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TMI Blog2024 (7) TMI 459X X X X Extracts X X X X X X X X Extracts X X X X ..... will not be effective unless there is a power of remand vesting in the appellate authority. In the Arbitration Act, there is no statutory embargo on the power of the Appellate Court under Section 37(1)(c) to pass an order of remand. However, looking at the scheme of the Arbitration Act, the Appellate Court can exercise the power of remand only when exceptional circumstances make an order of remand unavoidable. If the Courts dealing with appeals under Section 37 of the Arbitration Act start routinely passing the orders of remand, the arbitral procedure will cease to be efficient. It will cease to be costeffective. Such orders will delay the conclusion of the proceedings, thereby defeating the very object of the Arbitration Act. Therefore, an order of remand by Section 37 Court can be made only in exceptional cases where remand is unavoidable. The scope of interference in a petition under Section 34 is very narrow. The jurisdiction under Section 37 of the Arbitration Act is narrower - When members of the bar take up so many grounds in petitions under Section 34, which are not covered by Section 34, there is a tendency to urge all those grounds which are not available in law and waste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty developer to implement a slum rehabilitation scheme. M/s. Aurora was to construct 237 rehabilitation tenements for slum dwellers and 40 tenements for projectaffected persons (PAPs) free of cost and develop the property using the available Floor Space Index (FSI) and dispose of the same. It appears that M/s. Aurora could not discharge its obligations. Therefore, by the agreement dated 22nd September 1999 (described as an agreement for the grant of subdevelopment rights), the society appointed Bombay Slum Redevelopment Corporation Private Limited (the appellant) as the developer. Apart from taking over the obligations of M/s. Aurora under the development agreement dated 6th October 1996, the appellant corporation agreed to hand over 15,000 square feet of builtup area in the redeveloped property to M/s.Aurora against M/s. Aurora paying the cost of construction at Rs.600 per square foot. After that, the appellant started the development of the Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 2 of 35 property. On 10th March 2003, an agreement was executed by and between the appellant and one Samir Narain Bhojwani (the respondent), under which the appellant retained 45% of the tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king an appointment of the Court Receiver shall continue for four weeks with a liberty to the parties to seek appropriate interim orders in the restored petition under Section 34 of the Arbitration Act. Both the parties to the appeal under Section 37 have preferred these crossappeals. SUBMISSIONS 5. We have heard the learned senior counsel appearing for the parties in these appeals. The learned senior counsel representing the appellant submitted that an appeal under Section 37 of the Arbitration Act is essentially a continuation of the proceedings under Section 34. The scope of interference in an appeal under Section 37(1)(c) is narrower than what is available under Section 34 of the Arbitration Act. Reliance was placed on various decisions of this Court in support of the said submissions. Another contention is that while deciding the appeal under Section 37(1)(c), the Court can either set aside the award or affirm the award but cannot remand the petition under Section 34 for a fresh hearing. The submission is that the provisions of Order XLI of the Code of Civil Procedure, 1908 (for short, the CPC ) concerning remand do not apply to an appeal under Section 37 of the Arbitration Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clared that the Claimant is entitled to retain possession of 15 Flats in Wing A (earmarked for the Respondent) and 0.63 Flat in Wing B (earmarked for the Respondent), till the Respondent complies with all the directions being given in this Award; (c) The Respondent is directed to construct at its own cost 107 PAP tenements (or any higher number as may be specified by SRA) at Shiv Shakti Nagar, Kandivali, relatable to the Andheri Kamgar Nagar CHS Scheme and handover the same to SRA within 2 months from the date of this Award; (d) The Respondent is further directed to obtain from SRA a certificate of discharge of the Respondent from its obligation of constructing 107 (or any higher number of) PAP tenements relatable to Andheri Kamgar Nagar CHS Scheme, and handing over the same to SRA, within 3 months from the date of this Award; (e) The Respondent is directed to obtain further Commencement Certificate for construction of 6th to 22nd floors of Wing C (further CC for Wing C) on the basis of sanctioned building plans dated 21st October 2010, within 4 months from the date of this Award; (f) In case SRA requires the Respondent to comply with any condition under any Letter of Intent or und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for separate Lease and/or Assignment from MHADA in respect of the free sale component area in favour of the Andheri Kamgar Nagar Society, and, thereafter, in favour of the purchasers of the Apartments or their Association under the Indenture of Lease dated 31st March 1993 from MHADA; (o) The Respondent is further directed to pay Stamp Duty on the Indenture of Lease dated 31st March 1993 executed by MHADA and on the Development Agreement for Development dated 6th October 1996 between Andheri Kamgar Nagar CHS and Aurora Properties Investments and also on the Agreement for Sub Development dated 22nd September 1999 between Aurora Properties Investments and the Respondent; IV (p) Till the OC is received for Wing C, neither