Case Note & Summary
The petitioner, Jayabharat Automobiles Limited, filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging an arbitral award dated 14th September 2007. The respondent, B.R. International, a proprietary firm, had originally filed claims in arbitration, and the petitioner had filed counter claims. The dispute arose from an understanding in June 2000 where the respondent approached the petitioner to sell car accessories and air conditioning systems from the petitioner's showroom. The arbitrator allowed some of the respondent's claims and partly rejected the petitioner's counter claims. The petitioner challenged the award on grounds of patent illegality and other grounds under Section 34. The court examined the limited scope of interference with arbitral awards and found no patent illegality in the arbitrator's findings on the claims and counter claims. However, the court found that the arbitrator had awarded interest at 18% per annum from the date of the award without justification, which was excessive. The court reduced the interest rate to 12% per annum. The petition was partly allowed, modifying the award only to the extent of the interest rate.
Headnote
A) Arbitration - Challenge to Arbitral Award - Section 34 of 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 contravention of public policy. The court held that the arbitrator's findings on facts and interpretation of contract terms are not open to reappraisal unless perverse or contrary to law. (Paras 1-10) B) Interest - Award of Interest - Section 31(7) of Arbitration and Conciliation Act, 1996 - The arbitrator awarded interest at 18% per annum on the awarded amount from the date of the award until payment. The court held that the rate of interest was excessive and reduced it to 12% per annum, as the arbitrator had not provided any justification for the higher rate. (Paras 15-20)
Issue of Consideration
Whether the arbitral award dated 14th September 2007 is liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996 on the grounds of patent illegality or other grounds specified in the Act.
Final Decision
The petition is partly allowed. The arbitral award dated 14th September 2007 is modified to the extent that the rate of interest awarded at 18% per annum from the date of the award until payment is reduced to 12% per annum. The rest of the award is upheld.
Law Points
- Section 34 of Arbitration and Conciliation Act
- 1996
- scope of interference with arbitral award
- patent illegality
- interest rate
- counter claims
