Arbitral award review is narrow: courts cannot reweigh evidence or replace a plausible contractual interpretation in appeal.

In review under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, a court cannot reappreciate evidence or substitute its own contractual interpretation where the arbitral tribunal has taken a plausible view. The Supreme Court restored the award on variable charges, downrating, 4 MW power and netting out because the tribunal's findings were based on the parties' correspondence, supplementary arrangements and evidence, and no statutory ground for interference was shown. It also upheld post-award interest, finding no basis to reduce the rate on equitable considerations, and rejected procedural objections relating to expert appointment and document production because no prejudice or denial of natural justice was established.

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Issues: (i) Whether the High Court was justified in setting aside the arbitral award on the claim for variable charges on alternate fuel, downrating, variable charges on 4 MW power, and netting out; (ii) whether the reduction of post-award interest from 15% to 10% per annum was justified; and (iii) whether the procedural objections relating to appointment of an expert and production of documents disclosed any ground for interference with the award.

Issue (i): Whether the High Court was justified in setting aside the arbitral award on the claim for variable charges on alternate fuel, downrating, variable charges on 4 MW power, and netting out.

Analysis: The arbitral tribunal had decided the disputes on the basis of the contractual correspondence, the supplementary arrangements between the parties, and the evidence placed before it. The core question in relation to variable charges was whether supply on alternate fuel was to be billed on a fixed basis or on a formula linked to fuel price and foreign exchange variation. The tribunal treated the parties' communications and cabinet-level approval as establishing a variable tariff arrangement. On downrating, the tribunal found that the supplementary arrangements had altered the capacity regime and that the issue had been settled by the parties, supported by the OEM certificate and the minutes of the meeting. On 4 MW power and netting out, the tribunal again adopted a contractual construction based on the contemporaneous writings and billing arrangements. Interference under Section 34 and, more so, under Section 37 was not warranted merely because another view was possible. Reappreciation of evidence and substitution of the court's view for that of the arbitrator was impermissible.

Conclusion: The High Court was not justified in setting aside those portions of the award; the arbitral findings on these monetary claims were restored.

Issue (ii): Whether the reduction of post-award interest from 15% to 10% per annum was justified.

Analysis: The tribunal had awarded post-award interest under Section 31(7)(b) of the Arbitration and Conciliation Act, 1996. The rate awarded was not shown to be unreasonable or beyond the tribunal's jurisdiction, and the High Court's reduction rested on an impermissible reassessment of the award on equitable considerations. The record did not justify interference on proportionality grounds where the contractual and statutory framework already governed interest.

Conclusion: The reduction of post-award interest was not justified and was set aside.

Issue (iii): Whether the procedural objections relating to appointment of an expert and production of documents disclosed any ground for interference with the award.

Analysis: The request for expert appointment had been effectively abandoned by amendment of the counterclaim, and the tribunal had proceeded on the basis of the parties' own computations. The complaints regarding non-disposal of document-production requests and denial of additional written submissions did not establish any prejudice or denial of opportunity so as to attract Section 34(2)(a)(iii) or the principles of natural justice. The objections were procedural in nature and did not disclose any patent illegality or violation affecting the award.

Conclusion: No procedural ground for setting aside the award was made out against the claimant.

Final Conclusion: The High Court exceeded the limited scope of review under Sections 34 and 37 by reappreciating evidence and substituting its own view on the merits; the arbitral award stood restored in full and the claimant succeeded in appeal.

Ratio Decidendi: In proceedings under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, an arbitral award cannot be interfered with by reappreciation of evidence or by substituting a different contractual interpretation where the arbitrator has taken a possible view; interference is confined to patent illegality or other statutory grounds that go to the root of the award.

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