Madras HC imposes cost for dishonest attempt by appellant to wriggle out of its obligation to comply with arbitral award

Read Judgment: Kothari Industrial Corporation Limited vs. M/s. Southern Petrochemicals Industries Corporation Limited & Anr

Pankaj Bajpai

Chennai, September  30, 2021: While upholding the arbitral award dated September 30, 2017 in respect of electricity dues by Tamil Nadu Electricity Board, the Madras High Court ordered the appellant to pay costs of Rs.50,000 to the respondent (Southern Petrochemicals) and further costs of Rs.50,000 to the Tamil Nadu State Legal Services Authority (TNSLA) on account of his inglorious efforts in wasting judicial time. 

A Division Bench of Chief Justice Sanjib Banerjee and Justice P.D Audikesavalu observed that scope of interference u/s 34 of the Arbitration & Conciliation Act, 1996 is limited and the court does not sit in appeal over an award which has been challenged before it. 

The court does not re-appreciate the evidence and it is judicially accepted that the arbitrator is the final authority as to both the quality and the quantity of the evidence, added the Bench. 

The High Court further elaborated that once the appropriate tests are applied at the stage of Section 34 of the said Act, there is very little room for an appellate court to interfere with the order. 

“Litigants appear to be taking a chance by not accepting the finality of an award and questioning the same on specious grounds by invoking Section 34 of the Act and, even thereafter, pursuing worthless challenges in appeal from the order of dismissal of the petition u/s 34 of the said Act”, observed the Division Bench. 

Speaking for the Bench, Chief Justice Banerjee highlighted that one of the principal ways how litigants are encouraged to adopt this procedure and clog up courts with undeserving matters is the reluctance on the part of the courts to award appropriate costs.

In the present case, both the petition u/s 34 of the said Act and this worthless appeal were a complete waste of time and the contention of the appellant that the arbitrator did not look into the matter flies in the face of at least 20 pages of discussion in the award, added Chief Justice Banerjee. “The order impugned appropriately reads the award, finds that the arbitrator had applied his mind to the matters in issue and dealt with all three aspects that were urged by the appellant before the arbitration court, namely that the claim was not maintainable, that the claim was barred by limitation and that no amount was payable by the appellant herein, including the interest that has been awarded. The arbitration court found adequate reasons having been furnished by the arbitrator in the impugned award”, observed the High Court.