Delhi District Court
Punjab Agri Ventures Ltd And Anr vs M/S Small Farmers Agri Business ... on 27 April, 2026
Digitally signed
by
DHARMENDER
DHARMENDER RANA
RANA
Date:
2026.04.27
18:18:22 +0530
DLND010050892023
IN THE COURT OF DISTRICT JUDGE- 01,
NEW DELHI DISTRICT, PATIALA HOUSE COURTS,
NEW DELHI
Presided over by :- SH. DHARMENDER RANA (DHJS)
Arbitration No. 928/2023
1. Punjab Agri Ventures Ltd.,
Through its Managing Director
Sh. Ankush Aggarwal,
Bara Farm, Milestone 202,
G.T. Road, Sirhind,
District Fatehgarh Sahib.
2. Mr. Ankush Aggarwal,
Managing Director,
Punjab Agri Ventures Ltd.,
Bara Farm, Milestone 202,
G.T. Road, Sirhind,
District Fatehgarh Sahib. ......... Petitioners
Versus
1. M/s Small Farmers Agri Business
Consortium Society,
Through its Secretary/ Managing Director,
Regd. Office at NCUI Auditorium Building,
5th Floor, August Kranti Marg,
Hauz Khas, New Delhi- 110016.
2. The Registrar,
Indian Council of Arbitration,
Federation House, Tansen Marg,
Near Mandi House,
New Delhi- 110001. ........ Respondents
ARBTN/928/2023 Page 1 of 17
Digitally signed
by
DHARMENDER
DHARMENDER RANA
RANA
Date:
2026.04.27
18:18:26 +0530
Petition presented on : 23.01.2017
Arguments Concluded on : 23.04.2026
Judgment Pronounced on : 27.04.2026
ORDER
1. By way of the instant order, I propose to dispose off a petition filed under Section 34 of Arbitration & Conciliation Act (hereinafter referred to as A & C Act), assailing the Award dated 26.10.2016, whereby the claim filed by M/s Small Farmers Agri Business Consortium Society (respondent herein and claimant before Ld. Arbitrator), came to be allowed against the Punjab Agri Ventures Ltd. (petitioner herein and respondent before the Ld. Arbitrator).
2. Briefly stated:- M/s Small Farmers Agri Business Consortium Society (hereinafter referred to as respondent), entered into a venture capital loan agreement dated 29.09.2005 with Punjab Agri Ventures Ltd. (hereinafter referred to as petitioner), whereby the respondent invested a sum of Rs.75 Lakhs as venture capital assistance with the petitioner. On account of default of the petitioner to refund back the agreed amount in terms of afore-mentioned agreement, the respondent invoked arbitration and preferred its claim before Ld. Arbitrator, which eventually came to be allowed vide order dated 26.10.2016. Hence, the instant challenge.
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3. The petitioner has drawn my attention to the proceedings dated 30.11.2015 wherein on account of absence of claimant/ respondent and its failure to file evidence affidavit, Ld. Arbitrator closed the arbitration proceedings and specifically recorded that the mandate of Arbitral Tribunal is hereby terminated. Relevant portion of order dated 30.11.2015 is reproduced herein for ready reference:-
"Apparently, the absence of the Claimant and the non- filing of the evidence affidavits of the witnesses of the Claimant is an indication that the Claimant is not interested in pursuing its claims or these arbitration proceedings.
Accordingly, these arbitration proceedings are hereby closed and the mandate of this Arbitral Tribunal is hereby terminated."
4. It is forcefully argued by counsel for the petitioner that once the proceedings stood terminated, then in accordance with Section 32 (2) (c) r/w Section 14 of A & C Act, the only recourse available to the claimant/ respondent was to approach the Court for revival of the proceedings. It is forcefully argued that Ld. Arbitrator lacked the power to recall order dated 30.11.2015 and reviving the arbitration proceedings is in stark violation of statutory procedure prescribed under the provisions of A & C Act. In support of his contentions, Ld. Counsel for the petitioner has placed strong reliance upon the judgments of Hon'ble Apex Court in the matter of Lalit Kumar Sanghavi (Dead) Through LRs & Anr Vs. Dharamdas V. Sanghavi & Ors , ARBTN/928/2023 Page 3 of 17 Digitally signed by DHARMENDER DHARMENDER RANA RANA Date:
2026.04.27 18:18:35 +0530 (2014) 7 Supreme Court Cases 255 and Sai Babu Vs. Clariya Steels Pvt. Ltd., 2019 SCC OnLine SC 2448.
