Arbitrator's award is perverse if it relies on a perfunctory survey report while ignoring vital documentary evidence.

The Petitioner, a floriculture company, operated greenhouses in Haryana covered by a fire and miscellaneous insurance policy issued by the Respondent.

On June 2 and 4, 1998, severe storms damaged the greenhouses.

The Petitioner replaced 90 damaged polyethylene sheets from its stock to prevent further crop loss and notified the Respondent on June 5, 1998.

A surveyor (Mr. J.K. Sharma) visited the site on June 6 and September 19, 1998, subsequently submitting a report assessing damage to only 14.5 sheets.

A second surveyor (Mr. Ashwani Chaudhary) recommended a net payment for 15 sheets.

Following an arbitration clause invocation, the Sole Arbitrator passed an Award on March 17, 2012, granting the Petitioner only ₹3,17,935/- based on the surveyors' assessment of 15 sheets.

The Petitioner challenged this Award under Section 34 of the Arbitration and Conciliation Act, 1996, alleging patent illegality and perversity.

Whether the Arbitral Award was perverse for relying on a survey report that the surveyor admitted was based on memory and lacked physical measurements.

Whether the Arbitrator ignored vital evidence, such as the Petitioner’s stock registers and witness testimonies, in determining the quantum of loss.

Whether the Petitioner’s actions in repairing the damage prior to the surveyor's visit constituted a breach of Policy Condition 6(i).

The court applied Section 34 of the Arbitration and Conciliation Act, 1996, which permits setting aside an award for patent illegality or conflict with the "public policy of India".

It relied on *Associate Builders v. DDA* and *Delhi Airport Metro Express (P) Ltd. v. DMRC* to define "perversity" as a finding based on no evidence or one that ignores vital evidence.

Regarding insurance, the court applied the principle from *National Insurance Co. Ltd. v. Hareshwar Enterprises (P) Ltd.* and *United India Insurance Co. Ltd v. M/S Valley Iron & Steel Co. Ltd.*, establishing that a surveyor's report is a piece of evidence but is neither sacrosanct nor binding if it suffers from inherent infirmities.

The Court found the Arbitrator's reliance on the surveyor's report to be perverse because the surveyor, during cross-examination, admitted he did not calculate the total sheets, prepared no inventory, and based the report on "memory".

The Court noted a "material inconsistency" between the surveyor’s written report (claiming measurements were taken) and his 05.10.1998 letter and testimony (admitting they were not).

The Arbitrator was found to have ignored "vital evidence" including the Petitioner’s stock registers showing the use of 90 sheets and testimonies of four witnesses.

Regarding Policy Condition 6(i), the Court held that the Petitioner complied "forthwith" by notifying the insurer within three days of the first storm and one day of the second.

The Court reasoned that a prudent person is required to take reasonable steps to mitigate further loss (protecting sensitive plants), and the Arbitrator's conclusion that immediate repair was a violation was erroneous.

The Court answered the issues in favor of the Petitioner, stating that a report based on guesswork cannot override documentary evidence like stock registers.

The High Court set aside the Arbitral Award dated 17.03.2012 and allowed the petition.