Shyam Sunder vs Surender Singh Verma & Anr.

Anil Kshetarpal, J

Through the present Appeal under Section 37 of the Arbitration and Conciliation Act, 1996 ‘Section 37’ [hereinafter referred to as ‘A&C Act’], the Appellant assails the correctness of the Judgment dated 23.12.2025 [hereinafter referred to as the ‘Impugned Judgment’] passed by the learned District Judge in a petition instituted under Section 34 [hereinafter referred to as the ‘Section 34 Petition’] of the A&C Act ‘Section 34’. By way of the Impugned Judgment, the learned District Judge has declined interference with the Arbitral Award dated 03.06.2025 [hereinafter referred to as the ‘Award’] and has upheld the same.

The  challenge  laid  by  the  Appellant  in  the  Section  34  Petition was directed against the findings returned by the learned Sole Arbitrator [hereinafter referred to as the ‘Tribunal’] in respect of its claims arising out of a Collaboration Agreement executed between the parties. The Appellant contended that the Award suffered from patent illegality, inasmuch as material evidence had been ignored, findings had been returned in the absence of proof, and reliance had been placed upon documents which were neither duly proved nor admissible in evidence. The learned District Judge, however, found no ground to interfere and dismissed the Section 34 Petition.

Since the present Appeal arises under Section 37 against an order refusing to set aside the Award, the scope of interference is necessarily circumscribed. The question that arises for consideration is whether the learned District Judge committed any error warranting appellate interference while declining to set aside the Award.

FACTUAL MATRIX:

Before  examining  the  rival  submissions  advanced  on  behalf  of the parties, it would be appropriate to briefly notice the factual background giving rise to the present Appeal.

The Appellant is engaged in the business of construction, whereas Respondent No.1 is the owner of property bearing No.1302/13, Khasra No.93, Govindpuri, Kalkaji, New Delhi, admeasuring 185 sq. yds [hereinafter referred to as ‘subject property’]. Respondent No.2 is the son of Respondent No.1. The disputes between the parties arise out of a Collaboration Agreement dated 25.05.2013 [hereinafter referred to as ‘Collaboration Agreement’] executed between the Appellant and the Respondent No.1 in respect of the subject property.

In terms of the Collaboration Agreement, the Appellant was entrusted with the obligation of undertaking construction from the first floor up to the terrace, comprising multiple residential units, while the ground floor remained with the Respondent No.1. As per the Collaboration Agreement, upon completion of construction, six flats would be allocated to the Appellant.

During the continuance of the said arrangement, Respondent No.1  executed  a  registered  Gift  Deed  transferring  an  undivided  50% share  in  the  property  in  favour  of  Respondent  No.2.  It  is  the  case  of the Appellant that the said transfer, coupled with the subsequent conduct of Respondent No.2, impeded the progress of construction. The Respondents, however, dispute the said allegation.

According to the Appellant, as urged in the Section 34 Petition, substantial investments were made towards construction, and the work stood completed up to the agreed stage by the year 2016. It is alleged that notwithstanding such completion, the Respondents failed to convey title and possession of the six flats agreed to be allotted to the Appellant  and,  instead,  dealt  with  certain  portions  of  the  property  in favour of third parties.

The Respondents, on the other hand, contend that the Appellant was in breach of the Collaboration Agreement, having undertaken unauthorized  construction,  which  led  to  the  property  being  sealed  by the Municipal Corporation of Delhi [hereinafter referred to as’MCD’],besides  initiation  of  criminal  proceedings.  It  is  further  their case that  the  Appellant  repeatedly sought extensions,  failed to  adhere to the contractual stipulations, and eventually withdrew from the project.

It is further the stand of the Respondents that the parties brought the Collaboration Agreement to an end by executing a Cancellation Agreement  dated  08.03.2017  [hereinafter  referred  to  as  ‘Cancellation Agreement’], along with certain receipts and undertakings, under which the Appellant is stated to have accepted full and final settlement of all claims arising out of the arrangement.

