Rajasthan High Court - Jaipur
Rajasthan State Seeds Corporation ... vs M/S S.K. Enterprises on 18 November, 2022
Author: Birendra Kumar
Bench: Birendra Kumar
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
S.B. Civil Miscellaneous Appeal No. 864/2022
1. Rajasthan State Seeds Corporation Limited, Through
Managing Director, Rajasthan State Seeds Corporation
Limited Krishi Pant Bhawan, Bhagwandas Road, Jaipur.
2. Plant Manager, Rajasthan State Seeds Corporation Limited
In Front Of Government College, Baran, Rajasthan.
----Appellants
Versus
M/s S.k. Enterprises, Through Proprietor Shri Shushant
Khandelwal, R/o 11-A Bagherwal Market, New Grain Mandi, New
Dhanmandi, Kota.
----Respondent
For Appellant(s) : Mr. Dinesh Yadav
For Respondent(s) : Mr. L.L. Gupta
Mr. Vikram Jonwal
HON'BLE MR. JUSTICE BIRENDRA KUMAR
Order
18/11/2022
This is an appeal filed under Section 37 of the Arbitration and Conciliation Act, 1996 against the order of refusal to set aside arbitral award under Section 34 of the Act by the Additional District Judge No. 2, Kota vide order dated 15.07.2021.
A contractual agreement between the parties and dispute arising out of agreement led to a judicial order dated 17.09.2013 appointing sole arbitrator. The Arbitrator considered all the questions of law and facts raised before him and the award was made.
Learned counsel for the appellant contends that under sub Section 34 of the Act there are certain grounds specifically (Downloaded on 24/11/2022 at 12:36:59 AM) (2 of 4) [CMA-863/2022] mentioned on which the court can interfere with the award. The present matter is covered by Section 34 sub-section 2 (b) (ii) whereunder the award can be set aside if it is in conflict with the Public Policy of India. Explanation 1 and 2 reads as follows:-
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) 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) 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.
Learned Additional District Judge who heard the matter has considered in detail the scope and ambit of public policy, not involved in the facts and circumstances of the case. Therefore it cannot be argued that the aforesaid ground raised by the appellant was not considered by the court exercising power under Section 34 of the Act.
Learned counsel for the respondent has relied on different judgments of Hon'ble Supreme Court including P.R. Shah, Shares & Stock Broker (P) Ltd. vs M/s B.H.H. Securities (P) Ltd. & Ors. reported in AIR 12 SC 1866 for his submission that the court under Section 34 of the Act does not sit as a court of appeal over an award therefore the court has rightly dismissed the application filed under Section 34 of the Act.
In the case of MMTC Ltd. Vs. M/s Vedanta Ltd. reported in AIR 2019 SC 1168 Hon'ble Supreme Court considered the position of law and scope and ambit of interference under Sections 34 of the Act which reads as follow:-
11. "As far as Section 34 is concerned, the position is well-settled by now that the Court does not sit in appeal over the arbitral award and may (Downloaded on 24/11/2022 at 12:36:59 AM) (3 of 4) [CMA-863/2022] interfere on merits on the limited ground provided under Section 34(2)(b)(ii), i.e. if the award is against the public policy of India. As per the legal position clarified through decisions of this Court prior to the amendments to the 1996 Act in 2015, a violation of Indian public policy, in turn, includes a violation of the fundamental policy of Indian law, a violation of the interest of India, conflict with justice or morality, and the existence of patent illegality in the arbitral award. Additionally, the concept of the "fundamental policy of Indian law" would cover compliance with statutes and judicial precedents, adopting a judicial approach, compliance with the principles of natural justice, and Wednesbury reasonableness. Furthermore, "patent illegality"
itself has been held to mean contravention of the substantive law of India, contravention of the 1996 Act, and contravention of the terms of the contract.
It is only if one of these conditions is met that the Court may interfere with an arbitral award in terms of Section 34(2)(b) (ii), but such interference does not entail a review of the merits of the dispute, and is limited to situations where the findings of the arbitrator are arbitrary, capricious or perverse, or when the conscience of the Court is shocked, or when the illegality is not trivial but goes to the root of the matter. An arbitral award may not be interfered with if the view taken by the arbitrator is a possible view based on facts. (See Associate Builders v. DDA, (2015) 3 SCC 49). Also see ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705; Hindustan Zinc Ltd. v. Friends Coal Carbonisation, (2006) 4 SCC 445; and McDermott International v. Burn Standard Co. Ltd., (2006) 11 SCC 181).
It is relevant to note that after the 2015 amendments to Section 34, the above position stands somewhat modified. Pursuant to the insertion of Explanation 1 to Section 34(2), the scope of contravention of Indian public policy has been modified to the extent that it now means fraud or corruption in the making of the award, violation of Section 75 or Section 81 of the Act, contravention of the fundamental policy of Indian law, and conflict with the most basic notions of justice or morality. Additionally, sub-section (2A) has been inserted in Section 34, which provides that in case of domestic arbitrations, violation of Indian public policy also includes patent illegality appearing on the face of the award. The proviso to the same states that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence."(Downloaded on 24/11/2022 at 12:36:59 AM)
(4 of 4) [CMA-863/2022] On careful consideration of material available on the record, this court is of the view that there is no patent illegality in the award as such no ground mentioned under Section 34 of the Act is made out. The court below has correctly not interfered with the award, hence impugned order requires no interference.
Accordingly, instant appeal stands dismissed.
(BIRENDRA KUMAR),J ashu /5 (Downloaded on 24/11/2022 at 12:36:59 AM) Powered by TCPDF (www.tcpdf.org)