5. It is further argued that Ld. Arbitrator has not even bothered to consider the objections filed by the petitioner to the claim petition and has mechanically recorded that he had reasons to believe that the cheque was issued by the petitioner in acknowledgment of liability to pay. It is argued that the reasons to believe must emanate from the evidence and the personal belief of the Ld. Arbitrator cannot be a substitute for the objective criteria to adjudicate, based upon the evidence led by the parties. It is argued that it is evident from the record that no evidence was led by either of the parties and yet Ld. Arbitrator recorded that ' he is convinced that the petitioners are indeed liable to pay'. It is submitted that it is not the subjective satisfaction of Ld. Arbitrator rather it should be an objective assessment by an adjudicative body. It is submitted that one and a half page Award passed by Ld. Arbitrator is no better than mere administrative instruction and lacks the essential ethos of a reasoned Award/ judgment. It is submitted that the objections raised by the petitioner have not even been discussed in the Award and a very brief and cryptic Award sans any reasons, has been passed which is no Award in the eyes of law.
6. Counsel for the claimant/ respondent on the other hand, vehemently objects to the contentions raised by counsel for the petitioner. It is argued that Ld. Arbitrator has passed well-
ARBTN/928/2023 Page 4 of 17 Digitally signed by DHARMENDERDHARMENDER RANA RANA Date:
2026.04.27 18:18:40 +0530 reasoned Award. It is submitted that the judgments relied upon by the petitioner would not lay down the correct legal position. He submits that Ld. Arbitrator has rightly revived the petition upon the application moved by the claimant/ respondent. It is submitted that the objections were duly considered and rejected by Ld. Arbitrator and thereafter, a reasoned Award has been passed. It is submitted that the scope of inquiry under Section 34 of A & C Act is very limited and the impugned Award calls for no interference of this Court. Counsel for the claimant/ respondent further submits that Ld. Arbitrator relying upon the admission of liabilities in the reply dated 04.05.2012 of the petitioner, has rightly passed the Award. Counsel for the claimant/ respondent submits that petition under Section 34 of A & C Act deserves to be dismissed. He has placed strong reliance upon the judgments passed in SREI Infrastructure Finance Ltd. v. Tuff Drilling (2018) 11 SCC 470 and Harshbir Singh Pannu & Anr Vs. Jaswinder Singh, 2025 INSC 1400.
7. I have heard arguments advanced by Ld. Counsel for the parties and carefully perused the record.
8. The nub of the issue is whether the Ld. Arbitrator was competent to recall order dated 30.11.2015 whereby the arbitral proceedings were closed and mandate of Arbitral Tribunal was terminated.
Counsel for the petitioner has argued that no such power to recall vests with the Ld. Arbitrator once the mandate of ARBTN/928/2023 Page 5 of 17 Digitally signed by DHARMENDER DHARMENDER RANA RANA Date:
2026.04.27 18:18:44 +0530 Arbitral Tribunal is terminated. Whereas, counsel for the claimant/ respondent has forcefully argued that Ld. Arbitrator has power to recall its own orders and thus he has rightly exercised his authority in recalling the order dated 30.11.2015. Counsel for the claimant/ respondent has placed very strong reliance upon the judgment of SREI Infrastructure (supra) and Harshbir Singh Pannu (supra) to contend that a recall application is very much maintainable before the Ld. Arbitrator.
9. The Court is confronted with a peculiar legal conundrum. The petitioner has relied upon the judgment of Sai Babu Vs. Clariya Steels (supra), which is squarely applicable to the case at hand, whereas, claimant/ respondent has placed reliance upon SREI Infrastructures Vs. Tuff Drilling (supra) and Harshbir Singh Pannu Vs. Jaswinder Singh (supra), wherein Hon'ble Apex Court has categorically observed that when proceedings are terminated, the appropriate remedy available to the parties would be to first file an application for recall of such order.
