Limited Section 34 interference preserves arbitral awards, but excessive pendente lite interest may still be reduced.

Under Section 34 of the Arbitration and Conciliation Act, 1996, courts should not reappreciate an arbitral award as if sitting in appeal, and interference is confined to recognised grounds. Applying that principle, the award was found substantially supported by the record and not open to wholesale interference, although the lower court's rejection of objections was cursory. On interest, the award of 18% pendente lite interest was considered excessive because arbitral interest must remain reasonable where not clearly barred by contract. The interest component was therefore reduced to 9%, leaving the award otherwise substantially upheld.

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Issues: (i) Whether the arbitral award and the order upholding it warranted interference under Section 34 of the Arbitration and Conciliation Act, 1996; (ii) Whether the rate of interest awarded by the arbitrator required reduction.

Issue (i): Whether the arbitral award and the order upholding it warranted interference under Section 34 of the Arbitration and Conciliation Act, 1996.

Analysis: The challenge to the award was examined on the settled principle that a court does not sit in appeal over an arbitral award and interference is confined to recognised grounds. On the facts, most of the findings of the arbitrator were supported by the material on record and did not justify complete interference. The court below, however, had rejected the objections in a cryptic manner, yet the award itself was substantially sustainable.

Conclusion: Interference with the award as a whole was not warranted.

Issue (ii): Whether the rate of interest awarded by the arbitrator required reduction.

Analysis: The award of 18% interest was tested against the principles governing pendente lite interest in arbitration. The governing law permits interest where the contract does not expressly and clearly bar it, but the rate must still be reasonable and aligned with the facts and prevailing standards. In the circumstances, the awarded rate was found excessive, and reduction to 9% was considered appropriate.

Conclusion: The rate of interest was reduced from 18% to 9%.

Final Conclusion: The arbitral award was substantially upheld, but it was modified to the limited extent of reducing the interest component.

Ratio Decidendi: In arbitration, courts should not reappreciate the merits of the award under Section 34, but may interfere to the limited extent necessary to correct an excessive interest component where the contractual and factual setting so requires.

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