Finality After Dismissal of SLP and Limits of Review in Arbitration Matters: Supreme Court Bars Re-agitation of Section 34 Issues Post Section 37 Judgment

Case Name: Patel Engineering Ltd. v. North Eastern Electric Power Corporation Ltd. (NEEPCO)

Citation: 2020 INSC 403

Date of Judgment/Order: 22 May 2020

Bench: R. Banumathi, Indu Malhotra, Aniruddha Bose

Held: The Supreme Court held that once a challenge to a Section 37 arbitration judgment has been rejected by dismissal of a Special Leave Petition, the aggrieved party cannot reopen the same issues by filing a review petition before the High Court, and such review petitions are not maintainable.

Summary: The dispute arose from declaratory arbitral awards passed in favour of Patel Engineering Ltd. relating to payment for extra lead in transportation under multiple construction contracts awarded by NEEPCO. The arbitral awards were upheld by the Additional Deputy Commissioner under Section 34 of the Arbitration and Conciliation Act, 1996. However, the Meghalaya High Court, in appeals under Section 37, set aside the awards on the ground of perversity and patent illegality.

Patel Engineering challenged the Section 37 judgment before the Supreme Court by filing Special Leave Petitions, which were dismissed after hearing senior counsel. Subsequently, Patel Engineering filed review petitions before the High Court, contending that the High Court had failed to apply the post-2015 amended arbitration law, particularly the narrowed scope of public policy and patent illegality under Section 34.

The High Court dismissed the review petitions, holding that no error apparent on the face of the record existed. Before the Supreme Court, the petitioner argued that dismissal of the earlier SLP was non-speaking and did not bar review. The Supreme Court rejected this contention, holding that once all issues were raised and considered at the SLP stage, the matter attained finality.

The Court further observed that the High Court had correctly applied the test of perversity and “no possible view” as laid down in Associate Builders and Ssangyong Engineering, and that mere reference to older precedents like Saw Pipes or Western Geco did not vitiate the decision where the correct legal standard was ultimately applied.

Decision: All Special Leave Petitions were dismissed. The Supreme Court upheld the High Court’s rejection of the review petitions and reaffirmed that arbitration disputes cannot be endlessly reopened after dismissal of SLPs, thereby reinforcing certainty and finality in arbitral adjudication