Court Must Not Interfere Into Commercial Contract Unless Arbitrator’s Finding Is Excessive: Delhi HC Dismisses Plea Challenging ₹77.96 Cr Award
The Delhi High Court reiterated that the Court must not interfere into the commercial contract between the parties unless any finding of the Arbitrator is excessive.
The Court dismissed a Petition challenging the Arbitral Award of Rs. 77.96 crores being directed to be paid to ATC Telecom Infrastructure Pvt. Ltd. by Quadrant Televentures Limited.
A Single Bench of Justice Dinesh Kumar Sharma observed, “There is nothing on record to suggest that learned arbitrator has not considered the material before it or has considered the material which not on the record. This court does not have power to review or reappreciate the factual matrix of the case or correctness of the interpretation of the terms of the contract between the parties. It is also a settled proposition that in commercial contract between the parties, the court should not interfere into the same unless any finding of the learned Arbitrator is excessive. The Court considers that the finding arrived on learned tribunal does not call for any interference.”
The Bench emphasised that commercial contracts are entered into between the parties for the purpose of business, and such terms of the contract must be interpreted in sync with the business efficacy rules.
Senior Advocate Akhil Sibal appeared on behalf of the Petitioner while Senior Advocate Raj Shekhar Rao appeared on behalf of the Respondents.
Facts of the Case -
Essar Commvision Limited, being the predecessor-in interest of the Petitioner, was awarded the BSO (Basic Service Operation) license in 1997 for the Punjab service area. Thereafter, New Telecom Policy (NTP) was announced in 1999, which allowed the licensees to migrate from a Fixed License Fee regime to a Revenue Sharing Regime and the licenses to be granted for an initial period of 20 years extendable by an additional period of 10 years. In November 2003, Union of India on the recommendation of the sector Regulator, Telecom Regulatory Authority of India (TRAI) introduced the Unified Access service (UAS) licensing regime, permitting an access service provider to offer both fixed and/or mobile services under the same license, using any technology and also gave an option to the existing operators to either continue under the present regime or migrate to the new UAS License in the existing service area.
The Petitioner’s license was converted to UASL in 2003 and then, a few Master Service Agreements (MSAs) were executed between the Petitioner and others. Thereafter, Supplementary Agreement was executed between parties to settle the disputes. Since the period of UASAL held by the Petitioner was due to expire in 2017, it requested the Department of Telecom (DoT) to allow it to use the GSM spectrum for 20 years. However, DoT refused to allow the same and being aggrieved, the Petitioner filed a Telecom Petition before the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) which was still pending. Sole Arbitrator was appointed by the High Court and it passed the impugned Award by founding the Petitioner liable and directed it to pay the full amounts claimed by the Respondent amounting to Rs. 77.96 crores along with applicable interest. Hence, the Petitioner approached the High Court.
The High Court in view of the facts and circumstances of the case, noted, “It may be reiterated at the cost of brevity that the arbitrator is the final arbitor of the facts and is entitled to interpret the terms of the contract. The interpretation of a contract falls within the domain of the arbitrator, and such an interpretation can only be set aside if such is patently illegal or perverse.”
The Court said that the Court must only see whether the interpretation as on arrived by the Arbitrator could be arrived by any prudent person or just not perverse.
“It may also be reiterated while interpreting the term of a contract, the court cannot substitute its own view with the view of the arbitrator if it based upon logic and reason. … It is also to be noted that terms of terms are to be read in conjunction with each other and no term can be read in isolation”, it further reiterated.
“Even at the cost of brevity, it can be reiterated that all the terms have to read ejusdem generis”, it also remarked.
The Court enunciated that the Arbitrator is the ultimate master of the fact and key evidence and it is the settled proposition that the findings based on facts and evidence cannot be disturbed under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act).
Moreover, the Court reiterated that the construction of the term of a contract falls within the exclusive domain of the Arbitrator.
“This court considers that the real test while deciding the petition under section 34 of the A&C Act is that if on perusal of the impugned award the court finds that it has been passed on no evidence or is patently illegal or it is irrational or irrelevant factor has been taken into account, while ignoring vital evidence only then the court should interfere into the award. If the award is logical based on the reliable evidence, then there is no jurisdiction to interfere into the same”, it observed.
The Court concluded by saying that, under the concept of "patent illegality", the interference can be made only if there is a contravention of substantive law, failure to provide reason for the award, and misinterpretation of contractual terms and in this case, none of these conditions are present.
Accordingly, the High Court dismissed the Petition.
Cause Title- Quadrant Televentures Limited v. ATC Telecom Infrastructure Pvt. Ltd. & Anr. (Neutral Citation: 2024:DHC:10020)
Appearance:
Petitioner: Senior Advocate Akhil Sibal, Advocates Yashvardhan, Nikhil Y. Chawla, Gyanendra Shukla, Kritika Nagpal, and Pranav Das.
Respondents: Senior Advocate Rajshekhar Rao, Advocates Manish Jha, Shalini Sati Prasad, Zain Maqbool, Mehrunissa Anand, and Arsh Rampal.
