Madras High Court· 21 July 2026

Where an arbitrator finds 90% of water supplied was for domestic use, must the award explain why the consumer is still liable at the industrial tariff?

M/s. V.O. Chidambaranar Port Trust v. Tamil Nadu Water Supply and Drainage Board

O.S.A.No.30 of 2020 · O.S.A.No.30 of 2020
Coram: P.Velmurugan; K.Govindarajan Thilakavadi; K.Govindarajan; P.Velmurugan.

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Answer

Yes. Once the arbitrator found that about 90% of the water supplied to the Port Trust was utilised for domestic purposes, he was required to consider the effect of that finding while determining liability under the revised classification; the award did not explain why the domestic-use finding was no longer relevant after 01.12.2002, so the conclusion was not fully supported by the findings recorded.

Headnote

Arbitration and Conciliation Act, 1996 — s.34 — s.37 — Patent illegality — Award inconsistent with arbitrator's own finding — Arbitration and Conciliation Act, 1996 — s.34 — Scope of interference — Findings not supported by reasons — Held: Interference under Section 34 of the Arbitration and Conciliation Act, 1996, and consequently under Section 37, is confined to patent illegality on the face of the award or conclusions unsupported by the arbitrator's own findings; the Court cannot re-appreciate evidence merely because another view is possible. (¶15) Arbitration and Conciliation Act, 1996 — s.34 — Domestic water use finding — Liability under revised tariff category unexplained — Held further: Where the arbitrator found that 90% of water supplied was for domestic use and only 10% for industrial use, yet held the consumer liable at the "Other Beneficiaries" tariff without explaining why the domestic-use finding became irrelevant after the revised classification, the award's conclusion is not supported by its own findings and the inconsistency goes to the root of the award. (¶14, 16) Arbitration and Conciliation Act, 1996 — s.34 — Clause (C) of award — Patent illegality — Partial setting aside — Held further: Such an unexplained inconsistency amounts to patent illegality apparent on the face of the award, and the order under Section 34 confirming that clause of the award cannot be sustained; Clause (C) of the award is set aside while Clauses (A), (B) and (D) and the order of the Single Judge are confirmed. Appeal partly allowed. (¶17, 18)

In the Court's own words

Paragraph 14In our opinion, once the learned Arbitrator found that about 90% of the water supplied to the appellant was utilised for the residential quarters occupied by its employees and other domestic purposes, he ought to have considered the effect of the said finding while determining the appellant's O.S.A.No.30 of 20200 liability from 01.12.2002 onwards. Though the learned Arbitrator relied upon G.O.Ms.No.136 dated 03.10.2002 and placed the appellant under the category of "Other Beneficiaries", the Award does not adequately explain why the finding regarding the domestic use of water was no longer relevant after the revised classification came into force. The Award also does not explain why the appellant's liability should be determined only on the basis of the revised classification despite the finding regarding the actual utilisation of water.

Paragraph 16In the present case, the learned Arbitrator, on a proper appreciation of the evidence, found that about 90% of the water supplied to the appellant was utilised for domestic purposes and only 10% was utilised for industrial purposes. However, the learned Arbitrator held that the appellant was liable to pay water charges under the category of "Other Beneficiaries" with effect from 01.12.2002, without assigning adequate reasons as to why the finding regarding the actual use of water was not taken into account while determining the appellant's liability, particularly when the water was admittedly utilised for the residential quarters and other domestic purposes. In the absence of such reasons, the conclusion reached by the learned Arbitrator is not fully supported by the findings recorded in the Award. The learned Single Judge has also failed to consider this vital finding regarding the actual use of water while dealing with the challenge to the Award.

Acts & Sections

s.34 Arbitration and Conciliation Act, 1996s.37 Arbitration and Conciliation Act, 1996

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Also decided in this judgment

Under the Arbitration and Conciliation Act, 1996, is patent illegality made out where an award's conclusion is not supported by the arbitrator's own findings?

Plain-language answer prepared by the LexStreak Editorial Desk — verify against the judgment. Source: Madras High Court. Corrections