Orissa High Court
M/S. Essel Mining And Industries vs M/S Ravi Udyog Private Limited on 20 June, 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: 24-Jun-2025 16:53:35
IN THE HIGH COURT OF ORISSA AT CUTTACK
ARBA No. 5 of 2024
(From the judgment dated 13.3.2024 passed by the learned District
Judge, Keonjhar in Arbitration Petition No.5 of 2022 arising out of
award dated 25.9.2019 passed by the Ld. Sole Arbitrator in Arbitration
Proceeding No.1 of 2009, further modified on 15.2.2020 and 10.6.2020.)
M/s. ESSEL MINING AND INDUSTRIES .... Appellant (s)
LTD (EMIT) & Anr.
-versus-
M/s Ravi Udyog Private Limited .... Respondent (s)
Advocates appeared in the case through Hybrid Mode:
For Appellant (s) : Ms. Pami Rath, Sr. Advocate
along with
Mr. Ipsit Aurobindo Acharya,
Advocate
For Respondent (s) : Mr. Biplaba P. B. Bahali,
Advocate
CORAM:
DR. JUSTICE S.K. PANIGRAHI
DATE OF HEARING:-02.04.2025
DATE OF JUDGMENT:-20.06.2025
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 13.3.2024 passed by the learned District Judge, Page 1 of 34 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:35 Keonjhar in Arbitration Petition No. 5 of 2022 arising out of award dated 25.9.2019 passed by the Ld. Sole Arbitrator in Arbitration Proceeding No. 1 of 2009, further modified on 15.2.2020 and 10.6.2020. I. FACTUAL MATRIX OF THE CASE:
2. For the sake of brevity, the facts involved in the appeals are pithily discussed herein:
a. The Appellant is a company incorporated under the Companies Act,1956 forming the mining division of the Aditya Birla Group and being a leading player in the mining sector. Similarly, the Respondent is also a company incorporated under the Companies Act,1956 having its registered office at 190, Purbalok, 9th Street, PO-
Kalikapur, Near Calcutta Public School, Kolkota-700099.
b. On 19.12.2000, the Appellant issued a letter of intent for excavation, drilling, blasting and transportation of iron ore and overburden in its mine at Barbil, Odisha for a period of 36 months with stipulation that the Respondent would be paid hire charges at the consolidated rate of Rs.36.50 per M.T of material handled which was based on the diesel price of Rs.16.38 per ltr.
c. It was agreed between the Parties that the rate would be revised suitably pro-rata in increase in diesel price. It was further agreed that the rate would be increased by 5% Page 2 of 34 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:35 towards employee cost i.e. Rs.1.90 per annum after 31.3.2002.
d. Pursuant to the contract, the Respondent mobilized its equipment and staff to the site on 12.2.2001 and satisfactorily executed the work. However, allegedly the Appellant did not increase the employee cost of 5% despite being reminded to do so.
e. Ultimately on 4.8.2003, the Appellant wrote to the Respondent that, it has revised the rate with effect from 1.7.2003 which would be valid till 30.04.2004. However, the Respondent submitted on this front that, the revision of rate ought to have been given effect from 1.4.2003 and not from 1.7.2003 and had it been given effect from 1.4.2003, the Respondent would have received Rs.18,55,884.30 more. f. Again on 25.06.2004, the Appellant wrote to the Respondent to submit its revised offer taking the diesel rate of Rs.25.31 per ltr for its consideration and accordingly, the Respondent vide letter dated 16.7.2004 intimated the Appellant about the revised rate, however, the same was not revised.
g. On 10.1.2005 the Appellant executed another agreement with the Respondent extending the original and first agreement dated 19.12.2000 with similar scope of work with a little variation and it was made valid till 31.12.2005. Though the work was extended from time to time and the Page 3 of 34 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:35 last extension was from 30.6.2008 to 30.9.2008 vide letter dated 25.6.2008, the Appellant did not increase the rate as stipulated in the first agreement dated 19.12.2000. h. The work was alleged to be completed in all aspect within the extended period of 30.9.2008, but the final payment was not made by the present Appellant. Dispute emerged on multiple other fronts and the Respondent approached this Court u/s 11 of the A&C Act for appointment of an arbitrator.
i. Accordingly, vide order dated 6.3.2009, this Court was pleased to refer the dispute to Hon'ble Justice C.R.Pal (Retd.) Judge, Orissa High Court for arbitration. j. As, Hon'ble Justice C.R.Pal (Retd.) Judge, Orissa High Court withdrew from the arbitration, this Court vide order dated 20.7.2012 was pleased to appoint Sri. R.N.Biswal, Former Judge of the Orissa High Court as the new arbitrator.
k. It is to be mentioned here that, initially the Respondent had claimed Rs.7,74,30,837.41/- under four heads, after adjusting Rs.32,38,505/- which it had received from the Appellant towards advance. As there was mistake in calculation in second head of claim, by way of an amendment application dated 11.5.2013, it was enhanced from Rs.5,38,77,609.49/- to Rs.14,80,66,355.83/-. So the total claim amount was enhanced to Rs.17,16,20,583/-. This Page 4 of 34 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:35 amendment application was allowed on 4.8.2013. Apart from that, the Respondent had also claimed pre-reference, pendent lite and future interest at the rate of 18% per annum upon the amount of Rs.17,16,20,583.75/- to be paid by the Appellant.
