Case Note & Summary
The petitioner, M/s. Raviuday Construction Co., a partnership firm, challenged a majority arbitral award dated 15 May 2012 passed by a three-member arbitral tribunal. The dispute arose out of agreements between the petitioner (contractor/developer) and the respondent, Bhaktiyog Cooperative Housing Society Ltd., a cooperative housing society. The majority award directed the petitioner to pay the respondent Rs.7,35,000 towards the last installment, Rs.10,80,000 for excess FSI with 18% interest from 1 October 2007, Rs.25,00,572 as interest as per an annexed chart, Rs.9,73,753 towards construction of a community hall, and Rs.7,00,000 towards costs. The petitioner's counter claim was rejected. One arbitrator dissented, supporting the petitioner. The petitioner filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 to set aside the award. The court examined the limited scope of interference under Section 34, which is confined to grounds of patent illegality or conflict with public policy. The court noted that the majority award was based on a plausible interpretation of the agreements and evidence on record. The dissenting opinion did not make the majority award perverse or unreasonable. The court held that the award of interest at 18% and costs of Rs.7,00,000 were within the tribunal's discretion and not patently illegal. The rejection of the counter claim was also upheld. Consequently, the court dismissed the arbitration petition, upholding the majority award.
Headnote
A) Arbitration Law - Challenge to Arbitral Award - Section 34 of the Arbitration and Conciliation Act, 1996 - Scope of Interference - The court considered the limited grounds for setting aside an arbitral award under Section 34, including patent illegality and conflict with public policy. The court held that the majority award was based on a plausible interpretation of the agreements and evidence, and the dissenting opinion did not render the majority award perverse. The court refused to interfere with the award. (Paras 1-10) B) Arbitration Law - Interest and Costs - Section 31(7) of the Arbitration and Conciliation Act, 1996 - The arbitral tribunal awarded 18% interest on certain amounts and costs of Rs.7,00,000. The court held that the award of interest and costs was within the discretion of the tribunal and not patently illegal. (Paras 2-5) C) Arbitration Law - Counter Claim - Rejection of Counter Claim - The tribunal rejected the respondent's counter claim. The court found no reason to interfere as the tribunal's decision was based on evidence. (Para 2)
Issue of Consideration
Whether the majority arbitral award dated 15 May 2012 is liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996 on grounds of patent illegality or being against public policy.
Final Decision
The court dismissed the arbitration petition, upholding the majority arbitral award dated 15 May 2012.
Law Points
- Arbitration and Conciliation Act
- 1996
- Section 34
- Scope of interference
- Patent illegality
- Public policy
- Majority award
- Dissenting opinion
- Interest rate
- Costs
