Section 34 of the Indian Arbitration and Conciliation Act 1996 (Act) enables the court to set aside an arbitral award on the grounds specified in the section.

Section 18 of the Act provides for equal treatment of parties and requires the tribunal to give the parties a full opportunity to present their case.

A contract for modernisation and upgrading of the Rourkela Steel Plant (plant) was entered into between Steel Authority of India Limited (SAIL) and Salzgitter Manesmann International GmbH (SI). The contract provided that the arbitration would be governed by the laws of India. SI had initially formed a consortium with Otto India Private Ltd (OIPL), but that contract with OIPL was subsequently terminated and thereafter, the contract between SAIL and SI was amended. However, SAIL's right to levy liquidated damages for delay in performance was retained.

According to SAIL, there was an excessive delay on SI's part in completing the work. Further, when SI was requested to perform tests for the commissioning of the plant, it refused to proceed until payment of 5% of the contract price. On SAIL's refusal to pay 5% of the contract price until the defects were rectified, SI terminated the contract. SAIL then issued a notice terminating the contract and called upon SI to arrange for the uncompleted work to be carried out by third parties.

Meanwhile, SI initiated arbitration before a tribunal constituted by the Indian Council of Arbitration. By a majority, the tribunal made an award in favour of SI, along with legal costs and reimbursement of arbitration costs. Also, the tribunal dismissed the counterclaims of SAIL with costs. Therefore, SAIL filed a petition before the Delhi High Court under section 34 of the Act, challenging the majority award allowing SI's claims and dismissing SAIL's counterclaims.

The Delhi High Court refused to set aside the award and dismissed the petition with costs.

As regards the petitioner's contention that it was deprived of an opportunity to properly defend itself in the arbitral proceedings, the court, after considering various dates and events, held that SAIL caused avoidable delay at each stage of the arbitral proceedings and failed to adhere to the timetable set by the tribunal. Therefore, it was not deprived of any opportunity to defend itself under section 18 of the Act.

As regards the scope of court's jurisdiction under section 34 of the Act, the court relied on the Supreme Court of India's decision in PR Shah, Shares & Stock Brokers Ltd v BHH Securities Ltd (2012) 1 SCC 594 and held that the court cannot sit in appeal over the award of the tribunal by re-assessing and re-evaluating the evidence. Therefore, the court dismissed SAIL's submissions on the levy of damages that invited the court to re-evaluate the evidence.

As regards rejection of SAIL's counterclaims by the tribunal, the court held that the adequacy of the reasons given by the tribunal in concluding that SAIL was in breach of its obligations could not be called into question under section 34 of the Act.

This decision clearly sets out the scope of court's jurisdiction under section 34 of the Act. By refusing to set aside the award and awarding costs, the Delhi High Court has cautioned losing parties against filing a petition under section 34 as a tactic aimed at delaying enforcement.