Calcutta High Court Upholds ₹29.96 Crore Arbitral Award Against Bihar State Power Generation Company, Refuses To Interfere In Barauni Power Plant Dispute

The Calcutta High Court, Commercial Division, dismissed a petition filed by the Managing Director, Bihar State Power Generation Co. Ltd. (BSPGCL) under section 34 of the Arbitration and Conciliation Act, 1996, challenging an arbitral award passed in favour of R S Constructions. Justice Gaurang Kanth, on 4th December, 2025, while upholding the finality of the arbitral award, ruled that the arbitral tribunal had adopted a “logical, reasoned and plausible” view while granting compensation for illegally stopped dismantling work at the Barauni Thermal Power Station in Begusarai, Bihar. Background Facts The dispute originated from the Bihar State generating Generation Co. Ltd. holding an e-auction for the demolition, dismantling, and disposal of outdated and unusable thermal generating units at the Barauni Thermal Power Station, in which RS Construction had been announced as the successful bidder. Fulfilling the contract's 365-day deadline by paying all three instalments by March 2013, the demolition process commenced. However, on December 10, 2013, the Bihar Power Generation Company issued a stop-work order. The contractor repeatedly sought for a time extension, but they were rejected. As a result, arbitration proceedings commenced in which the Sole Arbitrator, Mr. Justice D.K Seth, passed an award dated September 17, 2023 holding the power utility liable for breach of contract and imposed a penalty of ₹29.96 crore plus 9% future interest. The company, under section 34 of the Arbitration and Conciliation Act, 1996 challenged the award on multiple grounds, including the "alleged misjoinder of parties", contending that the award was passed against the Managing Director and Chairman who were “non-signatories” to the arbitration agreement. They also alleged the absence of a formal Section 21 notice, and what they claimed was an "erroneous interpretation of contractual clauses governing to the validity period of the contract". They also objected to the Arbitrator's assessment of the value of unlifted materials, the quantification of loss of profit, and the award of arbitration costs. R S Construction on the other hand, contended that the award was well-reasoned, falling outside the restrictive ambit of Section arguing that the court is not an Appellate Authority. High Court of Calcutta, with bench comprising of Justice Gaurang Kanth, delivered the judgment on 4 December 2025, and held that the objections raised — including alleged misjoinder, lack of notice under Section 21, wrong timeline computation, and unsupported damage claims — does not fall under the grounds specified under Section 34 of the Arbitration Act. Justice Kanth, rejecting the misjoinder objection, held that the award is not avoid for being against “non-signatories”, clarifying that if corporate officials (MD/Chairman) are solely impleaded in a representative capacity and hence, identifying them in arbitration does not render them personal parties as the corporate signatories continue to be the actual parties. The court held that “the Award itself fastens liability exclusively upon the corporate entities that were signatories to the arbitration agreement and is neither directed against nor executable against the individual officers in their personal capacity”, hence their argument is “misconceived, unsupported by the record, and contrary to established legal principles.” On Section 21 notice, the Court noted that the power utility company participated in arbitration for years without objection, amounting to waiver. The Court also reiterated that it "cannot reappreciate evidence or substitute its own conclusions merely because another alternative view may be possible". Rejecting all objections of the company against the arbitral award, the Court concluded that "minimal judicial interference is the governing principle" and that the findings of the arbitrator "cannot be said to be perverse, irrational, or violative of the public policy of India". Conclusively ruling that “An arbitral award is to be accorded finality”, the Calcutta High Court dismissed the Section 34 petition in entirety, upholding the ₹29.96 crore arbitral award against Bihar State Power Generation Co Ltd. Case Title: Managing Director, Bihar State Power Generation Co. Ltd. & Anr. v. R S Construction & Anr. Case Number: AP-COM 21/2023 Coram: Hon'ble Justice Gaurang Kanth Date of Decision: 04 December 2025 Appearances: For the Petitioners: Mr. U. P. Singh, Senior Advocate; Mr. Kumar Manish, Advocate; Mr. S. K. Poddar, Advocate; Mr. Abin Lal Chakravarty, Advocate; Mr. Prashant Kumar, Advocate; Ms. Bhawna Tekriwal, Advocate; For the Respondents: Mr. Prashant Kumar and Ms. Bhawna Tekriwal Click Here To Read/Download Order

Calcutta High Court Upholds ₹29.96 Crore Arbitral Award Against Bihar State Power Generation Company, Refuses To Interfere In Barauni Power Plant Dispute

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