"The Arbitrator is the Sole Judge of Facts; Unless an Error of Law is Shown, Interference with the Award Should be Avoided" – Supreme Court Upholds Arbitrator's Award in Road Construction Contract Case

In a landmark judgment, the Supreme Court of India has restored an arbitration award in favor of M/S S.D. Shinde, concerning a road construction contract with the Government of Maharashtra Irrigation Department. The award had been previously set aside by the Bombay High Court.

The Bench comprising J. [S. RAVINDRA BHAT] and J. [DIPANKAR DATTA] emphasized the limited role of courts in arbitration matters, stating, "It is axiomatic that courts, while adjudging whether an arbitration award calls for interference has to be conscious that the arbitrator is the sole judge of facts; unless an error of law is shown, interference with the award should be avoided." [Para 23]

The court further noted that the scope of jurisdiction under Section 30/33 of the Indian Arbitration Act never extended beyond discerning if the award disclosed an “error apparent on the face of the award,” adding that the error of law must be apparent from the award itself or from a document actually incorporated therein [Para 24].

The judgment also dealt with the award of damages, where the court found that the arbitrators consciously eschewed the grant of compensation for loss of profit, and the sum awarded on various heads was fully supported by evidence. The court found the award of interest at 12% per annum neither implausible nor illegal [Para 22].

Supreme Court set aside the impugned judgment and the judgment of the trial court, restoring the award. The respondents were directed to ensure full payment in terms of the award to the appellant within eight weeks, and the appeals were allowed in these terms [Para 25].

Date of Decision: AUGUST 22, 2023

M/S S.D. SHINDE TR. PARTNER  vs GOVT. OF MAHARASHTRA & ORS.