The court reaffirmed that interference with arbitral awards is restricted to specific legal grounds, emphasizing the finality of arbitrator decisions based on contractual terms.

JUDGMENT :

Aniruddha P. Mayee, J.

1. The present First Appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (‘the Arbitration Act’ for sake brevity) impugns the judgment and order dated 31.3.2009 passed by the learned 7th Additional District Judge, Vadodara in Arbitration Misc. Application No.160 of 2002, whereby the learned Additional District Judge has allowed the application under Section 34 of the Arbitration Act and set aside the award dated 3.6.2002.

2. The relevant facts in the present case are that the appellant herein had invited tenders through its Superintending Engineer (Civil) for the work of construction of Multi-storied “DType” (20 residential units) for ONGC Township at Vadodara. The bid of the respondent contractor / claimant came to be accepted. Thereafter, an agreement came to be executed between the parties. As per the agreement, tender work was to commence from 31.3.1985 and was to be completed on or before 30.6.1986, and accordingly, work order dated 16.3.1985 came to be issued. That various disputes arose with respect to execution of the work between the parties. The respondent contractor filed Special Civil Suit No.110 of 1988 raising various claims. The appellant herein opposed the said suit and also filed an application stating that there was an arbitration agreement between the parties and the dispute, if any, had to be resolved through the arbitration mechanism. The said application came to be rejected by the learned Trial Court, which came to be confirmed by the High Court. Aggrieved, Special Leave Petition came to be filed before the Apex Court. With the consent of the parties, the Apex Court by its order dated 23.3.1999 in Civil Appeal No.5015 of 1989 referred the dispute to the Sole Arbitrator.

3. Pursuant to the reference, the respondent contractor / claimant filed its Statement of Claim. The appellant herein filed its reply as well as counter-claim against the respondent contractor. The parties completed the pleadings, placed the relevant documents on record and led the evidence in support of their case. After hearing the arguments, the learned Arbitrator by award dated 3.6.2002 was pleased to allow the two claims of the respondent contractor and rejected the rest of the claims. The learned Arbitrator also allowed the counter-claim of the appellant with respect to the liquidated damages and ordered the refund of the amount paid to the respondent contractor on the ground of escalation. Further, the learned Arbitrator has also awarded interest @ 12% per annum to the parties on the amount awarded.

4. Aggrieved, the respondent contractor/ claimant preferred Arbitration Misc. Application No.160 of 2002 in the District Court at Vadodara. By the judgment and order dated 31.3.2009, learned 7th Additional District Judge, Vadodara allowed the said application under Section 34 of the Arbitration Act and set aside the impugned award. Hence, this appeal.

5. Learned counsel Mr. Ajay R. Mehta, appearing for the appellant herein has submitted that the learned District Judge has gravely erred in setting aside the award on completely untenable grounds which are in contravention to the provisions of Section 34 of the Arbitration Act. He submits that the learned District Judge has set aside the well-reasoned award on extraneous grounds which are not recognized in law. He submits that in respect of claim No.1 of the respondent contractor, the learned Arbitrator has specifically recorded that the advocate for the respondent contractor/ claimant had argued few star items in claim No.1, but thereafter, it was agreed between the parties that in respect of claim No.1, the parties shall file their written submissions and on the basis of the same, the learned Arbitrator would decide the claim No.1. He submits that this action is not contrary to any public policy or perverse in law and, therefore, the learned District Judge ought not to have interfered with the said claim. He submits that claim No.1 was decided