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Courts should not interfere with Arbitral award unless such award portrays perversity unpardonable U/S.34 of the Arbitration Act: High Court of Delhi

It is trite law that an arbitral award can be set aside only on the limited ground as set out in Sub-section (2) and (2A) of Section 34 of the A&C Act. This Court cannot re-appreciate and re-evaluate the evidence and supplant its opinion in place of that of the Arbitral Tribunal. This Court does not act as a court of first appeal and the decision of an arbitrator with regard to the facts is final. It cannot be interfered with unless the same is patently illegal or otherwise falls foul of the fundamental policy of Indian law. This was held in ORIENTAL INSURANCE CO. LTD. V. DIAMOND PRODUCTS LTD. [O.M.P. (COMM.) 147 of 2018] in the High Court of Delhi by a single bench consisting of JUSTICE VIBHU BAKHRU.

Facts are that disputes had arisen between the parties in respect of an insurance claim made by the respondent company in terms of the Standard Fire and Special Peril Policy issued by the petitioner. The respondent filed a petition under Section 11 of the A&C Act before this court which has culminated in an award. The petitioner has filed a petition against the same award.

The counsel for the petitioner has submitted that the award should be set aside on the ground that the same is in conflict with the public policy of India, inasmuch as, the Arbitral Tribunal has erred in not following the Surveyor Report and has overlooked the observations of the Surveyor.

The counsel of the respondent submitted that the Arbitral Tribunal has correctly not assigned due weightage to the Surveyor Report, in which he had failed to provide any reason to make an overall ad-hoc deduction of 5% on account of deadstock, from the total value of raw material.

The court made reference to the judgment of  Apex court in the case of  Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd., wherein it was held that “ There is no dispute that Section 34 of the Arbitration Act limits a challenge to an award only on the grounds provided therein or as interpreted by various courts. We need to be cognizant of the fact that arbitral awards should not be interfered with in a casual and cavalier manner unless the court comes to a conclusion that the perversity of the award goes to the root of the matter without there being a possibility of alternative interpretation which may sustain the arbitral award. Section 34 is different in its approach and cannot be equated with a normal appellate jurisdiction. The mandate under Section 34 is to respect the finality of the arbitral award and the party’s autonomy to get their dispute adjudicated by an alternative forum as provided under the law. If the courts were to interfere with the arbitral award in the usual course on factual aspects, then the commercial wisdom behind opting for alternate dispute resolution would stand frustrated”.

Considering the facts of the case and the legal precedents, the court observed there was nothing contrary to the fundamental policy of India or opposed to the most basic notions of morality and justice. Thus the court held that no interference should be made with the decision of the Arbitral Tribunal on the merits of the claims raised by the respondent.

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