DELHI AIRPORT METRO EXPRESS PVT. LTD. versus DELHI METRO RAIL CORPORATION LTD.

Citation: [2021] 5 S.C.R. 984 · Decided: 09-09-2021 · Supreme Court of India · Bench: L. NAGESWARA RAO · Disposal: Disposed off

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Judgment (excerpt)

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984
SUPREME COURT REPORTS
[2021] 5 S.C.R.
   [2021] 5 S.C.R. 984
984
DELHI AIRPORT METRO EXPRESS PVT. LTD.
v.
DELHI METRO RAIL CORPORATION LTD.
(Civil Appeal No. 5627 of 2021)
SEPTEMBER 09, 2021
[L. NAGESWARA RAO AND S. RAVINDRA BHAT, JJ.]
Arbitration and Conciliation Act, 1996: s. 34 – Interference
with the arbitral award – Scope of – On facts, arbitration clause
invoked on account of dispute pertaining to Metro Rail project
between the parties – Arbitral tribunal held the termination notice
issued by the appellant was valid and on basis of ‘Adjusted Equity’
passed an award of Rs.2782.33 crore, along with interest, in favour
of the appellant – Single Judge of the High Court dismissed the
petition u/s. 34 for setting aside the award – However, the Division
Bench partly set aside the award – On appeal, held: While deciding
applications u/s. 34, the courts are mandated to strictly act in
accordance with and within the confines of s. 34, refraining from
appreciation or re-appreciation of matters of fact as well as law –
Courts do not sit in appeal against the arbitral award – Permissible
grounds for interference with a domestic award u/s. 34(2-A) on the
ground of patent illegality is when the arbitrator takes a view which
is not a possible one, or interprets a clause in the contract which no
fair-minded or reasonable person would, or commits an error of
jurisdiction by wandering outside the contract and dealing with
matters not allotted to them – Conclusions of the arbitrator which
are based on no evidence or have been arrived at by ignoring vital
evidence are perverse and can be set aside on the ground of patent
illegality – Also, consideration of documents which are not supplied
to the other party is a facet of perversity falling within the expression
‘patent illegality’ – If a dispute which is not capable of settlement
by arbitration is the subject-matter of the award or if the award is
in conflict with public policy of India, the award is liable to be set
aside – The conclusion of the Division Bench that the award of the
arbitral tribunal suffers from patent illegality and shocks the
conscience of the court is erroneous – Judgment of the Division
Bench of the High Court set aside and the arbitral award in the
favour of the appellant is restored.
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Allowing Civil Appeal No.5627 of 2021 and dismissing Civil
Appeal No.5628 of 2021, the Court
HELD: 1.1 A cumulative reading of the UNCITRAL Model
Law and Rules, the legislative intent with which the Arbitration
and Conciliation Act, 1996 is made, Section 5 and Section 34 of
the 1996 Act would make it clear that judicial interference with
the arbitral awards is limited to the grounds in Section 34. While
deciding applications filed under Section 34 of the Act, courts
are mandated to strictly act in accordance with and within the
confines of Section 34, refraining from appreciation or re-
appreciation of matters of fact as well as law. [Para 22][1004-E-F]
Uttarakhand Purv Sainik Kalyan Nigam Limited. v.
Northern Coal Field Limited (2020) 2 SCC 455; Bhaven
Construction Through Authorised Signatory Premjibhai
K. Shah v. Executive Engineer Sardar Sarovar Narmada
Nigam Ltd. and Another 2021 SCC OnLine SC 8;
Rashtriya Ispat Nigam Limited v. Dewan Chand Ram
Saran (2012) 5 SCC 306 : [2012] 4 SCR 122 – relied
on.
Ssangyong Engineering and Construction Company
Limited v. National Highways Authority of India (NHAI)
(2019) 15 SCC 131 : [2019] 7 SCR 522 – referred to.
1.2 The limited grounds available to courts for annulment
of arbitral awards are well known to legally trained minds.
However, the difficulty arises in applying the well-established
principles for interference to the facts of each case that come up
before the courts. There is a disturbing tendency of courts setting
aside arbitral awards, after dissecting and reassessing factual
aspects of the cases to come to a conclusion that the award needs
intervention and thereafter, dubbing the award to be vitiated by
either perversity or patent illegality, apart from the other grounds
available for annulment of the award. This approach would lead
to corrosion of the object of the 1996 Act and the endeavours
made to preserve this object, which is minimal judicial
interference with arbitral awards. That apart, several judicial
pronouncements of this Court would become a dead letter if
DELHI AIRPORT METRO EXPRESS PVT. LTD. v. DELHI METRO
RAIL CORPORATION LTD.
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SUPREME COURT REPORTS
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