Arbitral award partially set aside for patent illegality for failing to consider Section 56 regarding force majeure.

The Petitioner was awarded a license for advertising rights at eight Delhi Metro stations for five years starting in 2004.

Disputes arose regarding the commencement date of the license, electricity disconnections due to safety concerns, the forced removal of hoardings following a High Court order (W.P. (C) No. 165165/2006), and alleged "parallel advertising" by the Respondent.

A Sole Arbitrator rendered an Award on 26.02.2010, largely rejecting the Petitioner’s claims.

The Petitioner challenged this Award under Section 34 of the Arbitration and Conciliation Act, 1996, specifically contesting the findings on Claims 1, 2, 3, and 6.

Whether the Arbitrator’s determination of the license commencement date as 01.06.2004 (Claim 1) was patently illegal or contrary to the contract.

Whether the disconnection of electricity for safety reasons (Claim 2) constituted a breach of contract.

Whether the Petitioner was entitled to a remission of license fees for the period advertisements were removed per court orders (Claim 3) under the doctrine of force majeure or Section 56 of the Indian Contract Act.

Whether the Respondent’s permission for retail branding constituted "parallel advertising" in breach of the Petitioner's rights (Claim 6).

The Court applied Section 34 of the Arbitration and Conciliation Act, 1996, emphasizing the restricted scope of judicial intervention post-2015 Amendment.

It relied on *Associate Builders v. DDA* and *Ssangyong Engg. & Construction Co. Ltd. v. NHAI* to define "patent illegality" and "perversity," holding that an award is only set aside if it is so irrational that no reasonable person could reach it or if it ignores vital evidence.

It further applied Section 56 (frustration/impossibility) and Section 65 (restitution) of the Indian Contract Act, 1872, regarding the non-performance of reciprocal obligations due to supervening events.

Regarding Claims 1, 2, and 6, the Court found the Arbitrator’s decisions were based on plausible interpretations of the contract and contemporaneous correspondence, such as the letter dated 03.06.2004 fixing the commencement date.

The Court held it cannot substitute its own view for a "possible view" taken by the Arbitrator.

However, regarding Claim 3, the Court found the Award patently illegal.

The Arbitrator failed to analyze the legal consequences of the force majeure clause (Clause 41) in conjunction with Section 56 of the Contract Act.

Specifically, the Arbitrator failed to explain how the obligation to pay license fees survived when the very right to exploit the advertising space was suspended by a court-ordered removal of hoardings.

However, the Court set aside the Award in respect of Claim No. 3, holding that the failure to consider the principle of reciprocity and the impact of supervening impossibility on the payment of fees constituted a patent illegality.

The Petition was disposed of without costs.