Section 37 Appeal Is Not a Second Merits Review of an Arbitral Award: Rajasthan High Court

Under Contract No. 2 of 1995-96, the contractor firm was to manufacture and supply 37 lakh baked bricks to the State authorities (para 3). The Department made deductions under the contract's ‘G’ Schedule, on the premise that trench and diggi facilities were available at the site (para 2.1). The award of 25.09.2018 directed payment of ₹60,000 towards those deductions with simple interest at 6.5% per annum from 06.12.2004 (paras 2.2-2.3). The State's Section 34 objections relied on the ‘G’ Schedule, the firm's acceptance of the additional work order without protest and of the final bill, the absence of an interest clause, and the prolonged proceedings (paras 2.4-2.5). The District Judge, Bikaner dismissed them on 25.10.2024 (paras 2.8, 10).

The Court held that Section 34 is not an appeal: the Court does not reweigh evidence or displace a contractual interpretation reasonably possible on the material, and public policy and patent illegality do not reopen every finding (paras 5, 5.4-5.6). Following MMTC Ltd. v. Vedanta Ltd., Section 37 cannot travel beyond Section 34; it examines whether the Section 34 court correctly exercised its jurisdiction (paras 6.4, 6.7, 6.10). The limited power to modify an award recognised in Gayatri Balasamy did not arise, as there was no clerical error, severable portion or post-award interest correction (paras 7.3, 8-8.2). The deduction clause depended on a factual condition: the Arbitrator found the facilities were not available as asserted, the contractor having drawn water by its own tractor from the canal, and revisiting that would be reappraisal (paras 9.2-9.4). The District Judge's views that absence of protest was no absolute bar, and that Clause 17 contained no express stipulation extinguishing claims on acceptance of the final bill, were not shown to be legally impermissible (paras 9.5-9.6). No patent error was shown on interest, and mere duration was no ground (paras 9.7-9.9).