In a significant judgment, the Allahabad High Court ruled that arbitral awards can only be challenged on narrow grounds, affirming the principle of minimal judicial interference in arbitration matters. The court dismissed two appeals filed under Section 37 of the Arbitration and Conciliation Act, 1996. The appeals were led by Vivek Nayak (Deceased), represented by his legal heirs, and Om Prakash Nayak, contesting an arbitral award and subsequent lower court decisions. The case numbers are 17 of 2022 and 20 of 2022, respectively. Justice Piyush Agrawal presided over the case
Background of the Case:
The dispute originated from the acquisition of land near the Ghaziabad–Aligarh section in 2012 for infrastructure development. The appellants had initially purchased the land for commercial purposes and had set up a water bottling plant. Dissatisfied with the compensation determined by the Special Land Acquisition Officer, they sought a higher compensation, arguing that the assessment did not consider the market value adequately, as mandated under Section 26 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.
The appellants approached the Arbitrator/Collector, Aligarh, who modified the compensation. However, the Additional District Judge, Aligarh, later upheld the Arbitrator’s award, rejecting the appellants’ request for higher compensation and solatium, prompting them to file an appeal under Section 37 of the Arbitration Act.
Legal Issues:
1. Scope of Judicial Interference:
The primary issue was whether the courts could modify or interfere with an arbitral award based on perceived inadequacy of compensation. The appellants contended that the lower courts had failed to apply their judicial minds while assessing compensation and did not consider the commercial potential of the land.
2. Award of Solatium and Interest:
Another issue was whether solatium and interest, as stipulated under the 2013 Act, could be claimed, especially in light of the Supreme Court’s judgment in Union of India vs. Tarsem Singh (2019). The appellants argued that they were entitled to solatium and interest, even though the arbitral award was finalized in 2013, prior to the Tarsem Singh decision.
Court’s Observations and Ruling:
Justice Piyush Agrawal reiterated that arbitral awards can only be interfered with under limited grounds provided under Sections 34 and 37 of the Arbitration Act. Quoting relevant judgments, the court emphasized:
“The mere possibility of an alternative view on facts or interpretation of the contract does not entitle the courts to reverse the findings of the arbitral tribunal.”
The court further clarified that solatium and interest under the 2013 Act could not be applied retrospectively to arbitral awards finalized before the Tarsem Singh ruling. Citing a precedent from Smt. Savitri Devi vs. Union of India (2024), the judgment stated:
“Opening concluded arbitrations to apply new judicial decisions retroactively would create legal and procedural chaos, undermining the stability of the arbitration process.”
The court concluded that the appellants’ grounds for appeal were untenable, as they sought a reassessment of facts and compensation rather than addressing any fundamental error in the arbitral process. It dismissed the appeals, emphasizing that arbitral awards must be respected to maintain the autonomy and finality of the arbitration process.
Case Details:
– Case Number: Appeal No. 17 of 2022 & Appeal No. 20 of 2022
– Judge: Justice Piyush Agrawal
– Lawyers for Appellants: Badri Kant Shukla and Manu Saxena
– Lawyers for Respondents: Prabha Shankar Mishra, Pranjal Mehrotra, and Vinay Mishra
