Orissa High Court
Chief Engineer (Ez-Ii) vs Karunakar Mohanty on 24 July, 2025
Author: S.K. Panigrahi
Bench: S.K. Panigrahi
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 28-Jul-2025 17:28:24
IN THE HIGH COURT OF ORISSA AT CUTTACK
ARBA No.14 of 2020
(From the judgment dated 16.11.2019 passed by the learned District
Judge, Khurda at Bhubaneswar in Arbitration Proceeding No.183 of
2010 dismissing the petition filed under Section 34 of the A&C Act.)
Chief Engineer (EZ-II), Central .... Appellant (s)
Public Works Department, Patna,
Bihar & Ors.
-versus-
Karunakar Mohanty .... Respondent (s)
Advocates appeared in the case through Hybrid Mode:
For Appellant (s) : Mr. P. K. Parhi, DSGI
along with
Mr. S.S. Kashyap, Sr. Panel Counsel
For Respondent (s) : Mr. K.B. Panda,
Sr. Advocate along with
Mr. S. K. Panda, Advocate
CORAM:
DR. JUSTICE S.K. PANIGRAHI
DATE OF HEARING:-22.07.2025
DATE OF JUDGMENT: -24.07.2025
Dr. S.K. Panigrahi, J.
1. This Appeal under Section 37 of the Arbitration and Conciliation Act,
1996 (hereinafter referred to as "A&C Act") has been filed against the
judgment dated 16.11.2019 passed by the learned District Judge,
Khurda at Bhubaneswar in Arbitration Proceeding No.183 of 2010
Location: ORISSA HIGH COURT, CUTTACK
wherein the learned District Judge has dismissed the petition filed
under Section 34 of the A&C Act thereby confirming the award dated
12.07.2010 passed by the learned Sole Arbitrator in Arbitration Case
No.63 of 2007.
I. FACTUAL MATRIX OF THE CASE:
2. That, the brief facts of the case are that a tender was floated by the
Central Public Works Department (hereinafter referred to as "the
Department" for brevity) in the year 2004 for construction of 115
quarters for CRPF Jawans. The bid of the contractor for a sum of
Rs.3,82,98,373/- was accepted. The period for execution was 22 months
after calculating 22 days from the date of issue of the letter dated
28.01.2005 issued by the Department.
3. The authority of the said Department issued show cause notice on
21.04.2006 for rescinding the contract on the ground of tardy progress
of work. The contractor replied on 01.12.2006. Another notice was also
issued to the contractor indicating such slow progress and the
contractor also submitted his reply. Ultimately, the contract was
rescinded on 17.02.2006 by the employer of the contract.
4. The contractor filed his claim before the learned Arbitrator for a sum
of Rs.1,96,45,817/- along with pendent elite and future interest. The
Department filed the counter claim for a sum of Rs.35,80,333/- with
interest.
5. Seven issues have been framed by the Learned Arbitrator and award
has been passed for a sum of Rs.46,77,249/- directing for the payment
Location: ORISSA HIGH COURT, CUTTACK
of the amount to the contractor within 3 months and failure of
payment of the said amount within the time frame shall carry interest
@ 15% from the date of award till full realization.
6. The aforesaid award was challenged before the learned District Judge,
Khurda at Bhubaneswar under Section 34 of the Arbitration and
Conciliation Act, 1996 citing several grounds. After hearing the
parties, the learned District Judge, Khurda at Bhubaneswar has been
pleased to dismiss the above petition on merits.
7. Being aggrieved by the judgment dated 16.11.2019 passed by the
Learned District Judge, Khurda at Bhubaneswar in Arbitration
Proceeding No.183 of 2010, the Appellants prefer this appeal.
However, there was a delay of 165 days in filing the ARBA. Therefore,
the Appellants filed I.A. No.24 of 2020 for condonation of delay in
filing the ARBA which was allowed vide this Court's judgment and
order dated 20.4.2023.
8. Now that the facts leading up to the instant Appeal has been laid
down, this Court shall endeavour to summarise the contentions of the
Parties and the broad grounds that have been raised to seek the
exercise of this Court's limited jurisdiction available under S. 37 of the
A&C Act.
