Appeal by Union of India Dismissed; Court Reaffirms Limited Judicial Intervention in Arbitration Matters
In a significant ruling, the Jammu and Kashmir High Court dismissed an appeal filed by the Union of India challenging an arbitral award granted to M/S Sew Engineering Works Pvt. Ltd. The division bench, comprising Justices Rajnesh Oswal and Rahul Bharti, reaffirmed the limited scope of judicial intervention in arbitration matters, as prescribed under the Arbitration and Conciliation Act, 1997.
The dispute originated from a contract for the provision of OTM accommodation for the HQ Northern Command at Udhampur, which was awarded to M/S Sew Engineering Works Pvt. Ltd. However, due to arising disputes, the matter was referred to arbitration. The sole arbitrator, Mr. Satish Chander, passed an award on September 8, 2014, favoring M/S Sew Engineering Works Pvt. Ltd. This award was later upheld by the Principal District Judge, Udhampur, on January 11, 2023.
The Union of India challenged the arbitral award on grounds of patent illegality and violation of public policy. However, the High Court found these claims to lack legal substance. The bench emphasized that the scope of interference under Sections 34 and 37 of the Arbitration and Conciliation Act is limited. The court cannot reassess findings of fact or law unless they fall within the specific grounds for setting aside an award as outlined in Section 34.
Referring to past Supreme Court judgments, the bench reiterated that courts do not sit in appeal over arbitral awards and cannot re-examine the legality, reasonableness, or correctness of an arbitral award unless there is evidence of perversity or statutory violation. The court further noted that the appellant failed to demonstrate how the arbitral award violated public policy or statutory provisions.
The court upheld the arbitral award as well-reasoned and dismissed the Union of India's appeal, along with all connected applications. The amount deposited by the appellant is to be released to the respondent after due verification.
Bottom line:-
Arbitration and Conciliation Act, 1997 - Scope of interference under Sections 34 and 37 - Courts cannot sit in appeal over arbitral awards unless grounds stipulated under Section 34 are established.
Statutory provision(s): Arbitration and Conciliation Act, 1997 Sections 34, 37
