Arbitrator Need Not To Be Technical In Nature, Within Power To Decide Matter On Basis Of Material On Record: Delhi High Court Dismisses Section 34 Petition

The Delhi High Court single bench of Justice Dinesh Kumar Sharma held that arbitral proceedings before the arbitrator are not required to be technical in nature and the arbitrator is within its power to decide the same on the basis of material on record. The bench held that the arbitrator is the sole judge of the quality and quantity of evidence, and the court's role is not to reassess the material or correct the arbitrator's errors under Section 34 of the Arbitration and Conciliation Act, 1996.

Brief Facts:

The matter pertained to a dispute originated from a contract entered between Govt. Of Nct Of Delhi (Petitioner) and M/s R.S Sharma Contractors Pvt. Ltd. (Respondent) for the construction of a four-lane bridge and a double-lane bridge. The stipulated completion date was 15.02.2018, which was delayed until 24.12.2019, causing a delay of 677 days. Due to disputes regarding bill clearance arising from the delay, the Respondent invoked the Arbitrator clause, leading to the appointment of Mr/ Dinesh Kumar as the Sole Arbitrator. The arbitral award favored the Respondent, directing the Petitioner to pay Rs. 1,73,91,632/- along with pendent-lite and future interest. Feeling aggrieved, the Petitioner filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”).

Challenging the award under Section 34, the Petitioner contended that the award must be set aside as it follows an unjust procedure, violating Section 34(b)(ii) [against public policy] and Section 34(2A) [patent illegality] of the Arbitration Act, and exceeded the agreed terms of the contract. The impugned award, according to the Petitioner, contradicted the contract terms, specifically regarding the final bill's submission and acceptance, constituting a full and final settlement. The Petitioner further argued that the arbitrator, without evidence, deemed the Respondent's actions as "economic duress." The Petitioner contended that the Respondent's claim lacked proper documentary evidence and contradicted the Agreement terms.

Observations by the High Court:

The High Court held that the legislative mandate is to ensure an expeditious and binding dispute resolution process with minimal court intervention. The proceedings under Section 34 are summary, reflecting the legislative intent for minimal interference and prompt dispute resolution. It clarified that the scope of inquiry under Section 34 is confined to assessing whether the grounds specified in Section 34(2), 13(5), or 16(6) justify setting aside the award. It reiterated that the arbitrator is the sole judge of the quality and quantity of evidence, and the court's role is not to reassess the material or correct the arbitrator's errors.

The High Court held that the court cannot act as an appellate authority or subject the award to merit review. It held that interference is warranted only if findings are totally perverse, contrary to contract terms, violate natural justice, conflict with public policy, or fall under specified grounds in Section 34.

The High Court held that the arbitrator meticulously examined all clauses and provided findings in para 7.4, addressing each issue separately. It held that the proceedings before the arbitrator do not necessarily need to be technical in nature. The arbitrator has the authority to make decisions based on the available material in the record. It held that there was no discernible illegality or violation in the proceedings conducted by the arbitral tribunal. Therefore, the petition was dismissed.

Case Title: Govt. Of NCT of Delhi vs M/s R.S Sharma Contractors Pvt. Ltd

Citation: 2024 LiveLaw (Del) 246

Case Number: O.M.P. (COMM). 240/2023 & I.A. 12568/2023

Advocate for the Petitioner: Mr. Bharat Singh Sisodia and Mr. Z.A. Khan.

Advocate for the Respondent: Mr.Sanjeev Anand, Sr.Adv. with Mr. Vipin Prabhat.

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