The law of precedents holds the key to the abovesaid legal conundrum. Both the judgments i.e. Sai Babu (supra) and Harshbir Singh Pannu (supra) have been admittedly passed by the Coordinate Benches of equal strength. As per the law of precedents, a judgment, earlier in point of time, by a Coordinate Bench shall prevail upon the later judgment passed by Bench of equal strength. Therefore, in the humble understanding of this Court, the law laid down by Hon'ble Apex Court in the matter of ARBTN/928/2023 Page 6 of 17 Digitally signed by DHARMENDER DHARMENDER RANA RANA Date:
2026.04.27 18:18:48 +0530 Sai Babu (supra) shall prevail upon Harshbir Singh Pannu (supra). Though it can be argued that SREI Infrastructure Finance Ltd (supra) is the earliest in point of time, but SREI Infrastructure (supra) dealt with termination of the proceedings under Section 25 (a) and in the judgment itself, Hon'ble Apex Court has held that 'the eventuality as contemplated under Section 32, shall arise only when the claim is not terminated under Section 25 (a) and proceeds further.' It has been categorically observed that the word "unnecessary" or "impossible" has been used in different context than to one of default as contemplated under Section 25 (a) of the A & C Act.
10. In my considered opinion, the Ld. Arbitrator having conclusively opined that the claimant/ respondent is not interested in pursuing its claim or the arbitration proceedings and thereby closing the arbitration proceedings and observing that mandate of Arbitral Tribunal is hereby terminated, could not have entertained the recall application.
11. The situation at hand is squarely covered by the pronouncement of Hon'ble Apex Court in Sai Babu's case (supra), the relevant portion of the observation is reproduced herein for ready reference:-
"1. The sole arbitrator who was appointed in this case terminated proceedings under Section 32 (2) (c) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'Act'), by order dated 04.05.2017. However, on an application dated 05.05.2017 to recall the aforesaid order, the learned arbitrator passed an order on 18.05.2017 stating that, ARBTN/928/2023 Page 7 of 17 Digitally signed by DHARMENDER DHARMENDER RANA RANA Date:
2026.04.27 18:18:52 +0530 as good reasons had been made out in the affidavit for recall, he was inclined to recall the order even though under the Act, in law, it may be difficult to do so. A revision filed against the aforesaid order was dismissed by the High Court on 14.06.2017.
2. Having heard learned counsel for the parties, we are of the view that the matter is no longer res integra. In SREI Infrastructure Finance Ltd. Vs. Tuff Drilling (P) Ltd., this Court held:
21. Section 32 contains a heading "Termination of Proceedings". Sub-section (1) provides that the arbitral proceedings shall be terminated by the final arbitral award or by an order of the Arbitral Tribunal under sub-section (2). Sub-section (2) enumerates the circumstances when the Arbitral Tribunal shall issue an order for the termination of the arbitral proceedings. The situation as contemplated under Section 32 (2) (a) and 32 (2) (b) are not attracted in the facts of this case. Whether termination of proceedings in the present case can be treated to be covered by Section 32 (2) (c) is the question to be considered. Sub-Clause (c) contemplates two grounds for termination i.e. (i) the Arbitral Tribunal finds that the continuation of the proceedings has for any other reason become unnecessary, or (ii) impossible. The eventuality as contemplated under Section 32 shall arise only when the claim is not terminated under Section 25 (a) and proceeds further. The words "unnecessary" or "impossible" as used in clause (c) of Section 32 (2), cannot be said to be covering a situation where proceedings are terminated in default of the claimant.
The words "unnecessary" or "impossible" has been used in different contexts than to one of default as contemplated under Section 25 (a). Sub- section (3) of Section 32 further provides that the mandate of the ARBTN/928/2023 Page 8 of 17 Digitally signed by DHARMENDER DHARMENDER RANA RANA Date: 2026.04.27 18:18:57 +0530 Arbitral Tribunal shall terminate with the termination of the arbitral proceedings subject to Section 33 and sub-section (4) of Section 34. Section 33 is the power of the Arbitral Tribunal to correct any computation errors, any clerical or typographical errors or any other errors of a similar nature or to give an interpretation of a specific point or part of the award. Section 34 (4) reserves the power of the court to adjourn the proceedings 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 the Arbitral Tribunal will eliminate the grounds for setting aside the arbitral award. On the termination of proceedings under Section 32 (2) and 33(1), Section 33(3) further contemplates termination of the mandate of the Arbitral Tribunal, whereas the aforesaid words are missing in Section 25. When the legislature has used the phrase "the mandate of the Arbitral Tribunal shall terminate" in Section 32(3), non-use of such phrase in Section 25(a) has to be treated with a purpose and object. The purpose and object can only be that if the claimant shows sufficient cause, the proceedings can be recommenced."
