Arbitrator Is The Sole Judge Of Quality And Quantity Of Evidence, Court Cannot Act As Court Of Appeal: Punjab & Haryana High Court

"The High Court should not act as a Court of appeal and reappraise the material/evidence and embarked on a path by substitution in its own view." Punjab and Haryana High Court, in a significant ruling dated November 20, 2015, held that courts cannot reappraise evidentiary material or substitute their own view for that of the arbitral tribunal while exercising supervisory jurisdiction under the Arbitration and Conciliation Act, 1996.

Justice Amit Rawal dismissed a contractor's appeal against an arbitral award, reiterating that "the Arbitrator is the sole judge of quality and quantity of the evidence before him and decide on the basis of the available evidence."

The appellant-contractor was awarded a special road repair contract worth ₹9,93,340 to be executed between March 25, 1995, and September 24, 1995. Due to the non-supply of required bitumen by the Union of India, the work could not be executed within the stipulated timeline, leading to subsequent contract cancellation and arbitration. The Arbitrator partly allowed the claim by awarding ₹1,00,000 as compensation for loss of expected profit but rejected the claim for damages beyond September 24, 1995, prompting the contractor to challenge the award before the Section 34 court and subsequently before the High Court under Section 37.

The primary question before the High Court was whether the arbitral award suffered from patent illegality warranting interference under Section 34 of the Arbitration and Conciliation Act, 1996. The court was also called upon to determine whether a contractor is entitled to post-stipulated period damages in the absence of cogent evidence.

Limited Scope Of Judicial Interference Under Section 34

The High Court began by examining the statutory boundaries governing challenges to arbitral awards, underscoring that the supervisory court possesses limited scope of interference. Justice Rawal observed that where a party fails to lead evidence to establish claims for damages, the arbitral tribunal cannot be faulted for rejecting such claims, nor can such an omission fall within the realm of Section 34 of the 1996 Act.

The bench emphasized that the Arbitrator had acted as a technical expert to evaluate the record and appropriately awarded ₹1,00,000 after finding that the required bitumen was not available in the department's stores during the contract period.

Arbitrator Sole Judge Of Evidentiary Material

Addressing the appellant's contention that post-contractual damages were ignored, the court held that the appellant's plea fell flat due to the absence of supporting evidence. The bench affirmed the established legal doctrine that judicial intervention is strictly circumscribed to statutory grounds.

"The question which has now been raised in the aforementioned appeal has already been answered by the Hon'ble Supreme Court in catena of judgments wherein it has been laid down that until and unless the award suffers from illegality as statutorily prescribed under Section 31 (3) of the Act, the same cannot be interfered with."

Reliance On Apex Court Precedents In Associate Builders And Navodaya Mass

To reinforce the principle of judicial restraint, the High Court relied upon authoritative rulings of the Supreme Court in Associate Builders v. Delhi Development Authority (2015) and Navodaya Mass Entertainment Ltd. v. J. M. Combines (2015). The bench noted that interference is warranted only when an award is afflicted with an error apparent on the face of the record or where statutory legal provisions are violated.

The court explicitly cautioned that High Courts exercising arbitration jurisdiction must resist the temptation to sit as appellate forums.

"The High Court should not act as a Court of appeal and reappraise the material/evidence and embarked on a path by substitution in its own view. The arbitrator has dealt with the dispute which was contemplated and was within the scope of it."

Award Rendered By Technical Expert Upheld

Finding no perversity or error of law in the impugned arbitral award or the order of the Section 34 court, the High Court affirmed that the award was perfect and justified. The bench concluded that the arbitrator acted within jurisdiction and decided the controversy on the basis of available evidence on record.

The High Court dismissed the appeal and held that arbitral awards cannot be disturbed on merits unless there is patent illegality or statutory non-compliance. The ruling re-establishes the foundational principle that arbitral tribunals hold exclusive primacy over the appraisal and sufficiency of evidence.

Date of Decision: 20 November 2015