The Court mandates reconsideration with complete arbitral records in a dispute involving Union of India and M/s Nar Bahadur Dahal.
In a significant ruling, the Sikkim High Court has set aside a decision made by the Commercial Court, Gangtok, in an arbitration dispute between the Union of India and M/s Nar Bahadur Dahal (NBD). The High Court, comprising Chief Justice A. Muhamed Mustaque and Justice Bhaskar Raj Pradhan, emphasized the imperative requirement for the Commercial Court to examine the complete arbitral records while adjudicating an application under Section 34 of the Arbitration and Conciliation Act, 1996.
The appeal, filed by the Union of India under Section 37(1) of the Act, challenged the arbitral award which directed the payment of over Rs. 23 crores to the respondent, M/s Nar Bahadur Dahal. This sum was awarded by a tribunal presided over by Hon'ble Justice Pranab Kumar Chattopadhyay, a former Judge of the Calcutta High Court, which had allowed counterclaims by the contractor concerning a road improvement project from Gangtok to Nathula.
The Union of India contended that the respondent's counterclaims were time-barred, a plea previously overlooked by the Commercial Court due to its failure to call for the arbitral records. The High Court highlighted the necessity of examining these records to determine whether the grounds under Section 34, such as limitation, were substantiated. It stressed that without reviewing these documents, the Commercial Court could not appropriately assess the validity of the objections raised.
Citing precedents, including the Supreme Court’s judgments in Emkay Global Financial Services Limited v. Girdhar Sondhi and Canara Nidhi Limited v. M. Shashikala and Others, the High Court reiterated that applications under Section 34 are summary proceedings and should primarily rely on the records before the arbitrator. The necessity of cross-examination or additional evidence should be considered only in exceptional circumstances.
The High Court's decision mandates the Commercial Court to re-evaluate the case with a comprehensive review of the arbitral records, ensuring a thorough and just resolution. The parties are scheduled to appear before the Commercial Court, Gangtok, on June 1, 2026, to initiate the renewed proceedings.
Bottom line:-
Arbitration and Conciliation Act, 1996 - Commercial Court must call for and examine the arbitral records while deciding an application under Section 34 challenging an arbitral award.
Statutory provision(s): Arbitration and Conciliation Act, 1996 Sections 34, 37; Limitation Act, 1963 Section 3.
Union of India v. M/s Nar Bahadur Dahal (NBD), (Sikkim)(DB) : Law Finder Doc id # 2907190
