Courts Must Call For Arbitral Records Before Deciding Challenge To Arbitral Award: Sikkim High Court

The Sikkim High Court has reiterated that a court hearing a challenge to an arbitral award cannot decide the matter without first calling for the records of the arbitral tribunal.

A Division Bench of Chief Justice A. Muhamed Mustaque and Justice Bhaskar Raj Pradhan observed:

“The Court entertaining the application under Section 34 is required, imperatively, to look into the records of the Arbitral Tribunal to satisfy whether any grounds under Section 34 have been made out or not. Without calling for records, and merely on the basis of the arbitral award and upon hearing the parties, the Court cannot arrive at a conclusion with regard to any of the grounds raised under Section 34."

The ruling came while allowing an appeal filed by the Union of India against a Commercial Court order passed in proceedings challenging a ₹23.21 crore arbitral award in favour of contractor Nar Bahadur Dahal.

The arbitral award had been passed by former Calcutta High Court judge Justice Pranab Kumar Chattopadhyay, acting as sole arbitrator, directing payment of ₹23,21,54,534 to Nar Bahadur Dahal.

Nar Bahadur Dahal had been engaged by the Union of India for road improvement work from Gangtok to Nathula under a contract entered in 2009-10. The contract stood extended till 31 March 2015.

The arbitral tribunal allowed the contractor's counterclaims and rejected the claims raised by the Union of India.

Before the Commercial Court, Gangtok, the Union of India contended that the contractor's counterclaims, filed on 14 September 2022, were barred by limitation since the work had concluded on 31 March 2015. The Union also relied upon a letter dated 28 March 2017, which according to it showed that the contractor had stated that it did not have any claim.

The arbitral tribunal had rejected the limitation objection after appreciating the materials and records available before it.

The High Court observed that limitation is a question of facts and law and noted that courts can reject claims barred by limitation if such defect is apparent from the record.

The bench observed, “But we are also mindful of an issue relating to waiver of plea of limitation in the context of arbitration. Unlike a Court established as a public forum by the State, whose policy is to encourage litigation by litigants who are alert and vigilant about their rights, a question may arise before the Arbitral Tribunal as to whether a plea of limitation can be waived without raising such a plea, since such a forum is a private forum.”

The Court further observed, “It is only when it arrives at a finding that the claim is barred by limitation that, perhaps in the context of arbitration, a plea of waiver can be considered.”

However, the bench clarified that it was not examining the limitation issue because the Commercial Court itself had proceeded without calling for the arbitral records.

Referring to earlier decisions including Emkay Global Financial Services Limited v. Girdhar Sondhi and Canara Nidhi Limited v. M. Shashikala and Others, the High Court held that calling for arbitral records is an essential requirement while deciding a challenge to an arbitral award.

Setting aside the Commercial Court's judgment, the High Court directed fresh consideration of the matter after calling for the records from the arbitral tribunal.

The Commercial Court, Gangtok, was directed to reconsider all issues afresh within two months from receipt of the arbitral records. The parties were also directed to appear before the Commercial Court on 01 June 2026.

For Appellant (Union of India): Deputy Solicitor General of India Sangita Pradhan, with Advocates Sittal Balmiki and Amit Kumar Sharma.

For Respondent (Nar Bahadur Dahal): Senior Advocate Jorgay Namka, with Advocates Lahang Limboo and Sawal Rai.