The scope for judicial intervention in arbitral awards is strictly limited to clear violations of public policy or patent illegality; mere procedural errors or delays do not warrant the award's setting aside.

JUDGMENT :

Bhaskar Raj Pradhan, J.

The process of arbitration is initiated on a consensus of the parties when they desire to resolve their disputes arising out of the agreement through the process of arbitration instead of following the normal process of courts. The effort of the legislature in enacting the Arbitration and Conciliation Act, 1996 (in short, the Arbitration Act) is to ensure that this process is fair, efficient and capable of meeting the needs of the specific arbitration and to minimise the supervisory role of courts in the arbitral process. It is precisely for this reason that section 19 provides that the arbitral tribunal shall not be bound by the Code of Civil Procedure, 1908 or the Indian Evidence Act, 1872. It further provides that the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting its proceedings. Failing any agreement, the arbitral tribunal may conduct the proceedings in the manner it considers appropriate. The power of the arbitral tribunal while conducting the proceedings in the manner it considers appropriate, includes the power to determine the admissibility, relevance, materiality and weight of any evidence.

2. The ambit and scope of section 34 of the Arbitration Act is no longer res integra. Interference in an arbitration dispute for setting aside an arbitral award is limited to sub-section (2) and sub-section (3) of section 34. section 34 has been interpreted by the Hon’ble Supreme Court with sufficient clarity. It is the settled legal position that in an application under section 34, the Court is not expected to act as an Appellate Court and re-appreciate the evidence. Interference would be warranted when the award is in violation of “public policy of India”, which has been held to mean “the fundamental policy of Indian law”. It would be impermissible to interfere on the merits of the award. An award could also be interfered with on the ground that it is in conflict with justice or morality which is now understood as a conflict with “most basic notions of morality or justice”. It is only such arbitral award that shocks the conscience of the Court that can be set aside on the ground of patent illegality appearing on the face of the award and goes to the root of the matter. Mere erroneous application of law would not be a ground for interference. A perverse decision would amount to patent illegality.

3. In Punjab State Civil Supplies Ltd. vs. Sanman Rice Mills, [2024 INSC 742], the Hon’ble Supreme Court held as under:

“Conclusion

20. In view of the above position in law on the subject, the scope of the intervention of the court in arbitral matters is virtually prohibited, if not absolutely barred and that the interference is confined only to the extent envisaged under Section 34 of the Act. The appellate power of Section 37 of the Act is limited within the domain of of the Act. It is exercisable only to find out if the court, exercising power under of the Act, has acted within its limits as prescribed thereunder or has exceeded or failed to exercise the power so conferred. The Appellate Court has no authority of law to consider the matter in dispute before the arbitral tribunal on merits so as to find out as to whether the decision of the arbitral tribunal is right or wrong upon reappraisal of evidence as if it is sitting in an ordinary court of appeal. It is only where the court exercising power under has failed to exercise its jurisdiction vested in it by or has travelled beyond its jurisdiction that the appellate court can step in and set aside the order passe