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Chhattisgarh High Court Upholds Rejection of Bid to Overturn Arbitral Award on Limitation and Fabrication Grounds

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Case title: The Superintending Engineer, National Highway Circle, Public Works Department, Government of Chhattisgarh at Pension Bada, Raipur 492001, Chhattisgarh. VS ECI-Keystone (JV) through its Managing Director, H.No. 8-2-338/6, Road No.3, Panchavati Colony, Banjara Hills, Hyderabad 500034.

Case no.: ARBA No.51 of 2023

Dated on: 10th JUNE 2024

Quorum: HON’BLE MR JUSTICE Goutam Bhaduri and HON’BLE MR JUSTICE Sanjay S. Agrawal

FACTS OF THE CASE

The joint venture company namely; ECI-KEYSTONE was entered into a contract agreement for construction of two-lane road at certain different distances from Bhopalapatnam to Jagdalpur under the LWE scheme. The contract price was ₹ 184,54,47,686.69. Admittedly, the extension was granted to the respondent up till 30-6-2019. During the course of execution of the contract, certain dispute arose between the parties which led to appointment of the Arbitrator as per clause 25.3 (a) of the contract. The respondent invoked the arbitration clause under special condition of contract. The appellant Department also acceded to such appointment, consequently, the Sole Arbitrator was appointed. Subsequently, the Department was advised by the Ministry of Road that since high stakes were involved in the project, therefore, in accordance with the provisions of clause 25.3 the arbitration should be conducted by a panel of three Arbitrators. Consequently, an application was moved and initial consent though was withdrawn by the Department on 16-8 2021, but the proceeding by the time conducted before the Sole Arbitrator and the award was passed on 2-9-2022 (Annexure – A/2). The said arbitral award was assailed by the appellant before the Commercial Court (District Level), Naya Raipur, Chhattisgarh, by filing an application under Section 34 of the Act, 1996 along with the application under Section 36 (3) for grant of stay and application under Section 34 (3) for condonation of delay with a prayer to set aside the award on the ground that the appellant was not permitted to present the case and the prayer was made to set aside the ex parte award. According to the appellant, the arbitral award was not signed and received by the appellant and only received a photocopy of the award lately.

 ISSUES

  • Whether the signed copy of the arbitral award was duly delivered to the appellant as mandated under Section 31(5) of the Arbitration and Conciliation Act, 1996.
  • Whether the appellant’s application to set aside the arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996, was filed within the prescribed limitation period.
  • Whether the conduct of the appellant regarding the receipt and acknowledgment of the arbitral award demonstrated any attempt to fabricate facts or create a misleading narrative.
  • Whether the order of the Commercial Court, Nava Raipur, dismissing the appellant’s application on the ground of limitation was justified and warranted any interference by the higher court.
  • Whether the procedure for the removal of the Sole Arbitrator was appropriately followed by the appellant.

LEGAL PROVISINS

Arbitration and Conciliation Act, 1996:

Section 31(5) – Form and Contents of Arbitral Award: This section mandates that the signed copy of the arbitral award must be delivered to each party. It is crucial in this case since the appellant contends that they did not receive a signed copy of the award, which affects the timeline for challenging the award.

Section 34 – Application for Setting Aside Arbitral Award:

Section 34(1): Allows a party to apply to the court to set aside the arbitral award.

Section 34(3): Specifies the time limit for making an application to set aside the award. It states that such an application must be made within three months from the date on which the party making the application had received the arbitral award. It also provides an additional 30 days if the court is satisfied that the party was prevented by sufficient cause from making the application within the three-month period, but not thereafter.

Section 34(3) Proviso: Emphasizes that no further extension of time is permitted beyond the additional 30 days.

Section 36(3) – Enforcement of Arbitral Award: This section deals with the enforcement of arbitral awards and allows the court to grant a stay on the enforcement if an application under Section 34 is filed.

