FAO (COMM) 98/2026 Page 1 of 15

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* IN THE HIGH COURT OF DELHI AT NEW DELHI

% Judgment reserved on: 09.04.2026

Judgment pronounced on: 18.04.2026

Judgment uploaded on: 18.04.2026

+ FAO (COMM) 98/2026

AUSTIN HYUNDAI (AUSTIN DISTRIBUTORS PVT LTD)

.....Appellant

Through: Mr. Samrat Nigam, Sr. Adv.

with Ms. Archana Sonthalia,

Ms. Prachi Pratap, Dr. Prashant

Pratap, Mr. Amjid Maqbool,

Ms. Anupriya Dixit, and Ms.

Pallavi Pratap, Advs.

versus

AXALTA COATING SYSTEMS IND IA PVT LTD

.....Respondent

Through: Mr. Piyush Sharma and Mr.

Armaan Verma, Advs.

CORAM:

HON'BLE MR. JUSTICE ANIL KSHETARPAL

HON'BLE MR. JUSTICE AMIT MAHAJAN

J U D G M E N T

ANIL KSHETARPAL, J.:

1. Through the present Appeal preferred under Section 37 of the

Arbitration and Conciliation Act, 1996

1

[hereinafter referred to as the

„A&C Act‟], the Appellant assails the order dated 18.03.2026

[hereinafter referred to as the „Impugned Order‟] passed by the

learned District Judge whereby the petition filed by the Appellant

under Section 34 of the A&C Act

2

[hereinafter referred to as „Section

34 Petition‟] seeking setting aside of the arbitral award dated

13.09.2024 [hereinafter referred to as the „Award‟] came to be

1

Section 37

2

Section 34

FAO (COMM) 98/2026 Page 2 of 15

dismissed.

2. By virtue of the Impugned Order, the learned District Judge

declined to interfere with the findings returned by the learned Sole

Arbitrator, who had allowed the claims of the Respondent arising out

of a Supply Agreement dated 19.07.2019 [hereinafter referred to as

„Supply Agreement‟] and held the Appellant liable towards repayment

of the amount treated as upfront investment support along with allied

claims.

3. The principal question which therefore arises for consideration

before this Court is whether the learned District Judge, while

exercising jurisdiction under Section 34, committed any jurisdictional

error or patent illegality in refusing to set aside the arbitral award,

warranting interference by this Court in exercise of its limited

appellate jurisdiction under Section 37.

FACTUAL MATRI X:

4. Before adverting to the rival submissions advanced on behalf of

the parties, it would be apposite to briefly notice the factual

background leading to the present Appeal.

5. The Appellant, Austin Hyundai (Austin Distributors Pvt. Ltd.),

entered into a dealership agreement dated 30.04.2011 [hereinafter

referred to as „Dealership Agreement‟] with Hyundai Motors India

Ltd. for operating a non-exclusive automobile dealership at Kolkata.

The said dealership arrangement was subsequently renewed in the

years 2014 and 2017.

6. In furtherance of its obligation to provide after-sales services

FAO (COMM) 98/2026 Page 3 of 15

under the Dealership Agreement, the Appellant entered into the

Supply Agreement with the Respondent, Axalta Coating Systems

India Pvt. Ltd., for procurement of refinish paints, tints, thinner and

allied paint ancillaries required for authorised workshop operations.

7. The Supply Agreement contemplated that supplies could be

effected either directly by the Respondent or through its authorised

distributors/business associates, with payments to be made in

accordance with invoices issued from time to time. The relevant

portion is reproduced below:

“Axalta Coating Systems shall supply the Products itself or through

Axalta Coating Systems’s Authorised Distributors/Stockist

(hereinafter referred as Business Associates) to Austin Hyundai

(Austin Distributors Pvt. Ltd.) at the prices mentioned in Axalta

Coating Systems’s MRP list which shall be provided to Austin

Hyundai (Austin Distributors Pvt. Ltd.) annually. The payment shall

be made by Austin Hyndai (Austin Distributors Pvt. Ltd.) to Business

Associates on the terms as mentioned in the invoice(s) issued from

time to time.”