II. APPELLANTS' SUBMISSIONS:
9. During course of hearing, learned counsel for the Appellants
submitted that the contract was rescinded because of the slow and
poor quality of the work. The learned Arbitrator recorded a finding
Location: ORISSA HIGH COURT, CUTTACK
that the completion of the work occurred due to laches of the
Respondent, but contradicting the said findings, the learned
Arbitrator also held that the Appellants contributed to the delay, too.
Such contradictory findings are wholly unsustainable.
10.Furthermore, it was submitted that the Respondent, knowing fully
well the nature of the work and the place of execution, accepted the
contract; but subsequently, failed to execute the work, as he was
supposed to. In such a scenario, the Appellants were fully within their
jurisdiction to rescind the contract, which was a time-bound one. So,
there was no illegality in the rescission of the contract.
11.It was also contended that the learned Arbitrator, without considering
the facts of the case and the evidence on record, has passed the award,
and as such the same is patently illegal.
III. RESPONDENT'S SUBMISSIONS:
12.On the contrary, learned counsel for the Respondent contends that
while considering an application under Section 37 of the Act, the
Court is not to act as an Appellate Court. The Court is to see only
whether challenge to the award comes within the grounds contained
in sub-Section (2) of Section 34 of the Act. According to the learned
counsel, the contentions advanced on behalf of the Appellants for
challenging the award are factual in nature and, more or less, are pure
surmises. None of such contentions come within the purview of
Section 34(2) of the Act. Therefore, the award may not be interfered
with.
Location: ORISSA HIGH COURT, CUTTACK
13.It was earnestly contended that there is absolutely no illegality in the
award for which the Court may feel inclined to interfere with the
same.
IV. ISSUE FOR CONSIDERATION:
14.Having heard the parties and perused the materials available on
record, this court here has identified the following solitary issue to be
determined:
A. Whether the order of the Ld. District Judge warrants
interference keeping in mind the limitations of this court's
powers under Section 37 of the A&C Act?
V. ISSUE A: WHETHER THE ORDER OF THE LD. DISTRICT
JUDGE WARRANTS ANY INTERFERENCE KEEPING IN
MIND THE LIMITATIONS OF THIS COURT'S POWERS
UNDER SECTION 37 OF THE A&C ACT?
15.Before going into the merits of the contentions, it is necessary to
outline the ambit and scope of Section 37(2)(b) of the 1996 Act. The
said section is extracted below:
"37. Appealable orders.--(1)[Notwithstanding anything
contained in any other law for the time being in force, an
appeal] shall lie from the following orders (and from no
others) to the court authorised by law to hear appeals from
original decrees of the court passing the order, namely:
∗∗∗
(2) Appeal shall also lie to a court from an order of the
Arbitral Tribunal--
(a) accepting the plea referred to in sub-section (2) or sub-
section (3) of Section 16; or
Location: ORISSA HIGH COURT, CUTTACK
(b) granting or refusing to grant an interim measure under
Section 17."
16.The Supreme Court and this Court in catena of judgments have held
that the powers of appellate court while exercising jurisdiction under
Section 37(2)(b) of the 1996 Act against orders passed by the Arbitral
Tribunal is very restricted and narrow and the same should be
exercised when the orders seems to be perverse, arbitrary and
contrary to law. The judgment of Wander Ltd. v. Antox India (P) Ltd.1
passed by the Apex Court, elaborates the ambit and scope of the
appeals. Although the aforesaid judgment is not dealing with the
arbitration proceedings but the same deals with the power of
appellate court in the Civil Procedure Code, 1908 (CPC). Operative
paragraphs of the aforesaid judgment are extracted below:
"13. On a consideration of the matter, we are afraid, the
Appellate Bench fell into error on two important
propositions. The first is a misdirection in regard to the very
scope and nature of the appeals before it and the limitations
on the powers of the appellate court to substitute its own
discretion in an appeal preferred against a discretionary
order. The second pertains to the infirmities in the
ratiocination as to the quality of antox's alleged user of the
trade mark on which the passing-off action is founded. We
shall deal with these two separately.
