Arbitrator’s finding not completely immune from judicial scrutiny; arbitration award set aside

Jharkhand High Court: An arbitration appeal was filed before a Single Judge Bench comprising of Shree Chandrashekhar, J., under Section 37(1)(b) of Arbitration and Conciliation Act, 1996.

Facts of the case were that claimant, a construction company, was allotted the construction work of open channel and tunnel under Konar Irrigation Project and for the same, an agreement was executed. The construction work was to be completed in 3 years where time was the essence of the contract. Claimant had conveyed the problem faced by them in construction but the response of the Water Resources Department for the same took a long time. Claimant approached the Superintending Engineer, Tenughat Dam Circle to enter into arbitration and entering the same, arbitration took place and an award favouring claimant was passed.

The award was challenged by the Department by a petition under Sections 12, 13, 16 and 34 of the Act before the High Court. Impugned order’s legality was in question on the ground that the claims of claimant were barred under the limitation law. Claimant contended that Arbitrator answered the issue of limitation which is a question of fact against the Department and therefore it was not open to re-examination under Section 34 of the Act.  Court viewed that it would be wrong to completely immune finding in arbitration from judicial scrutiny in a proceeding under Section 34 or Section 37 as the same cannot be done if an error on the face of award is found.

High Court was of the view that the finding by Arbitrator of the claims not barred by limitation was an error apparent on the face of the award. Therefore, the arbitration appeal partly succeeded and impugned order to the extent where claims of claimant were allowed was declared time-barred claims and was set aside. [State of Jharkhand v. Sutlej Construction Limited,2018 SCC OnLine Jhar 1474, dated 12-10-2018]

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