Ms. Aastha Dhawan, Adv v. JASBIR SINGH SANDHU ORS on 26 Nov 2025

Judgment

1. Arbitration and Conciliation Act, 19962, the Appellant (Petitioner the present Appeal under Section 371 of before the learned District Judge) assails the correctness of the Judgment and Order dated 18.07.2024 [hereinafter referred to as ‘Impugned Order’], whereby the learned District Judge dismissed the petition [hereinafter referred to as ‘Section 34 Petition’] filed by the Appellant under Section 343 of the A&C Act and upheld the Award dated 05.06.2020 [hereinafter referred to as ‘Award’] passed by the learned Arbitrator.

2. Herein, the Appellant contends that the learned District Judge, while passing the Impugned Order, failed to appreciate the patent illegality apparent on the face of the Award, inasmuch as the learned 1 Section 37. 2 A&C Act. 3 Section 34. Signature Not Verified Signed By:JAI NARAYAN Signing Date:27.11.2025 17:25:35 FAO(COMM) 205/2024 Page 1 of 28 Arbitrator omitted to adjust the amount overpaid by the Appellant against the value of the work executed while determining the final awarded sum. However, readjustment of the amount overpaid was not pleaded before the learned District Judge.

3. Accordingly, the issue that falls for consideration before this Court is whether an arithmetical or computational error in the Arbitral Award can be corrected in proceedings under Section 37, notwithstanding that no such objection had been urged before the Court exercising jurisdiction under Section 34. FACTUAL MATRIX:

4. In order to comprehend the issues involved in the present case, relevant facts in brief are required to be noticed.

5. The Appellant, Respondent No. 2 and the Late Mr. Harvinder Singh, entered into an Agreement dated 10.04.2020 [hereinafter referred to as ‘the Agreement’] with Respondent No. 1/Claimant for the construction of their residential property bearing No. E-90, Greater Kailash Enclave-I, New Delhi [hereinafter referred to as the ‘subject premises’].

6. Along with the Agreement, Respondent No. 1 furnished a provisional estimate for the construction of the subject premises in the sum of Rs. 62,14,000/-, which was agreed upon by the parties. In addition thereto, the specifications of the works to be undertaken by Respondent No. 1, along with the materials proposed to be utilized, were also provided. Further, as reflected in the programme schedule executed between the parties, the entire construction was required to Signature Not Verified Signed By:JAI NARAYAN Signing Date:27.11.2025 17:25:35 FAO(COMM) 205/2024 Page 2 of 28 be completed by Respondent No. 1 on or before 10.01.2011. It is pertinent to note that the aforesaid documents, namely the Agreement, the provisional estimate, and the time schedule, stand admitted by both parties.

7. Pursuant the execution of the aforesaid documents, Respondent No. 1 commenced the construction work at the subject premises. However, it is the case of the Appellant that Respondent No. 1 not only failed to complete the construction within the stipulated period but also abandoned the work midway, thereby compelling the Appellant and Respondent Nos. 2 to 5, who are

representatives of the Late Mr. Harvinder Singh, to engage other contractors to complete the remaining works.

8. Thereafter, Respondent No. 1 invoked arbitration proceedings against the Appellant and Respondent Nos. 2 to 5, the joint owners of the subject premises, and asserted various claims in respect of the amounts allegedly payable to him for the purported works executed at the subject premises. Respondent No. 1 raised the following claims before the learned Arbitrator: i. Claim No.1: Sum of Rs.20,18,164/- being the balance payment of work done (final bill). ii. Claim No.2: Sum of Rs.51,000/- being the cost of Equipment and Machinery. iii. Claim No.3: Sum towards the market rise amount. iv. Claim No.4: Sum of Rs.1,98,848/- being the loss and damages. Signature Not Verified Signed By:JAI NARAYAN Signing Date:27.11.2025 17:25:35 FAO(COMM) 205/2024 Page 3 of 28 v. Claim No.7: Pre suit interest of Rs.13,96,686/- along with pendente lite and future interest @18% p.a. vi. Claim No.8: Sum of Rs.3,00,000/- towards the cost of Arbitration.