14. The appeals before the Division Bench were against the
exercise of discretion by the Single Judge. In such appeals,
the appellate court will not interfere with the exercise of
discretion of the court of first instance and substitute its
own discretion except where the discretion has been shown
to have been exercised arbitrarily, or capriciously or
1990 Supp SCC 727
Location: ORISSA HIGH COURT, CUTTACK
perversely or where the court had ignored the settled
principles of law regulating grant or refusal of interlocutory
injunctions. An appeal against exercise of discretion is said
to be an appeal on principle. Appellate court will not
reassess the material and seek to reach a conclusion different
from the one reached by the court below if the one reached by
that court was reasonably possible on the material. The
appellate court would normally not be justified in
interfering with the exercise of discretion under appeal
solely on the ground that if it had considered the matter at
the trial stage it would have come to a contrary conclusion.
If the discretion has been exercised by the trial court
reasonably and in a judicial manner the fact that the
appellate court would have taken a different view may not
justify interference with the trial court's exercise of
discretion. After referring to these principles
Gajendragadkar, J. in Printers (Mysore) (P) Ltd. v. Pothan
Joseph (SCC OnLine SC para 9)
'9. ...These principles are well established, but as has
been observed by Viscount Simon in Charles Osenton &
Co. v. Johnston "the law as to the reversal by a court of
appeal of an order made by a Judge below in the exercise
of his discretion is well established and any difficulty that
arises is due only to the application of well-settled
principles in an individual case."'
The appellate judgment does not seem to defer to this
principle."
17.The said judgment is consistently followed in adjudicating petitions
pertaining to the A&C Act by Courts across the Country in Green
Infra Wind Energy Ltd. v. Regen Powertech (P) Ltd.2; Sona Corpn.
India (P) Ltd. v. Ingram Micro India (P) Ltd.3; Manish Aggarwal
2018 SCC OnLine Del 8273
2020 SCC OnLine Del 300
Location: ORISSA HIGH COURT, CUTTACK
v. RCI Industries & Technologies Ltd.4; Tahal Consulting Engineers
India (P) Ltd. v. Promax Power Ltd.5 and Handicraft & Handlooms
Exports Co. of India v. SMC Comtrade Ltd.6.
18.In Reliance Infrastructure Ltd. v. State of Goa7, the Supreme Court of
India noticing its previous decision in MMTC Ltd. v. Vedanta Ltd.8
has noted the limited scope of interference
under Section 34 and further narrower scope of appeal under Section
37 of the Act particularly when dealing with the concurrent findings
of the arbitrator and that of the Court. Relevant paragraph '14'
of MMTC Ltd.(supra) as noted in paragraph '26' in Reliance
Infrastructure Ltd.(supra) is to be extracted hereinunder:--
"14. As far as interference with an order made
under Section 34, as per Section 37, is concerned, it cannot
be disputed that such interference under Section 37 cannot
travel beyond the restrictions laid down under Section 34.
In other words, the court cannot undertake an independent
assessment of the merits of the award, and must only
ascertain that the exercise of power by the court
under Section34 has not exceeded the scope of the provision.
Thus, it is evident that in case an arbitral award has been
confirmed by the court under Section 34 and by the court in
an appeal under Section 37, this Court must be extremely
cautious and slow to disturb such concurrent findings."
