Teja Electricals Appeal Dismissed Over Final Bill Dispute

Authority: High Court of Chhattisgarh at Bilaspur

Order Date: 30/10/2026

Case Overview

• Parties: Appellant – M/s Teja Electricals (proprietor Rajesh Tejwani, Nagpur, Maharashtra). Respondents – 1) Chief Administrative Officer (Construction), South East Central Railway, Bilaspur; 2) Chief Electrical Engineer (Construction), South East Central Railway, Bilaspur.
• Nature of Proceeding: Appeal (ARBA No. 91 of 2017) under Section 37 of the Arbitration and Conciliation Act, 1996 against the order of the Commercial Court dated 31.10.2017, which had dismissed the appellant’s application under Section 34 of the Act challenging the arbitral award dated 12 May 2015.
• Background:
• Tender for electrification of a private siding of M/s Ind Agro Synergy Ltd. at Koterlia was issued on 03 June 2005 by the respondents.
• Teja Electricals submitted a bid, was awarded the contract, and executed an agreement on 05 Oct 2005. The contract required completion within six months of the Letter of Acceptance dated 04 Aug 2005.
• Work was completed on 14 May 2006; a completion certificate was issued on 25 Dec 2007.
• Final bill of Rs 1,49,33,340 was submitted. After deducting the on‑account payment (85% of the bill), the net amount claimed as final payment was Rs 41,63,602.
• Respondent No. 2, on 06 June 2008, withheld the final payment, demanding the manufacturer’s test certificate for the galvanized masts supplied. The appellant submitted galvanising test reports from M/s Unique Structure & Tower Ltd. (dated 14 Oct 2005 and 10 Nov 2005) on 29 Sept 2008, but the respondents rejected them on the ground that the certificates were not issued by the actual manufacturer and that the material was procured from an unapproved source.
• Arbitration:
• Under Section 11(6) of the Act, the High Court appointed a sole arbitrator (order dated 04 July 2011).
• The appellant’s statement of claim (filed 17 Oct 2011) sought Rs 1,00,11,599 comprising the balance final bill (Rs 41,63,032), interest at 18% p.a. from 14 May 2006 to filing, amount already deposited with the Railways (Rs 8,29,867) with interest, and legal costs of Rs 3,00,000.
• The arbitrator’s award dated 12 May 2015 dismissed the claim, holding that the contract was not completed because the galvanized masts were not from RDSO/CORE‑approved sources.
• The appellant challenged the award under Section 34; the Commercial Court (order dated 31 Oct 2017) dismissed the challenge and affirmed the award.
• Contentions:
• Appellant argued that the work was completed, that 85% on‑account payment had been released based on the same certificates, that CORE had clarified (letter dated 03 Dec 2014) that both Unique Structure & Tower Ltd. and Shri Bajrang Alloys Ltd. were approved sources, and that RITES had inspected and certified the work. Hence, withholding the balance payment was unjustified.
• Respondents contended that the special conditions required materials to be procured only from RDSO/CORE‑approved sources and that the certificates submitted were not from the manufacturer, nor was the original supplier’s challan produced. Therefore, the final payment could be lawfully withheld.
• Legal Provisions Cited: Sections 34(1) & (2), 11(6), and 37 of the Arbitration and Conciliation Act, 1996; Section 13 and 16 of the Act; contractual clauses (Clause‑IV of Chapter II, Clause‑V, and Special Condition Item 3 concerning procurement and inspection).
• Judicial Reasoning:
• The Court emphasized the limited scope of interference under Section 37, which mirrors the restrictions of Section 34. It cannot re‑appreciate evidence or substitute its view for that of the arbitrator unless a ground of patent illegality or violation of public policy is established.
• The Court examined the contractual terms, noting that the special conditions expressly required procurement from RDSO/CORE‑approved sources and submission of the manufacturer’s test certificate and original challan at the time of final payment.
• The appellant had not produced the manufacturer’s original challan or a test certificate issued by the actual manufacturer; the documents submitted were only galvanising reports from a company that performed galvanisation, not manufacture.
• The Court held that the on‑account payment release does not constitute a waiver of the mandatory conditions for the final bill.
• Citing Supreme Court precedents (MMTC Ltd. v. Vedanta Ltd., Dyna Technology v. Crompton Greaves, Delhi Airport Metro Express v. DMRC, etc.), the Court reiterated that an award can be set aside only on grounds of patent illegality, violation of public policy, or jurisdictional error, none of which were demonstrated.

Final Outcome

• The High Court dismissed the appeal, finding it devoid of merit. The order of the Commercial Court affirming the arbitral award dated 12 May 2015 stands. No payment is due to the appellant, and the dispute is concluded.

Topics: Arbitration; Railway Contract Dispute