 crore against claims of over Rs 12 crore. The tribunal had, inter alia, awarded Rs 62.54 lakh towards deductions from running account bills, Rs 3.35 crore towards extra work, Rs 2.49 crore towards idle machinery charges and Rs 85.49 lakh towards idling manpower and fixed overheads. The High Court noted that the project had initially contemplated G+3 construction but was subsequently curtailed to G+2 because the site fell in a seismic zone, with the resulting delay and changes attributed to GHB.
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The Court also observed that a contract awarded by a statutory authority does not ipso facto become a statutory contract and continues to remain a private agreement between the authority and the contractor. It further noted that casual challenges under Sections 34 and 37 can burden courts with unnecessary litigation and observed that costs can serve as a deterrent.
The Bench ultimately directed that Rs 2 lakh out of the Rs 3 lakh costs be paid to the contractor towards advocate’s fees and legal expenses, while Rs 1 lakh be deposited with the High Court towards litigation costs, with the appeal dismissed.
