News Citation : 2025 LN (HC) 6
Bilaspur, September 18, 2025 : The High Court of Chhattisgarh has dismissed an arbitration appeal filed by the State of Chhattisgarh, affirming an arbitral award that settled a long-running dispute over industrial water charges between the government and Anjani Steels Limited.
A Division Bench comprising Chief Justice Ramesh Sinha and Justice Bibhu Datta Guru held that there was no ground to interfere with the arbitral award under the limited scope permitted by Section 34 of the Arbitration and Conciliation Act, 1996. The Court also upheld the earlier order of the Commercial Court in Raipur, which had refused to set aside the award.
The dispute traces back to memoranda of understanding signed in 2003 and 2007, under which Anjani Steels proposed major investments in Chhattisgarh and sought water allocation for its steel and power plants in Raigarh district. In November 2009, the Water Resources Department allotted 1.81 million cubic metres of water annually, linked to the future construction of the Kelo Dam. However, before the dam became operational in 2012, the company drew only 0.29 million cubic metres per year from a natural stream, Gerwani Nala, as its expansion project had not yet materialised.
Despite this, the State raised bills on the full allotted quantity and at higher rates, prompting the company to seek arbitration. In September 2018, the sole arbitrator ruled that the State could not charge Anjani Steels for unused water meant to be supplied only after the dam’s construction. The arbitrator also held that, until 2012, water drawn from a natural source attracted a lower rate under the 2006 government notification. At the same time, the company was directed to clear dues for the actual quantity used, with adjustments for excess payments already made.
Challenging this outcome, the State argued that the arbitrator had gone beyond the contract terms and ignored the agreed minimum payment clause. The Bench rejected these submissions, noting that the water allotment order formed part of the agreement and clearly tied the larger allocation to the dam’s completion. The judges also found no perversity or violation of public policy in the arbitrator’s reasoning.
Reiterating settled law, the Court emphasised that arbitral awards cannot be reopened on merits and that courts do not sit in appeal over factual findings or contractual interpretations made by arbitrators. Since the award was reasoned and based on the record, the appeal was dismissed.
Case Reference : ARBA No. 11 of 2020, State of Chhattisgarh and Others vs Anjani Steels Limited; Counsels: for the Appellants/State, Mr. Prafull N. Bharat, Advocate General, along with Mr. Sangharsh Pandey, Government Advocate; for the Respondent, Mr. Abhishek Sinha, Senior Advocate, along with Mr. Ghanshyam Patel, Advocate.