l. The Ld. Arbitrator passed the award of Rs. 3,11,42,207/- in favour of the Respondent in respect of one Claim, i.e. Claim No. 2 which pertained to increase towards employee cost, after deducting the advance payment made to the Respondent on 25.9.2019. This awarded amount was modified on account of correction to Rs. 3,18,95,916/- on 15.2.2020. A further modification was made in pursuance of this Court's order dated 23.2.2022 in W.P.(C) No. 11868 of 2021 and Rs.2,76,49,789/- was added to the awarded amount, making the total awarded amount - Rs.
5,95,45,705/-. This amount was directed to be paid within a period of three months, failing which interest was payable at the rate of 15% per annum till payment.
m. Aggrieved, the Appellant approached the Ld. District Judge, Keonjhar in Arbitration Petition No. 5 of 2022 u/s 34 of the A&C Act. The same was rejected vide impugned order and judgment dated 13.3.2024.
3. Now that the facts leading up to the instant Appeals have 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 Page 5 of 34 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:35 exercise of this Court's limited jurisdiction available under S. 37 of the A&C Act.
II. APPELLANTS' SUBMISSIONS:
4. The counsel for the Claimant assails the judgment of the Ld. District Judge mainly on the ground that the Ld. District Judge has failed to note that the Ld. Arbitrator has not considered that the claim dated 9.5.2009 in respect of Claim Item No.2 for the Work Order dated 19.12.2000 for the period 19.12.2000 to 31.12.2004 is barred by limitation under Section 43 read with Section 21 of the Act, 1996 and Section 2(j), Section 3 and Article 137 of the Limitation Act, 1963 and therefore, the award in respect of said Claim No.2 is illegal and violative of Section 34(2A) of the Act, 1996.
5. Moreover, it is submitted that the calculation of interest is without any basis as there is no existing agreement between the parties regarding the % of interest and hence 15% interest is high. Therefore, the award is bad in law and liable to be set aside.
III. RESPONDENT'S SUBMISSIONS:
6. Per contra, learned counsel for the Respondent submits that this Court or the court below is not entitled to re-appreciate evidence given the narrow scope of its powers under Section 34/37 of the A&C Act. It is submitted that the arbitration proceeding was initiated by the parties for resolution of their disputes pertaining to non-payment of its legitimate dues. There is no error evident on the face of the record, nor any patent illegality in the Arbitral Award, much less the Ld. District Page 6 of 34 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:35 Judge's order and therefore, the present Petition is liable to be dismissed.
IV. ISSUE FOR CONSIDERATION
7. 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?
8. First things first, it would be apposite to refer to the provisions of Section 34 & 37 of the Act, which provisions read as under:
"34. Aplication for setting aside arbitral award. -(1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with subsection (2) and sub-section (3).
(2) An arbitral award may be set aside by the Court only if-
(a) the party making the application establishes on the basis of the record of the arbitral tribunal that-
(i) a party was under some incapacity; or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or Page 7 of 34 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:35
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or (v.) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the Court finds that--
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India.
Explanation 1.--For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,-
(i) the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81; or
(ii) it is in contravention with the fundamental policy of Indian law; or Page 8 of 34 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:35
(iii) it is in conflict with the most basic notions of morality or justice.
Explanation 2.--For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.
(2-A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the court, if the court finds that the award is vitiated by patent illegality appearing on the face of the award:
Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.
(3) An application for setting aside may not be made after three months have elaaed from the date on which the party making that application had received the arbitral award or, if a request had been made under Section 33, from the date on which that request had been disposed of by the arbitral tribunal:
Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.
(4) On receipt of an application under sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award.
37. Appealable orders.--(1) (Notwithstanding anything contained in any other law for the time being in force, an Page 9 of 34 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:35 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:--
((a) refusing to refer the parties
to arbitration under Section 8;
(b) granting or refusing to grant any measure
under Section 9;
(c) setting aside or refusing to set aside an arbitral award under Section 34.) (2) An 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 Section17.
(3) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court."
9. On a careful perusal of Section 34 of the Act, it is clear that an arbitral award can only be set aside by moving an application on grounds mentioned under sub-section (2) and sub-section (3) of Section 34 of the Act. An award can be interfered with where it 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 of the fundamental policy of Indian law, or if it is in conflict with basic notions of morality and justice.
10. On a careful perusal of Section 34 of the Act, it is clear that an arbitral award can only be set aside by moving an application on grounds Page 10 of 34 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:35 mentioned under sub-section (2) and sub-section (3) of Section 34 of the Act. An award can be interfered with where it 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 of the fundamental policy of Indian law, or if it is in conflict with basic notions of morality and justice.
