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2020 (5) TMI 733 - SC - Indian LawsDomestic award between two Indian entities - Patent illegality - HELD THAT:- After considering the Constitution Bench decision in DURGA SHANKAR MEHTA VERSUS THAKUR RAGHURAJ SINGH AND OTHERS. [1954 (5) TMI 25 - SUPREME COURT] and number of other judgments, in BUSSA OVERSEAS & PROPERTIES (P) LTD. & ANOTHER VERSUS UNION OF INDIA & ANOTHER [2016 (1) TMI 914 - SUPREME COURT], the Court held that consistency is the cornerstone of the administration of justice and courts have evolved and formulated a principle that if the basic judgment is not assailed and the challenge is only to the order passed in review, the Supreme Court is obliged not to entertain such special leave petitions. Patent illegality as a ground for setting aside a domestic award was first expounded in the judgment of OIL & NATURAL GAS CORPN. LTD. VERSUS SAW PIPES LTD. [2003 (4) TMI 438 - SUPREME COURT] where this Court was dealing with a domestic award. This Court gave a wider interpretation to the ‘public policy of India’ in Section 34(2)(b)(ii) in Part I of the 1996 Act. The Court held that an award would be “patently illegal”, if it is contrary to the substantive provisions of law; or, provisions of the 1996 Act; or, terms of the contract. The present case arises out of a domestic award between two Indian entities. The ground of patent illegality is a ground available under the statute for setting aside a domestic award, if the decision of the arbitrator is found to be perverse, or, so irrational that no reasonable person would have arrived at the same; or, the construction of the contract is such that no fair or reasonable person would take; or, that the view of the arbitrator is not even a possible view - In the present case, the High Court has referred to the judgment in ASSOCIATE BUILDERS VERSUS DELHI DEVELOPMENT AUTHORITY [2014 (11) TMI 1114 - SUPREME COURT] at length and arrived at the correct conclusion that an arbitral award can be set aside under Section 34 if it is patently illegal or perverse. In the present case, the High Court in paragraph (51) has held that no reasonable person could have arrived at a different conclusion while interpreting Clauses 2.7 and 3.4 of the BoQ and Clauses 32(ii)(a) and 33(iii) of the Conditions of Contract. Any other interpretation of the above clauses would definitely be irrational and in defiance of all logic - Even though the High Court referred to various judgments, the case has been decided on the ground that the arbitral award is a perverse award and on a holistic reading of all the terms and conditions of the contract, the view taken by the arbitrator is not even a possible view. While dealing with the appeal under Section 37 of the Act, the High Court has considered the matter at length, and held that while interpreting the terms of the contract, no reasonable person could have arrived at a different conclusion and that the awards passed by the arbitrator suffer from the vice of irrationality and perversity. SLP dismissed.
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