Case Note & Summary
The petitioner, Hersheys India Pvt. Ltd., filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging an arbitral award dated April 4, 2014. The dispute arose from a commercial agreement between the petitioner and the respondent, Kanti Beverages Pvt. Ltd. The arbitral tribunal found in favor of the petitioner on all issues of liability and breach, but nonetheless directed the petitioner to pay Rs.75 lakhs to the respondent. The petitioner argued that this direction was inconsistent with the tribunal's own findings and sought to have that portion of the award set aside. The court analyzed the award and found that the tribunal had categorically held that the respondent had breached the agreement and that the petitioner was not liable. However, the tribunal then inexplicably ordered payment, which was contradictory to its reasoning. The court held that such an award suffers from patent illegality and is against public policy, as it grants relief that is not supported by the findings. The court partially set aside the award, excising the direction to pay Rs.75 lakhs, while confirming the rest of the award. The petition was allowed to that extent.
Headnote
A) Arbitration Law - Section 34 of the Arbitration and Conciliation Act, 1996 - Challenge to Arbitral Award - Inconsistency between findings and relief - The arbitral tribunal upheld all contentions of the petitioner on merits but directed payment of Rs.75 lakhs to the respondent. The court held that such an award is patently illegal and perverse as it grants relief contrary to its own findings, and set aside the payment direction while upholding the rest of the award. (Paras 1-13)
Issue of Consideration
Whether an arbitral award that upholds all contentions of the petitioner on merits but directs payment to the respondent is liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996.
Final Decision
The court partially allowed the petition, setting aside the direction to pay Rs.75 lakhs to the respondent while confirming the rest of the arbitral award.
Law Points
- Arbitral award must be consistent with findings on merits
- Section 34 of Arbitration and Conciliation Act
- 1996
- patent illegality
- perversity
- public policy
Case Details
Arbitration Petition No. 1608 of 2014
Mr. Sarosh Bharucha, a/w Khushi Dhanesha, Laleh Pandole, i/b Vashi & Vashi for the Petitioner; Mr. Vishal Kanade for Respondent
Kanti Beverages Pvt. Ltd.
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Nature of Litigation
Challenge to an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996.
Remedy Sought
Petitioner sought to set aside the portion of the arbitral award directing payment of Rs.75 lakhs to the respondent.
Filing Reason
The arbitral tribunal upheld all contentions of the petitioner on merits but directed payment to the respondent, which was inconsistent with its own findings.
Previous Decisions
Arbitral award dated April 4, 2014 passed by the Learned Arbitral Tribunal.
Issues
Whether the arbitral award directing payment of Rs.75 lakhs to the respondent is inconsistent with the tribunal's findings on merits.
Whether such inconsistency amounts to patent illegality or perversity warranting interference under Section 34 of the Arbitration and Conciliation Act, 1996.
Submissions/Arguments
Petitioner argued that the tribunal found in its favor on all issues but still directed payment, which is contradictory and illegal.
Respondent argued that the award was within the tribunal's discretion and should not be interfered with.
Ratio Decidendi
An arbitral award that grants relief contrary to its own findings on merits is patently illegal and perverse, and liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996.
Judgment Excerpts
This is a Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 challenging an arbitral award dated April 4, 2014 erroneously passed by the Learned Arbitral Tribunal upholding every contention of the Petitioner on merits but concluding that a direction to make payment of Rs.75 lakhs to the Respondent would be appropriate and just.
Procedural History
The arbitral tribunal passed an award on April 4, 2014. The petitioner filed Arbitration Petition No. 1608 of 2014 under Section 34 of the Arbitration and Conciliation Act, 1996 before the High Court of Judicature at Bombay, which was decided on October 7, 2025.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 34
