Orissa High Court
Uttam Biswal vs State Of Orissa And Ors on 10 October, 2025
Author: Sanjeeb K Panigrahi
Bench: Sanjeeb K Panigrahi
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 10-Oct-2025 17:50:14
IN THE HIGH COURT OF ORISSA AT CUTTACK
ARBA No.13 of 2025
Along with
W.P.(C) No.5117 of 2025
(From the judgment dated 20.11.2024 passed by the learned District
Judge, Kendrapara in Arbitration Proceeding No.1 of 2023 arising out
of the award dated 11.12.2022 passed by the learned Arbitrator in
Arbitration Proceeding No.2 of 2021).
Uttam Biswal .... Appellant (s)/
(Both in the ARBA and the Writ Petitioner (s)
Petition)
-versus-
State of Orissa and Ors. .... Respondent (s)/
Opposite Party (s)
Advocates appeared in the case through Hybrid Mode:
For Appellant (s)/ : Mr. Kamal Behari Panda, Sr. Adv.
Petitioner(s) Along with
Mr. S.K. Panda, Adv.
For Respondent (s)/ : Mr. Debasish Nayak, AGA
Opposite Party(s)
CORAM:
DR. JUSTICE SANJEEB K PANIGRAHI
DATE OF HEARING:12.08.2025
DATE OF JUDGMENT:-10.10.2025
Dr. Sanjeeb K Panigrahi, J.
1. Since both the applications arise from the same facts and involve the
same parties, the same were taken up for hearing together and are being
dealt with by this Common Judgment and Order.
2. This Appeal under Section 37 of the Arbitration and Conciliation Act,
1996 (hereinafter referred to as "A&C Act") has been filed against the
Location: ORISSA HIGH COURT, CUTTACK
judgment dated 20.11.2024 passed by the learned District Judge,
Kendrapara in Arbitration Proceeding No.1 of 2023 wherein the learned
District Judge has allowed the petition filed by the present Respondents
under Section 34 of the A&C Act thereby setting aside the award dated
1.12.2022 passed by the learned Arbitrator in Arbitration Proceeding
No.2 of 2021. The Writ Petition is preferred by the Petitioner (Appellant
in ARBA No.13 of 2025 making a prayer to quash the order dated
20.11.2024 passed by the learned District Judge, Kendrapara in
Execution Proceeding No.50 of 2023 arising out of the award passed in
Arbitration Proceeding No.2 of 2021.
I. FACTUAL MATRIX OF THE CASE:
3. The brief facts of the case are that the Appellant was awarded the work
of "Augmentation to Piped Water Supply to Village- Mahakalapada of
Block Mahakalapada in the district of Kendrapara'' on 9.10.2017 by the
Respondents vide tender notice dated 18.4.2017 which was to be
completed within 10 months.
4. It is alleged by the Respondents that the Appellant did not start the work
in time and a letter was issued to him that if work is not commenced
within a week, i.e. by 4.4.2018, the contract was liable to be rescinded
with imposition of fine.
5. Despite the notice, it is alleged that the work did not commence and
therefore, the present Respondents rescinded the contract on 26.4.2018.
6. Being aggrieved by such recission, the present Appellant preferred
ARBP No. 54/2018 before this Court seeking appointment of a sole
arbitrator. Vide order dated 11.12.2020, Sri Bijay Kumar Das (Retd.)
District Judge and Former Acting Chairman, Odisha Administrative
Location: ORISSA HIGH COURT, CUTTACK
Tribunal was appointed as the sole arbitrator to adjudicate upon the
dispute between the Parties.
7. Vide award dated 1.12. 2022, the Ld. Sole Arbitrator was pleased to hold
that the recission of the contract by the respondent is illegal and
arbitrary and the respondent has terminated the contract four months
prior to the scheduled date of completion without invoking the
provisions for extension of time and imposition of compensation and
penalty. Accordingly, a sum of Rs.22,71,960/- was awarded as
compensation for loss of profit and refund of security money along with
pendent lite interest @ 18% from the date of recission of the contract till
date which comes to Rs.16,35,811/- and in total Rs.39,07,771/- to the
present Appellant with future interest if payment was not made within
three months.
