Prem Lata Surekha's challenge dismissed; Court reaffirms limited scope of judicial interference in arbitration under Section 37 of Arbitration and Conciliation Act, 1996.
In a significant judgment, the Delhi High Court has dismissed an appeal filed by Smt. Prem Lata Surekha challenging an arbitral award that partitioned a disputed property between her and Sh. Chakradhari Surekha. The division bench, comprising Justices Prathiba M. Singh and Madhu Jain, reiterated the limited scope of judicial interference under Section 37 of the Arbitration and Conciliation Act, 1996.
The case revolved around a family-run partnership firm, M/s Sri Narayan Rajkumar, constituted in 1973, which later acquired a property in Naraina, New Delhi. Disputes arose when Sh. Chakradhari Surekha alleged that Smt. Prem Lata Surekha and her husband had manipulated partnership documents to usurp property rights. The arbitration, initiated based on the 1974 partnership deed, concluded that the partnership could only be dissolved with mutual consent or written notice, which had not occurred until 2015.
The arbitral tribunal, led by former Delhi High Court Judge Ms. Rekha Sharma, invalidated subsequent partnership deeds, citing lack of original documents and reliable evidence. The award divided the property equally between the surviving partners, Smt. Prem Lata and Sh. Chakradhari Surekha, a decision upheld by the High Court. The court emphasized that the arbitral award should not be interfered with unless there is evidence of perversity or illegality, aligning with precedents set by the Supreme Court.
The High Court also imposed costs of Rs. 1,00,000 on Smt. Prem Lata Surekha, citing her lack of good faith, including the unauthorized sale of part of the partnership property. This judgment reinforces the judiciary's stance on maintaining the sanctity of arbitral awards and limiting judicial interference in arbitration proceedings.
Bottom line:-
Arbitration - Scope of interference under Section 37 of the Arbitration and Conciliation Act, 1996 is limited to the grounds under Section 34 of the Act, and courts cannot undertake an independent assessment of the merits of the award.
Statutory provision(s):
Arbitration and Conciliation Act, 1996 Sections 34, 37, 29A; Partnership Act, 1932 Sections 32, 43
Smt. Prem Lata Surekha v. Sh. Chakradhari Surekha, (Delhi)(DB) : Law Finder Doc id # 2886765
