Section 37 courts cannot reappreciate arbitral merits absent patent illegality, perversity, or public-policy violation.

Jagaji Construction Company was engaged by Vyara Nagarpalika for works relating to the deepening and development of a lake, including excavation, pitching, foot-over bridges, an inlet gate and a spillway.

Disputes arose regarding payment of extra items, completion of work, security deposit, delay and alleged abandonment of the contract.

The arbitral tribunal, by a majority award dated 01.01.2010 as recorded in the judgment, awarded ₹43,65,190 towards claims, ₹49,79,330 as interest up to the date of the award, and ₹5,00,000 towards arbitration costs, with 18% post-award interest.

The Municipality challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996, contending that it was unsupported by evidence, vague and perverse. The challenge was dismissed. The Municipality thereafter preferred the present appeal under Section 37 of the Act.

The arbitral tribunal had conducted a site visit and recorded observations concerning the foot-over bridges, pitching, railing, inlet gate and non-execution of the spillway.

Whether the appellant was denied a reasonable opportunity to cross-examine the claimant before the arbitral tribunal?

Whether the majority arbitral award was unsupported by evidence, perverse, vague or otherwise vitiated by patent illegality, violation of public policy or non-compliance with substantive law?

Whether the High Court, exercising appellate jurisdiction under Section 37 of the Arbitration and Conciliation Act, 1996, could reappreciate the merits and evidence considered by the arbitral tribunal?

Whether the appellant was entitled to interference with the award or continuation of security furnished by the respondent for withdrawal of the deposited award amount?

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

A Section 37 court exercises limited appellate supervision over an order upholding or setting aside an arbitral award and cannot reassess the merits of the award or substitute its own view merely because another view is possible.

Interference is warranted only where the award discloses patent illegality, perversity, violation of public policy or a fundamental procedural failure.

A party cannot claim a right of cross-examination where the opposing party has not filed an affidavit or otherwise led oral evidence requiring cross-examination.

The tribunal also relied on the principle that, where time is not treated as essential or work remains incomplete, the employer must provide appropriate notice and an opportunity to complete the balance work before terminating the contract; the tribunal referred in this context to the Supreme Court decision reported in AIR 1997 SC 720.

The Court rejected the Municipality’s cross-examination objection because the claimant had not filed an affidavit of oral evidence; consequently, there was no oral testimony requiring cross-examination.

On the merits, the Court noted that the tribunal had considered the parties’ pleadings and evidence, verified the work through a site visit and provided findings on the certified measurements, outstanding payments, security deposit, delay and alleged abandonment.

The tribunal found that the deepening work and substantial components of the project had been completed, that the spillway had not been constructed even by the date of the site inspection, and that the Municipality had not contemporaneously called upon the contractor to complete the alleged balance work or taken contractual action for abandonment.

These findings supported the conclusion that the termination was illegal and that the Municipality was responsible for the prolonged period and consequential overhead claim.

Since the appellant’s objections substantially invited reconsideration of the evidence and merits, they fell outside the restricted scope of Section 37.

The Court found no patent illegality, perversity, violation of public policy or denial of procedural fairness in the award.

The majority award was found to be reasoned, evidence-based and plausible, and the appeal was accordingly dismissed.

In view of the dismissal, the Court directed the Registrar General to return the original bank-guarantee documents furnished by the respondent for withdrawal of the amount deposited by the appellant, upon proper identification and acknowledgment.