In a recent case concerning the Bina Project, the High Court reviewed the limits of arbitrators’ jurisdiction under the Arbitration Act. The case delved into whether the arbitrator overstepped by extending the award to cover multiple contracts beyond the agreed scope. This blog post focuses on the insightful legal analysis provided by the High Court, setting a precedent on the boundaries within which arbitrators can operate. Keep reading to understand the significance of this judgment in arbitration law.
Facts
- The appellant challenged the impugned judgment and order dated 02.01.2018 passed by the High Court of Madhya Pradesh at Jabalpur in A.A. No 30 of 2012.
- The High Court allowed the appeal filed under Section 37 of the Arbitration and Conciliation Act, 1996 and set aside the award passed by the Arbitrator.
- The original claimant felt aggrieved and dissatisfied with the High Court’s decision, leading to the present appeal in the Supreme Court of India.
- Leave has been granted for the appellant to challenge the impugned judgment and order.
- The learned arbitrator was appointed for the Bina Project contract only.
- The mandatory requirement under Sections 2(a), 8, and 20 of the Arbitration Act was to decide disputes based on the written agreement filed before the arbitrator.
- The learned arbitrator extended the award to cover disputes related to other projects and sister concerns like the Amlohri Project and Jhingurda Project.
- The appeal under Section 34 of the Arbitration Act against the arbitrator’s decision was dismissed, leading to an appeal under Section 37 before the High Court.
- The contractor issued a notice under Clause 9 of the agreement to appoint an arbitrator specifically for the Bina Project.
- The initial dispute was concerning the construction of 100 B-Type Quarters at Bina, governed by an agreement from 11.01.1986.
- The appellant had raised a bill and filed for arbitration regarding the Bina Project work.
- At the time, the dispute was solely focused on the Bina Project work.
Also Read: Court’s Jurisdiction in Re-appraising Arbitrator’s Findings
Analysis
- The High Court found that the arbitrator had exceeded jurisdiction in passing an award concerning 4 contracts.
- The application under Section 8/20 of the Arbitration Act was filed specifically for the construction contract of 100 B-Type Quarters at Bina 4 Project.
- The agreement for the Bina Project was presented in the application under Section 8/20 of the Arbitration Act.
- The High Court quashed and set aside the award passed by the Arbitrator for all claims except those related to the Bina Project.
- The High Court should have at least confirmed the amount awarded for the Bina Project.
- The entire award by the Arbitrator was set aside by the High Court, including the Bina Project claims.
- The present appeal is allowed in part, with the judgment modified to quash only the award for claims other than the Bina Project.
Also Read: Contrary Directions in Issuance of Letter of Intent
Decision
- Respondent has deposited 50% of the amount awarded by the Arbitrator
- Impugned judgment quashing the award for projects other than Bina Project is set aside
- Excess amount deposited shall be returned if any
- Award for Bina Project of Rs. 5,99,158/- is confirmed
Also Read: Application for Stay in Civil Suit Rejected: Court’s Legal Analysis
Case Title: SALUJA CONSTRUCTION COMPANY Vs. NORTHERN COALFIELDS LIMITED (2021 INSC 788)
Case Number: C.A. No.-007041-007041 / 2021