CONTENTIONS OF THE APPELLANT

The Learned Advocate General appearing for the appellant would submit that as per Section 31(5) of the Act, 1996 it is incumbent upon the Arbitrator to deliver signed copy of the award to each party. He would submit that the appellant was not served with the signed copy of the award. According to him, the Department received the photocopy of award along with the execution application on 10-2-2023 and immediately on 11-3-2023, a request letter was sent to supply signed copy of the award. Learned counsel would submit that the Arbitrator has stated that he has already sent signed copy of the award by registered post, but having not been received by the Department again a communication was made on 17-3-2023 and requested for supply of signed copy of award. He would submit that even the copy of the award was sought for, it was refused by the Arbitrator on the ground that it has already been sent by the registered post. Learned counsel would submit that since signed copy of award is not served under Section 31(5) of the Act, 1996, no cause of action accrues to prefer the application under Section 34 of the Act, 1996. Learned counsel would place reliance upon the decision rendered by the Supreme Court in the matter of State of Maharashtra and others v ARK Builders Private Limited1 to submit that the Supreme Court in this case has categorically laid down that the signed copy is required to be delivered to the party in a manner prescribed by law. He would further place reliance upon the decision rendered by the Supreme Court in the matter of Union of India v TECCO Trichy Engineers & Contractors2 to submit that who are the necessary party and receipt of order even by some of the Clerk would not amount to sending a copy. He would place reliance upon the decision rendered by the Supreme Court in the matter of Dakshin Haryana Bijli Vitran Nigam Limited v Navigant Technologies Private Limited3 to submit that Section 31(1) is couched in mandatory terms and signed copy of order is required to be delivered to the parties. Learned counsel would further submit that he has not pressed upon the issue, at this stage, as to the legality and validity of the arbitral award and confined his arguments only in respect of receipt of signed copy of the arbitral award and limitation since the challenge is with respect to dismissal of application on the ground of limitation, it is submitted that presently the other issue about correctness of award is required to be raised before the Commercial Court.

 CONTENTIONS OF THE RESPONDENTS

The Learned counsel appearing for the respondent, per contra, would vehemently oppose the arguments advanced by the appellant and would submit that service of arbitral award is not at all in issue as initially on 2-9-2022 passing of the award was informed by e mail and thereafter, the original copy of the signed award was sent through registered post. Signed copy of the award was received by the Department on 7-9-2022. He would submit that again the award was served by way of e-mail dated 8-9-2022 and the printout of attachment of e-mail dated 2-9-2022 served by the representative of the respondent on 7-9-2022 by hand. He would also submit that statement of the then Superintending Engineer Nagesh Kumar Jayanth, in affidavit, would show that some third person has served him with the copy of the award dated 7-9-2022. From the said fact, it is manifest that the department was very well in know of the fact that the award has been passed and was holding the same. Learned counsel would submit that the appellant took a different stand as related to the service of the copy of award and also tried to fabricate the facts and different stand has been taken in an application under Section 34 of the Act, 1996. It is stated that the truth came to fore when the affidavits were called upon by the Commercial Court, which shows the copy of award was delivered. He would submit that the Department has received the original arbitral award dated 2-9-2022 by registered post on 7-9-2022 and by e-mail on 8-9-2022 and subsequently copy of the award was received by hand at their office. Placing reliance upon the decision rendered by the Bombay High Court in the matter of Rahul v Akola Janta7, learned counsel would submit that only the party should be made aware of existence of award and effect and import of the award. He would submit that the appellant has not filed any documents along with the application e.g. copy of reply of the respondent to the application of the appellant under Section 34(3); copy of  affidavit of Shri Surender Kumar Manji along with photocopies of documents, which were filed before the Commercial Court; and copy of the complete set of documents filed by the respondent along with the copy of affidavit shows the fact otherwise Learned counsel would submit that the important document having been deliberately held back would show that wrong contentions have been made and in order to divert the issue an invert register was placed, thereby the appellant tried to create the camouflage, which should not be acceptable. He would submit that having send copy of the award by registered post and the same having been received it cannot be stated that the signed copy of the award has not been received. The letter of the Sole Arbitrator along with postal receipts would carry a presumptive value and by the statement it has not been rebutted. Thus, the Commercial Court taking into the conduct of the appellant dismissed the application at the threshold, which is well merited and warrants no interference of this Court.