8. Pursuant thereto, the Respondent extended an amount of

Rs.39,60,000/- to the Appellant, described as „upfront investment

support‟. Subsequently, the dealership agreement between the

Appellant and Hyundai Motors India Ltd. stood terminated on

11.08.2020, as a consequence whereof the Appellant ceased to operate

authorised Hyundai workshops and was unable to fulfil the minimum

purchase commitment envisaged under the Supply Agreement.

9. Disputes thereafter arose between the parties regarding the

nature of the aforesaid payment. While the Respondent asserted that

the amount constituted a recoverable financial support/loan linked to

minimum purchase obligations, the Appellant contended that it was in

the nature of a commercial business investment incapable of recovery.

FAO (COMM) 98/2026 Page 4 of 15

Upon exchange of legal notices dated 02.03.2022 and denial of

liability by the Appellant, the Respondent invoked arbitration under

the Supply Agreement.

10. The learned Sole Arbitrator [hereinafter referred to as „the

Arbitrator‟] adjudicated the disputes and, by Award dated 13.09.2024,

held inter alia that the Appellant was a party to the Supply

Agreement, had received upfront investment support along with GST,

had obtained supplies at discounted value, and had breached the

minimum purchase commitment stipulated under the contract. The

relevant portions are reproduced as follows:

“Tribunal also makes a finding that Austin Distributors Pvt. Ltd. is a

party to supply Agreement and is the only Respondent in these

proceedings ( Issue A and B)

***

For reasons set out above, the Tribunal makes a finding that Claimant

did pay to Respondent i.e., Austin Distributors Pvt. Ltd. and

Respondent did receive from Claimant Upfront Investment Support of

INR 39,60,000 along with GST of INR 7,12,800. (Issue C)

***

For reasons set out above, the Tribunal makes a finding that Claimant

supplied Respondent with Products at a discounted value of INR

12,30,313.63. (Issue D)

***

For reasons set out above, the Tribunal makes a finding that

Respondent breached the Supply Agreement by failing to discharge

the obligation of making the Minimum Purchase Commitment for each

of the three Contract Years. (Issue E)

***

As a result, the Tribunal makes no finding with regard to Issue F.

(Issue F)”

11. Aggrieved thereby, the Appellant instituted proceedings under

Section 34 before the learned District Judge contending, inter alia,

that the Award suffered from perversity, patent illegality, and

misinterpretation of contractual and evidentiary material.

12. During the pendency of proceedings, the Appellant also

FAO (COMM) 98/2026 Page 5 of 15

invoked Section 33 of the A&C Act seeking correction of certain

aspects of the Award. The learned Arbitrator permitted limited clerical

corrections but rejected objections relating to alleged misappreciation

of evidence by order dated 09.11.2024.

13. The Appellant further filed applications before the learned

District Judge seeking production of additional evidence and

summoning of a third party, namely Dial Automobiles Pvt. Ltd. The

application seeking stay of the Award under Section 36(3) of the A&C

Act was dismissed as not pressed.

14. Ultimately, by order dated 18.03.2026, the learned District

Judge dismissed the Section 34 Petition. Aggrieved by the refusal to

set aside the Award, the Appellant has preferred the present Appeal.

CONTENTIONS OF THE PARTIES:

15. Heard learned counsel appearing for the parties and perused the

record with their assistance.

16. Learned Senior Counsel for the Appellant submits as under:

i. The Arbitrator erred in treating the invoice dated 05.09.2019 as

“upfront investment support”, despite the amount being accounted as

taxable service income attracting GST and income tax, thereby

permitting impermissible recovery of a sum already treated as

revenue.

ii. The Supply Agreement was intrinsically dependent upon

continuation of the Hyundai dealership. Upon its termination, the

substratum of the contract stood extinguished, rendering enforcement

FAO (COMM) 98/2026 Page 6 of 15

of minimum purchase obligations legally unsustainable.

iii. The Award impermissibly relies upon invoices issued by Dial

Automobiles Pvt. Ltd., a non-signatory and non-party to arbitration,

thereby fastening liability on the Appellant based on third-party

transactions beyond the Arbitrator‟s jurisdiction.

iv. The Arbitrator erroneously rejected the Appellant‟s application

under Section 23(3) of the A&C Act [hereinafter referred to as

„Section 23(3) Application‟] seeking amendment, counter-claim, and

impleadment of a necessary party without hearing and by attributing

motives, thereby violating principles of natural justice.

