Section 37 appellate courts cannot reappreciate evidence absent perversity or patent illegality in an arbitral award.

The Managing Director of the H.P. State Forest Corporation appointed the Director (North), HPSFC, as arbitrator to adjudicate a dispute concerning shortfall in resin extraction from Lot No. 9/2006 (Suket), FWD, Sundernagar.

The arbitrator passed an award dated 30.01.2009, granting the claimant relief of ₹7,91,559 and restricting the non-claimant’s liability to ₹5,07,517, payable within 90 days.

The appellant challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996, contending that her counterclaim, supported by oral and documentary evidence, had been wrongly rejected and that the claimant’s claim should have been dismissed.

The learned District Judge, Mandi, dismissed the Section 34 objections on 20.03.2015. The appellant thereafter preferred the present appeal under Section 37 of the Act.

1. Whether the High Court, in an appeal under Section 37 of the Arbitration and Conciliation Act, 1996, could re-appreciate the evidence or substitute its own interpretation for the findings of the arbitrator and the Section 34 court.

2. Whether the arbitral award suffered from patent illegality, perversity, or other grounds warranting interference under Sections 34 and 37 of the Act, particularly in relation to the assessment of the appellant’s counterclaim, the contractual work period, adverse weather conditions, and the rebate allowed.

The Court applied Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, holding that judicial review of an arbitral award is limited and cannot be equated with ordinary appellate jurisdiction.

Relying on Konkan Railway Corporation Ltd. v. Chenab Bridge Project Undertaking, 2023 (9) SCC 85, and the principles reiterated in Dyna Technologies Pvt. Ltd. v. Crompton Greaves Ltd., (2019) 20 SCC 1, the Court held that an award should not be interfered with merely because an alternative view on facts or contractual interpretation is possible; interference is justified only where the award is perverse, manifestly arbitrary, or otherwise within the statutory grounds under Section 34.

Relying further on Bombay Slum Redevelopment Corporation Pvt. Ltd. v. Samir Barain Bhojwani, (2024) 7 SCC 218, the Court held that the scope of appellate scrutiny under Section 37 is narrower than that under Section 34, and is principally confined to examining whether the Section 34 court exercised its jurisdiction correctly.

The Court found that the appellant’s challenge essentially required reconsideration of the evidence and factual findings concerning the condition of the trees, the time available for completing the work, climatic conditions, labour availability, and the appropriate rebate.

It noted that the appellant had taken inconsistent positions regarding the condition of the trees: before the arbitrator, she had relied on dilapidated, dried, and diseased trees, whereas before the High Court she relied on the presence of 6,000 new trees and the consequent possibility of lower resin extraction.

The arbitrator had considered the relevant contentions while deciding Issue No. 4, and the appellant failed to identify any patent illegality or perversity in the award.

Since the District Judge had properly exercised jurisdiction under Section 34, the High Court held that Section 37 did not permit re-appreciation of the evidence or substitution of another possible view.

The appeal under Section 37 was accordingly dismissed, and the record was directed to be sent back.