Delhi High Court: The petitioner challenged the impugned award passed by the Arbitral Tribunal as well as prayed for the stay of the execution, operation and implementation of the said award. While exercising its commercial jurisdiction, the single judge bench of Chandra Dhari Singh, J., held that there was no patent illegality or error apparent on the face of the record and the arbitrator had passed the impugned award after considering all the relevant material placed before it during the arbitral proceedings. The award was well-reasoned and was not in contravention of the fundamental policy of Indian law, and thus, there was no reason for interfering with the impugned Award.
In the matter at hand, the petitioner was a leading Turnkey Construction Company in the public sector. To provide an alternative and a reliable transportation system into Jammu & Kashmir, the Government of India planned a 326 km long Railway Line for joining the Kashmir valley with the Indian Railways network named as Udhampur-Srinagar-Baramulla Rail Link. The project was declared a ‘Project of National Importance’. From Jammu to Baramulla, the length of the new rail line was 326 Km. The petitioner had invited bids for participation in tenders for the construction of tunnel in 2015.
The petitioner had informed the respondent that the cycle time calculation did not match with the geological L section provided with the tender and asked for rectification. Eventually the respondent’s bid was accepted, and a contractual agreement was entered into between the parties pursuant to which the petitioner engaged the respondent as a sub-contractor for construction of the said project.
After scrutinizing the project, the petitioner observed that there was a delay as per the schedule and the respondent was directed to deploy appropriate resources as per the contractual clauses to achieve the required progress.
On 19-11-2016, the respondent invoked the Arbitration clause which led to the constitution of the Arbitral Tribunal wherein the impugned award was passed in favour of the respondent.
Point of Consideration
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Whether the impugned award was patently illegal?
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Can the Arbitral Tribunal grant an extension of more days than sought by the claimant?
Court Analysis
The Court stated that the challenge of an award under Section 34 arising out of the Arbitration proceedings must satisfy the test laid down by the virtue of the provision of the Arbitration and Conciliation Act of 1996 (‘Act of 1996’). It noted that the intention of the legislature while enacting the Act of 1996 was to expeditiously and effectively dispose of the matter, limiting the interference of the Courts into the Arbitral proceedings. However, the award may only be set aside if it fulfils certain criteria to qualify as being bad in law.
The Court referred to a catena of cases which time and again reiterated that the scope of intervention of the Courts was limited in the cases of a challenge under Section 34 of the Act of 1996. The Court, while exercising its jurisdiction under Section 34 of the Act shall not sit in appeal or re-examine the facts and evidence of the case.
The Court was of the view that the Arbitrator had to adopt a judicial approach and the principle of natural justice had to be upheld. It was held that the Arbitrator had carefully considered the Contract and communication between the parties, deductions made by the respondent and the facts and circumstances to adjudicate the dispute.
The Bench was of the view that in the present case, the Arbitral Award was a well-reasoned award, with the findings being clearly arrived at based on all the documents and evidence on record.
The Court stated that under the limited scope of Section 34, the present case did not warrant the interference of this Court as the grounds stated by the petitioner did not meet the scope of this section thus, held that the petitioner cannot have the benefit of the ‘ground of patent illegality’ to assail the impugned Arbitral Award. It was viewed that the Arbitrator had clearly resorted to a Judicial approach while adjudicating upon such an issue.
“The Arbitral Tribunal is a creature of Contract, and the Contract is the only basis on which the Learned Tribunal should adjudicate, apart from the general provisions of law and jurisprudence.”
It was noted that the Arbitrator had upheld the principles of Natural Justice and warranted that the parties were granted relief.
“Arbitrator, being the ultimate master of the Arbitration, can adjudicate the claims in a manner that is on the lines of basic tenants of Law and the Principles of Natural Justice and Jurisprudence. As long as the Award does not shock the conscience of the Court, it warrants no interference of the Court.”
The Bench noted that Arbitrator had passed an extremely elaborative and comprehensive Award after dealing with each claim raised on behalf of the parties, the facts of the case, the material on record, including documents referred to, the precedents cited on behalf of the parties, however, stated that the Arbitral Award was only needed to be supported by reasoning, the validity of which was not for this Court to test.
With the above observation, the Court stated that the petitioner had failed to corroborate with evidence how the Arbitrator had erred in adjudicating the dispute. The scope of interference with an Arbitral Award under Section 34 of the Act, 1996 was fairly limited and narrow. The Courts shall not sit in an appeal while adjudicating a challenge to an Award which is passed by an Arbitrator, the master of evidence, after due consideration of facts, circumstances, evidence, and material before him.
The Bench stated that the petitioner had failed to make out a case against the respondent and was unable to show that the Award was patently illegal on the face of the record.
The Bench opined that there was no patent illegality or error apparent on the face of the record and the arbitrator had passed the impugned award after considering all the relevant material placed before it during the arbitral proceedings. The award was well-reasoned and was not in contravention of the fundamental policy of Indian law, and thus there was no reason for interfering with the impugned Award.
In view of the above, the Court found no reason to set aside the impugned Arbitral Award and accordingly dismissed the petition.
[Ircon International Limited v Afcons Infrastructure Limited, 2023 SCC OnLine Del 2350, decided on 26-04-2023]
Advocates who appeared in this case :
For the petitioner- Senior Advocate Narender Hooda, Advocate Shaurya, Advocate Sidhant Goel, Advocate Shubham Shankar Saxena, Advocate Karmany Dev Sharma and Advocate Anvit Seemansh;
For the respondent- Advocate Manu Seshadri and Advocate Pallavi Anand.