17. Per contra, learned counsel for the Respondent submits as

under:

i. The Arbitrator correctly construed the payment as upfront

investment support based on contractual terms and contemporaneous

conduct of parties, which cannot be re-examined in Section 37

proceedings.

ii. Termination of the dealership did not discharge contractual

obligations voluntarily undertaken under the independent Supply

Agreement between the parties.

iii. Reliance on distributor invoices was contractually permissible

since supplies through authorised business associates formed part of

the agreed commercial arrangement.

iv. The Section 23(3) Application was belated and rightly rejected

to prevent derailment of arbitral proceedings, causing no procedural

FAO (COMM) 98/2026 Page 7 of 15

prejudice to the Appellant.

18. No other submissions have been urged on behalf of the parties.

ANALYSIS AND FINDINGS:

19. This Court has considered the submissions advanced by learned

Counsel for the parties.

20. Before examining the rival contentions, it is necessary to

delineate the scope of appellate interference under Section 37.

21. The contours of judicial scrutiny of arbitral awards stand

authoritatively settled by the Supreme Court. In McDermott

International Inc. v. Burn Standard Co. Ltd. & Ors.

3

, the Court has

emphasised that the A&C Act assigns courts only a supervisory role in

arbitral matters. Judicial intervention is limited to ensuring fairness of

the process on grounds such as fraud, bias, or violation of natural

justice, and courts are not empowered to correct errors of fact or law

committed by the arbitral tribunal. The Court further held that

interpretation of contractual terms and evaluation of the conduct of

parties lie primarily within the domain of the arbitrator, and once

arbitral jurisdiction is established, interference is warranted only

where a patent illegality or jurisdictional infirmity is apparent on the

face of the award.

22. The position has also been affirmed in MMTC Ltd. v. Vedanta

Ltd.

4

, which underscores that the appellate jurisdiction under Section

37 is inherently circumscribed and derivative in nature. The appellate

3

(2006) 11 SCC 181

4

(2019) 4 SCC 163

FAO (COMM) 98/2026 Page 8 of 15

court is concerned not with the correctness of the arbitral award per

se, but with the legality of the exercise undertaken by the court

exercising jurisdiction under Section 34. Interference is therefore

warranted only where the court below has either exceeded the

permissible contours of Section 34 or failed to exercise jurisdiction

vested in it, and not merely because another view on facts or

contractual interpretation may appear possible.

23. Similar observations have been made by the Supreme Court in

Punjab State Civil Supplies Corporation Ltd. v. Sanman Rice Mills

5

,

the Supreme Court reiterated that the appellate jurisdiction under

Section 37 remains confined within the limits prescribed under

Section 34. The Court clarified that an appellate court does not sit as a

regular court of appeal over arbitral awards and cannot undertake

reappraisal of evidence or reassessment of factual findings merely

because another view is possible. The power under Section 37 is

supervisory in character, akin to revisional jurisdiction, and

interference is justified only where the Section 34 court has either

exceeded its jurisdiction or failed to exercise it in accordance with

law.

24. Importantly, while dealing specifically with Section 37

jurisdiction, a three-judge Bench of the Supreme Court in UHL Power

Company Ltd. v. State of Himachal Pradesh

6

held that an appellate

court under Section 37 exercises an even more restricted jurisdiction

than that under Section 34, and interference is justified only where the

Section 34 court itself has exceeded the permissible limits of review.

5

2024 SCC OnLine SC 2632

6

2024 SCC OnLine SC 2632

FAO (COMM) 98/2026 Page 9 of 15

25. Thus, the appellate scrutiny under Section 37 is supervisory in

nature. The Court is required to examine only whether the learned

District Judge, while exercising jurisdiction under Section 34, applied

the correct legal principles and remained within the statutorily

permissible bounds of interference.

26. Consequently, unless the Impugned Order discloses patent

illegality, jurisdictional error, or manifest perversity in the exercise of

Section 34 jurisdiction, this Court would be slow to interfere with the

decision under appeal.

27. Tested on the aforesaid settled principles governing appellate

interference under Section 37, the submissions advanced on behalf of

the Appellant are required to be examined only to ascertain whether

the learned District Judge committed any jurisdictional error while

declining to set aside the Award under Section 34, and not whether

this Court would have arrived at a different conclusion on merits.

