2017 (2) TMI 1531 - HC - Indian Laws

Validity of Arbitral Award - fraud or coercion - it is alleged that the Consent Terms were executed under pressure or coercion and were executed by the Petitioner herein on the basis that the Respondent would comply with its obligations under the MOU, which allegedly had not been done by the Respondent herein - Section 34 of the Arbitration and Conciliation Act, 1996 - HELD THAT - First and foremost there is no case pleaded of fraud having been played upon the Petitioner herein while executing the Consent Terms. The case is one of coercion, which in itself is bereft of any material particulars. It is not enough for a party to simply come to Court and aver coercion. For over four months after passing of the Award, and despite being well aware of the same, no objection was raised by the Petitioner herein to the effect that the Consent Terms were entered into under coercion. In fact, the matter remained pending before the learned Arbitrator only for the purpose of paying fees of the Tribunal. Even as late as on 16th July 2015 the Advocates for the Petitioner herein appeared before the learned Arbitrator and made no attempt to resile from the Consent Terms but simply sought time to seek instructions for making payment of the Arbitrator's fees. It is alleged by the Petitioner that the Respondent has in fact not complied with the terms of the MOU and on this ground alone, the Consent Terms must fail and the Award ought to be set aside. I cannot accept this submission. As is ex facie evident, the Consent Terms nowhere refer to the MOU. A reading of the Consent Terms shows that the payment terms therein were not conditional or contingent upon compliance with any terms of the MOU. I am not required to go into the question of whether the Respondent complied with the MOU, in as much as even assuming for argument's sake there had been non-compliance of the MOU by the Respondent, the Consent Terms, and accordingly the impugned Award, are not contingent upon the compliance with the MOU. Pertinently, even the resolution dated 16th March 2015 passed by the Board of Directors of the Petitioner herein authorizing the filing of the Consent Terms and the passing of the Award in terms thereof, makes no reference to the MOU, which in any event came to be executed only subsequently. Even assuming that the Petitioner herein has a grievance about any alleged non-compliance with the MOU, by the Respondent, the remedy of the Petitioner herein lies elsewhere, and this cannot be a ground to set aside the Award passed by consent of parties. The grounds urged by the Petitioner herein are unsustainable and appear to be an attempt to belatedly renege on the Consent Terms incorporated in the Award dated 18th March 2015 - Petition dismissed.

Summary

Issues:
Challenge to arbitration award based on coercion and non-compliance with MOU.

Analysis:
1. The petitioner challenged an arbitration award under Section 34 of the Arbitration and Conciliation Act, 1996, alleging that the Consent Terms, which formed the basis of the award, were executed under pressure or coercion. The petitioner claimed that the Respondent failed to comply with obligations under a Memorandum of Understanding (MOU) signed after the Consent Terms. The petitioner sought to withdraw the Consent Terms based on this alleged non-compliance.

2. The Court noted that the Consent Terms were signed willingly by the petitioner, as evidenced by a resolution passed by the Board of Directors authorizing the signing and seeking an award based on those terms. The Court found no material particulars supporting the coercion claim, especially since the petitioner took no action for over four months after the award was passed. The petitioner's attempt to challenge the award on the basis of coercion was deemed frivolous.

3. The petitioner also argued that the Consent Terms should be set aside due to the respondent's alleged non-compliance with the MOU. However, the Court observed that the Consent Terms did not make compliance with the MOU a condition for payment. The resolution authorizing the Consent Terms did not reference the MOU, which was signed later. Therefore, any grievances regarding the MOU's non-compliance were deemed irrelevant to the arbitration award based on the Consent Terms.

4. The Court dismissed the petition, stating that the petitioner's grounds were unsustainable and appeared to be a last-minute attempt to backtrack on the Consent Terms agreed upon. The Court found no legal basis to set aside the award and dismissed the petition with no order as to costs. Consequently, a related Notice of Motion was also disposed of in light of the petition's dismissal.