Case Note & Summary
The case involves five appeals filed by Central Warehousing Corporation (the appellant) against a common judgment dated 18.02.2019 dismissing its arbitration petitions under Section 34 of the Arbitration and Conciliation Act, 1996. The appellant had challenged five arbitral awards of even date. The underlying disputes arose from five contracts of different dates with identical terms, under which the respondent, Aqdas Maritime Agency Pvt. Ltd., acted as the handling and transport contractor for the appellant. The appellant claimed that it had reimbursed service tax to the respondent under a bona fide mistake, and sought recovery of that amount. The appellant relied on Clause XII, Para (i) of the contracts, which stated that all taxes/levies/fees/charges payable to any government body shall be paid by the contractor and no claim shall lie against the corporation. The arbitrator overruled the respondent's technical objection and held that the appellant, as the service recipient, was liable to pay service tax, and that the clause did not transfer the liability to the respondent. The learned Single Judge dismissed the Section 34 petitions, holding that the construction of the clause by the arbitrator fell within his domain and could not be challenged. The Division Bench, after hearing the appellant's counsel, found no merit in the appeals and dismissed them in limine, affirming that the arbitrator's interpretation was within his jurisdiction and not open to challenge under Section 34.
Headnote
A) Arbitration Law - Challenge to Arbitral Award - Section 34 Arbitration and Conciliation Act, 1996 - Interpretation of Contractual Clause - The appellant challenged five arbitral awards dismissing its claim for reimbursement of service tax paid to the respondent. The arbitrator held that under Clause XII(i) of the contract, the respondent had not taken over the liability to bear service tax. The Single Judge dismissed the petitions under Section 34, holding that the construction of the clause fell within the arbitrator's domain. The Division Bench upheld this view, finding no ground to interfere. Held that the interpretation of a contract by an arbitrator is within his domain and not a ground for challenge under Section 34 unless perverse or contrary to law. (Paras 1-5)
Issue of Consideration
Whether the construction of a contractual clause by the arbitrator, holding that the contractor was not liable to bear service tax, is open to challenge under Section 34 of the Arbitration and Conciliation Act, 1996.
Final Decision
The appeals are dismissed in limine. No case made out to issue notice to the respondent.
Law Points
- Arbitration
- Service Tax
- Contract Interpretation
- Section 34 Arbitration and Conciliation Act
- 1996
- Arbitral Domain
