Sanchayita Lahkar

The High Court of Delhi, Single Bench of Justice Dharmesh Sharma, dismissed an appeal challenging the dismissal of objections raised under Section 34 of the Arbitration and Conciliation Act, 1996. The appellant had contested the arbitral award dated 11.05.2005, which was upheld by the Additional District Judge on 03.02.2010.

The Court observed that the scope of interference under Section 34 is limited and does not permit re-appreciation of evidence or reassessment of the merits of the case. The court found no violation of public policy or patent illegality in the arbitral award.

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The dispute arose from a contract awarded to the appellant, M/s Brij Lal & Sons, for construction work at Sector-29, Faridabad, under Agreement No. 12/EE/FCD-II/99-2000, valued at ₹1,53,054/-. The stipulated completion date was 31.10.1999, later extended to 03.04.2000. Post-completion, disputes arose regarding deductions made and claims raised by the appellant.

Despite attempts by the appellant to initiate arbitration through the Chief Engineer of the respondent, no appointment was made, leading the appellant to file a suit under Sections 8 and 11 of the Act. The court ordered the appointment of an arbitrator within 60 days. Multiple arbitrators resigned before Sh. A.K. Singhal was appointed and entered reference on 03.09.2002.

The arbitral proceedings concluded on 04.08.2004, but the award was rendered after a delay of nine months, awarding the appellant ₹6,320/- along with 9% interest per annum from 03.02.2001.

The appellant challenged the award on the following grounds:

1. Deduction of ₹18,305/- as compensation under Clause 2 was allegedly non-arbitrable being an "excepted matter."

2. Forced use of Hindustan Tiles and denial of market rates for delayed work.

3. Use of 50mm tiles in place of 40mm due to unavailability.

4. Compensation claims for tiles cut to fit kerb stones without margins.

5. Dismantling, raising levels, and refilling with additional sand and lean concrete.

6. Additional labour costs for interlocking tiles.

7. Payment for excavation work for fixing kerb stones.

8. Damages due to project delay without issuing notice under Section 55 of the Contract Act.

The learned Arbitrator allowed claim No. 5 partially, granting ₹6,320/- for additional sand and tile re-fixing. All other claims were dismissed. The learned Arbitrator recorded, "Respondents do pay to the Claimants a sum of Rs. 6320/- (Rupees Six Thousand three hundred and twenty only) plus the interest awarded against claim No.10 in full and final settlement."

The appellant subsequently filed objections under Section 34, claiming entitlement to higher compensation, citing project delay caused by the respondents and increased cost of materials. The learned ADJ dismissed the objections, referencing several Supreme Court judgements limiting judicial interference in arbitral awards:

"It is not open to the court to probe the mental process of the arbitrator and speculate... as to what impelled the arbitrator to arrive at his conclusion." (AIR 1989 SC 890)

"The court has no jurisdiction to sit in appeal and examine the correctness of the award on merits." (AIR 1989 SC 777)

"The arbitrator is made the final arbiter of the dispute... The award is not open to challenge on the ground that the Arbitrator has reached a wrong conclusion or has failed to appreciate facts." (AIR 1987 SC 81)

Justice Dharmesh Sharma stated the principle that Section 34 is not an appellate provision but provides a narrow window for setting aside awards. The court recorded:

"The jurisdiction of the Court under Section 34 of the Act is neither in the nature of an appellate remedy nor is in the nature of a revisional remedy."

Further quoting MMTC Ltd. v. Vedanta Ltd. (2019) 4 SCC 163, the court recorded:

"The court cannot undertake an independent assessment of the merits of the award, and must only ascertain that the exercise of power by the court under Section 34 has not exceeded the scope of the provision."

The court also referred to NHAI v. M. Hakeem (2021) 9 SCC 1, stating:

"Parliament very clearly intended that no power of modification of an award exists in Section 34 of the Arbitration Act, 1996."

Citing Hindustan Construction Company Ltd. v. NHAI (2023 SCC OnLine SC 1063) and Reliance Infrastructure Ltd. v. State of Goa (2023 SCC OnLine SC 604), the court recorded that awards cannot be set aside unless they are:

"Patently illegal, perverse, or contrary to the public policy of India."

Referring to ONGC Ltd. v. Saw Pipes Ltd. (2003) 5 SCC 705, it was reiterated that an award may be set aside only if it is:

"Contrary to fundamental policy of Indian law, the interest of India, justice or morality, or is patently illegal."

Justice Sharma further cited S.V. Samudram v. State of Karnataka (2024) 3 SCC 623, reiterating that an award violates public policy if:

"It is unreasonable or perverse, in patent violation of statutory provisions, or in breach of natural justice."

The court noted that the learned Arbitrator considered each claim with sufficient reasoning, gave parties fair opportunity, and the appellant did not suffer any prejudice due to procedural delays. It observed:

"There is no issue of any proceeding being unfair or violative of the principles of natural justice in the course of arbitration proceedings."

"Although there was a delay in passing the impugned award, there was no prejudice suffered by the appellant in any manner."

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On the merits of the claims, the court stated:

"The claim of the appellant was marginalized based on his own conduct in delaying the performance of the work assigned to him."

It was further recorded:

"Re-examining the evidence would amount to seek an appeal over the arbitral award which is impermissible."

In conclusion, the High Court dismissed the appeal under Section 37, stating:

"There is nothing to indicate that the arbitral award is such which is patently illegal or violates any matters of public policy. In view of the aforesaid discussion, the award does not suffer from any legal infirmities. The appeal under Section 37 of the Act is hereby dismissed."

"The pending application also stands disposed of."

Advocates Representing the Parties:

For the Respondents: Ms. Arunima Dwivedi and Ms. Pinky Pawar, Advocates

Case Title: M/s Brij Lal & Sons v. Union of India & Anr.

Neutral Citation: 2025: DHC:2075

Case Number: FAO 351/2010 & CM APPL. 54765/2022

Bench: Justice Dharmesh Sharma

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