9. Thereafter, in the Statement of Claim, Respondent No. 1 alleged that the Appellant and Respondent Nos. 2 to 5 failed to make timely payments and caused delays by introducing repeated modifications to the architectural drawings, resulting in purported losses to him. He relied upon Running Bills Nos. 1 to 14, the Pre- Final Bill dated 02.06.2011, and the Final Bill dated 24.09.2011, while also asserting that the construction stood completed on

15.01.2011.

10. In their Statement of Defence, the Appellant and Respondent Nos. 2 to 5 placed on record a detailed list of incomplete and defective works, notice of which had been communicated to Respondent No. 1 vide email dated 28.02.2011, and contended that all such works had to be completed or rectified at their own expense through other contractors. It was thus their case that since electrical and sanitary works, plastering, and finishing had not been completed, no claim for the entire contract amount could arise, and consequently, they advanced the following counter-claims in arbitration: i. Counter Claim No.1: Sum of Rs.76,904/- towards payment of water bills till April, 2011, which were to be made by the Respondent No.1 as per the Agreement. Signature Not Verified Signed By:JAI NARAYAN Signing Date:27.11.2025 17:25:35 FAO(COMM) 205/2024 Page 4 of 28 ii. Counter Claim No.2: Sum of Rs.2,90,616/- towards payments made for electrical work at the subject premises, which was to be done by the Respondent No. 1 as per the Agreement. iii. Counter Claim No.3: Sum of Rs.7,00,000/- towards the payment received, which has not been accounted for. iv. Counter Claim No.4: Sum of Rs.1,30,709/- towards sanitary works got done, which was within the scope of work of the Respondent No. 1 as per the Agreement. v. Counter Claim No.5: Sum of Rs.12,000/- towards electricity earthing, which was within the scope of work of the Respondent No. 1 as per the Agreement. vi. Counter Claim No.6: Sum of Rs.9,14,305/- towards various other works which had to be done in the subject premises, which was within the scope of work of the Respondent No. 1 as per the Agreement. vii. Counter Claim No.7: Pendente lite and future interest @18% p.a. on all the counter-claims. viii. Counter Claim No.8: Rs. 2,00,000/- towards cost of arbitration.

11. Further, upon completion of the pleadings and admission denial of documents, the learned Arbitrator, on 25.01.2016, was pleased to frame the following issues for adjudication: “1. Whether the Claimant has completed the entire work under the Agreement as per the specifications provided under the Agreement Signature Not Verified Signed By:JAI NARAYAN Signing Date:27.11.2025 17:25:35 FAO(COMM) 205/2024 Page 5 of 28 and extra works as suggested by the Respondents to the complete satisfaction of the Respondents? OPC 2. Whether the Claimant or the Respondents are responsible for the delay in the execution of the work? OPP 3. To what extent payments have been made by the Respondent to the Claimant? OPP 4. Whether the Claimant is entitled for claims no. 1 to 6 as mentioned in the claim petition? OPC 5. Whether the Respondents are entitled for the counter claims in claim no. 1 to 8 as mentioned in the counter claims? OPR 6. Relief.”

12. The learned Arbitrator thereafter passed the Award, adjudicating upon and allowing the following claims of Respondent No. 1 and the counter-claims of the Appellant and Respondent Nos. 2 to 5: Issue Contentions of Contentions of Findings/Decision the Claimant the Appellants learned and Respondent Arbitrator Nos. 2 to 5 Issue No.1: The work was None of Claimant cannot Whether the completed by running bills or claim that he had Claimant has final bills were completed the entire completed

