Supreme Court

Atlanta Limited Vs. Union of India (UOI)

MANU/SC/0059/2022

18.01.2022

Arbitration

Arbitral award shall not to be challenged on the ground that the arbitrator had drawn his own conclusion or had failed to appreciate facts

The Appellant-claimant has preferred present appeal against the judgment passed by the Division Bench of the High Court partly allowing the appeal preferred by the Respondent-Union of India under Section 39 of the Arbitration Act, 1940 and interfering with the order passed by the learned Single Judge. The Division Bench of the High Court has, however, set aside the amount awarded by the learned Sole Arbitrator in favour of the Appellant towards idle hire charges and value of the tools and machineries. Further, the findings returned in the Award relating to extension of time and illegal termination of the contract by the Respondent-Union of India in favour of the Appellant-claimant were also set aside.

The Court does not sit in appeal over an Award passed by an Arbitrator and the only grounds on which it can be challenged are those that have been specified in Sections 30 and 33 of the Arbitration Act, namely, when there is an error on the face of the Award or when the learned Arbitrator has mis-conducted himself or the proceedings.

It is also a well-settled principle of law that, challenge cannot be laid to the Award only on the ground that the Arbitrator has drawn his own conclusion or failed to appreciate the relevant facts. Nor can the Court substitute its own view on the conclusion of law or facts as against those drawn by the Arbitrator, as if it is sitting in appeal. As long as the Arbitrator has taken a possible view, which may be a plausible view, simply because a different view from that taken in the Award, is possible based on the same evidence, would also not be a ground to interfere in the Award.

Once the learned Sole Arbitrator had interpreted the clauses of the contract by taking a particular view and had gone to great length to analyse several reasons offered by the Appellant-claimant to justify its plea that, it was entitled for extension of time to execute the contract, the Division Bench of the High Court ought not to have sat over the said decision as an Appellate Court and seek to substitute its view for that of the learned Arbitrator.

In the instant case, having gone through the Award, present Court find that the learned Sole Arbitrator was lucid in his reasoning for taking a particular view on the interpretation of the terms and conditions of the contract between the parties. It was for this very reason that the learned Single Judge had forbore from interfering with the arbitral Award and dismissed the petition filed by the Respondent-Union of India under Sections 30 and 33 of the 1940 Act. By going into the minute details of the evidence led before the learned Sole Arbitrator with a magnifying glass and the findings returned thereon, the Appellate Court has clearly transgressed the limitations placed on it.

Present Court accept the findings returned by the learned Sole Arbitrator endorsed by the learned Single Judge that, there was sufficient justification for the Appellant-claimant to have sought extension of time for completing the work and that the decision of the Respondent-Union of India to terminate the contract, was not for legitimate reasons.

The impugned judgment passed by the Division Bench of the High Court cannot be sustained and is quashed and set aside, while restoring the judgment passed by the learned Single Judge and upholding the decree granted in favour of the Appellant-claimant in terms of the Award along with interest. The appeal disposed of.

Tags : Arbitral award Appreciation of Facts

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