# UCM Coal Company Ltd v. Adani Enterprises Ltd

- **Citation:** (2025) 9 ILRA 42
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2025-09-23
- **Bench:** Arun Bhansali, C.J. Jaspreet Singh
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/ucm-coal-company-ltd-v-adani-enterprises-ltd-53899
- **Pages:** 28

## Headnote

Mr. Vikram Nankani (Sr. Adv.), Pranjal
Krishna, Abhishek Dwivedi, Suhaib Ashraf,
Brijesh Kumar, Manish Mehrotra, Utkarsh
Srivastava

Issue for consideration
Regarding legality of order and judgment dated
31.03.2023 passed by the Commercial Court-I,
Lucknow

Headnotes
Arbitral tribunal-View by the Tribunal cannot
be said to be without supporting evidenceTribunal has taken note of the rival submissions,
the material on record as well as the evidence
to give a cogent construction to the terms of the
contract-cannot be said to be perverse-Arbitral
Tribunal is vested with the power and discretion
to deal with the evidence-it has been exercised
correctly-not bound by strict rules of procedure
or evidence. (E-9)

Case Law Cited

## Text

_Characters 0–39,834 of 92,883. This is a partial read: ask again with offset=39834 for what follows._

42 INDIAN LAW REPORTS ALLAHABAD SERIES

25. In view of the aforesaid, the
criminal proceedings against the applicant
in the above mentioned case is not tenable
under law as such the charge-sheet dated
19.1.2021, cognizance order dated 7.7.2023
and the entire criminal proceedings arising
out of Case No. 9029 of 2023 (State Vs.
Himanshu Dubey) arising out of Case
Crime No. 0382 of 2020 under Section 363
of the Indian Penal Code, Police Station
Gauri Bazar, District Deoria pending
before the Chief Judicial Magistrate,
Court/Room No. 17, Deoria are hereby
quashed.

26.
Accordingly,
the
present
application filed under Section 482 Cr.P.C.
is allowed.
---------
(2025) 9 ILRA 42
APPELLATE JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 23.09.2025

BEFORE

THE HON'BLE ARUN BHANSALI, C.J.
THE HON'BLE JASPREET SINGH, J.

Appeal U/S 37 Of Arbitration & Conciliation Act
1996 No.- 52 of 2023

UCM Coal Company Ltd. ...Applicant
Versus
Adani Enterprises Ltd. ...Respondent

Counsel for the Applicant:
Pritish Kumar, AAG, Vibhanshu Srivastava,
Suyash Manjul

Counsel for the Respondent:
Mr. Vikram Nankani (Sr. Adv.), Pranjal
Krishna, Abhishek Dwivedi, Suhaib Ashraf,
Brijesh Kumar, Manish Mehrotra, Utkarsh
Srivastava

Issue for consideration
Regarding legality of order and judgment dated
31.03.2023 passed by the Commercial Court-I,
Lucknow

Headnotes
Arbitral tribunal-View by the Tribunal cannot
be said to be without supporting evidenceTribunal has taken note of the rival submissions,
the material on record as well as the evidence
to give a cogent construction to the terms of the
contract-cannot be said to be perverse-Arbitral
Tribunal is vested with the power and discretion
to deal with the evidence-it has been exercised
correctly-not bound by strict rules of procedure
or evidence. (E-9)

Case Law Cited
1. PSA Sical Terminals (P) Ltd. v. V.O.
Chidambranar Port Trust, (2023) 15 SCC 781
2. South East Asia Marine Engg. & Constructions
Ltd. (SEAMEC LTD.) v. Oil India Ltd., (2020) 5
SCC 164
3. State of Chhattisgarh v. SAL Udyog (P) Ltd.,
(2022) 2 SCC 275
4. DMRC Ltd. v. Delhi Airport Metro Express (P)
Ltd., (2024) 6 SCC 357
5. UHL Power Co. Ltd. v. State of H.P., (2022) 4
SCC 116
6. AC Chokshi Share Broker (P) Ltd. v. Jatin
Pratap Desai, (2025) 5 SCC 321
7. Batliboi Environmental Engineers Ltd. v.
Hindustan Petroleum Corpn. Ltd., (2024) 2 SCC
375

List of Acts
1.Arbitration and Conciliation Act, 1996

List of Keywords
Power and discretion; not bound by strict rules;
Arbitral Tribunal; perverse