(2022) 3 HCC (Del) 289
2023 SCC OnLine Del 2069
2023 SCC OnLine Del 3981
(2024) 1 SCC 479
(2019) 4 SCC 163
Location: ORISSA HIGH COURT, CUTTACK
19.The same view has been expressed in UHL Power Company
Ltd. v. State of Himachal Pradesh9 in paragraph '16' while noticing
paragraph '11' in MMTC Ltd.(supra):--
"16. As it is, the jurisdiction conferred on courts
under Section 34 of the Arbitration Act is fairly narrow,
when it comes to the scope of an appeal under Section 37 of
the Arbitration Act, the jurisdiction of an appellate court in
examining an order, setting aside or refusing to set aside an
award, is all the more circumscribed. In MMTC
Ltd. v. Vedanta Ltd. [MMTC Ltd. v. Vedanta Ltd., (2019) 4
SCC 163 : (2019) 2 SCC (Civ) 293], the reasons for vesting
such a limited jurisdiction on the High Court in exercise of
powers under Section 34 of the ArbitrationAct have been
explained in the following words : (SCC pp. 166-67, para
11)
"11. As far as Section 34 is concerned, the position is
well-settled by now that the Court does not sit in appeal
over the arbitral award and may interfere on merits on
the limited ground provided under Section 34(2)(b)(ii)
i.e. if the award is against the public policy of India. As
per the legal position clarified through decisions of this
Court prior to the amendments to the 1996 Act in 2015,
a violation of Indian public policy, in turn, includes a
violation of the fundamental policy of Indian law, a
violation of the interest of India, conflict with justice or
morality, and the existence of patent illegality in the
arbitral award. Additionally, the concept of the
"fundamental policy of Indian law" would cover
compliance with statutes and judicial precedents,
adopting a judicial approach, compliance with the
principles of natural
justice, and Wednesbury [Associated Provincial Picture
Houses Ltd. v. Wednesbury Corpn., [1948] 1 K.B.
223(CA)] reasonableness. Furthermore, "patent
(2022) 4 SCC 116
Location: ORISSA HIGH COURT, CUTTACK
illegality" itself has been held to mean contravention of
the substantive law of India, contravention of
the 1996 Act, and contravention of the terms of the
contract."
20.In Haryana Tourism Ltd. v. Kandhari Beverages Ltd.10 as noted in
paragraph '30' in Reliance Infrastructure Ltd.(supra), it was held on
the scope of interference under Sections 34 and 37 of the Act' 1996 as
under:--
"30.In Haryana Tourism [Haryana Tourism
Ltd. v. Kandhari Beverages Ltd., (2022) 3 SCC 237 : (2022)
2 SCC (Civ) 87], this Court yet again pointed out the
limited scope of interference under Sections 34 and37 of
the Act; and disapproved interference by the High Court
under Section 37 of the Act while entering into merits of the
claim in the following words : (SCC p. 240, paras 8-9)
"8. So far as the impugned
judgment and order [Kandhari Beverages
Ltd. v. Haryana Tourism Ltd., 2018 SCC OnLine
P&H 3233] passed by the High Court
quashing and setting aside the
award and the order passed by the Additional District
Judge under Section 34 of the Arbitration Act are
concerned, it is required to be noted that in an appeal
under Section 37 of the Arbitration Act, the High
Court has entered into the merits of the claim, which
is not permissible in exercise of powers
under Section 37 of the Arbitration Act.
9. As per settled position of law laid down by this
Court in a catena of decisions, an award can be set
aside only if the award is against the public policy of
India. The award can be set aside
under Sections 34/37 of the Arbitration Act, if the
award is found to be contrary to : (a) fundamental
2022) 3 SCC 237
Location: ORISSA HIGH COURT, CUTTACK
policy of Indian Law; or (b) the interest of India; or (c)
justice or morality; or (d) if it is patently illegal. None
of the aforesaid exceptions shall be applicable to the
facts of the case on hand. The High Court has entered
into the merits of the claim and has decided the appeal
under Section 37 of the Arbitration Act as if the High
Court was deciding the appeal against the
judgment and decree passed by the learned trial court.
Thus, the High Court has exercised the jurisdiction
not vested in it under Section 37 of
the Arbitration Act. The impugned
judgment andorder [Kandhari Beverages
Ltd. v. Haryana Tourism Ltd., 2018 SCC OnLine
P&H 3233] passed by the High Court is hence not
sustainable."
21.It was, thus, observed in paragraph '33' of Reliance Infrastructure
Ltd.(supra) as under:--
"33. Keeping in view the aforementioned principles
enunciated by this Court with regard to the limited scope of
interference in an arbitral award by a Court in the exercise
of its jurisdiction under Section34 of the Act, which is all
the more circumscribed in an appeal under Section 37, we
may examine the rival submissions of the parties in relation
to the matters dealt with by the High Court."
