LexASSOCIATE BUILDERS versus DELHI DEVELOPMENT AUTHORITY
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[2014] 13 S.C.R. 895 ASSOCIATE BUILDERS v. DELHI DEVELOPMENT AUTHORITY (Civil Appeal No.10531of2014) NOVEMBER 25, 2014. [RANJAN GOGOi AND ROHINTON FALi NARIMAN, JJ.] Arbitration and Conciliation Act, 1996: A B ss. 5 and 34(2) and (3) - Arbitral award - Judicial C intervention with - Scope of-Award of arbitrator- In favour of the appellant-contractor- Upheld by Single Judge of High Court - Division Bench of High Court in exercise of jurisdiction uls.34 setting aside the order of Single Judge negating four of the claims of the contractor in toto and scaling D down three of the claims - On appeal, held: An arbitration award can be set qside only on the grounds mentioned u/ s.34(2) and (3) - None of the grounds contained in sub- clause 2(a) of the Act deal with the merits of the decision rendered by the arbitral award - It is only when the award is in E conflict with the public policy of India that the merits of an arbitral award are to be looked into under specified circumstances - The Division Bench of High Court in exercise of its jurisdiction u/s. 34 has exceeded its jurisdiction F by interfering with the possible view of arbitrator on the facts -Arbitral award is upheld. 'Public policy'- Meaning of, in the context of Arbitration and Conciliation Act, 1996 - Discussed. Words and Phrases- 'Justice' and 'morality' - Meaning G of. Allowing the appeal, the Court HELD: 1. Section 34 in conjunction with s.5 of the Arbitration and Conc.iliation Act, 1996, makes it clear that H 895 896 SUPREME COURT REPORTS [2014] 13 S.C.R. A an arbitration award that is governed by part I of the Act, can be set aside only on the grounds mentioned under Section 34 (2) and (~), and not otherwise. None of the gnJunds conta'ined in sub-clause 2 (a) deal with the merits of the decision rendered by an arbitral award. It B is only when the award is in conflict with the public policy of India that the merits of an arbitral award are to be looked into under certain specified circumstances. [Para 12][915-C-D; G-H; 916-A] c D E F Renusagar Power Co. Ltd. v. General Electronic Co. 1993 (3) Suppl. SCR 22: 1994Supp (1) SCC 644; ONGC v. Saw Pipes 2003 (3) SCR 691 : 2003 (5) SCC 705; Hindustan Zinc Ltd. v. Friends Coal Carbonisation (2006) 4 SCC 445; McDermott International Inc. v. Burn Standard Co. Ltd. 2006 (2) Suppl. scR 409 : (2006) 11 sec 181; Centro trade Minerals & Metals Inc. v. Hindustan Copper Ltd. 2006 (2) Suppl. SCR 146 : (2006) 11 SCC 245; ODA v. R.S. Sharma and co. 2008 (12) scR 785: (2008} 13 sec 80; J.G. Engineers (P) Ltd. v. Union of India 2011 (8) SCR 486 : (2011) 5 SCC 758; Union of India v. Col. L.S.N. Murthy2011 (13) SCR 295: (2012) 1 sec 718 - relied on. 2. Violation of the Foreign Exchange Act and disregarding orders of superior courts in India would be regarded as being contrary to the fundamental policy of Indian law. The binding effect of the judgment of a G superior court being disregarded would be equally violative of the fundamental policy of Indian law. The juristic principle of a "judicial approach" demands that a decision be fair, reasonable and objective. On the obverse side, anything arbitrary and whimsical would H obviously not be a deter_mination which would either be ASSOCIATE BUILDERS v. DELHI DEVELOPMENT 897 AUTHORITY fair, reasonable or objective. The Audi Alteram Partem A principle which undoubtedly is a fundamental juristic principle in Indian law is also contained in Sections 18 and 34 (2) (a) (iii) of the Arbitration and Conciliation Act. A decision which is perverse or so irrational that no reasonable person would have arrived at the same, is B . important and requires some degree of explanation. It is settled law that where - a finding is based on no evidence, or an arbitral tribunal takes into account something irrelevant to the decision which it arrives at; or ignores vital evidence in arriving at its decision, such c decision would necessarHy be perverse. The other ground on which an award may be set aside is that it is contrary to the interest of India. [Para 12][925-C-D; 928-A-C; F-H; 931-A] ONGC Ltd. v. Western Geco International Ltd. D 2014 (9) SCC 263; H.B. Gandhi, Excise and Taxation Officer-cum-Assessing Authority v. Gopi Nath & Sons 1992 Supp (2) SCC 312; Ku/deep Singh v. Commr. of Police 1998 (3) Suppl. SCR 594: (1999) 2 SCC 10 - relied on. E 3. If an award is against justice or morality, it is agai
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