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TMI Blog2023 (1) TMI 795X X X X Extracts X X X X X X X X Extracts X X X X ..... 34(2)(a), the words furnishes proof have been substituted by the words establishes on the basis of the record of the arbitral tribunal . In that view of the matter, we hold that in case of arbitration proceedings commenced and concluded prior to the amendment of section 34(2)(a) by Act 33/2019, pre-amendment of section 34(2)(a) shall be applicable. Whether in an application filed under section 34(2)(a) pre-amendment where the requirement is that the party making an application has to furnish proof , whether such an applicant can be permitted to adduce evidence by way of affidavit or otherwise? - HELD THAT:- The applications under sections 34 of the Act are summary proceedings; an award can be set aside only on the grounds set out in section 34(2)(a) and section 34(2) (b); speedy resolution of the arbitral disputes has been the reason for enactment of 1996 Act and continues to be a reason for adding amendments to the said Act to strengthen the aforesaid object; therefore in the proceedings under section 34 of the Arbitration Act, the issues are not required to be framed, otherwise if the issues are to be framed and oral evidence is taken in a summary proceedings, the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the respondents original writ petitioners to adduce evidence in an application under Section 34 of the Arbitration Conciliation Act, 1996 (hereinafter referred to as the Act ), the original respondent before the High Court and in whose favour the award has been passed by the learned Arbitral Tribunal has preferred the present appeal. 2. The facts leading to the present appeal in a nutshell are as under: That against the award passed by the learned arbitrators dated 12.03.1998, an application under Section 34 of the Act being Arbitration Case No. 38/1998 has been filed by the respondents. That the respondents filed an interim application being IA No. 4 in section 34 application to adduce additional evidence. At this stage, it is required to be noted that as such the award passed by the learned arbitrators was an ex-parte award and no evidence was led by the respondents herein, who subsequently assailed the award by way of section 34 application. The appellant herein filed objections to the said interim application seeking permission to adduce evidence on the ground that the same was not maintainable in accordance with the provisions of the Arbitration Act, 1996. The grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dduce evidence/additional evidence in the proceedings under Section 34 of the Act is the subject matter of present appeal before this Court. 3. Shri Krishnan Venugopal, learned Senior Advocate has appeared on behalf of the appellant and Shri Balaji Srinivasan, learned Advocate has appeared on behalf of the respondents original writ petitioners. 3.1 Shri Krishnan Venugopal, learned senior counsel appearing on behalf of the appellant has vehemently submitted that in the facts and circumstances of the case, the High Court has committed a very serious error in permitting the respondents to adduce evidence in an application under section 34 of the Act. It is submitted that the impugned judgment and order passed by the High Court permitting the respondents to adduce additional evidence in an application under section 34 of the Act is against the object and purpose of the amending section 34(2)(a), amended vide Act No. 33/2019. It is submitted that if in an application under section 34 of the Act, the applicant who is aggrieved by the award passed by the arbitral tribunal is permitted to adduce evidence, it would defeat the object and purpose of amending section 34(2)(a) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cide based on the arbitral award that the dispute was not arbitrable or that award conflicts with public policy. It is submitted that therefore, the disjunctive or between clauses (a) and (b) of section 34(2) cannot be read as the conjunctive and . 3.4 It is further submitted that the ratio of this Court in the case of Fiza Developers(supra) was for framing of issues which is not required in section 34(2) proceedings. It is submitted that in the case of Emkay Global Financial Services Limited v. Girdhar Sondhi, reported in (2018) 9 SCC 49, this Court has explained the decision in the case of Fiza Developers (supra) and has expressly held that only section 34(2) (a) contemplates furnishing proof. It is submitted that the subsequent decision of this Court in the case of Canara Nidhi Limited v. M. Shashikala, reported in (2019) 9 SCC 462 has approved the interpretation of section 34(2)(a) in Emkay Global (supra). 3.5 It is further submitted that in the case of Gemini Bay Transcription Private Limited v. Integrated Sales Service Limited, reported in (2022) 1 SCC 753, this Court has treated 2019 amendment to section 34(2)(a) as clarificatory, while considering section 48(1) whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing execution. It is submitted that the respondents are bound to suffer the consequence of their wilful failure to participate in the arbitration proceedings before the arbitral tribunal, despite attending them after the rejection of their objection to the jurisdiction of the Tribunal. It is submitted that therefore the respondents cannot be allowed to lead evidence by taking advantage of their own wrong. 3.9 It is further urged by the learned senior counsel appearing on behalf of the appellant that if this Court is inclined to allow the respondents to lead evidence, in that case, (a) the appellant may be permitted to lead evidence including the permission for clubbing khatas where there are nalas and the corporation s later endorsement dated 28.6.2004 agreeing to consider clubbing of khatas concealed by the respondents, and (b) the questions of law regarding whether the corporation s refusal falls under section 34(2)(b) may kindly be left open. 4. The present appeal is vehemently opposed by Shri Balaji Srinivasan, learned counsel appearing on behalf of the respondents. It is submitted that in the present case initially the respondents challenged the arbitration proceedings/c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 34(2)(b) and not section 34(2)(a) alone, as sought to be contended on behalf of the appellant. 4.3 Learned counsel appearing on behalf of the respondents has heavily relied upon the decisions of this Court in the cases of Fiza Developers (supra); Emkay Global (supra); and Canara Nidhi (supra). He has also relied upon the decision of this Court in the case of S.P. Singla Constructions Pvt. Ltd. v. State of Himachal Pradesh, reported in (2019) 2 SCC 488 in support of his submission that the amending arbitration Act shall not be applicable with respect to arbitration proceedings commenced before the commencement of the amending act, unless the parties otherwise agree. 