22.It is observed in Punjab State Civil Supplies Corpn. Ltd. v. Sanman
Rice Mills11 that:
"9. The object of the Act is to provide for a speedy and
inexpensive alternative mode of settlement of dispute with
the minimum of intervention of the courts. Section 5 of the
Act is implicit in this regard and prohibits interference by
the judicial authority with the arbitration proceedings
except where so provided in Part-I of the Act. The judicial
2024 SCC OnLine SC 2632
Location: ORISSA HIGH COURT, CUTTACK
interference, if any, is provided inter-alia only by means of
Sections 34 and 37 of the Act respectively.
10. Section 34 of the Act provides for getting an arbitral
award set aside by moving an application in accordance
with sub-Section (2) andsub-Section (3) of Section 34 of the
Act which inter-alia provide for the grounds on which an
arbitral award is liable to be set aside. One of the main
grounds for interference or setting aside an award is where
the arbitral award is in conflict with the public policy of
India i.e. if the award is induced or affected by fraud or
corruption or is in contravention with the fundamental
policy of Indian law or it is in conflict with most basic
notions of morality and justice. A plain reading of Section
34 reveals that the scope of interference by the court with
the arbitral award under Section 34 is very limited and the
court is not supposed to travel beyond the aforesaid scope to
find out if the award is good or bad.
11. Section 37 of the Act provides for a forum of appeal
inter-alia against the order setting aside or refusing to set
aside an arbitral award under Section 34 of the Act. The
scope of appeal is naturally akin to andlimited to the
grounds enumerated under Section 34 of the Act.
12. It is pertinent to note that an arbitral award is not liable
to be interfered with only on the ground that the award is
illegal or is erroneous in law that too upon reappraisal of the
evidence adduced before the arbitral trial. Even an award
which may not be reasonable or is non-speaking to some
extent cannot ordinarily be interfered with by the courts. It
is also well settled that even if two views are possible there is
no scope for the court to reappraise the evidence and to take
the different view other than that has been taken by the
arbitrator. The view taken by the arbitrator is normally
acceptable and ought to be allowed to prevail.
xxxxxx
14. It is equally settled law that the appellate power
under Section 37of the Act is not akin to the normal
Location: ORISSA HIGH COURT, CUTTACK
appellate jurisdiction vested in the civil courts for the reason
that the scope of interference of the courts with arbitral
proceedings or award is very limited, confined to the ambit
of Section 34 of the Act only and even that power cannot be
exercised in a casual and a cavalier manner.
xxxxxx
16. It is seen that the scope of interference in an appeal
under Section37 of the Act is restricted and subject to the
same grounds on which an award can be challenged
under Section 34 of the Act. In other words, the powers
under Section 37 vested in the court of appeal are not
beyond the scope of interference provided under Section 34
of the Act."
Here, the Supreme Court has once again reiterated that even an award
which may not be reasonable or is nonspeaking to some extent cannot
ordinarily be interfered with by the courts. It is also well settled that
even if two views are possible, there is no scope for the court to
reappraise the evidence and to take the different view other than that
has been taken by the arbitrator. The view taken by the arbitrator is
normally acceptable and ought to be allowed to prevail.
23.In Konkan Railway Corpn. Ltd. v. Chenab Bridge Project12 referring
to MMTC Limited (supra) it has been held that:
"19....The scope of jurisdiction
under Section 34 and Section 37 of the Act is not akin to
normal appellate jurisdiction. It is well-settled that courts
ought not to interfere with the arbitral award in a
casual and cavalier manner. The mere possibility of an
alternative view on facts or interpretation of the contract
does not entitle courts to reverse the findings of the arbitral
tribunal..."