the Claimant nor the Respondent shall sell, or in any other manner dispose of, encumber, or create any third party rights in any flat or any parking space in Wing C; (q) Till the OC is received for Wing C and till the Respondent complies with the other directions given in Part II of the operative portion of this Award, the Respondent and the persons claiming through the Respondent shall not sell/ resell or in any other manner dispose of or encumber or create any thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 months from the date of obtaining OC for Wing C, or does not surrender 3.37 flats to the Claimant and the parking spaces related thereto, within the said period, the Claimant shall be entitled to sell off 3.37 flats earmarked for the Respondent in Wing C and the parking spaces related thereto; VI (x) The Respondent shall pay the Claimant costs of this proceeding quantified at Rs.1,50,00,000/( Rupees One Crore Fifty Lakhs), within 4 months from the date of this Award. The Respondent shall bear its own costs for this proceeding. 205. The claims made by the Claimant for the other reliefs not granted in this Award are hereby rejected. All the Counter Claims made by the Respondent are also rejected. 206. It is clarified that this Award does not deal with any of the 5 flats in Wing A, 3 flats in Wing B and 4 flats in Wing C, earmarked for Aurora Properties Investments, for which orders of injunction were passed by the Bombay High Court on 3rd and 17th December 2013 in Notice of Motion 147 of 2013, and which injunction orders have been restored by the Supreme Court by judgment and order dated 2ist August 2018 in Civil Appeal No. 7079 of 2018. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... direction to create the charge was exfacie without the jurisdiction. Thereafter, the learned Single Judge referred to the reliefs granted by the Arbitral Tribunal in clauses (c) to (l), (m) to (q), (t), (u) and (v) of paragraph 203 of the award. According to the learned Single Judge, some of the reliefs could have been granted only in the execution of the award. Further, the learned Single Judge held that under clauses (c) to (l) and (m) to (q) of paragraph 203 of the award, the appellant herein was directed to carry out various acts to obtain multiple permissions from the authorities within the prescribed time and based on such compliance, further directions were issued for the execution of multiple documents, etc. The authorities from whom the appellant was directed to obtain various permissions were admittedly not parties before the arbitral proceedings. The learned Single Judge also noted that the directions issued in the abovementioned clauses required continuous supervision by the Court. Therefore, in view of the provisions of the Specific Relief Act, 1963, such reliefs ought not to have been granted by the Arbitral Tribunal. 10. The learned Single Judge also held that thoug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he arguments were concluded. Moreover, the learned Single Judge found that relying upon the material, not forming part of the record, amounts to a breach of the principles of natural justice. A clear finding recorded by the learned Single Judge is that the learned Arbitrator has applied different yardsticks to the evidence adduced by both parties. Therefore, the Arbitral Tribunal did not treat the parties as equals. 12. The learned Judge held that while dealing with the per square feet rate of the flats for awarding a claim for damages, the Arbitral Tribunal completely ignored the evidence on record, which showed that the respondent had sold the flats at much lower rates. The learned Single Judge also discussed the finding recorded while rejecting the counterclaim. The learned Single Judge held that though the Arbitral Tribunal concluded that the building did not have a loadbearing capacity of 22 floors, the respondent neither pleaded nor proved the loadbearing capacity of the building. The learned Single Judge also held that awarding payment of interest on interestfree deposit was contrary to the terms of the contract, which shows patent illegality. However, the learned Single Jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ully satisfied the Appellant that he had made appropriate provision for shifting 107 PAPs to some other plot the Appellant was not required to proceed with the construction of building, was not accepted. However, there is no discussion as to why this stand of the Appellant was rejected. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. . .. .. .. (emphasis added) In the impugned judgment, certain findings recorded by the learned Single Judge have been criticised. Ultimately, in paragraphs 61 and 62 of the impugned judgment, the Division Bench held thus : 61. Considering that the impugned order has not addressed several issues raised by both parties before setting aside the Award, for the above reasons we are inclined to set aside the impugned order to remand the proceedings to the learned Single Judge. Further under the Award itself. question now will remain for damages. 62. Since we are of the opinion that the petition filed by the Respondent needs to be reconsidered, we refrain from going deeper into the controversy and in our discussion, which have only highlighted as to why the impugned order is unreasoned and therefore needs to be set aside for reconsideration. .. .. .. .. .. .. .. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Indian public policy, in turn, includes a violation of the fundamental policy of Indian law, a violation of the interest of India, conflict with justice or morality, and the existence of patent illegality in the arbitral award. Additionally, the concept of the fundamental policy of Indian law would cover compliance with statutes and judicial precedents, adopting a judicial approach, compliance with the principles of natural justice, and Wednesbury [Associated Provincial Picture Houses Ltd. v. Wednesbury Corpn., (1948) 1 KB 223 (CA)] reasonableness. Furthermore, patent illegality itself has been held to mean contravention of the substantive law of India, contravention of the 1996 Act, and contravention of the terms of the contract. ( emphasis added ) In the decision of this Court in the case of Konkan Railway Corporation Limited v. Chenab Bridge Project Undertaking (2023) 9 SCC 85 , in paragraph 18, it was held thus: 18. At the outset, we may state that the jurisdiction of the court under Section 37 of the Act, as clarified by this Court in MMTC Ltd. v. Vedanta Ltd. [MMTC Ltd. v. Vedanta Ltd., (2019) 4 SCC 163 : (2019) 2 SCC (Civ) 293], is akin to the jurisdiction of the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned Arbitrator and the Court under Sections 34 and 37 of the Arbitration Act. The legislature's intention is reflected in Section 19(1) of the Arbitration Act, which provides that an Arbitral Tribunal is not bound by the provision of the CPC. That is why the provisions of the CPC have not been made applicable to the proceedings under Sections 34 and 37(1)(c). We are not even suggesting that because the provisions of the CPC are not applicable, the Appellate Court dealing with an appeal under Section 37(1)(c) is powerless to pass an order of remand. The remedy of an appeal will not be effective unless there is a power of remand vesting in the appellate authority. In the Arbitration Act, there is no statutory embargo on the power of the Appellate Court under Section 37(1)(c) to pass an order of remand. However, looking at the scheme of the Arbitration Act, the Appellate Court can exercise the power of remand only when exceptional circumstances make an order of remand unavoidable. There may be exceptional cases where remand in an appeal under Section 37 of the Arbitration Act may be warranted. Some of the exceptional cases can be stated by way of illustration: a. Summary dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within a period of twelve months from the date it enters upon the reference and that the parties may, however, extend such period up to six months, beyond which period any extension can only be granted by the Court, on sufficient cause; (vi) to provide that a model fee Schedule on the basis of which High Courts may frame rules for the purpose of determination of fees of arbitral tribunal, where a High Court appoints arbitrator in terms of Section 11 of the Act; (vii) to provide that the parties to dispute may at any stage agree in writing that their dispute be resolved through fast track procedure and the award in such cases shall be made within a period of six months; (viii) to provide for neutrality of arbitrators, when a person is approached in connection with possible appointment as an arbitrator; (ix) to provide that application to challenge the award is to be disposed of by the Court within one year. 7. The amendments proposed in the Bill will ensure that arbitration process becomes more user friendly, cost effective and lead to expeditious disposal of cases. ( emphasis added ) The object of the Arbitration Act is to provide an arbitral procedure that is fair, efficient, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iction of the Section 37 Court. If we do something which Section 37 Court was required to do, it will be unjust to the parties as the unsuccessful party before us will be deprived of one forum of challenge. Therefore, we have no option but to set aside the impugned judgment of the Division Bench and request the Division Bench to decide the appeals on merits after considering the arbitral award and the decision of Section 34 Court. 21. Before we part with the judgment, we must record some serious concerns based on our judicial experience. Case after case, we find that the arbitral proceedings have become synonymous with very bulky pleadings and evidence and very long, timeconsuming submissions, leading to very lengthy awards. Moreover, there is a tendency to rely upon a large number of precedents, relevant or irrelevant. The result of all this is that we have very long hearings before the Courts in Sections 34 and 37 proceedings. 22. By way of illustration, we are referring to the factual aspects of the present case. The award runs into 139 pages. The petition under Section 34 of the Arbitration Act runs into 93 pages and incorporates 151 grounds. The judgment of the learned Single ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accordingly, we pass the following order : a. The impugned judgment dated 7th July 2023 in Commercial Appeal no.31 of 2023 is, hereby, set aside, and Commercial Appeal no.30 of 2023 is restored to the file of the High Court of Judicature at Bombay; b. The restored appeal shall be placed before the roster Bench on 29th July 2024 at 10:30 a.m. The parties to the appeal before this Court shall be under an obligation to appear before the concerned Bench on that day, and no fresh notice shall be served to the parties. The High Court will permit the appellants to file an amended memorandum of appeal containing only the relevant and permissible grounds. The concerned Division Bench shall fix a schedule for hearing of the appeal; c. The Registry of this Court shall forward a copy of this judgment to the Prothonotary and Senior Master of the High Court of Bombay, who shall ensure that the appeal is listed before the roster Bench as directed above; d. The interim relief, granted by this Court on 11th August 2023, shall continue to operate till the disposal of the remanded appeal; e. We make it clear that we have made no adjudication on the merits of the arbitral award and the judgment of the ..... 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