11. 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 determine whether the award is good or bad. Even an award that may not be reasonable or is non-speaking to some extent cannot ordinarily be interfered with by the Courts.
12. It is also a well settled proposition in law that the jurisdiction of the Court under Section 34 of the Act is neither in the nature of an appellate remedy or akin to the power of revision. It is also well ordained in law that an award cannot be challenged on merits except on the limited grounds that have been spelt out in sub-sections (2), (2- A) and (3) of Section 34 of the Act, by way of filing an appropriate application.
13. Having regard to the contentions urged and the issues raised, it shall also be apposite to take note of the principles enunciated by the Hon'ble Supreme Court in some of the relevant decisions cited by the parties on the scope of challenge to an arbitral award under Section 34 and the scope of appeal under Section 37 of the 1996 Act. Page 11 of 34 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:35
14. Before undertaking the aforesaid exercise, it would be apposite to consider as to how the expressions (a) "in contravention with the fundamental policy of Indian law"; (b) "in conflict with the most basic notions of morality or justice"; and (c) "patent illegality" have been construed.
15. The phrase "fundamental policy of Indian law" entered arbitral discourse long before the 2015 amendments, when Renusagar Power Co. Ltd. v. General Electric Co.1confined "public policy" challenges to three narrow heads: (i) fundamental policy of Indian law, (ii) interests of India, and (iii) justice or morality.
16. Subsequent decisions--most notably ONGC v. Western Geco2--
stretched that first head by equating "fundamental policy" with Wednesbury-style reasonableness review, permitting courts to re-enter the merits on the pretext of testing arbitral reasoning. Because that approach threatened the speedy, final nature of arbitration, Parliament rolled it back through the Arbitration and Conciliation (Amendment) Act, 2015.
17. Explanation 1 to Section 34(2)(b)(ii) and 48(2)(b) now insists that an award offends public policy 'only' if it violates India's "fundamental policy," a concept deliberately narrower than "contrary to the policy of Indian law." Ssangyong Engg. & Construction Co. Ltd. v. NHAI3 crystallised the post-amendment position: "fundamental policy" 1
(1984) 4 SCC 679 2 (2014) 9 SCC 263 3 (2019) 15 SCC 131 Page 12 of 34 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:35 reverts to the Renusagar (supra) standard, and Western Geco's (supra) judicial-review expansion "no longer obtains." Mere statutory error--
or even an award at odds with substantive Indian law--will not suffice unless the breach strikes at bedrock norms that undergird the administration of justice, such as disregard of natural-justice guarantees, wilful disobedience of binding precedents, or flouting statutes integrally linked to public interest. Crucially, courts must respect Explanation 2, which bars merits review under this ground; their scrutiny stops at identifying systemic, structural affronts to India's legal order, not re-weighing evidence or legal interpretation.
18. To determine whether an award crosses that threshold, courts apply a two-step lens. First, they must ask whether the complained-of rule is itself "fundamental": does it form part of the basic architecture that sustains the rule of law--e.g., audi alteram partem, jurisdictional competence, adherence to superior-court decrees, etc. Second, they ought to examine whether the tribunal's conduct amounts to 'contravention', not merely imperfect application. Thus, failure to supply any reasons, refusal to hear a party on pivotal issues, or adjudicating matters wholly outside the reference may qualify; but a plausible yet contestable contractual construction, or even wrongful exclusion of a document, ordinarily will not.
19. Associate Builders v. DDA4 had assimilated Western Geco (supra) -
style "perversity" and "judicial approach" tests into public-policy analysis; Ssangyong (supra) decisively excised those limbs, ruling that (2015) 3 SCC 49 4 Page 13 of 34 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:35 courts may not treat facial misinterpretations of law or contract as "fundamental-policy" breaches. Likewise, contraventions of statutes unconnected to public interest--say, stamp-duty underpayment--lie outside this head. The result is a calibrated, high-bar standard:
intervention is warranted only where the award undermines essential legal tenets that any fair-minded observer would recognise as indispensable to India's justice system. By retrenching the scope, the 2015 amendments realign Indian arbitration with the UNCITRAL model and global best practice, ensuring that "fundamental policy"
remains an exceptional filter, not a backdoor appeal on facts and law.
20. The "morality or justice" limb, present since Renusagar (supra), was likewise tightened in 2015. Explanation 1 now demands conflict with the "most basic notions" of morality or justice--language intentionally inserted to prevent subjective or elastic expansion. Indian courts have long recognised that justice and morality are context-sensitive; what shocks one era may not perturb another. Therefore, post-amendment jurisprudence treats this ground as a safety valve for truly egregious awards--those that outrage the court's conscience because they subvert elementary fairness intelligible to any reasonable layperson, whether legally trained or not. The Law Commission's 246th Report, echoed by Ssangyong (supra), emphasised that importing Wednesbury or proportionality tests here would "open the floodgates," defeating legislative intent. Consequently, an award may be annulled under this head only if it institutionalises manifest injustice--e.g., sanctions fraud, enforces a contract obtained by duress, or imposes liabilities Page 14 of 34 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:35 that blatantly contradict mutual assent--thereby eroding society's faith in adjudicatory fairness.
