Case Note & Summary
The appellant, Royal Palms (India) Private Limited, was a company engaged in a development project at Marol Maroshi, Borivali, Mumbai. The respondent, Neeta Jignesh Parikh, carrying on business as M/s Prashin Sales Agency, supplied various materials such as pipes, fittings, flanges, valves, and couplings to the appellant from November 2006 to October 2008. The appellant placed purchase orders after confirming quotations. It was undisputed that the appellant paid Rs.1,44,04,592.50 towards goods purchased. However, the respondent claimed an outstanding amount of Rs.61,36,187/- in respect of eight bills (Bill Nos.1233, 1266, 1271, 1278, 1285, 1294, 1298, and 901). On 20 June 2009, the respondent issued a statutory notice under Sections 433 and 434 of the Companies Act, 1956 demanding payment. The appellant resisted the notice on 7 July 2009, denying any amount due and alleging that the goods under those bills were never received and that the claim was false and fabricated in connivance with an employee. The respondent denied these allegations on 20 July 2009. In September 2009, the respondent filed a company petition for winding up the appellant. By order dated 2 August 2010, the company petition was disposed of, and the disputes were referred to arbitration. The learned arbitrator passed an award in favor of the respondent, directing the appellant to pay the outstanding amount with interest. The appellant challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996 before a learned Single Judge of the Bombay High Court, who dismissed the petition by judgment and order dated 6 May 2016. Aggrieved, the appellant filed the present appeal under Section 37 of the Act. The Division Bench heard the appeal and considered the submissions. The appellant argued that the award was perverse and that the learned Single Judge erred in not interfering. The respondent supported the award and the impugned order. The court held that the findings of fact by the arbitrator were based on evidence, including invoices and delivery challans, and were not perverse. The court noted that the appellant had not produced any evidence to rebut the respondent's case. The court further held that the scope of interference under Section 34 is limited and that the appellate court under Section 37 cannot reappreciate evidence. Consequently, the appeal was dismissed, and the award was upheld.
Headnote
A) Arbitration - Section 34 Petition - Scope of Interference - Section 34 of the Arbitration and Conciliation Act, 1996 - The court considered whether the arbitral award was liable to be set aside on grounds of perversity or patent illegality. The court held that findings of fact by the arbitrator are final and not open to reappreciation in proceedings under Section 34, and the award did not suffer from any infirmity warranting interference. (Paras 1-10) B) Arbitration - Appeal under Section 37 - Scope - Section 37 of the Arbitration and Conciliation Act, 1996 - The court examined the scope of appeal against an order dismissing a Section 34 petition. It held that the appellate court cannot reappreciate evidence or substitute its own view, and the appeal was dismissed as no grounds were made out. (Paras 1-10) C) Evidence - Delivery of Goods - Burden of Proof - Indian Evidence Act, 1872 - The dispute pertained to whether goods were delivered under unpaid invoices. The arbitrator found that the respondent had proved delivery based on invoices and delivery challans, and the appellant's denial was not supported by evidence. The court upheld this finding as a plausible view. (Paras 2-10)
Issue of Consideration
Whether the learned Single Judge erred in dismissing the petition under Section 34 of the Arbitration and Conciliation Act, 1996 challenging the arbitral award, and whether the award was liable to be set aside on grounds of perversity or patent illegality.
Final Decision
The appeal is dismissed. The judgment and order dated 6 May 2016 passed by the learned Single Judge dismissing the Section 34 petition is upheld. The arbitral award is maintained.
Law Points
- Arbitral award not liable to be interfered with under Section 34 of the Arbitration and Conciliation Act
- 1996 unless perverse or contrary to public policy
- Findings of fact by arbitrator are final and binding
- No reappreciation of evidence in appeal under Section 37 of the Act
- Section 34 petition dismissed as no grounds made out
