S. 37 A&C Act Grants Narrower Scope To Appellate Court To Review Findings In An Award If It’s Upheld U/S 34: Apex Court
The Supreme Court dismissed a Civil Appeal challenging the Judgment of the Delhi High Court in an Appeal under Section 37 of the A&C Act.
The Supreme Court reiterated that Section 37 of the Arbitration and Conciliation Act, 1996 (A&C Act) grants narrower scope to the Appellate Court to review the findings in an Award, if it is upheld under Section 34.
The Court reiterated thus in a Civil Appeal challenging the Judgment of the Delhi High Court being passed in an Appeal under Section 37 A&C Act.
The two-Judge Bench of Justice Abhay S. Oka and Justice Ujjal Bhuyan discussed the scope of interference in an Appeal under Section 37 A&C Act while referring to the case of Larsen Air Conditioning and Refrigeration Company v. Union of India and Ors. (2023) in which it was held as under –
“The limited and extremely circumscribed jurisdiction of the court under Section 34 of the Act, permits the court to interfere with an award, sans the grounds of patent illegality i.e. that “illegality must go to the root of the matter and cannot be of a trivial nature”; and that the Tribunal “must decide in accordance with the terms of the contract, but if an arbitrator construes a term of the contract in a reasonable manner, it will not mean that the award can be set aside on this ground” [ref : Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , SCC p. 81, para 42]. The other ground would be denial of natural justice. In appeal, Section 37 of the Act grants narrower scope to the appellate court to review the findings in an award, if it has been upheld, or substantially upheld under Section 34.”
AOR Rahul Shyam Bhandari represented the Appellant while Senior Advocate Gaurav Pachnanda represented the Respondent.
Brief Facts
An agreement was entered into between the Appellant and Respondent in 2012 for constructing five Road Over Bridges (ROBs) and their approaches at different locations in the Rajasthan State. According to the Appellant's case, the work at the sites was delayed for the reasons attributable to the Respondent and the Respondent withdrew the work relating to the construction of two ROBs (LC-200 and LC-233) from the scope of work and certified the completion of the remaining work. In 2013, the Appellant addressed a letter to the Respondent’s General Manager stating that the construction delay of ROBs at LC-108 was due to various hindrances at the site. The Appellant requested the Respondent to grant an extension of 264 days.
It was contended that the delay in construction work has resulted in an additional financial burden on account of the establishment and overheads, etc., for a longer period than planned, for which the Appellant would be claiming separately. However, the Respondent denied the Appellant’s request and asked to submit a detailed claim so that extension of time could be considered. Accordingly, the Respondent granted an extension of time and again the Appellant applied for the same. This time, its claims were rejected and resultantly, the Appellant invoked the arbitration clause in 2017. The Arbitral Tribunal passed an Award in favour of the Respondent and hence, the Appellant preferred a Petition under Section 34 A&C Act. The Single Judge dismissed the said Petition and on filing an Appeal, the Division Bench dismissed that as well. Being aggrieved, the Appellant moved to the Apex Court.
Reasoning
The Supreme Court in the above context of the case, observed, “By no stretch of imagination, after reading the said letter it can be inferred that clause 49.5 was waived by the respondent. In fact, the respondent stated that the claim for financial burden would have to be dealt with together with the proposal for an extension of time, and the said claim cannot be processed separately. Thereafter, on two occasions, on specific requests made by the appellant under clause 49 of the GCC, the extension of time was granted by the respondent.”
The Court added that, except for sub-clause 5 of clause 49, there is no other sub-clause which provides for grant of extension when the delay was attributable to the Respondent. It further noted that the extensions were granted at the instance of the Appellant by invoking clause 49.
“Hence, the argument of waiver of Clause 49.5 by the respondent deserves to be rejected. Moreover, detailed claim, as stated in the letter dated 14th October, 2013 was not submitted by the appellant. Therefore, the Division Bench rightly found no merit in the said contention”, it also said.
Accordingly, the Apex Court dismissed the Appeal, considering the limited scope of interference.
Cause Title- M/s. C & C Constructions Ltd. v. IRCON International Ltd. (Neutral Citation: 2025 INSC 138)
Appearance:
Appellant: AOR Rahul Shyam Bhandari, Advocates Vikas Goel, Tarun Dua, Ritesh Sharma, Pragun Dua, Anisha Dahiya, and Deepal Hooda.
Respondent: Senior Advocate Gaurav Pachnanda, AOR Sahil Tagotra, Advocates Sidhant Goel, Mohit Goel, Shubham S Saxena, Karmanya D Sharma, Nikita Jaitly, and Avni Sharma.
