Delhi High Court: Section 34 Of Arbitration Act Cannot Be Used For Reappreciation Of Facts

Delhi High Court: Section 34 Of Arbitration Act Cannot Be Used For Reappreciation Of Facts

Justice C. Hari Shankar of the Delhi High Court dismissed a petition filed under Section 34 of the Arbitration and Conciliation Act, 1996, challenging an arbitrator's award. The award directed the petitioners to execute a sale deed in favour of the respondents for a disputed property in New Delhi. The Court held that the petitioners' contentions should have been raised before the Arbitral Tribunal, and reappreciation of facts is not permitted under Section 34.

The case stemmed from arbitral proceedings initiated by the respondents seeking specific performance of an agreement to sell (ATS) concerning a property in New Delhi. The arbitrator ruled in favour of the respondents, ordering the petitioners to execute a sale deed. Aggrieved by the decision, the petitioners moved the High Court under Section 34 of the Act, challenging the award.

The petitioners argued that the arbitral proceedings were conducted ex parte because they were unaware of the proceedings until the respondents filed an execution petition. They further contended that the ATS could not have been executed because the original allotment letter for the disputed property included a covenant prohibiting further transfer. Additionally, they argued that the ATS predated the allotment of the property to the original allottee, making it invalid.

The respondents countered by presenting evidence, including checks and receipts, that demonstrated payments were made in accordance with the ATS. These documents were exhibited before the Arbitral Tribunal and submitted to the Court as well.

Upon reviewing the arbitral records, the Court found that the petitioners' claim of being unaware of the proceedings was unfounded. The first listing before the arbitrator on November 16, 2007, showed that petitioner 1 had appeared and signed the attendance sheet, a fact not disputed by the petitioners. The Court noted that the petitioners chose to remain absent from subsequent proceedings at their own risk, and by failing to file a statement of defence or present evidence, they effectively admitted the claims made by the respondents in their statement of claim.

The petitioners also argued that the original allotment letter, which they claimed contained a non-transfer covenant, was not part of the arbitral record. However, the Court pointed out that the petitioners had neither presented this allotment letter nor raised the issue before the arbitrator, and therefore, it could not be considered in the Section 34 proceedings.

The Court emphasised that the petitioners sought a reappreciation of the facts, which is not permissible under Section 34 of the Act. The Court reiterated that objections should have been raised during the arbitral proceedings and that Section 34 is not intended to allow a party to avoid participation in arbitration and later challenge the outcome.

In conclusion, the Court dismissed the petition, deeming it devoid of merit and emphasising that the limited scope of Section 34 cannot be used to re-litigate issues that should have been addressed before the arbitrator.