Section 37 courts cannot reappreciate evidence beyond Section 34’s limits.

BHEL, Sterling Bio Energy Systems Pvt. Ltd. and Semitech Innovations Global Pte. Ltd. entered into a Pilot Project Evaluation Agreement dated 26 October 2005 for an embedded automatic meter-reading system.

After BHEL placed the project on hold in July 2006, Sterling sought reimbursement and invoked arbitration.

The arbitrator awarded Sterling Rs.1,10,93,642, including travel-related expenses, pilot-project preparation expenses and payments to technology providers, with interest; other claims were rejected.

BHEL’s challenge under Section 34 of the Arbitration and Conciliation Act, 1996, was dismissed by the Civil Court, which declined to reappraise the evidence or interfere with the award.

BHEL then appealed under Section 37, arguing, among other things, that the awarded expenses were outside the contract, unsupported by evidence and time-barred.

Whether the arbitrator’s awards of expenses were outside the Pilot Project Evaluation Agreement or otherwise disclosed a ground for setting aside the award under Section 34.

Whether the arbitrator’s findings on proof of expenditure and limitation warranted interference by the Section 37 appellate court.

Whether the Section 37 court could reappraise the evidence or independently reassess the merits of the arbitral award.

Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, confine judicial review of arbitral awards; a Section 37 appeal cannot exceed the limits applicable under Section 34, and the appellate court cannot undertake an independent reassessment of the award’s merits or reappreciate evidence merely because another view is possible (MMTC Ltd. v. Vedanta Ltd., (2019) 4 SCC 163; UHL Power Co. Ltd. v. State of Himachal Pradesh, (2022) 4 SCC 116; Konkan Railway Corpn. Ltd. v. Chenab Bridge Project Undertaking, (2023) 9 SCC 85; Punjab State Civil Supplies Corpn. Ltd. v. Sanman Rice Mills, 2024 SCC OnLine SC 2632).

The agreement’s Annexure B allocated specified project and travel expenses to BHEL.

The Court noted that the arbitrator had considered the contractual terms, the parties’ evidence and the relevant communications when deciding that the claims were within the agreement and within time.

The Civil Court had likewise considered BHEL’s objections and found no demonstrated error in the arbitrator’s treatment of limitation or expenditure.

Because BHEL’s challenge required a different assessment of the evidence and contractual position, and the Section 37 court’s jurisdiction was more restricted than that under Section 34, the Court found no sustainable basis for interference.

It dismissed BHEL’s appeal, thereby leaving in force the Civil Court’s dismissal of the Section 34 challenge and the arbitral award; pending interlocutory applications were disposed of.