UNION OF INDIA VS. M/S D. KHOSLA & CO. RP NO. 115/2022 IN CFA NO.18/2014:

DATE: 17/10/2025

COURT: High Court of Jammu and Kashmir

BENCH: Justice Sanjeev Kumar

FACTS:

The case arose from a review petition filed by the Union of India seeking reconsideration of the judgment dated 09.05.2022 passed in CFA No. 18/2014 (Union of India v. M/s D. Khosla and Company). In the earlier judgment, the High Court had set aside the arbitral award concerning certain claims specifically Claim Nos. (1), (2), (4), (8), (15), and (16), on the ground that they were beyond the terms of the contract, yet remitted them back to the Arbitrator for fresh adjudication. The Union of India contended that this amounted to an error apparent on the face of the record, as the Court had already held that these claims were contrary to specific contractual provisions. The respondent-contractor opposed the review, arguing that the judgment had merged with the Supreme Court’s order dated 14.07.2022 dismissing the Special Leave Petition (SLP) filed by the contractor and allowing certain other claims to be re-adjudicated. It was submitted that, due to such merger, the High Court lacked jurisdiction to entertain a review.

The Union of India countered this argument, asserting that the Supreme Court’s dismissal of the SLP was a non-speaking order, one that neither provided reasons nor amounted to a declaration of law under Article 141 of the Constitution. Hence, the doctrine of merger did not apply, and the High Court retained the power to review its own judgment. The petitioner relied upon the principle that a review is maintainable if there is a mistake or error apparent on the face of the record, or if the decision conflicts with the statutory framework. Upon hearing both sides, the Court examined whether remitting the claims to the Arbitrator, despite finding them contrary to contract clauses, constituted such an apparent error justifying review.

ISSUES:

The central issues before the Court were: (1) whether the High Court had committed an error apparent on the face of the record by remitting certain claims to the Arbitrator after already holding them contrary to the contract terms; and (2) whether the review petition was maintainable in light of the Supreme Court’s dismissal of the contractor’s SLP, i.e., whether the doctrine of merger barred the High Court from reviewing its earlier decision.

JUDGEMENT WITH REASONING:

The High Court allowed the review petition filed by the Union of India. It recalled its earlier judgment dated 09.05.2022 to the extent of Claim Nos. (1), (2), (4), (8), (15), and (16), holding that those claims should not have been remitted for fresh adjudication. The Court directed that only Claim No. 13 be remitted to the Arbitrator. It further clarified that any award passed by the Arbitrator on the aforementioned six claims would be beyond his jurisdiction and thus null and void.

The Court reasoned that its earlier order contained an error apparent on the face of the record because it had simultaneously found certain claims to be contrary to explicit contractual clauses yet remitted them to the Arbitrator for reconsideration. Specifically, Claim No. 1 was held inconsistent with Clause 11 of the contract, which made variations in design due to soil strata the contractor’s responsibility without extra payment. Similarly, Claim No. 2 violated Clause 3.2, which required the contractor’s lump-sum rates to include trench and span excavation. Claims Nos. 4 and 8 also contravened Clauses 11(b) and 17(g) respectively, while Claims Nos. 15 and 16, concerning interest, had already been decided by the Court by reducing the rate from 18% to 6%. Having found these claims unsustainable under the contract, there was no legal basis to remit them for fresh adjudication. This inconsistency, the Court held, constituted a self-evident and rectifiable error justifying review under Order XLVII Rule 1 of the Civil Procedure Code (CPC).

On the question of maintainability, the Court rejected the respondent’s contention that the Supreme Court’s dismissal of the SLP barred review. Referring to Kunhayammed v. State of Kerala and V. Senthur v. M. Vijay Kumar, the Court clarified that the doctrine of merger does not apply when an SLP is dismissed by a non-speaking order without assigning reasons. Such dismissal merely indicates that the Supreme Court declined to exercise discretionary jurisdiction, not that it affirmed the lower court’s reasoning. Therefore, the High Court’s earlier judgment had not merged with the Supreme Court’s order and remained open to review. The Court concluded that its inadvertent remittance of unsustainable claims was a clear and correctable error within the narrow scope of review jurisdiction, and accordingly modified its prior judgment.

ANALYSIS:

The Delhi High Court’s decision in Union of India v. M/s D. Khosla and Company (Review Petition) underscores the narrow but vital scope of review jurisdiction under Order XLVII Rule 1 of the CPC, emphasizing that review is justified only when a clear and self-evident error exists on the face of the record. The Court found that its earlier judgment contained a fundamental inconsistency, it had declared certain claims (Nos. 1, 2, 4, 8, 15, and 16) as being contrary to explicit contractual terms, yet had remitted them to the Arbitrator for fresh adjudication. This contradiction, the Court held, amounted to a patent legal error warranting correction through review. By analyzing the contract clauses in detail, the Court reaffirmed that these claims were unsustainable, as they directly violated provisions making the contractor responsible for variations, excavation, and other cost contingencies. Since these claims were already decided as contractually barred, sending them back for re-arbitration would have exceeded the Arbitrator’s jurisdiction and undermined the finality of judicial findings. The Court’s intervention therefore ensured consistency and compliance with the contractual framework while maintaining the integrity of the arbitral process.

Equally significant was the Court’s rejection of the respondent’s argument regarding the doctrine of merger. Citing Kunhayammed v. State of Kerala and V. Senthur v. M. Vijay Kumar, the Court clarified that a non-speaking dismissal of a Special Leave Petition by the Supreme Court does not result in merger, as such dismissal does not constitute affirmation or endorsement of the lower court’s reasoning. This reaffirmation of the non-merger principle protected the High Court’s authority to correct its own mistake even after the SLP’s dismissal. The ruling thus reinforces the principle that review is not an appeal in disguise but a limited corrective mechanism to rectify glaring errors apparent from the record. In doing so, the judgment highlights judicial accountability, procedural precision, and respect for the boundaries of both arbitral and appellate jurisdiction.