1

DEPARTMEMT OF LAW
ALIGARH MUSLIM UNIVERSITY,
CENTER MALAPPURAM, KERELA

LAW OF CONTRACT
CASE COMMENT

TOPIC: Batliboi Environmental Engineers Ltd. Vs. Hindustan

Petroleum Corporation Ltd. and Anr. (2023).

SUBMITTED TO: SUBMITTED BY:

NAME: KULSUM HUSAIN
DR. AZMAT ALI SIR
FACULTY NO: 22LLBWK231
(ASSISTANT ENROLL NO:
PROFESSOR) GM5861
AMUMC COURSE:
BALLB (3rd Sem)
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TABLE OF CONTENT

S.NO CONTENTS PAGE NO

1 STATEMENT OF FACTS 5 to 6

2 PETITIONER ARGUMENT 6 to 7

3 RESPONDANT ARGUMENT 7 to 9

4 FINDINGS OF THE COURT 9 to

10
5 ANALOGY USED BY COURT 11 to
12
6 VERDICT 13

7 COMMENT 14 to
15
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INDEX OF AUTHORITIES

S CASES CITATION
NO
1 MMTC Ltd. v. Vedanta Ltd. and AIR 2001
Ssangyong Engg. & Construction Co. 2903 SC
Ltd. v. National Highways Authority of
India, [2023] SC 2903
2 Vishaka & Ors Vs. State of Rajasthan & AIR 1997
Ors [1997] INSC 665 (13 August 1997) 665 INSC

3 Batliboi Environmental Engineers Ltd. AIR 2023

Vs. Hindustan Petroleum Corporation 741 SC
Ltd. and Anr. 741 SC (21 SEPTEMBER
2023)

STATUTES
INDIAN CONTRACT ACT 1870
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ACKNOWLEDGEMENT

I would like to express my gratitude to my contract teacher Dr. Azmat Ali sir ,
who give me this opportunity to do a case comment Batliboi Environmental
Engineers Ltd. Vs. Hindustan Petroleum Corporation Ltd. and Anr. (2023)
Also I Would like to thank my classmates and friends for helping me in my
preparation for this project.

Thank You
Kulsum Husain
Faculty Roll No: 22LLBWK231
Enrollment No: GM5861
B.A LL.B(3nd sem)
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CASE COMMENT

BENCH: HONRABLE JUSTICE SANJIV KHANNA

CASE TITLE: Batliboi Environmental Engineers Ltd. Vs. Hindustan
Petroleum Corporation Ltd. and Anr.

CASE NUMBER: CIVIL APPEAL No. 1968 of 2012

PETITIONER: Batliboi Environmental Engineers Ltd

RESPONDENT: Hindustan Petroleum Corporation Ltd. and Anr.

SYNOPSIS
1.STATEMENT OF FACT
2.PETITITONER ARGUMENT
3. RESPONDENT ARGUMENT
4.FINDING OF COURT
5.ANALOGY USED BY THE COURT
6.VERDICT
7.COMMENT

1.STATEMENT OF FACT
The statement of facts in the aforementioned case unfolds against the
backdrop of an amendment to Section 34 of the Arbitration and Conciliation
Act (A&C Act) in India. This amendment, spurred by the observations in the
Supplementary Report to Report No. 246 on Amendments to the A&C Act
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by the Law Commission of India in February 2015, aimed to reshape the

landscape of arbitration proceedings within the country. The case under
consideration navigates through the intricacies of this legal framework,
shedding light on a dispute marked by an arbitral award that eventually
faced scrutiny under the amended Section 34.

Central to the case is the assertion that the amendment to Section 34 was a
response to concerns regarding the power to review arbitral awards on
merits. The Supplementary Report, titled 'Public Policy - Developments
post-Report No. 246,' posited that such review powers, as exemplified in the
Western Geco case and subsequently followed in Associate Builders, ran
contrary to the overarching objectives of the A&C Act. These objectives, as
outlined in the report, underscored the international best practice of
minimizing judicial intervention in arbitration proceedings.

