What was the core issue in Jajodia v. IDCO (1993)?

Whether alleged legal misconduct or errors by the arbitrator in granting damages allowed a court to set aside the award.

What rule did the Supreme Court apply?

Courts interfere only for clear legal error, excess of jurisdiction, or legal misconduct. Contract interpretation by an arbitrator is rarely reviewed.

What did the Supreme Court finally decide?

It restored the Subordinate Judge’s order and refused to set aside the award. No evident legal wrong or jurisdictional breach was found.

How should an award be read by courts?

As a whole. Isolated lines cannot be picked to attack the award if the overall reasoning is consistent and within jurisdiction.

Why is this case important for students?

It teaches the ‘hands-off’ approach: courts respect arbitral findings, especially on contract interpretation, unless a serious legal fault exists.

Jajodia Pvt Ltd v. Industrial Development Corporation of Orissa Ltd (1993) 2 SCC 106

Supreme Court of India 1993 Appellate Bench (1993) 2 SCC 106 Arbitration 6 min read

Author: Gulzar Hashmi | India | Published: 2 Nov 2025

PRIMARY_KEYWORDS: legal misconduct, set aside arbitral award, contract interpretation SECONDARY_KEYWORDS: Supreme Court, damages, jurisdiction, Section 20, IDCO, JOPL

Quick Summary

IDCO failed to supply steel under a contract and the matter went to arbitration. The arbitrator awarded money to JOPL. IDCO cried “legal misconduct” and asked courts to set aside the award. The Supreme Court said: no clear legal error, no excess of power. Reading the award as a whole, the reasoning stood. The award was restored.

CASE_TITLE: Jajodia Pvt Ltd v. IDCO (1993) • PUBLISH_DATE: 2 Nov 2025 • AUTHOR_NAME: Gulzar Hashmi • LOCATION: India

Issues

Can alleged legal misconduct in granting damages be a ground to set aside the award?
How far can courts review an arbitrator’s interpretation of the contract?

Rules

An award may be set aside only for: clear legal error, excess/lack of jurisdiction, or legal misconduct. Courts generally do not re-interpret the contract if the arbitrator’s view is a possible one.

Facts (Timeline)

Supply Contract — IDCO to supply JOPL 5,000 tons of M.S. rounds; contract later cancelled (Sep 1969).

Arbitration Invoked — Named arbitrator (Chief Secretary) declined; JOPL filed a Section 20 suit (Arbitration Act, 1940).

Arbitrator Appointed (Apr 1973) — Retired Patna High Court judge appointed by Subordinate Judge, Bhubaneswar.

Award (Sep 1975) — Rs. 11,00,344 to JOPL with 6% interest.

Challenge & Confirmation — Subordinate Judge made award rule of court; added 6% interest.

High Court — Upheld award but labelled “legal misconduct”; ordered fresh arbitration.

Supreme Court — Both sides appealed.

Timeline for Jajodia Pvt Ltd v. IDCO (1993)

Arguments

Appellant: JOPL

Award is reasoned and within issues framed with parties’ consent.
No jurisdictional breach; interpretation of contract is the arbitrator’s domain.
High Court erred in branding it “misconduct.”

Respondent: IDCO

Damages granted on wrong legal basis; discrepancies show misconduct.
Court should set aside and order fresh arbitration.

Judgment

Held: Appeal by IDCO dismissed; JOPL’s appeal allowed. The Supreme Court restored the Subordinate Judge’s decision and refused a fresh arbitration. The Court found no clear legal wrong, no excess of jurisdiction, and said the award must be read as a whole, not by isolating lines.

Effect: Money award with interest stood confirmed.
Review Limit: Contract interpretation by arbitrator is not re-opened unless palpably wrong.

Judgment graphic for Jajodia Pvt Ltd v. IDCO (1993)

Ratio Decidendi

Court interference is narrow. Unless there is an obvious legal mistake, breach of jurisdiction, or proven misconduct, the arbitrator’s view stands. Awards are read holistically, not piece by piece.

Why It Matters

Reaffirms limited judicial review in arbitration.
Teaches parties to frame issues clearly and consent to them on record.
Prevents “cherry-picking” sentences to attack an otherwise coherent award.

Key Takeaways

Narrow Grounds: Set-aside needs clear legal error, jurisdictional breach, or misconduct.
Interpretation Deference: Arbitrator’s plausible reading is respected.
Whole Award Reading: Courts look at the award in full, not isolated parts.
Party Consent Matters: Issues framed with consent support jurisdiction.

Mnemonic + 3-Step Hook

Mnemonic: “CLEAR JAW.” CLEAR Legal Error • Jurisdiction • Arbitrator’s Wrongdoing (misconduct). Without these, award survives.

Spot

Is there an obvious legal error or excess of power?

Read

Read the whole award, not stray lines.

Respect

Respect a plausible interpretation by the arbitrator.

IRAC Outline

Issue	Rule	Application	Conclusion
Whether alleged legal misconduct on damages allows setting aside the award?	Set-aside only for clear legal error, excess of jurisdiction, or misconduct; interpretation is for the arbitrator.	No clear legal wrong; issues framed with party consent; award coherent when read as a whole.	Award stands; no fresh arbitration; Subordinate Judge’s order restored.

Glossary

Legal Misconduct: Serious unfairness or legal fault by the arbitrator that justifies court interference.
Jurisdiction: The scope of questions the arbitrator is allowed to decide, based on parties’ reference.
Rule of Court: When a court confirms an award and makes it enforceable like a decree.