1. This Appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “A&C Act”) has been filed againstthe judgment dated 15.12.2012 passed by the learned District Judge, Khurda at Bhubaneswar in Arbitration Proceeding No.148 of 2011 wherein the learned District Judge has dismissed the petition filed under Section 34 of the A&C Actthereby confirming the award dated 30.4.2011 passed by the learned Sole Arbitrator Justice B.A.Khan.

I.      FACTUAL MATRIX OF THE CASE:

2. The factual matrix traces its origin to the tender process initiated by the appellant, National Aluminium Company Ltd. (NALCO), which on 2.6.2009 floated tenders for supply of burnt quick lime for its Damanjodi plant in Koraput district. The respondent, J.P. Mishra & Company, participated in the process and emerged as one of the successful bidders, along with four other suppliers. A formal purchase order was issued on 9.10.2009, stipulating, inter alia, that the lime supplied must conform to specifiedCaO content standards and that sampling and analysis would be conducted at the destination point, i.e., the NALCO laboratory at Damanjodi, whose results would be final and binding.

3. Pursuant to the contract, the respondent supplied material through three railway rakes. The rakes reached the site on 26.6.2010, and unloading was completed by 27.6.2010. There was no dispute in respect of the first two rakes; however, the third rake containing 2733.774 MT of lime soon became the focal point of controversy. The purchase order mandated that acceptance of material be based solely on NALCO’s laboratory analysis. According to NALCO, the third rake’s CaO content fell below the minimum acceptable limit of 60%, resulting in rejection and forfeiture of the consignment in accordance with Clause 8 of the purchase order. Intimation of such rejection was communicated to the respondent through letters referred to in the appeal papers.

4. The respondent protested immediately upon receiving the rejection communication and, by letters dated 29.6.2010 and 30.06.2010, sought a second sampling of the material. Although the contract did not expressly provide for re-sampling, further correspondence ensued between the parties, culminating in a second sampling exercise conducted on 28.7.2010 at Damanjodi. The respondent alleges that both the original and subsequent samplings were undertaken without proper notice and in its absence, thereby violating principles of natural justice. NALCO, on the other hand, maintains that notice was not contractually required, and even otherwise, the respondent’s representative had been present at the plant premises during the unloading and sampling process, an assertion said to be supported by the respondent’s own pleadings.

5. Dissatisfied with the rejection and asserting financial loss, the respondent invoked the arbitration clause on 19.10.2010. The dispute was referred to a sole arbitrator Justice B.A. Khan (Retd.) who entered reference and heard the parties. The respondent raised a monetary claim of Rs. 1,49,93,961, premised on the assertion that the material had been improperly rejected. NALCO defended the rejection on the ground that the laboratory tests were conducted strictly in accordance with contractual provisions, supported by standard sampling methodologies. Evidence of NALCO officials who conducted the tests was placed before the arbitrator. These competing narratives formed the basis upon which the arbitral tribunal undertook its assessment.

6. The learned arbitrator delivered the award on 30.04.2011, substantially allowing the respondent’s claim and granting Rs.1,19,66,698 in its favour. The award held, inter alia, that sampling and testing had not been done in accordance with the contract and that the respondent had been denied an opportunity to be present during the critical testing process. The arbitrator found procedural deficiencies serious enough to vitiate the rejection and forfeiture. NALCO contended that such findings were beyond the scope of the contract and contrary to the explicit acceptance criteria, but these submissions did not find favour at the arbitral stage.

7. Aggrieved, NALCO filed a petition under Section 34 of the Arbitration and Conciliation Act before the District Judge, Khurda, on 29.7.2011, registered as ARBP No. 148 of 2011, challenging the award on various grounds including excess of jurisdiction, misinterpretation of contractual terms, and violation of Section 28(3) of the Act. After conclusion of arguments on 11.11.2012, the learned District Judge pronounced judgment on 15.12.2012, dismissing the Section 34 petition and upholding the arbitral award. The court accepted the arbitrator’s view that proper notice and adherence to sampling methodology were essential and that their absence had caused prejudice to the respondent.

8. NALCO thereafter preferred the present appeal under Section 37 of the Act, challenging the judgment of the District Judge. Thus, the dispute, which germinated in the aftermath of the third rake’s rejection in June 2010 and evolved through arbitration and proceedings under Sections 34 and 37, now stands here before this Court.

9. Now that the facts leading up to the instant Appeal has been laid down, this Court shall endeavour to summarise the contentions of the Parties and the broad grounds that have been raised to seek the exercise of this Court’s limited jurisdiction available under S. 37 of the A&C Act.

