2021 Supreme(SC) 388

SUPREME COURT OF INDIA
R.F. NARIMAN, B.R. GAVAI, JJ.
PSA SICAL Terminals Pvt. Ltd. – Appellant
Versus
The Board of Trustees of V.O. Chidambranar Port Trust Tuticorin – Respondent
Civil Appeal Nos. 3699-3700 of 2018
Decided On : 28-07-2021

IMPORTANT POINTS
(1) Arbitral Tribunal is not a Court of law and its orders are not judicial orders. It cannot exercise its powers ex debito Justitiae.
(2) Role of Arbitrator is to arbitrate within terms of contract. He has no power apart from what parties have given him under contract.
(3) Contract duly entered into between parties cannot be substituted unilaterally without consent of parties.
(4) Judicial intervention on account of interfering on merits of arbitral award would not be permissible.

Headnote:

(A) Arbitration and Conciliation Act, 1996 – Section 34 – Petition against arbitral award – In an application under Section 34, court is not expected to act as an appellate court and reappreciate evidence – Scope of interference would be limited to grounds provided under Section 34 of Arbitration Act – Interference would be so warranted when award is in violation of public policy of India – Judicial intervention on account of interfering on merits of award would not be permissible – However, principles of natural justice as contained in Section 18 and 34(2)(a)(iii) of Arbitration Act would continue to be grounds of challenge of an award – An award would be set aside on the ground of patent illegality appearing on face of award and as such, which goes to roots of matter – However, an illegality with regard to a mere erroneous application of law would not be a ground for interference – Equally, reappreciation of evidence would not be permissible on the ground of patent illegality appearing on face of award – A decision which is perverse, though would not be a ground for challenge under public policy of India, would certainly amount to a patent illegality appearing on face of award – However, a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality. (Paras 42 and 43)

(B) Arbitration and Conciliation Act, 1996 – Section 37(1)(c) – Appeal against arbitral award – Dispute emanating from License Agreement – Bid document itself provides that prescribed rates and charges to be collected by Licensee from users shall not exceed maximum rates as approved by Government/Tariff Regulatory Authority – Licensee was entitled to recover from owners/consignees or vessel owners/agents, rates and/or charges due and payable by them for use of Container Terminal services including terminal charges, wharfage on cargo containerized, container box and cargo related charges in respect of cargo and other services provided by Licensee – However, it was provided, that rates and/or charges to be collected by Licensee shall not exceed rates fixed by Licensor in respect of similar services and duly notified by GoI in official gazette or to be fixed by TAMP constituted under Section 47A of Major Port Trusts Act, 1963 – According to Arbitral Tribunal, there was a change in policy which amounted to change in law which, in turn, adversely affected SICAL – Neither under Section 34 nor under Section 37 of Arbitration Act, Court is entitled to reappreciate evidence – Said limitation would be equally applicable to this Court also – When the bid document was notified and when SICAL submitted its bid and LoI was issued to it, there were no guidelines in vogue – Finding of Arbitral Tribunal that there was an existing law to the effect that royalty payable shall be permitted as a pass-through in cost while fixation of tariff, is based on ‘no evidence. (Paras 48, 52, 59, 60, 76, 77 and 78)

(C) Arbitration and Conciliation Act, 1996 – Section 37(1)(c) – Appeal against arbitral award – Contract duly entered into between parties cannot be substituted unilaterally without consent of parties – Intention of parties could be gathered from documents on record – SICAL wanted Agreement to be amended so as to change ‘royalty payment method’ to‘revenue-sharing method’ – However, ignoring stand of TPT, by impugned Award, Arbitral Tribunal has thrust upon a new term in Agreement between parties against wishes of TPT – ‘Royalty payment method’ has been totally substituted by Arbitral Tribunal, with ‘revenue-sharing method’ – Award has created a new contract for parties by unilateral intention of SICAL as against intention of TPT – Unilateral addition or alteration of a contract has been foisted upon an unwilling party – Fundamental principle of justice has been breached – Role of Arbitrator is to arbitrate within terms of contract – He has no power apart from what parties have given him under contract – If he has travelled beyond contract, he would be acting without jurisdiction-Jurisdiction of Arbitrator being confined to four corners of agreement, he can only pass such an order which may be subject-matter reference – Impugned Award would come under realm of ‘patent illegality’ and has been rightly set aside by High Court – Appeals dismissed. (Paras 79, 80, 81, 83, 85, 87, 88 and 95)

Facts of the case:

Appellant has approached this Court being aggrieved by the judgment and order dated 1st November 2017, passed by Division Bench of the Madras High Court in C.M.A. (MD) No. 345 of 2016 and C.M.P. (MD) No. 4867 of 2016, thereby allowing the appeal of the respondent No.1 herein under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996 vide which the High Court set aside the award dated 14th February 2014, passed by the Arbitral Tribunal and the order passed by the District Judge dated 25th February 2016, rejecting application filed by the respondent No.1 herein under Section 34 of the Arbitration Act.

Findings of Court:

Any observations made by the High Court with regard to other aspects of the matter except the validity of the Award, would not come in the way of either of the parties raising their grievances in either the proceedings which are pending before the Division Bench of the High Court or any other proceedings to which either of it would be entitled to take recourse in law.

Result : Appeals dismissed.