The court confirmed that arbitral awards must not violate public policy or lack merit, and emphasized the necessity of properly adjudicating objections under Section 34 of the Arbitration and Conciliation Act.

Judgment :

SUDESH BANSAL, J.

1. This is an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter for short “the A&C Act”) against the final order dated 08.01.2015 passed by the District Judge, Jhunjhunu, dismissing appellant’s application under Section 34 of the A&C Act and affirming the arbitral award dated 09.05.2009. The arbitral award dated 09.05.2009 was passed by the Sole Arbitrator Sh. Altaf Ahmed, Senior Advocate, whereby and whereunder the claim of appellant- HCL was disallowed, while the counter claim, put forth by respondent/ non-claimant- BGL was allowed to the tune of Rs.10,79,80,044/- (Principal Amount- Rs.6,88,20,333/- + Interest Amount- Rs.3,91,59,711/-). Against the arbitral award dated 09.05.2009, HCL filed objections under Section 34 of the A&C Act, seeking to set aside the arbitral award and to allow its claim against BGL. The objections filed by HCL against the arbitral award are double folded, first- against allowing the counter claim of BGL and second- against disallowing the claim of HCL. The District Judge, Jhunjhunu, vide final order dated 08.01.2015, impugned herein, dismissed the objections, not on merits, but merely by observing that none of the objections, attract any of the grounds enumerated under Section 34 of the A&C Act. Hence, HCL has preferred this appeal thereagainst, praying to allow its application under Section 34 of the A&C Act and consequently, to set-aside the arbitral award and decree its claim against BGL.

Note:- The term “HCL” stands for appellant- Hindustan Cooper Limited, which is a Public Sector Undertaking. The term “BGL” stands for respondent- M/s Bagwati Gas Limited, which is a limited company, incorporated under the Companies Act, 1956.

2. Heard learned Senior Counsels at length, appearing for and on behalf of respective parties so also scanned the record.

3. At the outset, it is noteworthy that objections of HCL under Section 34 of the A&C Act, were dismissed vide order dated 08.01.2015, it means, before introducing amendment to Section 34 of the A&C Act by Act No.3 of 2016 with retrospective effect w.e.f. 23.10.2015. Hence, objections of HCL are required to be considered within ambit & scope of Section 34 , as was existing prior to amendment w.e.f. 23.10.2015. It would be apropos to reproduce Section 34 of the A&C Act, prior to amendment w.e.f. 23.10.2015, which reads as under:-

34. Application for setting aside arbitral award- (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3).

(2) An arbitral award may be set aside by the Court only if-

(a) the party making the application furnishes proof that-

(i) a party was under some incapacity; or

(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or

(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or

(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or

(b) the Court finds that—

(i) the subject-matter of the dispute is not capable of settlement by ar