Tuesday, June 18, 2024

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๐™ฐ๐™ต๐™ต๐™พ๐š๐™ณ๐™ฐ๐™ฑ๐™ป๐™ด & ๐™ฐ๐™ฒ๐™ฒ๐™ด๐š‚๐š‚๐™ธ๐™ฑ๐™ป๐™ด

ARBITRATIONCASE LAWSLEGAL AFFAIRS

SEC 37 ARB

Haryana Tourism Limited vs M/s Kandhari Beverages Limited, SC 2022

FACT – That the appellant herein โ€“ Haryana Tourism Limited invited tenders/quotations for the supply of Aerated Cold Drinks at its Tourist Complexes for the period 15.05.2001 to 14.05.2002. 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.

That the Corporation organised a Mango Mela in 2001. 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 to deposit a sum of Rs. 19 lakhs as sponsorship money. The appellant terminated the contract. Dispute arose between the parties.

The matter was referred to the sole arbitrator. 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, Chandigarh under Section 34 of the Arbitration Act against the award passed by the arbitrator. The Additional District Judge dismissed the appeal/objection petition. Feeling aggrieved and dissatisfied with the order passed by Additional District Judge, the respondent preferred a further appeal before the High Court under Section 37 of the Arbitration Act.

  

The High Court had allowed the said appeal by entering into the merits of the claim and quashed and set aside the award passed by the arbitrator as well as the order passed by Additional District Judge, Chandigarh.

CAUSE – Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the High Court, the original claimant โ€“ Corporation had preferred the present appeal.

ARGUMENTSShri B.K. Satija, learned Advocate appearing on behalf of the appellant โ€“ Corporation had vehemently 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. That the High Court had materially erred in quashing and setting aside the award in exercise of its powers under Section 37 of the Arbitration Act.

 

He contended, that High Court had exceeded its jurisdiction under Section 37 of the Arbitration Act. It was submitted that the High Court had a very limited scope and/or jurisdiction while deciding the appeal under Section 37 of the Arbitration Act. It was submitted that in an appeal under Section 37 of the Arbitration Act, the High Court has no jurisdiction to enter into the merits of the claim awarded by the arbitrator, confirmed by the first appellate Court under Section 34 of the Arbitration Act.

The present appeal was vehemently opposed by Shri Kanwal Chaudhary, learned Advocate appearing on behalf of the respondent. It was submitted that as such the learned arbitrator had no jurisdiction at all to pass the award as no amount was due and payable as nothing was spent on marketing activities by the appellant โ€“ Corporation.

 

It was submitted that the composition of Arbitral Tribunal as well as the appointment of the sole arbitrator was not in accordance with clause 13 of the Contract. It was contended that the appointment of the sole arbitrator and his competence was challenged by the respondent, which was summarily rejected.

ISSUE – Whether the High Court has errerd by entering 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.

   

DECISION – So far as the question of jurisdiction of the arbitrator raised by the respondent was concerned, the same was dealt with by the High Court also and the said objection had been overruled by the High Court against which no appeal was preferred by the respondent. In that view of the matter, now it was not open for the respondent to challenge the jurisdiction of the arbitrator, that too in an appeal preferred by the original claimant โ€“ Corporation โ€“ 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 was concerned, the Supreme Court held that in an appeal under Section 37 of the Arbitration Act, the High Court had entered into the merits of the claim, which was 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 Apex Court held that 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 were applicable to the facts of the case on hand.

The impugned judgment and order passed by the High Court is hence not sustainable. In view of the above the Supreme Court quashed and set aside the impugned judgment and order passed by the High Court. 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 were restored.

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