Arbitral awards cannot be set aside based on documents missing from reconstructed judicial records.

The Public Works Department (PWD), Tripura, awarded a contract to the Appellant in 2014 for the construction of the Kailashahar District Jail.

Disputes arose in 2019, leading to the appointment of a Sole Arbitrator who passed an award on June 17, 2020, allowing several of the Appellant’s claims.

The Respondents challenged this award under Section 34 of the Arbitration and Conciliation Act, 1996 (“the Act”) before the Commercial Court.

While the Commercial Court initially dismissed the challenge, the High Court, in a previous appeal (Arb. A. 07/2022), remitted the matter back for a reasoned decision specifically on price escalation and Clause 44 of the agreement.

On remand, the Commercial Court set aside the entire Arbitral Award on August 31, 2024, prompting the present appeal.

1. Whether the Commercial Court exceeded its jurisdiction under Section 34 by adjudicating issues where the Arbitrator had already ruled against the Appellant and which were not challenged by the Appellant?

2. Whether an Arbitral Award can be set aside on the ground that certain documents relied upon by the Arbitrator were missing from the "reconstructed record" during Section 34 proceedings?

3. Whether the Arbitrator’s findings regarding the responsibility for delay and subsequent entitlement to price escalation were perverse or contrary to the fundamental policy of Indian law?

The Court emphasized that the scope of interference under Section 34 is highly restricted to grounds of "public policy" and "patent illegality," as established in Somdatt Builders-NCC-NEC (JV) v. NHAI.

The scope of interference under Section 34 is restricted as per Ssangyong Engg. & Construction v. NHAI.

Under Section 37, an appellate court cannot undertake an independent reassessment of the merits but must ensure the Section 34 court stayed within its bounds, per Reliance Infrastructure Ltd v. State of Goa and UHL Power Co. Ltd v. State of HP.

The inherent power to reconstruct records under Section 151 of the CPC must not prejudice a party due to the loss of documents in official custody, as held in Ram Khelwan v. Dy. Director of Consolidation.

The High Court found the Commercial Court’s judgment fundamentally flawed. First, the Commercial Court improperly "reversed" findings on Issues 2, 3, and 4; since the Arbitrator had ruled against the Appellant on these points and the Appellant had not challenged them, the Section 34 court—acting on a petition by the Respondents—had no cause to revisit them.

The Commercial Court erred by setting aside the award on Issue 5 (admitted liability) and Issue 8 (contract rescission) simply because the "reconstructed record" lacked the physical evidence (Annexure R-2 and Hindrance Register) that the Arbitrator had explicitly perused and cited.

The High Court held that the subsequent loss of documents cannot be used to doubt the Arbitrator's integrity or the existence of evidence.

The Court found the Arbitrator's conclusion—that the Respondents were 80% responsible for the delay due to design changes and site issues—was a "possible view" based on the record and did not shock the conscience of the court.

It held that the Commercial Court had exceeded its jurisdiction by re-appreciating evidence and interfering with a plausible arbitral view.

The Arbitral Award dated June 17, 2020, was upheld in its entirety and the Court awarded costs to the Appellant.