In Flowmore Limited v. Skipper Limited, FAO(OS)(COMM) 31/2023, decided on 28 October 2026, a Division Bench of the Delhi High Court (Justices Avneesh Jhingan and Shail Jain) set aside an arbitral award of Rs 8,15,05,674 with interest arising out of a cancelled purchase order for transmission-tower structures. The judgment is a working demonstration of the narrow but real ground that survives the bar on re-appreciating evidence: a finding resting on no evidence at all, or recorded by ignoring vital evidence, is patently illegal and cannot stand — even after the deference Section 37 commands.
The contract and the cancelled order
The purchase order of 2 March 2019 was for structural material for a transmission project, priced at roughly Rs 27.72 crore. Two clauses did the work in the eventual dispute. Clause 16 tied the 10% advance to an advance bank guarantee and a proforma invoice; Clause 38 barred manufacturing without written manufacturing clearance. Skipper furnished a guarantee of Rs 2.35 crore in June 2019; Flowmore never paid the advance and cancelled the order in July 2019. Skipper obtained interim relief under Section 9, a sole arbitrator was appointed, and in due course the arbitrator awarded Skipper Rs 8.15 crore with interest — accepting, critically, that Flowmore had waived prototype inspection and that Skipper had legitimately manufactured and then sold the material as scrap. Flowmore\'s counter-claim of Rs 26.45 crore was dismissed.
A procedural journey worth noting
The award survived a Section 34 challenge before a Single Judge. An earlier Division Bench, rather than deciding the Section 37 appeal, remanded the Section 34 petition — and the Supreme Court set that remand aside in December 2024 with the pointed observation that there was absolutely no reason for the Division Bench to remand, restoring the appeal for adjudication on merits. The present judgment, reserved in September and pronounced on 28 October 2026, is the merits decision the Supreme Court directed.
The three defects
The standard the Bench applied
What gives the judgment its doctrinal value is its care in policing its own limits. The Bench acknowledged that a court under Sections 34 and 37 cannot re-appreciate evidence merely because another view is possible. The intervention rested instead on the recognised exceptions within patent illegality: a finding based on no evidence, a finding arrived at by ignoring vital evidence, and an award whose reasoning contradicts itself. On the no-evidence standard the Bench quoted the governing formulation — "no evidence" means truly no relevant evidence, not scant or weak evidence — before concluding that the waiver finding failed even that exacting test. The award was set aside and the appeal allowed.
For award-holders, the case is a caution about awards that rest a chain of conclusions on a single document: if the document does not say what the award needs it to say, the entire chain is exposed. For challengers, it maps the only reliable route past Section 37 deference — not a better reading of the evidence, but a demonstration that a dispositive finding has nothing under it.
Where this leaves the parties
The setting aside of an award under Section 34 does not decree the counter-claim or decide the dispute; it removes the award, leaving the parties to their remedies, including fresh arbitration where available. Seven years after a cancelled purchase order, the parties are, in substance, back at the beginning — an outcome that itself carries a transactional lesson: contracts that condition advances, guarantees and manufacturing clearances on one another need equally precise correspondence during performance, because years later an arbitrator and three courts will parse a single go-ahead email word by word.
Frequently Asked Questions
What was the dispute?
Flowmore issued a purchase order of about Rs 27.72 crore to Skipper in March 2019 for structural material. The contract tied a 10% advance to a bank guarantee and proforma invoice, and barred manufacturing without written manufacturing clearance. Skipper furnished the guarantee, the advance was not paid, Flowmore cancelled the order, and a sole arbitrator ultimately awarded Skipper over Rs 8 crore while dismissing Flowmore's counter-claim of about Rs 26.45 crore.
How did the matter reach a second Division Bench hearing?
A Single Judge upheld the award under Section 34; an earlier Division Bench remanded the Section 34 petition, but the Supreme Court set aside that remand in December 2024 — observing that the Division Bench had not done its duty — and restored the appeal for a decision on merits. The present judgment is that decision.
On what basis was the award set aside?
Three connected defects: the finding that Flowmore waived prototype inspection of the towers rested on an email that, on its plain language, gave a go-ahead only for stubs and templates; that waiver finding was inconsistent with the arbitrator's own finding on when the advance became payable, making the award self-contradictory; and the arbitrator ignored vital evidence of Skipper's inconsistent stand on whether the goods were customised, which vitiated the scrap-sale analysis.
Does this open the door to evidence re-appreciation in Section 34/37 cases?
No. The Bench expressly reaffirmed that re-appreciation is impermissible and quoted the settled standard: "no evidence" means truly no relevant evidence, not scant or weak evidence. The ground is confined to findings with no evidentiary basis, findings ignoring vital evidence, and internal contradictions amounting to patent illegality.