Supreme Court: In the present appeal against the decision of a Division Bench of High Court of Delhi, setting aside award of an arbitration panel, the Court set aside the said order and upheld the findings of the Arbitrator, and observed that while interfering with an Arbitral Award on the grounds of public policy, the test is to decide that whether the Award shocks the conscience of the Court. The Court cannot substitute Arbitrator’s finding with what according to the it is just and it cannot interfere with error of facts like a Court of First Appellate.
In the present case the appellants were awarded a tender by DDA (Delhi Development Authority) for construction of middle and low income houses which was to be completed in 9 months. This was completed instead in 25 months allegedly due to delay on part of DDA for which the contractor sued the DDA for escalated costs resulting from such delay. The Arbitrator appointed by Delhi HC accepted claims of the appellant to the tune of 23.39 lakhs out of total claim for 37.28 lakhs.
The counsel for appellants M.L Verma claimed that the Division Bench of HC had surpassed its jurisdiction in going into findings of fact and evidence of the Arbitrator and taking into account evidence which was not pleaded in front of him and in doing so it has completely disregarded law laid down by the Court in relation to the limitations of a judge hearing objections to an Arbitral Award under Section 34 of the Arbitration and Conciliation Act, 1996. The DDA was represented by Amrendra Sharan
R.F. Nariman, J., delivering judgment of the Court held that the Award as laid down by an Arbitrator is subject to judicial intervention in case it is against public policy in India. Elaborating on the factors affecting public policy through a chronological development of law by the judgments of the Court on the issue, the Court laid emphasis on the findings in ONGC v. Saw Pipes, 2003 (5) SCC 705. After a clear analysis and explanation of these factors in the dictum, the Court found that the Division Bench of the HC had wrongly interfered with findings of the Arbitrator on several counts, and in total disregard of the principle that Arbitrator is the sole judge of quality and quantity of evidence before him. Associate Builders v. Delhi Development Authority, 2014 SCC OnLine SC 937, decided on 25.11.2014