II. APPELLANT’S SUBMISSIONS:

10. During the course of hearing, Learned Counsel for the Appellant submitted that the rejection of the third rake of burnt quick lime was strictly in accordance with the contractual framework governing the supply. It was contended that the purchase order clearly stipulated that sampling and analysis of CaO content would be conducted at the destination point, and that the analysis of NALCO’s laboratory was final and binding on both parties (Clause 6). The third rake delivered on 26.06.2010 was found to contain CaO below the minimum acceptable limit of 60%, and therefore, in compliance with Clause 8, the material was liable to be rejected and forfeited. Counsel emphasized that the respondent had previously accepted a penalty for sub-standard material in the first rake without objection, which demonstrated acquiescence to the contractual mechanism. It was further submitted that the Learned Arbitrator erred in holding that the sampling/testing was improper, even though there was no contractual requirement to issue notice to the respondent, and the respondent’s own CEO was admittedly present at the plant premises during the relevant period.

11. Learned Counsel further argued that the Learned Arbitrator travelled beyond the four corners of the contract in holding that natural justice was violated, despite the absence of any contractual mandate requiring participation or prior notice to the supplier during sampling. It was pointed out that the method of sampling prescribed in the contract, read with Annexure-B and IS 1514:1990, had been duly followed by NALCO officials, whose evidence remained unchallenged during arbitration. The District Judge, while dismissing the Section 34 petition, was said to have ignored this material evidence and failed to consider that the plea of improper sampling was raised for the first time only during oral arguments in the Section 34 proceedings. The Appellant contended that both the Arbitrator and the District Judge misapplied Section 28(3) of the Act by disregarding the contractual terms, thereby rendering the award patently illegal. On these grounds, the Appellant urged that the award dated 30.4.2011 and the judgment dated 15.12.2012 be set aside.

III. RESPONDENT’S SUBMISSIONS:

12. On the contrary, Learned Counsel for the Respondent submitted that both the Arbitral Award and the judgment of the Learned District Judge were the product of a reasonable and equitable interpretation of the governing contractual clauses, particularly Clauses 6 and 8 of the purchase order. It was asserted that the sampling and testing of the third rake were conducted in violation of the method expressly prescribed in the contract, which incorporated the Bureau of Indian Standards (IS 1514:1990) protocol for determining CaO content. Counsel emphasized that the contract did not permit unilateral sampling behind the back of the supplier and that adherence to the prescribed scientific procedure was a mandatory precondition to valid rejection. Since the rejection and forfeiture were not preceded by proper sampling in accordance with the agreed method, the appellant’s action was arbitrary, and the Learned Arbitrator rightly held that the deviation prejudiced the respondent’s rights. The District Judge, while exercising jurisdiction under Section 34, was said to have correctly refrained from substituting his own view for that of the Arbitrator.

13. It was further submitted that the appellant’s principal contention— that Clause 8 made NALCO’s lab report final and binding regardless of the manner of sampling—was misconceived, as the binding nature of the report presupposed sampling conducted strictly as per Annexure ‘B’ and the mandatory steps detailed therein. Any departure from the contractual procedure, including failure to provide fair opportunity for presence at sampling, undermined the integrity of the test itself. Counsel argued that the Arbitrator had acted fully within the scope of Section 28(3) by interpreting the contract in a manner consistent with commercial fairness and established legal principles. Accordingly, the respondent urged that the appeal under Section 37 be dismissed and the concurrent findings of the Arbitrator and the District Judge be affirmed.

IV. ISSUE FOR CONSIDERATION:

14. Having heard the parties and perused the materials available on record, this court here has identified the following solitary issue to be determined:

A. Whether the order of the Ld. District Judge warrants interferencekeeping in mind the limitations of this court’s powers under Section 37 of the A&C Act?

V. ISSUE A: WHETHER THE ORDER OF THE LD. DISTRICT JUDGE WARRANTS ANY INTERFERENCE KEEPING IN MIND THE LIMITATIONS OF THIS COURT’S POWERS UNDER SECTION 37 OF THE A&C ACT?

15. Before going into the merits of the contentions, it is necessary to outline the ambit and scope of Section 37(2)(b) of the 1996 Act. The said section is extracted below:

                  “37. Appealable        orders.—(1)[Notwithstanding anything contained in any other law for the time being in force, an appeal] shall lie from the following orders (and from no others) to the court authorised by law to hear appeals from original decrees of the court passing the order, namely:

                             ∗∗∗

                  (2)      Appeal shall also lie to a court from an order of the Arbitral Tribunal—

                  (a)      accepting the plea referred to in sub-section (2) or sub-section (3) of Section 16; or

                  (b)      granting or refusing to grant an interim measure under Section 17.”

