Section 34 courts cannot reappreciate evidence where the arbitral tribunal adopts a plausible contractual interpretation.

The Petitioner, a cooperative group housing society, awarded the Respondent a contract dated 23 July 1998 for construction of 110 flats at Vasundhara, Ghaziabad, for approximately Rs.7.53 crore, with completion contemplated within two years.

Disputes subsequently arose regarding delays, structural drawings, measurements, alleged incomplete or defective work, payments, escalation, and the parties’ respective liabilities.

On 25 March 2002, the parties executed a Memorandum of Compromise/Supplementary Agreement under which the Respondent agreed to complete the balance work for Rs.36.25 lakh; an additional sum of Rs.6.50 lakh was made subject to verification after measurement.

The Sole Arbitrator awarded Rs.14,25,000 to the Respondent with interest at 18% per annum from 25 August 2005 to 30 June 2013, quantified at Rs.20,13,525, while rejecting the Petitioner’s counterclaims.

The Petitioner challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996, alleging violation of public policy, patent illegality, failure to decide an issue, disregard of contractual terms and evidence, and procedural violations.

Whether the arbitral award was liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996 on the ground that it violated the public policy of India or suffered from patent illegality?

Whether the Sole Arbitrator failed to determine whether the proceedings were to be conducted ex aequo et bono or as an amiable compositeur under Section 19 of the Act?

Whether failure to expressly adjudicate Issue No. 7A—concerning the Petitioner’s entitlement to claim amounts despite having proceeded against the architect—invalidated the award?

Whether the Sole Arbitrator disregarded the Contract and the Supplementary Agreement by allowing Rs.14,25,000 and rejecting the Petitioner’s claims concerning incomplete work, overpayment, delay, defects, collusion, and rate differentials?

Whether the alleged failure to obtain expert evidence or comply with Sections 18, 24 and 26 of the Act rendered the award unsustainable?

The Court applied Section 34 of the Arbitration and Conciliation Act, 1996, under which an arbitral award may be set aside only on the statutorily prescribed grounds, including conflict with the public policy of India and, in a domestic arbitration, patent illegality appearing on the face of the award.

After the 2015 amendments, public policy is confined to fraud or corruption, violation of Sections 75 or 81, contravention of the fundamental policy of Indian law, or conflict with the most basic notions of justice or morality; patent illegality must go to the root of the matter and an award cannot be set aside merely for an erroneous application of law or reappreciation of evidence.

Relying on MMTC Ltd. v. Vedanta Ltd., (2019) 4 SCC 163, Associate Builders v. DDA, (2015) 3 SCC 49, Delhi Airport Metro Express Pvt. Ltd. v. DMRC, 2021 SCC OnLine SC 695, and OPG Power Generation (P) Ltd. v. Enexio Power Cooling Solutions (India) (P) Ltd., (2025) 2 SCC 417, the Court held that judicial review under Section 34 is supervisory, not appellate, and that a plausible and reasoned view taken by the arbitrator cannot be substituted by the Court.

Mere violation of municipal law or an alleged factual or contractual error does not, by itself, constitute a violation of the fundamental policy of Indian law or public policy.

The Court held that the challenge essentially sought a reappraisal of evidence and reconsideration of contractual disputes, which was impermissible under Section 34.

The Sole Arbitrator had considered the disputed 18th Running Bill, the parties’ payments, the joint measurements, and the Supplementary Agreement.

Since the Supplementary Agreement was undisputed and constituted a fresh arrangement governing the balance work and payment mechanism, the arbitrator was justified in treating it as superseding the earlier disputes and in limiting the Respondent’s entitlement to Rs.14,25,000, after accounting for Rs.22 lakh already paid against the agreed consideration of Rs.36.25 lakh.

The Petitioner’s objections regarding incomplete work, payment to another contractor, alleged defects, collusion with the architect, delay, damages, and rate differentials required reassessment of factual findings.

The arbitrator had found insufficient evidence of defective work, collusion, or delay attributable solely to the Respondent, particularly since changes in flat areas, an increase in the number of flats, and late supply of plans had contributed to the delay.

Even assuming that Issue No. 7A was not separately answered, the award read as a whole demonstrated consideration of the contractual relationship and relevant circumstances, and the alleged omission did not go to the root of the award.

The Court further found no demonstrated violation of natural justice, no necessity for expert evidence under Section 26, and no patent illegality or conflict with fundamental legal policy.

The award of Rs.14,25,000 in favour of the Respondent, together with interest of Rs.20,13,525 calculated at 18% per annum from 25 August 2005 to 30 June 2013, was therefore maintained.

The petition and pending applications were dismissed.