Jhawar Traders vs Sohan Lal Commodity Management Pvt Ltd on 3 July, 2026

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    Delhi District Court

    Jhawar Traders vs Sohan Lal Commodity Management Pvt Ltd on 3 July, 2026

          IN THE COURT OF MS. PREETI AGRAWAL GUPTA,
         DISTRICT JUDGE, (COMMERCIAL COURT)-02, WEST,
          TIS HAZARI COURTS, EXTENSION BLOCK, DELHI
    
    CNR NO.DLWT01-001352-2025
    OMP (COMM) No.3/2025
    
    M/S JHAWAR TRADERS,
    A proprietorship firm, Through its Proprietor,
    2603, Nai Basti, Naya Bazar, Delhi-110006.
                                                                                                       ...Petitioner
    
    VERSUS
    
    M/S SOHAN LAL COMMODITY MANAGEMENT PVT. LTD.
    A company incorporated under the Companies Act, 1956,
    642-643 DLF Tower, 15 Shivaji Marg Najafgarh Road,
    Moti Nagar, New Delhi-110015
                                                    ...Respondent
    
    
    OBJECTION UNDER SECTION 34 OF THE ARBITRATION
    & CONCILIATION ACT, 1996 FOR SETTING-ASIDE THE
    ARBITRAL AWARD DATED 09.10.2024 (SIGNED ON
    06.10.2024), PASSED IN ARBITRATION CASE TITLED AS
    'SOHAN LAL COMMODITY MANAGEMENT PVT. LTD.
    VS. JHAVAR TRADERS'.
    
               Date of institution of Petition                                       : 13.02.2025
               Date of Assignment to this court                                      : 14.02.2025
               Date of hearing of final argument                                     : 27.06.2026
               Date of Judgment                                                      : 03.07.2026
    
    JUDGMENT
    

    1. By way of this judgment, the present petition Under
    Section 34 of the Arbitration & Conciliation Act, 1996
    (hereinafter called as A & C Act) is being taken up for
    adjudication, as per law.

    OMP (Comm.) 3/2025 M/s Jawahar Traders Vs. M/s Sohan Lal Commodity Management Pvt Ltd. Page 1/50

    SPONSORED

    Digitally
    PREETI signed by
    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA

    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026

    2. This petition has been filed on behalf the Petitioner
    M/s Jhawar Traders (Respondent in the Claim petition in
    question), through its Proprietor Sh. Ashok Kumar Jhawar
    (Respondent in the claim petition in question) seeking setting
    aside of Arbitral Award dated 09.10.2024 passed by Sh. C. K.
    Chaturvedi, Ld. Sole Arbitrator, in respect of claim of the
    respondent namely M/S Sohan Lal Commodity Management Pvt.
    Ltd. As such, the impugned Award bears the date 06.10.2024 as
    ‘informed’, the effective and legal date of Award is 09.10.2024,
    after due compliances, as regards payment of requisite stamp fees
    by the respondent/Claimant. By way of the impugned Award,
    claim of the respondent/Claimant has been decreed for a sum of
    Rs.29,58,578/- in favour of the respondent and against the
    petitioner alongwith pendente lite interest @ 9% p.a. from the
    date of filing of the Statement of Claim till realisation of the
    decretal amount. The Counter-claim filed on behalf of petitioner
    herein, has been dismissed.

    3. After admitting the present petition, the operation of
    Arbitral Award was directed to be stayed conditionally and notice
    of the petition issued upon the respondent namely M/S Sohan Lal
    Commodity Management Pvt. Ltd. (Claimant before the Ld.
    Arbitrator). Despite opportunity to file reply to the petition,
    within the permissible timeline, respondent failed to file reply to
    the petition U/S 34 of Arbitration and Conciliation Act, within
    the maximum extendable statutory timeline of 120 days from
    receipt of notice of the petition and consequently, vide orders
    OMP (Comm.) 3/2025 M/s Jawahar Traders Vs. M/s Sohan Lal Commodity Management Pvt Ltd. Page 2/50
    Digitally
    PREETI signed by
    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA

    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026
    dated 13.01.2025, defence of the respondent has been struck off.
    However, this Court allowed that the contents of the reply of the
    petition would be treated as ‘Written Arguments’ on behalf of the
    respondent.

    4. During the pendency, the petitioner deposited the
    30% of the principal Award amount, as condition to entertain the
    present petition, which stood allowed vide orders of this Court
    dated 05.05.2026.

    5. The Arbitral Record was summoned and is placed on
    record. Original Arbitral Record dated 09.10.2024 alongwith
    arbitral proceedings, have been appreciated.

    6. The present petition has been filed on behalf of
    Petitioner U/S. 34 of the Arbitration & Conciliation Act, 1996,
    challenging the Award passed by Ld. Sole Arbitrator on
    09.10.2024, on various grounds, which have been crystalised
    herein-below : –

    (i). The Ld. Arbitral Tribunal failed to deal with the Petitioner’s
    specific submissions and material contentions, ignored vital
    evidence on record, rendering the Award perverse and legally
    unsustainable. The Tribunal exceeded its jurisdiction by
    adjudicating matters beyond the scope of the Contract and the
    arbitration agreement and suffers from patent illegality.

    OMP (Comm.) 3/2025 M/s Jawahar Traders Vs. M/s Sohan Lal Commodity Management Pvt Ltd. Page 3/50

    Digitally
    PREETI signed by
    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA

    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026

    (ii) The Impugned Award violates the settled principles
    governing arbitral awards under Section 34 of the Arbitration and
    Conciliation Act, 1996 and disregards the binding precedents of
    the Hon’ble Apex Court, relied upon by the Petitioner. The Award
    suffers from patent illegality and perversity as the Award is based
    on no evidence, ignores vital evidence, considers irrelevant
    factors and is irrational and contrary to ‘public policy of India’.

    (iii) The Tribunal wrongly accepted the Respondent’s claim for
    continuation of services till May 2020 despite Clause 13 of the
    SWM Agreement being limited to one year and ignored that no
    extension agreement or material evidence supporting
    continuation of services was produced.

    (iv) The Tribunal ignored the Respondent’s breach of the Lease
    Agreement, by failing to pay monthly rent of Rs.10,000/- plus
    GST, despite continued occupation of the godown, which was a
    standalone contractual obligation, independent of the SWM
    Agreement.

    (v) The Tribunal dismissed the Petitioner’s counterclaim without
    considering the evidence regarding the fact that the Respondent
    violated Clause 16 of the SWM Agreement by failing to deploy
    adequate manpower whereas emails from January and April 2020
    demonstrated repeated staff shortages, affecting operations.

    (vi) The tribunal failed to consider documentary evidence to the
    fact that the Respondent breached Clause 14 of SWM Agreement
    by failing to maintain computerized records and submit
    mandatory reports, which caused stock mismatches, reporting
    OMP (Comm.) 3/2025 M/s Jawahar Traders Vs. M/s Sohan Lal Commodity Management Pvt Ltd. Page 4/50
    Digitally
    PREETI signed by
    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA

    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026
    failures and FCI penalties.

    (vii) The Tribunal failed to consider the material breaches that the
    Respondent violated Clause 18(c) of SWM Agreement by failing
    to carry out regular fumigation and ignored that FCI inspection
    reports and emails documented infestations, delayed fumigation,
    chemical shortages, and resulting penalties.

    (viii) The Tribunal ignored documentary and financial evidence
    supporting the Petitioner’s case that the Respondent breached
    Clause 15 of SWM Agreement by failing to prevent stock
    shortages, verification discrepancies and storage losses and that
    FCI imposed recoveries and penalties, due to these lapses.

    (ix) The Tribunal failed to consider that the Respondent failed to
    vacate and hand over the godown after expiry of the contractual
    arrangement, which prolonged financial exposure and operational
    difficulties.

    (x) The Tribunal failed to consider that the respondent repeatedly
    ignored warnings regarding inadequate staffing, non-maintenance
    of records, failure to fumigate, stock discrepancies and reporting
    failures. These documented recurring breaches resulted in
    substantial losses and penalties, but were overlooked by the
    Tribunal.

    (xi) The proceedings were conducted in violation of principles of
    natural justice and were biased in favour of the respondent. The
    Award dated 09.10.2024 passed by Ld. Sole Arbitrator is
    perverse, erroneous, bad in law, against principles of natural
    justice and liable to be set aside.

    OMP (Comm.) 3/2025 M/s Jawahar Traders Vs. M/s Sohan Lal Commodity Management Pvt Ltd. Page 5/50

    Digitally
    PREETI signed by
    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA

    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026

    7. It is relevant to observe that the Respondent’s reply
    to the petition was filed beyond the maximum permissible period
    of 120 days and was accordingly struck off. However, this Court
    allowed that that the contents of the reply would treated as
    Written Arguments on behalf of the respondent. By way of
    Written Arguments on behalf respondent opposing the present
    petition, all the allegations made in the petition have been denied
    and it is contended that the present petition is not maintainable
    under Section 34 of the Act, for setting aside the impugned
    Award. It is submitted that the Arbitral Award dated 09.10.2024
    has been passed after following the due process of law and is a
    well reasoned Award, contending that the present petition
    deserves to be dismissed as baseless and filed on unfounded
    grounds. Further, as submitted, Arbitral Award is stated to be
    neither against the public policy nor perverse or patently illegal,
    as claimed in the petition, praying for dismissal of the petition for
    want of merits.

