GANGTOK, India, June 5 -- Sikkim High Court issued the following judgment/order on May 8:
The process of arbitration is initiated on a consensus of the parties when they desire to resolve their disputes arising out of the agreement through the process of arbitration instead of following the normal process of courts. The effort of the legislature in enacting the Arbitration and Conciliation Act, 1996 (in short, the Arbitration Act) is to ensure that this process is fair, efficient and capable of meeting the needs of the specific arbitration and to minimise the supervisory role of courts in the arbitral process. It is precisely for this reason that section 19 provides that the arbitral tribunal shall not be bound by the Code of Civil Procedure, 1908 or the Indian Evidence Act, 1872. It further provides that the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting its proceedings. Failing any agreement, the arbitral tribunal may conduct the proceedings in the manner it considers appropriate. The power of the arbitral tribunal while conducting the proceedings in the manner it considers appropriate, includes the power to determine the admissibility, relevance, materiality and weight of any evidence.
2. The ambit and scope of section 34 of the Arbitration Act is no longer res integra. Interference in an arbitration dispute for setting aside an arbitral award is limited to sub-section (2) and sub-section (3) of section 34. section 34 has been interpreted by the Hon'ble Supreme Court with sufficient clarity. It is the settled legal position that in an application under section 34, the Court is not expected to act as an Appellate Court and re-appreciate the evidence. Interference would be warranted when the award is in violation of "public policy of India", which has been held to mean "the fundamental policy of Indian law". It would be impermissible to interfere on the merits of the award. An award could also be interfered with on the ground that it is in conflict with justice or morality which is now understood as a conflict with "most basic notions of morality or justice". It is only such arbitral award that shocks the conscience of the Court that can be set aside on the ground of patent illegality appearing on the face of the award and goes to the root of the matter. Mere erroneous application of law would not be a ground for interference. A perverse decision would amount to patent illegality.
3. In Punjab State Civil Supplies Ltd. vs. Sanman Rice Mills1, the Hon'ble Supreme Court held as under:
"Conclusion: 20. 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. It is exercisable only to find out if the court, exercising power under Section 34 of the Act, has acted within its limits as prescribed thereunder or has exceeded or failed to exercise the power so conferred. The Appellate Court has no authority of law to consider the matter in dispute before the arbitral tribunal on merits so as to find out as to whether the decision of the arbitral tribunal is right or wrong upon reappraisal of evidence as if it is sitting in an ordinary court of appeal. It is only where the court exercising power under Section 34 has failed to exercise its jurisdiction vested in it by Section 34 or has travelled beyond its jurisdiction that the appellate court can step in and set aside the order passed under Section 34 of the Act. Its power is more akin to that superintendence as is vested in civil courts while exercising revisionary powers. The arbitral award is not liable to be interfered unless a case for interference as set out in the earlier part of the decision, is made out. It cannot be disturbed only for the reason that instead of the view taken by the arbitral tribunal, the other view which is also a possible view is a better view according to the appellate court. 21. 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."
4. The records reveal that the parties had entered into a contract for construction of living shelters, structures, sheds on Jawaharlal Nehru Marg in the State of Sikkim. The contract had an arbitration clause. When dispute arose between the parties, the respondent invoked the arbitration clause and approached the appellant for appointment of an Arbitrator. On 02.01.2019, Col. S. Gopikrishnan was appointed as the sole Arbitrator. Subsequently, Col. Anil Kothiyal replaced Col. S. Gopikrishnan for adjudication of the dispute. Pleadings were thereafter exchanged. The respondent filed its statement of claims on 15.01.2022. On 24.02.2022, statement of defence was filed by the appellant. The respondent thereafter filed a rejoinder on 06.05.2022 which was followed by a reply to the rejoinder by the appellant on 22.06.2022. Thereafter, on 16.07.2022, the appellant filed paragraph wise reply to the claims filed by the respondent. It was only, thereafter, that the sole Arbitrator passed the arbitral award on 27.12.2022.
The rest of the document can be viewed at https://hcs.gov.in/hcs/hg_orders/201600000042024_15.pdf
Disclaimer: Curated by HT Syndication.
