Utt HC | Once the arbitrator applies his mind to matter before him, Court should not reappraise the matter as in appeal; Appeal dismissed

Uttaranchal High Court: Manoj K. Tiwari, J. decided the Appeal filed against the order of the District Judge in an Arbitration case.

The facts giving rise to the instant appeal are that, the appellant raised an objection under Section 34 of the Arbitration and Conciliation Act, 1996, which was duly rejected by the District Judge hence, the appeal is filed under Section 37 of the said Act.

The factual matrix of the case was that the appellant contracted with the respondent (contractor) for the construction of a pump house building. The tenure specified for the said construction was for 11 months, but due to some delay the in handing over the construction site to the said respondent; subsequently, the construction had to be stopped due to various reasons. But consequently, the work was allegedly completed.

Since dispute arose between the parties regarding payment for the work done by the respondent, therefore, the matter was referred for arbitration in terms of the contract executed between the parties. The Arbitrator passed an award where he partially allowed the claims made by the respondent. Therefore aggrieved by the award of the Arbitrator the respondent filed an appeal on the ground that misconduct was caused by the Arbitrator.

Eventually, the District Judge rejected the said application filed under Section 34 of the Act. The only ground raised in the instant Appeal was that learned Arbitrator overlooked the condition contained in Clause 11(C) of the contract, while passing the award. The said Clause (C) was that “no claim in respect of the compensation, howsoever arising as a result of the extension granted shall be admitted.”

Counsel for the appellant Virndra Kapurwan, submitted that the Arbitrator erred in allowing the claim made by the respondent, without appreciating the real controversy involved in the matter. He further submitted that the District Judge erred in rejecting the challenge thrown by the appellant by making an application under Section 34 of the Act.

The Court found that the Arbitrator had considered the alleged clause and then passed the award. A perusal of the award revealed that Arbitrator had held that appellant was equally responsible for the delay in completion of work. It was further held that the appellant could not the shelter behind the Clause for a long delay.

The Court observed that the District Judge had rightly held that the ground was not available under Section 34 of the Act of 1996. “Misconduct by the Arbitrator was no more a ground of challenge to an arbitration award.”

The Court relied on the judgment of Navodaya Mass Entertainment v. J.M. Combines, (2015) 5 SCC 698, where the Supreme Court had held that “Once the Arbitrator has applied his mind to the matter before him, the Court cannot reappraise the matter as if it were an appeal and even if two views are possible, the view taken by the Arbitrator would prevail.”

In view of the aforesaid legal position, the Court held that the learned District Judge was justified in holding that he cannot go into the question of the reasonableness of the reasons given by Arbitrator. Learned District Judge has rightly held that an award given by the Arbitrator cannot be challenged on the ground of misconduct on the part of the Arbitrator. Hence, the appeal was dismissed.[Union of India v. Allied Traders, 2019 SCC OnLine Utt 671, decided on 03-07-2019]

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