Allahabad High Court: Procedural Irregularity Alone Not Ground to Set Aside Arbitral Award in U.P. State Highways Authority v. Abhijeet Meerut Karnal Toll Road Case
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TL;DR
- Allahabad High Court dismissed an appeal challenging an arbitral award in a public-private partnership dispute.
- The court held that not every procedural irregularity justifies setting aside an award under Sections 34 or 37 of the Arbitration and Conciliation Act, 1996.
- The applicant failed to show actual prejudice or denial of opportunity to rebut evidence.
- The court confirmed the tribunal's authority to handle procedure unless parties agreed otherwise.
Overview
The Allahabad High Court considered an appeal under Section 37 of the Arbitration and Conciliation Act, 1996, by the U.P. State Highways Authority regarding an arbitral award in its dispute with Abhijeet Meerut Karnal Toll Road Limited, arising from a terminated public-private partnership project. The key issue was whether alleged procedural irregularities warranted the setting aside of the arbitral award.
What Happened
The dispute stemmed from a public-private partnership agreement for the four-laning of the Meerut-Karnal Road. The concessionaire terminated the agreement after the U.P. State Highways Authority failed to procure the required right of way and took other related steps.
The arbitral tribunal issued a split award, with the majority granting Rs 157.57 crores for loss of profits and Rs 25.53 crores for EPC contractor payments. The presiding arbitrator dissented.
Both parties filed Section 34 petitions to set aside the award, which the Commercial Court, Lucknow, dismissed. The parties then appealed to the High Court under Section 37.
The U.P. State Highways Authority argued that it was denied a chance to rebut documents introduced by the opposing party after arguments closed, constituting procedural unfairness.
The High Court found there was no substantive prejudice or denial of opportunity and ruled that not every procedural irregularity is sufficient to invalidate an arbitral award.
Context
In India, the Arbitration and Conciliation Act, 1996, provides limits on judicial intervention in arbitral awards, with limited grounds for setting aside under Sections 34 and 37.
The case highlights the importance of demonstrating concrete prejudice or a denial of fair process-not just a technical or formal irregularity-to justify interference with an arbitral award.
Why It Matters
- The decision reinforces the autonomy of arbitral tribunals in India to determine their own procedures unless restricted by agreement.
- It clarifies for parties to arbitration in India that only procedural errors causing actual prejudice or denial of due process are grounds for setting aside awards.