Legal Provisions Involved: Sections 31(3) and 34 of the Arbitration and Conciliation Act, 1996.

Judgement By: Delhi High Court

Judge/Bench: Justice Jasmeet Singh

Facts

Traffic Media (India) Pvt. Ltd. entered into an agreement with the Delhi Metro Rail Corporation (DMRC) to display advertisements inside metro trains. Later, DMRC asked the company to take charge of additional trains and pay higher licence fees. Traffic Media objected, saying this was not part of the contract. DMRC eventually terminated the agreement. The dispute went to arbitration, where the Arbitrator rejected Traffic Media’s claims. The company then approached the High Court challenging the arbitral award.

Key Legal Provisions

Sections 31(3) and 34 of the Arbitration and Conciliation Act, 1996.

Issues Raised

Can a court set aside an arbitral award if the Arbitrator fails to give proper reasons, even though an interpretation of the contract was involved?

Arguments of the Case

DMRC argued that the Arbitrator’s interpretation of the contract should be respected. Traffic Media argued that the award ignored important clauses and did not explain why its claims were rejected.

Judgement

The High Court held that courts cannot interfere with an arbitral award just because another interpretation of the contract is possible. However, the Arbitrator must explain the reasoning behind the decision. Since the award failed to do so and ignored key issues, it was set aside. The petition was allowed.

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