2022 (12) TMI 1526 - HC - Indian Laws

Scope of interference with orders of the Tribunal under Section 37 of the Arbitration and Conciliation Act, 1996 - Whether the Tribunal has acted dehors the Agreement while passing the Impugned Order? - HELD THAT - The 2015 Amendment to the Act has amplified the powers granted to arbitral tribunals to provide interim relief under Section 17. The power is now almost pari passu the powers that a court exercises under Section 9 of the Act. Therefore, it would not be innocuous to pre-suppose that the principles guiding the exercise of the powers under both these sections must be similar. In INDIAN OIL CORPORATION LTD. THROUGH ITS SENIOR MANAGER VERSUS M/S SHREE GANESH PETROLEUM RAJGURUNAGAR THROUGH ITS PROPRIETOR MR. LAXMAN DAGDU THITE 2022 (2) TMI 1450 - SUPREME COURT , an arbitral award was partly set aside under Section 34 of the Act. The part, which was set aside, allowed for alteration of contractual terms by increasing the per-month rent, in complete contradistinction to the rate given in the contract. The Court held that arbitrator cannot go beyond the contract. Firstly, the Apex Court was dealing with a setting aside application of a final award. The scope of power under Section 17 is completely different. Secondly, even if the principle, that directions cannot be given dehors the agreement, can be adopted, the facts before the Court were such that the portion of the award was in complete defiance to the explicit rate given in the award. Both do not seem to be case in the circumstances before us, as will be discussed later. There are no restrictions that require the Tribunal to only constrain itself to the contract while granting interim reliefs. The objective behind the wide powers granted under Section 17 of the Act is to preclude the arbitral proceedings from becoming infructuous, as long as the relief does not explicitly stand contrary to the contract. The Impugned Order elaborately discusses the history of the dispute without assigning any liability. In the portion where it discusses the payment of 50% of the basic contract value plus 100% of taxes and duties payable on the HWM System, the Tribunal has mentioned the apprehensions of both sides - Arbitration application dismissed.

Summary

Issues Involved:
1. Whether the Tribunal has acted dehors the Agreement while passing the Impugned Order.
2. Whether the Impugned Order deserves to be set aside.

Issue A: Whether the Tribunal has acted dehors the Agreement while passing the Impugned Order?

The Tribunal's powers under Section 17 of the Arbitration and Conciliation Act, 1996, have been amplified by the 2015 Amendment, making them almost pari passu with the powers a court exercises under Section 9 of the Act. The Tribunal is not strictly bound by the technicalities of the CPC but must be guided by the basic principles while granting interim relief. The Tribunal's order is intended to secure the amount in dispute in arbitration and does not explicitly contravene the contract. The Tribunal has tried to resolve complexities and facilitate the carrying out of contractual obligations while keeping the points of dispute open for future deliberation.

The Tribunal's orders dated December 22, 2021, and March 7, 2022, laid down modalities for carrying out various stage-wise contractual obligations and were accepted by both parties, even though not in strict conformity with the agreement. The Tribunal noted that the claimant raised apprehensions, and directed the petitioner to provide a bank guarantee to the extent of the Impugned Amount. This exercise of power is reasonable and does not go against the agreement but facilitates it.

Issue B: Whether the Impugned Order deserves to be set aside?

The scope of interference with orders of the Tribunal under Section 37 of the Act is very limited. The Delhi High Court in Sanjay Arora v. Rajan Chadha and Ors. noted that interference is warranted only where the order suffers from patent illegality or perversity. The Tribunal's order has not been found to be perverse or patently illegal. The Tribunal has been thorough with regards to facts and has done a commendable job in contractual facilitation while keeping disputes for future deliberation.

The Tribunal considered the apprehensions of both sides and directed the petitioner to furnish a bank guarantee to balance the convenience and protect against the future award becoming a mere paper award. This exercise of power is adept and reasonable. The Tribunal's intention to deal with the respondent's application dated July 13, 2022, is evident from the mention of a 'common order' and the detailed discussion of the history of the dispute in the Impugned Order.

Conclusion:

The Tribunal has not acted dehors the Agreement while passing the Impugned Order. The Impugned Order does not deserve to be set aside. The arbitration application [A.P.O. 74 of 2022] and IA NO. GA 1/2022 are accordingly dismissed. There shall be no order as to cost. Urgent Photostat certified copy of this order, if applied for, should be made available to the parties upon compliance with the requisite formalities.