16. The Supreme Court and this Court in catena of judgments have held that the powers of appellate court while exercising jurisdiction under Section 37(2)(b) of the 1996 Act against orders passed by the Arbitral Tribunal is very restricted and narrow and the same should be exercised when the orders seems to be perverse, arbitrary and contrary to law. The judgment of Wander Ltd. v. Antox India (P) Ltd.(1990 Supp SCC 727) passed by the Apex Court, elaborates the ambit and scope of the appeals. Although the aforesaid judgment is not dealing with the arbitration proceedings but the same deals with the power of appellate court in the Civil Procedure Code, 1908 (CPC). Operative paragraphs of the aforesaid judgment are extracted below:

                  “13. On a consideration of the matter, we are afraid, the Appellate Bench fell into error on two important propositions. The first is a misdirection in regard to the very scope and nature of the appeals before it and the limitations on the powers of the appellate court to substitute its own discretion in an appeal preferred against a discretionary order. The second pertains to the infirmities in the ratiocination as to the quality of antox's alleged user of the trade mark on which the passing-off action is founded. We shall deal with these two separately.

                  14. The appeals before the Division Bench were against the exercise of discretion by the Single Judge. In such appeals, the appellate court will not interfere with the exercise of discretion of the court of first instance and substitute its own discretion except where the discretion has been shown to have been exercised arbitrarily, or capriciously or perversely or where the court had ignored the settled principles of law regulating grant or refusal of interlocutory injunctions. An appeal against exercise of discretion is said to be an appeal on principle. Appellate court will not reassess the material and seek to reach a conclusion different from the one reached by the court below if the one reached by that court was reasonably possible on the material. The appellate court would normally not be justified in interfering with the exercise of discretion under appeal solely on the ground that if it had considered the matter at the trial stage it would have come to a contrary conclusion. If the discretion has been exercised by the trial court reasonably and in a judicial manner the fact that the appellate court would have taken a different view may not justify interference with the trial court's exercise of discretion. After referring to these principles Gajendragadkar, J. in Printers (Mysore) (P) Ltd. v. Pothan Joseph (SCC OnLine SC para 9)

                  ‘9. …These principles are well established, but as has been observed by Viscount Simon in Charles Osenton& Co. v. Johnston “the law as to the reversal by a court of appeal of an order made by a Judge below in the exercise of his discretion is well established and any difficulty that arises is due only to the application of well-settled principles in an individual case.”’

                  The appellate judgment does not seem to defer to this principle.”

17. The said judgment is consistently followed in adjudicating petitions pertaining to the A&C Act by Courts across the Country in Green Infra Wind Energy Ltd. v. Regen Powertech (P) Ltd. (2018 SCC OnLine Del 8273) ; SonaCorpn. India (P) Ltd. v. Ingram Micro India (P) Ltd. (2020 SCC OnLine Del 300) ; Manish Aggarwal v. RCI Industries & Technologies Ltd. ((2022) 3 HCC (Del) 289) ; Tahal Consulting Engineers India (P) Ltd. v. Promax Power Ltd. (2023 SCC OnLine Del 2069) and Handicraft & Handlooms Exports Co. of India v. SMC Comtrade Ltd. (2023 SCC OnLine Del 3981)

18. In Reliance Infrastructure Ltd. v. State of Goa ((2024) 1 SCC 479) , the Apex Court noticing its previous decision in MMTC Ltd. v. Vedanta Ltd. ((2019) 4 SCC 163) has noted the limited scope of interference under Section 34 and further narrower scope of appeal under Section 37 of the Act particularly when dealing with the concurrent findings of the arbitrator and that of the Court. Relevant paragraph ‘14’ of MMTC Ltd.(supra) as noted in paragraph ‘26’ in Reliance Infrastructure Ltd.(supra) is to be extracted hereinunder:—

                  “14. As far as interference with an order made under Section 34, as per Section 37, is concerned, it cannot  be  disputed  that  such  interference under Section 37 cannot travel beyond the restrictions laid down under Section 34. In other words, the court cannot undertake an independent assessment of the merits of the award, and must only ascertain that the exercise of power by the court under Section34 has not exceeded the scope of the provision. Thus, it is evident that in case an arbitral award has been confirmed by the court under Section 34 and by the court in an appeal under Section 37, this Court must be extremely cautious and slow to disturb such concurrent findings.”

