Summary
The Court restored an arbitral award rejecting a dealer’s challenge to termination following its own withdrawal notice. Even assuming acceptance was required, the arbitrator plausibly found that IOC had accepted the notice before its attempted withdrawal. The High Court exceeded limited award-review jurisdiction by reassessing the correspondence and ordering dealership restoration with further damages liberty. Both appeals were allowed, with parties bearing their own costs.
Issues
- Whether the arbitrator’s finding that the dealer’s notice had been accepted was a permissible view of the correspondence.
- Whether a new contractual interpretation could be raised for the first time in the Supreme Court.
- Whether the High Court could reassess the merits and grant restoration and damages liberty after setting aside the award.
Provisions considered
- Sections 34 and 37, Arbitration and Conciliation Act, 1996A plausible arbitral view within jurisdiction cannot be displaced by merits reassessment. The High Court wrongly overturned the finding of acceptance and went beyond setting aside by directing dealership restoration and permitting further damages claims. (¶¶ 9, 10, 18, 21, 22, 23, 25, 26, 27, 28)
Held
- The dealer could not first argue in the Supreme Court that the agreement prohibited three-month termination during its initial fifteen years. That construction was never placed before the arbitrator or lower courts, was not the only possible view, and was inconsistent with the dealer’s own invocation of the termination clause. (¶¶ 17, 18)
- Clause 3 appeared to permit termination on expiry of three months’ notice without requiring acceptance. The Court nevertheless examined the case on the parties’ and arbitrator’s common assumption that acceptance was necessary. It therefore did not need to resolve that alternative construction as the basis of relief. (¶¶ 3, 19, 20, 21, 22, 24, 26)
- The original notice, its notarised confirmation and IOC’s responsive letter had to be read in context. The arbitrator’s finding that IOC conveyed acceptance before the dealer sought withdrawal was plausible and disclosed neither perversity nor patent illegality. Possible shortcomings in the wording of the acceptance letter did not entitle the High Court to substitute its own reading. (¶¶ 4, 5, 6, 8, 21, 22, 23, 24, 26)
- Reliance on later management approval did not alter the result: IOC explained that approval in relation to taking the matter forward and re-awarding the dealership, and the attempted withdrawal was in any event subsequent even to that approval. The High Court could not overturn the arbitral finding, already upheld under section 34, through a fresh merits review under section 37. (¶¶ 25, 26)
- The High Court also exceeded the permissible relief by directing restoration of the dealership and permitting damages after setting aside the award. On the law applied in this judgment, it should leave parties to their available remedies rather than grant substantive further relief by modifying the award. The appeals were allowed, the High Court judgment set aside and the award restored; parties were directed to bear their own costs. (¶¶ 27, 28)
Result
Both appeals allowed. High Court judgment set aside and arbitral award restored. Parties to bear their respective costs.