    CONCISE SUMMARY OF ARBITRAL PROCEEDINGS

    8. The Arbitral proceedings were initiated on a claim
    filed by the respondent namely M/s Sohan Lal Commodity
    Management Pvt. Ltd.(Respondent herein) in respect of Storage
    and Warehouse Management Agreement (SWM Agreement)
    dated 11.06.2019 for providing services for godowns of
    petitioner herein, at Obra, Aurangabad District in Bihar. The
    petitioner herein, being the owner of a PEG Godown situated at
    OMP (Comm.) 3/2025 M/s Jawahar Traders Vs. M/s Sohan Lal Commodity Management Pvt Ltd. Page 6/50
    Digitally
    PREETI signed by
    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA

    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026
    Obra, Aurangabad District in Bihar, entered into a Warehouse
    Management Agreement dated 11.06.2019 with the respondent
    (Claimant in the Award in question) whereby the respondent
    undertook to provide comprehensive services relating to storage
    management, preservation, fumigation, maintenance of records,
    deployment of manpower and operational management of the
    warehouse, used for storage of food grains belonging to Food
    Corporation of India (FCI) and Bihar State Warehousing
    Corporation (BSWC). The SWM Agreement contemplated
    commencement of contractual obligations with effect from
    18.07.2019 and contained detailed provisions regarding mutual
    obligations of the parties, payment mechanism and termination of
    the agreement. The parties also entered upon a Lease Agreement,
    dated 18.06.2019, under which, Respondent agreed to pay a
    monthly rent of Rs.10,000/- (exclusive of GST) for the premises,
    for a fixed term of 11 months commencing from 18.07.2019.

    9. According to the claimant (respondent herein), it
    commenced rendering contractual services from 18.07.2019 and
    continued to perform its obligations till May 2020 and the
    warehouse was handed back to the petitioner on 06.07.2020. It
    was alleged that despite rendering services continuously and
    raising monthly invoices in terms of Clause 18 of the Agreement,
    the petitioner failed to make timely payment of the agreed
    storage management and fumigation charges. The claimant
    asserted that several reminders and a legal demand notice were

    OMP (Comm.) 3/2025 M/s Jawahar Traders Vs. M/s Sohan Lal Commodity Management Pvt Ltd. Page 7/50
    Digitally
    PREETI signed by
    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA

    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026
    issued calling upon the petitioner to clear the outstanding dues,
    but no payment was forthcoming. Consequently, invoking the
    Clause 31 of the SWM Agreement contained in the contract, the
    claimant sought recovery of the outstanding amount together
    with contractual interest. The Claimant thereby filed Claim based
    on monthly invoice amount with interest @12% p.a., amounting
    to Rs.29,58,578/- after deducting amount of Rs.2,60,000/-
    admittedly received from respondent.

    10. The petitioner herein contested the claim, as
    respondent before the Arbitral Tribunal, by filing a detailed
    Statement of Defence wherein it was pleaded that as per SWM
    Agreement the claimant was responsible for providing services
    as per statutory norms for maintenance of stock delivery as and
    when required, to deploy staff as per requirement and
    maintenance of computerised records and registers. However,
    due to poor performance of the claimant, the respondent suffered
    heavy losses, and it decided against extending the tenure of
    Agreement for further period. It pointed out shortage of 829
    quintals of rice valueing Rs.56,40.000/- as on 06.07.2020 and
    after completion of physical verification of stocks lying in the
    godown, shortage of 1880 bags weighing 920 quintals valuing
    Rs.33,12,360/- were found. It was further submitted that 3600
    new gunny bags were given to the claimant during SWM
    Agreement, against which the claimant handed over only 1620
    gunny bags. The details of remaining 1980 bags were not given

    OMP (Comm.) 3/2025 M/s Jawahar Traders Vs. M/s Sohan Lal Commodity Management Pvt Ltd. Page 8/50
    Digitally
    PREETI signed by
    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA

    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026
    to the respondent. The petitioner, as respondent therein, further
    alleged that the claimant had committed repeated breaches of the
    contractual obligations under the PEG Scheme, 2008 and Clause
    16 of the SWM Agreement, by failing to properly preserve food
    grains, failing to undertake effective fumigation and spraying
    operations, failing to maintain adequate manpower, failing to
    maintain computerized records and stock registers and otherwise
    conducting warehouse operations in a negligent manner.
    According to the petitioner, these deficiencies resulted in
    substantial financial losses and exposed the petitioner to
    deductions imposed by FCI on account of abnormal storage
    losses.

    11. In further defence, petitioner further alleged that
    serious discrepancies were noticed at the time of handing over of
    the warehouse. It was claimed that shortages of wheat bags, rice
    bags and gunny bags were detected, besides deterioration of food
    grains stored in several rakes. It was also alleged that the
    claimant failed to comply with the obligations cast upon it under
    Clauses 10, 14, 15 and 16 of the SWM Agreement , resulting in
    financial liabilities upon the petitioner. On these premises, the
    petitioner did not only resist the claimant’s monetary claim but
    also raised substantial counter claims towards storage losses
    allegedly recovered by FCI, losses arising from shortage of
    stocks and gunny bags, damages arising from inadequate
    manpower deployment, mismatch of accounts and other

    OMP (Comm.) 3/2025 M/s Jawahar Traders Vs. M/s Sohan Lal Commodity Management Pvt Ltd. Page 9/50
    Digitally
    PREETI signed by
    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA

    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026
    consequential losses.

    12. Besides several defences raised against the claim
    filed before the Ld. Arbitrator, the respondent (petitioner herein)
    raised a counter claim Rs.7,51,000/- for non-compliance of
    Clause 15, on account if storage losses based on less quantity of
    1880 bags of rice weighing 920 quintals valuing Rs.33,12,360/-
    etc. and Rs.12,000/- is claimed for not employing adequate staff.

    13. The claimant filed its reply to the Statement of
    Defence as well as its response to the counter claims, denying the
    allegations, pleading that the petitioner herein had itself
    acknowledged satisfactory functioning of the warehouse
    throughout the contractual period and had never issued any
    contractual notice pointing out any alleged deficiency. It was
    denied that there was any shortage of stock at the time of handing
    over of possession and alleged that the allegations regarding
    damaged food grains were directly attributable to structural
    deficiencies in the warehouse, particularly water leakages,
    regarding which repeated communications had been addressed to
    the petitioner during the subsistence of the contract. The claimant
    relied upon email communications and documents to assert that
    that warehouse operations, preservation measures and fumigation
    activities had been regularly undertaken during the contractual
    period. It denied any deficiency or liability against the alleged
    deficiency claimed by way of counter claim.

    OMP (Comm.) 3/2025 M/s Jawahar Traders Vs. M/s Sohan Lal Commodity Management Pvt Ltd. Page 10/50

    Digitally
    PREETI signed by
    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA

    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026

    14. The Ld.Arbitral Tribunal framed issues regarding the
    claimant’s entitlement to recover the outstanding contractual dues
    together with interest and the petitioner’s entitlement to the
    counter claims. During the arbitral proceedings, on an application
    moved by the respondent (petitioner herein) under Section 23(3)
    of the Act, Ld. Arbitrator allowed additional email
    correspondences to be taken on record for purposes of
    appreciating of evidence during final arguments, while directing
    that no further evidence would be led by either party. Thereafter,
    Ld. Arbitrator proceeded to consider and adjudicate the pending
    dispute before him, after conclusion of recording of evidence of
    the parties and hearing the arguments addressed by respective Ld.
    Counsels for the parties. The impugned Award was passed in
    favour of the claimant, as prayed alongwith interest while the Ld.
    Arbitrator did not allow the counter-claim of the respondent
    (petitioner herein). Aggrieved by the said award, the petitioner
    has invoked the jurisdiction of this Court under Section 34 of the
    Arbitration and Conciliation Act, 1996.

    ADJUDICATION OF THE PRESENT PETITION

    15. Final arguments have been addressed at length, by
    Sh.Vikas Kumar, ld. Counsel for the petitioner and Sh. Rahat
    Bansal, ld. Counsel for respondent. Arbitral Award/record has
    been perused. Legal position has been examined.

    OMP (Comm.) 3/2025 M/s Jawahar Traders Vs. M/s Sohan Lal Commodity Management Pvt Ltd. Page 11/50

    Digitally
    PREETI signed by
    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA

    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026

    16. Aggrieved by the impugned award, the petitioner
    has challenged the same primarily on the grounds that the award
    suffers from patent illegality appearing on the face of the award,
    perversity in appreciation of evidence, non-consideration of
    material documentary evidence and failure to appreciate the real
    contractual obligations and omissions during the subsistence of
    the Contract between the parties. It has been submitted that the
    Award is liable to be set aside as the Ld. Arbitrator has failed to
    adjudicate the real controversy between the parties, the Ld.
    Arbitrator has proceeded on a fundamentally erroneous premise
    that the dispute merely concerned non-payment of contractual
    invoices. It is argued that the real controversy before the arbitral
    tribunal was whether the claimant had faithfully discharged the
    extensive contractual obligations undertaken by it under the
    SWM Agreement. It is argued that the Ld. Arbitrator has failed to
    undertake any meaningful examination of the entire evidence
    including voluminous email correspondence exchanges between
    the parties during the subsistence of the contract. It is contended
    that the petitioner had repeatedly brought to the notice of the
    claimant various deficiencies relating to maintenance of
    computerized records, infrastructural shortcomings, preservation
    issues, shortage of manpower, reporting defaults and operational
    deficiencies, including repeated complaints regarding water
    leakage affecting preservation of stocks. It is argued that the
    impugned Award neither analyses their evidentiary value nor
    reconciles them with the conclusions ultimately recorded and
    instead, the Ld.Arbitrator merely proceeded on the assumption
    OMP (Comm.) 3/2025 M/s Jawahar Traders Vs. M/s Sohan Lal Commodity Management Pvt Ltd. Page 12/50
    Digitally
    PREETI signed by
    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA

    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026
    that no actionable grievance existed because no formal cure
    notice terminating the agreement had been issued.