COURT’S ANALYSIS AND JUDGEMENT

We have heard learned counsel for the parties and perused the documents. As per the records the contract was executed between the parties on 1-12-2012 for construction of two-lane road at different intervening places. The parties to the contract were the Superintending Engineer, National Highway Circle, PWD, Government of Chhattisgarh, being the grantee and ECI Keystone Joint Venture was the contractor. The contract was extended from time to time. When the dispute arose, invocation of arbitration was made on 13 7-2020. The award shows the respondent therein (appellant herein) appointed the Arbitrator by its letter dated 10-8-2020 recording the mutual consent of both the parties. The first hearing was held on 8-9-2020 and the appellant sought for time for filing statement of defence. Eventually, the statement of defence was not filed. The award further reflects that thereafter, the appellant sought for cancellation of appointment of Arbitrator on various grounds. Para 39 of the award would reflect that the said objection was made after a period of 22 months on the ground that the Ministry of Road Transport & Highways, New Delhi, has not appointed Officer-in charge, therefore, the cancellation of appointment of Arbitrator was sought for. The said contention of the appellant was not accepted and the Arbitrator though was appointed, which was not objected and the appellant sought time to file its reply, but instead of filing reply unilaterally removal of Arbitrator was sought for. It is a settled principle that Arbitrator was required to be removed in accordance with the procedure prescribed under the provisions of the Act, 1996, but the same was not adopted by the appellant as the cancellation procedure for appointment of Arbitrator was not adhered to. Since the Sole Arbitrator was already in hold of arbitral proceedings, he proceeded with the same and eventually the award was passed on 2-9-2022. The issue in the present appeal arose, when an application was filed by the appellant herein to set aside the said award before the Commercial Court, Nava Raipur, and the same was dismissed on the ground of limitation. As per Section 34(3) from date of award when received the limitation starts and it is initially as three months. The proviso to the Section further gives a liberty for a period of thirty days apart from three months above but not thereafter. When specific limitation period is prescribed under statute is maximum for four months in the relevant case no further extension of time can be provided by the Court to challenge an award under the Act, 1996. It is the trite law that merely because Government authorities is involved, a different yardstick for condonation of delay cannot be laid down. The Arbitrator initially vide e-amil dated 2-9-2022 intimated the Superintending Engineer about passing of such award. The communication sent by e-mail would show that apart from the intimation of such award it was also averred that the award is sent through Registered Post with Acknowledgment Due to both the parties and the proof dispatch was also enclosed with the covering letter. Since the said award was sent by Registered Post, under the RTI Act subsequently the respondent obtained the information about service of such letter from the Department of Post India, which shows that the appellant Superintending Engineer, National Highway Circle, PWD, Raipur, has received the assignment. The e-mail dated 8-9-2022 sent by the Arbitrator would show that it was informed by him that hard copy of the award has been sent through the Registered Post to both the parties and since the additional request was made by the claimant to get a soft copy, the soft copy of the award sent to both the parties in the PDF format. Nagesh Kumar Jayant, working as Chief Engineer, the then Superintending Engineer in between 13-6-2022 to 17-10-2022 in his affidavit filed before the Commercial Court, has made a statement that on 7-9-2022 a third person who was not working in the office of the Superintending Engineer had handed over a photocopy of the award to him by hand. He did not give any receipt to the same and marked the said photocopy and gave it to one Mithilesh Kumar Sahu for keeping. Before this Court, a reference is made to a communication dated 17-3-2023 (Annexure-R/59), which purports that the explanation has been sought for from the concerned Receipt Clerk about receipt of registered post and the enquiry was going on. Applying the well settled principles of law and for the reasons stated hereinabove, we are of the view that the award was duly signed by the Arbitrator and sent & delivered the same to the appellant in terms of Section 31(5) of the Act, 1996, but contradictory statements were made and different stand was taken by the appellant to set aside the award on false grounds. In view of aforesaid discussion, we find that the impugned order passed by the learned Commercial Court, Nava Raipur, is just and proper, warranting no interference of this Court. As a sequel, the present appeal (ARBA No.51 of 2023), sans substratum, is liable to be and is hereby dismissed, leaving the parties to bear their own cost(s).

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Judgement Reviewed by – HARIRAGHAVA JP

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Delhi High Court extends arbitrator’s mandate despite expired deadline.

