Appellate Courts cannot reappraise merits or factual findings under Section 37 of the Arbitration Act.

The Appellant (Union of India/CPWD) awarded a contract to the Respondent for the construction of an Administrative Building at NEIAH, Shillong, valued at ₹23.60 crores

Under the NIT, the Respondent was required to submit a Trading Licence from the KHADC within one month

Due to the Model Code of Conduct, the Respondent failed to obtain the license, which consequently delayed procurement and GST registration

On 24.06.2024, the Appellant determined the contract and forfeited the Performance Guarantee (PG) of ₹1.18 crores, purportedly invoking Clause 5 of the Agreement

The Sole Arbitrator set aside the termination and ordered the release of the PG and litigation costs

The Commercial Court at Shillong dismissed the Appellant's Section 34 challenge on 03.02.2026

The Appellant then approached the High Court under Section 37

1. Whether the Appellant’s invocation of Clause 5 of the GCC to determine the contract was legally valid under the terms of the agreement.

2. Whether the High Court, exercising jurisdiction under Section 37 of the Arbitration Act, can interfere with concurrent findings of fact regarding the interpretation of contract clauses.

The court applied the restrictive principles of judicial interference under Section 34 and Section 37 of the Arbitration and Conciliation Act, 1996.

Section 37 courts cannot undertake an independent assessment of merits and must be "extremely cautious" in disturbing concurrent findings (MMTC Limited v. M/s Vedanta Limited (2019)).

An award can only be set aside if it is contrary to fundamental policy, public interest, justice/morality, or is patently illegal (Haryana Tourism Limited v. Kandhari Beverages Limited (2022)).

The appellate court does not sit in appeal to find if an award is right or wrong upon reappraisal of evidence (Punjab State Civil Supplies Corp. Ltd. v. Sanman Rice Mills (2024)).

The Court observed that the Appellant's primary contention—that an amended Clause 5 allowed forfeiture followed by termination—was never presented before the Arbitrator

Upon reviewing the GCC, the Court noted that Clause 3 specifically governs the determination of a contract for failure to proceed with work, whereas Clause 5 pertains to "Time and extension for delay"

The Arbitrator found that the Engineering-in-Charge invoked the wrong provision (Clause 5) to terminate the contract, rendering the action without jurisdiction

The High Court reasoned that since the Commercial Court had already concurred with the Arbitrator’s factual interpretation of these clauses, it could not re-examine the merits or substitute its own view for that of the Arbitral Tribunal under the narrow window of Section 37

The High Court dismissed the appeal and upheld the judgment of the Commercial Court, directing the Appellant to satisfy the award, specifically releasing the Performance Guarantee (Claim 2) and paying the awarded expenses (Claim 6) within four weeks