The Delhi High Court has dismissed an appeal challenging the setting aside of an arbitral award in a partnership dispute, holding that the arbitrator had ‘misdirected himself’ and returned findings that were ‘extraneous’ to the claimant’s own case. A Division Bench comprising Justice Navin Chawla and Justice Madhu Jain upheld the Single Judge’s order, which had interfered with the award under Section 34 of the Arbitration and Conciliation Act, 1996.
The dispute arose from inter se disagreements between the partners of M/S Rajendra Iron Mart. The appellant claimed that his signatures had been obtained on blank papers which were later misused to fabricate a Retirement Deed dated 19 January 2010, thereby excluding him from the partnership and its assets, including an industrial plot at Okhla. An arbitral tribunal accepted the appellant’s claim, declared the Retirement Deed and subsequent reconstitution of the firm invalid, and held that the appellant continued to be a partner.
However, the arbitral award was set aside by a Single Judge of the High Court in proceedings under Section 34, prompting the present appeal under Section 37. The appellant argued that the arbitral award was reasoned, based on evidence, and the Single Judge had impermissibly re-appreciated evidence as if sitting in appeal.
Rejecting these submissions, the Division Bench held that the arbitral tribunal had failed to return any clear finding on the appellant’s foundational plea that the Retirement Deed was signed on blank stamp papers and later fabricated. The Court noted that while the arbitrator had in fact agreed that a person engaged in prior litigation with partners would ordinarily not sign blank documents, it nevertheless proceeded to invalidate the Retirement Deed based on ‘other circumstances’ unrelated to the pleaded case. This approach, the Court held, justified interference under Section 34 of the Act.
Accordingly, the High Court upheld the Single Judge’s decision setting aside the arbitral award and dismissed the appeal.
Appearances
Appellant: Mr. S. S. Sastry, Mr. Rahul Kumar, and Mr. Abhishek Anand, Advocates
Respondents: Mr. Pawanjit S. Bindra, Senior Advocate, with Mr. Vinayak Marwah, Advocate
