An appellate authority reviewing an arbitral award possesses strictly limited supervisory jurisdiction; it cannot re-evaluate evidence or substitute its own interpretation of contractual clauses unless the award is proven to be patently illegal, perverse, or fundamentally in conflict with public policy.

ORDER :

1. Assailed herein is a judgment and order dated 06.11.2024 passed by the Commercial Court, Jodhpur Metropolitan, whereby the petition filed by the appellants under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter, “1996 Act”) was dismissed, and the Arbitral Award dated 31.12.2021 was upheld.

2. The dispute originates from a work order dated 22.09.2008 between the parties for construction of a Guest House of Academic Staff for a total work order of Rs.71,57,743/-. The work was to be completed within ten months, i.e., by 05.08.2009. Subsequently, an additional work order dated 18.09.2010 worth Rs.25 lakhs was issued for completion of the remaining work, extending the timeline up to 27.09.2010 without imposing any penalty.

2.1 However, due to lack of funds the University was unable to clear the bills. Consequently, the respondent stopped the work. The respondent also sent various communications to clear the outstanding dues. The matter was placed before the University’s Building Committee and Syndicate, wherein it was decided to pay the respondent for the work executed. The respondent was asked to submit his final bills. The respondent submitted final bills, and payments were made in parts. The respondent also submitted 14^th running bill dated 29.06.2011 amounting to Rs.5,90,397/-. The appellant made part-payment of the said bill which was accepted by respondent under protest, leading to a dispute over a balance sum of Rs.2,26,617/-.

2.2 On 14.12.2015, respondent invoked arbitration under Clause 23 of the agreement. Upon failure of the University to appoint an arbitrator, the respondent approached this Court under Section 11(6) of 1996 Act, resulting in the appointment of a sole arbitrator on 15.05.2019. Arbitration proceedings were conducted, and by award dated 31.12.2021, the Arbitrator ruled in favour of the respondent. The appellants objected to the award under Section 34 of 1996 Act; however, the award was upheld by the Commercial Court on 06.11.2024.

2.3 Hence, the instant appeal.

3. Ms. Adwaita Sharma, learned counsel for the appellants vehemently contends that the impugned judgment dated 06.11.2024, as well as the Arbitral Award dated 31.12.2021, are contrary to the settled principles of law and the facts borne out from the record. Being perverse, patently illegal, and in conflict with the public policy, the same deserve to be set aside. It is submitted that the learned Commercial Court failed to exercise the jurisdiction vested in it under Section 34 of the 1996 Act, having mechanically observed that the scope of interference is limited, without duly adjudicating upon the specific objections raised by the appellants. Such failure to consider material issues strikes at the very root of the matter and renders the impugned judgment wholly unsustainable.

3.1 It is further contended that the learned Arbitrator gravely erred in interpreting Clause 6 of the agreement by importing conditions such as obtaining consent of the contractor and recording reasons for re-measurement, which are not contemplated under the contract. The clause clearly provides that measurements determined by the Engineer-in-Charge are final and binding, and only requires reasonable notice. The Arbitrator, therefore, not only misinterpreted the contractual terms but also travelled beyond the scope of reference by deciding issues not raised by the parties, thereby vitiat