Puran Chandra Ramola vs State of Uttarakhand

SUDHANSHU DHULIA, J. (ORAL)

This is an appeal filed by the appellant under Section 37 of the Arbitration and Conciliation Act, 1996. The appellant had entered into a contract with

the respondent. The contract was for construction of a road. After the construction of the road, some dispute arose regarding the payment to the

contractor i.e. the present appellant. Consequently, appellant was constrained to move an application under Section 11 (6) of the Arbitration and

Conciliation Act, 1996 before this Court, where this Court vide order dated 09.07.2015 had appointed Shri S.K. Raturi as the Arbitrator, who is a

retired District Judge of the State.

In the arbitration proceedings, part of the claim of the appellant was allowed and an award of Rs.16,40,350/- (Rupees Sixteen Lakh Forty Thousand

Three Hundred Fifty Only) was awarded in favour of the appellant. To that extent the award and the findings therein were not in favour of the

appellant, the appellant challenged the same before the learned District Judge under Section 34 of the Arbitration and Conciliation Act, 1996. The

learned District Judge came to the conclusion that the only dispute raised by the appellant was regarding the measurement of the constructed area

which was not done properly. This plea of the appellant did not find favour with the learned District Judge who has dismissed the application of the

appellant. Hence the present appeal before this Court.

There are extremely limited grounds on which an application can be filed for setting aside the award under Section 34 of the Arbitration and

Conciliation Act, 1996. Section 34 of the Arbitration and Conciliation Act, 1996 reads as under:-

“34. Application for setting aside arbitral award.-

(1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2)

and sub-section (3).

(2) An arbitral award may be set aside by the Court only if- (a) the party making the application furnishes proof that-

(i) a party was under some incapacity, or

(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the

time being in force; or

(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise

unable to present his case; or

(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions

on matters beyond the scope of the submission to arbitration:

Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award

which contains decisions on matters not submitted to arbitration may be set aside; or

(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement

was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part;

or

(b) the Court finds that-

(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force; or

(ii) the arbitral award is in conflict with the public policy of India.

Explanation 1.- For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,-

(i)Â the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or

(ii)Â it is in contravention with the fundamental policy of Indian law; or

(iii) it is in conflict with the most basic notions of morality or justice.

Explanation 2.- For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a

review on the merits of the dispute.

(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.

(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had

received the arbitral award or, if a request had been made under Section 33, from the date on which that request had been disposed of by the arbitral

tribunal:

Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three

months it may entertain the application within a further period of thirty days, but not thereafter.

(4) On receipt of an application under sub-section(1), the Court may, where it is appropriate and it is so requested by a party, adjourn the

proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such

other action as in the opinion of arbitral tribunal will eliminate the grounds fro setting aside the arbitral award.

(5) An application under this section shall be filed by a party only after issuing a prior notice to the other party and such application shall be

accompanied by an affidavit by the applicant endorsing compliance with the said requirement.

(6) An application under this section shall be disposed of expeditiously, and in any event, within a period of one year from the date on which the notice

referred to in sub-section (5) is served upon the other party.â€​

I am of the considered view that the ground for interference for setting aside an award has been rightly rejected by the learned District Judge as

none of these grounds fall within the area carved out under Section 34 of the Arbitration and Conciliation Act, 1996. The only ground was that

measurement was not done properly which was a pure question of fact, rightly decided against the appellant by the learned Arbitrator, and

consequently did not find favour with the learned District Judge, Uttarkashi, as it was not a ground on which an award could be set aside.

In view of the above, there is no merit in the appeal. It is hereby dismissed. Let the lower court record be sent back to the court concerned.