Synopsis

The appellant (dealership) entered into a supply agreement with the respondent for procurement of paints and ancillaries. The respondent paid Rs. 39,60,000/- as “upfront investment support” linked to minimum purchase commitments. When the appellant’s dealership with Hyundai terminated, it ceased purchases. The respondent invoked arbitration. The arbitrator held that the amount was recoverable as the appellant had breached the minimum purchase obligation. The appellant’s Section 34 petition was dismissed by the District Judge. In appeal under Section 37, the Delhi High Court dismissed the appeal, reaffirming that: (i) the appellate jurisdiction under Section 37 is even more restricted than that under Section 34; (ii) the arbitrator’s interpretation of contractual terms and evaluation of evidence is binding unless perverse or patently illegal; (iii) the termination of the dealership did not automatically extinguish the independent supply agreement; (iv) reliance on invoices of a non‑signatory distributor was permissible as the contract allowed supplies through authorised business associates; and (v) the Section 23(3) application for amendment was rightly rejected as belated.

Court: High Court of Delhi at New Delhi

Coram: Justice Anil Kshetarpal and Justice Amit Mahajan

Date of Judgment: 18th April 2026

Citation: FAO (COMM) 98/2026 (2026:DHC:3202-DB)

Core Law: Arbitration and Conciliation Act, 1996 – Sections 34, 37, 23(3), 33

2. Legal Framework

Major laws and provisions involved

• Arbitration and Conciliation Act, 1996 – Section 34 (setting aside arbitral award), Section 37 (appeals), Section 23(3) (amendment of pleadings), Section 33 (correction of award)

• Contract law – principles of breach, independent contracts, frustration

Key legal principles applied

• Limited scope of appellate jurisdiction under Section 37: The appellate court under Section 37 exercises an even more restricted jurisdiction than that under Section 34. Interference is warranted only where the Section 34 court has exceeded the permissible limits of review or failed to exercise jurisdiction vested in it. The appellate court does not sit as a regular court of appeal over arbitral awards and cannot reappraise evidence or reassess factual findings merely because another view is possible.

• Arbitrator is the master of evidence and interpretation: Interpretation of contractual terms and evaluation of evidence lie primarily within the domain of the arbitrator. Once arbitral jurisdiction is established, interference is warranted only where a patent illegality or jurisdictional infirmity is apparent on the face of the award.

• Independent contract not extinguished by termination of related agree

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