28 July 2021, Wednesday

2 years ago

An award that was based on no evidence and unilaterally altered the contract rightly set aside (Supreme Court of India)

28 July 2021 | PSA Sical Terminals Pvt. Ltd. v. Board of Trustees & others | Civil Appeal Nos. 3699-3700 of 2018 | RF Nariman & BR Gavai JJ | 2021 SCC OnLine SC 508

While recognising the limits to the court’s interference with the arbitral awards, the Supreme Court upheld an order of the High Court setting aside the award. The 2-judge bench found that the award was based on no evidence and without considering the relevant evidence. So, there was perversity as explained in Associate Builders v. DDA, (2015) 3 SCC 49.

Secondly, the award substituted the “royalty payment module” for the “revenue-sharing module.” The evidence showed that this was what SICAL always wanted, but the other party opposed it. Thus, the tribunal created a new contract. This attracted:

  1. The ground conflicted with the public policy of India because the unilateral alteration was against the most basic notions of justice and fell in the exceptional category set out in Ssangyong Engineering and Construction Company Limited v. National Highway Authority of India (NHAI), (2019) 15 SCC 131.
  2. The patent illegality ground because the arbitrator travelled beyond the contract the acted without jurisdiction (citing Bharat Coking Coal Ltd. v. Annapurna Construction, (2003) 8 SCC 154 on the role of arbitrator to arbitrate within the terms of the contract, and distinguishing error within the jurisdiction and in excess of jurisdiction). Also, because an arbitrator’s order is not the order of a court of law that can exercise powers ex debito justitiae.

Access the judgment here.

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