Associate Builders v. Delhi Development Authority

Facts

A construction contractor, Associate Builders, obtained an arbitral award against the DDA for delay-related claims. The DDA's challenge succeeded before the High Court, which interfered with the tribunal's findings; the contractor appealed to the Supreme Court, which examined the permissible limits of S. 34 review.

Issues

• What are the precise heads under which an award may be set aside as contrary to public policy under S. 34?
• To what extent may a S. 34 court interfere with findings of fact, evidence and contract interpretation?

Arguments

Associate Builders argued the High Court had impermissibly sat in appeal and substituted its own view on facts and evidence. The DDA argued the award was perverse and contrary to public policy.

Held

The Court comprehensively summarised the pre-2015 public policy heads: (a) fundamental policy of Indian law (judicial approach, natural justice, Wednesbury, perversity/irrationality); (b) interests of India; (c) justice or morality (an award shocking the conscience); and (d) patent illegality going to the root of the matter (contravention of substantive law, the Act, or the contract). It emphasised that the S. 34 court is not a court of appeal, cannot correct errors of fact, must let a 'possible view' of the arbitrator on facts pass muster, and will not interfere merely because the evidence is thin. On the facts it restored the award.

Ratio decidendi

An award may be set aside under S. 34 only within the defined public-policy heads; the arbitrator is the final judge of facts, evidence and contract interpretation, and a possible/plausible view cannot be disturbed, the court not being an appellate forum.

Significance

The leading consolidating authority on pre-2015 S. 34 jurisprudence, repeatedly relied upon and partly carried forward by statute. Its formulation of patent illegality and perversity was expressly retained by Ssangyong for domestic (non-ICA) awards even after the 2015 Amendment, though the 'interests of India' head and Wednesbury were thereafter abolished.

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