19. The same view has been expressed in UHL Power Company Ltd. v. State of Himachal Pradesh ((2022) 4 SCC 116) in paragraph ‘16’ while noticing paragraph ‘11’ in MMTC Ltd.(supra):—

                  “16. As it is, the jurisdiction conferred on courts under Section 34 of the Arbitration Act is fairly narrow, when it comes to the scope of an appeal under Section 37 of the Arbitration Act, the jurisdiction of an appellate court in examining an order, setting aside or refusing to set aside an award, is all the more circumscribed. In MMTC Ltd. v. Vedanta Ltd. [MMTC Ltd. v. Vedanta Ltd., (2019) 4 SCC 163 : (2019) 2 SCC (Civ) 293], the reasons for vesting such a limited jurisdiction on the High Court in exercise of powers under Section 34 of the ArbitrationAct have been explained in the following words : (SCC pp. 166-67, para 11)

                  “11. As far as Section 34 is concerned, the position is well-settled by now that the Court does not sit in appeal over the arbitral award and may interfere on merits on the limited ground provided under Section 34(2)(b)(ii) i.e. if the award is against the public policy of India. As per the legal position clarified through decisions of this Court prior to the amendments to the 1996 Act in 2015, a violation of Indian public policy, in turn, includes a violation of the fundamental policy of Indian law, a violation of the interest of India, conflict with justice or morality, and the existence of patent illegality in the arbitral award. Additionally, the concept of the “fundamental policy of Indian law” would cover compliance with statutes and judicial precedents, adopting a judicial approach, compliance with the principlesof natural justice, and Wednesbury [Associated       Provincial Picture Houses Ltd. v. WednesburyCorpn., [1948] 1 K.B. 223(CA)] reasonableness. Furthermore, “patent illegality” itself has been held to mean contravention of the substantive law of India, contravention of the 1996 Act, and contravention of the terms of the contract.”

20. In Haryana Tourism Ltd. v. Kandhari Beverages Ltd. (2022) 3 SCC 237) as noted in paragraph ‘30’ in Reliance Infrastructure Ltd.(supra), it was held on the scope of interference under Sections 34 and 37 of the Act' 1996 as under:—

                  “30. In Haryana Tourism [Haryana Tourism Ltd. v. Kandhari Beverages Ltd., (2022) 3 SCC 237 : (2022) 2 SCC (Civ) 87], this Court yet again pointed out the limited scope of interference under Sections 34 and37 of the Act; and disapproved interference by the High Court under Section 37 of the Act while entering into merits of the claim in the following words : (SCC p. 240, paras 8-9)

                  “8. Sofar as the impugned judgment and order [Kandhari                  Beverages Ltd. v. Haryana Tourism Ltd., 2018 SCC OnLine P&H 3233] passed by the High Court quashing and setting aside the award and the order passed by the Additional District Judge under Section 34 of the Arbitration Act are concerned, it is required to be noted that in an appeal under Section 37 of the Arbitration Act, the High Court has entered into the merits of the claim, which is not permissible in exercise of powers under Section 37 of the Arbitration Act.

                  9.       As per settled position of law laid down by this Court in a catena of decisions, an award can be set aside only if the award is against the public policy of India. The award can be set aside under Sections 34/37 of the Arbitration Act, if the award is found to be contrary to : (a) fundamental policy of Indian Law; or (b) the interest of India; or (c) justice or morality; or (d) if it is patently illegal. None of the aforesaid exceptions shall be applicable to the facts of the case on hand. The High Court has entered into the merits of the  claim and has  decided  the  appeal under Section 37 of the Arbitration Act as if the High Court was deciding the appeal against the judgment and decree passed by the learned trial court. Thus, the High Court has exercised the jurisdiction not vested in it under Section 37 of the Arbitration Act. The impugned judgment andorder [Kandhari Beverages Ltd. v. Haryana Tourism Ltd., 2018 SCC OnLine P&H 3233] passed by the High Court is hence not sustainable.”

21.    It was, thus, observed in paragraph ‘33’ of Reliance Infrastructure Ltd.(supra) as under:—

                  “33. Keeping in view the aforementioned principles enunciated by this Court with regard to the limited scope of interference in an arbitral award by a Court in the exercise of its jurisdiction under Section34 of the Act, which is all the more circumscribed in an appeal under Section 37, we may examine the rival submissions of the parties in relation to the matters dealt with by the High Court.”

22.    It is observed in Punjab State Civil Supplies Corpn. Ltd. v. Sanman Rice Mills (2024 SCC OnLine SC 2632) that:

                  “9. The object of the Act is to provide for a speedy and inexpensive alternative mode of settlement of dispute with the minimum of intervention of the courts. Section 5 of the Act is implicit in this regard and prohibits interference by the judicial authority with the arbitration proceedings except where so provided in Part-I of the Act. The judicial interference, if any, is provided inter-alia only by means of Sections 34 and 37 of the Act respectively.

                  10.     Section 34 of the Act provides for getting an arbitral award set aside by moving an application in accordance with sub-Section (2) andsub-Section (3) of Section 34 of the Act which inter-alia provide for the grounds on which an arbitral award is liable to be set aside. One of the main grounds for interference or setting aside an award is where the arbitral award is in conflict with the public policy of India i.e. if the award is induced or affected by fraud or corruption or is in contravention with the fundamental policy of Indian law or it is in conflict with most basic notions of morality and justice. A plain reading of Section 34 reveals that the scope of interference by the court with the arbitral award under Section 34 is very limited and the court is not supposed to travel beyond the aforesaid scope to find out if the award is good or bad.

