Section 37 appellate review cannot exceed Section 34’s limited grounds for interfering with arbitral awards.

The respondent was awarded a contract by the Union of India for widening and maintenance of the link taxi track at Air Force Station Maharajpura, Gwalior, under an agreement dated 19 May 2009, for ₹1,87,99,462, to be completed in two phases within twelve months.

The first phase was extended up to 18 March 2010 and the second phase up to 7 June 2011.

After completing the work, the respondent submitted the final bill on 4 August 2011, and the appellant made payment on 22 April 2013.

Disputes subsequently arose. The respondent invoked arbitration on 8 August 2014, following which a sole arbitrator was appointed.

The arbitrator passed an award dated 26 September 2018, awarding ₹29,96,926 with interest against the respondent’s total claim of ₹1,51,72,881.27.

The Union of India’s challenge under Section 34 of the Arbitration and Conciliation Act, 1996, was dismissed by the Commercial Court on 17 March 2026, leading to the present appeal under Section 37.

Whether the arbitrator and the Commercial Court erred in holding that the appellant was responsible for the delay in completion of the contractual work and in awarding compensation to the respondent on that basis?

Whether the respondent’s arbitration claim was barred by limitation because the final bill was submitted on 4 August 2011, whereas the notice invoking arbitration was issued on 8 August 2014?

Whether the impugned order could be interfered with in an appeal under Section 37 when the award had been upheld under Section 34?

The Court applied Sections 34 and 37 of the Arbitration and Conciliation Act, 1996.

Under Section 34, judicial interference with an arbitral award is confined to the statutory grounds, including violation of the fundamental policy of Indian law, conflict with the most basic notions of justice or morality, and patent illegality appearing on the face of a domestic award; an award cannot be set aside merely for an erroneous application of law or by reappreciating evidence.

Relying on MMTC Ltd. v. Vedanta Ltd., (2019) 4 SCC 163, Jan De Nul Dredging India (P) Ltd. v. Tuticorin Port Trust, (2026) 3 SCC 186, Swan Gold Mining Ltd. v. Hindustan Copper Ltd., (2015) 5 SCC 739, and Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd., (2019) 20 SCC 1, the Court held that the appellate jurisdiction under Section 37 cannot exceed the limitations applicable under Section 34 and that a possible, reasoned view of the arbitrator cannot be displaced by a reassessment of the merits.

The Court declined to reassess the factual findings concerning delay because the Commercial Court had found that the appellant was responsible for the delayed handing over of the site, which caused the respondent to incur increased material and labour costs.

The appellant failed to demonstrate that this finding was illegal, perverse, or otherwise within the narrow grounds of interference under Section 34.

On limitation, the Court noted that a dispute existed regarding the rates applicable to the final bill; although the bill was submitted on 4 August 2011, payment was made only on 22 April 2013, and the arbitration notice was issued on 8 August 2014.

In these circumstances, the Court held that the claim could not be treated as barred by limitation.

Since the award and the Section 34 order disclosed no ground warranting interference, the Section 37 appeal also failed.

It upheld the finding that the appellant was responsible for the delay and rejected the limitation objection.

Applying the restricted scope of review under Sections 34 and 37, the Court found no illegality or perversity in the arbitral award or the Commercial Court’s order dated 17 March 2026.

The appeal was accordingly dismissed, and the impugned order was upheld.