3. It is clear, therefore, that a distinction was made by this Court between the mandate terminating under section 32 and proceedings coming to an end under section 25. This Court has clearly held that no recall application would, therefore, lie in cases covered by section 32(3).
4. This being the case, we allow the appeal that is being filed and set aside the judgment of the High Court of Karnataka dated 14.06.2017." (emphasis supplied)
12. When we closely examine the facts of SREI Infrastructure (supra) and Harshdip Singh Pannu (supra), it is ARBTN/928/2023 Page 9 of 17 Digitally signed by DHARMENDER DHARMENDER RANA RANA Date:
2026.04.27 18:19:01 +0530 evident that Hon'ble Apext Court has carved out a distinction between the procedural review and substantive review. In both the cases, SREI Infrastructure (supra) and Harshdip Singh Pannu (supra), review was allowed as it pertains to procedural issue viz.
Non-filing of the claim or non-payment of fees of Ld. Arbitrator. It is in this context, the Hon'ble Apex Court has permitted the recall application on the ground that though the proceedings stood terminated but the mandate of the Arbitral Tribunal was not terminated. Whereas, in the case at hand, Ld. Arbitrator has specifically opined that the claimant/ respondent has abandoned the claim and therefore, not only the arbitration proceedings were closed but even the mandate of Arbitral Tribunal was held to be terminated. Once the mandate of the Arbitral Tribunal and not merely the arbitration proceedings were terminated, the Ld. Arbitrator became functus officio and was not competent to review its order of reviving the mandate of Arbitral Tribunal. The situation at hand is squarely covered by Sai Babu's judgment (supra). The contention of counsel for the respondent that even a substantive review application is permitted, is clearly not tenable in the eyes of law. In this regard, it would be apt to reproduce herein the relevant portion of the judgment relied upon by counsel for the respondent himself in Harshbir Singh Pannu (supra):-
" 293. Lalitkumar V. Sanghvi (supra) holds that Section 14(2) empowers the court to decide on any controversy regarding the termination of the mandate of the arbitrator, which would also include the termination of the proceedings. A similar view has also been taken in Dani Wooltex (supra), wherein ARBTN/928/2023 Page 10 of 17 Digitally signed by DHARMENDER DHARMENDER RANA RANA Date:
2026.04.27 18:19:06 +0530 this Court entertained an application under Section 14 against an order terminating the proceedings under Section 32(2) of the Act, 1996.
294. SREI Infrastructure (supra) hold that the arbitral tribunal can entertain a recall application against the termination of proceedings, albeit in the context of Section 25(a).
295. The Delhi High Court in Future Coupons (supra) held that an order passed under Section 32(2) that results in the termination of the proceedings could be challenged under Article 227 of the Constitution.
296. Since the Act, 1996 provides no remedy against an order for termination of proceedings, it would serve the ends of justice if a purposive interpretation of the provision of Section 14 is adopted.
297. We are of the considered opinion that Section 14 sub-
section (2), particularly the expression "the Court to decide on the termination of the mandate" should be given an expansive meaning to include any challenge to an order for termination of proceedings simpliciter. We say so because, the termination of proceedings in essence results in the arbitrator being absolved of its duty to administer the arbitration.
298. As already discussed in the foregoing parts of this judgment, an order for termination of proceedings has the effect of bringing the mandate of the arbitral tribunal also to an end, which by extension also terminates the mandate of the arbitrator.
299. Thus, in our opinion, until this lacunae in the Act, 1996 is not resolved, the parties aggrieved by an order of termination of proceedings should be permitted to challenge the same before a court under Section 14(2) of the Act, 1996"
ARBTN/928/2023 Page 11 of 17 Digitally signed by DHARMENDERDHARMENDER RANA RANA Date:
2026.04.27 18:19:11 +0530 ..... 308. This to our minds, fortifies the view, that a remedy against the termination of proceedings, should very well be available in the form of a challenge under Section 14 of the Act, 1996." (emphasis supplied)
13. When we closely scrutinize the ratio of SREI Infrastructure (supra) and Harshdip Singh Pannu (supra), it is evident that the power to review is only confined to procedural issues and not to substantive issues.
