Rajasthan High Court: In a civil miscellaneous appeal filed by the appellants, challenging the affirmation of an arbitral award by the Arbitrator and the Court, a Division Bench of Sanjeev Prakash Sharma and Sanjeet Purohit, JJ., while dismissing the appeal held that the challenge to the existence of an arbitration clause was concluded by the Arbitrator and the Court under Section 11 of the Arbitration and Conciliation Act, 1996 (‘1996 Act’), and thus, could not be re-examined under Sections 34 or 37 of the 1996 Act. Further, the Court stressed that the scope of judicial intervention in arbitral matters under Section 37 is limited within the strict confines of Section 34 of the 1996 Act.
Background
The appellant filed the appeal under Section 37 of the 1996 Act, against the Arbitral Award dated 08-06-2024 and the amended award dated 12-07-2024, which had been affirmed by the Commercial Court vide an order dated 13-06-2025. The Commercial Court had rejected the appellant’s application raising objections under Section 34 of the 1996 Act. The appellant argued that there was no arbitration agreement between the parties and there was a gross delay in raising the claim by the Respondent as the period of limitation had allegedly expired in 2015.
Analysis And Decision
On the Existence of Arbitration Clause
The Court considered the objection regarding the non-existence of an arbitration clause. The Court observed that the Arbitrator had already examined this issue and had conclusively held that an arbitration clause existed between the parties. The Court further noted that the Court, at the stage of the appointment of the Arbitrator under Section 11 of the 1996 Act, had also examined the said aspect and had reached the same conclusion that an inter se arbitration clause existed, which governed both the parties.
The Court observed that the challenge to the issue of the existence of the arbitration agreement, having been decided by the Arbitrator and the Court during the Section 11 proceedings, would not lie in terms of Section 34 of the 1996 Act. The Court referred to the provision of Section 34 of the 1996 Act, which limits the recourse against an arbitral award to specific grounds, such as the invalidity of the arbitration agreement or the arbitral award dealing with a dispute not contemplated by the terms of submission.
The Court noted that in Punjab State Civil Supplies Corpn. Ltd. v. Sanman Rice Mills, 2024 SCC OnLine SC 2632, the Supreme Court held that, “the scope of the intervention of the court in arbitral matters is virtually prohibited, if not absolutely barred. Interference is confined only to the extent envisaged under Section 34 of the 1996 Act. The appellate power of Section 37 of the 1996 Act is limited within the domain of Section 34. The appellate court has no authority of law to consider the matter in dispute on merits to find out whether the decision of the Arbitral Tribunal is right or wrong upon reappraisal of evidence, as if it is sitting in an ordinary court of appeal. The Arbitral Award is not liable to be interfered unless a case for interference as set out in the decision is made out.”
The Court observed that the question regarding the existence of the arbitration clause was finally concluded at the stage of the Arbitrator himself, and further, having been decided by the Court while appointing the Arbitrator under Section 11, the Commercial Court had no jurisdiction to re-examine the same, and consequently, the challenge under Section 37 was not maintainable.
On the Ground of Limitation
The Court observed that the respondent was engaged in providing software and improvements which were continuously demanded by the appellant from time to time. Furthermore, the appellant had also directed the respondent to renew its performance bank guarantee from time to time, but the payments for the work performed were not released. The notices demanding the amount for the work performed, which was ongoing up to the year 2021, were issued on 09-11-2021. The Court concluded that the question of limitation did not arise at all in the present case, nor was it raised at any stage. Hence, the Court did not find any reason to entertain the objections under Section 37 of the 1996 Act.
The Court dismissed the appeal.
[Jaipur Vidhyut Vitran Nigam Limited v. Compucon Software Ltd., D.B. Civil Miscellaneous Appeal No. 3113/2025, decided on 15-09-2025]
Advocates who appeared in this case:
For the Appellant(s): Sarvesh Jain, Advocate
For the Respondent(s): James Bedi and Aditya Maheshwari, Advocates
Buy Arbitration and Conciliation Act, 1996 HERE