28. The principal contention of the Appellant is that the Arbitrator

erroneously treated the invoice dated 05.09.2019 as “upfront

investment support”, despite the amount allegedly being reflected as

taxable income attracting GST and income tax, thereby rendering its

recovery impermissible.

29. A perusal of the Award, however, reveals that the Arbitrator

arrived at the said conclusion upon detailed appreciation of both

documentary and oral evidence. The Arbitrator noted the categorical

admission emerging from the cross-examination of RW-2,

acknowledging payment of upfront investment support along with

GST to the Appellant. The Arbitrator further relied upon Clause 6 of

FAO (COMM) 98/2026 Page 10 of 15

the Supply Agreement, wherein the Appellant expres sly

acknowledged receipt of Rs.39,60,000/- as upfront investment support

and, as security thereof, executed a Demand Promissory Note pursuant

to Clause 15 of the Agreement, undertaking repayment upon demand.

The Arbitrator also examined contemporaneous correspondence,

including the Reply to the Termination Notice, wherein the Appellant

admitted receipt of the said amount though disputing its classification

as a loan.

30. On the basis of these contemporaneous contractual documents

and admissions attributable to the Appellant itself, the Arbitrator

recorded a clear finding that the Respondent had paid, and the

Appellant had received, upfront investment support of Rs.39,60,000/-

along with applicable GST. The Arbitrator further found the

Appellant‟s subsequent denial of receipt, as pleaded in its defence, to

be inconsistent with its earlier communications and contractual

acknowledgments.

31. The challenge raised before this Court essentially seeks re-

appreciation of evidence and reconsideration of the accounting

characterization of the transaction. The mere fact that the amount may

have been reflected as income for taxation purposes does not render

the arbitral interpretation impermissible once the contractual

framework and surrounding conduct demonstrated that the payment

was linked to minimum purchase obligations under the Supply

Agreement. Interpretation of contractual stipulations and evaluation of

evidentiary material fall squarely within the exclusive domain of the

Arbitrator.

FAO (COMM) 98/2026 Page 11 of 15

32. The Arbitrator having adopted a reasoned and plausible view

founded upon admissions, contractual clauses, and contemporaneous

records, the learned District Judge rightly declined to interfere. Such

findings, being neither perverse nor patently illegal, cannot be

reopened in appellate proceedings under Sections 34 or 37 merely

because an alternate interpretation is suggested by the Appellant.

33. The Appellant next contends that termination of the Hyundai

dealership extinguished the substratum of the Supply Agreement,

thereby rendering enforcement of minimum purchase commitments

legally untenable.

34. The Award, however, demonstrates that the Arbitrator

specifically examined this defence and found it to be unsupported by

any contractual stipulation or evidentiary material. The Arbitrator

recorded that although the Appellant asserted existence of an

understanding that supplies would continue only so long as the

Hyundai dealership subsisted, no evidence whatsoever was produced

to establish such an agreement. The Supply Agreement, on its plain

terms, imposed independent minimum purchase obligations upon the

Appellant for the stipulated contract period, and no clause provided

for automatic discharge upon termination of the dealership

arrangement.

35. The Arbitrator further noted that while reference was made in

the Statement of Defence to business losses allegedly arising from the

COVID-19 pandemic and consequent restrictions, no legally

cognisable defence, whether of force majeure, frustration, statutory

restriction, or governmental prohibition, was pleaded or substantiated.

FAO (COMM) 98/2026 Page 12 of 15

The pleadings contained no averment demonstrating how the

pandemic legally excused performance of contractual obligations.

Significantly, the Arbitrator found that the Appellant neither advanced

nor pursued any such defence during evidentiary hearings or final

arguments. In these circumstances, the Arbitrator concluded that

failure to meet the minimum purchase commitment constituted a

breach of the Supply Agreement.

36. The learned District Judge, while exercising jurisdiction under

Section 34, rightly declined to revisit these findings. The conclusions

drawn by the Arbitrator represent a plausible construction of the

contract and the pleadings before it.

