Courts Cannot Reassess Merits Of Arbitral Award U/S 37 Arbitration Act; Can't Exceed Limits Of Judicial Interference: Delhi High Court
The Court reiterated that appellate scrutiny under Section 37 is confined to the limited grounds available under Section 34, and does not permit an independent re-evaluation of the arbitral award.
The Delhi High Court has held that the scope of interference in an appeal under Section 37 of the Arbitration and Conciliation Act, 1996, is restricted to the same parameters governing challenges under Section 34, and courts cannot undertake a fresh assessment of the merits of an arbitral award.
The Court was hearing an appeal under Section 37 of the Act challenging the dismissal of a petition under Section 34 seeking the setting aside of an arbitral award concerning disputes arising out of a partnership firm and its assets.
A Division Bench of Justice Prathiba M. Singh and Justice Madhu Jain observed, relying on Supreme Court’s ruling in MMTC Limited v. Vedanta Limited (2019): “the authority of the Court under Section 37 of the Act is clearly restricted to the same grounds as set out in Section 34 of the Act, so that appeals do not exceed the limits of judicial interference established for first tier challenges to arbitral awards.”
Rajshekhar Rao, Senior Advocate, appeared for the Appellant; Kunal Kalra, Advocate, appeared for the respondents.
Background
The dispute arose out of a family-run partnership firm constituted in 1973 and reconstituted in 1974, which owned immovable property in Delhi. Differences arose between the parties regarding the constitution of the partnership and ownership of the property, leading to the invocation of arbitration under the partnership deed.
The arbitral tribunal, after examining the material on record, held that subsequent partnership deeds relied upon by one party were not proved and concluded that the original 1974 partnership continued. It further held that only two partners survived and directed the partition of the property in equal shares between them.
The award was challenged under Section 34, which was dismissed by the Single Judge. The present appeal under Section 37 was filed against that dismissal.
Court’s Observation
The Court, upon examination of the relevant material, reiterated that appellate jurisdiction under Section 37 is narrowly circumscribed, stating that interference under Section 37 cannot travel beyond the restrictions laid down under Section 34 and that the court cannot undertake an independent assessment of the merits of the award.
It further emphasised that once an arbitral award has been upheld under Section 34, appellate interference must be exercised with restraint, noting that courts must be “extremely cautious and slow to disturb such concurrent findings.”
The Court clarified that Section 37 does not permit re-evaluation of factual findings or evidence. It held that the findings of the arbitral tribunal, having been upheld by the Single Judge, could not be interfered with merely on the possibility of another view, especially where the arbitrator had undertaken a detailed analysis of documents and evidence.
The Court also relied on the Apex Court’s recent ruling in Konkan Railway Corporation Limited v. Chenab Bridge Project (2023) to emphasise judicial restraint in arbitration matters.
It observed that the jurisdiction under Sections 34 and 37 “is not like a normal appellate jurisdiction and courts should not interfere with the arbitral award lightly in a casual and cavalier manner.”
It further clarified that “the mere possibility of an alternative view on facts or interpretation of the contract does not entitle the courts to reverse the findings of the arbitral tribunal.”
Applying the above principles, the Court held that the arbitral tribunal had undertaken a detailed factual analysis and arrived at findings based on the material on record, including the conclusion that subsequent partnership deeds were not proved and that the original partnership continued.
It observed that such findings, having been affirmed under Section 34, did not warrant interference at the stage of Section 37, as the grounds for challenge were limited and did not extend to reappreciation of evidence.
Conclusion
The High Court held that the appeal under Section 37 was devoid of merit in view of the limited scope of interference and the concurrent findings of the arbitral tribunal and the Single Judge.
Accordingly, the appeal was dismissed, and costs were imposed on the Appellant.
Cause Title: Smt. Prem Lata Surekha v. Sh. Chakradhari Surekha & Ors. (Neutral Citation: 2026:DHC:3298-DB)
Appearances
Appellant: Rajshekhar Rao, Senior Advocate; Sangeeta Vazirani; Sachin Yadav; Ajay Sabharwal; Pradip Kumar, Advocates
Respondents: Kunal Kalra, Advocate