Section 34(2A) of The Arbitration Act

Paragraph 19 of Ssangyong Engineering, (2019) 15 SCC 131 noted that, the expansive interpretation given to “public policy of India” in Saw Pipes, (2003) 5 SCC 705 and Western Geco International Limited, (2014) 9 SCC 263 had been done away with and a new ground of ‘patent illegality’ was introduced which would apply to applications under Section 34 made on or after 23.10.2015. Paragraphs 36 and 37 held that, insofar as domestic awards are concerned, the additional ground of ‘patent illegality’ was now available under Sub-Section (2A) to Section 34.

The ground of ‘patent illegality’ is a ground 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 the same; or, the construction of the contract is such that no fair or reasonable person would take; or, the view of the Arbitrator is not even a possible view.

The High Court of Meghalaya at Shillong referred to Associated Builders, (2015) 3 SCC 49 at length and arrived at the correct conclusion. This finding is in conformity with Paragraph 40 in Ssangyong Engineering.”

Hon’ble Judges R. Banumathi, Indu Malhotra and Aniruddha Bose, Patel Engineering Ltd. v. North Eastern Electric Power Corporation Ltd., [Special Leave Petition (Civil) Nos. 3584-85 of 2020].

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The Power of Larger Bench

Hon’ble Justice Dipak Misra in Bussa Overseas, (2016) 4 SCC 696 held, “viewed in the backdrop of the factual score in entirety, we are of the considered opinion that decision in Thungabhadra Industries Ltd., (1964) 5 SCR 174 has to be confined to the facts of the said case.” Patel Engineering Ltd. interpreted… Bussa Overseas held, “the decision rendered in Thungabhadra Industries Ltd. is not correct.