21. In practice, Indian courts deploy a conscience-shock test grounded in universal principles rather than parochial moral codes. For instance, in Ssangyong (supra), the majority of an arbitral tribunal unilaterally rewrote a price-adjustment formula by applying an internal NHAI circular never agreed to by the contractor, effectively creating a new bargain. The Hon'ble Supreme Court held that foisting a unilateral modification on an unwilling party violated "the most basic notions of justice," as voluntariness lies at the heart of contract law. Similarly, awards enforcing contracts tainted by corruption or transactions forbidden by law (e.g., betting agreements) would offend basic morality. By contrast, awards involving commercial hardship, uneven economic results, or arguable legal mistakes ordinarily pass muster, for equity courts cannot rewrite bargains ex post. The guiding principle is restraint: morality-oriented intervention is reserved for circumstances where a lay observer would perceive the outcome as plainly unconscionable--where the tribunal's decision legitimises wrongdoing rather than merely errs in quantification or interpretation. This cautious approach upholds arbitral autonomy, protecting parties' bargain to accept a chosen tribunal's view, while ensuring that arbitration does not become a cloak for fundamental injustice. It mirrors international jurisprudence thereby strengthening India's reputation as an arbitration-friendly jurisdiction that simultaneously safeguards core ethical minima.
Page 15 of 34 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:35
22. Section 34(2-A), inserted in 2015, introduced "patent illegality appearing on the face of the award" as a separate annulment ground for domestic awards (it does not apply to foreign or Part II enforcement). The provision codifies and confines the doctrine earlier derived from ONGC v. Saw Pipes5, which had blended patent illegality with public policy. Parliament's aim was twofold: (i) retain a mechanism to nullify awards that flout obvious legal mandates, yet (ii) bar disguised appeals on facts or law. Accordingly, the proviso forbids setting aside "merely on the ground of erroneous application of law" or "re-appreciation of evidence." Ssangyong (supra) interprets patent illegality as errors that "go to the root of the matter" but are not subsumed within fundamental policy--thus covering blatant violations of substantive statutes, the Arbitration Act itself, or contract terms, provided they are manifest on the award's face. Notable examples include deciding disputes beyond the contract's scope, granting relief contrary to an express prohibition, or ignoring mandatory statutory caps. The test is objective and record-based: the error must be apparent without forensic excavation; hidden or debatable mistakes remain immune.
23. Courts evaluating patent illegality utilise the "perversity" benchmarks articulated in Associate Builders (supra) and reaffirmed in Delhi Metro Rail Corporation v. DAMEPL6. An award is perverse--and hence patently illegal--when (i) findings rest on no evidence, (ii) 5 (2003) 5 SCC 705 6 2024 INSC 292 Page 16 of 34 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:35 irrelevant factors decisively influence the outcome, (iii) vital evidence is ignored, (iv) reasons are wholly absent, or (v) the tribunal addresses matters beyond its jurisdiction. However, even these indicators must reveal themselves plainly on the award or arbitral record; courts cannot marshal new material or conduct painstaking re-evaluation. The focus is procedural and jurisdictional fidelity, not substantive correctness. Importantly, patent illegality is unavailable in international commercial arbitration seated in India--reflecting India's commitment to align with the UNCITRAL Model Law and minimise judicial intrusion where foreign parties are involved. Taken together, the 2015 framework establishes a tiered control system: "fundamental policy" and "most basic notions of morality or justice" guard systemic and ethical frontiers applicable to all awards, while "patent illegality"
offers an additional, carefully cabined safeguard for domestic awards to weed out egregious but non-fundamental legal flaws. This architecture balances finality with legitimacy, ensuring Indian courts remain sentinels of legality without morphing into appellate arbiters, thereby promoting efficiency and investor confidence in India-seated arbitration.
24. In MMTC Ltd. v. Vedanta Ltd.7, the Hon'ble Supreme Court took note of various decisions including that in Associate Builders (supra) and exposited on the limited scope of interference under Section 34 and further narrower scope of appeal under Section 37 of the 1996 Act, particularly when dealing with the concurrent findings (of the (2019) 4 SCC 163 7 Page 17 of 34 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:35 arbitrator and then of the Court). The Supreme Court, inter alia, held as under :
"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 the Hon'ble Supreme 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 v. Wednesbury Corpn., (1948) 1 KB 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.