(2023) 9 SCC 85
Location: ORISSA HIGH COURT, CUTTACK
24.In Dyna Technology Private Limited v. Crompton Greaves Limited13,
the Apex Court observed as under:
"24. There is no dispute that Section 34 of the Arbitration
Act limits a challenge to an award only on the grounds
provided therein or as interpreted by various courts. We
need to be cognizant of the fact that arbitral awards should
not be interfered with in a casual and cavalier manner,
unless the court comes to a conclusion that the perversity of
the award goes to the root of the matter without there being
a possibility of alternative interpretation which may sustain
the arbitral award. Section 34 is different in its approach
and cannot be equated with a normal appellate jurisdiction.
The mandate under Section 34 is to respect the finality of
the arbitral award and the party autonomy to get their
dispute adjudicated by an alternative forum as provided
under the law. If the courts were to interfere with the
arbitral award in the usual course on factual aspects, then
the commercial wisdom behind opting for alternate dispute
resolution would stand frustrated.
25. Moreover, umpteen number of judgments of this Court
have categorically held that the courts should not interfere
with an award merely because an alternative view on facts
and interpretation of contract exists. The courts need to be
cautious and should defer to the view taken by the Arbitral
Tribunal even if the reasoning provided in the award is
implied unless such award portrays perversity
unpardonable under Section 34 of the Arbitration Act."
25. Judicial scrutiny of arbitral awards is stringently limited under Indian
law. Section 34 of the Arbitration and Conciliation Act, 1996, provides
the exclusive grounds upon which an arbitral award can be
challenged. Courts, therefore, are not empowered to interfere merely
(2019) 20 SCC 1
Location: ORISSA HIGH COURT, CUTTACK
because another interpretation or outcome may seem more
reasonable. The jurisdiction under Section 34 is confined to procedural
and legal infirmities such as lack of jurisdiction, violation of natural
justice, or patent illegality. Consequently, appellate jurisdiction under
Section 37 is even narrower in its scope. Its purpose is to evaluate
whether the court adjudicating under Section 34 has remained within
the permissible statutory boundaries. The appeal court cannot re-
evaluate evidence or reconsider the factual matrix afresh. The
statutory framework thus reflects an overarching legislative intent to
insulate arbitral decisions from excessive judicial intervention. The
entire architecture of Sections 34 and 37 reinforces the finality and
autonomy of arbitral proceedings. Arbitration is designed to offer an
efficient, expert-led, and expedited alternative to litigation. Courts
must therefore resist the temptation to intervene unless the decision
by the court under Section 34 itself amounts to a significant
transgression of legal boundaries.
26.It is now firmly established in law that appellate review under Section
37 of the Act does not permit the court to act as a second court of first
instance. The appeal court's task is not to reassess the arbitral
tribunal's findings on merits or evidence, but only to determine
whether the court under Section 34 has exercised its discretion legally
and within its jurisdiction. This means the appellate court must limit
itself to checking if the Section 34 court has adhered to the narrow
scope prescribed by the Act. It is not sufficient for the appellate court
to identify an alternative or even preferable view--interference is
Location: ORISSA HIGH COURT, CUTTACK
justified only if the lower court has committed a jurisdictional error,
or has failed to apply the law correctly. The design of the Act ensures
that arbitration remains an autonomous dispute resolution
mechanism, minimally impacted by judicial oversight. The court
under Section 37 is not an appellate authority in the conventional civil
law sense; it cannot substitute its own interpretation for that of the
arbitrator unless a clear and grave legal error is demonstrated. In
essence, the appellate court serves as a watchdog over the procedural
fidelity of the Section 34 court--not the substantive reasoning of the
arbitrator.
