Municipal Corporation of Greater Mumbai v. Prestress Products (2003) 2 Arb LR 624

Quick Summary

This case explains how courts should review arbitral awards under Section 34. The Bombay High Court said: courts are not appellate forums on facts or law. Interference is limited to the grounds in the Act. Also, an arbitrator must follow the written contract and cannot presume terms that parties did not agree.

Most parts of the award were upheld. Some items (about 15) were sent back for re-determination, especially where the arbitrator assumed an agreement (e.g., clay excavation charges) contrary to Section 28(3).

Issues

• What standard should courts use when a party challenges an arbitral award under Section 34?
• Can an arbitrator rely on presumed agreements not found in the contract?

Rules

• No appellate review: Section 34 does not allow re-hearing on facts/law just because a judge would decide differently.
• Contract controls: Under Section 28(3), the arbitrator must decide in accordance with the contract; no presumed terms.

Interference is confined to statutory grounds (e.g., patent illegality, contravention of the contract, jurisdictional errors).

Arguments

The High Court disposed of the petition by largely upholding the award but remanding ~15 items for re-determination, including an item for material dug but not used. It approved the arbitrator’s use of execution-time indices, accepted the deduction of ~36% as a just determination, and did not disturb lab-test decisions aligned with payment terms.

The Court upheld the view that certain additional work lay outside the BOQ and could attract extra payment and tidal consequences. However, it found that the arbitrator disregarded contractual terms by presuming an agreement on clay excavation charges, breaching Section 28(3)—this warranted interference and remand.

Ratio Decidendi

• Section 34 is not an appeal: Courts won’t reweigh evidence or substitute views merely because they differ.
• Follow the contract: Presuming unagreed terms violates Section 28(3) and can justify limited interference.
• Targeted relief: Errors tied to contractual departures may be remanded; otherwise, findings stand.

Why It Matters

The ruling shows the narrow lane for Section 34 challenges and reminds arbitrators to stick to the contract text. For drafters, clear BOQ scope, rate indices, and testing clauses reduce post-award disputes.

Key Takeaways

• Not an appeal: Section 34 review is tight and ground-based.
• Contract rules: No assumed terms; apply Section 28(3) faithfully.
• Partial remand: Fix specific errors; preserve valid findings.
• BOQ clarity: Extra work outside BOQ can merit extra payment.

Mnemonic + 3-Step Hook

Mnemonic: “S34 = Slim & Strict”

1. Slim: Courts don’t re-try the case under Section 34.
2. Strict: Arbitrator must follow the contract (Section 28(3)).
3. Selective: Interfere only where the contract is ignored or law is breached.

IRAC Outline

Issue: How far can courts go under Section 34 when reviewing an arbitral award? Can arbitrators presume missing agreements?

Rule: Section 34 is non-appellate; interference is limited. Section 28(3) mandates decisions per the contract.

Application: Court upheld findings on indices, BOQ extras, deductions, and lab tests; but flagged a presumed agreement on clay excavation as contrary to the contract.

Conclusion: Award mostly stands; specific items remanded due to breach of Section 28(3).

Glossary

Section 34

Provision to set aside an arbitral award on limited statutory grounds.

Section 28(3)

Requires the arbitrator to decide in accordance with the contract terms.

BOQ

Bill of Quantities: itemized list describing work, rates, and quantities.

Patent Illegality

A clear error on the face of the award that can justify limited court interference.

FAQs

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