The Supreme Court of India on Friday held that the High Court has the power to set aside domestic arbitral award under section 34 of Arbitration and Conciliation Act, 1996 if it is patently illegal or perverse.
The appellant in the instant case has challenged the order passed by the High Court of Meghalaya at Shillong in and by which the High Court declined to entertain the review petitions filed by the petitioner seeking review of the judgment and order on the ground that no ground for review is made out and that there is a delay in filing the application for review.
Brief facts of the case are that the North Eastern Electric Power Corporation Ltd.(NEEPCO) filed three applications under Section 34 of the Arbitration and Conciliation Act, 1996 before the Additional Deputy Commissioner (Judicial), Shillong challenging the three arbitral awards dated 29.03.2016.
The Additional Deputy Commissioner (Judicial) vide common judgment dated 27.04.2018 rejected the applications under Section 34 of the Act and upheld all the three arbitral awards. The respondent- NEEPCO filed three appeals under Section 37 of the Act before the High Court. By the common judgment dated 26.02.2019, the High Court allowed the respondent’s appeals and set aside the common judgment dated 27.04.2018 passed by the Additional Deputy Commissioner (Judicial).
Aggrieved by the common judgment dated 26.02.2019, the petitioner preferred special leave petitions before the Supreme Court. After hearing both the parties, the Supreme Court vide order dated 19.07.2019 dismissed all the three SLPs filed by the petitioner holding that the Court is not inclined to interfere in the matters.
After dismissal of the SLPs, the petitioner filed review petitions before the High Court on the ground that the judgment of the High Court dated 26.02.2019 suffers from error apparent on the face of the record as it had not taken into consideration the amendments made to Arbitration and Conciliation Act, 1996 by Amendment Act of 2015. The said review petitions came to be dismissed by the High Court vide the impugned orders.
The ground of “patent illegality” for setting aside a domestic award has been given statutory force in Section 34(2A) of the 1996 Act. The ground of “patent illegality” cannot be invoked in international commercial arbitrations seated in India. Even in the case of a foreign award under the New York Convention, the ground of “patent illegality” cannot be raised as a ground to resist enforcement, since this ground is absent in Section 48 of the 1996 Act.
The newly inserted sub-section (2A) in Section 34, reads as follows:-
“(2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award;
Provided that, an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.”
Acting upon the plea, the bench comprising of Justice R. Banumathi, Justice Indu Malhotra & Justice Aniruddha Bose, observed that while dealing with the appeal under Section 37 of the Act, the High Court has considered the matter at length, and held that while interpreting the terms of the contract, no reasonable person could have arrived at a different conclusion and that the awards passed by the arbitrator suffer from the vice of irrationality and perversity.
The Supreme Court held that it is now not open to re-open the matter by filing a review petition on the same grounds, which have been rightly dismissed by the High Court. The Petitioner has failed to make out any error on the face of the judgment dated 26.02.2019. The High Court by the impugned order dated 10.10.2019 rightly dismissed the review petitions and we do not find any ground warranting interference with the impugned order. Thus, the special leave petitions were dismissed by the Supreme Court.
-India Legal Bureau