Supreme Court of India: Findings of Facts by the Arbitral Tribunal Based on the Evidence on Record are not to be Scrutinized by the Appellate Courts

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In [T]he State Of Jharkhand vs M/S Hss Integrated Sdn (2019) 9 SCC 798, the Supreme Court of India had eloquently reiterated the settled principles of arbitration in India that when two views are possible, a particular view taken by the Arbitral Tribunal which was also reasonable, should not be interfered with by the appellate court. Also, the Arbitral Tribunal is the master of evidence and the findings of fact which are arrived at by the arbitrators on the basis of the evidence on record are not to be scrutinized as if the Court was sitting in appeal.

Factual Matrix

A dispute arose out of a consultancy agreement between the Contractor and the Employer. As a result, the Employer invoked the arbitration clause and the Arbitral Tribunal, on appreciation of evidence, partly allowed its claim rejecting the counter claim of the Contractor. The Contractor then filed an application seeking setting aside of the award under Section 34 of the Arbitration & Conciliation Act, 1996 (‘Act’) which was rejected. The Contractor preferred an appeal under Section 37 of the Act against this decision which was also dismissed by the High Court thereby the award was confirmed in both the forums. The aggrieved Contractor challenged this decision before the Supreme Court in the present case.

Parties Contentions

The Contractor contended that the High Court has materially erred

  • in not properly appreciating the fact that the arbitral award was passed contrary to the materials on record;
  • in confirming the findings recorded by the Arbitral Tribunal that the termination of the contract was illegal and without following due procedure as required under the contract.

Per contra, the Employer argued that

  • the Arbitral Tribunal gave the specific findings in the award by giving cogent reasons on appreciation of evidence;
  • once the findings recorded by the Arbitral Tribunal are on appreciation of evidence and considering the materials on record, the same is rightly not interfered with by the Courts below in the proceedings under Sections 34 and 37 of the Act.

Judgement

The Court held that:-

  • the Arbitral Tribunal had rendered the award on appreciation of evidence and considering the various clauses of the contract which was confirmed in the proceedings under Sections 34 and 37 of the Act.
  • even when the view taken by the arbitrator is a plausible view, and/or when two views are possible, a particular view taken by the Arbitral Tribunal which is also reasonable should not be interfered with in a proceeding under Section 34 of the Act. (National Highway Authority of India vs M/S. Progressivemvr(Jv) (2018) 14 SCC 688)
  • the Arbitral Tribunal is the master of evidence and the findings of fact which are arrived at by the arbitrators on the basis of the evidence on record are not to be scrutinized as if the Court was sitting in appeal. (Maharashtra State Electricity Distribution Co. Ltd. v. Datar Switchgear Ltd. (2018) 3 SCC 133, Associate Builders v. DDA, (2015) 3 SCC 49 and  Munishamappa v. B. Venkatarayappa, (1981) 3 SCC 260))
  • the award passed by the Arbitral Tribunal can be interfered with in the proceedings under Sections 34 and 37 of the Act only in a case where the finding is perverse and/or contrary to the evidence and/or the same is against the public policy. (Associate Builders v. DDA, (2015) 3 SCC 49)
  • In the present case, the categorical findings arrived at by the Arbitral Tribunal are on appreciation of evidence considering the relevant provisions and material on record as well as on interpretation of the relevant provisions of the contract, which are neither perverse nor contrary to the evidence in record. Therefore, as such, the High Court have rightly not interfered with such findings of fact recorded by the Arbitral Tribunal.

Disclaimer: The views expressed in this post are mine and do not reflect the views of the organisation(s) I am engaged with

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