The case refers to MMTC Ltd. v. Vedanta Ltd. and Ssangyong Engg. &
Construction Co. Ltd. v. National Highways Authority of India, among other
judgments. These cases are cited for their examination of the scope of court
intervention under the amended Section 34, introduced by Act No. 3 of
2016. While these judgments might not be directly applicable to the present
case, their consideration suggests a broader context in which the court
evaluated the legal landscape surrounding arbitral awards post-amendment.

Moving further into the factual matrix, the court extensively analyzed the
specific arbitral award under scrutiny. The key contentions revolved around
the identified patent flaws and illegalities that permeated the award. One
major facet highlighted by the court was the manifest lack of reasoning in
arriving at conclusions. This underscored the court's commitment to
upholding the integrity of arbitral processes, emphasizing the importance of
well-founded reasoning in arbitration decisions.

Another significant point of contention pertained to the calculation of

amounts awarded. The court observed that these calculations were not only
flawed but, in fact, amounted to double or part-double payments. Such
financial discrepancies further contributed to the court's determination that
the award was unsustainable. The court's meticulous examination of these
aspects showcases a commitment to precision and adherence to legal
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standards in arbitral decisions, aligning with the objectives set forth in the
amendment to Section 34.

In essence, the statement of facts in this case unveils a legal landscape

shaped by legislative amendments, international best practices, and a
commitment to reducing judicial intervention in arbitration. The dispute at
hand serves as a microcosm of the broader efforts to streamline and fortify
the arbitration process in India, with a keen focus on the amended Section
34 and its implications for the validity and sustainability of arbitral awards.
2. PETITIONER ARGUMENT

The petitioner's argument in the case under discussion is anchored in the

perceived flaws and deficiencies within the arbitral award, which became
the focal point of legal scrutiny. The petitioner likely asserted a
multifaceted argument aimed at demonstrating the unsustainability of the
award under the amended Section 34 of the Arbitration and Conciliation
Act (A&C Act).

One primary contention of the petitioner revolved around the manifest

lack of reasoning in the arbitral award. This crucial aspect underscores the
petitioner's claim that the decision-making process lacked clarity,
coherence, or a logical foundation. By emphasizing the absence of well-
founded reasoning, the petitioner sought to portray the arbitral award as
fundamentally flawed and, therefore, unsustainable under the amended
legal framework.

Additionally, the petitioner likely highlighted contradictions within the

award as part of their argument. Inconsistencies in the conclusions drawn
or in the application of legal principles could significantly undermine the
credibility of the arbitral process. These contradictions may have been
presented as indicative of a decision-making process that deviated from
the standards expected under the amended Section 34, further bolstering
the petitioner's case for setting aside the award.

The calculation of amounts awarded appears to have been another crucial

aspect of the petitioner's argument. If, as contended by the petitioner, the
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calculations resulted in double or part-double payments, it would not only

signal a serious error but also could be construed as a departure from
established legal and financial norms. This financial aspect likely formed a
substantial part of the petitioner's argument, aiming to portray the award
as not only legally flawed but also economically untenable.

In summary, the petitioner's argument appears to be a comprehensive

challenge to the integrity of the arbitral award. By focusing on the lack of
reasoning, contradictions, and calculation errors, the petitioner sought to
convince the court that the award, as it stood, could not withstand scrutiny
under the amended Section 34 of the A&C Act. This argument aligns with
the overarching theme of the legal landscape post-amendment,
emphasizing the importance of precision, coherence, and adherence to
legal standards in arbitration proceedings.

3. RESPONDENT ARGUMENT

The details of the respondent's argument in the case under discussion are not explicitly
provided. However, in a hypothetical scenario where the respondent defended the
arbitral award, several potential arguments could be raised to counter the petitioner's
claims and uphold the validity of the decision.

1. *Procedural Regularity:*
The respondent might argue that the arbitral proceedings adhered to the prescribed
procedural norms and due process. If the petitioner's challenges were centered on
procedural irregularities, the respondent could contend that any perceived flaws did
not substantially impact the fairness of the proceedings or the final award.

2. *Judicial Restraint:*
In alignment with the objectives of the amended Section 34, the respondent could
assert that the court's scrutiny should be limited to procedural aspects and should not
delve into a reevaluation of the merits of the arbitral award. They might emphasize that
the amendment aims to minimize judicial intervention in arbitral decisions, aligning
with international practices.

