Section 37 courts cannot reappreciate evidence or disturb arbitral findings supported by material and free from perversity.

TMB Electronics engaged Shanti Developers for construction of a factory building at Kundli, Sonipat, under an agreement dated 13 March 2018; Shanti Developers’ architect was impleaded as a pro forma respondent. The contract stipulated completion within 12 months and contained provisions concerning completion certification, payment, defects liability, and GST.

Disputes arose regarding completion of the works and payment of the final bill. Shanti Developers claimed that the original and additional works had been completed by August–September 2020 and sought ₹8,21,98,982 towards unpaid work, loss of profits, interest, and costs.

TMB Electronics alleged abandonment, non-completion, defective foundation and basement work, non-compliance with contractual requirements, and irregularities concerning GST and billing.

A sole arbitrator was appointed by the High Court. The parties agreed to proceed without oral evidence, and TMB Electronics raised no counterclaim.

The arbitrator partially allowed the claim and awarded ₹6,14,97,594 for work executed under the original agreement, rejected the remaining substantive claims, awarded interest at 14% per annum from 7 September 2021, and granted costs.

TMB Electronics’ challenge under Section 34 of the Arbitration and Conciliation Act, 1996 was dismissed by the learned Single Judge, leading to the present appeal under Section 37.

Whether the arbitral award granting ₹6,14,97,594 for work executed under the original agreement was liable to be set aside under Section 34, particularly on the grounds that the work was not completed, the completion procedure under Clause 23 was not followed, and the claim was unsupported by sufficient evidence.

Whether the findings regarding completion and quantum of work were perverse, based on no evidence, or contrary to the contractual terms so as to warrant interference under Section 37.

Whether the inclusion of GST in the amount determined under the final bill rendered the award contrary to the agreement or otherwise legally unsustainable.

Whether the appellant could rely at the appellate stage on objections concerning GST liability, measurement records, and inconsistencies in the final bill which were allegedly not properly pleaded or adjudicated before the arbitrator or the Single Judge.

Section 34 of the Arbitration and Conciliation Act, 1996 permits limited judicial interference with an arbitral award and does not authorise re-appreciation of evidence; interference is justified where the award is based on no evidence, is perverse, irrational, or suffers from patent illegality.

The appellate jurisdiction under Section 37 is narrower still and is confined to examining whether the Section 34 court correctly applied these principles.

Under Section 19 of the Act, an arbitral tribunal is not bound by the CPC or the Indian Evidence Act, 1872, though it must act fairly and assess the material before it.

The Court relied on Indian Oil Corporation v. Shree Ganesh Petroleum, (2022) 4 SCC 463, for the principle that an arbitrator cannot disregard or rewrite contractual terms, but held that the principle did not assist the appellant on the facts.

It also applied the principles in Hind Construction Contractors v. State of Maharashtra, (1979) 2 SCC 70, and Arosan Enterprises Ltd. v. Union of India, (1999) 9 SCC 449, concerning whether time is of the essence, and noted the effect of Section 55 of the Contract Act where performance is accepted after the stipulated period.

Tax compliance and deposit of GST are matters for the competent statutory authorities and do not, by themselves, extinguish a contractor’s adjudicated contractual claim.

The Court found that the arbitrator’s conclusion that the work was completed in August–September 2020 was supported by admitted WhatsApp communications, progress photographs, drawings exchanged by the architect, and the absence of any specific pleading or contemporaneous communication identifying when or to what extent the work had allegedly been abandoned.

TMB Electronics had not established that a third party completed the remaining work, had not identified such third party or the alleged expenditure, and had raised no counterclaim for those costs.

The Court further held that the absence of a formal completion certificate did not invalidate the finding of completion where the work had been supervised and inspected through the architect and the contractual completion procedure had otherwise been substantially acted upon.

Regarding quantum, the arbitrator did not merely accept the final bill: the amount was recalculated by reference to the contractual rates, the working area, the earlier draft bill, GST, and payments already made. The final awarded figure was reached after adjusting the increased working area and deducting ₹5,17,19,000 paid by the appellant.

The Court held that the appellant’s objections involved re-appreciation of factual material and did not demonstrate perversity or a finding based on no evidence.

The GST objection also failed. Since the final bill had not been accepted and the GST-inclusive amount was crystallised only through the arbitral award, the appellant could not avoid payment on the ground that the GST component had not yet been deposited.

The Court preserved the appellant’s right to seek proof of deposit after making payment and left any statutory GST violation to the GST authorities.

The appeal was dismissed, and the judgment of the learned Single Judge upholding the award was affirmed.

The appellant was directed to pay the awarded amount with up-to-date interest; it may thereafter seek proof of deposit of the GST component, while any GST-law violation remains for determination by the competent statutory authorities.