Appearances of parties
Counsel for Petitioners(s):Pritish Kumar, AAG,
Vibhanshu Srivastava, Suyash Manjul

Counsel for Respondent(s) : Mr. Vikram Nankani
(Senior
Advocate)
with
Pranjal
Krishna,
Abhishek
Dwivedi,
Suhaib
Ashraf,
Brijesh
Kumar, Manish Mehrotra, Utkarsh Srivastava

(Delivered by Hon'ble Jaspreet Singh, J.)
9 All. UCM Coal Company Ltd. Vs. Adani Enterprises Ltd.
43

1. The respondent as claimant had
initiated arbitral proceedings before an
Arbitral Tribunal which culminated in a
unanimous award dated 20th November
2018, in favour of the respondent. The
appellant preferred a petition under Section
34 of the Arbitration and Conciliation Act,
1996 (in short, the Act of 1996) which was
dismissed by the Commercial Court-I,
Lucknow vide order and judgment dated
31.03.2023 and being aggrieved from the
same, the appellant preferred this appeal
before this Court under Section 37 of the
Act of 1996.

Factual Matrix

2.
In
order
to
appreciate
the
controversy involved in the instant appeal,
it will be worthwhile to take a glance at the
facts, briefly.

3. The Ministry of Coal, Government
of India in furtherance of Government
Company Dispensation Scheme allocated
Chhendipada and Chhendipada-II Coal
Blocks jointly to Uttar Pradesh Rajya
Vidyut Utpadan Nigam Ltd., Chhatisgarh
Mineral Development Corporation and
Maharashtra
State
Power
Generation
Corporation Limited who jointly ventured
to explore and undertake mining operations
from the allocated coal blocks.

4. The above three Government
Corporations
incorporated
a
Special
Company for the purpose of development,
exploration and mining of coal blocks
namely
UCM
Coal
Company
Ltd.
(hereinafter
referred
to
as
'UCM/appellant')

5. The appellant for the purposes of
development and exploration of the coal
blocks as allocated, floated tenders through
international competitive bidding process
to select a mine developer and operator for
the two Chhendipada Coal Blocks allocated
to the appellant. Several bids were received
and upon its examination, the bid of the
respondent was found favourable and it
was accepted.

6. A letter of award dated 27th
October, 2010 was issued to the respondent
which was followed by a formal mining
contract which was signed on 05th
February, 2011. In the said mining contract,
the appellant was described as a 'mine
owner'
whereas
the
respondent
was
described as the 'mine operator'.

7.
The
mining
contract
broadly
envisaged three stages; (i) approval and
clearance stage (ii) development stage and
(iii) operation stage.

8. The approval and clearance stage
inter-alia required the respondent to prepare
mining plans, seek clearances and approval
required for starting mining activities, coal
washery and other incidental infrastructural
activities including preparing a railway
siding.

9. It also required the respondent to
obtain forest clearance, environmental
clearance, clearances related to the drawl of
power and water, license for explosives and
clearance
for
land
acquisition
and
resettlement as per requirement for 5 to 10
years of mining activities.

10. While, the said contract was still at
the clearance stage, the
coal block
allocations came under the scrutiny of the
Supreme Court of India in a Public Interest
Litigation initiated by Shri Manohar Lal
Sharma. The same came to be decided by
the Supreme Court of India vide its
44 INDIAN LAW REPORTS ALLAHABAD SERIES
judgment dated 25.08.2014 followed by an
order dated 24.09.2014 and the coal
allocations,
including
relating
to
Chhendipada and Chhendipada-II were
cancelled.

11. It is in this context that disputes
arose between the appellant and the
respondent.

12. The matter was referred for
Arbitration before an Arbitral Tribunal
comprising of Hon'ble Mr. Justice K.A.
Punj
(Retd.),
who
was
the
party
nominated Arbitrator for the respondent,
Hon'ble Mr. Justice, N.K. Mehrotra
(Retd.) who was the party-nominated
arbitrator for the appellant and the two
party-nominated arbitrators appointed
Hon'ble Mr. Justice Deepak Verma,
(Retd. Judge of the Apex Court) as the
Presiding Arbitrator.

13. The respondent, who was the
claimant before the Arbitral Tribunal, had
laid its claims for recovering expenses
incurred by the claimant in the process of
acquisition of land in the coal block,
expenses incurred towards setting up of
mine infrastructure and for mobilizing
movable and immovable assets, and such
amount which was paid or committed as
advances
including
for
capital
commitments.

