Delhi HC Reaffirms Limited Scope of Judicial Review Under Section 34 of Arbitration Act

New Delhi, Dec 31 (KNN) The Delhi High Court has reiterated the restricted scope of judicial intervention under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act), emphasising that courts do not sit in appeal over arbitral awards.

In a ruling delivered on December 24, 2024, the court held that arbitral awards can only be set aside for patent illegality, jurisdictional errors, or violations of public policy. 

It underscored that arbitrators are the final arbiters of fact and contract interpretation unless their conclusions are perverse or unreasonable.

The court observed that judicial review is confined to checking whether the award has been passed without evidence, is patently illegal, or irrationally considers irrelevant factors while ignoring vital evidence. 

It reiterated that courts cannot substitute their views with the arbitrator’s if the latter’s interpretation is plausible. 
Importantly, under the concept of patent illegality, intervention is permissible only for contravention of substantive law, failure to provide reasons, or misinterpretation of contractual terms.

The court also clarified that awards cannot be set aside for alternative interpretations unless they are clearly irrational or shock the conscience. 

The judgment reinforced the principle that party autonomy and finality of arbitration must be respected, aligning with the legislative intent of minimal judicial interference.

The dispute arose between Quadrant Televentures Limited and ATC Telecom Infrastructure Pvt. Ltd. over unpaid invoices and exit penalties after Quadrant terminated its GSM services in 2017 following the Department of Telecommunications' (DoT) refusal to extend its Unified Access Service License (UASL). A Sole Arbitrator awarded ATC Rs 77.96 crore, rejecting Quadrant’s counterclaims.

Quadrant contended that the dispute fell within the exclusive jurisdiction of the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) and argued that penalties were unjustified as the termination was a force majeure event caused by regulatory actions. 

The court, however, found the arbitrator’s interpretation reasonable and the award consistent with contractual provisions.
Dismissing the challenge, the court upheld the arbitral award, affirming that the arbitrator acted within jurisdiction and followed a fair and judicial approach.

(KNN Bureau)