Case Note & Summary
The case involves two connected commercial appeals arising from an arbitral dispute between Asset Reconstruction Company (India) Ltd. (ARCIL) and Manyata Developers Pvt. Ltd. The appellant, ARCIL, challenged the order of the LXXXV Additional City Civil and Sessions Judge, Bengaluru, dated 15/12/2021, which dismissed its application under Section 34 of the Arbitration and Conciliation Act, 1996, to set aside the arbitral award. The respondent, Manyata Developers, also filed a cross-appeal against the same order. The High Court of Karnataka, comprising Justice Alok Aradhe and Justice Anant Ramanath Hegde, heard the appeals under Section 13(1) of the Commercial Courts Act, 2015 read with Section 37(1)(b) of the Arbitration Act. The core issue was whether the Commercial Court erred in not setting aside the arbitral award. The appellant argued that the award was perverse and against public policy, while the respondent contended that the award was based on a plausible interpretation of the contract. The court analyzed the limited scope of interference under Section 37, noting that an appellate court cannot reappreciate evidence or substitute its own view unless the award is found to be perverse or contrary to the fundamental policy of Indian law. The court held that the Commercial Court had correctly applied the law and that the award did not warrant interference. Consequently, the appeals were dismissed, and the order of the Commercial Court was upheld.
Headnote
A) Arbitration - Appeal under Section 37 - Scope of Interference - Section 37 of the Arbitration and Conciliation Act, 1996 - The court considered whether the Commercial Court's order dismissing the application to set aside the arbitral award was liable to be interfered with in appeal. Held that the appellate court under Section 37 has limited jurisdiction and cannot reappreciate evidence or substitute its own view unless the award is perverse or contrary to public policy (Paras 1-10).
B) Commercial Appeal - Maintainability - Section 13(1) of the Commercial Courts Act, 2015 - The appeal was filed under Section 13(1) of the Commercial Courts Act, 2015 read with Section 37(1)(b) of the Arbitration and Conciliation Act, 1996. Held that such an appeal lies against an order under Section 37 of the Arbitration Act, and the court must examine whether the lower court's order suffers from any legal infirmity (Paras 1-5).
Issue of Consideration
Whether the order passed by the Commercial Court under Section 37 of the Arbitration and Conciliation Act, 1996, dismissing the application to set aside the arbitral award, warrants interference in appeal under Section 13(1) of the Commercial Courts Act, 2015.
Final Decision
The High Court dismissed both appeals, upholding the order of the Commercial Court dated 15/12/2021 in Comm.A.A.No.201/2021, and confirming the arbitral award.
Law Points
- Arbitration
- Commercial Appeal
- Section 37 of Arbitration and Conciliation Act
- 1996
- Section 13(1) of Commercial Courts Act
- 2015
- Scope of interference with arbitral award
- Perversity
- Public policy
Case Details
2023 LawText (KAR) (06) 53
COMAP No.70 of 2022 C/W COMAP No.219 of 2023
Justice Alok Aradhe, Justice Anant Ramanath Hegde
Mr. V. Srinivasa Raghavan, Sr. Counsel for Ms. Sahana Devanathan a/w Mr. Chaitanya Sharma (for appellant in COMAP 70/2022); Sri. S.M. Chandrashekar, Sr. Counsel for Sri. Chandrashekar Patil (for respondent in COMAP 70/2022 and appellant in COMAP 219/2023); Sri/Smt. Maneesha Kongovi (for respondents in COMAP 219/2023)
Asset Reconstruction Company (India) Ltd. (in COMAP No.70/2022); Manyata Developers Private Limited (in COMAP No.219/2023)
Manyata Developers Pvt. Ltd. (in COMAP No.70/2022); ARCIL-AST-IX Trust and L and T Finance Ltd. (in COMAP No.219/2023)
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Nature of Litigation
Commercial appeals against an order of the Commercial Court dismissing an application to set aside an arbitral award.
Remedy Sought
The appellant in COMAP 70/2022 sought to set aside the order dated 15/12/2021 passed by the LXXXV Addl. City Civil and Sessions Judge, Bengaluru, in Comm.A.A.No.201/2021, and to allow the appeal. The appellant in COMAP 219/2023 sought similar relief.
Filing Reason
The appellant (ARCIL) challenged the Commercial Court's order dismissing its application under Section 34 of the Arbitration Act to set aside the arbitral award, arguing that the award was perverse and against public policy.
Previous Decisions
The Commercial Court (LXXXV Addl. City Civil and Sessions Judge, Bengaluru) dismissed the application under Section 34 of the Arbitration Act vide order dated 15/12/2021 in Comm.A.A.No.201/2021.
Issues
Whether the Commercial Court's order dismissing the application to set aside the arbitral award is liable to be interfered with in appeal under Section 37 of the Arbitration Act.
Whether the arbitral award suffers from perversity or is contrary to public policy.
Submissions/Arguments
The appellant (ARCIL) argued that the arbitral award was perverse and against the public policy of India, and the Commercial Court erred in not setting it aside.
The respondent (Manyata Developers) contended that the award was based on a plausible interpretation of the contract and that the scope of interference under Section 37 is limited.
Ratio Decidendi
The appellate court under Section 37 of the Arbitration and Conciliation Act, 1996, has limited jurisdiction and cannot reappreciate evidence or substitute its own view unless the arbitral award is found to be perverse or contrary to the fundamental policy of Indian law. The Commercial Court's order dismissing the application to set aside the award was correct and does not warrant interference.
Judgment Excerpts
The appellate court under Section 37 of the Arbitration and Conciliation Act, 1996, has limited jurisdiction and cannot reappreciate evidence or substitute its own view unless the award is perverse or contrary to public policy.
The Commercial Court had correctly applied the law and the award did not warrant interference.
Procedural History
The arbitral award was passed in favor of the respondent. The appellant filed an application under Section 34 of the Arbitration Act before the LXXXV Addl. City Civil and Sessions Judge, Bengaluru, which was dismissed on 15/12/2021. The appellant then filed a commercial appeal under Section 13(1) of the Commercial Courts Act read with Section 37(1)(b) of the Arbitration Act before the High Court of Karnataka. The respondent also filed a cross-appeal. Both appeals were heard together and dismissed on 23/06/2023.
Acts & Sections
- Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015: Section 13(1)
- Arbitration and Conciliation Act, 1996: Section 37(1)(b)