14. The claims of the respondent
were disputed by the appellant inter-alia
taking a ground that the respondent had
engaged sub-contractors without prior
written consent of the appellant, which
was prohibited in the mining contract. It
was also contended that inflated claims
had been made by the respondent which
could not be substantiated.

15. Before the Tribunal, five issues
were framed and after the parties were
given an opportunity to lead evidence, the
Tribunal after hearing the parties passed a
unanimous award on 20th November, 2018
inter alia allowing the claims of the
respondent
to
the
tune
of
Rs.
126,63,21,44/- along with the interest at the
rate of 11% per annum. The respondent
was also awarded interest of 11% per
annum on the amount allowed by the
Tribunal through an interim award dated
31.01.2017.
The
Tribunal,
however,
deferred the payment of interest on the
amount of Rs. 126 crores which was
payable by the respondent to its consultant
PMC, who had an award in its favour
against the respondent till the decision on a
petition filed by the respondent under
Section 34 of the Act of 1996 challenging
the award in favour of PMC Projects
(India) Pvt. Ltd.

16. The appellant being aggrieved
assailed
the
said
award
before
the
Commercial Court-I at Lucknow in a
petition under Section 34 of the Act of
1996 which came to be registered as
Arbitration Case no. 369 of 2019. The
Commercial
Court-I,
Lucknow
after
hearing the parties dismissed the said
petition by means of its judgment and order
dated 31.03.2023 which is under challenge
before this Court in appeal under Section
37 of the Act of 1996.

Submissions
on
behalf
of
the
appellant:-

17.
Mr.
Pritish
Kumar,
learned
Additional Advocate General for the State
of U.P. assisted by Sri Suyash Manjul and
Sri Vibhanshu Srivastava, has structured
his submissions in three layers:-
9 All. UCM Coal Company Ltd. Vs. Adani Enterprises Ltd.
45

(i) The Arbitral Tribunal has
misconstrued the contractual clause and
given an interpretation which amounts to
re-writing the contract;

(ii) Certain claims have been
allowed for which there was no evidence
before the Tribunal; and

(iii) Claims were awarded on the
basis of certain documents which could not
be made the basis for granting and allowing
such claims.

18. Elaborating his submissions, the
learned counsel for the appellant submitted
that the mining contract clearly prohibited
engagement of a sub contractor without the
prior written consent of the appellant. He
referred to Clauses 12.2, 27.5 and 27.6 of
the mining contract dated 05.02.2011.

19. It was further submitted that the
respondent had engaged several entities
such as PMC Projects (India) Pvt. Ltd. (in
short 'PMC'), SPARC Pvt. Ltd. (in short
'SPARC'), G.V. Info-solutions Pvt. Ltd. (in
short
'GVI'),
Hydro
Geo
Survey
Consultants Pvt. Ltd. (in short 'Hydro') and
Vimta Labs Ltd. (in short 'Vimta') without
the prior written approval, hence, there was
a clear violation of the above noted
provisions of the contract.

20. It was urged that the respondent
had setup a claim that the entities aforesaid
were
not
sub-contractors
but
were
consultants, however, it was submitted that
the mining contract did not envisage
engagement of any consultant nor they
were recognized as per the mining contract.

21. Any commitment made by the
respondent to such entities who did not
have the written approval of the appellant,
and any amount paid or committed to be
paid by the respondent to such entities
could not be extended to be recoverable
from the appellant.

22. It was also submitted that not only
the above mentioned entities were engaged
without the prior written consent of the
appellant but they had been engaged much
prior to the date of signing of the mining
contract, hence, any obligation arising
between
the
said
entities
and
the
respondent could not be made enforceable
against the appellant.

23.
Mr.
Kumar
submitted
that
primarily the major component of claims as
raised by the respondent related to the
payments said to have been made or
committed to be paid to primarily the major
sub contractors, namely the PMC and GVI,
however, their engagements were never
disclosed to the appellant. Even under the
mining contract, the respondent was
required to keep the appellant abreast with
the
developments
and
progress
by
submitting reports from time to time which
was also not done which was a further
breach made by the respondent.

