Fundamental Policy of Indian Law

This Supreme Court judgment underscores the narrow scope of judicial intervention under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996. It affirms that an arbitral award can be set aside if it violates the fundamental policy of Indian law, principles of natural justice, or the terms of the contract, or if it exhibits patent illegality or perversity that shocks the conscience of the court. The Tribunal must adjudicate within the contractual framework and cannot rewrite the agreement. Facts Of The Case: The dispute arose between SEPCO Electric Power Construction Corporation, an EPC contractor, and GMR Kamalanga Energy Ltd., the project owner, concerning the construction of thermal power plants in Odisha. Following delays and disagreements, SEPCO demobilized from the site ...

In a significant ruling, the Supreme Court held that a preliminary issue of limitation, being a mixed question of law and fact, cannot be permanently foreclosed by an arbitrator based on a demurrer. The Court clarified that such a decision on demurrer is not a final adjudication on merits and does not preclude a subsequent examination based on evidence, as it would violate the fundamental mandate of Section 3 of the Limitation Act, 1963. Facts Of The Case: The dispute arose from a Share Subscription Agreement (SSA) dated 23.07.2008 between Urban Infrastructure Real Estate Fund (Petitioner) and Neelkanth Realty Pvt. Ltd. (Respondent). The Petitioner invested Rs. 25 Crore, with a clause stipulating a refund if certain "Conditions Precedent" were not fulfilled within 90 days. The Respondent...

Tag: Fundamental Policy of Indian Law

No Waiver Without Clear Intent: Supreme Court Sets Aside Arbitral Award for Violating ‘No Oral Modification’ Clause