4.4 Making above submissions, it is prayed to dismiss the present appeal. 5. We have heard learned counsel for the respective parties at length. 6. The short question which is posed for the consideration of this Court is, whether the applicant can be permitted to adduce evidence to support the ground relating to Public Policy in an application filed under Section 34 of the Arbitration Conciliation Act, 1996? At the outset, it is required to be noted that in the present case the arbitration proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hasten to add that when it is said issues are not necessary, it does not mean that evidence is not necessary. XXXXXX 17. The scheme and provisions of the Act disclose two significant aspects relating to courts vis- -vis arbitration. The first is that there should be minimal interference by courts in matters relating to arbitration. Second is the sense of urgency shown with reference to arbitration matters brought to court, requiring promptness in disposal. 18. Section 5 of the Act provides that notwithstanding anything contained in any other law for the time being in force, in matters governed by Part I of the Act, no judicial authority shall intervene except where so provided in the Act. XXXXXXX 21. We may therefore examine the question for consideration by bearing three factors in mind. The first is that the Act is a special enactment and Section 34 provides for a special remedy. The second is that an arbitration award can be set aside only upon one of the grounds mentioned in sub- section (2) of Section 34 exists. The third is that proceedings under Section 34 requires to be dealt with expeditiously. 22. The scope of enquiry in a proceeding u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere the very fact that the application has been instituted under that particular provision declares the issue involved. Any further exercise to frame issues will only delay the proceedings. It is thus clear that issues need not be framed in applications under Section 34 of the Act. XXXXXXXX 29. In a regular civil suit, in the event of failure to file a defence, it will be lawful for the court to pronounce the judgment on the basis of facts contained in the plaint [vide Order 8 Rule 5(2) of the Code]. But in an application under Section 34, even if there is no contest, the court cannot, on the basis of the averments contained in the application, set aside the award. Whether there is contest or not, the applicant has to prove one of the grounds set out in Sections 34(2)(a) and (b). Even if the applicant does not rely upon the grounds under clause (b), the court, on its own initiative, may examine the award to find out whether it is liable to be set aside on either of the two grounds mentioned in Section 34(2)(b). It is perhaps in this sense, the High Court has stated that the proceedings may not be adversarial. Be that as it may. XXXXXXXX 31. Applications unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the breach. We therefore overrule the said decision. We are constrained to observe that Fiza Developers [Fiza Developers Inter-Trade (P) Ltd. v. AMCI (India) (P) Ltd., (2009) 17 SCC 796 : (2011) 2 SCC (Civ) 637] was a step in the right direction as its ultimate ratio is that issues need not be struck at the stage of hearing a Section 34 application, which is a summary procedure. However, this judgment must now be read in the light of the amendment made in Sections 34(5) and 34(6). So read, we clarify the legal position by stating that an application for setting aside an arbitral award will not ordinarily require anything beyond the record that was before the arbitrator. However, if there are matters not contained in such record, and are relevant to the determination of issues arising under Section 34(2)(a), they may be brought to the notice of the Court by way of affidavits filed by both parties. Cross-examination of persons swearing to the affidavits should not be allowed unless absolutely necessary, as the truth will emerge on a reading of the affidavits filed by both parties. We, therefore, set aside the judgment [Girdhar Sondhi v. Emkay Global Financial Services Ltd., 2017 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 34(2)(a) can be permitted to file affidavit in the form of evidence. However, the same shall be allowed unless absolutely necessary. 9. Now so far as the submission on behalf of the appellant that the requirement of furnishing proof as per pre-amendment of section 34(2) (a) of the Arbitration Act shall not be applicable to the application for setting aside the award on the grounds set out in section 34(2)(b) and the submission that in the execution proceedings the subsequent development of refusing to grant permission for amalgamation of the plots can be considered and it will be open for the applicants to point out in the execution proceedings that the award is not capable of being executed is concerned, at the outset, it is required to be noted that even for establishing that the arbitral award is in conflict with Public Policy of India, in a given case, the evidence may have to be led and by leading evidence, the person who is challenging the award on that ground can establish and prove that the arbitral award is in conflict with Public Policy of India and/or the subject matter of dispute is not capable of settlement by arbitration under the law for the time being i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), namely, that the dispute is not capable of settlement under the law for the time being in force and that the arbitral award is in conflict with the Public Policy of India, namely, against the relevant land laws. The event of refusal to amalgamate the plots is subsequent to the passing of the award and therefore naturally the same shall not be forming part of the record of the arbitral tribunal. Even otherwise, it is required to be noted that the award of the arbitral tribunal was an exparte award and no evidence was before the arbitral tribunal on behalf of the respondents. We are not opining on whether the arbitral tribunal was justified in proceeding with the further proceedings ex-parte or not. Suffice it to record that before the arbitral tribunal, such evidence was not there and nothing was on record on the amalgamation of the plots. The affidavit thus discloses specific document and the evidence requires to be produced. In that view of the matter, a strong exceptional case is made out by the respondents to permit them to file affidavits/adduce additional evidence. However, at the same time, the appellant also can be permitted to cross-examine and/or produce contrary evi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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