Factual/ Legal Errors In Arbitral Award Falling Short Of Perversity Do Not Merit Interference U/S 34 Or 37 Of Arbitration Act: Delhi High Court

The Delhi High Court has observed that the Arbitrator or Tribunal is the final arbiter on facts as well as in law, and even errors, factual or legal, which stop short of perversity, do not merit interference under sec. 34 or 37 of the Arbitration and Conciliation Act, 1996.

A division bench comprising of Justice Mukta Gupta and Justice Neena Bansal Krishna was dealing with an appeal under sec. 37 of the Act challenging the order dated 12.07.2017 passed by the Single Judge of High Court which had dismissed the objections filed by the appellant under sec. 34 of the Act seeking setting aside of the arbitration award dated 01.06.2016.

Movie Times had filed a suit against the respondents seeking injunction and recovery of rent against the respondents in respect of the leased premises. The same was disposed of vide order dated 07.10.2009, directing Movie Times to take recourse to arbitration, resulting in the appointment of the sole arbitrator to adjudicate the disputes between the parties, who passed the Arbitral award dated 01.06.2016 in relation to the disputes in respect of the Lease deed.

Aggrieved by the said Award, the appellant filed a petition under sec. 34 of the Act for setting aside the said award. The said petition was dismissed by the single Judge resulting in the filing of the appeal.

Disputes between the parties relate to the extent of the area leased to Movie Times under the Lease Deed dated 24.07.2006. It was the case of Movie Times that in terms of the said lease deed, the Appellant was authorised to use the area of 16000 sq.feet, however it was given possession of an area ad-measuring 13235 sq. ft. instead of 16000 sq. ft. and therefore, it was entitled to a proportional reduction in the lease rentals and also entitled to recover the excess amount paid in respect of Common Area Maintenance (CAM) charges. On the other hand, the respondents raised counterclaims seeking the rental withheld as well as unpaid CAM charges along with interest.

All the claims filed by Movie Times were declined vide the impugned award.

The Court was of the view that it was no longer res integra that the scope for interference in an appeal under sec. 37 (1) (c) of the Act is narrow.

In order to succeed, the appellant must establish that the finding of the Arbitrator is based on no evidence or the Arbitrator has taken into account material which is irrelevant or has ignored vital evidence," the Court said.

The Court said that it has been repeatedly held that while entertaining appeals under sec. 37 of the Act, the Court is not actually sitting as a Court of appeal over the award of the Arbitral Tribunal and therefore, the Court would not re-appreciate or re-assess the evidence.

"The position of law stands crystallized today, that findings, of fact as well as of law, of the arbitrator/Arbitral Tribunal are ordinarily not amenable to interference either under Sections 34 or Section 37 of the Act. The scope of interference is only where the finding of the tribunal is either contrary to the terms of the contract between the parties, or, ex facie, perverse, that interference, by this Court, is absolutely necessary," the Court said.

It added "The Arbitrator/ Tribunal is the final arbiter on facts as well as in law, and even errors, factual or legal, which stop short of perversity, do not merit interference under Sections 34 or 37 of the Act. While deciding an appeal it must be kept in mind that the Arbitrator/Tribunal is the final arbiter on facts as well as law, and even errors, factual or legal, which stop short of perversity, do not merit interference under Sections 34 or 37 of the Act."

Accordingly, the Court found no infirmity, illegality or impropriety in the award and order of the Single Judge.

While dismissing the appeal, the Court said that the amount deposited by the appellant before the Registrar General of High Court vide order dated 28th August 2017 be released to the respondent along with the interest that has accrued thereon.

Case Title: M/S. MOVIE TIMES CINEPLEX PVT. LTD. v. M/S. MRG DEVELOPERS PVT. LTD. & ORS.

Citation: 2022 LiveLaw (Del) 401

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