The Himachal Pradesh High Court highlighted that reasons are important in judicial or quasi-judicial decisions when it annulled an arbitral award.
The Himachal Pradesh High Court overturned an Arbitral Award and emphasized that the reasons provided are essential for judicial or quasi-judicial decisions. The Court was reviewing a Petition aimed at nullifying the Award given by the Arbitrator. Justice Satyen Vaidya, in a Single Bench, stated, “It is well established that the reasons are crucial for judicial or quasi-judicial decisions. They show how the mind has been applied to the facts and the relevant legal principles. In the case of Vishwanath Sood, the Engineer-in-charge did not impose a penalty or compensation, even though the contract had a clause for it. While Clause 2 of the current contract is similar to that in the Vishwanath Sood case, the factual circumstances are notably different.”
Advocate Sumit Raj Sharma represented the Petitioner, while Deputy Advocate General Sidharath Jalta represented the Respondents. In this matter, the Petitioner received a contract for construction work on the Chilladhar-Bihar road from Km 0/0 to 4/0 and the Jibhi-Bahu road from Km 0/0 to 7/0, awarded by the Respondent in 2002 for a tendered amount of Rs. 1,10,35,522/-. The work was supposed to be completed by April 13, 2003, but it was actually finished on October 31, 2005. The Petitioner raised disputes and invoked the arbitration clause in the contract. An Arbitrator was appointed, and it was argued that the Award was fundamentally flawed, leading the Petitioner to challenge it in the High Court.
The High Court stated that the award in question lacked reasoning regarding claims Nos 2(ii) and 3. It found the Arbitrator’s decision on these claims to be unreasonable and disregarding important evidence. The Court emphasized that no rational person would overlook fundamental legal principles in this situation, as the Arbitrator did. While some claims were ruled in favor of the contractor, the Court noted that it could not modify the award or send it back to the Arbitrator under Section 34 of the Arbitration and Conciliation Act, 1996. Therefore, the entire award needed to be annulled.
The Court also mentioned that it could not use its power under Section 34(4) since the petitioner did not request it. As a result, the High Court granted the Petition and annulled the Award.
Cause Title: Ashok Thakur v. State of H.P. & Another (Neutral Citation: 2024:HHC:12731)
