Case Note & Summary
The appellant, Mysore Minerals Limited (MML), a government undertaking engaged in mineral extraction and export, issued a tender notice on 18.5.1995 inviting bids from registered PWD contractors for handling earthwork excavation in its chromite sector mines. The respondent, Tam-Tam Pedda Guruva Reddy, a Class-I contractor, submitted a bid and was awarded the contract. Disputes arose between the parties regarding the execution of the contract, and the matter was referred to arbitration. The Arbitral Tribunal passed an award on 17.2.2003 in favor of the respondent. MML filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 before the VI Additional City Civil Judge, Bangalore, seeking to set aside the award. The City Civil Judge dismissed the petition by order dated 6.7.2007. Aggrieved, MML filed the present Miscellaneous First Appeal under Section 37(1)(b) of the Act. The High Court heard the appeal and reserved judgment. The court examined the scope of Section 34 and held that the court cannot reappreciate evidence or act as an appellate court. The award can be set aside only if it is contrary to public policy or vitiated by patent illegality. The court found that the arbitral tribunal had considered the evidence and interpreted the contract terms, and its findings were not perverse. The court also noted that the interpretation of the contract by the tribunal is final. Consequently, the High Court dismissed the appeal, upholding the order of the City Civil Judge and confirming the arbitral award.
Headnote
A) Arbitration Law - Section 34 of Arbitration and Conciliation Act, 1996 - Scope of Challenge - Reappreciation of Evidence - The court held that while dealing with a petition under Section 34 of the Act, the court cannot reappreciate the evidence or sit as an appellate court over the findings of the arbitral tribunal. The award can be set aside only if it is contrary to the public policy of India or is vitiated by patent illegality appearing on the face of the award. (Paras 5-10) B) Arbitration Law - Section 34 of Arbitration and Conciliation Act, 1996 - Perversity - The court held that a finding of fact recorded by the arbitral tribunal cannot be interfered with unless it is perverse, i.e., based on no evidence or ignoring vital evidence. The court must be satisfied that the view taken by the tribunal is impossible or unreasonable. (Paras 11-15) C) Contract Law - Interpretation of Contract - Finality of Arbitral Tribunal's Interpretation - The court held that the interpretation of the terms of the contract by the arbitral tribunal is final and binding on the parties, and the court under Section 34 cannot substitute its own interpretation unless the interpretation is so unreasonable that no reasonable person would have arrived at it. (Paras 16-20)
Issue of Consideration
Whether the judgment and order of the City Civil Judge dismissing the petition under Section 34 of the Arbitration and Conciliation Act, 1996 to set aside the arbitral award dated 17.2.2003 is sustainable in law.
Final Decision
The High Court dismissed the appeal, upholding the judgment and order dated 6.7.2007 passed by the VI Additional City Civil Judge, Bangalore in A.S. No.26/2003, thereby confirming the arbitral award dated 17.2.2003.
Law Points
- Scope of Section 34 of Arbitration and Conciliation Act
- 1996
- Reappreciation of evidence not permissible
- Perversity as ground for setting aside award
- Interpretation of contract by arbitral tribunal is final
- Public policy under Section 34(2)(b)(ii)
