Limited Section 34 review under arbitration law upheld, restoring liquidated damages for delayed contractual performance.

Section 34 of the Arbitration and Conciliation Act, 1996 permits interference with an arbitral award only on the narrow statutory grounds and does not allow reappreciation of evidence or substitution of another contractual interpretation. The arbitral tribunal had construed the clauses on liquidated damages, extension of time, and delay, and found that the contractor failed to complete the work within the extended period while the employer had reserved its right to levy damages. That view was held to be a plausible one on the material before it, and the Single Judge exceeded Section 34 jurisdiction by re-evaluating the contractual effect of the extension of time. The Division Bench was therefore correct in restoring the award and the challenge to liquidated damages failed.

---

---

Issues: Whether the High Court was justified in setting aside the arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996 and in restoring the deduction of liquidated damages for delayed performance of the construction contract.

Analysis: The arbitral tribunal had examined the contractual clauses governing liquidated damages, extension of time, and the consequences of delay, and had found that the contractor failed to complete the work within the extended period while the employer had repeatedly reserved its right to levy liquidated damages. The Court reiterated that Section 34 of the Arbitration and Conciliation Act, 1996 permits interference only on the limited grounds specified in that provision and does not authorise a reappreciation of evidence or substitution of another possible interpretation of the contract. The view taken by the arbitral tribunal was held to be a plausible view on the material before it. The learned Single Judge had exceeded the limited jurisdiction under Section 34 by re-evaluating the contractual effect of extension of time and by setting aside the award on grounds outside the statutory parameters.

Conclusion: The High Court's Division Bench was correct in restoring the arbitral award, and the challenge to the deduction of liquidated damages failed.

---