Scope Of Section 37 Of Arbitration & Conciliation Act Is More Summary In Nature And Different From An Ordinary Civil Appeal: SC
The Supreme Court reiterated that the scope of Section 37 of the Arbitration and Conciliation Act is more summary in nature and different from an ordinary civil appeal.
The Court set aside the impugned judgment of the Punjab and Haryana High Court in the exercise of powers under Section 37 of the Arbitration and Conciliation Act, 1996 (Act) which had set aside the order passed under Section 34 of the Act as well as the arbitral award by the arbitrator. The Court explained that an arbitral award cannot be disturbed only because instead of the view taken by the arbitral tribunal, the other view which is also a possible view is a better one according to the appellate court.
A Bench of Justice Pamidighantam Sri Narasimha and Justice Pankaj Mithal observed, “It must also be remembered that proceedings under Section 34 of the Act are summary in nature and are not like a full-fledged regular civil suit. Therefore, the scope of Section 37 of the Act is much more summary in nature and not like an ordinary civil appeal. The award as such cannot be touched unless it is contrary to the substantive provision of law; any provision of the Act or the terms of the agreement.”
Advocate Sanchar Anand represented the appellants, while AOR Abhimanyu Tewari appeared for the respondents.
Punjab State Civil Supplies Corporation Ltd (appellant) entered into an agreement with Sanman Rice Mills (respondent) to supply paddy. Following a dispute regarding the recovery of the balance amount between parties, an arbitrator was appointed. The respondent objected to the arbitral award by filing a petition under Section 34 of the Act, which was dismissed by the trial court.
Not satisfied by the aforesaid order, the respondent filed an appeal under Section 37 of the Act before the High Court, which was allowed by the impugned judgment.
The Supreme Court stated that a plain reading of Section 34 of the Act revealed that the scope of interference by a court with the arbitral award under Section 34 was “very limited” and a court was not supposed to travel beyond the aforesaid scope to find out “if the award is good or bad.”
“It is pertinent to note that an arbitral award is not liable to be interfered with only on the ground that the award is illegal or is erroneous in law that too upon reappraisal of the evidence adduced before the arbitral trial. Even an award which may not be reasonable or is non-speaking to some extent cannot ordinarily be interfered with by the courts,” the Court remarked.
The Bench reiterated that the appellate power under Section 37 of the Act was not akin to the normal appellate jurisdiction vested in the civil courts for the reason that the scope of interference of the courts with arbitral proceedings or award was very limited, confined to the ambit of Section 34 of the Act only and even that power “cannot be exercised in a casual and a cavalier manner.”
Consequently, the Court observed, “In view of the above position in law on the subject, the scope of the intervention of the court in arbitral matters is virtually prohibited, if not absolutely barred and that the interference is confined only to the extent envisaged under Section 34 of the Act. The appellate power of Section 37 of the Act is limited within the domain of Section 34 of the Act.”
Accordingly, the Supreme Court set aside the order of the High Court holding that the “Appellate Court committed manifest error of law” and allowed the appeal.
Cause Title: Punjab State Civil Supplies Corporation Limited & Anr. v. M/S Sanman Rice Mills & Ors. (Neutral Citation: 2024 INSC 742)
Appearance:
Appellants: Advocates Sanchar Anand, Shiv Kumar and Aman Kumar Thakur; AOR Devendra Singh
Respondents: AOR Abhimanyu Tewari; Advocates Eliza Bar, Sidhant Awasthy, Siddhant Saroha, Manav Bhalla, Abhijeet Chaudhary and Praveer Singh