8. Being aggrieved, the present Respondents preferred an appeal under
Section 34 of the A&C Act before the learned District Judge, Kendrapara
in Arbitration Proceeding No.1 of 2023.
9. Vide judgment dated 20.11.2024, the Ld. District Judge was pleased to
allow the appeal under Section 34 of the A&C Act and accordingly, set
aside the award dated 1.12.2022 for being perverse and patently illegal.
10. Being aggrieved by the judgment dated 20.11.2024 passed by the
Learned District Judge, Kendrapara in Arbitration Proceeding No.1 of
2023, the Appellant has preferred this appeal.
11. The present Appellant had also filed Execution Case No. 50 of 2023 in
the court of the Ld. District Judge, Kendrapara for execution of the
award. While allowing the Appeal of the Opposite Parties u/s 34 of the
Act, the Ld. District Judge has also deemed it appropriate to dismiss
Location: ORISSA HIGH COURT, CUTTACK
Execution Case No. 50 of 2023 initiated by the present Appellant on the
ground that the same has become infructuous by the judgment and
order dated 20.11.2024. Aggrieved by this, the Appellant has preferred
W.P.(C) No. 5117 of 2025 which is being taken up together with ARBA
No. 13 of 2025 here presently.
12. 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. APPELLANT'S SUBMISSIONS:
13. The learned counsel for the Appellant submitted that the Ld. District
Judge has in a challenged under Section 34 of the A&C Act attempted to
re-appreciate the entire evidence and re-assess the case of the parties
which is not permissible in law. The Ld. District Judge has sought to
substitute its own view for the Arbitrator's view which again is beyond
the scope of its jurisdiction.
14. Furthermore, it was argued that the present Appellant would have
found a way to complete the work within the stipulated time or would
have sought extension of time as provided for in the contract. The
present Respondents ought to have waited till at least the entire period
of time awarded to the Appellant was over before rescinding the
contract in such a hurried manner.
15. It was also contended that the learned Arbitrator, has meticulously
considered the facts of the case and the evidence on record, to pass the
award, and as such the same warranted no interference.
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III. RESPONDENTS' SUBMISSIONS:
16. On the contrary, during course of hearing, learned counsel for the
Respondents submitted that the contract was rescinded because of the
abject non commencement of the work.
17. Furthermore, it was submitted that the Appellant, 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 Respondents 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.
18. 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.
19. It was earnestly contended that there is absolutely no illegality in the
judgment of the Ld. District Judge for which the Court may feel inclined
to interfere with the same.
IV. ISSUE FOR CONSIDERATION:
20. 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
Location: ORISSA HIGH COURT, CUTTACK
LIMITATIONS OF THIS COURT'S POWERS UNDER SECTION 37
OF THE A&C ACT?
21. 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
(b) granting or refusing to grant an interim measure
under Section 17."
22. 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:
1990 Supp SCC 727
Location: ORISSA HIGH COURT, CUTTACK
"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
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
Location: ORISSA HIGH COURT, CUTTACK
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."
23. The aforesaid judgment has been consistently followed and applied by
various Courts across the country while adjudicating matters arising
under the Arbitration and Conciliation Act, 1996. Reference may be
made to 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 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. The ratio laid
down in the aforesaid decision has been reiterated and followed with
approval, thereby reinforcing its authoritative value in the domain of
arbitral jurisprudence.
24. In Reliance Infrastructure Ltd. v. State of Goa7, the Apex Court 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:--
2018 SCC OnLine Del 8273
2020 SCC OnLine Del 300
(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
"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."
25. 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
(2022) 4 SCC 116
Location: ORISSA HIGH COURT, CUTTACK
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 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."
26. 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
2022) 3 SCC 237
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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
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."
27. 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
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of the parties in relation to the matters dealt with by the
High Court."
28. 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
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.
2024 SCC OnLine SC 2632
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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
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."
