Delhi High Court reaffirms narrow scope of Section 34 challenges to arbitral awards

The Delhi High Court dismissed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 filed by M/s Winner Construction Pvt. Ltd., challenging a 2015 arbitral award arising from a contract to build an office building for the Agricultural Produce Marketing Committee, Azadpur. The Sole Arbitrator had allowed two of the contractor's claims, for a minimum-wage escalation and a wrongly deducted labour cess, but rejected its claims for interest on a delayed final bill and for escalation and extra establishment costs during an extended completion period, holding that the contractor had not proved the delay was attributable to the employer and had not given contemporaneous notice of its intention to claim compensation, as required under Section 55 of the Indian Contract Act, 1872. Justice Om Prakash Shukla held that a court hearing a Section 34 petition does not sit in appeal over an arbitral award and cannot reassess evidence or substitute its own interpretation of a contract merely because another view was possible.

Relying on the Supreme Court's restatement of the 'patent illegality' standard in Ramesh Kumar Jain v. Bharat Aluminium Company Ltd. (2025 INSC 1457), the Court held that interference is warranted only where an award's findings have no evidentiary basis, ignore vital evidence that was placed on record, or are so irrational that no fair or sensible person could have reached them on the same facts, none of which the Petitioner had shown. The petition was dismissed with no order as to costs.