    17. It has been further argued for the petitioner that the
    Arbitral Record in question itself demonstrates that though
    additional email correspondence were allowed to be taken on
    record as per Section 23(3) of the Arbitration and Conciliation
    Act, for appreciation during final arguments, the Ld. Arbitrator
    ignored the vital evidence while appreciating the claim and
    counter claim and failed to appreciate the material evidence
    which was of great significance and implications to the
    determination of the dispute before the Ld. Arbitrator. The failure
    of Ld.Arbitrator to analyse the testimonial evidence and even the
    vital documentary evidence, while deciding the principal
    disputes, renders the impugned Award vulnerable under Section
    34
    of the Act. It is contended that Ld. Arbitrator adopted a
    mechanical approach relating to issuance of cure notices as an
    absolute defence against every allegation of contractual breach. It
    is argued that the SWM Agreement did not only contemplate
    issuance of cure notices before termination of the contract, but
    also specifically provided substantive contractual obligations to
    be undertaken by the claimant under Clauses 10, 14, 15 and 16 of
    the SWM Agreement. These clauses dealt with preservation of
    stocks, maintenance of computerized records, deployment of
    adequate manpower, operational management, fumigation, safety
    measures and various obligations undertaken under the PEG

    OMP (Comm.) 3/2025 M/s Jawahar Traders Vs. M/s Sohan Lal Commodity Management Pvt Ltd. Page 13/50
    Digitally
    PREETI signed by
    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA

    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026
    Scheme and the Ld. Arbitrator failed to properly interpret these
    clauses thereby ignoring the breach of contractual obligation by
    the Claimant. It is argued that such repeated breaches of these
    provisions formed the very foundation of the defence as well as
    the counter claims, which have been ignored by the Ld.
    Arbitrator, thereby rendering his findings patently illegal and
    perverse, as per the facts and material on record.

    18. Another principal grievance raised by the petitioner
    is that the learned Arbitrator adopted inconsistent standards while
    appreciating documentary evidence of the parties. Whereas the
    claimant’s invoices, ledger accounts and correspondence were
    accepted without detailed scrutiny, the petitioner’s documentary
    evidence regarding operational deficiencies, shortage of
    manpower, infrastructural complaints, storage losses and other
    contractual breaches was either rejected on technical grounds or
    were not analysed at all. It is contended that arbitral proceedings
    are not governed by the strict rules of evidence applicable to civil
    trials and, therefore, all emails and communications exchanged
    between the parties during the subsistence of the Agreement
    material forming part of the arbitral record were required to be
    appreciated in a holistic manner.

    19. During further arguments on behalf of the petitioner,
    reliance were placed on several emails presented during the
    respondent evidence vide the email correspondence Ex.RW1/12,
    OMP (Comm.) 3/2025 M/s Jawahar Traders Vs. M/s Sohan Lal Commodity Management Pvt Ltd. Page 14/50
    Digitally
    PREETI signed by
    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA

    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026
    Ex.RW1/14 and RW1/15. It has been argued that the Ld.
    Arbitrator further failed to consider the documents such as
    Ex.R1/10 (Colly.) which were tendered by the respondent witness
    in support of the counter-claim and also ignored to consider
    Ex.RW1/11 which proved the case of the respondent in respect of
    claim for inadequate staff deployment by the claimant. It is
    submitted that the Ld. Arbitrator further failed to consider crucial
    evidence pertaining to stock shortages, chemical shortage,
    observation of the FCI regarding some stocks being found
    heavily infested for lack of adequate fumigation and repeated
    requests raised by respondent to the claimant to take necessary
    curative action during the subsistence of the contract obligation
    between the parties. So much So that the deductions of huge
    amount by the FCI in favour of respondent on account of
    shortages of stock found in Purnia and Kishanganj during the
    tenure of the claimant(respondent herein), have not been
    examined by the Ld. Arbitrator. The evidence on record
    pertaining to the Quality Control Reports of the FCI Bihar, which
    were placed on record have not been appreciated in arriving at
    the conclusion while delivering the Award by the Ld. Arbitrator.
    It is argued that the Ld. Arbitrator arrived at perfunctory
    conclusion without proper analyses of the defence, evidence and
    contractual obligations and liabilities of the claimant/respondent.

    20. Learned counsel further submitted that the findings
    of Ld. Arbitrator regarding the defence pertaining to adequacy of

    OMP (Comm.) 3/2025 M/s Jawahar Traders Vs. M/s Sohan Lal Commodity Management Pvt Ltd. Page 15/50
    Digitally
    PREETI signed by
    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA

    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026
    manpower, suffer from patent illegality. It is argued that the
    petitioner specifically pleaded that warehouse operations of the
    capacity involved required deployment of substantially higher
    manpower under the applicable PEG norms. Documentary
    communications allegedly demonstrated repeated shortage of
    staff and consequent operational deficiencies. However, the
    learned Arbitrator disposed of the entire issue by observing that
    adequacy of manpower was a subjective matter for the claimant
    without undertaking any analysis of the contractual provisions,
    applicable operational norms or the emails and communications
    exchanged between the parties during the subsistence of the
    Agreement. It is submitted that for these reasons also, the
    impugned Award suffers from patent illegality, is perverse and
    liable to be set aside, as per law.

    21. In the final leg of arguments, it has been contended
    that the impugned Award as a whole reflects non application of
    mind to the principal controversies existing between the parties.
    It is further contended that the Ld. Arbitrator imported findings
    from another arbitration matter titled ‘SLCM Vs. Capital
    Propmart” and observed that the reasoning rendered therein
    would form part of the present award, with the justification that
    Ld. Counsels in the present case, which led to the impugned
    Arbitral Award were the same and the discussion and reasons
    fully applied and were not repeated for the reason of brevity and
    paucity of time. It is contended that such observation by the Ld.

    OMP (Comm.) 3/2025 M/s Jawahar Traders Vs. M/s Sohan Lal Commodity Management Pvt Ltd. Page 16/50
    Digitally
    PREETI signed by
    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA

    (PREETI AGRAWAL GUPTA)
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    Arbitrator in itself renders the impugned Award unsustainable in
    the eyes of law. The petitioner accordingly submits that the
    cumulative effect of these infirmities renders the impugned
    award liable to be set aside u/s 34 of the A & C Act.

    22. In support of its case, ld. Counsel for petitioner has
    placed reliance on binding judicial pronouncements in
    SsangYong Engineering and Construction Company Limited v.
    National Highways Authority of India
    ” [(2019) 15 SCC 131];
    ‘ONGC v. Saw Pipes Limited’ [(2003) 5 SCC 705]; ‘ONGC v.
    Western Geco International Limited’ [(2014) 9 SCC 263]; ‘Patel
    Engineering v. North Eastern Electric Power Corporation
    Limited
    ‘ [(2020) 7 SCC 167]; ‘ONGC v. Garware Shipping
    Corporation Limited
    ‘ [(2007) 13 SCC 434]; ‘PSA SICAL
    Terminals (P) Ltd. v. Board of Trustees of V.O. Chidambranar
    Port Trust Tuticorin
    ‘ [2021 SCC OnLine SC 508], with the
    contention that the impugned Award is well covered and qualifies
    within the ambit of patent illegality and falls against the
    fundamental public policy of India, calling for annulment owing
    to its sufferance from infirmity, foundational defects in violation
    of principle of natural justice and fair adjudication.

    23. Per contra, ld. Counsel appearing for the respondent
    supported the impugned award and submitted that the scope of
    interference under Section 34 of the Arbitration and Conciliation
    Act is extremely limited. It has been argued that this Court does
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    not exercise appellate jurisdiction over Arbitral Awards and is not
    empowered to substitute its own opinion after fresh appreciation
    of evidence, merely because another view may also be possible.
    According to the respondent, the impugned Award is a well-
    reasoned award based upon documentary evidence, oral
    testimonies and proper interpretation of the contractual
    provisions and deserves to be upheld, as it suffers from no
    infirmity or illegality.

    24. Ld. Counsel for the respondent further submitted
    that the claimant continuously rendered warehouse management
    services throughout the contractual period and regularly raised
    invoices in accordance with Clause 18 of the Agreement. It was
    argued that despite receiving the benefit of such services, the
    petitioner deliberately withheld contractual payments while
    continuing to avail the services of the claimant. According to the
    respondent, no contractual notice pointing out any actionable
    breach was ever issued during the subsistence of the agreement
    and all allegations regarding operational deficiencies surfaced
    only after legal proceedings were commenced, at the instance of
    the respondent.

    25. It was further argued by ld. Counsel for
    respondent/Claimant that Ld.Arbitrator rightly appreciated the
    evidence and correctly rejected the counter claims which were
    unsupported by reliable documentary proof. It is contended that
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    the counter claim on the basis of alleged storage losses, shortages
    and financial deductions were not substantiated by primary
    documentary evidence and, therefore, no interference with the
    award is warranted merely because the petitioner seeks a
    different appreciation of the same evidence. It is further
    contended that the petitioner herein has not disclosed or taken
    any ground to show that the impugned Award suffers from patent
    illegality committed by the Ld. Tribunal in passing the impugned
    Award or to satisfy that the impugned Award is against the public
    policy of India. In support of respondent’s case, heavy reliance
    has been placed on the judicial pronouncements of Hon’ble Apex
    Courts in Associated Builders Versus Delhi Development
    Authority (2015) 3 SCC 49; Konkan Railway Corporation Ltd.
    Versus Chenab Bridge Project Undertaking (2023) 9 SCC 85;
    Ssangyong Engineering and Construction Co. Ltd. vs National
    Highway Authority of India
    (2019) 15 SCC 131 and MMTC
    Limited v. Vedanta Ltd
    , (2019) 4 SCC 163, with the argument
    that interference u/s 34 of the Arbitration and Conciliation Act is
    permissible only when findings of the Ld. Arbitrator are arbitrary,
    capricious or perverse or and if any illegality goes to root of the
    matter. It is contended that the Award does not suffer from any
    illegality, perversity or violation of public policy and warrants no
    interference by this Court. It is stated that a valid and enforceable
    order/Award dated 09.10.2024 was passed by Ld. Arbitrator and
    that the petition be dismissed, for want of merits.

