The legal community is abuzz with discussions surrounding a recent case where the High Court’s jurisdictional error in reviewing an arbitration award has been brought into question. This case delves into the limits of appellate courts when it comes to arbitration cases, shedding light on the complexities of legal analysis within the judicial system.
Facts
- Haryana Tourism Limited invited tenders for the supply of Aerated Cold Drinks at its Tourist Complexes.
- The tender submitted by the respondent was accepted.
- The respondent was supposed to pay Rs. 20 lakhs for Brand Promotion as per the agreement.
- A Mango Mela was organized by the Corporation on 07/08 July, 2001.
- The Corporation spent Rs. 1 lakh for the event.
- Musical nights were agreed upon by both parties.
- The appellant terminated the contract on 17.01.2002.
- The arbitrator directed the respondent to pay Rs. 9.5 lakhs.
- Appellant asked the respondent to deposit Rs. 19 lakhs as sponsorship money.
- The Additional District Judge dismissed the appeal/objection petition on 25.09.2014.
- The counter claim of Rs. 13.92 lakhs by the respondent was dismissed by the arbitrator.
- Respondent preferred a further appeal before the High Court under Section 37 of the Arbitration Act.
- High Court allowed the appeal, entered into the merits of the claim, and quashed the award passed by the arbitrator as well as the order passed by Additional District Judge, Chandigarh.
- Appellant, feeling aggrieved and dissatisfied, has preferred the present appeal against the High Court’s judgment and order.
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Arguments
- The appellant’s counsel argues that the High Court exceeded its jurisdiction under Section 37 of the Arbitration Act by quashing the award.
- It is contended that the High Court’s role in deciding the appeal under Section 37 was limited.
- The High Court’s approach in treating the appeal as a first appeal against a trial court’s judgment is criticized as beyond its jurisdiction.
- The challenge to the arbitrator’s appointment and competence was summarily rejected.
- The appellant asserts that the arbitrator lacked jurisdiction to pass the award as no amount was due for marketing activities.
- Issues with the Arbitral Tribunal’s composition and the sole arbitrator’s appointment are raised.
- Jurisdiction concerns could have been addressed under Section 16 of the Arbitration Act, not in an appeal under Section 37.
- The High Court, in an appeal under Section 37, is argued to have no authority to review the merits of the arbitrator’s decision upheld by the first appellate court.
- The appellant-Corporation did not spend any amount, so there was no payment to be made to them.
- The respondent filed a counter claim of Rs. 13.92 lakhs, which was rejected by the arbitrator.
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Analysis
- The High Court exceeded its jurisdiction by delving into the merits of the claim in an appeal under Section 37 of the Arbitration Act.
- The respondent cannot challenge the arbitrator’s jurisdiction in an appeal initiated by the original claimant.
- The High Court had already addressed and dismissed the respondent’s objection regarding the arbitrator’s jurisdiction.
- The award can only be set aside if it goes against the public policy of India, as established by previous rulings.
- The High Court’s judgment and order is not sustainable.
- The High Court exceeded its jurisdiction under Section 37 of the Arbitration Act.
- The High Court treated the appeal as if it was against a judgment and decree of the trial Court.
- None of the exceptions to the jurisdictional error are applicable in this case.
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Decision
- The impugned judgment and order passed by the High Court is quashed and set aside.
- No costs are awarded.
- The present appeal is allowed.
- The award passed by the arbitrator and the order passed by the Additional District Judge under Section 34 of the Arbitration Act are restored.
Case Title: HARYANA TOURISM LIMITED Vs. M/S KANDHARI BEVERAGES LIMITED (2022 INSC 32)
Case Number: C.A. No.-000266-000266 / 2022
