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SUPREME COURT OF INDIA
M.Y. EQBAL & PINAKI CHANDRA GHOSE, JJ.
Swan Gold Mining Ltd. – Appellant
Versus
Hindustan Copper Ltd. – Respondent
Civil Appeal No. 9048 of 2014 (Arising out of Special Leave Petition (Civil) No.10849 of 2013)
Decided On : 22-09-2014
(2003) 5 SCC 705—Discussed.
(B) Arbitration—Arbitral award—Scope of judicial scrutiny—When parties have arrived at a concluded contract and acted on the basis of those terms and conditions of contract then substituting new terms in the contract by Arbitrator or by Court would be erroneous or illegal. (Para 12)
(C) Arbitration and Conciliation Act, 1996—Section 34—Arbitral award—Scope of judicial scrutiny—Arbitrator appointed by parties is final Judge of facts—Finding of facts recorded by him cannot be interfered with on ground that terms of contract were not correctly interpreted by him—Arbitrator has gone in detail of dispute raised by appellant and rightly came to conclusion that responsibility on appellant is to abide by terms and conditions of Work Order—No patent illegality in impugned award—Appeal dismissed. (Paras 18, 19, 20, 23 and 24)
(D) Arbitration and Conciliation Act, 1996—Section 34(2)(b)(ii)—Contract Act, 1872—Section 23—Public policy—Words “public policy” or “opposed to public policy”, find reference in Section 23 of the Contract Act and also Section 34 (2)(b)(ii) of the Arbitration and Conciliation Act—Interpretation of contract is matter of Arbitrator who is a Judge chosen by parties to determine and decide dispute—Court is precluded from reappreciating evidence and to arrive at different conclusion by holding that arbitral award is against public policy. (Para 22)
Facts of Case—Appellant challenged award by way of filing petition under Section 34 of Arbitration and Conciliation Act before Calcutta High Court on grounds of perversity and contrary to law. Single Judge of High Court upholding award and reasons assigned by Arbitrator, dismissed appellant’s petition. Aggrieved by decision of Single Judge, appellant preferred appeal before Division Bench of High Court, which although upheld contention of appellant relating to evidence on the issue of deviation in price bid, dismissed Appeal on ground of terms contained in NIT and Work Order being in consonance with each other. Hence, this appeal by special leave by Australian company.
Findings of Court—Parties have entered into concluded contract, agreeing terms and conditions of contract which was finally acted upon. In such a case, parties to contract cannot back out and challenge award on the ground that same is against public policy. Even assuming ground available to appellant, award cannot be set aside as because it is not contrary to fundamental policy of Indian law or against interest of India or on ground of patent illegality. High Court has rightly come to conclusion that no ground exists for setting aside award as contemplated under Section 34 of the Act.
Based on the provided legal document, the key points are as follows:
The Court emphasized that it generally should not substitute its interpretation for that of the Arbitrator, as the Arbitrator's decision is considered binding between the parties. The Court's power to set aside an arbitral award is limited to instances where the award is patently illegal, erroneous on its face, or in contravention of the law or public policy (!) .
When the parties have reached a concluded contract and acted upon it, the Court should not substitute or alter the terms through judicial intervention. The Arbitrator, appointed by the parties, is the final judge of facts, and their findings of fact are not to be interfered with simply because the terms of the contract were not interpreted correctly (!) (!) (!) .
The scope of judicial scrutiny under Section 34 of the Arbitration and Conciliation Act is narrow. An arbitral award can only be challenged if it is found to be erroneous, patently illegal, or against the provisions of the Act, including the fundamental policy of Indian law or the interests of India. The Court is precluded from reappreciating evidence or arriving at a different conclusion on the merits of the case (!) (!) .
The arbitration award in this case was upheld because the Arbitrator's detailed analysis and findings were consistent with the contractual terms, and there was no patent illegality or perversity. The Court also noted that the parties had entered into a concluded contract, which they acted upon, making it inappropriate to challenge the award on grounds of public policy or legality (!) (!) (!) (!) .