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CASE TITLE – National Skill Development Corp. V. Best First Step Education Pvt Limited &Ors

CASE NUMBER – O.M.P. (MISC.) (COMM.) 608/2023

DATED ON – 29th February, 2024

QUORUM – HON’BLE MR. JUSTICE PRATEEK JALAN

 

FACTS OF THE CASE

The petitioner has filed this petition under Section 29A of the Arbitration and Conciliation Act, 1996 for extension of the mandate of the Arbitral Tribunal constituted to adjudicate disputes between the parties under a Loan Agreement dated 19.12.2013. According to the agreement, respondent No. 1 was the significant borrower, respondent Nos. 2 through 5 were guarantors, and respondent No. 6 is alleged to have made further undertakings in support of the petitioner. The petitioner was the lender. The parties to the arbitration procedures were the petitioner and respondent Nos. 1 through 6. Under the Indian Council of Arbitration (ICA) Rules, the arbitration was started. The petitioner filed a request for arbitration on March 21, 2022, and the respondents filed a counterstatement on April 8, 2022, after receiving the petitioner’s statement of claim on June 13, 2022. On January 27, 2023, an arbitrator was appointed, and on March 10, 2023, Respondent No. 6 was heard ex parte. The attorneys representing Respondent Nos. 1 through 5 withdrew on April 4, 2023, and no replacement attorneys showed up for them. The last hearing was place on July 14, 2023. On 16.11.2023, the petitioner filed a Section 29A petition, believing that the arbitrator’s authority would expire one year after the pleadings on 04.08. 2022. The arbitrator published the award on November 12, 2023, and the petitioner got it on December 20, 2023, despite the notification being sent on November 24, 2023.

 

ISSUES

Whether the mandate of the Tribunal can be extended, even after the award has been made?

 

COURT ANALYSIS AND JUDGEMENT

In the present case, the court learned that the petition was filed prior to the award, although after the mandate of the learned Arbitrator had already expired and that the factual petition is thus closer to the facts of the case in Harkirat Singh Sodh.

“If an award is delivered while the petition is pending and the petition was filed before the award was made, the case would still be maintainable. On the other hand, a petition that is submitted after the award is made and the setting aside process has begun cannot be maintained”

This distinction is also justified in principle, as a party cannot decide whether to request an extension of the mandate after learning of its outcome in the arbitration proceedings and being confronted with an award challenge based on this basis. The court determined that the petition should be granted after considering the case’s facts. Therefore, the arbitrator’s mandate, which was supposed to end on April 8, 2022, the day the pleadings concluded, is legally extended until November 12, 2023, the date the award was made. This ruling upholds the arbitrator’s decisions and the 11.12.2023 award. With this extension, the petition is therefore ended, and the issue is resolved as a result.

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Judgement Reviewed by – Gnaneswarran Beemarao

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Patent Illegality, Patent Injustice, Redefining Fairness in Award Review: Delhi High Court

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Case Title: MBL Infrastructures Limited vs Delhi Metro Rail Corporation

Case No: 12/12/2023

Decided on: O.M.P. (COMM) 311/2021

Coram: The Hon’ble Mr. Justice Chandra Dhari Singh

 

 Facts of the Case

MBL Infrastructure Ltd., a civil engineering company, entered into a contract with Delhi Metro Railway Corporation in 2012 to construct Sarai Metro Station in Delhi. The project, valued at Rs. 41.57 crore, was meant to be completed within 18 months. However, disputes arose due to alleged delays in site handover by the Metro and non-compliance by MBL. The Metro terminated the contract and encashed bank guarantees in 2013. Arbitration in 2015-2020 found the Metro responsible for delays and the termination illegal, but rejected MBL’s claims for damages and profits. MBL filed a petition challenging this partial award. The case hinges on proving who caused the project’s downfall. The court will determine whether the arbitration tribunal’s decision on specific claims was legally sound.

Legal Provision

Section 34 of the Arbitration and Conciliation Act, 1996 provides for the grounds of setting aside an arbitral award.

 (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3).

(2) An arbitral award may be set aside by the Court only if—

(a) the party making the application [establishes on the basis of the record of the arbitral tribunal that]—

(i) a party was under some incapacity; or

(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or

(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

 (iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or

(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or (b) the Court finds that— (i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or (ii) the arbitral award is in conflict with the public policy of India.

Section 73 of the Indian Contract Act, 1872 provides compensation for the loss or damage caused by the breach of Contract.

Issue

  1. Whether the learned Tribunal has erred in not awarding the damages to the petitioner despite holding that the delay is attributable to the respondent?
  2. Whether Arbitral tribunal can go beyond to grant relief to aggrieved party when contract illegally restricts Remedies?
  3. Whether DMRC’s actions caused significant delays and if MBL deserves compensation for their alleged losses?

