‘No Patent Illegality’: Himachal HC upholds arbitral award in Kendriya Vidyalaya, Palampur construction dispute
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Shimla, June 30,
The Himachal Pradesh High Court has dismissed an appeal by the Union of India and the Chief Engineer, Pathankot Zone, challenging arbitral awards granted to M/s B.S. Ranbir and Company in a construction dispute concerning a Kendriya Vidyalaya project at Palampur. Justice Sandeep Sharma, while upholding the findings of the District Judge, Kangra, emphasised the narrow scope of judicial interference in arbitration matters under Section 37 of the Arbitration and Conciliation Act, 1996.
The court held that the learned District Judge had rightly refused to interfere with the awards dated April 12 and April 24, 2018, which were passed by a Sole Arbitrator in favour of the contractor. The High Court underlined that “Courts should not interfere with an award merely because an alternative view on facts and interpretation of contract exists,” and observed that judicial review in arbitration matters is “very very limited.”
Justice Sharma noted that “the view taken by the learned Arbitrator is reasoned, justified and plausible,” adding that the award “does not suffer from any patent illegality.” He further held, “This Court has no reason to differ with the finding returned by the learned District Judge while upholding award passed by the learned Arbitrator for the reason that it has dealt with each and every aspect of the matter and no scope has been left for interference.”
The appellants had argued that several claims awarded by the Arbitrator, including those related to delays, interest, establishment expenses, and redoing of protective works, were unjustified and contrary to the contract. However, the court found that the Arbitrator had rightly appreciated the evidence and contractual provisions. For instance, the court noted that, “Having perused finding returned by the learned Arbitrator qua claim Nos. 5, 6 and 9, this Court is not persuaded to agree with learned Deputy Solicitor General of India, that Arbitral Tribunal has proceeded to award amount qua aforesaid claims on the assumptions contrary to the express terms of contract.”
The order further stated, “Though Mr. Balram [Deputy Solicitor General] submitted that learned Arbitrator while passing award failed to adhere to the expressed terms and conditions of the contract agreement, but having perused terms and conditions… this Court is not persuaded to agree.”
On the issue of patent illegality, the court reiterated the law by stating that “illegality must be apparent on the face of the award and not the one which is culled out by way of a long-drawn analysis of the pleadings and evidence.”
Quoting established Supreme Court precedents, the order highlighted that the Arbitration Act intentionally omits provisions for modifying arbitral awards, and courts must respect the finality of such awards unless they are “so perverse that they go to the root of the matter.”
Justice Sharma concluded, “Since awards, which ultimately came to be upheld vide judgment passed by the learned District Judge, do not suffer from any patent illegality, this Court is not persuaded to interfere… There is no scope left for this court to interfere in the impugned awards in exercise of limited jurisdiction under Section 37 of the Act.”
The appeal was consequently dismissed, affirming the Arbitrator’s award and the lower court’s decision.
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