Arbitration and Conciliation Act, 1996 — Ss.34 and 37 — Scope of interference with arbitral award — Re-appreciation of evidence — Computational objection — Adjustment of mobilization advance.
Jurisdiction under Section 37 being narrower than jurisdiction under Section 34, appellate Court cannot undertake fresh factual determination or re-appreciation of evidence relating to computation and reconciliation of accounts between parties. Where arbitral award and material on record disclosed that mobilization advance and recoveries thereof had been duly accounted for, challenge alleging excess award on account of non-adjustment, founded merely on speculative apprehension and not on demonstrable patent illegality, does not warrant interference under Sections 34 or 37.
(Paras 23 to 40)
Arbitration and Conciliation Act, 1996 — Ss.34 and 37 — Patent illegality — Scope.
Interference with arbitral award under Sections 34 and 37 is confined to cases involving patent illegality, perversity, jurisdictional error or violation of fundamental legal principles. Appellate Court under Section 37 does not sit in appeal over findings of arbitral tribunal and cannot substitute its own view on facts or computation.
(Paras 23 to 29, 42)
FACTS OF THE CASE
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Disputes arose between parties out of contract agreement relating to execution of works and same were referred to arbitration in terms of arbitration clause contained in contract.
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Arbitral Tribunal passed award granting various claims in favour of claimant including Claim No.6 relating to wrongful encashment of Performance Bank Guarantee (PBG).
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Employer challenged arbitral award under Section 34 of Arbitration and Conciliation Act contending that while awarding amount under Claim No.6, Arbitrator failed to account for adjustment of mobilization advance, thereby resulting in excess payment.
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Learned Single Judge dismissed Section 34 petition holding that plea regarding adjustment had not been raised before Arbitrator and that findings of Arbitrator did not warrant interference under Section 34.
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In appeal under Section 37, challenge was confined only to Claim No.6 and appellant contended that amount awarded suffered from computational illegality due to alleged duplication and non-adjustment of mobilization advance.
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Respondent asserted that mobilization advance had already been fully adjusted and accounted for in arbitral award including through recoveries made from running account bills and encashment of bank guarantee.
ANALYSIS OF FACTS AND LAW
The Division Bench undertook detailed examination of the limited scope of appellate interference under Section 37 of the Arbitration and Conciliation Act.
The Court reiterated settled principle that jurisdiction under Section 37 is even more circumscribed than jurisdiction under Section 34 and does not permit appellate Court to reassess evidence or substitute its own factual conclusions for those of arbitral tribunal.
Relying upon precedents including MMTC Ltd. v. Vedanta Ltd., UHL Power Co. Limited v. State of Himachal Pradesh and NHAI v. M. Hakeem, the Court held that interference is permissible only in cases involving patent illegality, perversity or jurisdictional infirmity.
The Court then examined contention relating to alleged non-adjustment of mobilization advance. It noted that Claim No.6 related to wrongful invocation of Performance Bank Guarantee whereas Claim No.7 independently dealt with recovery and adjustment of mobilization advance.
The Court found from arbitral award and affidavit filed by respondent that recoveries towards mobilization advance, including recoveries through running account bills and encashment of bank guarantee, had already been taken into account by Arbitrator while computing amounts payable.
The Division Bench held that appellant’s plea essentially invited Court to undertake fresh reconciliation of accounts and re-appreciation of computation, which is impermissible within narrow scope of Sections 34 and 37.
The Court further observed that challenge rested merely on speculative apprehension regarding duplication and not upon any demonstrable patent illegality apparent on face of award. Consequently, no ground for interference was made out.
RATIO DECIDENDI
In proceedings under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, Court cannot undertake fresh factual determination, re-appreciation of evidence or reconciliation of accounts relating to arbitral computation, and where arbitral award together with material on record demonstrates that recoveries and adjustments have been duly accounted for, a challenge alleging excess award founded only on speculative apprehension and not on demonstrable patent illegality, perversity or jurisdictional error, does not warrant interference with the arbitral award.
(Paras 23 to 42)
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