The Supreme Court has reaffirmed the narrow contours of the 'patent illegality' ground for setting aside a purely domestic arbitral award under Section 34(2A) of the Arbitration and Conciliation Act, 1996, holding that a court exercising Section 34 jurisdiction cannot re-open a tribunal's plausible construction of the contract merely because the court would have read the clause differently.
The Court explained that patent illegality must go to the root of the matter, such as an award founded on no evidence at all, an award that ignores a binding statutory provision, or an award that shocks the conscience of the court, and does not extend to a mere error of contractual interpretation, however debatable the tribunal's reasoning might appear.
The bench cautioned that Section 34 courts have, in some cases, used the patent illegality ground as a backdoor route to conduct a full merits review of the award, which the 2015 and 2019 amendments to the Act were specifically designed to prevent. The ruling restates the settled position that an arbitral tribunal is the final arbiter of questions of fact and contractual construction, and a Section 34 court's role remains supervisory rather than appellate.