The Chhattisgarh High Court, comprising Justice Rajani Dubey and Justice Bibhu Datta Guru, delivered a landmark judgment in M/s S.K. Minerals v. South Eastern Coalfields Ltd. (ARBA No. 35 of 2022). The Court reinstated an arbitral award, emphasizing the limited scope of judicial intervention in arbitration and reaffirming the arbitral tribunal’s authority as the master of evidence.
Background of the Case
The appellant, M/s S.K. Minerals, a partnership firm and registered contractor, filed an appeal under Section 37 of the Arbitration and Conciliation Act, 1996, challenging the Commercial Court’s order dated August 8, 2022. The Commercial Court had set aside an arbitral award in favor of the appellant, citing limitation and patent illegality. The dispute arose from a construction contract awarded by the respondent, South Eastern Coalfields Ltd. (SECL), for building an approach road to the Kapildhara Project in Chhattisgarh.
The project was delayed, partly due to unforeseen circumstances such as heavy rains and delayed forest clearance. Although the work was completed on April 30, 1995, disputes over payment and the finalization of the revised estimate led to arbitration proceedings.
Legal Issues Involved
1. Limitation: The primary legal issue was whether the appellant’s claims were barred by limitation. The respondent argued that the claims, raised after 11 years from the project’s completion, were time-barred.
2. Judicial Interference in Arbitration: The case also addressed the scope of judicial review under Sections 34 and 37 of the Arbitration Act, focusing on whether the Commercial Court exceeded its jurisdiction by reappraising the evidence and findings of the arbitrator.
Judgment and Key Observations
The High Court overturned the Commercial Court’s decision, reinstating the arbitral award. The judgment provided critical observations on arbitration law and judicial interference:
1. Limitation Is a Mixed Question of Law and Fact: The Court noted that the question of limitation was explicitly left to the arbitral tribunal by a previous High Court order (ARBA No. 40 of 2013). The arbitrator, after reviewing the evidence, held that the cause of action arose on July 18, 2006, when the appellant asserted its claims, and arbitration proceedings commenced on April 20, 2008. The High Court upheld this reasoning, emphasizing that the tribunal’s findings on limitation were well-founded.
2. Limited Scope of Judicial Review: Citing precedents, the Court reaffirmed that judicial interference under Section 34 of the Arbitration Act is limited to grounds such as fraud, corruption, or conflict with public policy. Courts cannot reappraise evidence or substitute their judgment for that of the arbitrator. The High Court observed that the Commercial Court erred by scrutinizing the arbitral award as if it were an appellate body.
3. Public Policy and Patent Illegality: The Court rejected the Commercial Court’s finding that the award conflicted with public policy. It emphasized that procedural delays attributable to the respondent, such as the non-finalization of the revised estimate and the failure to process payments, could not be used to deny the appellant’s claims.
Important Quotes from the Judgment
– “The arbitral tribunal is the master of evidence, and findings of fact derived from the evidence on record are not to be scrutinized as if the Court were sitting in appeal.”
– “A delay in preparing the final bill attributable to the respondent cannot deprive the claimant of its rightful claim under all principles of morality and justice.”
Details of the Award
The arbitral tribunal had awarded the following to the appellant:
– ₹2,59,536 with 9% interest per annum from May 1, 1995, to March 19, 2021.
– ₹1,47,203 without interest for the same period.
– Future interest at 9% per annum until payment.
– Costs of ₹1,00,000.
Parties and Counsel
– Appellant: M/s S.K. Minerals, represented by Advocates Mr. Manoj Paranjape and Mr. Amit Soni.
– Respondent: South Eastern Coalfields Ltd., represented by Senior Advocate Mr. H.B. Agrawal, with Advocates Ms. Swati Agrawal, Mr. Anumeh Shrivastava, and Mr. Akash Shrivastava.