In view of the disputes that arose between the parties in the course of execution of the Collaboration Agreement, inter alia, in relation to alleged breaches, financial claims, and the rights and obligations flowing from the said arrangement, the Appellant instituted a civil suit seeking injunctive relief. During the proceedings, the parties agreed to refer the dispute to arbitration in terms of the arbitration clause contained in the Collaboration Agreement.

A learned Sole Arbitrator [hereinafter referred to as the’Tribunal’] was appointed to adjudicate the disputes between the parties. Upon consideration of the material on record and the submissions advanced, the Tribunal rendered the Award dated 03.06.2025, whereby the claims of the Appellant came to be rejected.

Aggrieved by the Award, the Appellant instituted the Section 34 Petition,  assailing  the  Award,  inter  alia, on  the  ground  that  the  same suffered from patent illegality, perversity and non-consideration of material evidence.

The  learned  District  Judge,  vide  the  Impugned  Judgment  dated 23.12.2025, declined to interfere with the Award and dismissed the Section 34 Petition, primarily holding that the findings returned by the Tribunal  were  based  on  appreciation  of  evidence  and did  not  warrant interference within the limited scope of Section 34. It was further observed that the objections raised by the Appellant essentially sought re-appreciation of evidence, which is impermissible in proceedings under Section 34.

Aggrieved by the dismissal of the Section 34 Petition, the Appellant has preferred the present Appeal under Section 37.

In the aforesaid backdrop, we proceed to notice the submissions advanced on behalf of the parties.

CONTENTIONS OF THE PARTIES:

Heard learned counsel for the parties and, with their able assistance, perused the material on record.

Learned Counsel representing the Appellant submits as under:

i. The learned District Judge has rejected the challenge without examining whether the findings of the Tribunal were supported by legally admissible evidence or suffered from patent illegality, and has merely affirmed the Award.

ii. The Award is founded upon the alleged Cancellation Agreement dated 08.03.2017, which was specifically disputed and not proved in accordance with law. Despite this, the Tribunal relied upon the same,  and the learned District Judge erroneously treated the issue as one of mere appreciation of evidence.

iii. The  findings  regarding  alleged  payments,  including  cash transactions, are based on no evidence, in the absence of any documentary material, financial trail, or corroboration, rendering the Award perverse. This aspect has been overlooked in the Impugned Judgment.

iv. Material evidence on record, including documents reflecting inconsistencies in the Respondents’ case and lack of proof of expenditure, has been ignored by the Tribunal, which the learned District Judge has failed to consider.

v. The  findings  of  the Tribunal  are  contrary to  the terms  of the Collaboration Agreement and the contractual obligations of the parties, thereby attracting the ground of patent illegality.

Per contra, learned Counsel representing the Respondents submits as under:

i. The  scope  of  interference  under  Section  37  of  the  A&C Act does not permit re-appreciation of evidence or substitution of the Court’s view for that of the Tribunal.

ii. It is  submitted  that  the Tribunal  has rendered  a detailed and reasoned Award upon due consideration of the pleadings, evidence, and material on record, and the findings returned therein are plausible and within its jurisdiction.

iii. The learned District Judge has correctly held that the objections raised by the Appellant essentially seek a re- evaluation of evidence and reassessment of factual findings, which is impermissible under Section 34.

iv. It is further submitted that the findings relating to the Cancellation  Agreement,  as  well  as  the  transactions  between  the parties, are pure findings of fact based on appreciation of evidence, including documents and oral testimony, and are not open to interference in proceedings under Sections 34 or 37.

No other submissions have been advanced by  learned counsel for the parties.

ANALYSIS AND FINDINGS

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

At the outset, it would be apposite to delineate the scope of interference  in  an  Appeal  under  Section  37.  It  is  well-settled  that  the jurisdiction of the appellate court under Section 37 is circumscribed and  does  not  extend  beyond  the  parameters  laid  down under  Section 34.

