Case Note & Summary
The dispute originated from a Master Service Agreement dated 11.04.2019 where Appellant agreed to provide temporary delivery executives to Swiggy. Swiggy withheld payments citing GST department inspections and queries, leading Greenfinch to raise claims for unpaid invoices, compensation for manpower loss, and GST amounts. Greenfinch invoked arbitration, and the Arbitral Tribunal issued an award dated 04.01.2024, partly allowing Greenfinch's claims and Swiggy's counter-claim. Both parties filed applications under Section 34 of the Arbitration and Conciliation Act, 1996 before the Commercial Court to set aside the award to limited extents. The Commercial Court, by order dated 14.03.2025, set aside the award on the ground of patent illegality, holding that the evidence of Greenfinch's authorized representative, Smt. Jyothi, was inadmissible as she was not a competent witness. Greenfinch and Swiggy filed separate commercial appeals under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996, challenging this order. The High Court considered whether the Commercial Court erred in its application of Section 34 standards. The appellants argued that the Commercial Court overstepped by re-evaluating evidence on witness competence, which does not amount to patent illegality. The respondents defended the order, contending that the award was vitiated due to reliance on inadmissible evidence. The court analyzed that patent illegality under Section 34 requires a fundamental legal error, not mere errors in evidence appreciation. It held that witness competence is a matter of evidence weight, not admissibility, and the Commercial Court's finding was an impermissible intrusion into the arbitral tribunal's domain. The court emphasized the limited scope of judicial review under Section 34 and found the Commercial Court's order unsustainable. Consequently, the High Court set aside the Commercial Court's order and restored the arbitral award, allowing the appeals.
Headnote
A) Arbitration Law - Setting Aside Arbitral Award - Patent Illegality - Arbitration and Conciliation Act, 1996, Section 34 - Commercial Court set aside arbitral award solely on ground that evidence of authorized representative was inadmissible, holding award vitiated by patent illegality - High Court found this erroneous as witness competence is a matter of evidence appreciation, not patent illegality, and Commercial Court exceeded its limited jurisdiction under Section 34 - Held that Commercial Court's order is unsustainable and set aside, restoring arbitral award (Paras 5-6, 26-30). B) Arbitration Law - Appeal Under Section 37 - Scope of Judicial Review - Arbitration and Conciliation Act, 1996, Section 37(1)(c) - Appeals filed under Section 37(1)(c) against Commercial Court order setting aside arbitral award - High Court examined whether Commercial Court's intervention was within permissible grounds under Section 34 - Court held that appeal is maintainable to correct errors in Commercial Court's application of Section 34 standards (Paras 1, 4, 26). C) Evidence Law - Witness Competence - Admissibility of Evidence - Indian Evidence Act, 1872, Section 118 - Commercial Court held that authorized representative of company was not competent witness, thus her deposition should not have been considered by Arbitral Tribunal - High Court noted that witness competence relates to weight of evidence, not admissibility, and is a factual matter for arbitral tribunal to assess - This does not constitute patent illegality under Section 34 (Paras 5-6, 28). D) Commercial Law - Service Agreement Dispute - Withholding of Payments and GST Issues - Master Service Agreement dated 11.04.2019 - Dispute arose from Swiggy withholding payments to Greenfinch due to GST queries, leading to arbitration claims for unpaid invoices and compensation - Arbitral Tribunal partly allowed Greenfinch's claims and Swiggy's counter-claim, which were challenged before Commercial Court - High Court's decision focuses on procedural error in setting aside award, not merits of underlying dispute (Paras 7-25).
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Issue of Consideration: Whether the Commercial Court erred in setting aside the arbitral award on the ground of patent illegality based on the competence of a witness, and whether the appeal under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996 is maintainable.
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Final Decision
High Court set aside Commercial Court order dated 14.03.2025 and restored arbitral award dated 04.01.2024, allowing the appeals