24. Mr. Kumar emphasized that
Clause 27.6 of the mining contract clearly
indicated that there was no scope for any
implied approval or consent. Thus, even if
the respondent at some later point of time,
in their progress reports had made a
mention of such engaged entities yet the
fact remains that in absence of any prior
written consent, their engagement could not
be ratified nor there could be a deemed
approval from the side of the appellant.
Thus, the engagement of such entities at the
behest of the respondent stood vitiated
from its inception, vis-a-vis the appellant
who cannot be made, perforce to satisfy, or
46 INDIAN LAW REPORTS ALLAHABAD SERIES
subrogate the contractual liability having
arisen between the respondent and the said
sub contracting entities.

25. It was further submitted that the
mining contract had defined the relevant
terminology so that no extended meaning
could be ascribed to the words and
expressions used in the said contract by any
party. Hence, the respondent who as part of
their claims had stated that the entities were
not sub-contractors but were consultants
and the said mining contract did not give
any indication regarding engagement of
any consultant and by mere usage of the
word consultant, the respondent cannot
camouflage the actual status of such
entities who were none other than sub
contractors.

27. The Arbitral Tribunal while
dealing with the said issue went much
ahead and ascribed its own interpretation to
the scope of engagement of sub contractors
in derogation of the provisions of the
mining contract and treating the said
entities to be consultants by referring to the
meaning given to the word 'sub contractor'
and 'consultant' in a Law Lexicon but
ignoring the fact that in the mining
contract, the terms were given certain
specific meaning and as such the Tribunal
committed a grave error in effectively rewriting the contract which was a patent
illegality.

28. It was further urged that since the
mining
contract
did
not
envisage
engagement of consultants, hence, any
consultant engaged by the respondent
would be at its own peril. Alternatively, it
was urged that the respondent could give
any name to the engagement of such
entities but since the said entities worked
and performed such services which were
part of the mining contract in terms of the
Clause 8 and admittedly there was no prior
written approval, hence, the work done by
them would make their status to be a sub
contractor and this aspect has not been
considered by the Tribunal as well as the
Commercial Court I, Lucknow.

29. In support of his aforesaid
submissions, Mr. Kumar has relied upon
the decision of the Apex Court in (i) PSA
Sical
Terminals
(P)
Ltd.
v.
V.O.
Chidambranar Port Trust, (2023) 15
SCC 781 (ii) South East Asia Marine
Engg. & Constructions Ltd. (SEAMEC
LTD.) v. Oil India Ltd., (2020) 5 SCC
164 (iii) State of Chhattisgarh v. SAL
Udyog (P) Ltd., (2022) 2 SCC 275.

30. Mr. Kumar further submitted that a
huge sum has been awarded by the
Tribunal as payments which were paid and
committed to be paid by the respondent to
the sub contracting entities without any
evidence.

31. It was elaborated by Mr. Kumar
that if any payments were made by the
respondent to the said third party subcontracting agencies, then the respondent
should have brought the invoices raised by
such entities on record but no such invoices
were
placed
on
record
nor
any
corroborating evidence was placed on
record of the Tribunal to substantiate the
genuineness of the amount claimed and the
details of any payment made to the said
third party contractors, except certain
amount which was admitted by the
appellant and were cleared for payment.

32. It was also pointed out that the
work order which was issued by the
respondent
to
the
third
party
subcontracting entity clearly indicated that the
9 All. UCM Coal Company Ltd. Vs. Adani Enterprises Ltd.
47
said entity would raise an invoice. It is in
this context, it was urged, that in absence of
any invoice raised by the entity on the
respondent, the amount could not have
been said to be proved nor the liability
could have been said to have crystallized,
which would make the appellant liable to
reimburse the respondent for it.

33. It was stated that primarily, the
large part of the claim of the respondent
was based on the reimbursement of the
expenses and in absence of adequate
evidence, the Tribunal as well as the
Commercial Court-I, Lucknow committed
an error in overlooking this crucial aspect.
Accordingly, the findings returned by the
Tribunal as well as the Commercial CourtI, Lucknow is rendered perverse as it is not
supported by any evidence on record.

34. Mr. Kumar further submitted that
in order to dress the claim with a cloak of
legitimacy,
the
respondent
had
filed
certificates issued by their Chartered
Accountant, however, there were glaring
discrepancies in the said certificates as
well. The CA certificates up to June, 2014
indicated pre-cancellation expenses as
76.94
crores,
however,
upon
the
cancellation of the coal block allocations,
suddenly the expenses and project costs
escalated manifold and was shown to be
Rs. 494 crores. Major claims relating to
coal washery and capital commitments
were apparently unsupported as no invoice
or appropriate documentation or entries
made in the books of accounts maintained
by the respondent in their usual course of
business were filed and in absence of any
such cogent evidence, the amount claimed
by the respondent under the aforesaid,
claim could not have been mechanically
awarded by the Tribunal and more so this
issue was raised before the Commercial
Court, however, it did not appropriately
notice and deal with the said objection
resulting in sheer miscarriage of justice.