                  11.     Section 37 of the Act provides for a forum of appeal inter-alia against the order setting aside or refusing to set aside an arbitral award under Section 34 of the Act. The scope of appeal is naturally akin to andlimited to the grounds enumerated under Section 34 of the Act.

                  12.     It is pertinent to note that an arbitral award is not liable to be interfered with only on the ground that the award is illegal or is erroneous in law that too upon reappraisal of the evidence adduced before the arbitral trial. Even an award which may not be reasonable or is non-speaking to some extent cannot ordinarily be interfered with by the courts. It is also well settled that even if two views are possible there is no scope for the court to reappraise the evidence and to take the different view other than that has been taken by the arbitrator. The view taken by the arbitrator is normally acceptable and ought to be allowed to prevail.

                  xxxxxx

                  14. It is equally settled law that the appellate power under Section 37of the Act is not akin to the normal appellate jurisdiction vested in the civil courts for the reason that the scope of interference of the courts with arbitral proceedings or award is very limited, confined to the ambit of Section 34 of the Act only and even that power cannot be exercised in a casual and a cavalier manner.

                  xxxxxx

                  16. It is seen that the scope of interference in an appeal under Section37 of the Act is restricted and subject to the same grounds on which an award can be challenged under Section 34 of the Act. In other words, the powers under Section 37 vested in the court of appeal are not beyond the scope of interference provided under Section 34 of the Act.”

                  Here, the Supreme Court has once again reiterated that even an award which may not be reasonable or is nonspeaking to some extent cannot ordinarily be interfered with by the courts. It is also well settled that even if two views are possible there is no scope for the court to reappraise the evidence and to take the different view other than that has been taken by the arbitrator. The view taken by the arbitrator is normally acceptable and ought to be allowed to prevail.

23. In Konkan Railway Corpn. Ltd. v. Chenab Bridge Project ((2023) 9 SCC 85) referring to MMTC Limited (supra) it has been held that:

                  “19….The scope of jurisdiction under Section 34 and Section 37 of the Act is not akin to normal appellate jurisdiction. It is well-settled that courts ought not to interfere with the arbitral award in a casual and cavalier manner. The mere possibility of an alternative view on facts or interpretation of the contract does not entitle courts to reverse the findings of the arbitral tribunal…”

24. In Dyna Technology Private Limited v. Crompton Greaves Limited ((2019) 20 SCC 1) , the Apex Court observed as under:

                  “24. There is no dispute that Section 34 of the Arbitration Act limits a challenge to an award only on the grounds provided therein or as interpreted by various courts. We need to be cognizant of the fact that arbitral awards should not be interfered with in a casual and cavalier manner, unless the court comes to a conclusion that the perversity of the award goes to the root of the matter without there being a possibility of alternative interpretation which may sustain the arbitral award. Section 34 is different in its approach and cannot be equated with a normal appellate jurisdiction. The mandate under Section 34 is to respect the finality of the arbitral award and the party autonomy to get their dispute adjudicated by an alternative forum as provided under the law. If the courts were to interfere with the arbitral award in the usual course on factual aspects, then the commercial wisdom behind opting for alternate dispute resolution would stand frustrated.

                  25. Moreover, umpteen number of judgments of this Court have categorically held that the courts should not interfere with an award merely because an alternative view on facts and interpretation of contract exists. The courts need to be cautious and should defer to the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied unless such award portrays perversity unpardonable under Section 34 of the Arbitration Act.”

25. Judicial scrutiny of arbitral awards is stringently limited under Indian law. Section 34 of the Arbitration and Conciliation Act, 1996, provides the exclusive grounds upon which an arbitral award can be challenged. Courts, therefore, are not empowered to interfere merely because another interpretation or outcome may seem more reasonable. The jurisdiction under Section 34 is confined to procedural and legal infirmities such as lack of jurisdiction, violation of natural justice, or patent illegality. Consequently, appellate jurisdiction under Section 37 is even narrower in its scope. Its purpose is to evaluate whether the court adjudicating under Section 34 has remained within the permissible statutory boundaries. The appeal court cannot re-evaluate evidence or reconsider the factual matrix afresh. The statutory framework thus reflects an overarching legislative intent to insulate arbitral decisions from excessive judicial intervention. The entire architecture of Sections 34 and 37 reinforces the finality and autonomy of arbitral proceedings. Arbitration is designed to offer an efficient, expert-led, and expedited alternative to litigation. Courts must therefore resist the temptation to intervene unless the decision by the court under Section 34 itself amounts to a significant transgression of legal boundaries.

