S.34 Application Cannot Be Rejected Merely Because Approach Of Court Should Be Not To Interfere With Award: Delhi High Court

Additionally, the court held that both the parties, in their respective applications under Section 34 of the Act, raised grounds of patent illegality amongst the other grounds. However, the Judge has brushed aside these legal objections without either referring to the findings of the award or assigning any reasons for not accepting these grounds.

Brief Facts:

This dispute arose with respect to an agreement to sell related to a property. It was contended by the respondent that the agreement was not an agreement to sell but a lease agreement. When disputes arose between the parties, the claimant invoked arbitration, and an arbitral award was passed rejecting the claimant's prayer for Specific Performance of agreement to sell/ lease. However, the claimant was awarded compensation. Then, the claimant filed an application under Section 34 of the Act with a grievance that the relief for Specific Performance of the agreement should have been allowed by the arbitrator. And, the respondent filed an application under Section 34 of the Act to assail the award. The respondent contended that no prayer for compensation was made by the claimant. So, the arbitrator could not have awarded any compensation. These two applications were rejected by the court and then two appeals were filed under Section 37 of the act to assail two identical orders passed by the Single Judge.

Observation of the court:

The court noted that the issues under Section 34 of the Act were appropriately formulated by the Judge. However, it is the plea of both sides that these issues have not been appropriately answered vide the impugned orders. The court held that the impugned orders in both the appeals run into at least 75 paragraphs each but except for noticing the legal position and referring to the decisions of the Apex Court regarding the limited scope of interference with an arbitral award under Section 34 of the Act, there is absolutely no discussion or evaluation regarding the findings of the Arbitral Award which were challenged by both parties on a number of grounds.

Moreover, the court observed that the parties are correct in urging that none of the two impugned orders show any meaningful consideration of either the findings in the award or of the grounds raised by the parties. The Single Judge has been swayed only by the principle that interference with an arbitral award should be minimum. While there can be no quarrel with this proposition that the Arbitral Award should not be interfered with lightly, the same does not imply that applications filed under Section 34 ought to be rejected only on the grounds that the approach of the Court should be not to interfere with the award.

The court held that even though both the claimant and the respondent had, in their respective applications under Section 34 of the Act, raised grounds of patent illegality amongst the other grounds. However, the Judge has brushed aside these legal objections without either referring to the findings of the award or assigning any reasons for not accepting these grounds.

Therefore, the court allowed the appeals by setting aside the impugned orders. Since, it was passed without dealing with any of the grounds raised by the parties are unsustainable in law.

Case Title: IMAGING SOLUTIONS PVT. LTD. v. HUGHES COMMUNICATIONS INDIA LTD.

Case Number: FAO(OS) (COMM) 136/2023

Counsel for the Petitioner: Mr. Viraj Datar, Sr. Advocate with Mr. Varun Kumar, Advocates

Counsel for the Respondent: Mr. Dharwesh Mishra, Mr. Prateek Gupta and Mr. Raghav Tiwari, Advocates

Date of Judgment: 21.11.2024

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