Himachal Pradesh High Court Reiterates Limited Scope Of Court Intervention U/S 34 & 37 Of Arbitration & Conciliation Act

The Himachal Pradesh High Court bench of Justice Virender Singh has reiterated that the scope of interference with arbitral awards under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, is narrow and not akin to appellate jurisdiction. Courts may only interfere if the award exhibits patent illegality or arbitrariness that goes to the root of the matter.Brief Facts:The Government of India, by a notification under Section 3(A) of the National Highways Act, 1956, acquired land in Chamukha village, Mandi, Himachal Pradesh, for the four-lane construction of National Highway No. 21. Subject matter of the lis is situated in Village Chamukha. The Competent Authority assessed the market value of the acquired land as Rs.50 lakh per Bigha. An Arbitrator was appointed. The Arbitrator passed the award dated 28.11.2017, enhancing the market value to Rs.68,16,570 per bigha. The Appellant filed petitions under Section 34 of the Arbitration and Conciliation Act, 1996, which were dismissed by the District Judge on 4.12.2021. The Appellant filed the Appeal under Section 37 against the order dated 4.12.2021 on the ground that it is against the provisions of law and public policy. Contentions of the Appellant:Counsel for Appellant maintained that the award is non est because the Arbitrator had become functus officio and the award was passed after one year of entering into the reference in contravention of Section 29A of the Act. It was further submitted that the Arbitrator wrongly relied upon the sale deed pertaining to the land in village Thala, which was a very small area, in comparison to the large chunk of the land acquired by the appellant. Further, the District Judge failed to appreciate that enhancement of compensation was on the basis of a spot inspection report. Observations:The court referred to Konkan Railway Corporation Ltd. vs. Chenab Bridge Project Undertaking, which discussed the scope of Sections 34 and 37 of the Arbitration Act as follows: "The scope of jurisdiction under Section 34 and Section 37 of the Arbitration and Conciliation Act, 1996, is not akin to normal appellate jurisdiction. Courts should refrain from interfering with arbitral awards unless the award exhibits such perversity or arbitrariness that goes to the root of the matter.”In Bombay Slum Redevelopment Corporation Pvt. Ltd. vs. Samir Narain Bhojwani, the Supreme Court emphasized that the supervisory role of Courts under section 37 is very restricted.In Reliance Infrastructure Ltd. vs. State of Goa, it was held that 'patent illegality' in the award calls for interference but mere illegality is not patent illegality and it ought to be apparent on the face of the award, not the one, which is culled out by way of a long drawn analysis of pleadings and evidence.In Larsen Air Conditioning and Refrigeration Company's case vs. Union of India & Others [2023 LiveLaw (SC) 631], the Supreme Court held that Section 34 permits the Court to interfere with an award, sans the grounds of patent illegality, i.e., that illegality must go to the root of the matter and must not be trivial.In S.V. Samudram vs. State of Karnataka & Another, it was held that the Court's jurisdiction under Section 34 is fairly narrow, and that jurisdiction under Section 37 is even more circumscribed. The court held that the appellant could not satisfy the judicial conscience of the court as to how the award/impugned order suffered from perversity and was not sustainable in law. The court dismissed the appeal. Case Title: National Highways Authority of India vs. Devi Ram & OthersCitation: 2024 LiveLaw (HP) 78Case Number: Arbitration Appeal No.89 of 2024Citation: 2024:HHC:11447Date of Judgment: 14.11.2024Counsel for the Petitioner: Mr. K.D. Shreedhar, Senior Advocate with Ms. Sneh Bhimta, Advocate. Counsel for the Respondents: Mr. Suneet Verma, Mr.Varun Rana, Advocates.Click Here To Read/Download Order

Himachal Pradesh High Court Reiterates Limited Scope Of Court Intervention U/S 34 & 37 Of Arbitration & Conciliation Act

Tazeen Ahmed

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