PUNJAB STATE CIVIL SUPPLIES CORPORATION LTD. & ANR. versus M/S. RAMESH KUMAR AND COMPANY & ORS.

Citation: [2021] 7 S.C.R. 1132 · Decided: 13-11-2021 · Supreme Court of India · Bench: D.Y. CHANDRACHUD · Disposal: Appeal(s) allowed
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Judgment (excerpt)

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PUNJAB STATE CIVIL SUPPLIES
CORPORATION LTD. & ANR.
v.
M/S. RAMESH KUMAR AND COMPANY & ORS.
(Civil Appeal No 6832 of 2021)
NOVEMBER, 13, 2021
[DR. DHANANJAYA Y CHANDRACHUD AND
A. S. BOPANNA, JJ.]
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
[2021] 7 S.C.R. 1132
1132
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challenging an arbitral award under Section 34 of the 1996 Act.
[Para 11][1136-E-G]
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]
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6832
of 2021.
From the Judgment and Order dated 18.05.2016 of the High Court
of Punjab & Haryana at Chandigarh in FAO No.2637 of 2013 (O&M).
Himanshu Upadhyay, P. N. Puri, Advs. for the Appellants.
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
1 hereinafter referred to as the respondents
PUNJAB STATE CIVIL SUPPLIES CORPORATION LTD. v. M/S. RAMESH
KUMAR AND COMPANY
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forfeiting the security deposit. The award of the arbitrator was challenged
under Section 34 of the Arbitration and Conciliation Act 19962 in
Arbitration Case No 17 of 2006 before the District Judge at Chandigarh.
By a judgment dated 9 November 2012, the District Judge, finding no
substance in the petition under Section 34 of the 1996 Act, rejected it.
The judgm
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