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The Supreme Court observed that while considering an appeal under Section 37 of the Arbitration and Conciliation Act, a court cannot conduct an independent assessment of the merits of the award and must only ascertain that the exercise of power by the Court under Section 34 has not exceeded the scope of the provision.
The bench headed by Justice Mohan M. Shantanagoudar and Justice Vineet Saran held that in such appeals the court must only verify that the exercise of power by the Court under Section 34 did not exceed the scope of the provision. In the case of MMTC Ltd. vs. Vedanta Ltd., the division bench of the Delhi High Court had dismissed the appeal against the single bench order by rejecting the challenge to the majority Award approved by the Arbitral Tribunal.
In the judgment, Justice Shantanagoudar, explained the position of the law regarding the extent of interference with an arbitral award. The court observed that while considering the petition in accordance with Section 34, a court does not sit in appeal over the arbitral award and may interfere on the merits of the award on the limited ground as mentioned under Section 34(2)(b)(ii), i.e. if the award goes against the public policy of India.
The bench also noted 2015 amendments to Section 34 and mentioned that the above position was somewhat modified. In accordance with the insertion of Explanation 1 to Section 34(2), the scope of the violation of the public policy of India has been modified to the extent that it now means fraud or corruption in the issuance of the award, violation of Section 75 or Section 81 of the Act, contravention of the fundamental policy of Indian law, and conflict with the most basic notions of justice or morality.
Moreover, sub-section (2A) has been inserted in Section 34, which states that in the case of domestic arbitrations, contravention of Indian public policy also includes illegality of a patent that appears on the face of the award. It is provided that an award shall not be set aside merely on account of an incorrect application of the law or by re-appreciating of evidence. It said that with respect to interference with an order issued pursuant to Section 34, as per Section 37, it cannot be disputed that such interference under Section 37 cannot exceed the restrictions set forth in Section 34. The Court cannot conduct an independent evaluation of the merits of the award, and should only verify that the exercise of power by the Court under Section 34 did not exceed the scope of the provision.
‘‘Thus, it is evident that in case an arbitral award has been confirmed by the Court under Section 34 and by the Court in an appeal under Section 37, this Court must be extremely cautious and slow to disturb such concurrent findings."
In facts of the case, the bench affirmed the Delhi High Court order refusing to interfere with the Majority award.
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