26. It is now firmly established in law that appellate review under Section 37 of the Act does not permit the court to act as a second court of first instance. The appeal court's task is not to reassess the arbitral tribunal’s findings on merits or evidence, but only to determine whether the court under Section 34 has exercised its discretion legally and within its jurisdiction. This means the appellate court must limit itself to checking if the Section 34 court has adhered to the narrow scope prescribed by the Act. It is not sufficient for the appellate court to identify an alternative or even preferable view—interference is justified only if the lower court has committed a jurisdictional error, or has failed to apply the law correctly. The design of the Act ensures that arbitration remains an autonomous dispute resolution mechanism, minimally impacted by judicial oversight. The court under Section 37 is not an appellate authority in the conventional civil law sense; it cannot substitute its own interpretation for that of the arbitrator unless a clear and grave legal error is demonstrated. In essence, the appellate court serves as a watchdog over the procedural fidelity of the Section 34 court—not the substantive reasoning of the arbitrator.

27. When interpreting Section 37, it is imperative to contextualize it alongside Section 5 of the Act, which serves as a foundational provision reinforcing the minimal interference ethos. Section 5 makes clear that courts shall not intervene in arbitral matters except as expressly provided in the Act. This legislative mandate is not merely procedural—it is a substantive limitation on judicial power. Appeals under Section 37, especially those arising under Section 37(2)(b), are therefore constrained by both the statutory scheme and overarching judicial philosophy. Unlike appeals under other civil statutes, where courts may dive deep into factual findings or discretionary decisions, the Arbitration Act imposes a tight statutory leash. The objective is to prevent the unraveling of arbitration outcomes through prolonged court battles. Any order passed by an arbitral tribunal, particularly at interlocutory stages, must be accorded due deference unless it reveals clear arbitrariness, irrationality, or breach of fundamental legal principles. Courts must, therefore, resist the impulse to interfere merely because a different view appears plausible or even more just in hindsight. Arbitration is based on party autonomy, and any judicial incursion must align strictly with the boundaries demarcated by Sections 5, 34, and 37.

28. The judiciary's intervention in arbitral matters must be exercised with utmost caution, especially where the arbitral tribunal’s decisions reflect reasonable interpretations of contractual terms or factual matrices. The 1996 Act was introduced with the explicit objective of limiting the role of courts, ensuring faster and more efficient resolution of disputes outside traditional litigation. Consequently, appellate courts under Section 37 must act with deliberate restraint, only intervening when the arbitral process has clearly deviated from established legal standards. This includes instances of perversity, gross arbitrariness, or when settled legal principles have been ignored or misapplied. Importantly, arbitral decisions—even at interim stages—deserve judicial respect unless a substantial illegality is apparent. The appellate court’s function is supervisory, not substitutive. It is not tasked with forming a fresh opinion but must ensure that the arbitral tribunal's discretion has been exercised within legal bounds. In other words, Section 37 does not allow for wholesale re-litigation of disputes that have already been adjudicated by an arbitral forum. The credibility of the arbitration system hinges on this judicial discipline. Allowing appeals to turn into de facto retrials would defeat the very purpose of choosing arbitration over courtroom adjudication.

29. The foundational framework of the Arbitration Act reflects an express intent to exclude ordinary civil appellate practices in arbitral matters. The powers conferred under Section 37(2)(b) are not akin to those under civil appellate jurisdiction, where factual reappraisal and discretionary judgments are routine. Rather, the Act envisions a system where arbitral orders are largely immune from judicial revisitation unless a serious and demonstrable breach of procedure or law occurs. This philosophy is rooted in the recognition that arbitration is a consensual mechanism designed to bypass the complexities and delays of civil litigation. Courts, therefore, must respect the principle of finality, stepping in only where an order of the arbitral tribunal is tainted by evident perversity or gross misapplication of law.

30. In view of the above position in law on the subject, the scope of the intervention of the court in arbitral matters is virtually prohibited, if not absolutely barred and that the interference is confined only to the extent envisaged under Section 34 of the Act. The appellate power of Section 37 of the Act is limited within the domain of Section 34 of the Act. It is exercisable only to find out if the court, exercising power under Section 34 of the Act, has acted within its limits as prescribed thereunder or has exceeded or failed to exercise the power so conferred. The Appellate Court has no authority of law to consider the matter in dispute before the arbitral tribunal on merits so as to find out as to 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. It is only where the court exercising power under Section 34 has failed to exercise its jurisdiction vested in it by Section 34 or has travelled beyond its jurisdiction that the appellate court can step in and set aside the order passed under Section 34 of the Act. Its power is more akin to that superintendence as is vested in civil courts while exercising revisionary powers. The arbitral award is not liable to be interfered unless a case for interference as set out in the earlier part of the decision, is made out. It cannot be disturbed only for the reason that instead of the view taken by the arbitral tribunal, the other view which is also a possible view is a better view according to the appellate court.

