UT of J&K and Ors. vs. Mrs. Rajinder Oberoi
Arb. P. No. 15/2024 | Decided on 04.07.2025 | Justice Sanjay Dhar | High Court of J&K and Ladakh
In a significant pronouncement reinforcing the principle of judicial non-intervention in arbitral matters, the High Court of Jammu & Kashmir and Ladakh, in UT of J&K and Ors. vs. Mrs. Rajinder Oberoi, has reiterated that arbitral awards can be set aside only on narrow grounds under Section 34 of the Arbitration and Conciliation Act, 1996, and not on account of mere legal or factual disagreement with the tribunal.
This case reflects the continuing judicial trend favouring minimal interference and respect for arbitral autonomy.
Factual Background
The genesis of the dispute lies in a lease deed executed in 1989 between the petitioner (UT of J&K) and the respondent (Mrs. Rajinder Oberoi), whereby the respondent was granted a 15-year lease (renewable for another 15 years) of a property at Gulmarg to operate a hotel and restaurant. The lease also empowered the respondent to mortgage leasehold rights to raise a loan for construction.
Due to the outbreak of militancy in 1990, the respondent migrated from the Kashmir Valley and claimed she was later prevented from resuming construction because of her husband’s political affiliations. She alleged arbitrary cancellation of the lease during its currency without notice and challenged the cancellation through a writ petition.
Upon invocation of the arbitration clause by the petitioners, the dispute was referred to an Arbitral Tribunal headed by Hon’ble Mr. Justice M.K. Hanjura (Retd.), which rendered an award in favour of the respondent, inter alia:
- Setting aside the lease cancellation,
- Granting restoration of possession or compensation of ₹1,37,57,009 with interest and alternate land rights,
- Awarding litigation expenses of ₹20 lakhs plus arbitral costs.
Challenge Under Section 34: Grounds Raised
The UT of J&K assailed the award on multiple grounds:
- Excess of Jurisdiction: Reliefs granted were allegedly beyond the terms of reference.
- Public Policy Violation: The award was claimed to be against public policy, especially considering a third-party interest (Shri Ghulam Qadir Palla) in the property.
- Patent Illegality: It was argued that the respondent had failed to prove expenses or losses.
High Court’s Analysis & Key Findings
Justice Sanjay Dhar meticulously examined the award and applicable legal principles, ultimately dismissing the challenge.
1. Minimal Judicial Intervention
The Court reiterated that courts must adopt a hands-off approach and cannot re-appreciate evidence or substitute their interpretation of contract terms where the arbitral interpretation is plausible.
“Every error of law committed by the Arbitral Tribunal would not constitute a patent illegality.”
2. Scope of Reference
The Court held that once disputes are referred under Section 8, arbitration commences de novo, and parties are not bound by prayers in the prior writ petition. The respondent’s expanded claims in arbitration were valid and within jurisdiction.
3. On Migrant Status and Jurisdiction
Despite the respondent’s status as a registered migrant under the J&K Migrant Immovable Property Act, 1997, the Court ruled that this did not oust arbitral jurisdiction, especially when arbitration was invoked at the petitioners’ own instance.
4. Third Party Interest
The Court applied the Group of Companies Doctrine from Cox and Kings v. SAP India Pvt. Ltd. to hold that non-signatory Shri Ghulam Qadir Palla derived rights through the petitioners and was thus bound by the result of the arbitration.
5. Award of Compensation
Although most of the respondent’s claims were rejected, the award of ₹1.37 crore was justified as compensation for outstanding loan liabilities arising due to premature lease cancellation—supported by evidence and falling squarely within Section 73 of the Indian Contract Act.
Conclusion: A Reaffirmation of Arbitral Finality
This judgment is a powerful reaffirmation that arbitral awards are not to be casually disturbed. The Court’s approach balances procedural fidelity with substantive fairness—respecting arbitral autonomy while ensuring justice is served in accordance with law.
For stakeholders in commercial arbitration, this decision underscores the importance of:
- Respecting arbitral processes,
- Carefully framing arbitration clauses and submissions, and
- Understanding that the scope for judicial interference post-award is extremely limited.
Key Takeaway
Courts cannot act as appellate authorities over arbitral awards. So long as the arbitrator’s interpretation is reasonable and findings are not outrageously perverse, interference under Section 34 is unwarranted—even where the court may have arrived at a different conclusion.
Disclaimer
This blog is intended purely for academic and informational purposes. It does not constitute legal advice or opinion. Readers are advised to refer to the original judgment and consult qualified professionals for specific legal guidance.