Court cannot set aside arbitral award by carving out claims neither pleaded nor urged before the Tribunal

The Appellant (a manufacturer) and the Respondent (a logistics provider) entered into a Service Agreement dated 09.08.2011 for a fixed tenure ending on 31.08.2014

The Respondent alleged that services continued until 15.01.2015 without a fresh agreement and claimed outstanding dues of ₹26,79,927.22 (Claim A), along with other claims for losses and breach of confidentiality (Claims B, C, and D)

The Sole Arbitrator dismissed all claims, holding that Claim A pertained to a period outside the arbitration agreement and that all invoices for that period had been paid as per bank records

Under Section 34, the learned Single Judge partially set aside the award, carving out ₹11,49,547 from Claim A as "pre-31.08.2014" dues, alleging the Tribunal failed to adjudicate a dispute over "forged" invoices for this period

The Appellant challenged this partial setting aside under Section 37

1. Whether the Single Judge exceeded jurisdiction under Section 34 by adjudicating a component of a claim not specifically pleaded or independently urged before the Arbitral Tribunal

2. Whether the interference with the Arbitral Award was sustainable in the absence of a finding of patent illegality, perversity, or contravention of fundamental policy

3. Whether the Arbitral Tribunal’s findings that invoices were duly paid and no amount remained outstanding warranted interference

The Court applied Section 34 and Section 37 of the Arbitration and Conciliation Act, 1996, which limit judicial interference to specific grounds such as "patent illegality" or "perversity"

The court applied the principle that a court under Section 34 cannot reappreciate evidence or act as a court of appeal

Referencing Dyna Technologies Pvt. Ltd. v. Crompton Greaves Ltd., it noted that an award cannot be set aside merely for brief reasoning if the logic is intelligible

Regarding the permissibility of partial setting aside of severable parts of an award, the court referenced Gayatri Balasamy v. ISG Novasoft Technologies Ltd.

The Division Bench found that the Respondent’s "Claim A" was explicitly pleaded for the period of 01.09.2014 to 15.01.2015

The Single Judge erred by manually bifurcating this claim to create a "pre-31.08.2014" component that the Respondent had never independently pleaded or quantified before the Arbitrator

The court noted that the Arbitrator had indeed examined the evidence, including bank statements and contemporaneous emails (07.02.2015 to 17.02.2015), concluding that the Appellant had cleared the invoices

Since the Respondent had limited "Claim A" to the post-expiry period, the Arbitrator could not be faulted for failing to adjudicate a "pre-expiry" dispute that was never formally put in issue

The Single Judge’s decision to set aside the award was based on a restructured claim rather than any "patent illegality" appearing on the face of the original award

The Court answered the issues by stating that the Arbitral Award did not suffer from perversity or patent illegality and that the Arbitrator had correctly adjudicated the claim as framed by the parties

The Court allowed the appeal and set aside the Single Judge’s order dated 18.02.2022, and the Arbitral Award dated 06.08.2019 was fully restored