Alerts & Updates

ELP – Arbitration Weekly Update – Patel Engineering Ltd. v. North Eastern Electric Power Corporation Ltd

Litigation, Arbitration & Dispute Resolution | May 22, 2020

Recently, in Patel Engineering Ltd. v. North Eastern Electric Power Corporation Ltd., the Supreme Court of India reflected upon “patent illegality” as a ground to challenge an arbitral award under section 34 of the Arbitration and Conciliation Act, 1996 (Act).

Disputes arose between the parties and three arbitral Awards (Awards) were made in favour of Patel Engineering Ltd. (PEL). While North Eastern Electric Power Corporation Ltd. (NEEPCO) challenged the awards under section 34 of the Act, the applications under section 34 of the Act were rejected and the Awards were upheld (Section 34 Judgment).

NEEPCO filed appeals against the Section 34 Judgment under section 37 of the Act before the High Court of Meghalaya at Shillong (High Court). The High Court held that the Awards suffered from the vice of irrationality and perversity (Section 37 Judgment), and set aside the Awards. Aggrieved by the Section 37 Judgment, while PEL preferred special leave petitions before the Supreme Court from the Section 37 Judgment, the same were dismissed.

Thereafter, PEL filed Review Petitions (Review Petitions) before the High Court seeking review of the Section 37 Judgment. The High Court dismissed the Review Petitions (Order) and held in favor of NEEPCO. Aggrieved by the dismissal of the Review Petitions, PEL preferred three Special Leave Petitions (SLPs) before the Supreme Court arising from the Order.

The Supreme Court agreed with the High Court’s conclusion that the Awards suffered from the vice of irrationality and perversity. The Supreme Court inter alia held that the High Court by the impugned Order rightly dismissed the Review Petitions and there was no ground for interference. Based on the foregoing, the SLPs were dismissed with no order as to costs. Read the detailed update here.

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