31. It must also be remembered that proceedings under Section 34 of the Act are summary in nature and are not like a full-fledged regular civil suit. Therefore, the scope of Section 37 of the Act is much more summary in nature and not like an ordinary civil appeal. The award as such cannot be touched unless it is contrary to the substantive provision of law; any provision of the Act or the terms of the agreement.

32. It is within this statutory and jurisprudential framework that the present appeal must be evaluated.The core issue for consideration here is whether the Arbitral Award, as upheld by the Ld. District Court, suffers from patent illegality warranting interference under Section 37 of the Act.

33. The contractual relationship between the parties arose from the tender floated on 2.6.2009, leading to issuance of a purchase order on 9.10.2009. The contract stipulated precise technical obligations, particularly with respect to sampling and testing of burnt lime supplied to the appellant’s plant. The Arbitrator examined these stipulations and interpreted Clauses 6 and 8 as incorporating the sampling procedure found in Annexure 'B' and IS 1514:1990.

34. The Learned Arbitrator commenced his analysis by examining the contractual provisions that governed the supply, sampling, and acceptance of burnt quick lime. Clause 6 of the Purchase Order was reproduced and emphasised, as was Clause 8 which stipulated that acceptance, penalties, and rejection would flow strictly from the analysed value obtained, including the provision that if CaO fell below 60%, the material was to be forfeited. The Arbitrator held that because the contract expressly incorporated standardised procedures, compliance with them was mandatory, and any deviation would undermine the validity of the rejection itself.

35. The Award records that Annexure ‘B’, read with IS 1514:1990 required that several samples be drawn from different parts of the rake and at varying depths, ensuring that the resulting composite sample was representative of the bulk. The Arbitrator noted the mandatory wording of the standard procedure which required that multiple samples from the front, middle, and rear of each wagon be drawn and thereafter combined into a composite sample before testing. The appellant, however, failed to produce any contemporaneous sampling sheets or logs demonstrating that the prescribed method was followed. The Arbitrator considered this omission fatal because the burden lay on the purchaser—who conducted sampling unilaterally—to demonstrate compliance with the contractually embedded scientific method. He therefore held that the appellant had not satisfactorily established that the sampling was representative.

36. The Award further records that the Arbitrator rejected the appellant’s argument that the laboratory analysis was contractually “final,” holding that such finality attaches only when the sampling which forms the basis of all subsequent testing is validly performed. The Arbitrator found that NALCO’s officials neither documented the sampling exercise nor provided corroborative evidence that the method under Annexure ‘B’ had been adhered to. Because the representative character of the sample was not established, the Arbitrator concluded that the resulting CaO test value could not be treated as a reliable basis for rejecting material worth several lakhs of rupees. The Arbitrator therefore regarded the test report as procedurally vitiated, rather than chemically incorrect, rendering the rejection unsustainable.

37. Moreover, the Purchase Order itself required, under Clause 6, that “the supplier shall furnish a certificate confirming that the material supplied is as per the specification.” The record shows that such a certificate did in fact accompany the rake in question, asserting conformity with the guaranteed CaO content. The Learned Arbitrator noted that the presence of this contractual certificate created an initial presumption in favour of the vendor that the material, at the point of dispatch, met the agreed technical parameters. In the absence of demonstrable adherence to the prescribed sampling methodology by the purchaser, this presumption was not displaced; rather, it strengthened the respondent’s plea that the rejection was unsustainable.

38. Based on the above reasoning, the Arbitrator concluded that the forfeiture under Clause 8 could not legally stand because the foundation for invoking it the sampling was itself defective. He held that once the sampling process was shown to be irregular, the entire rejection decision collapsed, irrespective of what the laboratory analysis indicated. The Award reasoned that contractual rights of forfeiture must be exercised strictly in accordance with the agreed procedure, particularly when severe financial consequences such as complete non-payment and loss of freight attached to the supplier. Accordingly, the Arbitrator allowed the respondent’s claim, holding that the rejection was arbitrary, unsupported by proper sampling, and therefore contrary to the contract.

39. The Learned District Judge, upon examining the arbitral record, concurred that the contract required strict adherence to this scientifically prescribed method. Given that the contract imposed a duty to sample in a scientifically valid manner, the lack of such documentation was considered a material procedural lapse. The District Judge pointed out that the Arbitrator’s conclusion was based on gaps in the appellant’s own evidence. In the absence of perversity, such a finding cannot be revisited by this Court. The scrutiny under Section 37 does not extend to filling evidentiary lacunae or rewriting the factual narrative. This Court finds no reason to disturb such concurrence, especially when the arbitrator’s reading flows directly from explicit contractual language rather than any subjective view.

