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Civil · Reportable judgment

Punjab State Civil Supplies Corporation Ltd. & Anr. vs M/s. Ramesh Kumar and Company & Ors.

Court
Supreme Court of India
Date
13 November 2021
Case No.
Civil Appeal No 6832 of 2021
Result
Allowed
Bench
D.Y. Chandrachud, A.S. Bopanna
Citation
[2021] 7 S.C.R. 1132 : 2021 INSC 725
Supreme Court Reports [2021] 7 S.C.R. 1132 : 2021 INSC 725
Headnote

Arbitration and Conciliation Act 1996: ss. 34 and 37 – Arbitral award – Jurisdiction of High Court u/s. 37 arising from the disposal of a petition challenging an arbitral award u/s. 34 – On facts, High Court not only set aside the judgment of the District Judge rejecting the petition u/s. 34 but also awarded the claim of the respondents, together with interest – Sustainability of – Held: Not sustainable – High Court seems to have proceeded as if it was exercising jurisdiction in a regular first appeal from a decree in a civil suit – High Court was required to determine as to whether the District Judge had acted contrary to the provisions of s. 34 in rejecting the challenge to the arbitral award – High Court went one step further while reversing the judgment of the District Judge in decreeing the claim in its entirety, which was clearly impermissible – While considering a petition u/s. 34 the court does not act as an appellate forum – Thus, the order passed by the High Court set aside. Allowing the appeal, the Court

HELD: 1.1 While considering a petition under Section 34 of the Arbitration and Conciliation Act 1996, it is well-settled that the court does not act as an appellate forum. The grounds on which interference with an arbitral award is contemplated are structured by the provisions of Section 34. The District Judge had correctly come to the conclusion that there was no warrant for interference with the arbitral award under Section 34. The High Court seems to have proceeded as if it was exercising jurisdiction in a regular first appeal from a decree in a civil suit. The jurisdiction in a first appeal arising out of a decree in a civil suit is distinct from the jurisdiction of the High Court under Section 37 of the 1996 Act arising from the disposal of a petition challenging an arbitral award under Section 34 of the 1996 Act. [Para 11][1136-E-G]

Read the full headnote (1 more paragraph)

1.2 In the instant case, the High Court was required to determine as to whether the District Judge had acted contrary to the provisions of Section 34 of the 1996 Act in rejecting the challenge to the arbitral award. Apart from its failure to do so, the High Court went one step further while reversing the judgment of the District Judge in decreeing the claim in its entirety. This exercise was clearly impermissible. The arbitrator was entitled to draw relevant findings of fact on the basis of the evidence which was adduced by the parties. This was exactly what was done in the arbitral award. The award of the arbitrator was challenged unsuccessfully by the respondents under Section 34 of the 1996 Act. There was no basis in law for the High Court to interfere with the judgment of the District Judge and, as to even go a step further by decreeing the claim. The judgment of the High Court is unsustainable and is set aside. In consequence, the appeal filed by the respondents to challenge the rejection of the petition under Section 34 of the 1996 Act is dismissed. [Para 12, 13][1136-H; 1137-A-D]

As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.

Full Judgment Text

The Judgment of the Court was delivered by DR DHANANJAYA Y CHANDRACHUD, J. 1. Leave granted. 2. The appeal arises from a judgment of a Single Judge of the High Court of Punjab and Haryana dated 18 May 2016 in FAO 2637 of 2013. 3. By an arbitral award dated 20 December 2005, the sole arbitrator rejected the claims of the first and second respondents1, amounting to Rs 4,88,437 and upheld the action of the appellants of hereinafter referred to as the respondents forfeiting the security deposit. The award of the arbitrator was challenged under Section 34 of the Arbitration and Conciliation A
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