Narrow Scope of Judicial Interference Under Section 34 and 37 of the Arbitration Act: SC

The Hon’ble Supreme Court, in Madhya Pradesh Road Development Corporation Ltd v. M/s Jabalpur Corridor Pvt. Ltd (Civil Appeal No. 10877 of 2018 dated May 29, 2026), dismissed the appeal challenging an arbitral award arising out of a BOT road concession project and reaffirmed that courts exercising jurisdiction under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, cannot reappreciate evidence or substitute the arbitral tribunal’s interpretation of contractual provisions merely because another view is possible.

The dispute arose from a concession agreement executed in 2003 between Madhya Pradesh Road Development Corporation Ltd (“MPRDC”) and Jabalpur Corridor Pvt. Ltd (“JCPL”). Following disputes between the parties and termination of the concession arrangement entered into between the parties, arbitration proceedings were initiated under the Arbitration and Conciliation Act, 1996. The arbitral tribunal ultimately passed a majority award in favour of JCPL, including compensation by way of termination payment and reimbursement of investments made in the project. The award was subsequently upheld by the District Court under Section 34 of the Arbitration and Conciliation Act, 1996, and by the Madhya Pradesh High Court under Section 37 of the Arbitration and Conciliation Act, 1996.

Before the Hon’ble Supreme Court, the principal contention of MPRDC was that the arbitral tribunal had travelled beyond the scope of the claims referred to arbitration by awarding “termination payment” under the concession agreement, particularly in relation to Dispute No. 2 concerning the value of work done. MPRDC further contended that the concession agreement constituted a “works contract” governed by the Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983, and, consequently, the arbitral tribunal constituted under the Arbitration and Conciliation Act, 1996, lacked jurisdiction to adjudicate the dispute.

Per contra, JCPL submitted that the arbitral award, the Section 34 decision, and the Section 37 judgement all contained detailed and reasoned findings in its favour, thereby resulting in concurrent findings of fact and law. It was further contended that the issue relating to the applicability of the Madhya Pradesh Adhiniyam and the jurisdiction of the arbitral tribunal had already been adjudicated in earlier proceedings and had attained finality after dismissal of the challenge before the Supreme Court. JCPL also argued that the award of termination payment was within the scope of the disputes referred to arbitration and represented a plausible interpretation of the concession agreement.

Before the Hon’ble Supreme Court, the principal issue for consideration was whether the High Court, while exercising appellate jurisdiction under Section 37 of the Arbitration and Conciliation Act, 1996, had committed any error warranting interference with the concurrent findings upholding the arbitral award.

Upon examining the statutory framework and the settled jurisprudence governing Sections 34 and 37, the Hon’ble Supreme Court reiterated that the Arbitration and Conciliation Act, 1996, is founded on the principle of minimal judicial intervention and that arbitral awards enjoy a high degree of finality. The Court observed that proceedings under Section 34 are not appellate in nature and are confined to the limited grounds expressly enumerated in the statute.

The Court attached significance to the fact that the arbitral tribunal had considered the contractual provisions, appreciated the evidence on record and arrived at an interpretation of the concession agreement which was not only plausible but also, in the Court’s view, the only possible view. In particular, the Court upheld the tribunal’s approach that the claim for termination payment under Clause 32.6 was within the scope of the disputes referred to arbitration and did not warrant interference under Section 34(2)(a)(iv).

With respect to the jurisdictional challenge based on the Madhya Pradesh Adhiniyam, the Hon’ble Supreme Court observed that the issue had already been raised by MPRDC under Sections 14 and 16 of the 1996 Act and had travelled through multiple judicial forums. The High Court had earlier held that the concession agreement was to be governed by the Arbitration and Conciliation Act, 1996, and that determination had been affirmed when the Supreme Court dismissed the special leave petition and review petition arising therefrom. Consequently, the issue had attained finality inter se the parties and could not be reopened in collateral proceedings on the basis of subsequent legal developments or later judgements. The Court also noted that the jurisdictional plea was belatedly sought to be revived only at the stage of rejoinder before the Supreme Court and could not be permitted to unsettle an arbitral process that had already culminated in concurrent findings under Sections 34 and 37.

The Hon’ble Supreme Court also declined to interfere with the interest component of the award, observing that the pre-award interest was contractually stipulated under the concession agreement and that the post-award interest followed the statutory regime under the unamended Section 31 of the Arbitration and Conciliation Act 1996.

Accordingly, finding no perversity, patent illegality, jurisdictional error, or other ground falling within the limited scope of Sections 34 and 37, the Hon’ble Supreme Court dismissed the appeal and directed release of the deposited amounts along with accrued interest to the respondent.