    26. The Court has appreciated vehement arguments on
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    behalf of respective Counsels. The impugned Arbitral Award
    dated 09.10.2024 has been perused. The grounds of challenge
    raised in the present petition and the response thereof, has been
    duly considered. Legal statutory position and binding judicial
    pronouncements have been duly appreciated, as per the facts and
    circumstances of the present case.

    RELEVANT LEGAL POSITION CONSIDERED

    27. It may be relevant to first examine the well settled
    legal position for exercise of jurisdiction of this Court u/s 34 of
    the arbitration and Conciliation Act.

    28. There can be no dispute regarding the settled legal
    position that the jurisdiction of the Court under Section 34 of the
    Arbitration and Conciliation Act which is supervisory in nature
    and does not permit re-appreciation of the evidence as an
    appellate court. At the same time, it is equally well settled that an
    Arbitral Award may call for interference by this Court, if it
    suffers from patent illegality appearing on the face of the Award,
    ignores vital evidence, fails to decide material contractual issues,
    adopts an interpretation which no fair-minded or reasonable
    person would adopt or otherwise discloses perversity in
    appreciation of evidence. This Court is to carefully examine the
    objection petition u/s 34 of the A & C Act within the limited
    contours and scope of its jurisdiction under the Act. This Court is
    guided by well settled and binding judicial precedents of the
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    Hon’ble superior courts to examine the relevant legal principles
    governing a challenge of the Arbitral Award.

    29. A three-Judge Bench of the Hon‟ble Supreme Court,
    after an exhaustive consideration of a catena of earlier judgments,
    in ‘OPG Power Generation (P) Ltd. v. Enexio Power Cooling
    Solutions (India) (P) Ltd.
    ‘, (2025) 2 SCC 417 while dealing with
    the grounds of conflict with the public policy of India and patent
    illegality, grounds which have also been urged in the present
    case, encapsulated the relevant legal principles governing a
    challenge to the arbitral award, as under :

    “Relevant legal principles governing a challenge to an
    arbitral award

    30. Before we delve into the issue/sub-issues
    culled out above, it would be useful to have a look at
    the relevant legal principles governing a challenge to
    an arbitral award. Recourse to a court against an
    arbitral award may be made through an application for
    setting aside such award in accordance with sub-
    sections (2), (2-A) and (3) of Section 34 of the 1996
    Act. Sub-section (2) of Section 34 has two clauses, (a)
    and (b). Clause (a) has five sub-clauses which are not
    relevant to the issues raised before us. Insofar as clause

    (b) is concerned, it has two sub-clauses, namely, (i) and

    (ii). Sub-clause (i) of clause (b) is not relevant to the
    controversy in hand. Sub-clause (ii) of clause (b)
    provides that if the Court finds that the arbitral award is
    in conflict with the public policy of India, it may set
    aside the award.

    Public policy

    31. “Public policy” is a concept not statutorily defined,
    though it has been used in statutes, rules, notification,
    etc. since long, and is also a part of common law.
    Section 23 of the Contract Act, 1872 uses the
    expression by stating that the consideration or object of
    an agreement is lawful, unless, inter alia, opposed to
    public policy. That is, a contract which is opposed to
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    public policy is void.

    *****

    37. What is clear from above is that for an award to be
    against public policy of India a mere infraction of the
    municipal laws of India is not enough. There must be,
    inter alia, infraction of fundamental policy of Indian
    law including a law meant to serve public interest or
    public good.

    *****

    30. The Hon’ble Apex Court further considered the
    implications of the 2015 amendment in Section 34 and 48 of the
    A & C Act and was pleased to lay down:

    “The 2015 Amendment in Sections 34 and 48

    42. The aforementioned judicial pronouncements were
    all prior to the 2015 Amendment. Notably, prior to the
    2015 Amendment the expression “in contravention
    with the fundamental policy of Indian law” was not
    used by the legislature in either Section 34(2)(b)(ii) or
    Section 48(2)(b). The pre-amended Section 34(2)(b)(ii)
    and its Explanation read:

    *****

    44. By the 2015 Amendment, in place of the old
    Explanation to Section 34(2)(b)(ii), Explanations 1 and
    2 were added to remove any doubt as to when an
    arbitral award is in conflict with the public policy of
    India.

    45. At this stage, it would be pertinent to note that we
    are dealing with a case where the application under
    Section 34 of the 1996 Act was filed after the 2015
    Amendment, therefore the newly substituted/added
    Explanations would apply [Ssangyong Engg. &
    Construction Co. Ltd. v. NHAI
    , (2019) 15 SCC 131].

    46. The 2015 Amendment adds two Explanations to
    each of the two sections, namely, Section 34(2)(b)(ii)
    and Section 48(2)(b), in place of the earlier
    Explanation. The significance of the newly inserted
    Explanation 1 in both the sections is two-fold. First, it
    does away with the use of words : (a) “without
    prejudice to the generality of sub-clause (ii)” in the
    opening part of the pre- amended Explanation to
    Section 34(2)(b)(ii); and (b) “without prejudice to the
    generality of clause (b) of this section” in the opening
    part of the pre-amended Explanation to Section 48(2)
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    (b); secondly, it limits the expanse of public policy of
    India to the three specified categories by using the
    words “only if”. Whereas, Explanation 2 lays down the
    standard for adjudging whether there is a contravention
    with the fundamental policy of Indian law by providing
    that a review on merits of the dispute shall not be done.

    This limits the scope of the enquiry on an application
    under either Section 34(2)(b)(ii) or Section 48(2)(b) of
    the 1996 Act.

    47. The 2015 Amendment by inserting sub-section (2-
    A) in Section 34, carves out an additional ground for
    annulment of an arbitral award arising out of
    arbitrations other than international commercial
    arbitrations. Sub-section (2-A) provides that the Court
    may also set aside an award if that is vitiated by patent
    illegality appearing on the face of the award. This
    power of the Court is, however, circumscribed by the
    proviso, which states that an award shall not be set
    aside merely on the ground of an erroneous application
    of the law or by reappreciation of evidence.

    48. Explanation 1 to Section 34(2)(b)(ii), specifies that
    an arbitral award is in conflict with the public policy of
    India, only if:

    (i) the making of the award was induced or affected by
    fraud or corruption or was in violation of Section 75 or
    Section 81; or

    (ii) it is in contravention with the fundamental policy of
    Indian law; or

    (iii) it is in conflict with the most basic notions of
    morality or justice.

    49. In the instant case, there is no allegation that the
    making of the award was induced or affected by fraud
    or corruption, or was in violation of Section 75 or
    Section 81. Therefore, we shall confine our exercise in
    assessing as to whether the arbitral award is in
    contravention with the fundamental policy of Indian
    law, and/or whether it conflicts with the most basic
    notions of morality or justice. Additionally, in the light
    of the provisions of sub-section (2-A) of Section 34, we
    shall examine whether there is any patent illegality on
    the face of the award.

    50. Before undertaking the aforesaid exercise, it would
    be apposite to consider as to how the expressions:

    (a) “in contravention with the fundamental policy of
    Indian law”;

    (b) “in conflict with the most basic notions of morality
    or justice”; and
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    (c) “patent illegality” have been construed.

    In contravention with the fundamental policy of Indian
    law

    51. As discussed above, till the 2015 Amendment the
    expression “in contravention with the fundamental
    policy of Indian law” was not found in the 1996 Act.
    Yet, in Renusagar Power Co. Ltd. v. General Electric
    Co.
    , 1994 Supp (1) SCC 644, in the context of
    enforcement of a foreign award, while construing the
    phrase “contrary to the public policy”, this Court held
    that for a foreign award to be contrary to public policy
    mere contravention of law would not be enough rather
    it should be contrary to:

    (a) the fundamental policy of Indian law; and/or

    (b) the interest of India; and/or

    (c) justice or morality.”

    31. After duly considering the developing legal position
    by way of appreciation of catena of judgments of the Hon’ble
    Apex Court, the Hon’ble Supreme Court in OPG Power
    Generation (P) Ltd.
    (Supra) was pleased to lay down the latest
    legal position as under:

    “55. The legal position which emerges from the
    aforesaid discussion is that after “the 2015
    Amendments” in Section 34(2)(b)(ii) and Section 48(2)

    (b) of the 1996 Act, the phrase “in conflict with the
    public policy of India” must be accorded a restricted
    meaning in terms of Explanation 1. The expression “in
    contravention with the fundamental policy of Indian
    law” by use of the word “fundamental” before the
    phrase “policy of Indian law” makes the expression
    narrower in its application than the phrase “in
    contravention with the policy of Indian law”, which
    means mere contravention of law is not enough to
    make an award vulnerable. To bring the contravention
    within the fold of fundamental policy of Indian law, the
    award must contravene all or any of such fundamental
    principles that provide a basis for administration of
    justice and enforcement of law in this country.

    56. Without intending to exhaustively enumerate
    instances of such contravention, by way of illustration,
    it could be said that:

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    (a) violation of the principles of natural justice;(b)
    disregarding orders of superior courts in India or the
    binding effect of the judgment of a superior court; and

    (c) violating law of India linked to public good or
    public interest, are considered contravention of the
    fundamental policy of Indian law.

    However, while assessing whether there has been a
    contravention of the fundamental policy of Indian law,
    the extent of judicial scrutiny must not exceed the limit
    as set out in Explanation 2 to Section 34(2)(b)(ii).”

