Background
Aptec1 entered into a contract with the Ministry of Defence for the supply of mountaineering boots for the defence forces. The Ministry received the goods and after inspecting them, it made a payment on account to Aptec. The Ministry subsequently issued a notice alleging that boots were defective, and encashed the bank guarantee that had been furnished by Aptec.
Aptec commenced arbitration and filed applications before the tribunal seeking discovery of documents, which were rejected. Aptec challenged this rejection under §34 of the Arbitration Act. The §34 Court dismissed the challenge, stating that a tribunal's procedural order does not qualify as an interim award and thus cannot be challenged under §34. Aptec challenged this order before a Division Bench.
Decision
The Division Bench of the Delhi High Court set aside the decision of §34 Court and held that:
- An application under §34 is maintainable against an arbitral award and as per §2(1)(c), an arbitral award includes an interim award.
- An interim award includes the tribunal's order that conclusively determines any substantive issue between the parties.
- In the discovery proceedings, Aptec had claimed that an accessory used by the Ministry on Aptec's boots and manufactured by another company, were incompatible with the boots. When dismissing the discovery applications, the tribunal held that the accessories were satisfactory and there was no evidence of incompatibility. As such, the tribunal has given a final finding on an issue in dispute which was conclusive and binding on the parties and this was an interim award capable of being challenged under §34.
Footnote
1. 2025 SCC OnLine Del 92
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