12. It is only if one of these conditions is met that the Court may interfere with an arbitral award in terms of Section 34(2)(b)(ii), but such interference does not entail a review of the merits of the dispute, and is limited to situations where the findings of the arbitrator are arbitrary, capricious or perverse, or when the conscience of the Court is shocked, or when the illegality is not trivial but goes to the root of the matter. An arbitral award may not be interfered with if the view taken by the arbitrator is a possible view based on facts. (See Associate Builders v. DDA [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] Also see ONGC Ltd. v. Saw Pipes Ltd. [ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705] ; Hindustan Page 18 of 34 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:35 Zinc Ltd. v. Friends Coal Carbonisation [Hindustan Zinc Ltd. v. Friends Coal Carbonisation, (2006) 4 SCC 445] ; and McDermott International Inc. v. Burn Standard Co. Ltd. [McDermott International Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181] )
13. It is relevant to note that after the 2015 Amendment to Section 34, the above position stands somewhat modified. Pursuant to the insertion of Explanation 1 to Section 34(2), the scope of contravention of Indian public policy has been modified to the extent that it now means fraud or corruption in the making of the award, violation of Section 75 or Section 81 of the Act, contravention of the fundamental policy of Indian law, and conflict with the most basic notions of justice or morality. Additionally, sub-section (2- A) has been inserted in Section 34, which provides that in case of domestic arbitrations, violation of Indian public policy also includes patent illegality appearing on the face of the award. The proviso to the same states that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.
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 Section 34 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. In Ssangyong Engg. (supra), the Supreme Court has set out the scope of challenge under Section 34 of the 1996 Act in further details in the following words :
Page 19 of 34Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:35 "37. Insofar as domestic awards made in India are concerned, an additional ground is now available under sub-section (2-A), added by the Amendment Act, 2015, to Section 34. Here, there must be patent illegality appearing on the face of the award, which refers to such illegality as goes to the root of the matter but which does not amount to mere erroneous application of the law. In short, what is not subsumed within "the fundamental policy of Indian law", namely, the contravention of a statute not linked to public policy or public interest, cannot be brought in by the backdoor when it comes to setting aside an award on the ground of patent illegality.
38. Secondly, it is also made clear that reappreciation of evidence, which is what an appellate court is permitted to do, cannot be permitted under the ground of patent illegality appearing on the face of the award.
39. To elucidate, para 42.1 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 :
(2015) 2 SCC (Civ) 204] , namely, a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an arbitral award. Para 42.2 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , however, would remain, for if an arbitrator gives no reasons for an award and contravenes Section 31(3) of the 1996 Act, that would certainly amount to a patent illegality on the face of the award.
40. The change made in Section 28(3) by the Amendment Act really follows what is stated in paras 42.3 to 45 in Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , namely, that the construction of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator construes the contract in a manner that no fair-minded or reasonable person would; in short, that the arbitrator's view is not even a possible view to take. Also, if the arbitrator wanders outside the contract and deals with matters not allotted to Page 20 of 34 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:35 him, he commits an error of jurisdiction. This ground of challenge will now fall within the new ground added under Section 34(2-A).
41. What is important to note is that a decision which is perverse, as understood in paras 31 and 32 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 :
(2015) 2 SCC (Civ) 204] , while no longer being a ground for challenge under "public policy of India", would certainly amount to a patent illegality appearing on the face of the award. Thus, a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality. Additionally, a finding based on documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties, and therefore, would also have to be characterised as perverse."
26. The limited scope of challenge under Section 34 of the Act was once again highlighted by the Supreme Court in PSA Sical Terminals (P) Ltd. v. V.O. Chidambranar Port Trust8 and the Supreme Court particularly explained the relevant tests as under :
"40. It will thus appear to be a more than settled legal position, that in an application under Section 34, the Court is not expected to act as an appellate court and reappreciate the evidence. The scope of interference would be limited to grounds provided under Section 34 of the Arbitration Act. The interference would be so warranted when the award is in violation of "public policy of India", which has been held to mean "the fundamental policy of Indian law". A judicial intervention on account of interfering on the merits of the award would not be permissible. However, the principles of 2021 SCC OnLine SC 508 8 Page 21 of 34 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:35 natural justice as contained in Sections 18 and 34(2)(a)(iii) of the Arbitration Act would continue to be the grounds of challenge of an award. The ground for interference on the basis that the award is in conflict with justice or morality is now to be understood as a conflict with the "most basic notions of morality or justice". It is only such arbitral awards that shock the conscience of the Court, that can be set aside on the said ground. An award would be set aside on the ground of patent illegality appearing on the face of the award and as such, which goes to the roots of the matter. However, an illegality with regard to a mere erroneous application of law would not be a ground for interference. Equally, reappreciation of evidence would not be permissible on the ground of patent illegality appearing on the face of the award.
41. A decision which is perverse, though would not be a ground for challenge under "public policy of India", would certainly amount to a patent illegality appearing on the face of the award. However, a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality.
