Himachal Pradesh High Court Stays Further Arbitration Over Construction Project At IIT Mandi

The Himachal Pradesh High Court has held that further proceedings in an ongoing arbitration concerning a construction project involving the Indian Institute of Technology (IIT) Mandi and the Central Public Works Department (CPWD) shall remain stayed while it examines IIT Mandi's plea to be impleaded in the dispute arising from an arbitral award of Rs 3,79,52,929.

The matter was heard on March 16, 2026, by a Division Bench of Chief Justice G.S. Sandhawalia and Justice Bipin C. Negi.

The dispute originates from a Memorandum of Understanding dated August 25, 2011, under which CPWD was entrusted with calling tenders and executing construction works for IIT Mandi's academic and residential complex at Kamand in consultation with the institute.

The agreement also provided that IIT Mandi would be liable to pay claims upheld by an arbitrator or court in relation to the project.

The work was not completed within time, and the contractor's request for extension was rejected in March 2020.

The balance work was thereafter assigned to Mathura Dass Ahuja and Sons, which led to an arbitral award of ₹3,79,52,929, following which CPWD directed IIT Mandi to deposit the awarded amount, subject to the outcome of proceedings under the Arbitration and Conciliation Act, 1996.

IIT Mandi challenged an order dated April 18, 2025 passed by the learned Arbitrator rejecting its application for impleadment, despite observing that it could be a proper party in a civil suit and that a liability of about Rs 6.89 crore may fall upon it.

Before the High Court, IIT Mandi submitted that CPWD was executing the project on its behalf under the MoU and in consultation with it.

It pointed out that the MoU required joint monitoring of the project through a committee nominated by IIT Mandi and permitted the institute to issue directions, including instructing CPWD not to continue the work.

It further argued that it would ultimately bear liabilities arising from arbitral or court awards relating to the project.

IIT Mandi also relied on the contractor's claims alleging frequent changes in design and delays attributable to both CPWD and IIT Mandi, including delay in revising drawings, which disrupted the project.

It contended that, as the beneficiary of the project and the party likely to bear the financial burden of the award, it was a necessary party to the arbitration and must be allowed to raise its defence.

Taking note of the submissions, the High Court issued notice to the Central Public Works Department, whose counsel accepted notice, and directed issuance of notice to the other respondent.

In the meantime, the Court directed that further proceedings before the learned Arbitrator shall remain stayed.

The matter has been listed for further hearing on May 4, 2026.

For Appellant (IIT Mandi): Advocates Akhil Mittal, Abhinav Purohit.

For Respondent (CPWD): Advocates Balram Sharma (Deputy Solicitor General of India), Rajeev Sharma.