Plausible View Taken By Arbitrator On Facts Is To Be Respected; Courts Don’t Sit As Court Of Appeal While Exercising Jurisdiction U/S. 34 A&C Act: Delhi HC

A Single-Judge Bench of Justice Subramonium Prasad said, “A view has been taken by the learned Arbitrator on the facts of the case and it is well settled that the learned Arbitrator is the ultimate master of the quality and quantity of evidence to be relied on. It is settled that a plausible view taken by the Arbitrator on facts of the case is to be respected.”

Advocate Rakesh Kumar appeared for the Petitioner.

In this case, the Petitioner Company is engaged in the manufacturing of wearing apparel while the Respondent Company is also engaged in the supply of fabrics. The Petitioner had placed four purchase orders for supply of fabric. The claim of the Respondent was for Rs 1,38,62,111.96, which was the unpaid amount for the the goods delivered to the Petitioner. Before the Arbitrator, the petitioner had submitted that the goods were not delivered on time by the Respondent/Claimant and due to the delay in supply of fabrics by the Respondent, the Petitioner herein failed to complete the onward orders placed by the purchaser, which resulted in cancelling of the order. Alleging that the petitioner suffered severe losses and damage on account of delayed supply of material by the Respondent, a counter-claim of Rs.96,35,204.90 together with interest was filed by the Petitioner herein. The Arbitrator disbelieved the case of the petitioner, allowed the claim of the Respondent/Claimant and rejected the counter-claim raised by the Petitioner herein. Aggrieved thereby, a petition was filed before the High Court.

At the outset, the Court made it clear that under Section 34 of the Arbitration Act the Court cannot re-appreciate evidence and substitute its own conclusion to the one arrived at by the Arbitrator even though a different conclusion can be arrived at on re-appreciating evidence. “As has been rightly held by the Courts that while exercising jurisdiction under Section 34 of the Arbitration Act, the Courts do not sit at a Court of appeal and the onus to show that the time was the essence of the contract is on the Petitioner herein…”, it added.

It was further noticed that the Arbitrator had meticulously gone into the evidence on record to appreciate the contentions taken by the Petitioner and the Respondent. It had also applied various provisions relied on by the Petitioner herein before rejecting the counter-claim of the Petitioner herein and allowing the claim of the Respondent/Claimant. “ Therefore, it cannot be said that the Award is based on no evidence or that the learned Arbitrator has taken into account something irrelevant to the decision while arriving at the conclusion or has ignored any vital evidence in arriving at a decision which would make the decision perverse.”

After going through the statement of defence and the counter-claim and the evidence filed by the Petitioner, the Bench was of the opinion that it couldn’t be stated that the conclusion arrived at by the Arbitrator was perverse or was such that would categorise the Award as perverse or patently illegal.

The petitioner had also contended that the Ministry of MSME issued a notification on June 26, 2020 and as per the said notification existing Udyog Aadhar Certificate holders were supposed to migrate themselves to Udyam. Once the Respondent had been registered under the MSMED Act, the Respondent was entitled to the benefits of the MSMED Act.

The Bench further observed that the Arbitrator was of the opinion that the Petitioner herein knew that the Respondent is entitled to the benefit of MSMED Act and that was the reason the Petitioner participated before the MSME Council and in the arbitration proceedings without raising this issue. “In the considered opinion of this Court, that the arguments raised by the Petitioner amounts to splitting hairs and clutching at straws which cannot be countenanced and is impermissible in law”, it added.

Thus, dismissing the Petition, the Bench held, “ The conclusion arrived at by the learned Arbitrator therefore cannot be found fault with under Section 34 of the Arbitration & Conciliation Act either on the ground that it is opposed to the policy or on the ground that it is in contravention with the fundamental policy of Indian law or is in conflict with the basic notion of morality and justice or is vitiated by patent illegality. Therefore, the challenge to the impugned Award cannot be accepted.”

Cause Title: In-Time Garments Pvt Ltd v. HSPS Textile Pvt Limited [Neutral Citation- 2024:DHC:8757]

Appearance:

Petitioner: Advocates Rakesh Kumar, Abhimanu Mahajan, Preeti Kashyap, Varun Pandit, Yash Dhawan and Yash Tewari

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