Case Note & Summary
The petitioners, Prasar Bharati (the Broadcasting Corporation of India), challenged an arbitral award dated 17th December 2008 passed by a sole arbitrator under Section 34 of the Arbitration and Conciliation Act, 1996. The dispute arose from an agreement dated 14th September 2000 between the petitioners and the respondents, B4U Multimedia International Limited, for supply of blockbuster Hindi films for telecast on Doordarshan's National Network (DD1). The revenue was to be shared in the ratio of 50:50. The respondents proposed rates which were accepted by the petitioners. The respondents did not pay the dues, and the petitioners by letter dated 23rd January 2000 demanded payment of Rs.1,14,91,813. The respondents made only part payment and failed to provide accounts. The respondents sought to change the revenue sharing ratio to 60:40, which was not agreed. In April 2001, the respondents disputed their liability. The petitioners terminated the agreement on 12th June 2001 and demanded Rs.3,15,56,439 with interest. The respondents invoked arbitration on 21st June 2001. The arbitrator awarded Rs.8,40,00,000 to the respondents as damages for breach of contract by the petitioners, and rejected the petitioners' counter claim for dues. The petitioners challenged the award on grounds of patent illegality and perversity. The court held that under Section 34, the court cannot reappreciate evidence or substitute its own view unless the award is perverse or patently illegal. The arbitrator's findings on breach and quantum were based on evidence and plausible. The court dismissed the petition, upholding the award.
Headnote
A) Arbitration Law - Setting Aside Award - Section 34 Arbitration and Conciliation Act, 1996 - Limited Grounds - The court examined the scope of interference under Section 34 and held that the court cannot reappreciate evidence or substitute its own view unless the award is perverse or patently illegal. The arbitrator's findings on breach of contract and quantum of damages were based on evidence and not open to challenge. (Paras 1-10) B) Contract Law - Breach of Agreement - Revenue Sharing - The dispute arose from an agreement for supply of films where revenue was to be shared 50:50. The respondent failed to pay dues and provide accounts. The arbitrator found the respondent in breach and awarded damages. The court upheld the award as the findings were plausible and not against the terms of the contract. (Paras 2-8) C) Arbitration Law - Counter Claim - Section 34 Arbitration and Conciliation Act, 1996 - The petitioner's counter claim for dues was rejected by the arbitrator. The court held that the arbitrator's decision on the counter claim was based on appreciation of evidence and cannot be interfered with under Section 34. (Paras 3-9)
Issue of Consideration
Whether the arbitral award dated 17th December 2008 is liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996 on grounds of patent illegality, perversity, or violation of public policy.
Final Decision
The court dismissed the petition, upholding the arbitral award dated 17th December 2008.
Law Points
- Section 34 of Arbitration and Conciliation Act
- 1996
- limited grounds for setting aside award
- patent illegality
- perversity
- reappreciation of evidence not permissible
- arbitrator's interpretation of contract binding
- no interference with findings of fact unless shocking conscience
