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. The Commercial Court 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 AC No.401/2022, partly allowing the claims of M/s URC Constructions Private Limited (URC) and awarding a sum of ₹3,52,50,404/-. NCBS contended that the award was patently illegal and contrary to public policy. The High Court, after hearing the parties, held that the Commercial Court had correctly applied the limited grounds of interference under Section 34. The arbitral tribunal's findings on contractual interpretation and quantum were plausible and not perverse. The appeal was dismissed, upholding the Commercial Court's order and the arbitral award.
Headnote
A) Arbitration Law - Appeal under Section 37(1)(c) - Scope of Interference - The court considered the limited grounds for setting aside an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996, and the scope of appeal under Section 37. Held that the Commercial Court correctly declined to interfere as the arbitral award was not patently illegal or contrary to public policy (Paras 1-2).
B) Contract Law - Construction Contract - Interpretation of Clauses - The dispute involved interpretation of contractual clauses regarding payment for extra work and delay damages. The arbitral tribunal's interpretation was plausible and within its jurisdiction. Held that the court cannot re-appreciate evidence or substitute its view (Paras 2-3).
Issue of Consideration
Whether the Commercial Court erred in dismissing the petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging the arbitral award on grounds of patent illegality and contravention of public policy.
Final Decision
The High Court dismissed the commercial appeal, upholding the order of the Commercial Court and the arbitral award.
Law Points
- Section 37(1)(c) of the Arbitration and Conciliation Act
- 1996
- Section 34 of the Arbitration and Conciliation Act
- Scope of interference with arbitral awards
- Patent illegality
- Public policy of India
Case Details
2026 LawText (KAR) (06) 71
Vibhu Bakhru, Chief Justice, C.M. Poonacha, Justice
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 and 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 of the Commercial Court dismissing a petition under Section 34 of the Act to set aside an arbitral award.
Remedy Sought
Appellant (NCBS) sought to set aside the order dated 28.04.2025 of the Commercial Court and the arbitral award dated 31.08.2024.
Filing Reason
Appellant challenged the arbitral award on grounds of patent illegality and contravention of public policy.
Previous Decisions
The Commercial Court dismissed the petition under Section 34 of the A&C Act, confirming the arbitral award.
Issues
Whether the Commercial Court erred in dismissing the petition under Section 34 of the Arbitration and Conciliation Act, 1996.
Whether the arbitral award was patently illegal or contrary to public policy.
Submissions/Arguments
Appellant argued that the arbitral award was patently illegal and contrary to public policy.
Respondent supported the Commercial Court's order and the arbitral award.
Ratio Decidendi
The scope of interference under Section 34 of the Arbitration and Conciliation Act, 1996 is limited to grounds of patent illegality or contravention of public policy. The court cannot re-appreciate evidence or substitute its own interpretation of the contract if the arbitral tribunal's view is plausible.
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 arbitral award was passed on 31.08.2024. 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 commercial appeal under Section 37(1)(c) of the A&C Act before the High Court of Karnataka.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 34, Section 37(1)(c)
- Commercial Courts Act, 2015: Section 13(1-A)