    32. The comprehensive legal position, after appreciation
    of its own well celebrated pronouncements on the extent and
    scope of Section 34 of the A & C Act of 2015, have been
    examined by the Hon’ble Supreme court in laying the binding
    and guiding legal position for this Court while exercising power
    u/s 34 of the A & C Act. The Hon’ble Apex Court in OPG Power
    Generation (P) Ltd.
    (Supra) laid the binding guidance on
    examining if an Arbitral Award suffered from ‘patent illegality’
    by way of following settled legal position:

    “Patent illegality

    65. Sub-section (2-A) of Section 34 of the 1996 Act,
    which was inserted by the 2015 Amendment, provides
    that an arbitral award not arising out of international
    commercial arbitrations, may also be set aside by the
    Court, if the Court finds that the award is visited by
    patent illegality appearing on the face of the award. The
    proviso to sub-section (2-A) states that an award shall
    not be set aside merely on the ground of an erroneous
    application of the law or by reappreciation of evidence.

    66. In ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC
    705, while dealing with the phrase “public policy of
    India” as used in Section 34, this Court took the view
    that the concept of public policy connotes some matter
    which concerns public good and public interest. If the
    award, on the face of it, patently violates statutory
    provisions, it cannot be said to be in public interest.
    Thus, an award could also be set aside if it is patently
    illegal. It was, however, clarified that illegality must go
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    to the root of the matter and if the illegality is of trivial
    nature, it cannot be held that award is against public
    policy.

    67. In Associate Builders v. DDA, (2015) 3 SCC 49,
    this Court held that an award would be patently illegal,
    if it is contrary to:

    (a) substantive provisions of law of India;

    (b) provisions of the 1996 Act; and

    (c) terms of the contract [See also three-Judge Bench
    decision of this Court in State of Chhattisgarh v. SAL
    Udyog (P) Ltd.
    , (2022) 2 SCC 275].

    The Court clarified that if an award is contrary to the
    substantive provisions of law of India, in effect, it is in
    contravention of Section 28(1)(a) of the 1996 Act.
    Similarly, violating terms of the contract, in effect, is in
    contravention of Section 28(3) of the 1996 Act.

    68. In Ssangyong Engg. & Construction Co. Ltd. v.
    NHAI
    , (2019) 15 SCC 131 this Court specifically dealt
    with the 2015 Amendment which inserted sub-section
    (2-A) in Section 34 of the 1996 Act. It was held that
    “patent illegality appearing on the face of the award”

    refers to such illegality as goes to the root of matter, but
    which does not amount to mere erroneous application
    of law. It was also clarified that what is not subsumed
    within “the fundamental policy of Indian law”, namely,
    the contravention of a statute not linked to “public
    policy” or “public interest”, cannot be brought in by the
    backdoor when it comes to setting aside an award on
    the ground of patent illegality [ See Ssangyong Engg.
    & Construction Co. Ltd. v. NHAI
    , (2019) 15 SCC 131].

    Further, it was observed, reappreciation of evidence is
    not permissible under this category of challenge to an
    arbitral award [See Ssangyong Engg. & Construction
    Co. Ltd. v. NHAI
    , (2019) 15 SCC 131].
    Perversity as a ground of challenge

    69. Perversity as a ground for setting aside an arbitral
    award was recognised in ONGC Ltd. v. Western Geco
    International Ltd.
    , (2014) 9 SCC 263. Therein it was
    observed that an arbitral decision must not be perverse
    or so irrational that no reasonable person would have
    arrived at the same. It was observed that if an award is
    perverse, it would be against the public policy of India.

    70. In Associate Builders v. DDA, (2015) 3 SCC 49
    certain tests were laid down to determine whether a
    decision of an Arbitral Tribunal could be considered
    perverse. In this context, it was observed that where:

    (i) a finding is based on no evidence; or
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    (ii) an Arbitral Tribunal takes into account something
    irrelevant to the decision which it arrives at; or

    (iii) ignores vital evidence in arriving at its decision,
    such decision would necessarily be perverse.

    However, by way of a note of caution, it was observed
    that when a court applies these tests it does not act as a
    court of appeal and, consequently, errors of fact cannot
    be corrected. Though, a possible view by the arbitrator
    on facts has necessarily to pass muster as the arbitrator
    is the ultimate master of the quantity and quality of
    evidence to be relied upon. It was also observed that an
    award based on little evidence or on evidence which
    does not measure up in quality to a trained legal mind
    would not be held to be invalid on that score.

    71. In Ssangyong Engg. & Construction Co. Ltd. v.
    NHAI
    , (2019)15 SCC 131, which dealt with the legal
    position post the 2015 Amendment in Section 34 of the
    1996 Act, it was observed that a decision which is
    perverse, while no longer being a ground for challenge
    under “public policy of India”, would certainly amount
    to a patent illegality appearing on the face of the award.
    It was pointed out that an award based on no evidence,
    or which ignores vital evidence, would be perverse and
    thus patently illegal.
    It was also observed that a finding
    based on documents taken behind the back of the
    parties by the arbitrator would also qualify as a
    decision based on no evidence inasmuch as such
    decision is not based on evidence led by the parties,
    and therefore, would also have to be characterised as
    perverse [ See Ssangyong Engg. & Construction Co.
    Ltd. v. NHAI
    , (2019) 15 SCC 131].

    72. The tests laid down in Associate Builders v. DDA,
    (2015) 3 SCC 49 to determine perversity were followed
    in Ssangyong Engg. & Construction Co. Ltd. v. NHAI,
    (2019) 15 SCC 131 and later approved by a three-Judge
    Bench of this Court in Patel Engg. Ltd. v. North
    Eastern Electric Power Corpn. Ltd.
    , (2020) 7 SCC 167.

    73. In a recent three-Judge Bench decision of this Court
    in DMRC Ltd. v. Delhi Airport Metro Express (P) Ltd.,
    (2024) 6 SCC 357, the ground of patent
    illegality/perversity was delineated in the following
    terms: (SCC p. 376, para 39)
    “39. In essence, the ground of patent
    illegality is available for setting aside a
    domestic award, if the decision of the
    arbitrator is found to be perverse, or so
    irrational that no reasonable person would
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    have arrived at it; or the construction of the
    contract is such that no fair or reasonable
    person would take; or, that the view of the
    arbitrator is not even a possible view. A
    finding based on no evidence at all or an
    award which ignores vital evidence in
    arriving at its decision would be perverse and
    liable to be set aside under the head of
    “patent illegality”. An award without reasons
    would suffer from patent illegality. The
    arbitrator commits a patent illegality by
    deciding a matter not within its jurisdiction
    or violating a fundamental principle of
    natural justice.”

    Scope of interference with an arbitral award

    74. The aforesaid judicial precedents make it clear that
    while exercising power under Section 34 of the 1996
    Act the Court does not sit in appeal over the arbitral
    award. Interference with an arbitral award is only on
    limited grounds as set out in Section 34 of the 1996
    Act. A possible view by the arbitrator on facts is to be
    respected as the arbitrator is the ultimate master of the
    quantity and quality of evidence to be relied upon. It is
    only when an arbitral award could be categorised as
    perverse, that on an error of fact an arbitral award may
    be set aside. Further, a mere erroneous application of
    the law or wrong appreciation of evidence by itself is
    not a ground to set aside an award as is clear from the
    provisions of sub-section (2-A) of Section 34 of the
    1996 Act.

    75. In Dyna Technologies (P) Ltd. v. Crompton
    Greaves Ltd.
    , (2019) 20 SCC 1, paras 27-43, a three-
    Judge Bench of this Court held that courts need to be
    cognizant of the fact that arbitral awards are not to be
    interfered with in a casual and cavalier manner, unless
    the court concludes that the perversity of the award
    goes to the root of the matter and there is no possibility
    of an alternative interpretation that may sustain the
    arbitral award. It was observed that jurisdiction under
    Section 34 cannot be equated with the normal appellate
    jurisdiction. Rather, the approach ought to be to respect
    the finality of the arbitral award as well as party’s
    autonomy to get their dispute adjudicated by an
    alternative forum as provided under the law.”

    33. The aforesaid judicial precedents make it clear that
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    GUPTA

    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026
    while exercising power under Section 34 of the 1996 Act the
    Court does not sit in appeal over the arbitral award. In ‘ Dyna
    Technologies (P) Ltd. v. Crompton Greaves Ltd.
    ‘, (2019) 20 SCC
    1, it was observed that jurisdiction under Section 34 cannot be
    equated with the normal appellate jurisdiction.

    FINDINGS OF THE COURT

    34. Keeping the aforesaid binding legal principles in
    view, this Court now proceeds to examine whether the impugned
    award withstands judicial scrutiny under Section 34 of the
    Arbitration and Conciliation Act. Having considered the rival
    submissions and perused the arbitral record, this Court is
    conscious of the limited jurisdiction conferred under Section 34
    of the Arbitration and Conciliation Act, 1996 . The Court is not
    expected to substitute its own interpretation merely because
    another view is possible. Equally, however, it is the settled
    position of law that where the arbitral tribunal ignores material
    evidence, fails to determine the principal disputes arising from
    the contract, or returns findings which are unsupported by the
    record, the award would suffer from patent illegality warranting
    interference under Section 34 of the Act. In the present case,
    there are allegations of passing of the impugned Award, suffering
    from perversity and patent illegality, in complete disregard of
    vital evidence presented by the petitioner (respondent in the
    Award in question) during the arbitral proceedings. It has been
    alleged that the impugned Award has been passed in violation of
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    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA

    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026
    fundamental principles of arbitral jurisprudence and
    transgressing its jurisdiction beyond the terms of the contract
    thereby committing blatant error in exercise of its jurisdiction,
    amounting to patent illegality. The Court is to examine if
    impugned Award suffers from such defects that demonstrates
    perversity or patent illegality as recognised by the Hon’ble Apex
    Court in Ssangyong Engineering v. NHAI (Supra). This Court is
    to examine if the ld. Arbitrator has adopted such fair principles
    critical to ensuring that the arbitral process remained fair,
    transparent and legally sound.

