No Interference with the Arbitral Award Would be Warranted Unless the View is Patently Illegal or Perverse – Delhi High Court

07 May 2024 8:19 AM

By: Admin

In a landmark judgment announced on 19th September 2023, the Delhi High Court has settled the ongoing litigation between the National Highways Authority of India (NHAI) and D S Toll Roads Pvt. Ltd. The Court has upheld the arbitral award dated 07.07.2016 and emphasized limited judicial interference with arbitration awards.

Justice Manoj Kumar Ohri presided over the matter filed under Section 34 of the Arbitration & Conciliation Act, 1996. The case revolved around a dispute related to the delay in the completion of a highway project in Tamil Nadu. D S Toll Roads Pvt. Ltd. had claimed various amounts as compensation for delays and additional costs incurred.

"The scope of interference under section 34 of the Act is limited. The arbitral tribunal is the final adjudicating authority in respect of the disputes between the parties, as well as the interpretation of the agreement between them," the judge noted in his observation. He added, "No interference with the arbitral award would be warranted unless the Court finds that the view is patently illegal or perverse."

The Court further clarified that sub-clauses 13.5.1 and 13.5.2, dealing with compensation for delays in handing over the site, were not applicable in this case. Instead, the court concluded that the computation of damages should be done according to sub-clause 31.2 of the Concession Agreement.

This decision has clarified the limits of judicial intervention in arbitration matters and will likely serve as a precedent in similar future disputes.

NHAI had challenged the arbitral award that granted various compensatory amounts to D S Toll Roads Pvt. Ltd. The contractor had raised six claims amounting to various figures, and the Arbitral Tribunal had awarded interest on these claims as well.

Legal experts are viewing the decision as a strong endorsement of arbitration as a dispute resolution mechanism, where courts are not to interfere unless absolutely necessary, according to the standards set by Section 34 of the Arbitration and Conciliation Act.

In the words of the judge, "The Court is not meant to act as a court of first appeal, and cannot supplant its view over that of the arbitral tribunal."

The judgment has been received with great interest by the legal community and could have significant implications for arbitration proceedings in India going forward.

Date of Decision: September 19, 2023

NATIONAL HIGHWAYS AUTHORITY OF INDIA vs D S TOLL ROADS PVT. LTD.