The present case was decided by the Hon'ble Supreme Court of India on 28.04.2025, wherein, the Hon'ble Supreme Court of India discussed about the limited extent of the interference of the Hon'ble Court, exercising its jurisdiction under Section 34 and 37 of the Arbitration and  Conciliation Act, 1996 (hereinafter referred to as "A&C Act).

The present Judgement was directed against the Judgement and Order dated 08.08.2019 passed by the Hon'ble High Court of Judicature at Madhya Pradesh (hereinafter referred to as "Hon'ble High Court"), wherein, the Division Bench of the Hon'ble High Court in exercise of its Jurisdiction under Section 37 of the A&C Act has set aside the Order dated 02.01.2019 passed by the Ld. Single Judge of the Hon'ble High Court.

The brief facts pertaining to the present Case are: -
  • That the parties to the present case entered into an Agreement between for construction of the office building. However, due to certain reasons, which were beyond the control of the parties, the Appellant has to request for Extension of Time. The same was even granted by the Respondent twice, post which the Appellant completed the work, however, with a delay of 10 months from the actual date of completion, as was agreed in the Agreement.
  • Despite the said approval for Extension of Time and the Appellant completing the work, within the extended time period, the Respondent levied liquidated damages on the Appellant and paid the amount after deducting the amount of Liquidated Damages. 
  • Being aggrieved by the said Act, the Appellant invoked the Arbitration Clause, as was mentioned in the Agreement and initiated the Arbitration Proceedings and the certain Claims and Counter Claims were raised. Thereafter, on 10.05.2010, the Ld. Arbitral Tribunal was pleased to dismiss the Claim and Counter Claim of the parties on the ground that it did not find any of the Claims and Counter Claims to have been established.
  • Challenging the said Award, the Appellant approached the Hon'ble High Court by way of Petition under Section 34 of A&C Act, wherein, the Ld. Single Judge of the Hon'ble High Court, on 02.01.2019, set aside the Award by observing that the since the Extension of Time was granted and the work was completed within the extended time period and therefore, the deduction of the amount of Liquidated Damages was not justified. 
  • Aggrieved by the said Judgement of the Hon'ble High Court, the Respondent by way of Petition under Section 37 of the A&C Act, approached the Division Bench of Hon'ble High Court. The Hon'ble Division Bench of the Hon'ble High Court, on 08.08.2019, exercising its jurisdiction under Section 37 of the A&C Act, allowed the Petition and set aside the Order dated 02.01.2019.
  • Aggrieved thereby, the Appellant filed the Special Leave Petition, wherein, on 23.04.2024, the leave was granted. 
The opinion of the Hon'ble Supreme Court regarding the Section 34 of the A&C Act was that: -
  • An Arbitral Award cannot be set aside on a ground which is beyond the grounds as mentioned in Section 34 of the A&C Act.
  • An Arbitral Award is not liable to be interfered with only on the ground that the award is illegal or is erroneous in law.
  • An Arbitral Award is not liable to be interfered only on the ground that it would require re-appraisal of the evidence adduced before the Ld. Arbitral Tribunal.
  • The Scope of Interference in Arbitral Award is only confined to the extent as envisaged under Section 34 of the A&C Act.
  • The Court exercising its power under Section 34 of the A&C Act has to perforce to limit its jurisdiction within the four corners of Section 34.
  • The proceedings under Section 34 of the A&C Act are summary in nature.
  • The Award cannot be touched.
  • The Award can only be touched if it is contrary to: -
    • The substantive provisions of law or 
    • Section 34 of the A&C Act or 
    • The terms of the Agreement
  • The jurisdiction of the Court under Section 34 of the A&C Act is a restrictive jurisdiction.
  • The Arbitral Autonomy must be respected.
  • The Judicial Interference should remain minimal or else it will defeat the object of the A&C Act.
In view of the same, the Hon'ble Supreme Court was pleased to dismiss the present Civil Appeal on the ground that the same is devoid of merit and that the Division Bench of the Hon'ble High Court was justified in reversing the Order of the Ld. Single Judge of the Hon'ble Court.

STATUTES INVOLVED
  • CONSTITUTION OF INDIA
  • INDIAN CONTRACT ACT, 1872
  • ARBITRATION AND CONCILIATION ACT, 1996
IMPORTANT LINKS
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