15.01.2011, as received by the work as per the work and stated by him Appellant and Agreement. extra work to the plaint Respondent However, he did the the complete and the cross- Nos. 2 to 5. extra works satisfaction examination. Moreover, claimed in the final of the other party? Claimant bills to the complete satisfaction of the Signature Not Verified Signed By:JAI NARAYAN Signing Date:27.11.2025 17:25:35 FAO(COMM) 205/2024 Page 6 of 28 different other party. bills and these final bills do no match and have changed time. Accordingly, Issue 1 is partly decided against Claimant and partly in favour of other party. Issue No.2: There were Claimant Claimant has Whether the constant abandoned Claimant or delays in July, incomplete and has the end of the 2011 without plausible party, completing the explanation for the required for as, same. same. Thus, Claimant cannot responsibility the delay completion of work. delay in the failure execution of architect the work? provide drawings on time, hindrance unloading the building material, etc. Issue No.3: The The The amount To amount by the amount that has received extent other party to been paid to the Claimant from the Signature Not Verified Signed By:JAI NARAYAN Signing Date:27.11.2025 17:25:35 FAO(COMM) 205/2024 Page 7 of 28 payments Claimant Respondents Rs.65,50,000/- Rs.75,00,000/- determined made to the Claimant? Rs.68,00,000/- Issue No.4: Claimant was This work is far The actual value of Whether the in excess of the Claimant execute work sanctioned area. constructed entitled in excess of Claimant excluding claims no. 1 the estimated not give them alleged extra work 6 areas provided the bill for the the extent of mentioned in same and also, Rs.65,44,049/- Agreement. abandoned petition? in July,

2011. - All counter claims except Counter Claim 1 Counter Claim 2 of the Appellants and Respondent Nos.2 to 5 have been rejected. Issue No.5: - Whether the Respondents entitled counter claims claim no. 1 8 mentioned in the counter Signature Not Verified Signed By:JAI NARAYAN Signing Date:27.11.2025 17:25:35 FAO(COMM) 205/2024 Page 8 of 28 claims? Issue No.6: - - Relief Claimant is entitled to receive a sum of Rs.7,88,965 with interest @10% p.a. from the date of invocation arbitration, 1,50,000/- as costs of arbitration. Respondents entitled to receive Rs.50,673 (for Counter Claim No. 1 and Counter Claim No.2).

13. Aggrieved by the same, the Appellant and Respondent Nos. 2 to 5 instituted the Section 34 Petition, assailing the Award as being, inter alia, patently illegal and manifestly perverse on the face of the record. However, the Appellant failed to raise the ground of arithmetical error before the court exercising jurisdiction under Section 34. Signature Not Verified Signed By:JAI NARAYAN Signing Date:27.11.2025 17:25:35 FAO(COMM) 205/2024 Page 9 of 28

14. Upon hearing the parties, the learned Court proceeded to dismiss the Section 34 Petition and upheld the Award rendered by the learned Arbitrator.

15. Aggrieved by the dismissal of the Section 34 Petition vide Impugned Order, the present Appeal has been filed by the Appellant. CONTENTION OF THE PARTIES:

16. Heard learned Counsel for the parties at length and, with their able assistance, perused the paperbook.

17. The arguments raised by learned Counsel for Plaintiffs/Appellants are: i. A bare perusal of the Award would show that it is completely perverse, and the learned Arbitrator has committed glaring defects while passing the Award, which vitiates the entire Award. ii. Both the learned Arbitrator and learned District Judge failed to take into account that the charges towards Mumty and the Machine room were not covered under ‘Extra Work’ as claimed by the Respondent No. 1 and could not have been awarded to him, as it was within his scope of work and he was duly paid for it. The award of claim of Rs. 70,200/- towards Mumty and Rs. 65,000/- towards Machine Room are patently illegal, on the face of it and are therefore liable to be set aside. iii. In the Award, the learned Arbitrator gave a finding on Issue No. 3 that the Respondent No. 1 received a sum of Rs. 68,00,000 for the work done at the subject premises. Furthermore, while Signature Not Verified Signed By:JAI NARAYAN Signing Date:27.11.2025 17:25:35 FAO(COMM) 205/2024 Page 10 of 28 addressing Issue No. 4, he made a finding that the value of the work done at the subject premises is determined to be Rs. 65,44,049/-. The Appellant and Respondent Nos. 2 to 5, even as learned Arbitrator, made an extra payment of Rs.2,55,951/- (i.e., Rs. 68,00,000 - Rs. 65,44,049) to the Respondent No. 1, however, the same was not adjusted in the final awarded amount granted to the Respondent No. 1.