    35. It has been considered that the impugned Award
    dated 09.10.2024 in question has been passed pursuant to the
    appointment of Ld. Sole Arbitrator vide orders of Hon’ble High
    Court of Delhi dated 19.01.2021 on a Petition U/S 11 of the Act
    filed by the respondent. The Hon’ble High Court recognised the
    existence of an Arbitration Agreement, vide Clause 31 and were
    pleased to appoint the Ld. Arbitrator to decide the matter
    pertaining to the disputes between the parties, in respect of the
    SWM Agreement entered between the parties as on 11.06.2019.
    The Statement of Claim was filed by the respondent herein
    before the Ld. Arbitral Tribunal raising the demand of
    Rs.29,58,578/- alongwith interest against the petitioner herein.
    The petitioner filed its statement of defence disputing the claim
    filed by the respondent herein and also filed its counter-claim
    raising claims of Rs.60,98,532/- for recovery of alleged losses
    incurred due to the respondent’s breaches, including deductions
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    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA

    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026
    made by BSWC/FCI for storage discrepancies and weight
    shortages.

    36. On further appreciation of the Arbitral record, it is
    reflected that the parties led their respective evidence and
    testimony, in support of their respective claims and counter
    claims. Before adjudication leading to the impugned Award,
    petitioner herein (Respondent in the arbitral proceedings) was
    allowed to place additional documents, to be considered during
    arguments, as per law. After concluding the proceedings, ld. Sole
    Arbitrator delivered the impugned Award on 06.10.2024, which
    was decreed on 09.10.2024, upon deposit of requisite stamp
    duties by the claimant and accordingly, impugned Award dated
    09.10.2024 granting Rs.29,58,578/- to the respondent (Claimant)
    alongwith interest @ 9% p.a. from the date of Statement of
    Claim, was passed and the counter claim raised by the petitioner
    (Respondent/Counter Claimant in Award) was dismissed. Being
    aggrieved by the impugned Arbitral Award, the present petition
    u/s 34 of A & C Act has come up for determination before this
    Court.

    37. The petition has been filed accompanied with a
    prayer for seeking condonation of delay U/S 34(3) of the Act r/w
    Section 151 CPC. The copy of arbitral Award was received by
    the petitioner on 15.10.2024 and the petition u/s 34 A & C Act
    was filed within the statutory period of 90 days i.e. on
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    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA

    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026
    10.01.2025 before another territorial jurisdiction. However,
    owing to defect of territorial jurisdiction, the petition was
    withdrawn and filed before this Court, for which condonation on
    the ground of exclusion of limitation for bonafide litigation
    before the Court of another territorial jurisdiction, has been
    prayed. The petitioner came up for filing before the territorial
    jurisdiction of this Court on 13.02.2025. The petitioner has
    accordingly sought exclusion of limitation for an inadvertent
    filing of the petition before another court of territorial
    jurisdiction, as per Section 14 of the Limitation Act. The petition
    has been admitted before this Court, without any objection raised
    on behalf of the respondent, either at the first instance or during
    the proceedings. Even otherwise, the petitioner has disclosed
    sufficient cause for filing the petition beyond the period of three
    months from receipt of the notice of Award. After excluding the
    time taken for bonafide filing before another Court of territorial
    jurisdiction, it has been duly explained that the petitioner was
    prevented by sufficient cause to file the petition within a period
    of three months and the same may be entertained within a period
    of 30 days thereafter, as per proviso 2 Section 34(3) of the
    Arbitration and Conciliation Act. Accordingly, the petition is
    taken up for determination on its merits herein.

    38. The present petition raises several grounds of
    challenges to the impugned Award on the assertion of the
    petitioner that the ld. Arbitrator has failed to appreciate the

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    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA
    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026
    contractual duties and obligations of the parties arising out of the
    SWM Agreement dated 11.06.2019 and Lease Agreement dated
    18.06.2019, which were interlinked agreements by virtue of
    which the claimant( respondent herein), was given rights for
    possession, management and operation of the petitioner’s
    godown under PEG Scheme 2008. It is the case of the petitioner
    that the ld. Sole arbitrator has failed to appreciate the evidence
    and documents placed before him during the trial and has
    proceeded on one sided appreciation of evidence presented by the
    claimant. It has been alleged that the Ld. Arbitrator has omitted
    to take into account crucial evidence presented by the petitioner
    in defence of the claim and in support of its counter claim. It has
    been further alleged that the ld. Arbitrator has failed to appreciate
    material evidence for determining the necessary contractual
    obligations of the claimant in terms of the several binding clauses
    of the SWM Agreement binding between the parties. The
    respondent has outrightly denied that the impugned award suffers
    from any perversity or any patent illegality and has duly
    supported reasons and discussions of the Arbitrator as based on
    the material and evidence placed before the Arbitral Tribunal. It
    is case of the respondent that the Arbitral Tribunal has duly
    considered all the relevant facts and law applicable and material
    to the disputes that was pending before the Tribunal to arrive at a
    just and logical adjudication/conclusion. It has been argued that
    this Court is not competent to substitute its own wisdom in place
    of that of the Arbitrator as the impugned Arbitral Award has been
    passed in accordance with the principles of natural justice, after
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    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA

    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026
    according full opportunity to the respondent (petitioner herein).

    39. A careful reading of the impugned award shows that
    the ld. Sole Arbitrator has devoted considerable discussion to the
    contractual obligation of the petitioner to make timely payment
    of monthly invoices and the absence of any formal cure notice or
    notice of termination during the currency/subsistence of the
    SWM Agreement. While these circumstances undoubtedly
    constitute relevant considerations, they could not have
    substituted an independent adjudication of the principal
    controversy which arose between the parties. The central issue
    before the ld. Arbitrator was not merely whether invoices
    remained unpaid but whether the claimant had discharged the
    extensive contractual obligations undertaken under the SWM
    Agreement dated 11.06.2019 so as to become entitled to the
    contractual remuneration claimed.

    40. It is an admitted case of the parties that the rights of
    obligations of the parties emanated from the execution of the
    SWM Agreement dated 11.06.2019 and another agreement
    namely ‘Lease Agreement’ dated 18.06.2019 by which a PEG
    godown located at Obra, Aurangabad District Bihar, constructed
    under the scheme of 2008, was handed over to the respondent
    (Claimant) for management and operations of the petitioner’s
    godown, in compliance with the quality standards mandated by
    the Food Corporation of India (FCI). These agreement executed
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    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA

    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026
    under the PEG Scheme, 2008 pertained to ensuring scientific
    preservation and maintenance of food grains in compliance with
    mandated quality standards. The SWM Agreement executed
    between the parties was not a simple agreement for payment
    against supply of goods or isolated services. It was a
    comprehensive warehouse management contract requiring the
    claimant to undertake preservation of food grains, fumigation,
    deployment of adequate manpower, maintenance of statutory
    records, compliance with PEG norms, operational management
    of the warehouse and various ancillary obligations undertaken
    under Clauses 3 to 21 of the SWM Agreement. As a defence and
    to support its counter claim during the arbitral process, the
    petitioner (respondent therein) alleged that the mandatory
    obligations had been repeatedly breached by the
    claimant/respondent herein, during the subsistence of the contract
    and that such deficiencies on the part of the claimant resulted in
    financial consequences including deterioration of food grains,
    storage losses and operational lapses. These pleadings by way of
    defence and counter claim of the petitioner before the Ld.
    Arbitrator, formed the very foundation of the defence and counter
    claims and therefore, required independent adjudication on their
    own merits.

    41. The Court has meticulously appreciated the arbitral
    record which discloses that the parties had produced extensive
    emails exchanged with each other during the subsistence of the

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    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA

    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026
    SWM Agreement in question. The Statement of Defence filed by
    the petitioner as respondent in the arbitration proceedings, raised
    specific allegations against the claimant alleging that there were
    several deficiencies committed by the claimant, which caused
    deposition of penalties by the supervisory government agency
    FCI, during the subsistence of the Agreement between the
    parties. It is further notable that the respondent in reply to the
    counter-claims itself filed and placed reliance on various email
    communications to explain the circumstances surrounding
    damage to food grains, structural deficiencies in the warehouse
    and day-to-day operational issues. The award also records that
    the petitioner moved an application under Section 23(3) seeking
    permission to place additional Gmail communications on record
    and that the ld. Arbitrator specifically directed that those
    communications would be considered at the stage of final
    appreciation of evidence, as per law.

    42. On appreciation of the reasons and findings of the
    Ld. Arbitrator leading to passing of the impugned Award, there is
    absence of any analysis of the documents and emails, presented
    by the petitioner in its defence and in support of its counter
    claim, on record. The claimant has specifically relied upon
    emails dated 01.02.2020, 14.03.2020, 02.04.2020 and 17.04.2020
    regarding stock transactions and operational issues, yet the award
    does not analyse whether those communications corroborate or
    contradict the rival cases. The claimant relied upon emails and

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    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA

    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026
    communications exchanged between the parties during the
    subsistence of the agreement asserting that repeated complaints
    had been addressed to the petitioner regarding water leakage in
    the warehouse structure, which according to the claimant was the
    responsibility of the owner under Clause 3 of the SWM
    Agreement. The claimant also relied upon email correspondence
    relating to inward and outward movement of stocks, operational
    transactions, fumigation activities, preservation and security of
    stocks, deployment of adequate man power for smooth
    operations and claim of providing adequate man power. Against
    the correspondence relied upon by the claimant, there are several
    emails relied upon by the petitioner (respondent therein), which
    were placed on record, including email dated 13.08.2019,
    14.12.2019, 14.01.2020, 07.04.2020, 20.05.2020, 17.05.2020
    which were addressed to the claimant/respondent raising
    concerned about alleged deficiencies and failure to maintain
    computerised record, submit periodical reports and proper
    coordination with FCI and BSWC officials. Further by way of
    the afore-detailed email communications, petitioner raised
    concerns about inadequate staffing at Kishanganj godown
    whereby the record also comprises of reiterated emails dated
    16.12.2019 and 14.01.2020. By way of the contentious
    correspondences during subsistence of the SWM Agreement, the
    petitioner repeatedly called upon the respondent to rectify breach
    of its fundamental responsibilities alleging that the failure of the
    claimant(respondent herein) to take any effective corrective
    action was causing significant disruptions in warehouse
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    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA

    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026
    operations. The petitioner/respondent before the arbitrator,
    documents and email correspondences to support its defence and
    counter claim to allege that the failure of the respondent to fulfil
    its obligations under the SWM Agreement, were in breach of
    Clause 14, Clause 16 and further alleged that the respondent also
    committed breach of Clause 18 of the SWM Agreement by
    failing to conduct regular fumigation. It has been a defence raised
    by the petitioner(respondent) that the FCI made substantial
    deductions over the past year on account of the deficiencies and
    stock shortages, due to which huge losses were suffered.