3. *Reasonable Discretion of Arbitrators:*

The respondent may argue that arbitrators are granted a reasonable degree of
discretion in interpreting facts and applying the law. They might contend that, even if
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there were perceived flaws in reasoning, these could be attributed to the arbitrators'
interpretation rather than constituting a grave error warranting the setting aside of the
award.

4. *Calculation Disputes:*
Regarding the calculation of amounts awarded, the respondent might present a
different interpretation or clarification for the alleged double or part-double payments.
They could argue that any discrepancies were minor or explainable, and did not
undermine the overall fairness or enforceability of the arbitral award.

5. *Legal Precedents:*
The respondent might invoke legal precedents or decisions that support the validity
of the arbitral award under similar circumstances. By referencing cases where courts
upheld awards despite certain deficiencies, they could argue that the petitioner's
contentions are not strong enough to set aside the decision.

6. *International Best Practices:*

Aligning with the international best practices highlighted in the amendment, the
respondent may argue that the court should adopt a pro-arbitration stance, promoting
finality and efficacy of arbitration. They might stress that the amended Section 34
encourages a limited review, avoiding excessive interference in the arbitral process.

It's important to note that without specific details on the respondent's arguments in
the case, these points are hypothetical and based on common strategies employed in
defending arbitral awards. The actual response would depend on the nuances of the
case and the legal reasoning adopted by the respondent's legal team.

4. FINDING OF COURT

The court, after a meticulous examination of the arbitral award and

considering the petitioner's arguments, ultimately found in favor of setting
aside the award. The court's findings were grounded in a detailed analysis of
the flaws and illegalities identified in the award, which were deemed significant
enough to render it unsustainable under the amended Section 34 of the
Arbitration and Conciliation Act (A&C Act).

Key findings of the court include:

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1. *Manifest Lack of Reasoning:*

The court emphasized the presence of a manifest lack of reasoning in the
arbitral award. This implies that the decision-making process lacked clarity,
logical coherence, or a well-founded basis for arriving at conclusions. The court
likely considered this deficiency as a substantial departure from the standards
expected under the amended Section 34.

2. *Calculation Errors and Double Payments:*

The court scrutinized the calculations of amounts awarded and identified
errors that amounted to double or part-double payments. This financial
discrepancy was considered a significant flaw, contributing to the court's
determination that the award was not only legally flawed but also economically
untenable.

3. *Contradictory Elements:*
The court highlighted contradictions within the award as another factor
contributing to its unsustainability. Inconsistencies in the conclusions drawn or
in the application of legal principles were likely considered indicative of a
decision-making process that deviated from the standards expected under the
amended Section 34.

4. *Exercise of Court's Jurisdiction under Section 37:*

The court invoked its power and jurisdiction under Section 37 read with
Section 34 of the A&C Act. This indicates that the court, in setting aside the
award, relied on specific legal provisions that empower it to intervene in
arbitration matters where necessary, especially in instances where the
amended Section 34 is applicable.

5. *Alignment with Objectives of Amendment:*

The court's findings appear to align with the objectives of the amended
Section 34, which aims to minimize judicial intervention in arbitral awards and
promote finality and efficacy of arbitration. The emphasis on flaws and
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illegalities reflects a commitment to upholding the integrity of arbitral

processes within the framework of the amended legislation.

In summary, the court's findings indicate a thorough examination of the arbitral

award, with a focus on flaws in reasoning, calculation errors, and
contradictions. These findings collectively led the court to conclude that the
award was unsustainable and warranted setting aside under the amended
provisions of the A&C Act.
.
5.ANALOGY

While the case details provided do not explicitly mention a specific analogy used by the
court, one can conceptualize an analogy that aligns with the court's emphasis on flaws in
reasoning, calculation errors, and contradictions in the arbitral award.

*Analogy: The Flawed Blueprint in Construction*

Imagine a scenario where an architect is tasked with designing a building, and the blueprint
provided is found to be riddled with errors, inconsistencies, and lacking a coherent plan. The
court, in this case, plays the role of an oversight body responsible for ensuring the integrity
of the construction process.

