2023 Supreme(SC) 495

SUPREME COURT OF INDIA
DINESH MAHESHWARI, SANJAY KUMAR, JJ.
Reliance Infrastructure Ltd. – Appellant
Versus
State Of Goa – Respondent
Civil Appeal No. 3615 of 2023 (Arising Out Of SLP(C) No. 8493 of 2021) With Civil Appeal No. of 2023 (Arising Out Of SLp(C) No. 16778 of 2021)
Decided on : 10-05-2023

IMPORTANT POINTS
(1) If Arbitrator construes term of contract in a reasonable manner, award cannot be set aside with reference to deduction drawn from construction.
(2) Setting aside of arbitral award – Narrow scope of patent illegality cannot be breached by mere use of different expressions which nevertheless refer only to “error” and not to patent illegality.
(3) Framing of issues – Court is not required to frame and record issues where defendant at first hearing of suit makes no defence.

Headnote:

(A) Arbitration and Conciliation Act, 1996 – Sections 34 and 37 read with Section 13 of Commercial Courts, Commercial Division and Commercial Appellate Divisions of High Courts Act, 2015 – Arbitral award – Setting aside of – Dispute emanation from Power Purchase Agreement – There is limited scope of interference in an arbitral award by a Court in exercise of its jurisdiction under Section 34 of Act, which is all the more circumscribed in appeal under Section 37 – Arbitral award is not an ordinary adjudicatory order so as to be lightly interfered with by Courts under Sections 34 or 37 of Act of 1996 as if dealing with appeal or revision against a decision of any subordinate Court – It is not a mere illegality which would call for interference, but it has to be “a patent illegality – Narrow scope of patent illegality cannot be breached by mere use of different expressions which nevertheless refer only to “error” and not to patent illegality – Real issue was as to whether invoices prepared by claimant were in accordance with terms and conditions of proposal made by claimant and accepted by Government; and core of dispute was as to whether price of energy to be supplied was based upon a fixed dollar rate and a fixed import price irrespective of actual fluctuations – Tribunal indeed adverted to all relevant facts and evidence in that regard and determined this issue in favour of claimant – Consideration of any adjudicatory forum would be vitiated by asking wrong questions but this flaw operates against consideration of High Court rather than against consideration of Arbitral Tribunal – If Arbitrator construes term of contract in a reasonable manner, award cannot be set aside with reference to deduction drawn from construction – Possibility of interference would arise only if construction of Arbitrator is such which could not be made by any fair-minded and reasonable person – Judgment passed by High Court partly set aside and Award in question restored in its entirety. (Paras 13.8, 16.4, 17, 18, 36 and 39)

(B) Arbitration and Conciliation Act, 1996 – Section 31 – Award of interest by Arbitrator – Unless award otherwise directs, sum payable under arbitral award shall carry interest at the rate of 2% higher than current rate of interest prevalent on the date of award, from the date of award to the date of payment – Arbitral Tribunal was well within its jurisdiction under Section 31 of Act to award interest at the rate of 15% p.a. and there was no justification to reduce the same to 10% p.a. – High Court was not exercising any equity jurisdiction so as to resettle rate of interest as deemed fit by it. (Paras 34 and 34.1)

(C) Civil Procedure Code, 1908 – Order XIV Rule 1 – Framing of issues – At first hearing of suit Court shall, after reading plaint and written statements, if any, and after examination under rule 2 of Order X and after hearing parties or their Pleaders, ascertain upon what material propositions of fact or of law parties are at variance, and shall thereupon proceed to frame and record issues on which right decision of case appears to depend – Court is not required to frame and record issues where defendant at first hearing of suit makes no defence – Court, while dealing with regular civil suit, would be ascertaining as to upon what material proposition of fact or law parties are at variance, and thereupon would frame and record issues on which right decision of case appears to depend. (Para 16.4)

Facts of the case:

By way of impugned judgment and order dated 08.03.2021, while dealing with an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 read with Section 13 of Commercial Courts, Commercial Division and Commercial Appellate Divisions of High Courts Act, 2015, High Court has proceeded to upset the order dated 12.09.2019, as passed by the Principal District & Sessions Judge, North Goa, Panjim in dismissing the application filed under Section 34 of the Act; and has partially set aside the award dated 16.02.2018, as made by the Arbitral Tribunal comprising of Sole Arbitrator, a former Judge of Supreme Court.

Findings of Court:

Fact of the matter remains that nothing of a patent illegality apparent on the face of the award has been pointed out. The submissions essentially are of indicating some alleged errors on the merits of the case which, as noticed, do not fall within the parameters of Section 34 of the Act of 1996.

Result – Appeal allowed.