Introduction
The Arbitration and Conciliation Act, 1996, was envisaged as a swift and specialized dispute resolution framework, minimizing judicial interference and maximizing finality. However, when it comes to claims for enhanced compensation—particularly in public projects or land acquisition matters—procedural constraints built into the Act often result in grave injustice. A common misstep is to assume that Section 37 of the Act offers a second bite at the cherry after a failed Section 34 application. In reality, both provisions operate within rigid procedural confines that render them ineffective in correcting substantive omissions, such as under-compensation or denial of statutory entitlements.
This article critically analyses why Section 37 does not offer an efficacious remedy in compensation-related arbitration cases, especially after the failure of a Section 34 petition, and why recourse to writ jurisdiction under Article 226 of the Constitution often becomes the only viable route to justice.
Understanding Sections 34 and 37 of the Arbitration Act
Section 34 – Setting Aside an Arbitral Award
Section 34 permits a party to challenge an arbitral award before a court, but only on narrow grounds that reflect the procedural or jurisdictional infirmities in the arbitral process:
* The application must be filed within three months of receiving the award, extendable by 30 days with sufficient cause.
* Grounds include:
– Incapacity of a party
– Invalid arbitration agreement
– Improper notice or denial of a fair hearing
– Decision on matters beyond the arbitration scope
– Arbitrator misconduct or irregularity
– Conflict with public policy
– Patent illegality (in domestic arbitrations)
Notably, the court cannot review the merits or re-evaluate evidence under Section 34.
Section 37 – Appeal from Orders under the Act
Section 37 permits appeals from limited categories of orders:
* Grant or refusal of interim measures under Section 9 or 17
* Orders under Section 34, either allowing or refusing to set aside an award
* Jurisdictional rulings under Section 16
While it functions as an appellate remedy, Section 37 does not expand the scope of review. Courts remain constrained to examine the correctness of the Section 34 order, not the substantive correctness of the arbitral award itself.
Why Section 37 is Inadequate in Compensation Claims
1. No Scope for Re-appreciation of Evidence or Recalculation of Compensation
The primary limitation is that Section 37 is not an appeal on facts or on the merits of the arbitral award. Appellate courts are not empowered to revisit or reassess:
* Quantum of compensation granted
* Evidentiary appreciation by the arbitral tribunal
* Denial or miscalculation of statutory entitlements
If a tribunal under-calculates compensation or omits mandatory benefits like solatium or interest, courts under Section 37 cannot correct this unless such omission amounts to a patent illegality violating public policy—which is rarely upheld.
2. No Power to Modify or Enhance the Award
Courts under both Sections 34 and 37 may only:
* Set aside the award, or
* Uphold the award.
They cannot modify or rectify the compensation. Thus, even where statutory entitlements are demonstrably omitted, courts lack the jurisdiction to intervene substantively.
3. Ignored Statutory Rights and Entitlements
In arbitration proceedings under special statutes like the National Highways Act, 1956 or the Right to Fair Compensation and Transparency in Land Acquisition Act, 2013, landowners are entitled to:
* 30% solatium under Section 23(2)
* 12% additional compensation under Section 23(1A)
* Interest under Section 28
Yet, arbitral tribunals often exclude or misapply these. Attempts to correct such errors via Section 34 usually fail on technical grounds, and Section 37 does not allow substantive correction either. Courts have repeatedly affirmed that such statutory claims must be raised in writ proceedings, not through appellate remedies under the Act.
4. Protracted Litigation and Procedural Futility
Even when the appeal is filed timely, the litigation under Section 37 is time-consuming and cost-intensive. Worse, it often culminates in mere affirmation of the award—without addressing the underlying substantive injustice. The result is a procedural mirage where the appearance of remedy masks its futility.
5. Judicial Precedents Recognizing the Inadequacy of Section 37
Courts have now begun to explicitly recognize that Section 37 cannot provide meaningful relief in compensation disputes:
* Kisanlal Bairudas Jain v. Union of India (Bombay HC, 2025): The High Court refused to relegate petitioners to Section 37, holding that writ jurisdiction was the only effective forum to enforce statutory compensation rights.
* Smt. Rampyari v. NHAI (Allahabad HC, 2024): The Court held that appellate review under Section 37 cannot correct undervaluation or omission of statutory entitlements.
* M/s. PCL-Suncon (JV) v. NHAI (Delhi HC): The Court permitted a writ petition despite a pending statutory remedy, emphasizing that silence in arbitral awards on statutory entitlements violates public obligations that warrant constitutional review.
Article 226: A Constitutional Safety Valve
When statutory mechanisms under the Arbitration Act fail to deliver justice—particularly where fundamental rights or statutory entitlements are ignored—Article 226 of the Constitution serves as a potent corrective tool.
High Courts are empowered to issue writs in the following situations:
* Where statutory remedies are ineffective, illusory, or inadequate
* Where denial of compensation or benefits causes irreparable harm
* Where natural justice is violated
* Where arbitral outcomes violate statutory or constitutional guarantees
Writ jurisdiction, being discretionary and equitable, has been used by constitutional courts to ensure fair compensation and enforcement of statutory benefits, especially in land acquisition and infrastructure development matters.
Conclusion: From Formalism to Fairness
Sections 34 and 37 of the Arbitration Act represent procedural pathways that often stop short of delivering substantive justice, particularly in claims for enhanced compensation. They are tailored for limited review and finality, not for equitable correction. This structural rigidity renders them ineffective when arbitral awards omit statutory dues or grant inadequate compensation.
For claimants seeking rightful entitlements, writ jurisdiction under Article 226 has become the only realistic remedy, ensuring that justice is not sacrificed at the altar of procedural finality. As courts increasingly recognize this gap, litigants and legal advisors must realign strategy from procedural rectification to constitutional enforcement.
