Case Note & Summary
The dispute arose from a tripartite agreement dated 18 May 2004 between Essar Oils Limited (Petitioner), Central Warehousing Corporation (Respondent No.1), and State Trading Corporation of India Ltd. (Respondent No.2). The agreement pertained to the storage and handling of High Speed Diesel and Motor Spirit. A key clause specified warehousing management charges of Rs.14 per metric ton, with a handwritten insertion of 'per month' that was disputed. Invoices were initially paid but later disputed, leading to arbitration. The sole arbitrator awarded Rs.52,35,842/- to the Respondents. Essar Oils challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996, arguing that the handwritten insertion was binding and that the award was contrary to public policy. The court held that the handwritten insertion was not binding as it lacked consent from all parties, and the arbitrator's findings were not perverse. The court partially allowed the petition, modifying the award to reduce the amount by Rs.5,00,000/- due to a calculation error, but otherwise upheld the award.
Headnote
A) Arbitration Law - Challenge to Arbitral Award - Section 34 of the Arbitration and Conciliation Act, 1996 - Public Policy - The court examined whether the arbitral award was in conflict with the public policy of India. The court held that the award was not contrary to public policy as the arbitrator's interpretation of the handwritten insertion was plausible and not perverse. (Paras 1-10) B) Contract Law - Handwritten Insertion - Consent - The court considered whether the handwritten insertion of 'per month' in the tripartite agreement was binding. The court held that the insertion was not binding as it was made without the consent of all parties, and the arbitrator's finding that the insertion was not part of the agreement was reasonable. (Paras 3-8) C) Arbitration Law - Section 34 - Interference with Findings of Fact - The court held that under Section 34, the court cannot reappreciate evidence or interfere with findings of fact unless they are perverse or contrary to the terms of the contract. The court found no perversity in the arbitrator's findings. (Paras 5-10)
Issue of Consideration
Whether the handwritten insertion of 'per month' in the tripartite agreement was binding on the parties and whether the arbitral award was contrary to public policy under Section 34 of the Arbitration and Conciliation Act, 1996.
Final Decision
The court partially allowed the petition, modifying the award to reduce the amount by Rs.5,00,000/- due to a calculation error, but otherwise upheld the award.
Law Points
- Arbitration and Conciliation Act
- 1996
- Section 34
- Public Policy
- Handwritten Insertion
- Consent
- Warehousing Charges
