Courts Cannot Intervene Merely Because Another View is Possible: Allahabad High Court Upholds ₹126 Crore Arbitration Award to Adani Enterprises

Allahabad High Court (Lucknow Bench) comprising Chief Justice Arun Bhansali and Justice Jaspreet Singh delivered a significant judgment in UCM Coal Company Ltd. v. Adani Enterprises Ltd., reaffirming judicial restraint in interfering with arbitral awards under Section 37 of the Arbitration and Conciliation Act, 1996. Dismissing the appeal filed by UCM Coal Company Ltd., the Court held that the unanimous arbitral award dated 20 November 2018, granting approximately ₹126 crores to Adani Enterprises, did not suffer from patent illegality or perversity, and therefore could not be disturbed.

The Court stressed that “the jurisdiction of the Court under Section 37 is even narrower than that under Section 34,” and reiterated the cardinal principle that “once the arbitrator has taken a plausible view of the matter, even if another view is possible, the same is not a ground for interference.”

“Section 37 Is Not a Second Appeal—Courts Must Not Re-Appreciate Evidence”: High Court Declines to Sit in Appeal over Tribunal’s Findings

The challenge before the High Court was mounted under Section 37 against an order dated 31 March 2023 passed by the Commercial Court, Lucknow, which had dismissed UCM’s Section 34 petition challenging the arbitral award in favour of Adani Enterprises. The award arose out of a contractual dispute regarding unauthorised sub-contracting, cost reimbursements, and breach of mining obligations under a coal mining agreement.

One of the main grounds urged by UCM was that Adani Enterprises had violated Clauses 12.2, 27.5, and 27.6 of the agreement by engaging third parties—particularly PMC Projects (India) Pvt. Ltd. and other entities—without UCM’s written consent. However, the arbitral tribunal had found, on an interpretation of the contract and the evidence led, that these third parties were domain-specific consultants, not sub-contractors, and that there was no requirement of prior written approval for engaging consultants.

Upholding the tribunal’s interpretation, the High Court held: “The engagement of domain-specific experts for securing statutory approvals and clearances does not amount to unauthorised subcontracting. The tribunal rightly noted that the contract nowhere prohibited the appointment of consultants.” [Para 78]

The Court also observed that UCM was fully aware of these engagements and had itself relied on work done by these entities in its communications with the Ministry of Coal.

“The Tribunal Is the Final Arbiter on Quality and Quantity of Evidence”—Court Holds Arbitral Award Was Based on Adequate Documentary and Judicial Proof

Another central attack mounted by UCM was that the tribunal had accepted claims without adequate evidence, particularly in relation to ₹125 crores paid to PMC Projects (India) Pvt. Ltd. by Adani. This amount had already been adjudicated in favour of PMC in a separate arbitral award dated 20 July 2017, which had attained finality. Adani had then claimed reimbursement from UCM under the mining agreement.

The High Court found that the tribunal’s reliance on this earlier arbitral award, as well as Chartered Accountant certificates, work orders, invoices, and internal correspondences, was appropriate and not legally flawed. The Court observed:

“The tribunal was entitled to rely on the arbitral award in favour of PMC as conclusive evidence of Adani’s liability. Once the tribunal was satisfied with the CA certificates and the accompanying documentary record, the threshold of evidentiary sufficiency was met.” [Paras 91–100]

The Court also noted that UCM had failed to cross-examine Adani’s witnesses effectively and did not produce any countervailing evidence of its own.

Reaffirming the limits of judicial interference under Section 37, the Court remarked:

“Unless the award is so irrational or perverse as to shock the conscience of the Court, the findings of fact by the arbitrator are binding.” [Para 80]

“Tribunal Did Not Re-write the Contract—Its Interpretation Was Commercially Reasonable”: High Court Dismisses Allegations of Perversity

UCM argued that the tribunal had “rewritten the contract” by not enforcing the clause requiring prior written consent for third-party engagements. The High Court rejected this contention, stating:

“The tribunal’s interpretation of the clauses was commercially reasonable and rooted in a holistic reading of the agreement. Merely because the appellant reads the contract differently does not mean the tribunal’s view is perverse.” [Para 82]

The Court relied on the Supreme Court’s dictum in Dyna Technologies v. Crompton Greaves [(2019) 20 SCC 1], stating that if the view taken by the arbitrator is “a possible view based on evidence on record,” courts cannot substitute their own interpretation.

It also referred to MMTC Ltd. v. Vedanta Ltd. [(2019) 4 SCC 163] to underline the doctrine of limited judicial review under Sections 34 and 37 of the Arbitration Act, cautioning against any temptation to reassess evidence.

No Violation of Public Policy or Patent Illegality—Award Found to Be Within Four Corners of Law and Contract

In summing up the decision, the Court found that the award:

– Was based on adequate reasoning,
– Reflected plausible interpretation of the contract,
– Did not contravene the public policy of India, and
– Did not suffer from patent illegality.

The Court categorically ruled:

“The impugned award does not suffer from any infirmity or illegality warranting interference under Section 37 of the Arbitration Act. The appeal fails.” [Para 101]

With this, the Allahabad High Court put to rest a long-running commercial dispute, reinforcing the finality of arbitral adjudication.

This judgment is a reiteration of judicial deference to arbitration as a dispute resolution mechanism, where courts are not to interfere unless there is a manifest violation of law or contract. It echoes the sentiment expressed by the Supreme Court in Associate Builders v. DDA [(2015) 3 SCC 49], where it was held:

“The arbitral tribunal’s interpretation of contract terms, unless perverse or unreasonable, must be respected.”

Date of Judgment: 23 September 2025