10 June 2024


High Court of Delhi

Arjun Mall Retail Holdings Pvt. Ltd & Ors. vs. Gunocen Inc. (Neutral Citation:2024:DHC:495-DB)




Under Section 34 of the Arbitration Act, scope of interference by the courts is very limited and it can be touched upon only if there is any patent illegality in the Arbitral Award

Present appeal under Section 37 of the Arbitration and Conciliation Act, 1996 read with Section 11 of the Commercial Acts, 2015 impugns the order passed by the learned Commercial Court, whereby the objections filed by the Appellant under Section 34 of the Act against the Arbitral Award, has been dismissed. Vide impugned judgment/ Award, the Appellants have been directed to pay a sum of Rs.75,00,000 along with interest @ 24% per annum.

The Respondent had sent several notices invoking the Arbitration clause. Thereafter, vide legal notice, the Respondent had informed the Appellants in respect of invocation of the arbitration clause and appointment of the learned Sole Arbitrator. Therefore, the Tribunal entered into reference. When the matter came up for hearing before the learned Arbitrator, none appeared on behalf of the Appellants. Relevantly, there is a time gap of almost eight months from the date of issuance of first legal Notice of invocation of arbitration proceedings and its actual commencement. Yet, the Appellants did not take any recourse to law for revocation of appointment of learned Arbitrator or in challenge of the arbitration clause.

Under Section 34 of the Act, 1996 scope of interference by the Court is limited to the extent that the Arbitral Award is not vitiated on basis of pleadings raised by the parties. The learned District Judge has rightly observed that if a party fails to raise a plea in arbitral proceedings, it cannot take a fresh ground to seek relief before the Appellate Authority and any such plea, deserves to be rejected.

Under Section 34 of the Act, scope of interference by the courts is very limited and only if there is any patent illegality in the Arbitral Award, then only it is required to be touched upon. In the present case, even if it is accepted that the appellants had raised objection to the appointment of learned Arbitrator by sending a letter to him but the fact remains that the appointment was never challenged under the provisions of Section 11(6) of the Act, 1996 nor did the Appellants participate in arbitral proceedings, despite having knowledge of the same. Instead of contesting the Respondent's claim before the learned Arbitrator, the Appellants remained mute spectator and only after losing the battle in arbitral proceedings, the appellants preferred appeal under Section 34 of the Act, challenging the appointment of Arbitrator as well as the Arbitral Award.

Therefore, the challenge against the appointment of the learned Sole Arbitrator is not tenable in the present case. There is no illegality or perversity in the impugned judgment. Appeal dismissed.

Tags : Award Direction Legality

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