Case Note & Summary
The National Centre for Biological Sciences (NCBS) filed a commercial appeal under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996, challenging an order dated 28.04.2025 passed by the LXXXIII Additional City Civil and Sessions Judge, Commercial Court at Bengaluru in Com. A.P No.186/2024. That order had dismissed NCBS's petition under Section 34 of the A&C Act seeking to set aside an arbitral award dated 31.08.2024. The arbitral award was passed by a sole arbitrator in a dispute between NCBS and M/s URC Constructions Private Limited (URC) arising out of a construction contract. The arbitrator partly allowed URC's claims and awarded a sum of ₹3,52,50,404/- with interest at 12% per annum from the date of the award until payment. NCBS contended that the arbitrator had erroneously interpreted the contract, ignored material evidence, and that the award was patently illegal. The Commercial Court rejected these contentions and confirmed the award. In the present appeal, the High Court examined the scope of interference under Section 37(1)(c) and held that it is limited to cases of patent illegality or perversity. The court found that the arbitrator's interpretation of the contract and appreciation of evidence were plausible and within his jurisdiction. The court noted that the appellant's challenge essentially sought a reappreciation of evidence, which is not permissible in an appeal under Section 37. Consequently, the High Court dismissed the appeal, upholding the Commercial Court's order and the arbitral award.
Headnote
A) Arbitration Law - Appeal under Section 37(1)(c) - Scope of Interference - Patent Illegality - The court considered whether the Commercial Court's order confirming the arbitral award was liable to be set aside on grounds of patent illegality or perversity - Held that the scope of interference under Section 37 is limited and does not permit reappreciation of evidence or correction of errors of interpretation unless the award is perverse or contrary to fundamental policy of Indian law (Paras 1-10).
B) Arbitration Law - Arbitral Award - Challenge under Section 34 - Grounds of Patent Illegality - The appellant challenged the award on the ground that the arbitrator erroneously interpreted the contract and ignored evidence - Held that the arbitrator's interpretation of the contract and appreciation of evidence are within his jurisdiction and not open to challenge unless the view taken is impossible or perverse (Paras 11-20).
C) Arbitration Law - Award of Interest - Pre-award and Post-award Interest - The arbitrator awarded interest at 12% per annum from the date of the award until payment - Held that the award of interest is within the discretion of the arbitrator and not interfered with in appeal (Paras 21-25).
Issue of Consideration
Whether the impugned order dismissing the Section 34 petition and confirming the arbitral award suffers from any patent illegality or perversity warranting interference under Section 37(1)(c) of the A&C Act.
Final Decision
The High Court dismissed the appeal, upholding the order of the Commercial Court and the arbitral award.
Law Points
- Section 37(1)(c) of Arbitration and Conciliation Act
- 1996
- Section 34 of Arbitration and Conciliation Act
- Patent illegality
- Reappreciation of evidence
- Interpretation of contract
Case Details
2026 LawText (KAR) (06) 70
Vibhu Bakhru, Chief Justice, C.M. Poonacha, J.
Sri Arvind K. Kamath, ASGI along with Sri A.K. Vasantha, Advocate for appellant; Sri T. Suryanarayana, Senior Advocate along with Sri Pratik Pany, Advocate and Sri Abhilash Raju, Advocate for C/R-1
National Centre for Biological Sciences, Tata Institute of Fundamental Research
M/s URC Constructions Private Limited, Hon'ble Justice Pradeep D. Waingankar (Former Judge, High Court of Karnataka) - Sole Arbitrator
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Nature of Litigation
Commercial appeal under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996 against an order dismissing a Section 34 petition challenging an arbitral award.
Remedy Sought
Appellant sought to set aside the order dated 28.04.2025 passed by the Commercial Court in Com. A.P No.186/2024, which had confirmed the arbitral award dated 31.08.2024.
Filing Reason
Appellant contended that the arbitral award was patently illegal and perverse, and that the Commercial Court erred in not setting it aside.
Previous Decisions
The arbitral tribunal partly allowed the claims of respondent No.1 and awarded ₹3,52,50,404/- with interest. The Commercial Court dismissed the appellant's Section 34 petition, confirming the award.
Issues
Whether the impugned order dismissing the Section 34 petition and confirming the arbitral award suffers from any patent illegality or perversity warranting interference under Section 37(1)(c) of the A&C Act.
Submissions/Arguments
Appellant argued that the arbitrator erroneously interpreted the contract and ignored material evidence, leading to a patently illegal award.
Respondent contended that the arbitrator's findings were based on a plausible interpretation of the contract and evidence, and that the scope of interference under Section 37 is limited.
Ratio Decidendi
The scope of interference under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996 is limited to cases of patent illegality or perversity. An appellate court cannot reappreciate evidence or substitute its own interpretation of the contract unless the arbitrator's view is impossible or perverse.
Judgment Excerpts
The National Centre for Biological Sciences [NCBS] has filed the present appeal under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996 [A&C Act] impugning an order dated 28.04.2025 [impugned order] passed by the learned LXXXIII Additional City Civil and Sessions Judge, Commercial Court at Bengaluru [Commercial Court] in Com. A.P No.186/2024.
The Arbitral Tribunal partly allowed the claims of respondent No.1 [URC], which was a claimant before it. The Arbitral Tribunal awarded a sum of `3,52,50,404/- (Rupees Three Crore Fifty Two Lakh Fifty Thousand Four Hundred and Four only).
Procedural History
The dispute arose from a construction contract between NCBS and URC. URC filed a claim before the sole arbitrator, who passed an award on 31.08.2024 partly allowing the claims. NCBS filed a petition under Section 34 of the A&C Act before the Commercial Court, which was dismissed on 28.04.2025. NCBS then filed the present appeal under Section 37(1)(c) before the High Court of Karnataka.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 37(1)(c), Section 34
- Commercial Courts Act, 2015: Section 13(1-A)
