Section 37 courts cannot reappreciate evidence or exceed Section 34’s narrow review limits.

Under a registered 25-year lease dated 5 September 1997, premises were let to the President of India (Calcutta Telephones) for a telephone exchange; the lessee’s interest later vested in BSNL.

After the Pollution Control Board directed the exchange to cease operating at the premises, BSNL shifted the active exchange but left a generator and other equipment there.

BSNL gave notice purporting to terminate the lease from 23 August 2007.

Disputes followed over termination, rent, possession, equipment removal and damage to the premises.

The sole arbitrator made an award on 13 May 2016, which BSNL unsuccessfully challenged under Section 34 of the Arbitration and Conciliation Act, 1996; BSNL then appealed under Section 37.

The High Court considered the challenge on its merits, assuming in BSNL’s favour that the Section 34 application was maintainable.

1. Whether the award exceeded the scope of the reference or rested on an impermissible construction of the lease’s six-month notice requirement.

2. Whether the Pollution Control Board’s direction frustrated the lease or otherwise excused BSNL from liability for rent while it retained the premises.

3. Whether the arbitrator’s findings on possession, damages and BSNL’s counterclaim disclosed grounds for interference under Sections 34 and 37.

4. Whether BSNL could raise the lease’s alleged invalidity and rely on Section 106 of the Transfer of Property Act for the first time in its Section 37 appeal.

Section 37 of the Arbitration and Conciliation Act, 1996 does not permit an appellate court to travel beyond the restrictions in Section 34 or independently reassess the merits of an award.

Under Section 34, interference may be warranted where, among other recognised grounds, an award decides a dispute beyond the reference, adopts a construction no reasonable person could adopt, is based on no evidence or ignores vital evidence, or conflicts with public policy; Section 34(2A) also provides for patent illegality appearing on the face of the award.

Section 34(3) prescribes the time limit for a challenge, including a maximum further 30-day period where sufficient cause is shown.

Section 73 of the Contract Act, 1872 permits compensation for loss naturally arising from a breach.

The Court relied on Ssangyong Engineering & Construction Co. Ltd. v. NHAI, Delhi Airport Metro Express (P) Ltd. v. DMRC, Somdatt Builders-NCC-NEC (JV) v. NHAI, Punjab State Civil Supplies Corporation Ltd. v. Sanman Rice Mills and Jan De Nul Dredging India (P) Ltd. v. Tuticorin Port Trust for the narrow scope of review under Sections 34 and 37.

A new plea dependent on facts cannot be raised for the first time in a Section 37 appeal to impeach an award.

The arbitrator’s conclusion that the notice period ran from communication to the lessor, leaving less than six months before the stated termination date, was a plausible construction of Clause 7.1; the Court would not substitute its own reading.

The waiver plea was not pleaded or established before the arbitrator, so rejecting it when raised at final argument disclosed no reviewable error.

The Pollution Control Board’s direction required BSNL to stop operating and shift the exchange, not to remain in occupation; BSNL had not established that the premises became substantially and permanently unfit for the leased purpose.

The arbitrator had considered the evidence on attempted equipment removal and BSNL’s continued control of the premises, and the Court declined to reassess those factual findings.

The damages assessment rested on evidence and a stated basis, while the counterclaim had been rejected for reasons including lack of personal knowledge and insufficient proof of obstruction; neither determination was shown to be perverse or otherwise within the limited grounds for interference.

The challenge to the lease’s validity was raised too late.

Although the Section 34 court had found the delay unexplained, the application was filed within the outer statutory period even if time ran from the award date; the High Court therefore assumed maintainability and addressed the merits.

It dismissed the appeal, affirmed the Section 34 court’s judgment and upheld the arbitral award; pending applications were disposed of, with no order as to costs.