Case Note & Summary
The appeal arises from a judgment of a learned Single Judge of the Bombay High Court dismissing Arbitration Petition No. 18 of 2003 under Section 34 of the Arbitration and Conciliation Act, 1996, which sought to set aside an arbitral award dated 11th September 2002 and an additional award dated 9th September 2005. The appellant, C R Menon, sole proprietor of Suprabha Industries, entered into a stevedoring services agreement with ONGC on 13th November 1992. The agreement required the appellant to employ 52 workers from the former contractor, M/s Kanji & Jadhavji & Co. The appellant claimed to have employed these workers and performed satisfactorily, but after about two months, ONGC directed the appellant to employ additional workers. The appellant refused, leading ONGC to terminate the contract and claim damages. The sole arbitrator found the appellant in breach and awarded damages of Rs. 1,20,000 with interest at 18% per annum from the date of the award. The appellant challenged the award under Section 34, and during the pendency, the Single Judge directed an additional award on interest, which was also challenged. The Single Judge dismissed the petition, leading to the present appeal under Section 37. The Division Bench held that the scope of appeal under Section 37 is limited to examining whether the Single Judge's decision was perverse or patently illegal. The court found no such infirmity, as the arbitrator's findings of fact were based on evidence and not perverse. The award of damages and interest was upheld. The appeal was dismissed with no order as to costs.
Headnote
A) Arbitration Law - Appeal under Section 37 - Scope of Interference - The court considered the limited scope of an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 against a judgment dismissing a petition under Section 34. Held that the appellate court does not re-examine the merits of the award but only examines whether the Single Judge's decision was perverse or patently illegal. (Paras 1-10) B) Arbitration Law - Patent Illegality - Breach of Contract - The dispute pertained to a stevedoring contract where the appellant failed to employ the required number of workers, leading to termination by ONGC. The arbitrator found breach and awarded damages. Held that the findings of fact by the arbitrator are final and not open to challenge unless perverse. (Paras 11-20) C) Arbitration Law - Interest - Award of Interest - The arbitrator awarded interest at 18% per annum from the date of the award until payment. The court upheld the award of interest, noting that the arbitrator has discretion under the Interest Act, 1978 and the contract. (Paras 21-25)
Issue of Consideration
Whether the learned Single Judge erred in dismissing the petition under Section 34 of the Arbitration and Conciliation Act, 1996 challenging the arbitral award, and whether the award suffers from patent illegality or perversity warranting interference under Section 37 of the Act.
Final Decision
The appeal is dismissed. The judgment of the learned Single Judge dated 8th March 2006 dismissing Arbitration Petition No. 18 of 2003 is upheld. No order as to costs.
Law Points
- Section 37 of Arbitration and Conciliation Act
- 1996
- Section 34 of Arbitration and Conciliation Act
- Scope of appeal under Section 37
- Patent illegality
- Perversity
- Interest under Interest Act
- 1978
- Section 73 of Indian Contract Act
- 1872
