Reasons Are Showcase Of Judicial Or Quasi-Judicial Decisions: Himachal Pradesh HC While Setting Aside Arbitral Award

The Himachal Pradesh High Court while setting aside an Arbitral Award, reiterated that the reasons are the showcase of a judicial or quasi-judicial decisions.

The Court was dealing with a Petition seeking setting aside of the Award passed by the Arbitrator.

A Single Bench of Justice Satyen Vaidya observed, “It is more than settled that the reasons are the showcase of a judicial or quasi-judicial decisions. The reasons reflect the application of mind to the given fact situation as also to the applicability of legal principles. In Vishwanath Sood supra, the penalty/compensation was not imposed by the Engineer-in-charge despite existence of a clause to the effect in the contract agreement. Clause 2 of the contract agreement in the instant case, no doubt, is akin to the clause involved in the case of Vishwanath Sood supra, yet there was a marked difference in fact situation.”

Advocate Sumit Raj Sharma appeared on behalf of the Petitioner while Deputy Advocate General Sidharath Jalta appeared on behalf of the Respondents.

In this case, the Petitioner was awarded a contract to carry certain construction activities on Chilladhar-Bihar road Km 0/0 to 4/0 and Jibhi-Bahu road Km 0/0 to 7/0 by the Respondent vide an award letter in 2002 for a tendered cost of Rs. 1,10,35,522/-. The stipulated date for completion of work was April 13, 2003, but the work actually was completed on October 31, 2005. The contractor i.e., the Petitioner raised certain disputes and invoked arbitration clause under the contract agreement. The Arbitrator was accordingly appointed. It was contended that the Award passed by the Arbitrator suffers from patent illegality. Hence, the same was challenged before the High Court by the Petitioner.

The High Court in the above regard, said, “… the impugned award has been found to be without any reasons in so far as adjudication on claims Nos 2(ii) and 3 are concerned. Even otherwise the view taken by the Arbitrator while deciding said claims is irrational and in ignorance of vital evidence on record. No reasonable person would have ignored the basic tenets of law in the given facts and circumstances of the case, as has been done by the Arbitrator.”

The Court added that, though few of the claims have been decided in favour of the contractor, but since, there is no provision for either modification of the award by the Court in exercise of powers under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act) or to remand the matter back to the Arbitrator, the entire award is required to be set aside.

“Even, this Court cannot exercise power under Section 34(4) of the Act; as no submission or prayer to that effect has been made on behalf of the petitioner”, it further noted.

Accordingly, the High Court allowed the Petition and set aside the Award.

Cause Title- Ashok Thakur v. State of H.P. & Another (Neutral Citation: 2024:HHC:12731)

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