Party cannot Challenge Arbitral Award after Receiving Amount Payable under same: Delhi HC [Read Order]

In a recent decision the Delhi High Court observed that the party cannot challenge arbitral award after receiving amount payable under the same.

The Petitioner ( claimant in arbitration ), despite being the successful party in the arbitration, remains discontent with the arbitral award, rendered by a Sole Arbitrator. Their challenge is directed towards the findings on two specific claims i.e., Claims No. 4 and 5, that were only partially allowed.

The petitioner asserted that these findings exhibit ‘patent illegality’ and that the impugned award is in conflict with ‘the most basic notions of morality and justice,’ and ‘fundamental policy of Indian Law’. Conversely, the Respondent argues that the award is faultless, and the grounds of the Petitioner's challenge do not fall under any of the permissible criteria outlined in Section 34 of the Arbitration and Conciliation Act, 1996.

The petitioner contended that the impugned award violates Section 34 of the Arbitration and Conciliation Act, specifically Section 34(2)(b)(ii) and Section 34(2A), as it contravenes the fundamental policy of Indian law, conflicts with the most basic notions of morality or justice and suffers from patent illegality. It thus warrants interference by the Court.

It was also contended that the arbitral tribunal has contradicted its own findings in the operative part of award and has applied terms of the contract which were not applicable to the facts and disputes between parties.

A Single Bench of Justice Sanjeev Narula observed that “The mere reference to circulars by Respondent does not automatically entitle Petitioner to a loss of profit at a rate of 7.5%. Notably, the project in question has been terminated. Under these circumstances, the tribunal deemed it reasonable to award damages at 5% of the reduced work value. Such a determination is both reasonable and justified. Thus, given this context and the tribunal's careful consideration of available facts and evidence, there appears to be no substantial basis for judicial interference with the tribunal's award.”

“The prayer to set aside the award qua Claim no. 5 to that extent which it has been disallowed is not tenable. It is undisputed fact that on 18th August, 2022, Petitioner has already received the awarded amount under Claim no. 5. This acceptance would estop them from challenging the award as held in Sporty Solutionz Pvt. Ltd v. Badminton Association of India and another” the Court noted.

To Read the full text of the Order CLICK HERE

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