    43. The appreciation of impugned Award reveals that the
    Ld. Arbitrator did not analyse and reconciled the communications
    and records of rival parties, placed before him to arrive at a
    finding as to whether any deficiencies in compliance of
    contractual obligations by the claimant stood proved or not or if
    such alleged deficiencies in day-to-day operation of the
    warehouse, could be proved on record by the petitioner or not. It
    was incumbent upon the learned Arbitrator to examine whether
    the communications merely established routine operational
    exchanges or whether they disclosed continuing deficiencies
    having a bearing upon the contractual obligations of either party.
    Instead, the award merely notices the existence of some
    correspondence without evaluating its legal or evidentiary effect.
    Such omission, in the opinion of this Court, cannot be treated as
    a mere error in appreciation of evidence but amounts to failure to

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    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA

    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026
    consider material evidence going to the root of the disputes.
    Instead of examining whether the claimant had substantially
    complied with its contractual obligations, the learned Arbitrator
    appears to have proceeded on the premise that in the absence of
    issuance of contractual cure notices and termination of the
    Agreement, the petitioner’s allegations necessarily stood diluted.
    Paragraphs 21 to 33 of the award repeatedly emphasise that the
    petitioner neither terminated the Agreement nor issued cure
    notices contemplated under Clause 2(c) and, therefore, the
    claimant’s performance ought to be treated as satisfactory.

    44. In the considered opinion of this Court, such an
    approach amounts to an oversimplification of the contractual
    disputes which actually arose between the parties. The
    contractual mechanism providing for cure notices regulated the
    parties’ rights concerning continuation or termination of the
    Agreement. However, whether the claimant had in fact
    committed breaches of its contractual obligations was a distinct
    issue requiring independent adjudication upon appreciation of
    evidence. Absence of termination Notice could not automatically
    lead to the legal conclusion that every contractual obligation had
    been faithfully discharged or that every complaint raised by the
    petitioner stood waived.

    45. Ld. Counsel for the respondent argued that this
    Court ought not to re-appreciate the evidence forming part of the
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    GUPTA AGRAWAL
    GUPTA

    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026
    arbitral record. The submission correctly states the limits of
    Section 34 jurisdiction. However, there exists a fundamental
    distinction between reassessment of evidence and complete non-
    consideration of material evidence. While the former falls outside
    the jurisdiction of the Court, the latter has consistently been
    recognised by the Hon’ble Supreme Court as a valid ground for
    interference where such omission affects the decision-making
    process itself.

    46. Equally significant is the manner in which the
    learned Arbitrator dealt with the petitioner’s defence concerning
    alleged operational deficiencies. The defence raised specific
    allegations regarding inadequate manpower, deficiencies in
    preservation, non-maintenance of computerized records, shortage
    of operational staff, storage losses and various failures in
    warehouse management. These allegations were founded upon
    contractual clauses allocating specific responsibilities to the
    claimant. However, the impugned award does not undertake any
    clause-wise examination of these contractual obligations before
    recording findings on the petitioner’s liability to pay the
    contractual remuneration.

    47. The discussion relating to manpower illustrates
    this difficulty. The petitioner specifically pleaded that
    adequate manpower as required under PEG norms had not
    been deployed by the claimant. Instead of examining the
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    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA

    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026
    contractual stipulations, the applicable operational
    requirements and the documentary correspondence
    exchanged between the parties, the learned Arbitrator
    disposed of the issue by observing that adequacy of
    manpower was essentially a subjective matter to be
    determined by the claimant itself. Such reasoning, with
    respect, overlooks the nature of the contractual obligations.
    Whether manpower was contractually adequate could not be
    determined solely by the claimant’s subjective assessment. The
    Agreement itself imposed operational responsibilities and the
    petitioner had produced documentary material alleging persistent
    shortages. The learned Arbitrator was expected to determine
    whether the contractual standards stood satisfied, rather than
    conclude the issue on the basis of general observations.

    48. Likewise, the ld.Arbitrator repeatedly observed that
    the petitioner continued with the Agreement throughout its tenure
    and therefore must be deemed to have accepted the claimant’s
    performance. This reasoning, in the opinion of this Court, travels
    beyond the contractual framework. The Agreement related to
    management of warehouses storing public food stocks belonging
    to governmental agencies. Continuity of warehouse operations
    may have been dictated by operational necessity. It is further
    relevant to consider that the claimant did not produced any
    extension agreement or material evidence supporting the
    continuation of services by the claimant (respondent herein).

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    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA

    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026
    Even otherwise, such continuation, by itself, could not dispense
    with the requirement of examining whether the claimant had in
    fact complied with the contractual obligations undertaken by it.

    49. The impugned Award also proceeds on the premise
    that because monthly invoices reflected charges for fumigation,
    the allegation of inadequate fumigation necessarily stood
    disproved. Such inference does not necessarily follow. The
    raising of invoices establishes that charges were claimed; it does
    not by itself establish that the contractual standard of
    performance stood achieved. Whether fumigation operations
    were undertaken in accordance with the contractual
    specifications required independent examination of the
    operational records, inspection reports, correspondence and other
    documentary evidence produced by the parties. The impugned
    award does not disclose any such analytical exercise.

    50. This Court also finds substance in the grievance that
    the learned Arbitrator adopted inconsistent standards while
    appreciating documentary evidence. The claimant’s invoices,
    reminders and ledger accounts were readily accepted as
    establishing entitlement to payment. Conversely, substantial
    portions of the petitioner’s documentary case were rejected either
    on technical deficiencies or without detailed discussion of the
    relied upon emails and communications. Although insufficiency
    of proof may ultimately justify rejection of a particular claim, the
    adjudicatory process nevertheless requires the tribunal to
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    GUPTA AGRAWAL
    GUPTA

    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026
    examine all material evidence before arriving at such conclusion.
    Ex. RW1/3 regarding non-submission of periodical reports was
    noticed but dismissed as “merely theoretical”, without examining
    whether repeated reporting defaults constituted breach of
    contractual obligations.

    51. It may be further relevant to consider that the Ld.
    Arbitrator, in the impugned Award, has observed that the
    reasoning adopted in the award rendered in ‘SLCM Vs. Capital
    Propmart’ shall be read as part of the present award. Though an
    Arbitrator may rely upon principles of law laid down in another
    decision, he cannot incorporate factual findings and appreciation
    of evidence recorded in another arbitral proceeding without
    independently examining the evidence led in the case before him.
    Every arbitral reference is founded upon its own pleadings,
    evidence and contractual relationship. Adoption of factual
    findings from another arbitration, without an independent
    analysis of the evidence available in the present proceedings,
    amounts to a failure to exercise the adjudicatory function in the
    manner required of an arbitral tribunal. Such an approach is
    inconsistent with the requirement of fair and independent
    adjudication.

    52. Arbitration undoubtedly permits flexibility in
    procedural matters. Nevertheless, the duty to render a reasoned
    Award under Section 31(3) of the Act obliges the arbitral tribunal
    to indicate why material testimonial and documentary evidence
    has neither been accepted nor discarded. A reasoned Award does
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    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA
    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026
    not require discussion of every aspect of evidence on record;
    however, where there is substantial cross-examination of the
    claimant’s witnesses towards the breaches alleged by the
    respondent before the Ld. Tribunal further seeking support from
    contentious correspondence including emails exchanged between
    the parties and placing on record the correspondence pertaining
    to alleged quality cheque deficiencies filed by the FCI and
    material showing deductions made by the FCI owing to
    deficiencies and discrepancies, a complete absence of analysis of
    such evidence on record as relied upon by the respondent therein,
    renders the reasoning process of the Ld. Arbitral Tribunal,
    vulnerable to judicial scrutiny. Not only the documentary
    evidence by way of voluminous correspondence exchanged
    between the parties has been ignored by the Ld. Arbitrator in
    arriving at its finding, the Ld. Arbitrator has also omitted to
    analyse the testimonies of the witnesses during trial. The
    impugned Award, therefore, discloses that several findings have
    been returned by the Ld. Arbitrator without even determining the
    issues before the Ld. Arbitral Tribunal in complete omission of
    the crucial evidence on record. Ld. Arbitrator has completely
    ignored to consider the relevant correspondence and
    communications on record, exchanged between the parties during
    the contractual period, which were directly related to the alleged
    shortcomings in warehouse operations, structural deficiencies,
    preservation issues and contractual compliances. The Tribunal is
    expected to assess the probative value of the material placed
    before it on the touchstone of fairness, relevance and surrounding
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    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA

    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026
    circumstances. However, appreciation of the impugned Arbitral
    Award reveals that the Ld. Arbitrator proceeded with his findings
    without taking into account the crucial and vital evidence that
    was placed on record and if appreciated, could go to the root of
    the matter in fairly adjudicating the claim and counter claim
    raised before the Ld. Arbitral Tribunal.

