Arbitral awards passed in haste without evidence constitute patent illegality and shock the judicial conscience.

The Appellant-contractor was awarded a canal construction project in 1990-91 with a completion deadline of August 13, 1993

Due to delays and disputes, the work was only completed on June 21, 2006

Previous litigations (RCS No. 258/1994 and RCS No. 221/1995) were compromised, wherein the Appellant waived claims regarding rate revisions and the contract was revived

Upon completion, the Appellant invoked arbitration for several claims. After several arbitrators withdrew, Mr. B.B. Jadhav was selected as the Sole Arbitrator from a list provided by the Respondent

However, the Respondent objected to his appointment, claiming another officer (Mr. A.R. Kamble) was the designated arbitrator

While the Respondent challenged Jadhav’s appointment before the High Court and Supreme Court, Mr. Jadhav proceeded ex-parte and passed an award of Rs. 102.45 Crores plus 18% interest on January 27, 2015

The Respondent challenged this award under Section 34 of the Arbitration and Conciliation Act, 1996 ("The Act"), and the District Judge-1, Beed, set aside the award

1. Whether the arbitrator Mr. B.B. Jadhav was appointed in terms of Clause 52 and 53 of the agreement?

2. Whether the application under Section 34 of the Act was filed before the appropriate Court having jurisdiction?

3. Whether the arbitral award was patently illegal and amenable to interference under Section 34 of the Act?

The Court applied Section 2(e) of the Act defining "Court" and Section 20 regarding the "place" of arbitration

It relied on BGS SGS Soma JV v. NHPC Limited (2020) to distinguish between "seat" and "venue," establishing that in the absence of a designated seat, the Court where the cause of action arises has jurisdiction

Regarding the scope of interference, the Court applied Section 34(2A) (patent illegality) and Section 25 (default of a party)

It further relied on PSA Sical Terminals Pvt. Ltd. v. Board of Trustees (2023), which held that an award based on no evidence, ignoring vital evidence, or exhibiting perversity that shocks the conscience of the court constitutes patent illegality

On the first issue, the Court found Mr. Jadhav's appointment valid as it followed the procedure in Clause 53, where the contractor selected a name from a list provided by the Chief Engineer

On jurisdiction, the Court noted the contract did not specify a "seat"; hence, the meetings held in Pune or Aurangabad were mere "venues" of convenience. Since the cause of action arose in Beed, the District Court at Beed had jurisdiction under Section 2(e)

Regarding the merits, the Court found the Arbitrator acted with "undue haste" by proceeding ex-parte despite knowing the Respondent had challenged his appointment in higher courts

The Court observed that the Arbitrator failed to follow Section 25 correctly; although the proceedings were ex-parte, the Arbitrator was still required to decide on merits based on evidence. Instead, the award was "completely bereft of evidence," failed to examine technical data, and ignored the impact of the previous civil court compromise decree

This procedural impropriety and lack of evidentiary basis rendered the award perverse and patently illegal

The Court held that the award was patently illegal and shocked the conscience of the Court due to the Arbitrator’s biased conduct and the absence of supporting evidence

The parties were granted liberty to agree upon a new arbitrator or approach the Court under Section 11 for a fresh appointment