1 August 2022


Judgments

Supreme Court

Haryana Tourism Limited Vs. Kandhari Beverages Limited

MANU/SC/0033/2022

11.01.2022

Arbitration

An award can be set aside only if the award is against the public policy of India

The Appellant - Haryana Tourism Limited ('Corporation') invited tenders/quotations for the supply of Aerated Cold Drinks at its Tourist Complexes for the period 15th May, 2001 to 14th May, 2002. The tender submitted by the Respondent herein was accepted by the Corporation. As per the agreement, the Respondent - company was supposed to pay a sum of Rs. 20 lakhs on account of Brand Promotion which was required to be spent as per mutual agreement between the parties.

The Corporation has organised a Mango Mela. The Corporation spent a sum of Rs. 1 lakh. Both the parties agreed to hold musical nights. According to the Respondent herein, it spent a sum of Rs. 13.92 lakhs. However, the Appellant - Corporation asked the Respondent vide letter dated 20th September, 2001 to deposit a sum of Rs. 19 lakhs as sponsorship money. The Appellant vide letter dated 17th January, 2002 terminated the contract. Dispute arose between the parties. The matter was referred to the sole arbitrator.

Vide award, the arbitrator directed the Respondent to pay a sum of Rs. 9.5 lakhs. The counter claim lodged by the Respondent claiming Rs. 13.92 lakhs was dismissed by the arbitrator. The Respondent thereafter filed objection petition before Additional District Judge, under Section 34 of the Arbitration Act against the award passed by the arbitrator. Vide order, the Additional District Judge dismissed the appeal/objection petition.

Feeling aggrieved and dissatisfied with the order passed by Additional District Judge, dismissing the appeal/objection petition under Section 34 of the Arbitration Act, the Respondent herein preferred a further appeal before the High Court under Section 37 of the Arbitration Act. By the impugned judgment and order, the High Court has allowed the said appeal by entering into the merits of the claim and has quashed and set aside the award passed by the arbitrator as well as the order passed by Additional District Judge.

Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the High Court, the original claimant - Corporation has preferred the present appeal.

The question of jurisdiction of the arbitrator raised by the Respondent has been dealt with by the High Court also and the said objection has been overruled by the High Court against which no appeal is preferred by the Respondent. In that view of the matter, now it is not open for the Respondent to challenge the jurisdiction of the arbitrator that too in an appeal preferred by the original claimant - Corporation - Appellant herein.

So far as the impugned judgment and order passed by the High Court quashing and setting aside the award and the order passed by the Additional District Judge under Section 34 of the Arbitration Act are concerned, it is required to be noted that in an appeal under Section 37 of the Arbitration Act, the High Court has entered into the merits of the claim, which is not permissible in exercise of powers under Section 37 of the Arbitration Act.

As per settled position of law laid down by this Court in a catena of decisions, an award can be set aside only if the award is against the public policy of India. The award can be set aside under Sections 34/37 of the Arbitration Act, if the award is found to be contrary to, (a) fundamental policy of Indian Law; or (b) the interest of India; or (c) justice or morality; or (d) if it is patently illegal. None of the aforesaid exceptions shall be applicable to the facts of the case on hand. The High Court has entered into the merits of the claim and has decided the appeal under Section 37 of the Arbitration Act as if the High Court was deciding the appeal against the judgment and decree passed by the learned trial Court. Thus, the High Court has exercised the jurisdiction not vested in it under Section 37 of the Arbitration Act. The impugned judgment and order passed by the High Court is hence not sustainable.

The impugned judgment and order passed by the High Court is quashed and set aside. The award passed by the arbitrator and the order passed by the Additional District Judge under Section 34 of the Arbitration Act overruling the objections are restored. Appeal allowed.

Tags : Award Arbitrator Jurisdiction

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