Rajasthan High Court
Rajasthan State Seeds ... vs M/S S.K. Enterprises on 18 November, 2022
Bench: Birendra Kumar
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
S.B. Civil Miscellaneous Appeal No. 864/2022
1. Rajasthan State Seeds Corporation Limited, Through
Managing Director, Rajasthan State Seeds Corporation
Limited Krishi Pant Bhawan, Bhagwandas Road, Jaipur.
2. Plant Manager, Rajasthan State Seeds Corporation Limited
In Front Of Government College, Baran, Rajasthan.
----Appellants
Versus
M/s S.k. Enterprises, Through Proprietor Shri Shushant
Khandelwal, R/o 11-A Bagherwal Market, New Grain Mandi, New
Dhanmandi, Kota.
----Respondent
For Appellant(s) : Mr. Dinesh Yadav
For Respondent(s) : Mr. L.L. Gupta
Mr. Vikram Jonwal
HON'BLE MR. JUSTICE BIRENDRA KUMAR
Order
18/11/2022
This is an appeal filed under Section 37 of the Arbitration and
Conciliation Act, 1996 against the order of refusal to set aside
arbitral award under Section 34 of the Act by the Additional
District Judge No. 2, Kota vide order dated 15.07.2021.
A contractual agreement between the parties and dispute
arising out of agreement led to a judicial order dated 17.09.2013
appointing sole arbitrator. The Arbitrator considered all the
questions of law and facts raised before him and the award was
made.
Learned counsel for the appellant contends that under
sub Section 34 of the Act there are certain grounds specifically
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mentioned on which the court can interfere with the award. The
present matter is covered by Section 34 sub-section 2 (b) (ii)
whereunder the award can be set aside if it is in conflict with the
Public Policy of India. Explanation 1 and 2 reads as follows:-
Explanation 1.--For the avoidance of any doubt, it is clarified that an
award is in conflict with the public policy of India, only if,--
(i) the making of the award was induced or affected by fraud or
corruption or was in violation of section 75 or section 81; or
(ii) it is in contravention with the fundamental policy of Indian law; or
(iii) it is in conflict with the most basic notions of morality or justice.
Explanation 2.--For the avoidance of doubt, the test as to whether
there is a contravention with the fundamental policy of Indian law shall
not entail a review on the merits of the dispute.
Learned Additional District Judge who heard the matter has
considered in detail the scope and ambit of public policy, not
involved in the facts and circumstances of the case. Therefore it
cannot be argued that the aforesaid ground raised by the
appellant was not considered by the court exercising power under
Section 34 of the Act.
Learned counsel for the respondent has relied on different
judgments of Hon'ble Supreme Court including P.R. Shah, Shares
& Stock Broker (P) Ltd. vs M/s B.H.H. Securities (P) Ltd. & Ors.
reported in AIR 12 SC 1866 for his submission that the court
under Section 34 of the Act does not sit as a court of appeal over
an award therefore the court has rightly dismissed the application
filed under Section 34 of the Act.
In the case of MMTC Ltd. Vs. M/s Vedanta Ltd. reported in
AIR 2019 SC 1168 Hon'ble Supreme Court considered the position
of law and scope and ambit of interference under Sections 34 of
the Act which reads as follow:-
11. "As far as Section 34 is concerned, the
position is well-settled by now that the Court does
not sit in appeal over the arbitral award and may
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interfere on merits on the limited ground provided
under Section 34(2)(b)(ii), i.e. if the award is
against the public policy of India. As per the legal
position clarified through decisions of this Court prior
to the amendments to the 1996 Act in 2015, a
violation of Indian public policy, in turn, includes a
violation of the fundamental policy of Indian law, a
violation of the interest of India, conflict with justice
or morality, and the existence of patent illegality in
the arbitral award. Additionally, the concept of the
"fundamental policy of Indian law" would cover
compliance with statutes and judicial precedents,
adopting a judicial approach, compliance with the
principles of natural justice, and Wednesbury
reasonableness. Furthermore, "patent illegality"
itself has been held to mean contravention of the
substantive law of India, contravention of the 1996
Act, and contravention of the terms of the contract.
It is only if one of these conditions is met that
the Court may interfere with an arbitral award in
terms of Section 34(2)(b) (ii), but such interference
does not entail a review of the merits of the dispute,
and is limited to situations where the findings of the
arbitrator are arbitrary, capricious or perverse, or
when the conscience of the Court is shocked, or
when the illegality is not trivial but goes to the root
of the matter. An arbitral award may not be
interfered with if the view taken by the arbitrator is
a possible view based on facts. (See Associate
Builders v. DDA, (2015) 3 SCC 49). Also see ONGC
Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705; Hindustan
Zinc Ltd. v. Friends Coal Carbonisation, (2006) 4
SCC 445; and McDermott International v. Burn
Standard Co. Ltd., (2006) 11 SCC 181).
It is relevant to note that after the 2015
amendments to Section 34, the above position
stands somewhat modified. Pursuant to the insertion
of Explanation 1 to Section 34(2), the scope of
contravention of Indian public policy has been
modified to the extent that it now means fraud or
corruption in the making of the award, violation of
Section 75 or Section 81 of the Act, contravention of the
fundamental policy of Indian law, and conflict with
the most basic notions of justice or morality.
Additionally, sub-section (2A) has been inserted in
Section 34, which provides that in case of domestic
arbitrations, violation of Indian public policy also
includes patent illegality appearing on the face of
the award. The proviso to the same states that an
award shall not be set aside merely on the ground of
an erroneous application of the law or by
reappreciation of evidence."
(4 of 4) [CMA-863/2022]
On careful consideration of material available on the record,
this court is of the view that there is no patent illegality in the
award as such no ground mentioned under Section 34 of the Act is
made out. The court below has correctly not interfered with the
award, hence impugned order requires no interference.
Accordingly, instant appeal stands dismissed.
(BIRENDRA KUMAR),J
ashu /5
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