The Hon’ble Supreme Court in MMTC Ltd. v. Vedanta Ltd. 2019) 4 SCC 163 has held that while exercising jurisdiction under Section 37, the Court cannot undertake an independent assessment of the merits of the arbitral award and is only required to examine whether the court exercising jurisdiction under Section 34 has acted within the confines of the provision.

Similarly, in Punjab State Civil Supplies Corpn. Ltd. v. Sanman  Rice  Mills 2024 SCC OnLine SC 2632,  it  has  been  held  that  the  appellate  court,  while exercising  powers  under  Section  37,  does  not  sit  in  Appeal  over the arbitral award and cannot re-appreciate the evidence. The scope of interference is confined to examining whether the court under Section 34 has either exceeded its jurisdiction or failed to exercise jurisdiction vested in it.

Further,  a  three-judge  Bench  of  the  Hon’ble  Supreme  Court  in UHL Power Co. Limited v. State of Himachal Pradesh (2022) 4 SCC 116 has reiterated that the jurisdiction under Section 37 is even more circumscribed than that  under  Section  34,  and  the  appellate  court  must  exercise  restraint and cannot substitute its own view for that of the Tribunal.

The principle that the Court does not sit in Appeal over the findings of the Tribunal has also been emphasized in McDermott International Inc. v. Burn Standard Co. Ltd. &  Ors. (2006) 11 SCC 181, wherein it has been  observed  that  the  role  of  the  Court  is  supervisory  in  nature  and intervention is warranted only in limited circumstances such as patent illegality, violation of natural justice, or jurisdictional error.

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. (2019) 11 SCC 465; ONGC Ltd. Western Geco International Ltd. (2014) 9 SCC 263; Numaligarh Refinery Ltd. v. Daelim Industrial Co. Ltd. (2007) 8 SCC 466; Tata Hydro-Electric Power Supply Co. Ltd. v. Union of India (2003) 4 SCC 172; Ssangyong Engg. & Construction Co. Ltd. v. NHAI (2019) 15 SCC 131; and, NHAI v. M. Hakeem (2021) 9 SCC 1.

Thus, it is well-settled that an Appeal under Section 37 is not an avenue for re-appreciation of evidence or re-evaluation of factual findings. The enquiry is limited to examining whether the learned Court under Section 34 has applied the correct legal principles and whether the Award suffers from any infirmity falling within the limited grounds of interference recognized under the A&C Act.

Tested on the aforesaid principles, the contentions advanced on behalf of the Appellant are required to be examined.

The  principal  challenge  raised  by the  Appellant  centres  around the reliance placed by the Tribunal on the Cancellation Agreement dated 08.03.2017, which, according to the Appellant, was neither proved in accordance with law nor admissible in evidence. It is urged that  the  findings  founded  thereon  stand  vitiated,  and  that  the  learned District Judge has failed to properly examine this aspect.

A perusal of the Award, however, indicates that the Tribunal has  not  treated  the  said  document  in  isolation,  but  has  assessed  it  in conjunction with the attendant circumstances, including the conduct of the parties, contemporaneous material, and oral evidence led during the arbitral proceedings. The Tribunal has, upon such evaluation, returned a categorical finding as to the existence and effect of the Cancellation Agreement.

In particular, the Tribunal has extracted and relied upon the contents of Ex. CW1/R-8, which records receipt of a sum of Rs. 60,00,000/-, comprising consideration towards two flats as well as cash payment, expressly acknowledged as a “full and final settlement”against Cancellation Agreement. The Tribunal has treated this document as a contemporaneous acknowledgment of settlement, bearing directly on the Appellant’s rights and obligations.

The Tribunal has further disbelieved the  Appellant’s attempt to dilute the evidentiary value of the said document by alleging that signatures were obtained on blank papers, noting that no foundational pleading or cogent evidence was led in support of such a plea. The absence of any such averment, coupled with lack of substantiating material, has been held to be fatal to the Appellant’s case.

