Arbitral Award Based On One Of The Two Possible Views Cannot Be Challenged Unless Patently Illegal Or Arbitrary: Allahabad HC

The Court was hearing an Appeal under Section 37 of the Arbitration & Conciliation Act, 1996 filed against the impugned order passed by the Arbitrator/Collector as well as the judgement & decree passed by the Additional District Judge in Arbitration Case.

The bench of Justice Piyush Agrawal observed, “If two views were possible, the Tribunal has taken one view and on the said basis, the order cannot be challenged, unless & until, the parties are able to show that the order is patently illegal or arbitrary.”

Advocate Badri Kant Shukla appeared for the Appellant and Advocate Pranjal Mehrotra appeared for the Respondent.

Brief Facts-

It is the case of the Appellants that following a notification regarding land acquisition they filed objections. Even after that, the Special Land Acquisition Officer issued an award determining compensation. Dissatisfied, the Appellants approached the Arbitrator/Collector, who revised the award. The Appellants, who had purchased the land for commercial use and built a factory, then challenged the decision in an Arbitration Case before the Additional District Judge but their Appeal was dismissed.

The Court mentioned the Supreme Court decision in Punjab State Civil Supplies Corporation Ltd. & Another Vs. M/s Sanman Rice Mills (2018) and quoted, “…appellate power under Section 37 of the Act is 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 is 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.”

The Court further noted that a ground has been taken for payment of solatium and interest in the memo of appeal, which according to the Court cannot be permissible as the said ground has been taken after the order of the Apex Court in the case of Union of India v. Tarsem Singh (2019).

The Court mentioned the decision of the Supreme Court in Savitri Devi Vs. Union of India (2024) and quoted, “Opening concluded arbitrations would be akin to opening a Pandora's box. The case of Tarsem Singh (supra) introduced specific interpretations and guidelines that impacted the awarding of solatium and interest. However, applying these guidelines retroactively to arbitrations that concluded prior to the judgment would create an untenable situation. The arbitrators, the parties, and the legal community operate within the legal framework and judicial precedents available at the time of the arbitration. Imposing future judicial decisions on past arbitrations would disrupt the stability and predictability that arbitration aims to provide.”

Accordingly, the Court dismissed both the Appeals.