ORIENTAL INSURANCE COMPANY LIMITED V SARADA RANI ENTERPRISES1
The Calcutta High Court has set aside an arbitral award on the grounds that the tribunal had awarded an amount on the basis of an unpleaded claim made by the Insured that was unsupported by verification / affidavit.
Background
A challenge was brought under §34 of the Arbitration Act 1996 seeking to set aside the award of ₹60 lacs in favour of the Insured.
The arbitration concerned water damage to cement bags stored in the Insured's godowns. The Tribunal had two survey reports before it, one authored by a surveyor appointed by the Insurer and one authored by a surveyor appointed by the Court. However, the Tribunal ignored these and placed sole reliance on a letter from the Insured asking for ₹60 lacs.
Analysis
The Court found that the reliance on the Insured's letter was unjustified since it was without any material basis whatsoever and based on a unilateral claim made in a correspondence by the Insured, which had no legal footing.
The Court concluded that the Tribunal's decision was patently perverse and against the principles of the fundamental policy of Indian law.
The Court held that §34(4) of the Arbitration Act 1996 does not permit remitting matters to the Tribunal to reconsider an award where the defect is not merely technical but substantive and incurable.
Footnote
1. 2024 SCC OnLine Cal 6943
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