The Supreme Court has once again reaffirmed the settled legal position
that an arbitral award, even if it appears to be not wholly reasonable or
is partially nonspeaking, does not, for that reason alone, warrant
interference by the Court. It is now trite that where two plausible views
are possible on the basis of the material placed before the arbitral
tribunal, the Court, while exercising its limited supervisory jurisdiction
under Section 34 of the Arbitration and Conciliation Act, 1996, cannot
re-appreciate the evidence or substitute its own view for that of the
arbitrator. The interpretation adopted by the arbitral tribunal, if found
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to be a possible and rational view, must ordinarily command judicial
deference and be permitted to stand.
29. 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..."
30. 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.
(2023) 9 SCC 85
(2019) 20 SCC 1
Location: ORISSA HIGH COURT, CUTTACK
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."
31. Judicial interference with arbitral awards is narrowly circumscribed
under Indian law. Section 34 of the Arbitration and Conciliation Act,
1996, prescribes the exclusive grounds for challenge, confined to
jurisdictional errors, procedural irregularities, violation of natural
justice, or patent illegality. Courts cannot intervene merely because an
alternative view appears more plausible. The appellate jurisdiction
under Section 37 is still narrower, limited to examining whether the
court under Section 34 acted within its statutory remit. Reappraisal of
evidence or reconsideration of factual findings is impermissible. The
legislative design of Sections 34 and 37 thus underscores the finality,
autonomy, and minimal judicial oversight that form the cornerstone of
arbitral jurisprudence.
32. It is now firmly established that judicial review under Section 34 of the
Arbitration and Conciliation Act, 1996, is not an appellate exercise on
facts or merits. The court's jurisdiction is narrowly confined to
examining jurisdictional errors, procedural improprieties, violations of
natural justice, or patent illegality apparent on the face of the award. The
appellate power under Section 37 is even more circumscribed, being
limited to verifying whether the Section 34 court acted within its
statutory bounds. The existence of an alternative or even a more
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plausible view does not justify interference. The appellate court is not a
second forum of first instance and cannot substitute its own
interpretation for that of the arbitral tribunal absent a manifest
miscarriage of justice or jurisdictional transgression. The statutory
framework thus upholds arbitration as an autonomous, self-contained
process, shielded from excessive judicial intervention and governed by
the principle of minimal court interference.
33. When interpreting Section 37 of the Arbitration and Conciliation Act,
1996, it must be read in conjunction with Section 5, which enshrines the
legislative policy of minimal judicial intervention. Section 5
unequivocally restricts court interference in arbitral proceedings to
instances expressly sanctioned by the Act--a limitation that is
substantive, not merely procedural. Accordingly, the appellate
jurisdiction under Section 37, particularly under clause (2)(b), is
narrowly circumscribed by both the statutory design and the
overarching principle of arbitral autonomy. Unlike conventional civil
appeals, scrutiny under the Arbitration Act does not extend to a
reappraisal of evidence or discretionary determinations. The legislative
intent is to safeguard the finality and integrity of arbitral adjudication
and to prevent its erosion through prolonged judicial scrutiny. Orders
of the arbitral tribunal, even at interlocutory stages, merit judicial
deference unless vitiated by patent illegality, manifest arbitrariness, or
perversity. Courts must eschew the temptation to substitute their own
view merely because an alternative interpretation appears more
plausible. Party autonomy remains the bedrock of the arbitral regime,
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and judicial oversight must remain confined within the narrow
parameters delineated by Sections 5, 34, and 37 of the Act.
34. 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 would defeat the very purpose of choosing arbitration
over courtroom adjudication.
35. 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
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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.
36. 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 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
Location: ORISSA HIGH COURT, CUTTACK
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.
37. 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.
38. It is within this statutory and jurisprudential framework that the present
appeal must be evaluated. The core issue for consideration here is
whether the manner of setting aside of the award by the Ld. District
Court, warrants interference under Section 37 of the Act.
