Case Number: Civil Appeal No. 266 OF 2022.

Judges Name: Hon’ble Judges M.R. Shah J, B.V. Nagarathna J

Order dated: 11.01.2022

“Jurisdiction of the High Court under Section 37 of the Arbitration and Conciliation Act, 1996 is limited.”

Facts of the Case:

• The Haryana Tourism Limited (Appellant) invited tenders for supply of cold drinks at its tourist complexes and the tender of M/s. Kandhari Beverages Limited (Respondent) was accepted by the Appellant. As per the agreement, the Respondent was required to pay Rs. 20 Lakhs towards the brand promotion. The Appellant requested the Respondent vide letter dated 20.09.2001 to deposit Rs. 19 Lakhs. The Appellant terminated the contract and disputes arose between the parties. The matter was referred to sole arbitrator and the arbitrator passed an award dated 17.11.2005 directing directed the respondent to pay a sum of Rs.9.5 lakhs. Aggrieved by the award, the Respondent filed an appeal under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “Act”) which was dismissed by the Additional District Judge. An appeal under Section 37 of the Act was filed by the Respondent before the Hon’ble High Court of Punjab and Haryana and the Hon’ble High Court quashed the award of the Arbitrator. The Appellant has preferred the appeal before the Hon’ble Supreme Court.

Order:

The Hon’ble Supreme Court observed/held as follows:

• The Appellant’s main contention was that the Hon’ble High Court exceeded its jurisdiction under Section 37 of the Act.
• An award can be set aside only if it against the public policy of India. The award can be set aside under section 34/37 of the Act, if the award is found to be contrary to (a) fundamental policy of Indian law; or (b) the interest of India; or (c) justice or morality; or (d) if it is patently illegal. 
• The Hon’ble High Court has exceeded its jurisdiction by entering into the merits of the claim. Hence the impugned judgment and order passed by the High Court is not sustainable.

The Hon’ble Supreme Court dismissed the Appeal.