Unexplained Delay and Non-adjudication of Issues Insufficient to Set Aside Award Absent Demonstrated Prejudice

The Petitioner (Shriram Pistons) and Respondent (Usha International) entered into an agency agreement on 30.04.1999 for export sales

A subsequent modification agreement was executed on 31.03.2000

Upon termination of the relationship in 2004, disputes arose regarding unpaid commissions. The Respondent invoked arbitration based on the 1999 Agreement

The Sole Arbitrator passed an award dated 04.05.2013, directing the Petitioner to pay Rs. 68.57 lakhs with 10% interest

The Petitioner challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996, primarily contending that the 1999 Agreement was unsigned and thus the tribunal lacked jurisdiction

1. Whether a valid arbitration agreement existed between the parties despite the Petitioner’s claim that the 1999 Agreement was unsigned and superseded

2. Whether the arbitral award was vitiated by patent illegality due to an 18-month delay in pronouncement and alleged failure to adjudicate specific issues

3. Whether the Arbitrator erroneously reversed the burden of proof, thereby violating the fundamental policy of Indian law

The court primarily applied Section 34 of the Arbitration and Conciliation Act, 1996, which limits judicial interference to grounds of patent illegality, jurisdictional error, and conflict with public policy

It relied on the "perversity test" from Associate Builders v. DDA and Ssangyong Engg. & Construction Co. Ltd. v. NHAI, holding that an award is patently illegal only if the arbitrator's view is not even a "possible view" or ignores vital evidence

The court also applied the principle from OPG Power Generation (P) Ltd. v. Enexio Power Cooling Solutions, reinforcing that a mere erroneous application of law or re-appreciation of evidence does not warrant setting aside an award

The Court found that the Arbitrator had specifically addressed the jurisdictional objection, concluding that both parties had acted upon the 1999 Agreement for years, thus establishing a binding contract through conduct regardless of a formal signature

Regarding the burden of proof, the Court noted that the Arbitrator analyzed the Respondent's documentary evidence (TDS certificates and commission statements) before concluding the Petitioner failed to rebut it; this was a matter of appreciation of evidence, which is the Arbitrator's sole domain

On the issue of delay, the Court held that while an 18-month delay is undesirable, it does not invalidate an award unless the Petitioner proves specific prejudice, which was absent here given the detailed nature of the award

Finally, the Court ruled that the failure to provide issue-wise headings (Issue IV and VII) did not mean the substance of the claims was neglected, as the award addressed the underlying controversies holistically

The Court affirmed that the Arbitrator's interpretation was a "possible view" entitled to judicial deference. Consequently, the Enforcement Petition (O.M.P. (ENF.) (COMM) 216/2025) was allowed to proceed, and the Judgment Debtor was directed to deposit the entire awarded amount with interest within four weeks