27.When interpreting Section 37, it is imperative to contextualize it
alongside Section 5 of the Act, which serves as a foundational
provision reinforcing the minimal interference ethos. Section 5 makes
clear that courts shall not intervene in arbitral matters except as
expressly provided in the Act. This legislative mandate is not merely
procedural--it is a substantive limitation on judicial power. Appeals
under Section 37, especially those arising under Section 37(2)(b), are
therefore constrained by both the statutory scheme and overarching
judicial philosophy. Unlike appeals under other civil statutes, where
courts may dive deep into factual findings or discretionary decisions,
the Arbitration Act imposes a tight statutory leash. The objective is to
prevent the unraveling of arbitration outcomes through prolonged
court battles. Any order passed by an arbitral tribunal, particularly at
interlocutory stages, must be accorded due deference unless it reveals
clear arbitrariness, irrationality, or breach of fundamental legal
Location: ORISSA HIGH COURT, CUTTACK
principles. Courts must, therefore, resist the impulse to interfere
merely because a different view appears plausible or even more just in
hindsight. Arbitration is based on party autonomy, and any judicial
incursion must align strictly with the boundaries demarcated by
Sections 5, 34, and 37.
28.The judiciary's intervention in arbitral matters must be exercised with
utmost caution, especially where the arbitral tribunal's decisions
reflect reasonable interpretations of contractual terms or factual
matrices. The 1996 Act was introduced with the explicit objective of
limiting the role of courts, ensuring faster and more efficient
resolution of disputes outside traditional litigation. Consequently,
appellate courts under Section 37 must act with deliberate restraint,
only intervening when the arbitral process has clearly deviated from
established legal standards. This includes instances of perversity,
gross arbitrariness, or when settled legal principles have been ignored
or misapplied. Importantly, arbitral decisions--even at interim
stages--deserve judicial respect unless a substantial illegality is
apparent. The appellate court's function is supervisory, not
substitutive. It is not tasked with forming a fresh opinion but must
ensure that the arbitral tribunal's discretion has been exercised within
legal bounds. In other words, Section 37 does not allow for wholesale
re-litigation of disputes that have already been adjudicated by an
arbitral forum. The credibility of the arbitration system hinges on this
judicial discipline. Allowing appeals to turn into de facto retrials
Location: ORISSA HIGH COURT, CUTTACK
would defeat the very purpose of choosing arbitration over courtroom
adjudication.
29.The foundational framework of the Arbitration Act reflects an express
intent to exclude ordinary civil appellate practices in arbitral matters.
The powers conferred under Section 37(2)(b) are not akin to those
under civil appellate jurisdiction, where factual reappraisal and
discretionary judgments are routine. Rather, the Act envisions a
system where arbitral orders are largely immune from judicial
revisitation unless a serious and demonstrable breach of procedure or
law occurs. This philosophy is rooted in the recognition that
arbitration is a consensual mechanism designed to bypass the
complexities and delays of civil litigation. Courts, therefore, must
respect the principle of finality, stepping in only where an order of the
arbitral tribunal is tainted by evident perversity or gross
misapplication of law.
30.In view of the above position in law on the subject, the scope of the
intervention of the court in arbitral matters is virtually prohibited, if
not absolutely barred and that the interference is confined only to the
extent envisaged under Section 34 of the Act. The appellate power
of Section 37 of the Act is limited within the domain of Section 34 of
the Act. It is exercisable only to find out if the court, exercising power
under Section 34 of the Act, has acted within its limits as prescribed
thereunder or has exceeded or failed to exercise the power so
conferred. The Appellate Court has no authority of law to consider the
matter in dispute before the arbitral tribunal on merits so as to find
Location: ORISSA HIGH COURT, CUTTACK
out as to whether the decision of the arbitral tribunal is right or wrong
upon reappraisal of evidence as if it is sitting in an ordinary court of
appeal. It is only where the court exercising power under Section 34
has failed to exercise its jurisdiction vested in it by Section 34 or has
travelled beyond its jurisdiction that the appellate court can step
in and set aside the order passed under Section 34 of the Act. Its
power is more akin to that superintendence as is vested in civil courts
while exercising revisionary powers. The arbitral award is not liable
to be interfered unless a case for interference as set out in the earlier
part of the decision, is made out. It cannot be disturbed only for the
reason that instead of the view taken by the arbitral tribunal, the other
view which is also a possible view is a better view according to the
appellate court.
31.It must also be remembered that proceedings under Section 34 of
the Act are summary in nature and are not like a full-fledged regular
civil suit. Therefore, the scope of Section 37 of the Act is much more
summary in nature and not like an ordinary civil appeal. The award
as such cannot be touched unless it is contrary to the substantive
provision of law; any provision of the Act or the terms of the
agreement.
