Raipur
The Chhattisgarh High Court has upheld an arbitral award and a subsequent commercial court order that favoured M/s Anjani Steels Limited in a long-standing water supply dispute with the state government. The court dismissed an appeal filed by the State of Chhattisgarh, ruling that the arbitral award was neither illegal nor contrary to public policy.
A division bench of Chief Justice Ramesh Sinha and Justice Bibhu Datta Guru, in its judgment dated September 18, 2025, held that the state was not entitled to bill the company for the full allotted water quantity of 1.81 Million Cubic Metres (MCM) annually before the construction of the Kelo Dam.
Case Background
The dispute originated from a water supply agreement signed on December 11, 2009, under which Anjani Steels was allotted 1.81 MCM of water per year from the Kelo River for its existing and proposed plants. The agreement made clear that the full allotment would be available only after the Kelo Dam was built, which was completed in 2012.
Until then, the company required just 0.29 MCM annually for its existing plant, drawing the water from Gerwani Nala, a natural source. Despite this, from July 2010, the state’s water department began billing Anjani Steels for the entire 1.81 MCM, triggering the dispute.
When the company sought correction of the bills, the department refused and even threatened to terminate the agreement. The matter was eventually referred to arbitration by the High Court.
Arbitrator’s Findings
Sole arbitrator Justice (retd) L.C. Bhadoo, in an award dated September 9, 2018, ruled largely in favour of Anjani Steels. Key findings included:
- Rejection of the state’s counter-claim of ₹8.53 crore.
- Liability of the company to pay only for actual usage (0.29 MCM annually) from July 2012.
- Permission for the company to adjust amounts already paid for unused water against future bills.
- Striking down a 20-year condition imposed by the state to reduce water quantity as arbitrary.
The Commercial Court upheld the arbitral award on October 18, 2019. The state challenged this before the High Court.
High Court’s Analysis
The bench, after examining the agreement and water allotment order, confirmed that the contractual condition requiring construction of the Kelo Dam had not been fulfilled when the disputed bills were raised.
It also cited a March 21, 2006, government notification fixing the rate for water drawn from natural sources at ₹0.90 per cubic metre, compared with the ₹3.00 per cubic metre charged by the state. Since Anjani Steels had drawn water from Gerwani Nala until June 2012, the arbitrator’s finding that the lower rate should apply was deemed proper.
The court stressed that under Section 34 of the Arbitration and Conciliation Act, 1996, courts cannot reappraise evidence or substitute their own contractual interpretation for that of the arbitrator. It reaffirmed that arbitrators are the “masters of evidence” and that judicial review in such matters is limited.
Final Order
Dismissing the state’s appeal, the High Court found no error, perversity, or conflict with public policy in the arbitral award. The court also underscored that the state had illegally charged Anjani Steels for an additional 1.52 MCM of water before the Kelo Dam was completed.
The bench concluded by affirming the finality of arbitral awards, leaving both parties to bear their own costs.
