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TMI Blog2024 (2) TMI 1404X X X X Extracts X X X X X X X X Extracts X X X X ..... e was, in fact, no restraint on the respondent at any point of time, material or otherwise, to perform or continue to perform the Agreement in the terms thereof. Second, the petitioner was all along aware of the orders of the PNGRB and the Delhi High Court from 2010-11 onwards as would appear from the respondent's Balance Sheets for relevant years. Even if it is assumed that the petitioner/ or its witness did not check the particular pages in the Balance Sheets disclosing the orders, such oversight would fall within the exception to section 19 of the Contract Act which sets the standard to ordinary diligence of the party who complains, that the truth could easily have been discovered - the petitioner has made vague and omnibus allegations without any particulars of the fraud committed on the part of the respondent. It is evident from the records that the petitioner's only intention for filing the present application is to avoid making any deposit for securing the award. This would also be clear from the prayer in the application GA 1 of 2022. The respondent/award-holder has been deprived of the fruits despite the award being of 21.6.2022. The Court, hence, sees no impedimen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mediate effect till the matter was decided by the PNGRB. Counsel submits that the petitioner was hence fraudulently induced to enter into the GSPA with the respondent which was clearly voidable on the ground of fraud. It is also submitted that fraud cannot be put into any straight jacket definition and that the facts of the present case must be seen in the context of the order passed by the PNGRB and the Delhi High Court. 5. Learned counsel appearing for the respondent/award-holder places the relevant facts to deny that there was any violation of the PNGRB or the Delhi High Court orders or fraud in the form of suppression or otherwise on the part of the respondent. Counsel submits that one of the witnesses of the petitioner had himself relied upon the respondent's Balance Sheets for the relevant financial years which disclosed the orders passed by PNGRB and the Delhi High Court. Counsel submits that the orders were in the public domain i.e on the website of the respondent. 6. The brief facts which are undisputed and relevant to the matter are narrated below. 7. The question of the Arbitration Agreement being induced or effected by fraud rides on the orders passed by the PNGRB a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obtained CBM from the respondent and also paid for the same during the period of the contract i.e. from 11.5.2011 till the date when the petitioner terminated the Agreement on 7.7.2014. 12. It is also relevant that the subsequent order of PNGRB dated 31.3.2014 continued to allow the respondent without any restraint from supplying CBM to its customers and only imposed a monetary penalty. Moreover, the respondent filed a writ petition challenging the aforesaid order of the PNGRB and the Delhi High Court stayed the said order on 28.4.2014. The Delhi High Court restrained PNGRB from taking any coercive steps and allowed the respondent to continue supply CBM through the pipeline as it existed on that date. By a later order dated 1.8.2014, the Delhi High Court noted that CBM is a valuable natural resource and allowed the respondent to replace certain pipelines of its customers. The order of 28.4.2014 was made absolute on 22.9.2014 till disposal of the writ petition. The writ petition is pending as on date. 13. The above sequence of orders indicates that there was no restraint on the respondent, at any point of time, either by PNGRB or by the Delhi High Court, to stop supply of CBM to its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1872. 18. The petitioner's argument of the Arbitration Agreement being induced or effected by fraud is hence without substance and is accordingly rejected. The second proviso to section 36(3) of the 1996 Act requires a prima facie case for fraud 19. The second proviso to section 36(3) of The Arbitration and Conciliation Act, 1996, inserted into the Act in 2021 with retrospective effect from 23.10.2015, provides that an award shall be unconditionally stayed pending disposal of the challenge to the award under section 36 of the Act, where the arbitration agreement or contract, which forms the basis of the award or the making of the award was induced or effected by fraud or corruption. 20. The petitioner/award-debtor has only argued fraud and the Arbitration Agreement being vitiated by the fraudulent inducement thereof. 21. The second proviso to section 36(3) requires the Court to be satisfied of a prima facie case of the arbitration agreement being vitiated thus. The words prima facie as a part of the requirement of the Court's finding contemplates a finding of fraud on the face of the record, that is to say from a first-blush look of the arbitration agreement or the awar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otherwise, to perform or continue to perform the Agreement in the terms thereof. Second, the petitioner was all along aware of the orders of the PNGRB and the Delhi High Court from 2010-11 onwards as would appear from the respondent's Balance Sheets for relevant years. Even if it is assumed that the petitioner/ or its witness did not check the particular pages in the Balance Sheets disclosing the orders, such oversight would fall within the exception to section 19 of the Contract Act which sets the standard to ordinary diligence of the party who complains, that the truth could easily have been discovered. 26. Fraud has to be spelt out and must be obvious to the eye, at least for the purposes of unconditional stay of an award. Fraud must also be reprehensible or unconscionable conduct with the active intention of deceiving another where the outcome of the award or the execution of an agreement would altogether have been different if the fraud had been discovered : Elektrim SA vs. Vivendi Universal SA; (2007) EWHC 11 (Comn). 27. In any event, the petitioner has made vague and omnibus allegations without any particulars of the fraud committed on the part of the respondent. 28. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeth of a subsisting order of restraint and specific performance of a transfer of property, respectively. These decisions lose relevance in view of the specific finding of the Court that there was no order of restraint on the respondent from performing the terms of the agreement. Venture Global Engineering v. Satyam Computer Services Limited; 2010:INSC:501 : (2010) 8 SCC 660 involved unearthing of a fraud subsequent to passing of the award while in the present case, the respondent/award-holder disclosed the orders on its website and the said disclosures were also in the possession of the award-debtor. 32. It is evident from the records that the petitioner's only intention for filing the present application is to avoid making any deposit for securing the award. This would also be clear from the prayer in the application GA 1 of 2022. The respondent/award-holder has been deprived of the fruits despite the award being of 21.6.2022. The Court, hence, sees no impediment for the respondent to execute the award unless the petitioner secures the award on appropriate terms. 33. The awarded amount was Rs. 58,50,45,169/-along with interest as on 21.6.2022. The accrued interest and the amo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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