Patel Engineering Ltd. v. NEEPCO

The Supreme Court said the 2015 amendments apply and reaffirmed that a domestic award can be set aside for patent illegality under Section 34(2A). Here, the High Court found the awards perverse and unreasonable. The Supreme Court agreed: the arbitrator’s view was not even a plausible view.

Bottom line: when an award clearly clashes with law, the Act, or the contract, courts can step in—but only on the face of the award.

1. Was the Meghalaya High Court right to set aside the awards for patent illegality?
2. Should the 2015 amendments to the 1996 Act be applied to these proceedings?

• Section 34(2A): Domestic awards may be set aside for patent illegality on the face of the award.
• Patent Illegality Test: Perversity, clear unreasonableness, or conflict with substantive law, the 1996 Act, or the contract.
• 2015 Amendments: Clarify and confine court intervention; applicable here per the Supreme Court.

Held: The 2015 amendments must be considered. The Court reaffirmed the meaning of patent illegality for domestic awards and agreed with the High Court that the awards were unreasonable and perverse. The arbitrator’s view was not even a plausible one.

Result: High Court’s decision to vacate the awards stood; PEL’s review attempts failed.

Section 34(2A) allows setting aside a domestic award if, on the face of it, the award is perverse/unreasonable or violates substantive law, the Act, or the contract. The 2015 amendments inform and limit the court’s review but do not protect plainly illegal awards.

• Clarity: Confirms how patent illegality works post-2015.
• Balance: Minimal interference overall, but strong check against perverse awards.
• Exam use: Cite for “plausible view” vs “perverse view” distinction.

Mnemonic: “FACE–FIT–FIX”

1. FACE: Look at the face of the award for perversity.
2. FIT: Does it fit the law, the Act, and the contract?
3. FIX: If not, courts may fix it by setting aside under 34(2A).

Patent Illegality

A clear, face-level defect: perversity, unreasonableness, or conflict with law/Act/contract in a domestic award.

Plausible View

A reasonable interpretation open on the record; if absent, interference may follow.

2015 Amendments

Reforms narrowing court intervention but recognizing 34(2A) for patent illegality in domestic awards.