Under Section 37, appellate courts cannot reappraise evidence or disturb a reasoned award upheld under Section 34.

The Union of India and M/s Phoenix Engineers & Contractors entered into an agreement for constructing a school building and staff quarters at AFA Hyderabad, for a contract value of ₹1,51,41,809.31. The work commenced on 14 April 1994 and was completed on 25 August 1998. Disputes arising during execution were referred to a sole arbitrator.

The contractor raised 14 claims totalling ₹1,79,60,874, while the Union raised four counter-claims totalling ₹1,20,000. By award dated 31 December 2002, the arbitrator allowed certain contractor claims amounting to ₹10,71,712, including ₹6,24,500 for damages due to prolongation of the contract, and allowed one counter-claim for ₹5,970.

The Union’s petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging the award as unreasoned, vague, beyond the scope of reference and patently illegal, was dismissed by the Principal District Judge, Ranga Reddy District, on 30 June 2011.

The Union thereafter preferred the present appeal under Section 37 of the Act.

1. Whether the arbitral award was liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996, on the grounds that it was unreasoned, vague, patently illegal, beyond the scope of reference, or contrary to the contract.

2. Whether the arbitrator acted inconsistently by allowing Claim No. 6 for damages due to prolongation of the contract while rejecting Claim No. 9, which carried a similar description.

3. Whether the arbitrator failed to consider or adjudicate the Union’s counter-claims.

4. Whether the High Court, exercising appellate jurisdiction under Section 37, could reappraise the merits and evidence underlying the arbitral award.

The Court applied Sections 34 and 37 of the Arbitration and Conciliation Act, 1996. Section 34 permits limited judicial interference with an arbitral award on recognised statutory grounds, including patent illegality apparent on the face of the award, while Section 37 provides an appellate remedy whose scope is narrower and cannot exceed the grounds available under Section 34.

Relying on Jan De Nul Dredging India Private Limited v. Tuticorin Port Trust, (2026) 3 SCC 186, the Court held that a Section 37 court cannot act as an ordinary appellate court, reappraise evidence, or substitute its view merely because another view is possible.

The Court also relied on Somdatt Builders-NCC-NEC (JV) v. National Highways Authority of India, (2025) 6 SCC 757, for the principle that courts should refrain from interfering with a plausible view taken by a technically qualified arbitral tribunal.

An award must contain reasons where required by Section 31(3), but the presence of detailed findings and reasons defeats a challenge based merely on alleged lack of reasoning.

The Court examined the arbitral award and found that the arbitrator had independently considered each of the contractor’s 14 claims and had provided reasons for allowing or rejecting them. Consequently, the award was neither unreasoned nor patently illegal on its face.

Since the arbitrator was a Chief Engineer possessing relevant technical expertise, and had interpreted and applied the contractual terms on a plausible basis, the Court held that the award did not exceed the scope of reference.

The apparent inconsistency between Claim Nos. 6 and 9 was rejected because, despite having similar headings, the claims concerned materially different matters: Claim No. 6 related to prolongation damages, whereas Claim No. 9 concerned additional escalation following the freezing of the escalation index, which the contractor had undertaken to accept.

The allegation that the counter-claims were ignored was also unfounded: two counter-claims had been withdrawn, ₹5,970 had been awarded on another, and the remaining counter-claim had been rejected.

Applying the restricted standard under Section 37, the Court held that it could not reassess the factual or contractual conclusions of the arbitrator or interfere with the Section 34 court’s decision in the absence of a jurisdictional or statutory error.

The judgment dated 30 June 2011 dismissing the Union’s Section 34 petition was therefore affirmed, and the appeal under Section 37 was dismissed.

The appellant was permitted to withdraw ₹6,24,500 awarded under Claim No. 6, together with interest at 10% per annum from the date of the arbitral award until realisation.

The Court declined to grant relief concerning the alleged unauthorised withdrawal by the contractor’s partner, as that issue involved inter se partnership disputes and a pending criminal case beyond the scope of the Section 37 proceedings.

No order as to costs was made, and pending miscellaneous petitions were closed.