Case Note & Summary
The petitioners, M/s. Akbarally's and its partners, filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 challenging an arbitral award dated 28th March 2014. The award allowed the claim of the respondent, Indian Oil Corporation, directing the petitioners to pay Rs.15,61,101/- with interest at 9% per annum from the date of filing of the claim till payment or realization. The dispute arose from a Memorandum of Understanding (MOU) dated 11th December 2000, under which the petitioners agreed to pay compensation to the respondent for premises used and occupied. The petitioners alleged that on 12th August 2010, discussions were held between officers of the respondent and the petitioners, wherein the officers agreed to a one-time settlement accepting 50% of the compensation in full and final settlement. The petitioners sent a cheque of Rs.3,33,960/- on 16th August 2010 and handed over possession of the shop on 28th September 2010. However, the respondent demanded the balance amount, leading to arbitration. The arbitrator rejected the petitioners' contention of an oral settlement, holding that the officers lacked authority to bind the respondent. The court, while dismissing the petition, held that the arbitrator's findings were based on evidence and were not perverse, and no grounds under Section 34 were made out for interference.
Headnote
A) Arbitration - Challenge to Arbitral Award - Section 34 of the Arbitration and Conciliation Act, 1996 - Alleged Oral Settlement - The petitioners contended that officers of the respondent corporation agreed to accept 50% of the compensation in full settlement. The arbitrator rejected this contention, holding that the officers had no authority to bind the corporation. The court upheld the award, finding no grounds for interference under Section 34. (Paras 1-4) B) Contract - Authority of Officers - Public Sector Undertaking - Oral Agreement - The court held that an oral settlement alleged to have been made by officers of a public sector undertaking is not binding unless it is shown that the officers had the requisite authority. The arbitrator's finding that no such authority existed was based on evidence and was not perverse. (Paras 2-4)
Issue of Consideration
Whether the arbitral award passed by the learned arbitrator is liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996 on the ground that the respondent's officers had agreed to a one-time settlement accepting 50% of the compensation amount.
Final Decision
The court dismissed the arbitration petition, upholding the arbitral award dated 28th March 2014.
Law Points
- Arbitration Act
- 1996
- Section 34
- Public Sector Undertaking
- Authority of Officers
- Oral Settlement
- Binding Nature
- Evidence Appreciation
- No Interference