39. The Learned Arbitrator has concluded that time was not of the essence
of the contract, given the explicit provision allowing for the extension of
the intended completion date, and the provision for the payment of
liquidated damages in case of delays. Furthermore, the Arbitrator found
that, with four months still remaining before the expiration of the
completion deadline, the termination of the contract was both
premature and arbitrary, lacking proper invocation of the contract's
provisions. In this context, the Learned District Judge examined Clause
4 and Clause 28 of the contract, which provided mechanisms for
extending the completion date, and emphasized the distinction between
an extension of time for completion of work and an extension for
commencement of work. Moreover, the District Judge reviewed Clause
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54, which addresses termination in the case of a fundamental breach of
the contract. The District Judge observed that the clause did not
explicitly authorize termination due to non-commencement of work,
although it did not rule out such a possibility. After assessing the
evidence, including a letter marked Ext.C/12 which purportedly
imposed an ultimatum for the commencement of work, the District
Judge concluded that the Arbitrator had erred by ignoring this critical
evidence, thereby rendering the Arbitrator's award legally flawed.
40. This Court finds that the Learned Arbitrator is the primary authority
when it comes to evaluating and interpreting the evidence presented
during the arbitration proceedings. The Arbitrator is entrusted with the
responsibility of weighing the relevance, credibility, and weight of the
evidence in order to arrive at an informed decision. In this regard, the
Arbitrator's findings and conclusions, grounded in the evidence before
him, are binding and final. Courts, upon reviewing such findings,
should not substitute their own judgment for that of the Arbitrator,
unless there is a clear and evident error of law or fact. The Arbitrator's
discretion in assessing evidence is paramount, as he or she is the sole
arbiter of the factual matrix of the case.
41. It is also well-established in legal precedent that a court, when reviewing
an arbitral award, is not entitled to reappraise the evidence or reconsider
the factual aspects of the case. The court's role is confined to ensuring
that the award is not vitiated by legal errors or procedural irregularities.
The court is not a forum for a fresh evaluation of the evidence or for
substituting its own conclusions for those reached by the Arbitrator.
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42. A reviewing court cannot substitute its own view or judgment in place
of that of the Arbitrator merely because it believes its perspective might
be superior or more reasonable. The court must respect the Arbitrator's
role as the decision-maker based on the facts and evidence presented
during the arbitration process. The standard of review does not permit
the court to override the Arbitrator's conclusions simply because it
might prefer a different outcome.
43. The impugned order, which seeks to set aside the award of the
Arbitrator, should not be readily upheld. Upon careful review, it
becomes evident that the award, while subject to scrutiny, does not
exhibit characteristics of being patently illegal. There is no manifest error
of law or fact that would justify a complete disregard for the Arbitrator's
findings. The courts should exercise caution before interfering with an
arbitral award, particularly in the absence of glaring irregularities.
Unless the award is shown to have violated established principles of
law, it should not be set aside on the grounds of perceived legal
deficiencies that are not sufficiently egregious.
44. Courts are generally reluctant to interfere with the findings of an
Arbitrator, as arbitration is meant to provide a swift and conclusive
resolution to disputes. The courts' jurisdiction to review arbitral awards
is limited and narrow in scope, intended only to address issues of
legality, fairness, or procedural error. Judicial intervention in arbitral
awards is an exception rather than the rule. Courts should be cautious
not to undermine the efficiency of the arbitration process, which is
designed to provide a more expedient and specialized forum for dispute
resolution. As such, intervention should be sparing and only when it is
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absolutely necessary to correct clear and material legal flaws in the
award, which is not the case in the present matter.
VI. CONCLUSION:
45. 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
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.
46. 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.
47. As ARBA No.13 of 2025 is allowed, with regards to the prayer made in
W.P.(C) No.5117 of 2025, this Court deems it appropriate to not delve
into merits, but to quash the order dated 20.11.2024 passed in Execution
Proceeding No.50 of 2023 and restore the same before the court of the
learned District Judge, Kendrapara.
48. ARBA No.13 of 2025 and W.P.(C) No.5117 of 2025 are disposed on the
abovementioned terms. No order as to costs.
49. Interim order, if any, passed earlier in any of the aforesaid Application/
Petition stands vacated.
(Dr. Sanjeeb K Panigrahi)
Judge
Orissa High Court, Cuttack,
Dated the 10th Oct., 2025
