Arbitration Appeals By Public Sector Undertakings Are Main Contributors To "Menace Of Docket Explosion": Delhi HC [Read Judgment]

The Delhi High Court recently censured public sector undertakings for challenging arbitral awards, opining that such attempts contribute to "the menace of docket explosion, which plagues our Courts and consumes valuable time".

The Bench comprising Acting Chief Justice Gita Mittal and Justice C. Hari Shankar observed, "Despite wealth of judicial authority on this point, and repeated disapproval voiced by the Supreme Court and as well as several High Courts including this Court thereon, it is almost invariably seen that every award passed by the arbitrator/Arbitral Tribunal, especially, where the awards are commercial in nature, are challenged, first before the Single Judge and thereafter before the Division Bench merely because the “aggrieved party” possess the financial wherewithal to do so.

It is a matter of concern that the majority of such challenges are by public sector undertakings, the appellant before us being one of the main contributors thereto. Such attempts contribute, in a great deal to the menace of “docket explosion”, which plagues our Courts and consumes valuable time which could be used for settling more important disputes. We unhesitatingly deprecate this practice."

The Court was hearing an Appeal under Section 37 of the Arbitration and Conciliation Act, 1996 filed by the National Highways Authority of India (NHAI), challenging Arbitral Awards passed in October, 2014 and January, 2015, in arbitration proceedings against M/s. BSC- RBM-Pati (JV). The dispute arose out of a contract for four-laning and strengthening existing two-lane pavements, and the tribunal awarded Rs. 3.43 crores to the Respondent. Around Rs. 3 crore of the award was now under challenge before the Court.

Examining NHAI's claims, the Court, however, opined that the appeal was merely an attempt to re-argue the entire dispute de novo, observing, "We are of the view that the impugned award of the learned Tribunal suffers from no infirmity whatsoever and, in fact, exhibits commendable effort, on the part of the learned Tribunal to resolve the controversy. There can be no question, therefore, of any interference therewith, by this Court, either under Section 34 or under Section 37 of the Act. Any such interference would be a gross disservice to the very institution of arbitration, and the laudable purposes for which the Act was enacted, superseding the earlier Arbitration Act of 1940, under which such challenges were the norm."

It, therefore, dismissed the appeal with costs of Rs. 1,00,000, directing NHAI to pay it to the Respondent within a period of four weeks.