42. To understand the test of perversity, it will also be appropriate to refer to paras 31 and 32 from the judgment of this Court in Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , which read thus : (SCC pp. 75-76) '31. The third juristic principle is that a decision which is perverse or so irrational that no reasonable person would have arrived at the same is important and requires some degree of explanation. It is settled law that where:
(i) a finding is based on no evidence, or
(ii) an Arbitral Tribunal takes into account something irrelevant to the decision which it arrives at; or
(iii) ignores vital evidence in arriving at its decision, such decision would necessarily be perverse.Page 22 of 34 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:35
27. In Delhi Airport Metro Express (P) Ltd. v. DMRC9 , the Supreme Court again surveyed the case law and explained the contours of the Courts' power to review the arbitral awards. Therein, the Supreme Court not only reaffirmed the principles aforesaid but also highlighted an area of serious concern while pointing out "a disturbing tendency" of the Courts in setting aside arbitral awards after dissecting and reassessing factual aspects. The Supreme Court also underscored the pertinent features and scope of the expression "patent illegality" while reiterating that the Courts do not sit in appeal over the arbitral award. The relevant and significant passages of this judgment could be usefully extracted as under :
"26. A cumulative reading of the Uncitral Model Law and Rules, the legislative intent with which the 1996 Act is made, Section 5 and Section 34 of the 1996 Act would make it clear that judicial interference with the arbitral awards is limited to the grounds in Section 34. While deciding applications filed under Section 34 of the Act, Courts are mandated to strictly act in accordance with and within the confines of Section 34, refraining from appreciation or reappreciation of matters of fact as well as law. (See Uttarakhand Purv Sainik Kalyan Nigam Ltd. v. Northern Coal Field Ltd. [Uttarakhand Purv Sainik Kalyan Nigam Ltd. v. Northern Coal Field Ltd., (2020) 2 SCC 455 : (2020) 1 SCC (Civ) 570] , Bhaven Construction v. Sardar Sarovar Narmada Nigam Ltd. [Bhaven Construction v. Sardar Sarovar Narmada Nigam Ltd., (2022) 1 SCC 75 : (2022) 1 SCC (Civ) 374] and Rashtriya Ispat Nigam Ltd. v. Dewan Chand Ram (2022) 1 SCC 131 9 Page 23 of 34 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:35 Saran [Rashtriya Ispat Nigam Ltd. v. Dewan Chand Ram Saran, (2012) 5 SCC 306] .) ***
28. This Court has in several other judgments interpreted Section 34 of the 1996 Act to stress on the restraint to be shown by Courts while examining the validity of the arbitral awards. The limited grounds available to Courts for annulment of arbitral awards are well known to legally trained minds. However, the difficulty arises in applying the well-established principles for interference to the facts of each case that come up before the Courts. There is a disturbing tendency of Courts setting aside arbitral awards, after dissecting and reassessing factual aspects of the cases to come to a conclusion that the award needs intervention and thereafter, dubbing the award to be vitiated by either perversity or patent illegality, apart from the other grounds available for annulment of the award. This approach would lead to corrosion of the object of the 1996 Act and the endeavours made to preserve this object, which is minimal judicial interference with arbitral awards. That apart, several judicial pronouncements of this Court would become a dead letter if arbitral awards are set aside by categorising them as perverse or patently illegal without appreciating the contours of the said expressions.
29. Patent illegality should be illegality which goes to the root of the matter. In other words, every error of law committed by the Arbitral Tribunal would not fall within the expression "patent illegality". Likewise, erroneous application of law cannot be categorised as patent illegality. In addition, contravention of law not linked to public policy or public interest is beyond the scope of the expression "patent illegality". What is prohibited is for Courts to reappreciate evidence to conclude that the award suffers from patent illegality appearing on the face of the award, as Courts do not sit in appeal against the arbitral award. The permissible grounds for interference with a Page 24 of 34 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:35 domestic award under Section 34(2-A) on the ground of patent illegality is when the arbitrator takes a view which is not even a possible one, or interprets a clause in the contract in such a manner which no fair-minded or reasonable person would, or if the arbitrator commits an error of jurisdiction by wandering outside the contract and dealing with matters not allotted to them. An arbitral award stating no reasons for its findings would make itself susceptible to challenge on this account. The conclusions of the arbitrator which are based on no evidence or have been arrived at by ignoring vital evidence are perverse and can be set aside on the ground of patent illegality. Also, consideration of documents which are not supplied to the other party is a facet of perversity falling within the expression "patent illegality".
30. Section 34(2)(b) refers to the other grounds on which a court can set aside an arbitral award. If a dispute which is not capable of settlement by arbitration is the subject-matter of the award or if the award is in conflict with public policy of India, the award is liable to be set aside. Explanation (1), amended by the 2015 Amendment Act, clarified the expression "public policy of India" and its connotations for the purposes of reviewing arbitral awards. It has been made clear that an award would be in conflict with public policy of India only when it is induced or affected by fraud or corruption or is in violation of Section 75 or Section 81 of the 1996 Act, if it is in contravention with the fundamental policy of Indian law or if it is in conflict with the most basic notions of morality or justice.
