The Bombay High Court upheld an arbitral award arising from a B2B textile transaction, rejecting technical objections raised under Section 34 of the Arbitration Act. The Court held that attempts to re-argue invoice balances and quality issues amounted to an abuse of process aimed at delaying payment of legitimate commercial dues.

Legal Issue 

Whether an Arbitral Award arising from a B2B commercial transaction can be set aside under Section 34 of the Arbitration Act based on technical objections regarding invoice balances and quality, or if such challenges constitute an abuse of process intended to delay corporate debt recovery. 

Brief Facts

The Petitioner (Jalaram Fabrics) challenged an Arbitral Award dated 21 July 2022 issued by a three-member tribunal of the Bharat Merchants’ Chamber. The dispute involved a commercial default where the Respondent (Nisarg Textiles) claimed unpaid balances for textile goods supplied under various invoices. The Petitioner raised several technical and evidentiary objections to the tribunal's findings on the quantity and quality of goods to avoid the liability of ?11,44,850 plus interest. 

Court’s Reasoning

The Court emphasized that in commercial arbitrations, the "hands-off" approach is paramount. It noted that the Petitioner’s attempt to re-litigate factual findings on invoices amounted to an invitation for the Court to act as an appellate body, which is barred under Section 34. From a corporate legal standpoint, the Court observed that the Petitioner had "unjustifiably refused" to settle legitimate commercial debts. The reasoning highlighted that corporate entities must not be allowed to use the legal system to cause "litigation fatigue" for creditors. The tribunal's decision was deemed a "plausible view" that did not shock the conscience of the Court. 

Judgment

The Arbitration Petition was dismissed with the Court upholding the award in its entirety. To discourage corporate litigants from filing frivolous challenges to delay the execution of commercial awards, the Court imposed additional costs of ?50,000 on the Petitioner. 

Subsequent Development 

This judgment reinforces the judiciary's commitment to the "Ease of Doing Business" by penalizing corporate debtors who use Section 34 petitions as a strategy to delay the payment of balance invoice amounts. It signals that High Courts will increasingly use their power to award costs to curb meritless commercial litigation. 

Access the full judgement here

Case Title Jalaram Fabrics v. Nisarg Textiles Pvt. Ltd. 

Neutral Citation 2026:BHC-OS:397 

Court High Court of Judicature at Bombay (Original Side)

Bench Justice Sandeep V. Marne