Arbitral award review is limited: a plausible contract interpretation cannot be replaced by a minority view on section 37 appeal.

A firm-price purchase order for imported equipment was construed as not making the respondent liable for foreign exchange variation, because the final contract omitted an express exchange-rate clause that had appeared in the draft and the negotiations showed only that the U.S. dollar component was to remain firm. The majority arbitral view, upheld by the Single Judge, was treated as a plausible contractual construction, so the claim for exchange variation failed. On appellate review under section 37, the Court reiterated that interference is confined to limited grounds and that a plausible arbitral view cannot be replaced by another possible view. The minority award could not be accepted, as that would amount to impermissible modification of the award.

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Issues: (i) Whether the contract was a firm price contract and whether foreign exchange variation on imported equipment was recoverable from the respondent. (ii) Whether, in an appeal under section 37, the Court could set aside the majority award and accept the minority award after the learned Single Judge had declined interference under section 34.

Issue (i): Whether the contract was a firm price contract and whether foreign exchange variation on imported equipment was recoverable from the respondent.

Analysis: The Purchase Order showed that the contract was for a total price arrived at on the basis of a U.S. dollar value converted at Rs.31.61, but it contained no express clause making the respondent liable for exchange-rate fluctuation. The draft purchase order had contained an exchange-rate clause, yet that clause was omitted from the final contract after negotiations. The correspondence and the final wording indicated that the parties agreed only that the U.S. dollar component would remain firm, not that the exchange rate itself would remain fixed or that the respondent would bear fluctuation risk. The majority arbitral view, upheld by the learned Single Judge, was found to be a plausible construction of the contract and consistent with the parties' pre-contract negotiations.

Conclusion: The claim for recovery of foreign exchange variation was rejected, and this finding was in favour of the respondent.

Issue (ii): Whether, in an appeal under section 37, the Court could set aside the majority award and accept the minority award after the learned Single Judge had declined interference under section 34.

Analysis: The appellate jurisdiction under section 37 is narrower than the supervisory jurisdiction under section 34. The Court reiterated that an arbitral award can be interfered with only on limited grounds such as patent illegality, fraud, bias, or conflict with public policy, and that a plausible view taken by the arbitral tribunal cannot be substituted merely because another view is possible. Accepting the minority award would amount to impermissibly modifying the award, which is not open in such proceedings.

Conclusion: No ground was made out to interfere with the learned Single Judge's order or to replace the majority award with the minority award, and this issue was decided against the appellant.

Final Conclusion: The appeal failed as the majority arbitral award was held to be a reasoned and plausible construction of the contract, and no basis was found for appellate interference under section 37.

Ratio Decidendi: In proceedings under sections 34 and 37 of the Arbitration and Conciliation Act, 1996, a court cannot reappreciate the merits to substitute its own view for a plausible arbitral interpretation of the contract, nor can it impermissibly modify an award by preferring a minority view.

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