35. In support of his aforesaid
submissions, Mr. Kumar has relied upon a
decision of the Apex Court in DMRC Ltd.
v. Delhi Airport Metro Express (P) Ltd.,
(2024) 6 SCC 357 to urge that if any
finding or claim has been allowed without
evidence then the same is liable to be set
aside.

Submissions
on
behalf
of
the
respondent:-

36. Mr. Vikram Nankani, learned
Senior Counsel, who had joined the
proceedings through video conferencing,
assisted by Mr. Pranjal Krishna and Mr.
Abhishek Dwivedi, learned counsel for the
respondent submitted that the scope of an
appeal under Section 37 of the Act of 1996
is limited to whether an order passed by the
Court in proceedings under Section 34 of
the Act of 1996, to set aside the award, or
refusing to set aside the award, is just and
appropriate keeping in mind the limited
grounds as envisaged in Section 34 of the
Act of 1996 itself.

37. Since the proceedings of Section
34 of the Act of 1996 is not in the nature of
an appeal as understood in context with
regular civil litigation and unless the
grounds as set out in Section 34 of the Act
of 1996 itself is made out till then this
Court would not interfere under Section 37
of the Act of 1996 as the scope of the
appeal is even narrower than under Section
34 of the Act of 1996.

38. It was further submitted that the
scheme of the Act of 1996 is such that the
Arbitral Tribunal has been recognized as
48 INDIAN LAW REPORTS ALLAHABAD SERIES
the exclusive authority to deal with the
matter before it. The Tribunal has the
power and jurisdiction to give its finding by
construing the clauses of the contract. If the
Tribunal upon assessing the evidence
before it has taken a view by construing the
clause of contract then unless the said view
ascribed by the Tribunal is found to be so
preposterous, that no fair minded person
can
arrive
at
such
construction
or
interpretation till then the view of the
Tribunal is to be respected and it is binding.

39. The Tribunal has also been given
the exclusive authority to examine, sift and
evaluate the evidence and its finding based
on such evidence cannot be re-appreciated
or re-examined both in terms of quality and
quantity either by the court in exercise of
powers under Section 34 of the Act of 1996
or by the Appellate Court in terms of
Section 37 of the Act of 1996. It is in this
context that the scope of the Appellate
Court is said to be even narrower and in
support of his aforesaid submissions, he has
relied upon the decision of the Apex Court
in (i) UHL Power Co. Ltd. v. State of
H.P., (2022) 4 SCC 116 and (ii) AC
Chokshi Share Broker (P) Ltd. v. Jatin
Pratap Desai, (2025) 5 SCC 321.

40.
Armed
with
the
aforesaid
decisions, Mr. Nankani further urged that
no infirmity could be pointed out by the
learned counsel for the appellant referable
to the findings given in the order dated
31.03.2023 passed by the Commercial
Court.
He
further
argued
that
the
Commercial Court being conscious of its
limitations as prescribed by law in exercise
of its powers under Section 34 of the Act of
1996 evaluated the submissions and found
that the basis of the entire argument raised
by learned counsel for the appellant rested
on the premise relating to the interpretation
of the clauses of the mining contract and
the view formed by the Arbitral Tribunal
thereon was based on evidence and it was
well within the domain of the Tribunal to
be so hence it refrained from interfering
with the Award.

42. It is further urged that the Tribunal
had not only noticed the submissions of the
respective parties but also copiously
referred to clauses of the contract and
referred to the cross-examination of the
witnesses to amplify the manner in which
both the contracting parties understood the
working of the said contract and thereupon
gave its findings unanimously, which
cannot be disturbed in a petition under
Section 34 or in an appeal under Section 37
of the Act of 1996. Now, the attempt of the
learned counsel for the appellant to suggest
that the Commercial Court overstepped its
jurisdiction, is nothing but to tempt this
Court to enter an arena of re-appreciating
of evidence which is not for this Court to
do in terms of Section 37 of the Act of
1996.

