Source: Calcutta High Court

Why in News?

Recently, a bench of Justice Krishna Rao was hearing an appeal against order in an Arbitration Petition.

• The Calcutta High Court gave this judgment in the case of Suresh Dhanuka v. Shahnaz Husain.

What is the Background of Suresh Dhanuka v. Shahnaz Husain Case?

• Before the learned Arbitrator, the claimant contended that Respondent No.2, by order dated 11^th June 2004, sought Lead Antimony Alloy Wire of specific dimensions and composition.
• The petitioner duly supplied 141207 kgs of wire in August and September 2004, accompanied by pre-inspection reports and billing.
• Despite this, Respondent No.2 failed to pay and cited issues with the wire's suitability, causing operational interruptions.
• After reminders and exchanges, Respondent No.2 rejected the entire consignment, demanding its return.
• The petitioner contested, asserting adherence to specifications.
• Arbitration ensued, leading to an Award on 12^th May 2006.
• The Arbitrator granted Rs.2,48,289/- for materials used by Respondent No.2 but denied the remaining Rs.16,78,599/-, citing the petitioner's retrieval of rejected material per supply terms.
• Respondent No.2, in its defense, highlighted the tender specifics and alleged absence of requisite test certificates.
• The Arbitrator considered both sides' arguments and awarded Rs.2,78,083.68/-, resolving the dispute between the parties.
• The petitioner/appellant filed an Arbitration Original Petition in 2006, which was dismissed.
• They appealed to set aside the order given in the petition of 2006.
  • The appellant argued the lower court and arbitrator did not consider their claims properly.

What were the Court’s Observations?

• The Calcutta High Court noted the limited scope of interfering with arbitration awards, emphasizing errors apparent on the record or perversity as grounds for interference.
  • It mentioned “The scope of interfering with the arbitration award is very limited until and unless there is error apparent on the face of the record and there is perversity in the award”.

What is Judicial Intervention under Arbitration and Conciliation Act, 1996?

• About:
  • One of the key features of the Act is the limited scope for judicial intervention in arbitral proceedings.
  • Section 5 of the Arbitration and Conciliation Act, 1996 (A&C Act), specifically deals with the extent of judicial intervention in matters governed by the Act.
• Section 5: Extent of Judicial Intervention:
  • Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part.
• Purpose:
  • This section essentially establishes that judicial intervention in arbitration matters should be limited, and courts should refrain from interfering with arbitral proceedings unless explicitly provided for in the Act itself.
  • The Act aims to promote arbitration as a preferred method of dispute resolution by minimizing judicial interference and facilitating a more expeditious resolution process.