Case Note & Summary
The case involves an appeal under Section 37 of the Arbitration and Conciliation Act, 1996, filed by Indian Oil Corporation Ltd. (IOCL) against a judgment of a learned single Judge of the Bombay High Court. The single Judge had partly allowed an arbitration petition under Section 34 of the Act, setting aside claim nos. (d) and (g) of the arbitral award dated 30 June 2005, setting aside interest awarded on security deposit, and reducing the interest rate from 18% per annum to 12% per annum. The dispute arose from a contract executed on 11 April 1998 between IOCL and Artson Engineering Ltd. for the Crude Distribution System Project. The contract was governed by General Conditions of Contract (GCC) and Special Conditions of Contract (SCC), with time being of the essence. Due to delays in providing information and approving drawings, the work progressed slowly. The arbitrator awarded various claims, including claim nos. (d) and (g) and interest at 18% per annum. The single Judge, under Section 34, found that the arbitrator's findings on claim nos. (d) and (g) were patently illegal and against public policy, and that the interest rate of 18% was excessive. The Division Bench, in the present appeal, considered the scope of interference under Section 37 and upheld the single Judge's order, finding no error in the exercise of jurisdiction. The appeal was dismissed, and the order of the single Judge was confirmed.
Headnote
A) Arbitration Law - Appeal under Section 37 - Scope of Interference - The appeal under Section 37 of the Arbitration and Conciliation Act, 1996 is against a judgment of a single Judge partly allowing a petition under Section 34 of the Act. The Division Bench considered the correctness of the single Judge's order setting aside claim nos. (d) and (g) and interest on security deposit, and reducing interest from 18% to 12% per annum. The Court upheld the single Judge's order, finding no error in the exercise of jurisdiction under Section 34. (Paras 1-3) B) Arbitration Law - Interest Rate - Reduction from 18% to 12% - The learned single Judge reduced the interest rate awarded by the arbitrator from 18% per annum to 12% per annum. The Division Bench affirmed this reduction, noting that the rate of 18% was excessive and the reduction to 12% was reasonable and within the bounds of Section 34 of the Act. (Para 2) C) Arbitration Law - Setting Aside of Claims - Claim Nos. (d) and (g) - The single Judge set aside claim nos. (d) and (g) of the arbitral award. The Division Bench upheld this decision, finding that the arbitrator's findings on these claims were patently illegal or against public policy, warranting interference under Section 34 of the Act. (Para 2)
Issue of Consideration
Whether the learned single Judge erred in partly setting aside the arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996, particularly in respect of claim nos. (d) and (g) and interest on security deposit, and reducing the interest rate from 18% to 12% per annum.
Final Decision
The appeal is dismissed. The judgment and order of the learned single Judge dated 30 October 2015 is confirmed.
Law Points
- Section 37 of the Arbitration and Conciliation Act
- 1996
- Section 34 of the Arbitration and Conciliation Act
- Scope of appeal under Section 37
- Reduction of interest rate from 18% to 12% per annum
- Setting aside of specific claims (d) and (g) and interest on security deposit