Court Decision and Analysis

In light of the precedents set by the judgements in cases like, NHAI v. Trichy Thanjavur Expressway Ltd. 2023 SCC Del 5183, Union of India v. Alcon Builders & Engineer (P) Ltd 2023 SCC OnLine Del 160, and few more, the Court found itself empowered under Section 34 of the Act to rectify specific parts of the arbitration award that are demonstrably flawed and fundamentally unjust. Such portions must be so blatantly erroneous that they shake the very foundation of this Court’s judicial conscience.

However, it is crucial to note that setting aside any portion of the award should not inadvertently impact the upheld sections. Any such action must be carefully executed to avoid unintended consequences or cascading effects that disrupt the remaining provisions.

Therefore, should the Court choose to set aside Claim No. 3 (Damages on Account of Idling of Machines and loss of overheads) and Claim No. 4 (loss of profit), it assured that the remaining claims will remain unaffected and suffer no adverse repercussions. This targeted approach upholds the valid aspects of the award while correcting the demonstrably problematic portions.

The Tribunal’s decision was legally flawed. They admitted respondent’s wrongful delays and contract termination, yet denied damages to the petitioner. This contradicts the law and ignores the unique circumstances of the case, where wrongful termination replaced a deserved extension.

The Award exhibited patent illegality due to the Tribunal’s inconsistency in Claim no. 1. While acknowledging the respondent’s project delays, they inexplicably withheld damages from the petitioner, rendering the Award legally unsound.

In view of the aforementioned claims, court partially allowed the petition and disposed pending applications.

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Written by- Bhawana Bahety

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The Delhi High Court held that it is not allowed for a litigant to adopt opposing positions in the same litigation.

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Title: ANR International Private Limited v. Mahavir Singhal & Ors.

Decided on: 03 November, 2023

+ FAO (COMM) 164/2023 & CM APPL. 40580/2023

CORAM: Hon’ble Justice V. Kameswar Rao and Justice Anoop Kumar Mendiratta

Introduction

A party cannot be allowed to approve and reprobate on the same facts at the same time, the Delhi High Court stated in dismissing a plea that contested a trial court ruling dated June 2, 2023.

Facts of the Case

The current appeal challenges an order dated June 02, 2023 issued by the District Judge of Commercial Court-01, Shahdara, Karkardooma, Delhi, dismissing an application filed by defendant No. 1 in the suit bearing CS(COMM.) No. 541/2022, pursuant to Section 8 of the Arbitration and Conciliation Act, 1996.

Courts analysis and decision

The court noted that the courts would be encouraging and abetting such litigants to break the law, especially fiscal laws, and would be allowing the litigants to periodically change their appearance to their benefit and the detriment of the public coffers and the general public if they were allowed to take a different stance during litigation than they have been taking while abiding by various laws. It went on to say that the same cannot be allowed and rejected the plea as not maintainable. The court went on to say that the respondent used Section 21 of the Act of 1996 to invoke the arbitration clause, despite the appellant’s initial denial due to incorrect counsel.

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Delhi High Court dismissed the appeal filed under Section 37 of the Arbitration and Conciliation Act, 1996.

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Title: UNION OF INDIA versus INDIAN AGRO MARKETING CO-OPERATIVE LTD

Judgment reserved on: 25th May, 2023.

Judgment delivered on: 11th July, 2023.

 + FAO (COMM) 123/2022 & CM APPLs. 36105-36107/2022, 36109/2022

CORAM: HON’BLE MR. JUSTICE SANJEEV SACHDEVA

      HON’BLE MR. JUSTICE MANOJ JAIN

Introduction

Delhi High Court dismissed the appeal filed under Section 37 of the Arbitration and Conciliation Act, 1996 impugns order dated 28.05.2022 passed by learned District Judge (Commercial Court) whereby, the objection petition filed by the appellant herein under Section 34 of said Act has been dismissed.

Facts of the Case

The appellant issued a tender for the purchase of 5450 metric tonnes (MT) of “Gramme whole.” In this tender procedure, the respondent M/s Indian Agro Marketing Co-operative Limited took part, and they were given the job of supplying 1125 MT of whole gramme at the price of Rs. 3553/- per quintal. On February 9, 2012, the appellant issued an acceptance letter. The work had a total cost of Rs. 3,99,71,250 and was due between February 1 and February 15, 2012.

