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Synopsis

While dismissing a petition seeking direction to modify the arbitral award passed, the Delhi High Court on Wednesday observed that the courts have a limited role in setting aside arbitral awards based on the specific grounds given under Section 34 of the Arbitration and Conciliation Act, 1996. The high court said that courts should refrain from making any modifications in the arbitral awards.

A single judge bench of Justice Chandra Dhari Singh observed that the courts should recognize that while opting to resolve disputes through arbitration, the parties consciously choose to exclude the court’s jurisdiction and therefore, the act of modifying or altering the arbitral award by the courts defeats the objective of the Act.

“Thus, the exercise of modifying or altering the arbitral award by the Courts not only goes against the Scheme of the Act, but also defeats the objective of the arbitration process. Therefore, after the dispute between the parties is resolved through arbitration, the Courts should recognize that their role is limited to setting aside arbitral awards based on the specific grounds enshrined under Section 34 of the Act, 1996 and should refrain from making any modifications in the arbitral awards,” said the court.

The present petition was filed by Oriental Insurance Co. Ltd. under section 34 of the Arbitration and Conciliation Act, 1996 to set aside the award passed by Arbitral Tribunal. The counsel for the petitioner submitted that the Arbitral Tribunal did not exercise its jurisdiction fairly and reasonably and that the petitioner had suffered losses due to disruptions in the smooth functioning of work with clients especially claim underwriting and payments at the national level.

It was further contended that the Arbitral Tribunal completely overlooked the delay and laches on part of the respondent in completing the work as per the agreement.

On the other hand, the counsel for the respondent- HCL Infosystems Ltd. submitted that the statements made by the petitioner were baseless and without any factual claims. It was submitted that according to Section 34 of the Act, the courts are mandated to strictly act in accordance with and within the confines of Section 34.

Court noted that section 34 of the Act, 1996 deals with applications for setting aside an arbitral award on very limited grounds.

Conclusively, finding no merit in the submissions advanced by counsel for the petitioner, court dismissed the present plea.

Cause Title: Oriental Insurance Co. Ltd. vs. HCL Infosystems Ltd.