Section 37 review cannot exceed Section 34’s narrow grounds for setting aside arbitral awards.

GESCOM engaged Power Gear Limited under turnkey contracts for substation works, which were to be completed within nine months.

After deducting liquidated damages of ₹17,69,022 from the contractor’s bills for delay, GESCOM faced claims for repayment; it filed counterclaims seeking ₹90.90 lakh for alleged losses caused by the delay.

The arbitrator awarded the contractor ₹17,69,022 with interest at 18% per annum from the date of the award until realization and rejected GESCOM’s counterclaims.

GESCOM’s challenges under Section 34 of the Arbitration and Conciliation Act, 1996 were dismissed by the Principal District Judge, Kalaburagi.

GESCOM then appealed under Section 37 of that Act, read with Section 13 of the Commercial Courts Act, 2015.

1. Whether the Principal District Judge was justified under Section 34 of the Arbitration and Conciliation Act, 1996 in upholding the arbitral awards.

2. Whether the High Court, exercising appellate jurisdiction under Section 37, had grounds to interfere with the Section 34 judgment and the awards.

Section 34 of the Arbitration and Conciliation Act permits interference with an arbitral award only on the statutory grounds, including patent illegality that goes to the root of the matter and denial of natural justice; a reasonable interpretation of the contract by the tribunal is not, by itself, a ground to set aside an award (Associate Builders v. DDA, as quoted at para 48).

Section 37 review is confined to the limits of Section 34: the appellate court cannot independently reassess the merits of the award or exceed the reviewing court’s authority (MMTC Ltd. v. Vedanta Ltd. and Konkan Railways Corporation Ltd. v. Chenab Bridge Project Undertaking, quoted at paras 48–49).

The court also relied on M/s C & C Construction Ltd. v. Ircon International Ltd. and Somdatt Builders NCC-NEC v. NHAI for the requirement of restraint when an award has been upheld under Section 34.

S.V. Samudram v. State of Karnataka was cited for the limited options available to a Section 37 court and the need for reasoned findings before interfering with an award.

The court considered GESCOM’s reliance on ONGC v. Western Geco International Ltd. and Urban Infrastructure Real Estate Fund v. Neelkanth Realty Private Ltd., but held that GESCOM had not demonstrated how the awards violated public policy.

The arbitrator’s findings reflected shared responsibility for delay: some issues were decided for GESCOM, while others were decided for the contractor, including findings that GESCOM had delayed certain payments and that the contractor was not entirely responsible for the delay.

The agreement also provided for an extension of time where the purchaser’s acts or omissions delayed performance (clause 40.1, reproduced at para 45).

The High Court concluded that GESCOM’s arguments largely challenged the tribunal’s assessment of the evidence and its conclusions on delay; they did not establish a recognised ground for setting aside the awards.

Its general assertion that the awards were contrary to public policy, without showing how, was insufficient.

Given the limited scope of Section 34 and the still narrower appellate review under Section 37, the Court found no basis to disturb the District Judge’s decision or the awards.

It permitted Power Gear to withdraw the amount deposited by GESCOM in Court and directed the Registry to release it upon proper identification; pending applications were disposed of.