44. The learned Senior Counsel for the
respondent
further
submitted,
without
prejudice to his aforesaid submissions
relating to the scope of interference in
proceedings under Section 34 and 37 of the
Act of 1996, that the mining contract is a
hugely specialized contract. It is true that
the contract was divided in three stages and
it is also true that the instant contract did
not move ahead beyond the first stage of
approvals and clearance as it was cancelled
by the Apex Court in the Public Interest
Litigation instituted by Shri Manohar Lal
Sharma, however, even the clearances and
approvals were not mere simple clearances
which were required to be obtained in a
routine course, from the Government
Agencies.
9 All. UCM Coal Company Ltd. Vs. Adani Enterprises Ltd.
49

46. The approvals and clearances
related to environmental clearance, also
involved acquisition of land including a
resettlement of the persons displaced.
Complete mine plans had to be prepared
which also involved laying of railway
sidings.
These
clearances
required
a
detailed
specialized
study
and
only
thereafter such reports are prepared which
are assessed by experts and only thereafter,
if it is found that there is no negative
impact on the environment, would such
permissions be granted.

47. It was also submitted that the
contract did not require the mine operator
(i.e. the respondent) to have all in-house
facilities so that no outside help could be
engaged.
For
preparation
of
such
specialized
reports,
specialists
and
consultants are engaged and it is for the
very same reason that the contract did not
put an embargo for the mine operator to not
engage any consultant specifically.

48. It was further urged that there is
essentially a marked difference between a
consultant and a sub-contractor. Though,
the engagement of a sub contractor
without the prior written consent of the
mine owner was envisioned in the
contract but it did not prohibit the
engagement of a consultant by the mine
operator nor it required the prior written
consent of the mine owner.

49. In the aforesaid backdrop, the
respondent had clearly raised this issue
before the Tribunal and led ample evidence
to substantiate that the PMC, GVI, Hydro,
Vimta Labs and SPRAC were consultants
who were specialized entities having
expertise in their respective fields and they
were engaged only for the purposes of
consultancy to guide the respondent in
facilitating the procurement of the said
clearances and approvals.

50. It was also pointed out that all such
approvals and clearances were applied by
the respondent as an agent of the appellant.
The respondent followed the terms of the
mining contract scrupulously and at each
stage furnished the progress reports to the
appellant to keep it well informed of the
work undertaken by the respondent.

51. It was also submitted that
alongwith
the
aforesaid
progress
statements, the necessary reports prepared
by such expert entities were also submitted
and the appellant was very well aware of
the specialized work done by the aforesaid
consultants and at no point of time, there
was any objection or demur on the part of
the appellant on this count.

52. It is only after the cancellation of
the coal block allocation and upon claims
raised by the respondent did this idea
germinate within the appellant-corporation
to create a ruse to deny the legitimate
claims of the respondent.

53. Mr. Nankani, learned Senior
counsel further submitted that the Tribunal
has clearly drawn out the distinction
between a sub contractor and a consultant
and it also took note of the evidences of the
respective parties and thereupon it gave its
finding that the entities were consultants
and not sub contractors. Accordingly, the
Tribunal held that the claim of the
respondent could not be refused on the
ground
that
the
entities
were
sub
contractors and were engaged without prior
consent of the appellant.

54. The learned Senior Counsel also
breezed through the records to substantiate
50 INDIAN LAW REPORTS ALLAHABAD SERIES
that ample evidence was filed by the
respondent
before
the
Tribunal
to
substantiate its claim for reimbursement
relating to the money paid and committed
to be paid to the third party entities. Work
orders were placed on record and it was
also pointed out that one of the consultants
namely PMC had also instituted arbitral
proceedings against the respondent and the
pleadings relating to the said arbitration
was also placed on record before the
Arbitral Tribunal, dealing with the dispute
between the appellant and the respondent.

55. It was also pointed out that as far
as claims regarding the PMC made against
the respondent is concerned, they related to
payments which were to be made by the
respondent to the PMC on milestone basis,
arising out of this particular mining
agreement. Moreover, the milestones were
achieved which is not quite disputed,
accordingly, now the appellant cannot take
the plea that the claims raised by the third
party, namely PMC, against the respondent
appears to be collusive or inflated.

56. It was urged that the appellant had
been the beneficiary of the said contract,
inasmuch as, the matter relating to land
acquisition and other clearances and the
ancillary work done by the said third party
agencies had been recognized by the
appellant who relied upon the same while
submitting the necessary document before
the Ministry of Coal. This in itself, proved
the fact that not only the appellant was
aware of the working of these consultants
but he was also aware of the fact that the
milestones as set out had been achieved by
the said third party consultant.

