S. 37 of Arbitration Act | Fresh Material Barred At Appellate Stage If Not Placed Under Section 34: Calcutta High Court

The Calcutta High Court has held that parties to an arbitration cannot introduce completely new material for the first time at the appellate stage (Section 37) of arbitration proceedings if such material could have been produced earlier but was not placed before the court when the arbitral award was initially challenged (Section 34)

The court emphasised that an appeal at this stage is not an opportunity to cure evidentiary lapses or supplement the record belatedly.

A division bench of Justices Sabyasachi Bhattacharyya and Supratim Bhattacharya made the observation while deciding cross-appeals arising from an arbitral award dated February 29, 2020. The award had been set aside by a single judge of the High Court on July 27, 2023.

The bench clarified that the Arbitration and Conciliation Act prescribes a narrowly tailored framework of judicial scrutiny. Unlike regular civil appeals under the Code of Civil Procedure, an appellate court hearing an arbitration appeal does not enjoy wide powers to admit additional evidence.

The court noted that there is no provision in the Arbitration Act akin to Order XLI Rule 27 of the CPC, which permits production of additional evidence in civil appeals.

“Hence, completely new materials, which could be obtained during pendency of the Section 34 application but were not furnished before the court taking up the challenge under Section 34, cannot be permitted to be produced before the Section 37 court for the first time,” the Bench observed.

At the same time, the court drew a clear distinction between fresh material and documents already on record. It held that documents which were produced before the court hearing the challenge to the arbitral award, and were therefore available for consideration, could still be examined at the appellate stage even if they were not specifically referred to in the pleadings.

“Hence, there is no reason as to why documents which were produced before the Section 34 Court and thus were available for consideration by the said Court, although not specifically mentioned in the Section 34 applications, cannot be looked into by the Section 37 Court,” it said.

The arbitration in question had its origin in a civil suit instituted in 2014, pursuant to which an arbitrator was appointed by consent through a court order dated August 1, 2014. The parties against whom the arbitral award was passed, including Feather Touch Limited, challenged the award in 2020. When the matter reached the appellate stage, an attempt was made to rely on additional documents and factual material that had not been placed before the court earlier.

The High Court rejected this approach, making it clear that an appeal in arbitration proceedings cannot be used to plug gaps in evidence or improve the record at a later stage.

In the end, the Division Bench allowed the appeals, holding that the Single Judge was wrong to set aside the arbitral award and that the conclusions drawn were not supported by the material on record.