18. Per contra, learned Counsel for the Respondent, while relying upon the judgment rendered by the two-judge Bench of the Supreme Court in McDermott International Inc. v. Burn Standard Co. Ltd. & Ors.4, has made the following submissions: i. An Arbitrator is the sole judge of the facts involved in a matter and factual findings are not amenable to interference by the Court, beyond the scope and ambit of Section 34. ii. Proceedings under Section 37 are not akin to an appeal, whereby all the issues can be contended and deliberated again. iii. Appellant has come up with a new frivolous ground, with mala fide intent, that the learned Arbitrator has failed to adjust Rs.2,55,951/- as overpayment made by the Appellant against the work carried out in the terms of the Agreement, which was not pleaded anymore. Therefore, if something is not pleaded in the Section 34 Petition, it cannot be sought in a subsequent appeal under Section 37. 4 (2006) 11 SCC 181. Signature Not Verified Signed By:JAI NARAYAN Signing Date:27.11.2025 17:25:35 FAO(COMM) 205/2024 Page 11 of 28 iv. Respondent has only received Rs.68,00,000/-, which pertinent the Award. Rs.68,00,000/-, including mobilisation advance, has already been adjusted in the final bill. Thus, the above question of readjustment does not arise.

19. Learned Counsel for the parties have not made any other submissions. ANALYSIS AND FINDINGS:

20. This Court has analysed the submissions advanced by the learned Counsel for the parties.

21. It would be apposite to set out herein the scrutiny permissible by this Court in exercise of its powers under Section 37. It is now well-settled that the appellate jurisdiction of the Court under Section 37 is to be exercised with due restraint, ensuring that it does not traverse beyond the statutory confines delineated under Section 34. The Supreme Court in the judgment of MMTC Ltd. v. Vedanta Ltd.5 contemplated upon the limited and supervisory nature of an appeal under Section 37 and has observed that: “14. As far as interference with an order made Under Section 34, as per Section 37, is concerned, it cannot be disputed that such interference Under Section 37 cannot travel beyond the restrictions laid down Under Section 34. In other words, the court cannot undertake an independent assessment of the merits of the award, and must only ascertain that the exercise of power by the court Under Section 34 has not exceeded the scope of the provision. Thus, it is evident that in case an arbitral award has been confirmed by the court Under Section 34 and by the court in an appeal Under Section 37, this Court must be extremely cautious and slow to disturb such concurrent findings.” (Emphasis supplied) 5 (2019) 4 SCC 163. Signature Not Verified Signed By:JAI NARAYAN Signing Date:27.11.2025 17:25:35 FAO(COMM) 205/2024 Page 12 of 28

22. Similar observations have been made by the Supreme Court in Punjab State Civil Supplies Corpn. Ltd. v. Sanman Rice Mills6, which reads as follows: “20. In view of the above position in law on the subject, the scope of the intervention of the court in arbitral matters is virtually prohibited, if not absolutely barred and that the interference is confined only to the extent envisaged under Section 34 of the Act. The appellate power of Section 37 of the Act is limited within the domain of Section 34 of the Act. It is exercisable only to find out if the court, exercising power under Section 34 of the Act, has acted within its limits as prescribed thereunder or has exceeded or failed to exercise the power so conferred. The Appellate Court has no authority of law to consider the matter in dispute before the arbitral tribunal on merits so as to find out as to whether the decision of the arbitral tribunal is right or wrong upon reappraisal of evidence as if it is sitting in an ordinary court of appeal. It is only where the court exercising power under Section 34 has failed to exercise its jurisdiction vested in it by Section 34 or has travelled beyond its jurisdiction that the appellate court can step in and set aside the order passed under Section 34 of the Act. Its power is more akin to that superintendence as is vested in civil courts while exercising revisionary powers. The arbitral award is not liable to be interfered unless a case for interference as set out in the earlier part of the decision, is made out. It cannot be disturbed only for the reason that instead of the view taken by the arbitral tribunal, the other view which is also a possible view is a better view according to the appellate court.” (Emphasis supplied)