    53. This Court is, therefore, unable to accept the
    respondent’s submission that the challenge merely seeks a fresh
    appreciation of evidence. The present case is not one where the
    petitioner merely seeks substitution of one possible view by
    another. Rather, the challenge is directed against the significant
    omission of the Ld. Arbitrator to consider the critical and vital
    evidence which formed an integral part of the arbitral record.
    Though, reappreciation of evidence is not permissible, it is the
    law of the land that an Arbitral decision must not be perverse or
    so irrational that no reasonable person would have arrived at the
    same. In the facts of the present case, the findings arrived at by
    the Ld. Arbitrator is based on presumption of one sided
    contractual obligations in favour of the claimant after ignoring
    vital evidence pertaining to the alleged breach of the contractual
    obligations arising from the binding clauses in the SWM
    Agreement, which formed the basis of business relationship
    between the parties.

    54. As afore-considered, in a recent three-Judge Bench
    decision of the Hon’ble Supreme Court of India in ‘DMRC Ltd.
    v. Delhi Airport Metro Express (P) Ltd.’ (2024) 6 SCC 357, the
    OMP (Comm.) 3/2025 M/s Jawahar Traders Vs. M/s Sohan Lal Commodity Management Pvt Ltd. Page 45/50

    Digitally
    PREETI signed by
    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA
    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026
    ground of patent illegality/perversity was delineated in the
    following terms:

    “39. In essence, the ground of patent illegality is
    available for setting aside a domestic award, if the
    decision of the arbitrator is found to be perverse, or so
    irrational that no reasonable person would have arrived
    at it; or the construction of the contract is such that no
    fair or reasonable person would take; or, that the view
    of the arbitrator is not even a possible view. A finding
    based on no evidence at all or an award which ignores
    vital evidence in arriving at its decision would be
    perverse and liable to be set aside under the head of
    “patent illegality”. An award without reasons would
    suffer from patent illegality. The arbitrator commits a
    patent illegality by deciding a matter not within its
    jurisdiction or violating a fundamental principle of
    natural justice.”

    It was further held:-

    “71. In Ssangyong Engg. & Construction Co. Ltd. v.
    NHAI
    , (2019)15 SCC 131, which dealt with the legal
    position post the 2015 Amendment in Section 34 of the
    1996 Act, it was observed that a decision which is
    perverse, while no longer being a ground for challenge
    under “public policy of India”, would certainly amount
    to a patent illegality appearing on the face of the award.
    It was pointed out that an award based on no evidence,
    or which ignores vital evidence, would be perverse and
    thus patently illegal. It was also observed that a finding
    based on documents taken behind the back of the
    parties by the arbitrator would also qualify as a
    decision based on no evidence inasmuch as such
    decision is not based on evidence led by the parties,
    and therefore, would also have to be characterised as
    perverse

    72. The tests laid down in Associate Builders v. DDA,
    (2015) 3 SCC 49 to determine perversity were followed
    in Ssangyong Engg. & Construction Co. Ltd. v. NHAI,
    (2019) 15 SCC 131 and later approved by a three-Judge
    Bench of this Court in Patel Engg. Ltd. v. North
    Eastern Electric Power Corpn. Ltd.
    , (2020) 7 SCC

    167.”

    OMP (Comm.) 3/2025 M/s Jawahar Traders Vs. M/s Sohan Lal Commodity Management Pvt Ltd. Page 46/50

    Digitally
    PREETI signed by
    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA

    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026

    55. It is well settled law by way of binding precedents
    herein-above partly reproduced and duly appreciated that there is
    limited scope of challenge u/s 34 of the A & C Act which has
    been reiterated and reaffirmed over evolving legal position of the
    country. This well settled legal position was once again
    highlighted by the Hon’ble Apex Court in ‘ PSA SICAL
    Terminals (P) Ltd. v. Board of Trustees of V.O. Chidambranar
    Port Trust Tuticorin
    ‘ [2021 SCC OnLine SC 508], and numerous
    pronouncements of our own Hon’ble Delhi High Court, to make
    it clear that this Court, in exercise of its jurisdiction u/s 34 of A
    & C Act, is not permitted to reappreciate the evidence as an
    Appellate Court would do and further any interference would be
    so warranted when the Award is in violation of ‘public policy of
    India’, which has been held to mean ‘the fundamental police of
    Indian law’. However, the principles of natural justice as
    contained in Section 18 and 34(2)(a)(iii) of the Arbitration Act
    would continue to be the grounds of challenge of an Award.
    Accordingly, it is well settled position of law that ‘It is only such
    arbitral awards that shock the conscience of the Court, that can
    be set aside on the said ground. An award would be set aside on
    the ground of patent illegality appearing on the face of the award
    and as such, which goes to the roots of the matter.’

    56. At the cost of repetition, it may be relevant to
    consider the case of “Associate Builders v. Delhi Development
    Authority
    ”, (2015) 3 SCC 49, which was duly appreciated and
    followed in case Ssang Yong Engineering (Supra), wherein it has
    been held that where the decision of an Arbitrator in construction
    OMP (Comm.) 3/2025 M/s Jawahar Traders Vs. M/s Sohan Lal Commodity Management Pvt Ltd. Page 47/50
    Digitally
    PREETI signed by
    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA
    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026
    of terms of a contract, is perverse, such decision or passing of the
    Award would certainly amount to a patent illegality appearing on
    the face of the award. Thus, a finding based on no evidence at all
    or an award which ignores vital evidence in arriving at its
    decision would be perverse and liable to be set aside on the
    ground of patent illegality. Additionally, findings of the Arbitrator
    based on one sided documents or ignoring the documents filed by
    the other as in the present case, would also qualify as a decision
    based on no evidence inasmuch as such decision is not based on
    evidence led by the parties, and is therefore, liable to be
    characterised as perverse.

    57. In the present case, this Court has appreciated the
    entire arbitral record and the findings of the Ld Arbitrator which
    led to his findings therein leading to passing of the impugned
    Award dated 09.10.2024. The Ld. Arbitrator has failed to
    consider the binding contractual obligations between the parties
    under several Clauses of the SWM Agreement which dealt with
    the core issues and services that were intended to be rendered by
    the claimant in respect of the preservation, safety and well keep
    of the food grains of FCI. There has been voluminous documents
    and correspondence brought on record before the ld. Arbitrator
    by both the claimant and the petitioner (as respondent therein).
    However, ld. Arbitrator clearly adopted inconsistent standards in
    deciding the claim on the basis of the invoices and accounts
    relied upon by the claimant, while ignoring the documentary
    evidence brought forth by the petitioner, regarding operational
    deficiencies, shortage of manpower, infrastructural complaints,
    OMP (Comm.) 3/2025 M/s Jawahar Traders Vs. M/s Sohan Lal Commodity Management Pvt Ltd. Page 48/50
    Digitally
    PREETI signed by
    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA
    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026
    storage losses and other contractual breaches. Ld. Arbitrator has
    failed to analyse the comprehensive material and evidence placed
    on record and thereby, has ignored vital evidence in arriving at
    his findings. Hence, the Ld. Arbitrator failed to rightly appreciate
    the entire evidence and ignored vital evidence in arriving at its
    decision thereby rendering the decision as ‘perverse’. As per well
    settled law, an Award based no evidence, or which ignores vital
    evidence, is perverse and thus, patently illegal (Reliance placed
    on ‘Ssangyong Engg. & Construction Co. Ltd. v. NHAI‘, (2019)
    15 SCC 131; ‘Associate Builders v. DDA‘, (2015) 3 SCC 49).

    58. In view of the aforesaid facts and discussions, this
    Court is of the considered opinion that the decision-making
    process adopted by the ld. Arbitrator lacks objective adjudication
    and thereby, suffers from patent illegality, appearing on the face
    of the Award. The Award proceeds substantially on presumptions
    arising from non-issuance of cure notices and continuation of the
    contractual relationship, while failing to fairly and independently
    adjudicate the contractual breaches alleged by the petitioner
    (respondent therein) through material and crucial evidence. Such
    omission strikes at the very root of the entire adjudicatory
    process by which the arbitral conclusions have been reached and
    therefore, attracts judicial interference within the limited
    parameters recognised u/s 34 of the Arbitration and Conciliation
    Act.

    OMP (Comm.) 3/2025 M/s Jawahar Traders Vs. M/s Sohan Lal Commodity Management Pvt Ltd. Page 49/50

    Digitally
    PREETI signed by
    AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA

    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026

    59. Having failed to adequately evaluate the entire
    evidence and material on record and ignoring vital evidence
    pertaining to alleged breaches and contractual obligations which
    go to the root of the matter, the impugned Award dated
    09.10.2024 suffers from patent illegality appearing on the face of
    the Award. Accordingly, the Award is perverse and liable to be set
    aside on the ground of patent illegality.

    60. Therefore, the present petition is allowed and
    impugned Award dated 09.10.2026 is set aside.

    Parties shall be at liberty to assert their respective
    rights and claims, in accordance with law.

    No orders as to costs.

    Petition stands disposed of accordingly.
    File be consigned to Record R oom.

    Digitally
    Announced in the open Court today PREETI signed by
    on this 03rd day of July, 2026. AGRAWAL PREETI
    GUPTA AGRAWAL
    GUPTA
    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026

    OMP (Comm.) 3/2025 M/s Jawahar Traders Vs. M/s Sohan Lal Commodity Management Pvt Ltd. Page 50/50

    (PREETI AGRAWAL GUPTA)
    District Judge (Commercial Court)-02
    West/Tis Hazari Courts/Delhi.

    03.07.2026



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