Case Note & Summary
The appeal under Section 37 of the Arbitration and Conciliation Act, 1996 was filed by M/s. Bharat Petroleum Corporation Limited challenging the judgment and order dated 27.01.2009 passed by the learned District Judge in Civil Misc. Application No.251/2006, which dismissed the appellant's petition under Section 34 of the Act to set aside the arbitral award dated 23.08.2006. The dispute arose from an LPG distributorship agreement dated 21.05.1986 between the appellant and the respondent, Mrs. Anuradha Ajit Malgaonkar, who operated 'Ponda Gas Service'. The appellant alleged that the respondent failed to maintain proper registers and accounts, and that during an inspection on 07.05.1992, 643 cylinders and 324 pressure regulators were found missing. Consequently, the appellant terminated the dealership under clause 29 of the agreement. The respondent challenged the termination, and the matter was referred to arbitration. The sole arbitrator passed an award in favor of the respondent, which the appellant sought to set aside under Section 34. The District Judge dismissed the petition, leading to the present appeal. The High Court examined the scope of interference under Section 37 and held that the appeal is against an order refusing to set aside the award, and the court's role is limited to examining whether the District Judge's view was perverse or contrary to law. The court noted that the arbitrator had considered the evidence and found that the appellant failed to prove the alleged shortages and violations. The court further held that the award was not in conflict with the public policy of India, as there was no fraud, corruption, or violation of fundamental policy. The court dismissed the appeal, upholding the District Judge's order and the arbitral award.
Headnote
A) Arbitration Law - Appeal under Section 37 - Scope of Interference - The appeal under Section 37 of the Arbitration and Conciliation Act, 1996 is against an order refusing to set aside an award under Section 34. The court's interference is limited to examining whether the District Judge's view was perverse or contrary to law, and not to reappreciate evidence. (Paras 1-2) B) Arbitration Law - Setting Aside Award - Public Policy - Section 34 of the Arbitration and Conciliation Act, 1996 - The award can be set aside only if it is in conflict with the public policy of India, which includes fraud, corruption, or violation of fundamental policy of Indian law. Mere erroneous findings of fact do not warrant interference. (Paras 3-4) C) Contract Law - Termination of Distributorship - Clause 29 of Agreement - The appellant terminated the distributorship agreement under clause 29 alleging missing cylinders and safety violations. The arbitrator found the termination unjustified and awarded compensation. The court upheld the award as not perverse. (Paras 2-3)
Issue of Consideration
Whether the learned District Judge erred in dismissing the petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging the arbitral award, and whether the award was in conflict with the public policy of India.
Final Decision
The appeal is dismissed. The judgment and order dated 27.01.2009 passed by the learned District Judge in Civil Misc. Application No.251/2006 is upheld.
Law Points
- Section 37 of the Arbitration and Conciliation Act
- 1996
- Section 34 of the Arbitration and Conciliation Act
- Public policy of India
- Perversity
- Reappreciation of evidence