23. Further, a three-judge Bench of the Supreme Court in UHL Power Co. Limited v. State of Himachal Pradesh7 held the following: “15. This Court also accepts as correct, the view expressed by the appellate court that the learned Single Judge committed a gross error in reappreciating the findings returned by the Arbitral Tribunal and taking an entirely different view in respect of the interpretation of the relevant clauses of the implementation agreement governing the parties inasmuch as it was not open to the said court to do so in proceedings Under Section 34 of the Arbitration Act, by virtually acting as a court of appeal. 6 2024 SCC OnLine SC 2632. 7 (2022) 4 SCC 116. Signature Not Verified Signed By:JAI NARAYAN Signing Date:27.11.2025 17:25:35 FAO(COMM) 205/2024 Page 13 of 28

16. As it is, the jurisdiction conferred on courts Under Section 34 of the Arbitration Act is fairly narrow, when it comes to the scope of an appeal Under Section 37 of the Arbitration Act, the jurisdiction of an appellate court in examining an order, setting aside or refusing to set aside an award, is all the more circumscribed.” (Emphasis supplied)

24. Learned Counsel for the Respondents has placed his reliance upon the judgment rendered by the two-judge Bench of the Supreme Court in McDermott International (supra), where the Court has taken a similar view. The relevant extracts of the same are extracted hereunder: “52. The 1996 Act makes provision for the supervisory role of courts, for the review of the arbitral award only to ensure fairness. Intervention of the court is envisaged in few circumstances only, like, in case of fraud or bias by the arbitrators, violation of natural justice, etc. The court cannot correct errors of the arbitrators. It can only quash the award leaving the parties free to begin the arbitration again if it is desired. So, the scheme of the provision aims at keeping the supervisory role of the court at minimum level and this can be justified as parties to the agreement make a conscious decision to exclude the court's jurisdiction by opting for arbitration as they prefer the expediency and finality offered by it. ***

112. It is trite that the terms of the contract can be express or implied. The conduct of the parties would also be a relevant factor in the matter of construction of a contract. The construction of the contract agreement is within the jurisdiction of the arbitrators having regard to the wide nature, scope and ambit of the arbitration agreement and they cannot be said to have misdirected themselves in passing the award by taking into consideration the conduct of the parties. It is also trite that correspondences exchanged by consideration for the purpose of construction of a contract. Interpretation of a contract is a matter for the arbitrator to determine, even if it gives rise to determination of a question of law. (See Pure Helium India (P) Ltd. v. ONGC [(2003) 8 SCC 593] and D.D. Sharma v. Union of India [(2004) 5 SCC 325] .) the parties are required to be

113. Once, thus, it is held that the arbitrator had the jurisdiction, no further question shall be raised and the court will not exercise Signature Not Verified Signed By:JAI NARAYAN Signing Date:27.11.2025 17:25:35 FAO(COMM) 205/2024 Page 14 of 28 its jurisdiction unless it is found that there exists any bar on the face of the award.

114. The above principles have been reiterated in Chairman and MD, NTPC Ltd. v. Reshmi Constructions, Builders & Contractors [(2004) 2 SCC 663] , Union of India v. Banwari Lal & Sons (P) Ltd. [(2004) 5 SCC 304] , Continental Construction Ltd. v. State of U.P. [(2003) 8 SCC 4] and State of U.P. v. Allied Constructions [(2003) 7 SCC 396] .” (Emphasis supplied)

25. The Courts have adopted the same consistent view in a catena of decisions, a few of which may be adverted to, namely, Vedanta Ltd. v. Shenzhen Shandong Nuclear Power Construction Co. Ltd.8; ONGC Ltd. Western Geco International Ltd.9; Numaligarh Refinery Ltd. v. Daelim Industrial Co. Ltd.10; Tata Hydro-Electric Power Supply Co. Ltd. v. Union of India11; Ssangyong Engg. & Construction Co. Ltd. v. NHAI12; and, NHAI v. M. Hakeem13.

26. Thus, is a well-embedded principle in arbitration jurisprudence that the scope of interference under Section 37 is even narrower than that contemplated under Section 34. The appellate court, while examining an order passed under Section 34, does not sit in substantive review of the arbitral award, nor does it reassess or re- appreciate the evidence underlying the Arbitrator’s findings. Thus, the enquiry under Section 37 is confined to testing whether the court below has acted within the statutory boundaries prescribed under Section 34, and whether its decision suffers from patent illegality, perversity, or a jurisdictional infirmity warranting correction.