The Court clarified that the words "public policy" referenced in the relevant statutes relate to fundamental legal principles and the interests of the nation. An arbitral award that aligns with the parties' contractual obligations and does not violate fundamental legal policies should not be set aside on the ground of public policy (!) (!) .
Ultimately, the Court dismissed the appeal, affirming that the High Court's decision to uphold the arbitral award was correct, and there was no merit in challenging the award on the grounds of perversity, illegality, or public policy (!) .
These points collectively reinforce the principle that courts should respect the autonomy of arbitration and the finality of arbitral awards, intervening only in clear cases of illegality or fundamental breach of public policy.
Judgment :-
M.Y. Eqbal, J.
Leave granted.
2. This appeal by special leave is directed against the judgment and order dated 19.9.2012 passed by the Division Bench of the Calcutta High Court whereby appeal preferred by the appellant against the order of learned Single Judge of the High Court was dismissed. Learned Single Judge had dismissed the appellant’s petition under Section 34 of the Arbitration and Conciliation Act (in short, ‘the Act’) challenging the award of the Arbitrator.
3. The case of the appellant is that a notice inviting tender (NIT) was issued by the respondent-Hindustan Copper Ltd. inviting offers for operation of its Surda Mine and Mosabani Concentrator Plant. Respondent-company was having several mines rich with natural resources being metallic ores. The global tender floated by the respondent provided that it shall be the responsibility of successful bidder for payment of all statutory duties. The appellant-company submitted its technical and financial bids. It is contended on behalf of the appellant that the NIT contained a techno commercial bid and a separate price bid. Price bid of the appellant provided that any Excise Duty/Service taxes or any levy presently applicable or any variation or new levy in future to be reimbursed on actual basis.
4. After negotiation and acceptance of the final price offer, on 3.3.2007 respondent issued a Letter of Intent to the appellant on the terms and conditions of the NIT and other terms agreed during subsequent discussions/negotiations. Finally, on 26.3.2007 a contract was executed between the parties for re-commissioning and operation of the Surda Mine and Mosabani Concentrator Plant. Thereafter, a work order was issued on 14.4.2007 and the appellant raised its Invoices on 31.12.2007, by which reimbursement of basic excise duty and other duties payable by the appellant to the Government was sought. On refusal by the respondent to make payment in respect of excise duty and other taxes paid by the appellant relating to the work executed, the arbitration clause was invoked and the dispute was referred to a sole Arbitrator, who after considering the pleadings and evidence led by the parties, held that the price bid of the appellant was not exclusive of applicable taxes. Learned Arbitrator held that the clause relating to payment of taxes was deleted by the appellant’s representative Mr. Ahlawat on 19.1.2007 and since work order was acknowledged, it is binding on the appellant.
5. The appellant challenged the award by way of filing petition under Section 34 of the Arbitration and Conciliation Act before the Calcutta High Court on the grounds inter alia of perversity and contrary to law. Learned Single Judge of the High Court upholding the award and reasons assigned by the learned Arbitrator, dismissed appellant’s petition. Aggrieved by the decision of the learned Single Judge, appellant preferred appeal before the Division Bench of the High Court, which although upheld the contention of the appellant relating to the evidence on the issue of deviation in price bid on 19.1.2007, dismissed the Appeal on the ground of terms contained in NIT and Work Order being in consonance with each other. Hence, this appeal by special leave by the Australian company.
6. Mr. Amarendra Sharan, learned senior counsel appearing for the appellant assailed the award and the impugned order passed by the High Court on various grounds. Learned counsel contended that the appellant is a reputed Australian Mining Company and it submitted bid in response to NIT. The price bid submitted by the appellant provided for “base price plus 55%” and that any excise duty/service tax or any levy to be reimbursed on actual basis. A meeting of the Tender Evaluation Committee of the respondent-company with the bidders was held on 18.1.2007 and 19.1.2007 and the respondent did not object to the price bid submitted by the appellant which was exclusive of taxes. It is further contended by the senior counsel that after opening o
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