***
42. The Division Bench referred to various factors leading to the termination notice, to conclude that the award shocks the conscience of the Court. The discussion in SCC OnLine Del para 103 of the impugned judgment [DMRC v. Delhi Airport Metro Express (P) Ltd., 2019 SCC OnLine Del 6562] amounts to appreciation or Page 25 of 34 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:35 reappreciation of the facts which is not permissible under Section 34 of the 1996 Act. The Division Bench further held [DMRC v. Delhi Airport Metro Express (P) Ltd., 2019 SCC OnLine Del 6562] that the fact of AMEL being operated without any adverse event for a period of more than four years since the date of issuance of the CMRS certificate, was not given due importance by the Arbitral Tribunal. As the arbitrator is the sole Judge of the quality as well as the quantity of the evidence, the task of being a Judge on the evidence before the Tribunal does not fall upon the Court in exercise of its jurisdiction under Section
34. [State of Rajasthan v. Puri Construction Co. Ltd., (1994) 6 SCC 485] On the basis of the issues submitted by the parties, the Arbitral Tribunal framed issues for consideration and answered the said issues. Subsequent events need not be taken into account."
28. The position in Associate Builders (supra) was recently summarised as hereinbelow recorded by Indian Oil Corpn. Ltd. v. Shree Ganesh Petroleum10:
"42. In Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204 (two-Judge Bench)] , this Court held that an award could be said to be against the public policy of India in, inter alia, the following circumstances:
42.1. When an award is, on its face, in patent violation of a statutory provision.
42.2. When the arbitrator/Arbitral Tribunal has failed to adopt a judicial approach in deciding the dispute. 42.3. When an award is in violation of the principles of natural justice.
42.4. When an award is unreasonable or perverse.
(2022) 4 SCC 463 10 Page 26 of 34 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:35 42.5. When an award is patently illegal, which would include an award in patent contravention of any substantive law of India or in patent breach of the 1996 Act. 42.6. When an award is contrary to the interest of India, or against justice or morality, in the sense that it shocks the conscience of the Court."
29. In Haryana Tourism Ltd. v. Kandhari Beverages Ltd.11, the Supreme Court yet again pointed out the limited scope of interference under Sections 34 and 37 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 :
"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 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 (2022) 3 SCC 237 11 Page 27 of 34 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:35 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 and order [Kandhari Beverages Ltd. v. Haryana Tourism Ltd., 2018 SCC OnLine P&H 3233] passed by the High Court is hence not sustainable."
30. As regards the limited scope of interference under Sections 34/37 of the Act, this Court also considers it apposite to refer to the following observations of a three-Judge Bench of the Supreme Court in UHL Power Co. Ltd. v. State of H.P.12:
"15. This Court also accepts as correct, the view expressed by the appellate court that the learned Single Judge committed a gross error in reappreciating the findings returned by the Arbitral Tribunal and taking an entirely different view in respect of the interpretation of the relevant clauses of the implementation agreement governing the parties inasmuch as it was not open to the said court to do so in proceedings under Section 34 of the Arbitration Act, by virtually acting as a court of appeal.
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."
31. As noticed, arbitral award is not an ordinary adjudicatory order so as to be lightly interfered with by the Courts under Sections 34 or 37 of the 1996 Act as if dealing with an appeal or revision against a decision of any subordinate Court. The expression "patent illegality" has been (2022) 4 SCC 116 12 Page 28 of 34 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:35 exposited by the Supreme Court in the cases referred hereinbefore. The significant aspect to be reiterated is that it is not a mere illegality which would call for interference, but it has to be "a patent illegality", which obviously signifies that it ought to be apparent on the face of the award and not the one which is culled out by way of a long-drawn analysis of the pleadings and evidence.
32. Of course, when the terms and conditions of the agreement governing the parties are completely ignored, the matter would be different and an award carrying such a shortcoming shall be directly hit by Section 28(3) of the Act, which enjoins upon an Arbitral Tribunal to decide in accordance with the terms of contract while taking into account the usage of trade applicable to the transaction. As said by the Supreme Court in Associate Builders (supra), if an arbitrator construes the term of contract in a reasonable manner, the award cannot be set aside with reference to the deduction drawn from construction. The possibility of interference would arise only if the construction of the arbitrator is such which could not be made by any fair-minded and reasonable person.
33. Keeping in view the aforementioned principles enunciated by the Supreme Court with regard to the limited scope of interference in an arbitral award by a Court in the exercise of its jurisdiction under Section 34 of the Act, which is all the more circumscribed in an appeal under Section 37, this Court may examine the rival submissions of the parties in relation to the matters dealt with by the High Court.
34. This Court under Section 37 has only three options: Page 29 of 34 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:35
(a) Confirming the award of the arbitrator;
(b) Setting aside the award as modified under Section 34; and
(c) Rejecting the application(s) under Sections 34 and 37.
35. Prima facie, a perusal of the impugned judgment and Award unequivocally demonstrates that the Arbitrator relied upon written submissions, documentary evidence, and the statements of the parties involved in the transaction to determine and quantify the claims.
36. At Paragraph 15 of the impugned judgment, the Ld. District Judge very adroitly has identified the crux of the matter - whether the two agreements/work orders dated 19.12.2000 and 10.1.2005 were in continuation or separate. On the basis of the material available on record, the Ld. Arbitrator framed Issue No. 3 on the same lines and decided it first. After considering the letter dated 10.1.2005, the submissions of the counsel and multiple other exhibits, the Ld. Arbitrator held that the subsequent work order dated 10.1.2005 to be a continuation of the earlier agreement/work order. The Ld. District Judge has examined the same and this Court is in agreement with the conclusion arrived at, as there is no glaring error in the same. A view, taken by the Arbitrator, cannot be trifled with lightly.