57. The learned Senior Counsel also
submitted that certain discrepancies as
sought to be pointed out by the learned
counsel for the appellant, suggesting
inflation in the claim amount as indicated
in the certificates issued by the Chartered
Accountants
is
not
tenable.
It
was
submitted that the respondent in its usual
course of business prepared its books of
account and being a company the said
accounts are duly audited and are certified
by a Chartered Accountant. It is not the
case of the appellant that the certificates
issued by the Chartered Accountant are
false and fabricated rather the objection
appears to be that up to the pre-cancellation
stage of the coal allocation, the expenses
were shown as Rs. 76.94 crores whereas
post cancellation, the said amount was
shown as Rs. 494 crores.

58. Explaining the same, it was stated
that upon the cancellation of the coal block
allocation, it was certain that no further
activity would be done in furtherance of the
said mining contract, hence, all the
expenses or losses had to be accounted for
at that point of time. Accordingly, the
submission was that this aspect was also
considered both by the Tribunal and the
Commercial Court and it cannot be said
that the view taken is bad in the eyes of law
or there was no evidence in this regard or
that the findings are based on inadmissible
documents.

59. It was pointed out that the Tribunal
also
noted
the
standard
accounting
procedures on the basis of which such
certificates were issued by the Chartered
Accountant which were not shown to be
false or patently against the settled
accounting procedures, hence, on the basis
of evidence, the Tribunal arrived at
findings which cannot be said to be bad in
the eyes of law. Thus the said findings are
not amenable to any further re-appreciation
by this Court especially once the award had
9 All. UCM Coal Company Ltd. Vs. Adani Enterprises Ltd.
51
been accepted by the Commercial Court,
who refused to set it aside in proceedings
under Section 34 of the Act of 1996.

60. It was also urged that evidence
was filed in several volumes before the
Arbitral Tribunal which has been duly
noted and thereafter a unanimous award
has been passed by the Tribunal. Thus, to
suggest that there was no material or
evidence before the Tribunal to support the
findings
is
absolutely
incorrect.
Accordingly, the decision cited by learned
counsel for the appellant in Delhi Metro
(supra) is clearly distinguishable on facts,
and in any case it is not applicable to the
present case.

61. It was also submitted that the
award clearly takes note of the claims and
the defence including the counter claim of
the appellant. On the basis of the
respective
pleadings,
the
Tribunal
framed expressive issues upon which
evidence was led and after considering
the submissions specific findings have
been recorded which are well reasoned
and such findings cannot be said to be
bad. Moreover, considering the award
has been affirmed by the court in
proceedings under Section 34 of the Act
of 1996, in such circumstances, the
attempt of the appellant to persuade this
Court to re-appreciate the evidence and
to act as an Appellate Court, as
understood in regular civil proceedings,
is not appropriate, hence, for all the
aforesaid reasons, the appeal deserves
to be dismissed.

Discussions and Analysis

62. The Court has heard the learned
counsel for the parties and also perused the
material on record.

63. At the outset, it will be appropriate
to notice the contours of scope and
jurisdiction of this Court while dealing with
an appeal under Section 37 of the Act of
1996.

64. The Apex Court in MMTC Ltd. v.
Vedanta Ltd., (2019) 4 SCC 163 has held
as under:-

"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 principles of natural
justice,
and
Wednesbury
[Associated
Provincial Picture Houses v. Wednesbury
Corpn.,
(1948)
1
KB
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.

12. It is only if one of these
conditions is met that the Court may
interfere with an arbitral award in terms of
Section 34(2)(b)(ii), but such interference
does not entail a review of the merits of the
52 INDIAN LAW REPORTS ALLAHABAD SERIES
dispute, and is limited to situations where
the findings of the arbitrator are arbitrary,
capricious or perverse, or when the
conscience of the Court is shocked, or
when the illegality is not trivial but goes to
the root of the matter. An arbitral award
may not be interfered with if the view taken
by the arbitrator is a possible view based on
facts. (See Associate Builders v. DDA
[Associate Builders v. DDA, (2015) 3 SCC
49 : (2015) 2 SCC (Civ) 204] . Also see
ONGC Ltd. v. Saw Pipes Ltd. [ONGC Ltd.
v. Saw Pipes Ltd., (2003) 5 SCC 705] ;
Hindustan Zinc Ltd. v. Friends Coal
Carbonisation [Hindustan Zinc Ltd. v.
Friends Coal Carbonisation, (2006) 4 SCC
445] ; and McDermott International Inc. v.
Burn Standard Co. Ltd. [McDermott
International Inc. v. Burn Standard Co.
Ltd., (2006) 11 SCC 181] )

