Case Note & Summary
The appellant, M/s. Karnataka Soaps and Detergents Limited, a Government of Karnataka undertaking, was aggrieved by the judgment dated 03.12.2009 passed by the VI Additional City Civil Judge, Bangalore City, in A.S. No.19/2008, which dismissed its application under Section 34 of the Arbitration and Conciliation Act, 1996, seeking to set aside an arbitral award dated 05.03.2008. The appellant had entered into a commercial agreement with the first respondent, M/s. Olivia Impex Private Limited, and disputes arose leading to arbitration before the sole arbitrator, Sri. Timmanna Bhat Davate. The arbitrator passed an award against the appellant. The appellant challenged the award before the City Civil Judge, who confirmed the award. The appellant then filed the present appeal under Section 37(1)(b) of the Act. The High Court, after hearing the parties, held that the scope of interference under Section 37 is limited and that the findings of fact by the arbitrator are final unless perverse. The court found no patent illegality or violation of public policy in the award and dismissed the appeal, confirming the judgment of the City Civil Judge.
Headnote
A) Arbitration Law - Appeal under Section 37 - Scope of Interference - Section 37 of the Arbitration and Conciliation Act, 1996 - The court held that the scope of interference in an appeal under Section 37 is even narrower than under Section 34, and findings of fact by the arbitrator cannot be re-appreciated unless perverse or based on no evidence. (Paras 1-2)
B) Arbitration Law - Public Policy Challenge - Section 34(2)(b)(ii) of the Arbitration and Conciliation Act, 1996 - The court reiterated that an award can be set aside on grounds of public policy only if it is contrary to the fundamental policy of Indian law, or is patently illegal, or is opposed to justice or morality. (Paras 1-2)
Issue of Consideration
Whether the judgment of the City Civil Judge dismissing the application under Section 34 of the Arbitration and Conciliation Act, 1996, and confirming the arbitral award, warrants interference under Section 37 of the Act.
Final Decision
The High Court dismissed the appeal, confirming the judgment of the VI Additional City Civil Judge, Bangalore City, dated 03.12.2009 in A.S. No.19/2008, and upheld the arbitral award dated 05.03.2008.
Law Points
- Scope of interference under Section 37 of Arbitration and Conciliation Act
- 1996
- is limited
- findings of fact by arbitrator are not re-appreciable
- patent illegality must appear on face of award
- public policy challenge requires violation of fundamental policy of Indian law.
Case Details
2016 LawText (KAR) (01) 18
M.F.A.No. 7233 OF 2010 (AA)
Shri. M.R.C. Ravi for appellant; Shri. Thomas Vellapally for respondent 1
M/s. Karnataka Soaps & Detergents Limited
M/s. Olivia Impex Private Limited and Sri. Timmanna Bhat Davate
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Nature of Litigation
Appeal under Section 37(1)(b) of the Arbitration and Conciliation Act, 1996 against dismissal of application under Section 34 of the Act to set aside arbitral award.
Remedy Sought
Appellant sought to set aside the judgment of the City Civil Judge dismissing its application under Section 34 and to set aside the arbitral award.
Filing Reason
Appellant was aggrieved by the arbitral award dated 05.03.2008 and the judgment of the City Civil Judge dated 03.12.2009 confirming the award.
Previous Decisions
Arbitral award dated 05.03.2008 passed by sole arbitrator; judgment dated 03.12.2009 of VI Additional City Civil Judge, Bangalore City, in A.S. No.19/2008 dismissing application under Section 34.
Issues
Whether the judgment of the City Civil Judge dismissing the application under Section 34 of the Arbitration and Conciliation Act, 1996, and confirming the arbitral award, warrants interference under Section 37 of the Act.
Submissions/Arguments
Appellant argued that the award was patently illegal and against public policy.
Respondent supported the award and the judgment of the City Civil Judge.
Ratio Decidendi
The scope of interference under Section 37 of the Arbitration and Conciliation Act, 1996 is limited; findings of fact by the arbitrator are final unless perverse; no patent illegality or violation of public policy found in the award.
Judgment Excerpts
The appellant herein, being aggrieved by the Judgment dated 3rd December 2009, passed in A.S. No.19/2008, by the VI Additional City Civil Judge, Bangalore City (CCCH-11), dismissing the Arbitration Suit filed by the plaintiff/appellant under Section 34 of Arbitration and Conciliation Act, 1996 and confirming the award passed by the learned Sole Arbitrator dated 5th March 2008, has presented this appeal.
Brief facts of the case as stated in the memorandum of appeal are, the appellant- M/s. Karnataka Soaps and Detergents Limited is a Government of Karnataka undertaking and a Company incorporated under the Companies Act, 1956 (hereinafter called ‘Company’ for short), engaged in the manufacture of soaps and detergents.
Procedural History
Disputes arose between appellant and first respondent leading to arbitration before sole arbitrator Sri. Timmanna Bhat Davate, who passed award on 05.03.2008. Appellant filed A.S. No.19/2008 under Section 34 of the Arbitration and Conciliation Act, 1996 before the VI Additional City Civil Judge, Bangalore City, which was dismissed on 03.12.2009. Appellant then filed M.F.A.No. 7233/2010 under Section 37(1)(b) of the Act before the High Court of Karnataka.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 34, Section 37(1)(b)