14. Further, one cannot loose sight of the fact that the law of judicial precedents mandates that the judgment of Coordinate Bench being earlier in point of time shall prevail.
Had the Hon'ble Apex Court in the matter of Harshbir Singh Pannu (supra) opted to differ with the judgment in Sai Babu, the Hon'ble Apex Court would certainly have referred the matter to a larger Bench. When we closely scrutinize both the judgments, it is evident on record that it was only in context of procedural review, the Hon'ble Apex Court has held an application for recall to be maintainable and not in substantive cases wherein the Ld. Arbitrator has held that mandate of Arbitral Tribunal was terminated. It is the mandate of Arbitral Tribunal which has come to an end and not merely the arbitration proceedings.
15. Further, the challenge to the impugned Award deserves to be allowed on an additional ground.
In the matter of Harshbir Singh Pannu (supra), Hon'ble Apex Court has opined that if the Arbitral Tribunal ARBTN/928/2023 Page 12 of 17 Digitally signed by DHARMENDER DHARMENDER RANA RANA Date:
2026.04.27 18:19:17 +0530 allows the recall application, the aggrieved party, though liable to participate in the proceedings, is certainly entitled to challenge the final award under Section 34 of the A & C Act. Thus, even as per Harshbir Singh Pannu (supra), the order of recall is amenable to challenge under Section 34 of the A & C Act.
16. The recall application of the claimant/ respondent was allowed by the Ld. Arbitrator vide order dated 04.04.2016. The relevant portion of the recall order is reproduced herein for ready reference:
"Application has been filed by the Claimant for revival of the proceedings. Reply thereto has been filed by the Respondent. After hearing the detailed submissions of the Ld. Counsel for both the parties, I allow the Claimant's application and revive these arbitration proceedings."
17. Evidently, the reasons for allowing the recall application are conspicuously missing. Once it is admitted that the order for recall is amenable to judicial scrutiny under Section 34 of the A & C Act, reasons becomes indispensable. Counsel for the petitioner has forcefully argued that his objections to the recall/ revival application were neither considered nor discussed. Admittedly, the cryptic order allowing the recall application fails to discuss the contentions of the petitioner nor it reveals the reasons for rejection of the petitioner's objection to the recall application. In the matter of Delhi Airport Metro Express Pvt. Ltd. Vs. Delhi Metro Rail Corporation Ltd. Civil Appeal no.
ARBTN/928/2023 Page 13 of 17 Digitally signed by DHARMENDERDHARMENDER RANA RANA Date:
2026.04.27 18:19:21 +0530 5627 of 2021, Arising out of SLP (C) no. 4115 of 2019 decided on 09.09.2021, it has been held as under:
"...22. A cumulative reading of the UNCITRAL Model Law and Rules, the legislative intent with which the 1996 Act 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. (See: Uttarakhand Purv Sainik Kalyan Nigam Limited. v. Northern Coal Field Limited. 1, Bhaven Construction Through Authorised Signatory Premjibhai K. Shah v. Executive Engineer Sardar Sarovar Narmada Nigam Ltd. and Another2 and Rashtriya Ispat Nigam Limited v. Dewan Chand Ram Saran3 ).
23. For a better understanding of the role ascribed to courts in reviewing arbitral awards while considering applications filed under Section 34 of the 1996 Act, it would be relevant to refer to a judgment of this Court in Ssangyong Engineering and Construction Company Limited v. National Highways Authority of India (NHAI) 4 wherein R.F. Nariman, J. has in clear terms delineated the limited area for judicial interference, taking into account the amendments brought about by the 2015 Amendment Act. The relevant passages of the judgment in Ssangyong (supra) are noted as under:-
"34. What is clear, therefore, is that the expression "public policy of India", whether contained in Section 34 or in Section 48, would now mean the "fundamental policy of Indian law" as explained in paras 18 and 27 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49: (2015) 2 SCC (Civ) 204] i.e. the fundamental policy of Indian law would be relegated to "Renusagar" understanding of this expression. This would necessarily mean that Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12] expansion has been done away with. In short, Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12] ,as explained in paras 28 and 29 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , would no longer obtain, as under the guise of 1 (2020) 2 SCC 455 2 2021 SCC OnLine SC 8 3 (2012) 5 SCC 306 4 (2019) 15 SCC 131 ARBTN/928/2023 Page 14 of 17 Digitally signed by DHARMENDER DHARMENDER RANA RANA Date:
2026.04.27 18:19:27 +0530 interfering with an award on the ground that the arbitrator has not adopted a judicial approach, the Court's intervention would be on the merits of the award, which cannot be permitted post amendment. However, insofar as principles of natural justice are concerned, as contained in Sections 18 and 34(2) (a)(iii) of the 1996 Act, these continue to be grounds of challenge of an award, as is contained in para 30 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 :
(2015) 2 SCC (Civ) 204] .