The respondent made a request for an extension of the delivery time to March 31, 2012, citing the fact that a significant portion of the “delivery period” had already passed even before the receipt of the acceptance letter. The appellate granted this motion, and the delivery deadline was extended to March 31, 2012. According to the contract’s terms and conditions, the respondent provided a 39,97125/- rupee unconditional bank guarantee.

The respondent could not supply „Gram Whole‟ by 31.03.2012. In a “performance notice” dated 16.04.2012, the appellant instructed the respondent to carry out its contractual responsibility to provide supply on or before 17.05.2012, adding that the contract would be voided if such supply was not made.

Since no delivery was delivered, the contract was terminated on June 29, 2012, and the appellant forfeited the bank guarantee in accordance with clauses 7(4) of DGS&D-68 (Revised) and 18(d)(viii) of the appendix to the tender investigation.

 The respondent received the remaining funds after the appellant withheld Rs. 28,97,988 as “general damages.” Since the contract contained a “arbitration clause,” the respondent sought the court to request the appointment of an arbitrator by submitting ARB.P. No. 597/2014. This court was happy to appoint Shri A.K. Garg, Additional District Judge (retired), as Sole Arbitrator in an order dated February 26, 2015.

The Arbitral tribunal rejected the claims of the respondent and passed an Award accordingly. The appellant filed a petition under Section 34 of the aforementioned Act to contest the claimed award. The contested order dismissed the objection petition, OMP (COMM.) No. 37/19, which prompted the filing of the current appeal.

Analysis of the court

The appellant cited ONGC Vs. Saw Pipes Ltd. (2003) 5 SCC 705, and the arbitral tribunal noted that in that case, all of the contractor’s security was permitted to be forfeited because the parties “expressly agreed” that the amount was a true pre-estimate of damages and that liquidated damages were not a punishment. Thus, the Arbitral Tribunal determined that the factual matrix in the current instance was distinct. The forfeiture of a portion of the bank guarantee as “general damages” was not justified since the appellant was unable to demonstrate any financial loss, and no evidence was presented to support this conclusion. The Arbitral Tribunal further noted the cases of Kailash Nath v. DDA (2015) 4 SCC 136, Fateh Chand v. Balkishan Das (1964), and Maula Bax v. UOI (1969) 2 SCC 554.

The appellant cited the Supreme Court’s ruling in Construction and Design Services v. Delhi Development Authority: (2015) 14 SCC 263, arguing that because the purchase was for a public purpose, they were not obliged to prove any loss. The work on the “sewage plant” was delayed in the aforementioned instance, and as there was no way to calculate the losses brought on by the delay, it was determined that the damages were not calculable. In the current instance, the contract pertains to the purchase of goods, and any loss sustained by the appellant may clearly be measured in monetary terms.

In Ministry of Defence, Govt. of India vs. CENREX SP Z.O.O. (supra), it was held, among other things, that the amount sought as liquidated damages could be claimed as per Section 74 of the Indian Contract Act, 1872, once the nature of the contract was such that losses were incalculable. This was done without proving or demonstrating how much loss was caused.

It was noted in MMTC Ltd. v. Vedanta Ltd. (2019) 4 SCC 163 that, in terms of challenging an order issued under Section 34, it cannot be contested that such challenges brought under Section 37 cannot go beyond the bounds of Section 34. In other words, the court cannot independently evaluate the merits of the award; instead, it must just confirm that the court’s use of its authority under Section 34 has not gone beyond the bounds of that provision. Regarding Section 34, it is well established that the Court does not hear appeals involving arbitral awards but may intervene on the merits in certain circumstances.

Thus, it is unnecessary to reiterate that interference under Section 37 of the aforementioned Act does not involve a review of the merits of the dispute and is only permitted in instances where the arbitrator’s findings are arbitrary, capricious, or perverse, when the court’s conscience is shocked, or when the illegality is not minor but instead affects the core of the issue. If the arbitrator’s position is one that might be supported by the evidence, then the arbitral decision cannot be challenged. Referring to Associate Builders v. DDA DDA, (2015) 3 SCC 49; Associate Builders v. See ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705.

Nothing that is shown to us suggests any obvious illegality, a completely illogical or irrational interpretation of a contract, or a result that was reached by disregarding significant facts or on the basis of “no evidence.” However, given the established legal position and the relevant facts, we do not believe there is a need for us to become involved. As a result, the appeal is denied.

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Written By – Shreyanshu Gupta

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