37. Arbitration, by its very nature, departs from the strict procedural rigidity of formal court trials. The arbitrator, while vested with substantial discretion, exercises this within a framework that upholds the core tenets of natural justice. Unlike a judicial officer bound by the Evidence Act or procedural codes, an arbitrator operates under a more flexible evidentiary regime. However, this flexibility does not equate Page 30 of 34 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:35 to unbridled authority. The arbitrator must still adhere to basic standards of fairness, ensure both parties have an equal opportunity to present their case, and base the award on material that has been legitimately placed on record. Arbitrators may adopt procedures tailored to the dispute at hand, but the credibility and admissibility of evidence must still be judged against principles of logical relevance and procedural fairness. The arbitrator's findings must ultimately reflect a rational evaluation of the materials presented, forming a coherent and well-reasoned basis for the award. It is this calibrated balance between discretion and accountability that defines the arbitrator's role as a fact-finder in arbitration.
38. The autonomy of the arbitrator in assessing facts is intrinsic to the finality and efficacy of arbitral adjudication. Courts consistently refrain from substituting their own assessment of evidence for that of the arbitrator, even where an alternative view may be plausible. This judicial restraint is premised on the consensual nature of arbitration-- the parties, having elected to resolve their dispute through an arbitral process, implicitly accept the arbitrator's factual conclusions as binding. The limited grounds for judicial interference under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996 underscore this principle. A court will intervene only where the arbitrator's approach is shown to be perverse, in violation of public policy, or lacking in jurisdiction. The prohibition against re-appreciation of evidence ensures that arbitral awards are not undermined by endless litigation. In this context, the arbitrator's primacy in fact-finding is not only a Page 31 of 34 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:35 procedural convenience but a doctrinal imperative that upholds the integrity and independence of the arbitral process.
39. A perusal of the arbitral award would elucidate that the sole Arbitrator has considered the facts of the case, the contentions of both the parties and other documentary and oral evidence on record to take a decision. Now, even if one might feel that the evidence could be clearer and its quality could be higher to buttress the award, however, the same does not by itself warrant interference by this Court given the restrictive scope of this Court's powers u/s 37 of the A&C Act.
40. What the Arbitral Tribunal has held in the Award has exclusively been its view on the evidence on record and the relevant surrounding facts/factors. The view so taken by the Arbitral Tribunal cannot be said to be wholly perverse or suffering from patent illegality so as to be interfered with. Needless to observe that even if two views are possible, the Court cannot substitute its own view with that of the Arbitral Tribunal.
41. The Arbitral Tribunal has taken a particular view of the evidence before it. If it were an appeal against the award, the approach of the Court could have been different but, not so while examining the award within the confines of Section 34 of the Act. This Court would hasten to observe in this regard too that even in a regular appeal against a decree of the trial court, the appellate court would not substitute its own views without specifically recording a finding as to the error in the decision under challenge. In any case, if the approach of this Court in the present case is countenanced, the result would only Page 32 of 34 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:35 be of making every award susceptible to challenge before the Court on those very grounds which are, otherwise, of appeal or revision and which are not permitted by the legislature to be taken under Section 34 of the 1996 Act.
42. The narrow scope of "patent illegality" cannot be breached by mere use of different expressions which nevertheless refer only to "error" and not to "patent illegality". This Court is impelled to reiterate what has been stated and underscored by the Supreme Court in Delhi Airport Metro Express (supra) that restraint is required to be shown while examining the validity of arbitral award by the Courts, else interference with the award after reassessing the factual aspects would be defeating the object of the 1996 Act. This is apart from the fact that such an approach would render several judicial pronouncements of the Hon'ble Supreme Court redundant if the arbitral awards are set aside by categorizing them as "perverse" or "patently illegal" without appreciating the contours of these expressions.
43. Fact of the matter remains that nothing of a patent illegality apparent on the face of the award has been pointed out. The submissions essentially are of indicating some alleged errors on the merits of the case which, as noticed, do not fall within the parameters of Section 37 of the 1996 Act.
VI. CONCLUSION:
44. In light of the discussion above, keeping the settled principles of law in mind and for the reasons given above, this Court is of the considered view that judgment dated 13.3.2024 passed by the learned Page 33 of 34 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:35 District Judge, Keonjhar in Arbitration Petition No. 5 of 2022 arising out of award dated 25.9.2019 passed by the Ld. Sole Arbitrator in Arbitration Proceeding No. 1 of 2009, further modified on 15.2.2020 and 10.6.2020 is not liable to be interfered with.
45. ARBA No. 5 of 2024 is disposed of on the abovementioned terms. No order as to costs.
46. Interim order, if any, passed earlier stands vacated.
(Dr.S.K. Panigrahi) Judge Orissa High Court, Cuttack, Dated the 20th June, 2025/ Page 34 of 34