Delhi High Court rules against re-adjudication in arbitration case, citing public policy concerns [Read Judgment]

New Delhi: The Delhi High Court has issued a significant ruling emphasizing that re-adjudicating previously settled issues contradicts public policy, particularly in arbitration matters.

Delhi High Court Ruling on Arbitration: A Landmark Decision on Public Policy

Justice Subramonium Prasad addressed a petition filed by Jaiprakash Associates Limited under Section 11 of the Arbitration and Conciliation Act, 1996, seeking the appointment of an arbitrator for disputes with NHPC Limited.

The court examined a case where Jaiprakash Associates had previously undergone arbitration regarding additional costs claimed for overstaying at a project site. Although the earlier arbitral tribunal found no evidence to support the claim, it still awarded Rs. 60 crores based on principles of good conscience.

Re-Adjucation in Arbitration: Delhi HC Stands Firm Against Endless Litigation

Justice Prasad observed, “The Arbitral Tribunal, after examining the pleadings and evidence before it, returned a finding that the claim of additional costs made by the Petitioner has no legs to stand on and lacks any material basis. To this extent, the issue stands concluded between the parties.”

The court stressed the need to prevent misuse of the arbitration process, stating, “This Court cannot be expected to act mechanically merely to deliver a purported dispute raised by an applicant at the doors of an arbitrator, else the process of the Court would be susceptible to abuse by parties seeking endless litigation.”

Addressing the scope of judicial review under Section 11, the court noted that while generally limited, courts can intervene in cases of manifest non-arbitrability to prevent resource wastage and protect parties from unnecessary arbitration proceedings.

The court concluded that referring the parties back to arbitration for issues already conclusively decided would violate public policy, dismissing the petition for fresh arbitration.

Mr. Lovkesh Sawhney, Senior Advocate, along with Mr. Rohit Kumar, appeared for the Petitioner, while Mr. Gauhar Mirza, Ms. Hiral Gupta, Ms. Sukanya Singh, Mr. Rohit Rahar, and Mr. Devarshi Mohan represented the Respondent.

Case Title: M/S Jaiprakash Associates Limited v. M/S NHPC Limited

[Read Judgment]