Ledger Entries Unsupported by Primary Evidence or Corroborative Underpinnings Insufficient to Fasten Liability for Claims

The Appellant, a seed distributor for the Respondent, operated under a 2011 agreement to sell subsidized seeds to farmers in Uttar Pradesh

Under the scheme, 50% of the cost was paid by farmers and 50% was a government subsidy to be released to the dealer through the Respondent upon verification of beneficiary lists

The Appellant claimed an outstanding amount of ₹35,73,855.01, comprising ₹10,43,595.01 in commission and ₹25,30,260 relating to "recovery of subsidy" for 2011-2012

The Sole Arbitrator awarded the commission amount but rejected the subsidy claim due to lack of evidence

The District Judge, Saket, dismissed the Section 34 petition challenging the award

The Appellant then filed this appeal under Section 37 of the Arbitration and Conciliation Act, 1996

1. Whether the scope of judicial interference under Section 37 of the Arbitration Act allows for a merits-based reappraisal of evidence

2. Whether the Arbitrator’s rejection of the claim for ₹25,30,260, based on the Appellant's failure to produce primary evidence (invoices/cash memos), constitutes patent illegality or perversity

The court applied the restricted scope of judicial review under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, emphasizing that an appellate court cannot act as a court of merit or reappraise evidence unless the award is patently illegal or perverse

It relied on Punjab State Civil Supplies Corporation Limited v. Sanman Rice Mills, which limits Section 37 powers to ensuring the Section 34 court acted within its jurisdictional limits

Statement identifying the evidentiary principle that ledger entries are merely corroborative and cannot, in isolation, fasten liability without primary documentation like invoices or cash memos

The court observed that the Appellant's claim for the subsidy amount rested solely on a contested "Subsidiary Ledger" entry from 2013-14, which the Respondent’s witness categorically denied and which was unsupported by any invoices from the 2011-12 period

The court reasoned that since the Appellant admitted its contractual obligation to maintain cash memos and approved format registers to claim subsidies, the failure to produce these primary documents before the Arbitrator was fatal to its claim

The court found that the Arbitrator’s decision to prioritize primary evidence over a disputed ledger entry was a "possible and reasonable view"

The court further clarified that the Respondent’s communications only admitted the commission amount, not the subsidy component, thus negating any claim of "admission"

The High Court dismissed the appeal and upheld the District Judge's order, limiting relief to the commission amount of ₹10,43,595.01