Elementary that a challenge to an arbitrary award is not treated as an appeal unless it leads to miscarriage of justice : Calcutta high court

Elementary that a challenge to an arbitrary award is not treated as an appeal unless it leads to miscarriage of justice : Calcutta high court


It is elementary that a challenge to an arbitrary award is not treated as an appeal and the limited scope of interference does not permit the court to correct an error within the bounds of the arbitrator’s authority, unless the error is apparent on the face of the award and results in manifest miscarriage of justice, is upheld by the high court of Calcutta, by the learned bench of Sanjib Banerjee in the case of Tonganagaon Tea Company Private Limited V. M/S Associated Tea Industries, AP No. 1677 of 2014.



The parties apparently entered into an agreement on April 1, 2005 under which a sum of Rs.65 lakh advanced by the respondent to the petitioner was to be adjusted against the supply of green tea by the petitioner to the respondent. For the three financial years of 2005-06, 2006- 07 and 2007-08, the petitioner herein was to supply green tea leaves of value of Rs.15 lakh each; and, in course of the financial year 2008-09, the petitioner was to supply green tea leaves of value of Rs.20 lakh. The respondent claimed in the reference that the petitioner neither supplied the tea nor repaid the amount despite demands.

The respondent relied on a cheque for Rs.71,50,000/- apparently issued by the petitioner in its favour and claimed that such cheque was dishonourd upon presentation and it was evident that the respondent’s claim was undisputed. For reasons not necessary to be gone into herein, the arbitrator disregarded the dishonoured cheque. However, the arbitrator proceeded on the claim under the agreement of April 1, 2005 and the petitioner’s defence thereto.

The petitioner submits that it was the petitioner’s specific case before the arbitrator that the petitioner had effected supply of green tea leaves to the respondent, at least between April and October, 2005; but the respondent did not acknowledge the same or give any credit to the petitioner on such account. The petitioner complains that even the respondent’s witness acknowledged that supplies were received by the respondent from the petitioner’s tea garden during the relevant period, but the arbitrator failed to take such matter into account while deciding the claim. The petitioner says that the award contradicts itself in it referring to the documents adduced in evidence by the petitioner in support of its assertion that substantial supplies were effected by the petitioner to the respondent, but in the later part of the award it being recorded that there was no material in support of the petitioner’s assertion of repayment or adjustment of the dues.


The court upheld that a party discharging a part of its debt to another would not have a clearer acknowledgment of the part discharge than the documents relied upon before the arbitrator by the petitioner herein. The cloud of doubt that was sought to be raised by the petitioner herein in respect of the claim appears to have been adequately dispelled by the respondent’s witness that the supplies pertaining to the weighment certificates and challans produced by the petitioner herein were, in fact, supplies obtained by the respondent from Shankar Traders against payments made to Shankar Traders. The court found out that it was asserted by the respondent in its rejoinder that during the relevant period 11,35,325 kg of green tea leaves were obtained by the respondent from Shankar Traders against payment and corroborated by the respondent’s witness in course of his testimony. On the state of the facts and the evidence before the arbitrator, it was apparent that the debt due from the petitioner to the respondent had not been demonstrated by the petitioner to have been discharged. Finally the court presiding over a challenge to an arbitral award is not called upon to look into the evidence or reappraise the same. However, since the relevant oral evidence on such aspect of the matter has been quoted in the award and such evidence appearing from the award itself has been made the basis for the challenge, the same has been looked into by the respective court.

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Judgement reviewed by – Rani Banerjee

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