32.It is within the bounds of statutory and jurisprudential framework
that the present appeal must be evaluated. The core issue for
consideration here is whether the Arbitral Award, as upheld by the
Ld. District Court, suffers from patent illegality warranting
interference under Section 37 of the Act.
Location: ORISSA HIGH COURT, CUTTACK
33.At the outset, the contentions raised by the Appellants fail to establish
any of the statutory grounds for setting aside an arbitral award as
outlined in Section 34(2) of the Arbitration and Conciliation Act, 1996.
The objections do not invoke violation of the fundamental policy of
Indian law, public interest, or morality, nor is there any indication that
the award is in conflict with justice in a manner envisaged by the Act.
The primary grievance--that the Arbitrator made inconsistent
findings regarding delay and contributory laches--is inherently a
factual dispute. A careful examination of the award reveals that these
issues were thoroughly addressed under Issue No. 3. The learned
Arbitrator recorded a clear finding that while there was a delay of 4
months and 20 days attributable to the Respondent, the greater
responsibility lay with the Appellants due to their failure to provide
essential construction drawings and the delayed handover of the
project site by nearly 11 months.
34.Ultimately, the Arbitrator has also held the Appellants accountable for
at least 21 months of delay and this aspect too has been adequately
addressed by the learned Arbitrator in the course of deciding Issue
No.5. The Arbitrator found that the contract had been illegally
rescinded by the Appellants themselves. On that basis, it was
concluded that the counterclaim was unsustainable in law. The
Arbitrator's rationale is supported by a contextual reading of the
contractual provisions and the overall sequence of events leading up
to the termination. The claim was dismissed not summarily, but with
reasoned analysis, indicating that judicial standards of fairness and
Location: ORISSA HIGH COURT, CUTTACK
due process were fully observed. No case has been made out by the
Appellants to show that this aspect of the award is so perverse,
illogical, or contrary to law as to justify judicial interference. A mere
difference of opinion or a more favorable reading of the facts from the
Appellants' perspective cannot be a ground for interference under
Section 34 or by extension, Section 37 of the Act.
35.In light of the above discussion, it is evident that the Appellants have
not identified any infirmity in the arbitral award that would rise to the
level of patent illegality or jurisdictional error as contemplated under
Section 34(2A) of the Act. The Arbitrator has provided reasoned
findings, grounded in documentary evidence and consistent with
legal principles applicable to contractual breaches and delay. These
findings were not only comprehensive but were also examined and
upheld by the District Court. It is now well settled that neither the re-
evaluation of facts nor the mere possibility of a more favourable
interpretation can form the basis for setting aside an award. The
appellate court, particularly while exercising powers under Section 37,
must adhere strictly to the limited scope of judicial review. It cannot
act as a court of first appeal, nor can it re-assess the arbitral process as
if the award is being tried afresh. Given that the Arbitrator acted
within his jurisdiction, followed due process, and arrived at a decision
through a reasoned and evidentiary process, there is no warrant for
interference. The appeal, therefore, lacks merit and must be dismissed
in keeping with the principles governing limited judicial oversight in
arbitration.
Location: ORISSA HIGH COURT, CUTTACK
VI. CONCLUSION:
36.In the above context, it cannot be said the view taken in the impugned
award is not even a possible view, so as to warrant interference in the
proceedings under Section 34 and/or 37 of the A & C Act. On the
contrary, the approach of the arbitrator appears to be judicious taking
into account the attendant facts and circumstance.
37.In the circumstances, there is no justification to interfere with the
findings in the impugned award in respect of the aforesaid claims,
having regard to the scope of jurisdiction
under Section 34 and/or 37 of the A & C Act.
38. ARBA No.14 of 2020 is disposed on the abovementioned terms. No
order as to costs.
39. Interim order, if any, passed earlier stands vacated.
(Dr.S.K. Panigrahi)
Judge
Orissa High Court, Cuttack,
Dated the 24th July, 2025/
