Narrow Section 34 review limits interference with arbitral awards on tax liability under a concluded contract

An arbitral award was upheld against a Section 34 challenge because the contract documents, read as a whole, showed that the bidder had accepted responsibility for statutory levies, including excise duty, sales tax and service tax. The Court reiterated that interference under Section 34 is narrow, the arbitral tribunal remains the primary fact-finder, and courts cannot rewrite a concluded bargain or substitute a different commercial allocation of liability. The challenge on patent illegality and public policy failed because the award was neither contrary to the fundamental policy of Indian law nor otherwise vitiated by a recognised ground for setting aside.

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Issues: Whether the arbitral award was liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996 on the ground of patent illegality or conflict with public policy of India, in view of the contract documents governing liability for taxes.

Analysis: The contractual documents, read together, showed that the rates and final work order were framed on the basis of the notice inviting tender, subsequent negotiations, the letter of intent and the work order, and that the successful bidder accepted responsibility for statutory levies including excise duty, sales tax and service tax. The Court reiterated that interference under Section 34 is limited and that the arbitral tribunal is the final judge of facts. Where the parties have entered into a concluded contract and acted upon its terms, neither the Court nor the arbitrator can substitute a different bargain. The challenge based on public policy was rejected because the award was neither contrary to fundamental policy of Indian law nor vitiated by patent illegality.

Conclusion: The award did not suffer from patent illegality or any ground warranting interference under Section 34, and the challenge failed.

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