Source: Allahabad High Court 

Why in News? 

A bench of Justice Piyush Agarwal held that the order cannot be challenged unless the parties are able to show that the order is patently illegal or arbitrary.                  

• The Allahabad High Court held this in the case of Vivek Nayak (Died) And Another v. The Arbitrator / Collector And 3 Others. 

What was the Background of Vivek Nayak (Died) And Another v. The Arbitrator / Collector And 3 Others Case? 

• By a notification dated 10th June 2012 objections were invited for acquisition of land near Ghaziabad. 
• Pursuant to this the Appellants filed objection, and an award was passed by the Special Land Acquisition Officer determining the compensation. 
• Aggrieved by the said award an application was filed before the Arbitrator/Collector, Aligarh wherein six issues were framed. 
• The Arbitrator modified the award passed by the competent authority by order dated 29th September 2013. 
• Aggrieved by the above order the Appellants preferred Arbitration Case No. 80/2013 before the Additional District Judge, Aligarh which was dismissed by the judgment dated 15th January 2022. 
• The Appellants in this case submitted that the competent authority did not consider the market value while determining the award according to Section 26 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013   
• Further, the Appellants submitted that they have been deprived of the legitimate claim of solatium and interest as per the judgment of the Apex Court in Union of India v. Tarsem Singh (2019). 

What were the Court’s Observations?  

• The Court held that the bare perusal of the record shows that the order was passed after due consideration and detailed reasons have been assigned for not granting compensation as per the commercial rate. 
• The Court held that if two views are possible and the Tribunal has taken one view on the basis of that order cannot be challenged unless the parties are able to show that the order is patently illegal. 
• The Court further held that the ground regarding payment of solatium and interest cannot be permissible as the said ground was taken only after the order of the Apex Court in the case of Union of India v. Tarsem Singh (2019). 
• In other words the Court observed that the judgment in the case of Tarsem Singh came only after almost six years. 
• Thus, the Court dismissed the appeals.

What is Appeal under Section 37 of Arbitration and Conciliation Act, 1996 (A & C Act)? 

• Section 37 of A & C Act lays down Appealable orders. 
• Section 37 (1) is a non-obstante clause which provides that the appeal shall lie from the following orders: 
  • Refusing to refer the parties to arbitration under Section 8 
  • Granting or refusing to grant any measure under Section 9 
  • Setting aside or refusing to set aside an arbitral award under Section 34 
• Section 37 (2) provides that an appeal shall lie to a Court from an order of the arbitral tribunal in following cases: 
  • Accepting the plea referred to in Section 16 (2) or Section 16 (3) 
  • Granting or refusing to grant an interim measure under Section 17 
• Section 37 (3) provides that: 
  • No Second Appeal shall lie from an order in appeal under this Section 
  • Nothing in this Section shall takeaway the right to appeal to Supreme Court.

What is the Relation between Section 34 and Section 37 of A & C Act?  

• Section 34 of the A & C Act provides for application for setting aside the arbitral award. 
• The Court has held that the scope of interference in an appeal under Section 37 of the Act is restricted and subject to the same grounds on which an award can be challenged under Section 34 of the Act. 
• The powers under Section 37 of the Act are not beyond the scope of interference provided under Section 34 of the Act. 
• In the case of MMTC Limited v. Vedanta Limited (2019) the Court held that the interference under Section 37 of the Act cannot be travel beyond the restrictions laid down in Section 34 of the Act. 
• In case of an appeal under Section 37 the Court must be extremely cautious and slow to disturb such concurrent findings. 

What are the Landmark Judgments on Scope of Interference under Section 37 of the A & C Act?  

• Konkan Railway Corporation Limited v. Chenab Bridge Project Undertaking (2023) 
  • This was a judgment delivered by a three judge bench. 
  • The Court held that the scope of jurisdiction under Section 34 and Section 37 of the Act is not like a normal appellate jurisdiction and the Courts should not interfere with the arbitral award lightly in a casual and cavalier manner. 
  • The mere possibility of an alternate view on facts or interpretation of the contract does not entitle the Courts to reverse the findings of the arbitral tribunal.  
• Punjab State Civil Supplies Corporation Ltd. & Another v. M/s Sanman Rice Mills & Others (2024) 
  • The appellate power of Section 37 of the Act is limited within the domain of Section 34 of the Act. 
  • It must also be remembered that proceedings under Section 34 of the Act are summary in nature and are not like a full-fledged regular civil suit. Therefore, the scope of Section 37 of the Act is much more summary in nature and not like an ordinary civil appeal. 
  • The award as such cannot be touched unless it is contrary to the substantive provision of law; any provision of the Act or the terms of the agreement. 
  • The Appellate Court has no authority of law to consider the matter in dispute before the arbitral tribunal on merits so as to find out as to whether the decision of the arbitral tribunal is right or wrong upon reappraisal of evidence as if it is sitting in an ordinary court of appeal.