Court Can’t Substitute Its Views Or Parties’ Views In Place Of That Taken By Arbitral Tribunal When It’s Not In Conflict With Legal Position: Madras HC
The Madras High Court emphasised that the Section 34 Court under the Arbitration and Conciliation Act, 1996 (A&C Act) cannot substitute its own views or parties’ views in place of the view taken by the Arbitral Tribunal if the same is not in conflict with the settled legal position.
The Court emphasised thus in an Original Side Appeal under Order XXXVI Rule 9 of the Original Side Rules read with Clause 15 of the Letters Patent and Section 37 of A&C Act read with Section 13 of the Commercial Courts Act, 2015 (CCA), seeking to set aside the Judgment and Decree.
A Division Bench comprising Justice M. Sundar and Justice K. Govindarajan Thilakavadi observed, “The Section 34 Court cannot substitute its own views or the views of the parties in place of the view taken by the learned Arbitral Tribunal, if the view taken by the learned Arbitrator is not in conflict with the settled legal position. There is nothing to suggest that the findings and conclusions rendered by the learned Arbitrator are per se perverse, illegal or non-sustainable. There is no ground to state that the award suffers ''patent illegality'' and the award is against the public policy of Indian Law.”
The Bench said that the views of the Sole Arbitrator cannot be found fault with only for the reason that some other views can emerge by appreciating the same set of facts and evidence, until and unless it is shown that such a view is totally obnoxious and unsupported by the sound legal principles.
Senior Advocate AR.L. Sundaresan and Advocate A.R. Karthik Lakshmanan appeared for the Appellant while Advocate K.V. Babu appeared for the Respondent.
In this case, the Appellant was the Claimant and the Respondent was the Counter Claimant before the Arbitral Tribunal. The dispute arose out of a Memorandum of Understanding (MOU) entered between the parties for purchasing immovable properties. Since the Respondent failed to comply with the terms of agreement, the Appellant initiated Arbitral proceeding. The Respondent resisted the claim as barred by limitation and sought for counter claim in the statement of defence.
The Sole Arbitrator pronounced the Award and directed the Respondent to pay the amount with interest. The Arbitrator decided the issue of limitation in favour of the Appellant and being aggrieved, the Respondent preferred an Application under Section 34 of A&C Act before the Commercial Division of the High Court. The Petition was allowed and the Single Judge set aside the Arbitral Award. Being aggrieved, the Appellant was before the Division Bench.
The High Court after hearing the contentions of the counsel, noted, “… there is no inherent infirmity committed by the learned Arbitrator in allowing the claim petition of the claimant/appellant. It is settled law that even otherwise the award is not open to challenge on the ground that the Arbitral Tribunal has reached a wrong conclusion.”
The Court added that Section 34 of A&C Act was deliberately engrafted and couched in a particular manner bearing in mind the fact that there should be limited intervention of Courts in Arbitral proceedings especially after the proceedings have been concluded and the award has been pronounced BY THE Arbitral Tribunal.
“… while assailing the order passed under Section 34 of the Act either setting aside the award or upholding the award an appeal is provided under Section 37 of the Act, however, the contours of the proceedings under Section 37 also is limited to the scope and the ambit of challenge under Section 34 of the Act”, it said.
The Court further reiterated that the contravention of a statute not linked to public policy or public interest, which is not subsumed within the fundamental policy of Indian law cannot be brought in by the backdoor when it comes to setting aside an award on the ground of patent illegality.
“It is clear from the amendment of 2015 that re-appreciation of evidence, which is what an Appellate Court is permitted to do, is not permitted under the ground of patent illegality appearing on the face of the award. … In the present case, a judicial appreciation of the Arbitral award goes to show that the learned Arbitrator has properly appreciated the facts of the case and has done a due analysis of the evidence led by the parties and has rendered his findings after due consideration, application of mind and on the touchstone of the law”, it also observed.
The Court, therefore, concluded that the Respondent has miserably failed to show any patent illegality in the Arbitral award warranting interference by the Single Judge under Section 34 application and more so, when the scope of interference under Section 34 is limited and within the contours of the ground specified under Section 34 of the Act. It added that the award is not required to be set aside on the ground of mere erroneous application of law or by reappreciation of the evidence until and unless it suffers from patent illegality.
Accordingly, the High Court allowed the Appeal and set aside the impugned Order.
Cause Title- N. Jayamurugan v. M/s. Saravana Global Holdings Ltd.
Appearance:
Appellant: Senior Advocate AR.L. Sundaresan and Advocate A.R. Karthik Lakshmanan.
Respondent: Advocates K.V. Babu and Sashidhar Sivakumar.