40. The appellant has consistently argued that the contract does not require prior notice to the supplier before sampling. While this proposition may be textually correct, the Arbitrator’s reasoning did not hinge on a mandatory notice requirement. Although the contract did not mandate prior notice to the supplier, the Arbitrator held that where the purchaser conducts sampling at its own premises without the supplier’s participation, the obligation to strictly comply with the prescribed method becomes even more stringent. The Award notes that the respondent had been present at the plant premises for unloading but was not informed that sampling was underway. The Arbitrator did not treat absence of notice as an independent breach but as an aggravating factor: the lack of transparency combined with the absence of documentary proof heightened doubts about whether proper sampling occurred. He therefore held that principles of procedural fairness is implicit in commercial contracts had not been met. The focus was on compliance with the sampling methodology, which envisioned representative extraction during unloading and documentation of the sampling process. The Arbitrator concluded that non-compliance with that method rendered the laboratory report unreliable. The District Judge accepted this reasoning, emphasizing that once the foundation of the test is compromised, the consequential rejection cannot stand.

41. Central to the appellant’s case is the argument that the NALCO laboratory report was contractually final. Finality clauses, however, are not absolute. They operate only when the underlying act here, sampling, is carried out in accordance with the contract. If the Arbitrator finds that the sampling deviated from the mandatory protocol, the finality clause cannot cure the breach. The Arbitrator interpreted the contract to mean that the binding force of the test result is premised on proper sampling. This interpretation is neither strained nor implausible. The District Judge, therefore, rightly refrained from interfering.

42. This Court is guided by the principle that if two views are possible and the Arbitrator adopts one that is not palpably unreasonable, the court must respect that choice. The Arbitrator’s conclusion that sampling must conform strictly to IS 1514:1990 flows from the contract’s express incorporation of that standard. The District Judge correctly recognized that the Arbitrator’s reading of the contract was entirely plausible. Section 37 does not permit a court to substitute its own understanding merely because another interpretation appears equally plausible.

43. The appellant contended that the respondent had previously accepted a penalty in respect of the first rake and had thereby waived any objection to the process. The Arbitrator carefully distinguished this circumstance, emphasizing that the earlier penalty was minor and not disputed, whereas the later dispute involved complete forfeiture. The District Judge affirmed that principles of waiver cannot be mechanically applied when the contractual and factual matrices differ fundamentally. This Court agrees that the distinction is rational and that the Arbitrator’s reasoning is not vulnerable to the charge of perversity.

44. This Court recognises that the sampling issue forms the factual heart of the dispute. However, under Section 37, the question is not whether this Court would have reached the same factual conclusion, but whether the conclusion reached is so irrational as to shock judicial conscience. After reviewing the award and the judgment under Section 34, this Court finds that both forums analysed the evidence in a careful and structured manner. There is nothing arbitrary or capricious in their reasoning. The arbitral award is anchored in a broad evaluation of the parties’ conduct, correspondence exchanged, and compliance with contractual processes. The District Judge’s judgment under Section 34 reveals careful engagement with these aspects. That court appropriately acknowledged that the Arbitrator’s evaluation was a matter of fact, not law. This Court, operating under the more restrictive framework of Section 37, finds no jurisdictional error or perversity warranting intervention.

45. The appellant’s submissions before this Court essentially attempt to re-argue facts as to whether samples were properly taken, whether the respondent’s representative was present, whether the laboratory results could nonetheless stand. These matters have been squarely addressed by both the Arbitrator and the District Judge. Section 37 does not permit a third round of factual analysis. Absent demonstrable perversity, such findings are binding.

46. The Arbitration Act embodies a legislative commitment to party autonomy and minimal judicial intervention. Awards cannot be interfered with merely because a different view is possible. The Arbitrator provided detailed reasons, interpreted contractual clauses faithfully, and relied on established scientific standards. The District Judge found no ground to invoke the limited exceptions under Section 34. This Court, therefore, finds that the appellant has not met the threshold required to invoke appellate interference.

VI.    CONCLUSION:

47. In the above context, it cannot be said the view taken in the impugned award is not even a possible view, so as to warrant interference  in  proceedings  under Section 34 and/or 37 of the A&C Act. On the contrary, the approach of the arbitrator appears to be judicious taking into account the attendant facts and circumstance.

48. Having examined the record, the pleadings, the award, and the Section 34 judgment, this Court finds that (i) the Arbitrator adopted a plausible and commercially sensible reading of the contract, (ii) the District Judge correctly applied the narrow framework of Section 34, and (iii) the appellant has failed to establish perversity, patent illegality, or jurisdictional overreach. The concurrent findings therefore warrant deference. As such, no grounds are made out for interference under Section 37, and the appeal must fail.

49. ARBA No. 10 of 2013 is disposed on the abovementioned terms. No order as to costs.

50. Interim order, if any, passed earlier stands vacated.