High Court of Karnataka at Bengaluru Allows/Dismisses Appeal Under Section 37 of Arbitration Act Against Order Refusing to Set Aside Arbitral Award. Dispute Concerns Iron Ore Sale by E-Auction and Interpretation of Refund Clause on Failure to Lift Entire Quantity.

Commercial appeal under Section 37 of Arbitration and Conciliation Act, 1996 read with Section 13(1A) of Commercial Courts Act, 2015 against order of Commercial Court dismissing petition under Section 34 to set aside arbitral award.

Appellant sought setting aside of arbitral award dated 03.07.2024 and the order of the Commercial Court dated 28.07.2025, and ultimately refund of advance consideration for unlifted quantity of iron ore.

Appellant claimed that balance iron ore did not meet minimum Fe 45% specification as required by Supreme Court order and sought refund under Clause 9 of e-auction bid document; arbitral award rejected claim on grounds of locus standi and contract interpretation.

Earlier arbitral award dated 20.05.2019 was set aside by Commercial Court on 09.12.2021 (confirmed by High Court on 28.01.2022). Supreme Court appointed new arbitrator (Respondent No.2) who passed impugned award dismissing claim. Commercial Court dismissed Section 34 petition on 28.07.2025.

Whether the Arbitral Tribunal's finding on locus standi was perverse and based on no evidence. Whether the Arbitral Tribunal's interpretation of Clause 9 of the bid document amounted to rewriting the contract and was patently illegal. Whether the impugned award violated Section 28(3) of the Arbitration and Conciliation Act, 1996. Whether the Commercial Court erred in refusing to interfere with the award under Section 34.

Appellant's counsel: Clause 9 expressly provided for refund of advance amount for unlifted quantity with forfeiture of security deposit only; no provision for forfeiture of advance; Arbitrator's interpretation that Clause 9 only applies upon MC termination is rewriting the contract. Locus standi: appellant was the auction purchaser and deposited money; no evidence of assignment of right to refund; adverse inference was perverse. Appellant's counsel: Balance material had Fe content of 41.43%, below the required Fe 45%, rendering it useless for beneficiation or sale due to restrictions on resale of iron ore. Respondent's counsel: Scope under Sections 34 and 37 is limited; Arbitrator's view on locus standi and interpretation of contract is plausible and cannot be interfered with. Relied on Supreme Court decisions in Punjab State Civil Supplies Corporation Limited v. Sanman Rice Mills and Jan De Nul Dredging India Private Limited v. Tuticorin Port Trust.

Clause 9 is triggered only when the MC terminates the contract, and not when the bidder fails or refuses to lift the balance quantity. the Arbitral Tribunal drew an adverse inference that the appellant firm had assigned all its assets and liabilities and thus had no locus standi to maintain the claim.

Appellant participated in e-auction for iron ore and was highest bidder; deposited full consideration but lifted only part; claimed refund for unlifted quantity after chemical analysis showed Fe content below 45%. MC rejected representation; appellant filed writ petition, dismissed with liberty to arbitrate. CEC Chairman appointed arbitrator; first award rejected claims; set aside by Commercial Court (confirmed by High Court). Supreme Court appointed new arbitrator; award dated 03.07.2024 dismissed claims on locus standi and contract interpretation. Appellant filed Section 34 petition; Commercial Court dismissed it on 28.07.2025. Appeal filed under Section 37.

• Arbitration and Conciliation Act, 1996: Section 11, Section 28(3), Section 34, Section 37(1)(c)
• Commercial Courts Act, 2015: Section 13(1A)
• Constitution of India: Article 136
• Indian Partnership Act, 1932: