Sanchayita Lahkar

The High Court of Delhi Division Bench of Justice Anil Kshetrapal and Justice Harish Vaidyanathan Shankar held that there was no requirement for any interference with the findings of the arbitral tribunal or the decision of the commercial court upholding the award. The Court directed that the appeal challenging the dismissal of a Section 34 petition be rejected, affirming the arbitral award which directed a partial refund with interest. The Bench concluded that the arbitral award was reasoned, based on the terms and conditions of the agreement, and devoid of any patent illegality or perversity.

The appeal concerned a dispute arising from a tender issued for the lifting of various agricultural commodities, including 100 metric tons of Canadian-origin red lentils, on an "as is where is" basis, later increased to 300 metric tons. The highest bidder agreed to lift the lentils within 30 days from the appellant’s Kolkata godown. In its acceptance letter, the bidder stipulated that only cargo in "sound and good condition" would be accepted.

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An advance payment of Rs. 36,45,844, including earnest money deposit, was made for 110 metric tons. The bidder lifted 83.94 metric tons before lodging a complaint on 02.12.2011 alleging that the consignment was partially damaged. A joint third-party survey conducted on 13.02.2012 revealed that approximately 70% of the stock was damaged. The bidder eventually lifted 111.28 metric tons but sought a refund for the excess amount paid for the damaged cargo.

The appellant rejected the claim, relying on the original "as is where is" clause. The matter proceeded to arbitration, where the tribunal found that the "as is where is" condition was diluted by the subsequent agreement to supply only sound condition lentils. The arbitrator awarded a refund of Rs. 5,67,864 along with 10% interest per annum from 25.03.2012 to 15.07.2014.

A Section 34 petition challenging the award was dismissed by the commercial court, which upheld the arbitrator’s interpretation and findings. The appellant then filed the present appeal under Section 37 of the Arbitration and Conciliation Act, 1996, and Section 13 of the Commercial Courts Act, 2015.

In the appeal, the appellant restricted arguments to whether the "as is where is" clause should have applied. Both the arbitral tribunal and the commercial court found that the clause had been superseded by the parties’ mutual agreement following the joint survey. The appellant had conceded in its reply before the arbitrator that the earlier clause no longer applied and that only sound cargo would be lifted.

The Division Bench observed: "The reasoning of learned Sole Arbitrator does not contain any perversity, or patent illegality, nor is it against the terms of the Contract." The Court noted that both the arbitral tribunal and the commercial court had addressed the dispute from the perspective of the agreed modification to supply only sound quality lentils.

It recorded: "Given the fact that it is the stated and admitted position by the Appellant that the earlier 'as is where is basis' clause now stands substituted and is only limited to as to whether the Respondents carried out their obligation of lifting that conformed to the stipulation of 'sound condition', this Court is of the opinion that there is really no requirement to get into any other aspects."

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The Court stated that its appellate jurisdiction under Section 37 was limited to examining whether the commercial court, in exercising powers under Section 34, had acted within its statutory bounds. Citing Supreme Court precedents, it recorded that an appellate court cannot reappraise evidence or substitute its interpretation for that of the arbitrator.

It was noted: "This Court cannot re-appreciate evidence or interpret the Clauses of the Agreement which the petitioner is calling upon the Court to do." The Bench found that the arbitrator had applied his mind to the contractual terms, considered the pleadings and documents, and arrived at a reasonable interpretation.

The Division Bench directed that the present appeal, along with pending applications, stands rejected. It stated: "This Court is of the opinion that there is no requirement for any interference with the findings of either the learned Sole Arbitrator or that of the learned District Judge." It affirmed that the arbitral award, as upheld by the commercial court, was a reasoned one, based on evidence, contractual terms, and proper calculations.

Advocates Representing the Parties:

For the Appellant: Mr. Sumit Jidani, Advocate.

Case Title: PEC Ltd. v. M/s Badri Singh Vinimay Pvt. Ltd. & Anr.

Neutral Citation: 2025: DHC:6384-DB

Case Number: FAO (COMM) 192/2025, CM APPL. 44314/2025, CM APPL. 44315/2025, CM APPL. 44316/2025

Bench: Justice Anil Kshetrapal, Justice Harish Vaidyanathan Shankar