Court affirms limited scope of judicial review under Arbitration and Conciliation Act, 1996, dismissing appeal against Commercial Court's dismissal of challenge to arbitral award.
In a significant judgment, the Kerala High Court has upheld the decision of an Arbitrator to dissolve a partnership and declare certain sale deeds as void, reinforcing the limited scope of judicial review under the Arbitration and Conciliation Act, 1996. The Division Bench, comprising Chief Justice Nitin Jamdar and Justice Syam Kumar V.M., dismissed an appeal challenging the Commercial Court's dismissal of a petition under Section 34 of the Act, which contested the arbitral award.
The dispute revolved around a partnership formed to operate 'Hotel Alakananda' in Kollam, which included a contentious FL-3 license for running a bar. The Arbitrator had declared the partnership dissolved and voided associated sale deeds, finding them to be shadow agreements unsupported by consideration. The appellants, partners in the firm, contested these findings, arguing non-arbitrability and limitation issues, which the High Court found untenable.
The Court emphasized that its appellate power under Section 37 of the Act is confined to assessing whether the Commercial Court exceeded or failed to exercise its jurisdiction under Section 34. The High Court reiterated that it cannot reappraise evidence or replace the Arbitrator's findings with its own. The Arbitrator's conclusion that the sale deeds were mere inter-party arrangements, lacking in consideration and not affecting third-party rights, was upheld.
The judgment also addressed contentions regarding the non-transferability of the FL-3 license, affirming that the partnership arrangement contravened the Kerala Abkari Rules and was thus void under Section 23 of the Contract Act, 1872. The Court concluded that the Arbitrator had appropriately dissolved the partnership in light of irreconcilable differences among partners and the legal constraints surrounding the license.
The Kerala High Court's decision underscores the principle that court intervention in arbitral matters is strictly limited, and arbitral awards are not to be disturbed unless a case of jurisdictional excess or failure is made out. The dismissal of the appeal reinforces the legal framework supporting arbitration as an effective dispute resolution mechanism.
Bottom Line:
Arbitrator's decision to dissolve a partnership and declare sale deeds void upheld by the Kerala High Court under Section 37 of the Arbitration and Conciliation Act, 1996; limited scope of judicial review under Section 34 and Section 37 reaffirmed.
Statutory provision(s): Arbitration and Conciliation Act, 1996 Sections 34, 37; Contract Act, 1872 Section 23; Specific Relief Act, 1963 Section 31; Kerala Abkari Rules, Rule 191
Lazar Chakkola v. Sudarsanan Pillai.G, (Kerala)(DB) : Law Finder Doc Id # 2831312