13. It is relevant to note that after
the 2015 Amendment to Section 34, the
above position stands somewhat modified.
Pursuant to the insertion of Explanation 1
to Section 34(2), the scope of contravention
of Indian public policy has been modified
to the extent that it now means fraud or
corruption in the making of the award,
violation of Section 75 or Section 81 of the
Act, contravention of the fundamental
policy of Indian law, and conflict with the
most basic notions of justice or morality.
Additionally, sub-section (2-A) has been
inserted in Section 34, which provides that
in case of domestic arbitrations, violation
of Indian public policy also includes patent
illegality appearing on the face of the
award. The proviso to the same states that
an award shall not be set aside merely on
the ground of an erroneous application of
the law or by reappreciation of evidence.

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
Section 34 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.

15. Having noted the above
grounds for interference with an arbitral
award, it must now be noted that the instant
question pertains to determining whether
the arbitral award deals with a dispute not
contemplated by or not falling within the
terms of the submission to arbitration, or
contains decisions on matters beyond the
scope of the submission to arbitration.
However, this question has been addressed
by the courts in terms of the construction of
the contract between the parties, and as
such it can be safely said that a review of
such a construction cannot be made in
terms of reassessment of the material on
record, but only in terms of the principles
governing interference with an award as
discussed above.

16. It is equally important to
observe
at
this
juncture
that
while
interpreting the terms of a contract, the
conduct of parties and correspondences
exchanged would also be relevant factors
and it is within the arbitrator's jurisdiction
to consider the same. [See McDermott
International Inc. v. Burn Standard Co. Ltd.
[McDermott International Inc. v. Burn
Standard Co. Ltd., (2006) 11 SCC 181] ;
9 All. UCM Coal Company Ltd. Vs. Adani Enterprises Ltd.
53
Pure Helium India (P) Ltd. v. ONGC [Pure
Helium India (P) Ltd. v. ONGC, (2003) 8
SCC 593] and D.D. Sharma v. Union of
India [D.D. Sharma v. Union of India,
(2004) 5 SCC 325] .]"

65. Similarly, the Apex Court in UHL
Power Co. Ltd. v. State of H.P., (2022) 4
SCC 116 has observed as under:-

"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
Arbitration Act 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 principles of natural
justice,
and
Wednesbury
[Associated
Provincial
Picture
Houses
Ltd.
v.
Wednesbury Corpn., (1948) 1 KB 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."

17. A similar view, as stated
above, has been taken by this Court in K.
Sugumar v. Hindustan Petroleum Corpn.
Ltd. [K. Sugumar v. Hindustan Petroleum
Corpn. Ltd., (2020) 12 SCC 539] , wherein
it has been observed as follows : (SCC p.
540, para 2)

"2. The contours of the power of
the Court under Section 34 of the Act are
too well established to require any
reiteration. Even a bare reading of Section
34 of the Act indicates the highly
constricted power of the civil court to
interfere with an arbitral award. The reason
for this is obvious. When parties have
chosen to avail an alternate mechanism for
dispute resolution, they must be left to
reconcile themselves to the wisdom of the
decision of the arbitrator and the role of the
court should be restricted to the bare
minimum. Interference will be justified
only in cases of commission of misconduct
by
the
arbitrator
which
can
find
manifestation in different forms including
exercise
of
legal
perversity
by
the
arbitrator."

18. It has also been held time and
again by this Court that if there are two
plausible interpretations of the terms and
conditions of the contract, then no fault can
54 INDIAN LAW REPORTS ALLAHABAD SERIES
be found, if the learned arbitrator proceeds
to accept one interpretation as against the
other. In Dyna Technologies (P) Ltd. v.
Crompton
Greaves
Ltd.
[Dyna
Technologies (P) Ltd. v. Crompton Greaves
Ltd., (2019) 20 SCC 1] , the limitations on
the Court while exercising powers under
Section 34 of the Arbitration Act has been
highlighted thus : (SCC p. 12, para 24)

"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.