The Delhi High Court recently addressed an appeal under Section 37 of the Arbitration and Conciliation Act, 1996. In its judgment, the Court emphasized that a delay in the publication of an arbitral award does not invalidate it unless the delay has materially affected the rights of the parties involved.

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Case Background

The dispute arose from a contract awarded to the Appellant by Respondent No. 1, valued at Rs. 1,53,054. The contract was initially set for completion on 31.10.1999 but was completed on 03.04.2000 following an extension of time from 01.11.1999 to 03.04.2000. Upon completion, the Appellant raised claims for the work done, which were disputed by the Respondent.

As per the arbitration agreement, the dispute was referred to a sole arbitrator. The arbitrator entered reference on 03.09.2002, and the final hearing was conducted on 04.08.2004. However, the award was published on 11.05.2005, nine months after the hearing's conclusion.

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Aggrieved by the award, the Appellant filed a petition under Section 34 of the Act before the Additional District Judge (ADJ), challenging the arbitral award. On 03.02.2010, the ADJ dismissed the objections. The present appeal was filed against this order.

Appellant's Contentions:

• The ADJ’s order was legally flawed and failed to consider the merits of the case.
• The arbitrator took an unreasonable amount of time to issue the award, which affected the legal validity of the award.
• The delay in publication exceeded two years, with a nine-month gap after the final hearing, which led to the stamp paper’s validity lapsing.
• The award failed to address the core disputes under the arbitration agreement.

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Respondents' Counter-Arguments:

• The department fully cooperated, and the delay was due to the Appellant’s inefficiencies.
• Clause 5 of the agreement stated that time was of the essence, and the Appellant failed to complete the work within the stipulated period.
• The Appellant had unsuccessfully challenged the award in Civil Court, Faridabad, and Tis Hazari Court, Delhi, with both petitions being dismissed.

The Delhi High Court reviewed the case and examined the scope of Section 34 of the Act. It reiterated that the jurisdiction under Section 34 is limited and does not permit re-examination of the award on merits.

• “The jurisdiction of the Court under Section 34 of the Act is neither appellate nor revisional in nature.”
• The Court emphasized that an arbitral award can only be challenged on the limited grounds specified in Section 34(2) and (3).
• The Court cited Supreme Court precedents, including MMTC Ltd. v. Vedanta Ltd. (2019) 4 SCC 163 and Hindustan Construction Company Ltd. v. National Highways Authority of India (2023 SCC OnLine SC 1063), to explain the limits of judicial intervention.

The Court further examined the concept of “public policy of India” under Section 34(2)(b)(ii) and referred to the Supreme Court's decision in ONGC Ltd. v. Saw Pipes Ltd. (2003) 5 SCC 705:

• “An award patently violating statutory provisions cannot be said to be in public interest and would adversely affect the administration of justice.”

Upon reviewing the facts, the Court found no illegality or procedural irregularity in the award. The arbitrator had duly considered all claims, and there was no violation of natural justice principles.

• The delay in the publication of the arbitral award alone does not render it invalid.
• The challenge under Section 34 requires showing that the delay materially affected the parties’ rights.
• Re-examining the evidence is not permissible in an appeal under Section 37.
• The arbitral award was well-reasoned, and there was no element of public policy violation.

Case Title: M/s Brij Lal & Sons v. Union of India

Case Number: FAO 351/2010 & CM APPL. 54765/2022

Appearance:

Appellant – Appellant in Person

Respondents – Ms. Arunima Dwivedi, Ms. Pinky Pawar, Adv.

Date: 28.03.2025