The abject lack of justification in an arbitral award and an order given by an arbitration court to retain such an award recently attracted the outrage of the Madras High Court.
The exercise of the arbitration court of rewriting the arbitration award by providing reasons in favor of the claims argument or the quantum awarded does not constitute the business of the Arbitration Court stated the high court. The bench comprising Chief Justice Sanjib Banerjee and Justice Senthilkumar Ramamoorthy observed that: Although it is not required to justify any paisa or rupee awarded to the claimant in an arbitral award, the general principle on which the quantum is based must be discernible from the award itself, in order for the award to be meaningful or even legally intelligible. In this case, the decision contested before the Arbitration Court was a textbook example of what an arbitral award will never be.
The Court emphasized that, both in civil litigation and under the Arbitration Act, 1996, there is a statutory mandate to pass reasoned orders. The bench noted that, as legally required by the Act of 1996, it is imperative that explanations should be given with respect to the award that is being rewarded unless the parties dispense it by agreement. The bench also added that the award has been quoted in this order in its entirety. No page of it has been left out or overlooked, but still, the outcome of the award would do injustice to the arbitrator and the party who was the beneficiary of the reward In view of what is readily evident from the face of the award, the Arbitration Court's observation pointed that the above-mentioned award is outrageous and not acceptable. The complete absence of explanations can not be glossed over in the way in which the verdict and order are questioned.
The High Court ruled that both the arbitral award and the conclusive judgment go against the most rudimentary principles of governing law and the philosophy of jurisprudence established over the years in this branch.