ARBITRAL AWARDS ARE FINAL AND REASSURANCE WITH THE SAME ARE OUTSIDE THE SCOPE OF JUDICIAL PURVIEW

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CASE DIARY

Name of the case

NTPC Limited v. M/s Deconar Services Pvt. Ltd.

Application Ref.

Civil Appeal No. 6483 of 2014

Appellant

NTPC Limited

Respondent

M/s Deconar Services Pvt. Ltd.

Judiciary

Supreme Court of India

Bench

·         Chief Justice N V Ramana

·         Justice Surya Kant

·         Justice Aniruddha Bose

Date of judgment

March 04, 2021

OVERVIEW

·     The Apex Court on 4th day of March 2021 was considering an appeal filed by Appellant involving substantial question of law viz. whether the judiciary is empowered or bound to interfere with the arbitral award issued by the arbitrator under the Arbitration Act, 1940. 

·     The Hon’ble Court expounded the grounds on which the sanctity of arbitral award can be reassessed / revalued by the courts.

FACTS:

·   The Appellant and Respondent entered into a contractual agreement consequent to floating tenders with respect to construction of distinctive residential. The Respondent agreed for undertaking the tender offered by the Appellant upon certain conditions.

·     There was an apparent delay in handing over of construction site by the Appellant due to which the projects beyond the stipulated period mentioned under contract due to which dispute arose between the parties.

·       The matter was referred to arbitration through dispute resolution clause in the contract.

·       The Arbitrator after perusing the entire case with material available in hands, passed an award dated 7th July 2000 in favor of the Respondent and awarded the Respondent monetary compensation with interest viz. per annum 18% and 21% future interest.

·      The Appellant challenged the award issued by the Arbitrator in the jurisdiction of Delhi High Court under Section 30 and 33 of the Arbitration Act, 1940 and was dismissed by the Single Judge bench which was also reaffirmed and dismissed by a division bench of the Delhi High Court wherein the Appellant had challenged the award under Section 39 the Arbitration Act, 1940.

·      Aggrieved by the ruling of Delhi High Court, the Appellant challenged the same before the Apex Court.

 STATUTORY STANDPOINT:

·    Section 30 of the Arbitration Act, 1940 articulates that the award issued by arbitrator is liable to be set aside on the following grounds:

a.      Misconduct of the Arbitrator

b.      In case award is made subsequent to an order of a court

c.      The award is invalid

·     Section 33 read with Section 39 of the Arbitration Act, 1940 empowers a person aggrieved by the award issued by an arbitrator to apply before the court of appropriate jurisdiction to challenge the validity of the award itself

QUESTION OF LAW:

Whether the judiciary is empowered by the virtue of law to reassess the award issued by the Arbitrator?

DICTUM OF THE COURT:

·     The contractual agreement envisages the intention of the parties through the language embodied in such agreements.

·    Reliance is placed on the ruling of the Apex Court in Kwality  Manufacturing  Corporation v. Central Warehousing Corporation, (2009) 5 SCC 142 to hold that scope of interference by the court in respect of an arbitral award is limited.

·        For setting aside the award of an arbitrator, two facts has to be established:

a.      There was a misconduct on the part of the Arbitrator

b.      The award issued by the Arbitrator suffers from error of law

·    The Arbitrator has carefully considered the case in entirety with all the materials available in hand inclusive of all the clauses in the contact entered between the parties.

·     The Appellant has failed to establish that there was an apparent error of law in the award or the conduct of the Arbitrator was bad in law. The dispute between the Appellant and the Respondent has arose out of the conduct of the Appellant himself and there was no case on the part of the Appellant to demonstrate that there was a misconduct on the either Respondent or the Arbitrator.

·      The Court is not bound to sit upon adjudging the award passed by the arbitrator as the same is final and binding upon the parties unless the contrary intention / conduct of Respondent or the Arbitrator is established which in the present case stands unsubstantiated.

The Judgment can be accessed at:

https://main.sci.gov.in/supremecourt/2010/21277/21277_2010_32_101_26605_Judgement_04-Mar 2021.pdf


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