High Court Dismisses Appeal Under Section 37 of Arbitration Act, Upholds Arbitral Award and District Court Order in Partnership Dispute. Court holds that findings of fact by arbitrator are not open to reappreciation under Section 34 unless perverse or contrary to public policy.

High Court: Karnataka High Court Bench: BENGALURU

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2026-05-18 15:52:58

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Case Note & Summary

The appellants, M. Mallikarjuna and Smt. Rajeshwari Mallikarjuna, filed an appeal under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996 (A&C Act) before the High Court of Karnataka at Bengaluru. They challenged the judgment dated 31.01.2025 passed by the Principal District and Sessions Judge, Davanagere (District Court) in A.P.No.13/2022, which had dismissed their petition under Section 34 of the A&C Act seeking to set aside an arbitral award dated 17.06.2022. The arbitral award was rendered by a sole arbitrator in A.C.No.147/2019, arising from a dispute between the appellants and the respondents, Sri S.P. Sridhara and Sri S.P. Muralidhar, concerning a partnership or contractual matter. The appellants contended that the District Court erred in not interfering with the award, arguing that the arbitrator's findings were perverse and against the evidence. The respondents supported the District Court's order, asserting that the award was well-reasoned and within the bounds of law. The High Court, comprising Chief Justice Vibhu Bakhru and Justice C.M. Poonacha, heard the appeal and reserved judgment. The court analyzed the limited scope of interference under Section 34 and Section 37 of the A&C Act, emphasizing that findings of fact by the arbitrator are final and cannot be reappreciated unless they are perverse or contrary to the public policy of India. The court found no such perversity or illegality in the award or the District Court's order. Consequently, the High Court dismissed the appeal, upholding the arbitral award and the District Court's judgment. The decision reinforces the principle of minimal judicial intervention in arbitration matters.

Headnote

A) Arbitration Law - Appeal under Section 37 - Scope of Interference - Section 37(1)(c) of the Arbitration and Conciliation Act, 1996 - The court examined the limited scope of appeal against an order under Section 34, holding that findings of fact by the arbitrator are final and not open to reappreciation unless perverse or contrary to public policy. (Paras 1-3)

B) Arbitration Law - Challenge to Arbitral Award - Section 34 - Grounds of Challenge - Section 34 of the Arbitration and Conciliation Act, 1996 - The court reiterated that an arbitral award can be set aside only on grounds specified in Section 34, including incapacity, invalid arbitration agreement, lack of proper notice, or contravention of public policy. Mere erroneous findings do not warrant interference. (Paras 2-3)

Issue of Consideration

Whether the District Court erred in dismissing the petition under Section 34 of the A&C Act challenging the arbitral award, and whether the High Court should interfere under Section 37 of the A&C Act.

Final Decision

The High Court dismissed the appeal, upholding the judgment of the District Court dated 31.01.2025 and the arbitral award dated 17.06.2022.

Law Points

Section 37(1)(c) of Arbitration and Conciliation Act
1996
Section 34 of Arbitration and Conciliation Act
Scope of interference with arbitral award
Perversity and public policy grounds
Reappreciation of evidence not permissible

Case Details

2026 LawText (KAR) (04) 8

MFA No. 2192 of 2025 (AA)

2026-04-02

Vibhu Bakhru, C.J., C.M. Poonacha, J.

Sri Lakamapurmath Chidanandayya (for appellants), Sri Jayakumar S. Patil, Senior Advocate a/w Sri Varaprasad K. (for respondents)

M. Mallikarjuna and Smt. Rajeshwari Mallikarjuna

Sri S.P. Sridhara and Sri S.P. Muralidhar

Nature of Litigation

Appeal under Section 37 of the Arbitration and Conciliation Act, 1996 against dismissal of petition under Section 34 challenging arbitral award.

Remedy Sought

Appellants sought to set aside the judgment of the District Court dated 31.01.2025 in A.P.No.13/2022 and the arbitral award dated 17.06.2022.

Filing Reason

Appellants were aggrieved by the District Court's order dismissing their petition under Section 34 of the A&C Act to set aside the arbitral award.

Previous Decisions

Arbitral award dated 17.06.2022 passed by sole arbitrator in A.C.No.147/2019; District Court judgment dated 31.01.2025 in A.P.No.13/2022 dismissing Section 34 petition.

Issues

Whether the District Court erred in dismissing the petition under Section 34 of the A&C Act? Whether the High Court should interfere under Section 37 of the A&C Act?

Submissions/Arguments

Appellants argued that the arbitral award was perverse and against the evidence, and the District Court failed to properly appreciate the grounds under Section 34. Respondents contended that the award was well-reasoned and the District Court correctly applied the limited scope of interference under Section 34.

Ratio Decidendi

Findings of fact by an arbitrator are final and not open to reappreciation under Section 34 of the A&C Act unless they are perverse or contrary to the public policy of India. The scope of interference under Section 37 is equally limited.

Judgment Excerpts

The appellants have filed the present appeal under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996 [A&C Act], impugning the judgment dated 31.01.2025 passed by the Principal District and Sessions Judge, Davanagere [District Court] in A.P.No.13/2022 [impugned order]. The said petition was filed by the appellants under Section 34 of the A&C Act seeking the setting aside of the Arbitration Award dated 17.06.2022 [impugned award] passed by an arbitral tribunal comprising of a sole arbitrator [Arbitral Tribunal]. The impugned award was rendered in A.C.No.147/2019.

Procedural History

The dispute was referred to arbitration, resulting in an award dated 17.06.2022. The appellants filed a petition under Section 34 of the A&C Act before the District Court, which was dismissed on 31.01.2025. Aggrieved, the appellants filed the present appeal under Section 37 of the A&C Act before the High Court.