*Reasoning Flaws as Architectural Design Issues:*

In the same way, the court in the case focused on the manifest lack of reasoning in the
arbitral award, one can draw a parallel with a blueprint lacking clear design rationale. Just as
a building design needs a logical flow to ensure stability and functionality, the court may
argue that the arbitral award should have had a clear and reasoned basis for its conclusions.

*Calculation Errors as Structural Flaws:*

The court's identification of calculation errors leading to double or part-double payments
can be likened to structural flaws in the building. If the calculations for load-bearing
elements are incorrect, it jeopardizes the stability of the structure. Similarly, erroneous
financial calculations in the award may be viewed as compromising its economic integrity.
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*Contradictions as Inconsistencies in Construction Materials:*

Just as inconsistencies in the use of construction materials can compromise the durability of
a building, contradictions within the arbitral award might be analogized to inconsistencies in
legal principles. The court may argue that just as a building needs uniformity in its materials,
legal decisions require consistency for reliability.

*Court's Intervention as Blueprint Revision:*

The court, invoking its jurisdiction under Section 37 read with Section 34 of the A&C Act, can
be compared to an oversight body stepping in to revise the flawed blueprint. In construction,
such intervention might involve corrections to the design to ensure compliance with safety
and regulatory standards. Similarly, the court's intervention seeks to rectify the flaws in the
arbitral process according to legal standards.

This analogy illustrates how the court's findings and actions in the case can be
metaphorically aligned with issues in the construction of a building, highlighting the
importance of a sound foundation (reasoning), structural integrity (calculation accuracy),
and consistency in materials (avoidance of contradictions) for a reliable and sustainable
outcome.

6.VERDICT

The verdict in this case resulted in the dismissal of the appeal without any order as to
costs. This means that the court rejected the petitioner's appeal, upholding the
decision to set aside the arbitral award. The dismissal without costs implies that the
court did not impose any financial penalties on either party, indicating that the
decision was based on the merits of the case rather than any procedural or punitive
considerations.

In essence, the court's verdict affirms the finding that the arbitral award was
unsustainable due to the identified flaws and illegalities, as discussed in the court's
detailed analysis. The dismissal of the appeal underscores the court's determination
that the award was rightly set aside by the division bench of the High Court,
exercising power and jurisdiction under Section 37 read with Section 34 of the
Arbitration and Conciliation Act (A&C Act).
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The absence of an order as to costs suggests that the court did not find any compelling
reason to impose additional financial burdens on either party, further emphasizing that the
decision was primarily based on the substantive issues raised during the legal proceedings.
Overall, the verdict reflects the court's commitment to upholding the integrity of the
amended Section 34 of the A&C Act, which aims to minimize judicial intervention in arbitral
awards and promote the effectiveness of the arbitration process.

7. COMMENT

The court's handling of the above-mentioned case reflects a commitment to upholding the
integrity of arbitration proceedings within the framework of the amended Section 34 of the
Arbitration and Conciliation Act (A&C Act). The detailed analysis undertaken by the court in
assessing the flaws and illegalities in the arbitral award indicates a rigorous scrutiny aligned
with the objectives of minimizing judicial intervention and promoting the efficacy of the
arbitration process.

The court's emphasis on the manifest lack of reasoning in the arbitral award underscores the
importance of clear and well-founded decision-making in arbitration. By highlighting
calculation errors leading to double or part-double payments and contradictory elements,
the court signals a commitment to precision and coherence in arbitral decisions, aligning
with international best practices.

The dismissal of the appeal without any order as to costs indicates that the court's decision
was driven by substantive considerations rather than procedural or punitive aspects. This
reflects a focus on the merits of the case and the court's determination that the arbitral
award was rightly set aside by the division bench of the High Court.

The court's invocation of its jurisdiction under Section 37 read with Section 34 further
emphasizes the legal basis for intervention. The court appears to be acting in accordance
with the amended provisions, which grant specific powers to review and set aside arbitral
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awards in certain circumstances, maintaining a delicate balance between facilitating

arbitration and ensuring its integrity.

In summary, the court's approach in this case aligns with the broader goals of arbitration
reform in India, emphasizing the importance of reasoned decision-making, adherence to
legal standards, and a limited scope for judicial intervention. The case serves as an
illustration of the evolving legal landscape in arbitration matters, with the court playing a
crucial role in safeguarding the fairness and effectiveness of the arbitral process.