Arbitral Award Can Be Interfered With Only If Finding Is Perverse/Contrary To Evidence/Against Public Policy, Reiterates SC [Read Judgment]

The Supreme Court has reiterated that the the award passed by an Arbitral Tribunal can be interfered with in the proceedings under Sections 34 and 37 of Arbitration and Conciliation Act only in a case where the finding is perverse and/or contrary to the evidence and/or the same is against the public policy.

In this case, the Arbitral Tribunal gave a specific finding that the termination of the contract between the Jharkhand Government and HSS Integrated SDN was illegal and without following the procedure as required under the contract. The claims to the extent of Rs.2,10,87,304 was allowed by the Tribunal. In Section 34 proceedings initiated by the Government, this award was confirmed. Later the High court dismissed the appeal filed under Section 37 of the Act.

The bench comprising Justice Arun Mishra and Justice MR Shah, to dismiss the special leave petition referred to the following observations made in the judgments in Associate Builders v. DDA (2015) 3 SCC 49, NHAI v. Progressive-MVR (2018) 14 SCC 688 and Maharashtra State Electricity Distribution Co. Ltd. v. Datar Switchgear Ltd.

• Even when the view taken by the arbitrator is a plausible view, and/or when two views are possible, a particular view taken by the Arbitral Tribunal which is also reasonable should not be interfered with in a proceeding under Section 34 of the Arbitration Act
• The Arbitral Tribunal is the master of evidence and the findings of fact which are arrived at by the arbitrators on the basis of the evidence on record are not to be scrutinized as if the Court was sitting in appeal
• The award passed by the Arbitral Tribunal can be interfered with in the proceedings under Sections 34 and 37 of Arbitration Act only in a case where the finding is perverse and/or contrary to the evidence and/or the same is against the public policy.

While dismissing the SLP, the bench observed:

In the present case, the categorical findings arrived at by the Arbitral Tribunal are to the effect that the termination of the contract was illegal and without following due procedure of the provisions of the contract. The findings are on appreciation of evidence considering the relevant provisions and material on record as well as on interpretation of the relevant provisions of the contract, which are neither perverse nor contrary to the evidence in record. Therefore, as such, the First Appellate Court and the High Court have rightly not interfered with such findings of fact recorded by the learned Arbitral Tribunal. 

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