37. In the present case, the Arbitrator has specifically found that the

Supply Agreement constituted an independent commercial

arrangement containing express minimum purchase obligations for a

defined contractual period and that no contractual term made its

continuance contingent upon subsistence of the Hyundai Dealership

Agreement. The question whether the two agreements were

interdependent was thus examined on the basis of the contractual

terms and evidentiary record, and answered by the Arbitrator upon

appreciation of facts. No perversity, patent illegality, or jurisdictional

infirmity in this finding, duly affirmed by the Court exercising

jurisdiction under Section 34, has been demonstrated so as to warrant

interference in appellate jurisdiction under Section 37.

38. The Appellant further argues that the Award is vitiated as

reliance was placed upon invoices issued by Dial Automobiles Pvt.

Ltd., a non-signatory to the arbitration agreement, thereby allegedly

FAO (COMM) 98/2026 Page 13 of 15

fastening liability upon the Appellant on the basis of third-party

transactions.

39. The Award, however, demonstrates that the Arbitrator

examined this aspect in detail. The Arbitrator noted that Annexure C/5

was produced to establish supply of products during the subsistence of

the Supply Agreement and comprised a consolidated Credit Note

dated 22.07.2020 together with individual invoices reflecting supplies

made at a discounted value of Rs.12,30,313.63/-. Significantly, each

of the invoices forming part of the said annexure bore the stamp of the

Appellant and the signatures of its authorised signatory

acknowledging receipt of the products. The credit note itself carried

the authorised signatures and company stamps of both the distributor

and the Appellant.

40. The Arbitrator further recorded that although the Appellant

disputed receipt of products and alleged inferior quality as well as

excessive billing, no evidence whatsoever was adduced to substantiate

these assertions. In the absence of supporting material, the Arbitrator

rejected the defence for failure to prove the same and returned a

factual finding that supplies had indeed been effected at the

discounted value reflected in the documentary record.

41. It is also material that the Supply Agreement expressly

contemplated supplies being effected either directly by the

Respondent or through authorised distributors/business associates.

The reliance placed upon distributor invoices was therefore consistent

with the contractual framework and was undertaken only for

evidentiary purposes to establish performance of contractual

FAO (COMM) 98/2026 Page 14 of 15

obligations, and not for imposing liability upon a non-party to

arbitration.

42. The challenge raised by the Appellant thus essentially seeks re-

appreciation of documentary evidence and reassessment of factual

findings rendered by the Arbitrator. Such an exercise lies wholly

outside the permissible scope of scrutiny under Sections 34 and 37.

The learned District Judge rightly declined to interfere with these

findings.

43. The Appellant has also assailed rejection of its application

under Section 23(3) of the A&C Act seeking amendment, counter-

claim, and impleadment of a third party, alleging violation of

principles of natural justice.

44. The record reveals that the said application was moved at an

advanced stage of the arbitral proceedings. The Arbitrator exercised

procedural discretion in declining the request so as to avoid derailment

of the proceedings. The learned District Judge, upon examination,

found no procedural unfairness or denial of opportunity affecting the

validity of the arbitral process.

45. It is well settled that procedural management of arbitral

proceedings lies primarily within the discretion of the arbitral tribunal.

Unless prejudice of a fundamental nature or denial of equal

opportunity is demonstrated, such procedural orders do not furnish a

ground for setting aside an award. The Appellant has failed to

establish any such violation.

46. A cumulative reading of the Award and the Impugned Order

FAO (COMM) 98/2026 Page 15 of 15

indicates that the learned District Judge correctly confined himself to

the parameters of Section 34 review and refrained from reappreciating

evidence or substituting the findings of the Arbitrator. The

conclusions reached represent a plausible view emerging from the

contractual framework and material placed before the Arbitrator.

CONCLUSION:

47. In view of the foregoing discussion and for the reasons recorded

hereinabove, this Court is of the considered opinion that the learned

District Judge has exercised jurisdiction strictly within the confines of

Section 34 and has rightly declined to interfere with the Award.

48. The Appellant has failed to demonstrate any patent illegality,

jurisdictional error, perversity, or violation of principles of natural

justice either in the Award or in the Impugned Order dated 18.03.2026

so as to justify interference by this Court in exercise of its limited

appellate jurisdiction under Section 37.

49. The Appeal, being devoid of merit, is accordingly dismissed.

ANIL KSHETARPAL, J.

AMIT MAHAJAN, J.

APRIL 18, 2026

jai/shah