Uttaranchal High Court | Commercial Court cannot modify arbitral award in absence of manifest and patent error/illegality

   

Uttaranchal High Court: The Division Bench of Sanjaya Kumar Mishra and Ramesh Chandra Khulbe, JJ. allowed appeals filed by the Contractor under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter “the Act”) and held that judgments passed by the Additional. District Judge, Commercial Court, Dehradun are liable to be set aside as it committed an error by partly upholding the award of the Arbitral Tribunal disallowing the three claims of the Contractor.

In the present case, the Appellate Court rejected claim nos. 1 and 9 of the Contractor amounting to Rs. 33,66,989.86 and Rs. 2,00,000, whereas, the Original Court had rejected claim no. 7(b) of the Contractor amounting to Rs. 25,50,390. Further, Additional. District Judge, Commercial Court, Dehradun after re-appreciating the evidence, had set aside claim nos. 1, 9 and 7(b) decided in favor of the Contractor by the Arbitral Tribunal. The Contractor approached the High Court for restoration of his claims and Union of India approached this Court for setting aside judgment and Arbitral Awards.

The question before the Court in this case is “Whether the Additional. District Judge, Commercial Court, Dehradun has jurisdiction under Section 34 of the Act to re-appreciate the evidence and modify the same?”. The Court relied on the case of Delhi Airport Metro Express Pvt. Ltd. v. Delhi Metro Rail Corporation Ltd., 2021 SCC OnLine SC 695, wherein the Supreme Court, in clear terms, has interpreted Section 34 of the Act and has recognized that restraint should be shown while examining the validity of the Arbitral Awards. Only when there is patent illegality, which goes to root of the matter or when there is contravention of law linking to public policy and public interest, then it is within the scope of the Court to take a different view and interfere with the findings.

The Court observed that the Counsel for the Union of India, neither in the oral arguments nor in the written arguments, has demonstrated that there has been a patent illegality going to root of the matter or that the Arbitral Award is against the public policy of India or that the dispute is not capable of settlement by arbitration under the law for the time being in force. Moreover, the Court observed that the Union of India has not made out any ground for setting aside of the award.

The Court opined that that Additional. District Judge, Commercial Court, Dehradun committed an error by partly upholding the award of the Arbitral Tribunal disallowing the three claims of the Contractor. Moreover, it has not given any finding that if each of the claims, which were set aside, is a severable part of the award or not.

The Court held that since the Additional. District Judge, Commercial Judge, Dehradun, has not found any manifest and patent error in the awards, therefore, the judgments passed by it cannot be sustained and are liable to be set aside.

[Ravindra Kumar Gupta v. Union of India, 2022 SCC OnLine Utt 1279, decided on 21-10-2022]


Advocates who appeared in this case:

Aditya Pratap Singh, Advocate, for the Appellant(s);

V.K. Kaparwan, Advocate, for the Respondent(s).

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