Additionally, the Tribunal has placed reliance upon the admissions of  CW1  in  cross-examination, particularly with  respect to his signatures on the sale deeds executed in favour of third parties. From this, the Tribunal has drawn an adverse inference that the transactions were undertaken with the knowledge, consent, and for the ultimate benefit of the Appellant, thereby reinforcing the Respondent’s case regarding settlement and adjustment of rights.

The Tribunal has also taken into account the admitted execution of documents evidencing extension of the Collaboration Agreement, as well as its eventual cancellation. The inconsistency in the Appellant’s  stand,  admitting  signatures  at  some  places  while  denying at others, has been held insufficient to dislodge the documentary evidence proved against him.

On a cumulative assessment of the documentary record and oral evidence,  including  the  admissions  elicited  in  cross-examination,  the Tribunal has concluded that the Claimant failed to discharge the burden of proof and,  in fact,  corroborated the defence set up by  the Respondent. The finding as to the validity and effect of the Cancellation Agreement is thus rooted in appreciation of evidence and cannot be characterised as perverse or based on no evidence.

The  learned  District  Judge,  while  dealing  with  this  contention, has specifically noted that the objection raised by the Appellant pertains  to  the  manner  of  appreciation  of  evidence  and  the  weight  to be assigned thereto. It has been held that once the Tribunal has considered the material on record and taken a plausible view, the Court, in exercise of jurisdiction under Section 34, cannot reassess the sufficiency of such material or substitute its own conclusions.

This Court finds no infirmity in the aforesaid approach. The question whether a document stands proved, as well as the evidentiary value  to  be  attached  to  it,  falls  within  the  domain  of appreciation  of evidence  led  by  the  parties. The  distinction  between  a  finding  based on“noevidence” and one based on  appreciation of available material must be borne in mind. In the present case, the findings of the Tribunal cannot be said to be unsupported by evidence so as to warrant interference within the limited scope of Section 34 or, a fortiori, under Section 37.

Insofar as the contention relating to alleged payments, including cash transactions, is concerned, the Tribunal has returned findings based on bills, including lack of proof, absence of linkage to the subject  property  and  inconsistencies  in  invoices  and  admission  made by the Appellant. The learned District Judge has rightly observed that such findings are rooted in appreciation of evidence, which lies exclusively within the domain of the Tribunal, and do not disclose perversity or patent illegality.

The submission that the findings are based on“noevidence” is, in effect, an invitation to reassess the adequacy or reliability of the evidence relied upon  by  the Tribunal.  Such an exercise falls  outside the  permissible  contours  of  jurisdiction  under  Sections  34  and  37.  A mere  possibility  of  an  alternative  view  would  not  justify  interference where the view taken by the Tribunal is a plausible one.

Further, the contention that material evidence has been ignored also does not merit acceptance. The Award  reflects due consideration of the documentary and oral evidence on  record.  The learned  District Judge has concurred with this position, holding that the objections raised by the Appellant seek a re-appreciation of the evidentiary record, which is impermissible.

The further submission that the findings of the Tribunal are contrary to the terms of the Collaboration Agreement is equally unavailing. The interpretation of contractual provisions and determination of the rights and obligations of the parties  fall squarely within the jurisdiction of the Arbitral Tribunal. Unless such interpretation is shown to be patently illegal or wholly implausible, no interference is warranted. No such case is made out in the present matter.

Viewed thus, the learned District Judge has correctly applied the settled principles governing interference under Section 34 and has neither exceeded nor failed to exercise the jurisdiction vested in it. The impugned judgment reflects a conscious application of the limited scope of interference and does not suffer from any patent illegality, perversity, or jurisdictional error.

CONCLUSION:

For  the  reasons  aforesaid,  the  present  Appeal,  being  devoid  of merit, is dismissed. The Impugned Judgment dated 23.12.2025 passed by the learned District Judge, affirming the Arbitral Award dated 03.06.2025, calls for no interference.

All pending applications, if any, stand disposed of.