Court Cannot Supplant Its Own View In Place Of That Of The Arbitral Tribunal: Delhi HC

The Delhi High Court has reiterated that the scope of Section 34 of the A&C Act does not entail re-adjudication of the disputes and therefore, the arbitral award cannot be modified. The examination under Section 34 of the A&C Act is limited to considering whether the arbitral award is liable to be set aside on the specified grounds.

In that context, the Bench of Justice Vibhu Bakhru and Justice Tara Vitasta Ganju observed that, "in a proceeding under Section 34 of the A&C Act, the Court does not supplant its own view in place of that of the Arbitral Tribunal. The examination is confined to determining whether the arbitral award is required to be set aside on the grounds as set out in Section 34 of the A&C Act."

Senior Counsel Lovkesh Sawheny and Counsel Rohit Kumar appeared for the appellant, while Senior Counsel Dinesh Agnani, along with others, appeared for the respondent.

M/s Jaiprakash Associates Limited (JAL) filed an appeal under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996, challenging a judgment rendered by a Single Judge. IRCON filed the petition under Section 34 of the A&C Act seeking to set aside an Arbitral Award dated 15.04.2010 rendered by a Sole Arbitrator.

The Arbitral Tribunal had awarded ₹16.97 crores as reasonable expenditure on "mobilization etc." and 12% simple interest on this amount. The tribunal also awarded post-award interest at 12% per annum on the total awarded amount of ₹21.82 crores. IRCON's counterclaims were rejected. In the proceedings under Section 34, the Single Judge modified the award by deleting certain items of unrealized costs and reducing post-award interest to 6% per annum. The judgment awarded ₹12.99 crores to JAL with 6% interest from the date of the award.

JAL contested the judgment on grounds including the Single Judge's alleged error in interfering with the award, modifying it by deleting pendente lite interest, reducing post-award interest, and incorrectly computing the awarded amount. The main controversy was whether the award could be interfered with to this extent under Section 34 of the A&C Act.

The Court observed that, "the decision of the learned Single Judge to delete the award of pendente lite interest and to reduce the post award interest from 12% per annum to 6% per annum is fundamentally flawed... It is apparent that the learned Single Judge has rejected JAL’s claim for pre award interest and has, accordingly, deleted the award in respect of pendente lite interest. However, there is no reason provided in the impugned judgment for rejecting the award of pendente lite interest. The learned Single Judge has also reduced the post-award interest. There is no reason provided in the impugned judgment for such reduction."

Accordingly, the appeal was allowed and the impugned judgment was set aside.

Appearances:

Appellant: Senior Counsel Lovkesh Sawhney, Counsel Rohit Kumar

Respondent: Senior Counsel Dinesh Agnani, Counsels Leena Tuteja, Ishita Kadyan

Cause Title: M/s Jaiprakash Associates Limited vs M/s Ircon International Limited

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