35. It is important to notice that the ground for interference insofar as it concerns "interest of India" has since been deleted, and therefore, no longer obtains. Equally, the ground for interference on the basis that the award is in conflict with justice or morality is now to be understood as a conflict with the "most basic notions of morality or justice". This again would be in line with paras 36 to 39 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , as it is only such arbitral awards that shock the conscience of the court that can be set aside on this ground.
36. Thus, it is clear that public policy of India is now constricted to mean firstly, that a domestic award is contrary to the fundamental policy of Indian law, as understood in paras 18 and 27 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49: (2015) 2 SCC (Civ) 204], or secondly, that such award is against basic notions of justice or morality as understood in paras 36 to 39 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204]. Explanation 2 to Section 34(2)(b)(ii) and Explanation 2 to Section 48(2)(b)(ii) was added by the Amendment Act only so that Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12] , as understood in Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , and paras 28 and 29 in particular, is now done away with.
37. Insofar as domestic awards made in India are concerned, an additional ground is now available under sub-section (2- A), added by the Amendment Act, 2015, to Section 34. Here, there must be patent illegality appearing on the face of the award, which refers to such illegality as goes to the root of the matter but which does not amount to mere erroneous application of the law. In short, what is not subsumed within "the fundamental policy of Indian law", namely, the contravention of a statute not linked to public policy or public interest, cannot be brought in by the backdoor when it comes to setting aside an award on the ground of patent illegality.
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2026.04.27 18:19:32 +0530
38. Secondly, it is also made clear that reappreciation of evidence, which is what an appellate court is permitted to do, cannot be permitted under the ground of patent illegality appearing on the face of the award.
39. To elucidate, para 42.1 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , namely, a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an arbitral award. Para 42.2 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , however, would remain, for if an arbitrator gives no reasons for an award and contravenes Section 31(3) of the 1996 Act, that would certainly amount to a patent illegality on the face of the award.
40. The change made in Section 28(3) by the Amendment Act really follows what is stated in paras 42.3 to 45 in Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 :
(2015) 2 SCC (Civ) 204] , namely, that the construction of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator construes the contract in a manner that no fair-minded or reasonable person would; in short, that the arbitrator's view is not even a possible view to take. Also, if the arbitrator wanders outside the contract and deals with matters not allotted to him, he commits an error of jurisdiction. This ground of challenge will now fall within the new ground added under Section 34(2-A).
41. What is important to note is that a decision which is perverse, as understood in paras 31 and 32 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 :
(2015) 2 SCC (Civ) 204] , while no longer being a ground for challenge under "public policy of India", would certainly amount to a patent illegality appearing on the face of the award. Thus, a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality. Additionally, a finding based on documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties, and therefore, would also have to be characterised as perverse."...
25. .......... An arbitral award stating no reasons for its findings would make itself susceptible to challenge on this account. The 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 ARBTN/928/2023 Page 16 of 17 Digitally signed by DHARMENDER DHARMENDER RANA RANA Date:
2026.04.27 18:19:36 +0530 documents which are not supplied to the other party is a facet of perversity falling within the expression 'patent illegality'...
Therefore, in the absence of any reasoning, the impugned Award cannot be sustained in the eyes of law.
18. Thus, I concur with the counsel for the petitioner that Ld. Arbitrator has committed a patent illegality by recalling the order dated 30.11.2015 and reviving the arbitration proceedings despite termination of the mandate of Arbitral Tribunal. Accordingly, the petition succeeds. The Award dated
26.10.2016 is hereby set aside.
19. File be consigned to record room after necessary compliance. Copy of this order be sent to Ld. Arbitrator alongwith the arbitral record.
Pronounced in open Court
on 27.04.2026 (Dharmender Rana)
District Judge - 01
PHC/New Delhi
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