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2023 (8) TMI 1227 - SC - Indian LawsScope of arbitral award - Rejection of claims set aside - legality of the order passed by the Division Bench of the High Court while exercising jurisdiction under Section 37 of the Act - HELD THAT - The scope of jurisdiction under Section 34 and Section 37 of the Act is not akin to normal appellate jurisdiction. It is well-settled that courts ought not to interfere with the arbitral award in a casual and cavalier manner. The mere possibility of an alternative view on facts or interpretation of the contract does not entitle courts to reverse the findings of the Arbitral Tribunal. In the present case, the Arbitral Tribunal interpreted the contractual clauses and rejected the Respondent s claims pertaining to Disputes. The findings were affirmed by the Single Judge of the High Court in a challenge under Section 34 of the Act, who concluded that the interpretation of the Arbitral Tribunal was clearly a possible view, that was reasonable and fair-minded in approach. The principle of interpretation of contracts adopted by the Division Bench of the High Court that when two constructions are possible, then courts must prefer the one which gives effect and voice to all clauses, does not have absolute application. The said interpretation is subject to the jurisdiction which a court is called upon to exercise. While exercising jurisdiction under Section 37 of the Act, the Court is concerned about the jurisdiction that the Section 34 Court exercised while considering the challenge to the Arbitral Award. The Division Bench of the High Court committed an error in setting aside the concurrent findings of the Arbitral Tribunal and the Single Judge of the High Court. The Award of the Arbitral Tribunal and the decision of the Single Judge of the High Court under Section 34 of the Act cannot be termed as perverse or patently illegal as concluded by the Division Bench of the High Court. The decision of the Arbitral Tribunal is a plausible view, and the Single Judge refrained from interfering with it under Section 34 of the Act - the Division Bench should not have interfered with these orders. Appeal allowed.
Issues Involved:
1. Legality of the Division Bench's Order under Section 37 of the Arbitration and Conciliation Act 1996 2. Reimbursement of Entry Tax (Dispute III) 3. Reimbursement of Toll Tax (Dispute IV) Summary: 1. Legality of the Division Bench's Order under Section 37 of the Arbitration and Conciliation Act 1996: The Supreme Court examined whether the Division Bench of the High Court of Bombay exceeded its jurisdiction under Section 37 of the Arbitration and Conciliation Act 1996 by reinterpreting the contract and substituting its view for that of the Arbitral Tribunal. The Court emphasized that the jurisdiction under Section 37 is akin to that under Section 34, which does not permit re-evaluation of the merits of the award or reinterpretation of the contract unless the award is perverse or patently illegal. The Supreme Court concluded that the Division Bench erred in setting aside the concurrent findings of the Arbitral Tribunal and the Single Judge, as their interpretation was a possible view and not perverse. 2. Reimbursement of Entry Tax (Dispute III): The Arbitral Tribunal rejected the claim for reimbursement of Entry Tax based on its interpretation of Clause 5.1.2, stating that it only covered taxes directly chargeable by the contractor on the bills raised to the appellant, not indirect taxes like Entry Tax. The Tribunal also relied on Clauses 7.1.1 and 7.1.2, which barred claims for individual tax variations, and Clause 11.7, which included all taxes in the quoted rates. The Single Judge of the High Court upheld this interpretation under Section 34, noting that it was a reasonable view. However, the Division Bench reinterpreted Clause 5.1.2 to include indirect taxes like Entry Tax, applying the principle of ejusdem generis. The Supreme Court found that the Division Bench overstepped its jurisdiction by reinterpreting the contract and substituting its view for that of the Arbitral Tribunal and the Single Judge. 3. Reimbursement of Toll Tax (Dispute IV): Similar to Dispute III, the Arbitral Tribunal rejected the claim for reimbursement of increased Toll Tax, interpreting the contractual clauses to mean that such claims were not reimbursable. The Single Judge upheld this interpretation, finding it reasonable. The Division Bench, however, found that Clause 5.1.2 specifically mentioned toll tax and thus should cover the increased toll tax. The Supreme Court held that the Division Bench's reinterpretation was beyond its jurisdiction under Section 37, as the Arbitral Tribunal's view was a plausible interpretation of the contract. Conclusion: The Supreme Court allowed the appeal, set aside the judgment of the Division Bench of the High Court, and restored the judgment and order of the Single Judge, affirming the Arbitral Tribunal's award. The Court reiterated the limited scope of judicial intervention under Sections 34 and 37 of the Arbitration and Conciliation Act 1996, emphasizing the need to respect the finality of arbitral awards and the autonomy of the parties to choose arbitration as their dispute resolution mechanism.
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