Court Exercise of Section 34 Jurisdiction Cannot Substitute Arbitrator’s Plausible View With Its Own Findings

The National Airports Authority of India appointed the appellant (NBCC) as a Project Management Consultant for the Bhubaneswar Airport. NBCC awarded a contract to the respondent (J.G. Engineers) on March 13, 1993, for terminal and allied building works

The project faced delays, and though time was extended repeatedly until December 15, 1995, NBCC terminated the contract on March 20, 1996, alleging breach by the contractor

In the resulting arbitration, the Sole Arbitrator held that delay prior to March 25, 1995, was attributable to NBCC, but delay thereafter was primarily due to the contractor’s financial incapacity. The Arbitrator ruled the termination unlawful but awarded several counter-claims to NBCC (restricted by a 10% liquidated damages cap under Clause 72 of the GCC)

Both parties filed Section 34 applications. The learned Single Judge of the High Court set aside the findings holding the contractor liable for post-1995 delays and quashed all counter-claims allowed in favor of NBCC, prompting these Section 37 appeals

1. Whether the learned Single Judge exceeded the jurisdiction under Section 34 of the Arbitration and Conciliation Act, 1996, by re-appreciating evidence and substituting the Arbitrator's findings on the cause of delay

2. Whether the quashing of counter-claims (related to advances, electricity charges, and overheads) was legally sustainable given the Arbitrator’s reasoned findings

The court applied Section 34(2A) and Section 37 of the Arbitration and Conciliation Act, 1996, regarding the limited scope of judicial interference with arbitral awards

It relied on Gayatri Balsamy v. ISG Novasoft Technologies Limited (2025), establishing that Section 34 is not an appellate power akin to Order 41 of the CPC

It further applied Steel Authority of India Limited v. Gupta Brothers Steel Tubes Limited (2009), which dictates that if an arbitrator’s conclusion is based on a "possible view" or a "plausible construction" of the contract, the court should not interfere even if the conclusion is allegedly erroneous

The Division Bench found that the learned Single Judge erred by re-evaluating the merits of the factual dispute regarding project delays. While the Arbitrator had provided detailed reasons for attributing post-March 1995 delays to the contractor—citing lack of financial resources, failure to start "Allied Buildings" not requiring drawings, and diversion of mobilization advances—the Single Judge ignored these and substituted a different view based solely on the lack of approved shop drawings

The Court noted that the Arbitrator, possessing technical expertise, had arrived at a plausible conclusion

Furthermore, the Single Judge’s decision to quash all counter-claims on the basis that they were "damages" was incorrect; many counter-claims (e.g., Nos. 2-6 and 9) related to the recovery of actual money advances and unpaid electricity bills, which were not dependent on the lawfulness of the termination

The Court held that since the Arbitrator’s views were reasoned and not "shockingly perverse," the Single Judge acted beyond the "guardrails" of Section 34

The Court allowed the appeals, set aside the judgment of the learned Single Judge, and restored the original Arbitral Award dated December 17, 2013

The security furnished by the appellant was discharged, and the Registrar was directed to release the bank guarantee