MP High Court Sets Aside District Court Order Rejecting SAIL's Arbitration Challenge In Two Paragraphs

The Madhya Pradesh High Court at Jabalpur has set aside a district court order that rejected SAIL's objections to a Rs 1.54-crore arbitration award, with its reasoning confined to just two paragraphs. The High Court said such a dismissal, without dealing with the objections raised, cannot be sustained.

Justice Vivek Jain, while ordering a fresh decision through a reasoned order observed,

“Such a non-speaking order passed in course of proceedings under Section 34 cannot be upheld by this Court, because there is no reasonable consideration of the grounds raised by the appellant in the application under section 34.” the court said.

The dispute relates to limestone mining work carried out for SAIL at the Koteshwar mines. The contractor, R. Haranadha Reddy, had raised several claims after disputes arose during the contract period. An arbitrator allowed a number of those claims and rejected others. After adjusting counterclaims filed by SAIL, the arbitrator ruled in favour of the contractor and directed SAIL to pay a net amount of Rs 1.54 crore.

SAIL challenged the arbitration award before the district court in Katni. It raised 43 separate objections, questioning how each claim and counterclaim had been decided. SAIL argued that the award was legally flawed and should be set aside. The district court rejected the challenge, but summed up its reasoning in just two paragraphs.

The High Court said this approach was not acceptable. It noted that even if courts are not expected to write long judgments in arbitration matters, they must still show that they have applied their mind.

“Though there may not be requirement of having a discussion like a judgment in civil suit, but each and every ground raised must have had some consideration, in at least a couple of lines to show the reasoning of the Court that how the ground raised does not fall within the purview of the grounds as enumerated in Section 34(2) of the Act of 1996,” the court observed.

Holding that this basic requirement was missing, the High Court sent the case back to be decided afresh by the Commercial Court at Jabalpur.