Jan De Nul Dredging India Pvt. Ltd. vs Tuticorin Port Trust

Held: In the instant case, the power to award compensation for idle time of the equipment including Backhoe Dredger is traceable to Clause 51.1 of the Lease Agreement and therefore the Arbitral Tribunal was not wrong in interpreting the clauses so as to make an award in favour of the appellant-Dredging India under Claim No.7 – In such a situation, the interpretation given by the Arbitral Tribunal is apparently a plausible view and was rightly not disturbed by the Single Judge in exercise of power u/s.34 of the Act – Therefore, in appeal u/s.37 of the Act, the said reasoning could not have been disturbed so as to permit a different view – The interpretation given by the Arbitral Tribunal had to be accepted by the Appellate Court – In the case at hand, the Arbitral Award contains logical reasons in construing the various clauses of the License Agreement and the view taken by the Arbitral Tribunal had been accepted by the court u/s.34 of the Act as a reasonable and a possible view – The License Agreement permits deployment of Backhoe Dredger (BHD) without specifying whether it is a minor or a major dredger – This Court is of the opinion that the Appellate Court manifestly erred in law in interfering with the judgment and order of the Single Judge of the High Court passed u/s.34 of the Act so as to disturb the arbitral award in respect of Claim No.7. [Paras 46, 48, 49, 50] Arbitration and Conciliation Act, 1996 – s.34 – Whether the Challenge to the award, in the instant case was on any of the grounds enumerated u/s.34 or on the ground that the award of the Claim No.7 is against the fundamental policy of India or the basic notions of morality or justice:

Held: In the case at hand, a challenge to the award of the Arbitral Tribunal before the Single Judge of the High Court would reveal that it was confined to Claim No.7 and that too on the merits of the same and not on the ground of violation of the public policy of India or that it is against the basic notions of morality or justice – The Arbitral Tribunal, in making the award, has interpreted the various clauses of the License Agreement so as to hold that the appellant-Dredging India is entitled for appropriate compensation with regard to idling of its Backhoe Dredger (BHD) for want of non-supply of site within time – Apparently, the challenge to the award of the Arbitral Tribunal was neither on any of the grounds enumerated u/s.34, nor even on the ground that the award of the Claim No.7 is against the fundamental policy of India or the basic notions of morality or justice – That being the position, the award of the Arbitral Tribunal was not liable to be disturbed u/s.34 of the Act and was rightly not disturbed – It is settled in law that the appellate powers u/s.37 are limited to the scope of s.34 and cannot exceed beyond it – The award of the Arbitral Tribunal is not contrary to any substantive provision of law or any provision of the Act. [Paras 28, 29, 30, 38]

Arbitration and Conciliation Act, 1996 – s.34 – Grounds for challenging the arbitral award:

Held: The Act provides for the challenge of the arbitral award before the court on limited grounds as contemplated by s.34 of the Act i.e. where one of the party was under some incapacity; or where the arbitration agreement itself was not valid; or the parties were not given proper notice of the appointment of an arbitrator or the arbitral proceedings; or was unable, for some reason, to present his case before the Arbitrator or Arbitral Tribunal; or if the arbitral award deals with the dispute not contemplated or falling within the terms of the arbitration or deals with the matters beyond the scope of the arbitration; or where the constitution of the Arbitral Tribunal was not in accordance with arbitration agreement; and, or where the court finds the subject matter of the arbitral dispute was incapable of settlement by arbitration or the arbitral award is in conflict with the public policy of India. [Para 26] Arbitration and Conciliation Act, 1996 – s.37 – Appellate Court – Jurisdiction u/s.37:

Held: The jurisdiction of the court u/s.37 of the Act is akin to the jurisdiction of the court u/s.34 of the Act, and, therefore, the scope of interference by the court in appeal u/s.37 cannot go beyond the grounds on which challenge can be made to the award u/s.34 of the Act – Moreover, the courts exercising powers u/ss.34 and 37, do not act as a normal court, and therefore, ought not to interfere with the arbitral award on a mere possibility of an alternative view – In other words, the scope of interference of the court with the arbitral matters is virtually prohibited, if not absolutely barred – The powers of the Appellate Court are even more restricted than the powers conferred by s.34 of the Act – The appellate power u/s.37 of the Act is exercisable only to find out if the court exercising power u/s.34 of the Act, has acted within its limits as prescribed thereunder or has exceeded or failed to exercise the power so conferred – The Appellate Court exercising powers u/s.37 of the Act has no authority of law to consider the matter in dispute before the Arbitral Tribunal on merits so as to hold as to whether the award of the Arbitral Tribunal is right or wrong – The Appellate Court in exercise of such power cannot sit as an ordinary court of appeal and reappraise the evidence to record a contrary finding – The award of the Arbitral Tribunal cannot be touched by the court unless it is contrary to the substantive provision of law or any provision of the Act or the terms of the agreement. [Paras 36, 37]

Arbitration and Conciliation Act, 1996 – Purpose of the Act – Minimum intervention of the Court:

Held: The Act is a special enactment which aims to resolve contractual/commercial disputes through arbitration with the minimum intervention of the court, if not without the intervention of the court – In the event, the courts are allowed to step in at every stage and the arbitral awards are subjected to challenge before the courts in hierarchy before court of first instance, through regular appeals and finally by means of SLP/Civil Appeal before the Supreme Court, it would obviate/frustrate and defeat the very purpose of the Act – It is therefore, necessary to accept the arbitral award if it is not patently illegal or does not fall within the scope of intervention u/s.34 of the Act – The appeal thereof has a much narrower scope of intervention particularly when the arbitral award has been upheld u/s.34 of the Act – The appellate jurisdiction acquires little significance only when the arbitral award has been erroneously upheld or set aside by the court in exercise of its power u/s.34 of the Act as discussed earlier, but has no authority of law to consider the matter which was before the Arbitral Tribunal on merits. [Para 51]