Summary
The Court restored the arbitral rejection of claims for increased entry-tax and toll-tax costs in the Chenab bridge contract. The tribunal’s construction of the tax and price-variation clauses was reasonable and plausible. The Division Bench exceeded Section 37 jurisdiction by substituting its preferred construction for that view.
Issues
- Whether Section 37 permitted overturning the tribunal’s interpretation of the tax-reimbursement and price-variation clauses.
- Whether the award was perverse or patently illegal.
Provisions considered
- Sections 34 and 37, Arbitration and Conciliation Act, 1996Section 37 review is confined by the same limits as Section 34 and cannot become an independent appellate assessment of contractual meaning or evidence. (¶¶ 14, 15, 16, 18, 20, 21, 22, 23, 24)
- Section 5, Arbitration and Conciliation Act, 1996The statutory restraint on judicial intervention reinforced respect for the parties’ choice of arbitration and the tribunal’s plausible resolution. (¶¶ 22, 23, 24)
Held
- Section 37 jurisdiction cannot extend beyond the restrictions governing a Section 34 challenge. A possible alternative view of facts or contractual language does not authorise replacement of a reasonable arbitral interpretation. (¶¶ 14, 15, 16, 18, 20)
- The tribunal reasonably read Clause 5.1.2 as covering taxes chargeable on bills to the corporation, while costs and taxes forming components of quoted rates were governed by the general price-variation mechanism. Clauses 7.1.1, 7.1.2 and 11.7 supported rejection of separate reimbursement for the disputed entry and toll taxes. (¶¶ 7, 8, 8.1, 8.2, 8.3, 17, 18, 22, 24)
- The principle of giving effect to all contractual clauses does not enlarge the reviewing court’s jurisdiction. The Division Bench could not invoke harmonious construction simply to replace the tribunal’s plausible view; decisions permitting intervention for genuinely impossible or perverse interpretations were distinguishable. (¶¶ 19, 20, 21, 22)
- The evidence and interpretation here disclosed a possible, reasonable view rather than perversity or patent illegality. The Single Judge properly respected the limited challenge jurisdiction, and the Division Bench should have left that decision undisturbed. (¶¶ 22, 23, 24)
Result
Appeal allowed. Division Bench judgment set aside; Single Judge’s order rejecting the Section 34 challenge restored, leaving the arbitral rejection of the disputed tax claims in place. No costs.