9911796707
TMI Blog2024 (7) TMI 1464X X X X Extracts X X X X X X X X Extracts X X X X ..... legality appearing on the face of the award.' It is important to remember that the position with respect to the limited interference of the courts has changed slightly in light of the 2015 Amendment to Section 34 of the A C Act. The scope of violating Indian public policy has been expanded to include fraud or corruption in the award-making process, violating Sections 75 or 81 of the Act, violating the fundamental policy of Indian law, and going against the most fundamental ideas of justice or morality as a result of the addition of Explanation 1 to Section 34(2). Furthermore, Section 34 now contains sub-section (2-A), which states that in the event of domestic arbitrations, patent illegality appearing on the face of the verdict also constitutes a breach of Indian public policy. This court at the stage of challenge under section 34 has to only prima facie see if there is a patent illegality in the impugned award which shocks the conscience of the court. Further, this court cannot appraise the evidence or merits in a challenge under section 34 of the A C Act. The mere fact that another reasonable conclusion can be drawn from the case s merits does not give the power to this court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent an amount of Rs. 3,89,05,457/- together with interest at the rate of 12% from the date of the Award till the date of payment/realization. SUBMISSIONS OF THE PARTIES 7. Learned counsel for the petitioner submitted that the impugned award is vitiated by non-consideration of the facts and is covered under section 34(b)(ii), Explanation I- (iii) as also u/s 34(2) since the impugned award is in conflict with the public policy, basic notions of justice and is vitiated by patent illegality appearing on the face of the award. 8. Learned counsel has submitted that the language of section 60(5) of the Insolvency Bankruptcy Code, 2016 (IBC for short) is very wide and would encompass any question of law or facts that arise in relation to the IBC proceedings. It is further submitted that the question with regards to ECGC money was squarely raised before the NCLT, hence, the arbitration proceedings could not have continued. 9. Learned counsel has further submitted that the arbitral proceeding was not maintainable as it caused prejudice to the rights of the petitioner bank against whom the same recovery is sought by the committee of creditors in the IBC proceedings. Learned counsel has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Respondent would not bind the said party and that party would remain free to agitate its remedies there for, whether against the Petitioner or against the Respondent, and nothing observed in the Award would affect or prejudice the rights of the said party. 14. Learned counsel for the respondent further submitted that the Petitioner has failed to file any application under Section 33 of the A C Act in order to redress its alleged (and misconceived) grievance with respect to the point on maintainability of the arbitration proceedings. 15. Learned counsel for the respondent also submitted that the finding recorded by the Learned Arbitral Tribunal that the cause of action in favour of the Respondent arose on learning of the ECGC Claim Amount during the 10th meeting of the CoC and on the Petitioner denying payment thereof to the Respondent, does not fall within any of the available grounds under Section 34 (2) of the Act. It is submitted that the view of the learned Arbitrator is correct and no exception can be taken to the same much less in the present proceedings. ANALYSIS AND CONCLUSION 16. Before delving into the facts and observations of the arbitrator, it would be appropriate t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.] 2[(2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award: Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by re- appreciation of evidence.] (3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter. (4) On receipt of an application under sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence would not be permissible on the ground of patent illegality appearing on the face of the award. 18. Further, in MMTC Limited v. Vedanta Limited, 1 (2019) 4 SCC 163, it was inter-alia held as under: 11.As far as Section 34 is concerned, the position is well- settled by now that the Court does not sit in appeal over the arbitral award and may interfere on merits on the limited ground provided under Section 34(2)(b)(ii) 12. It is only if one of these conditions is met that the Court may interfere with an arbitral award in terms of Section 34(2)(b)(ii), but such interference does not entail a review of the merits of the dispute, and is limited to situations where the findings of the arbitrator are arbitrary, capricious or perverse, or when the conscience of the Court is shocked, or when the illegality is not trivial but goes to the root of the matter. An arbitral award may not be interfered with if the view taken by the arbitrator is a possible view based on facts. 14. the court cannot undertake an independent assessment of the merits of the award, and must only ascertain that the exercise of power by the court under Section 34 has not exceeded the scope of the provision. 19. In A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any, of the respondent being required by the ECGC to not credit the amount reimbursed by ECGC to the borrower's account till the amount due from the borrower is realized or written off? OPPr B. Whether as per the terms of the contract between the parties, the respondent is liable to pay to the claimant the net amount received by the respondent from ECGC and which was not credited by the respondent to the account of the borrower till assignment by the respondent of the debt owed by the borrower to the respondent in favour of the claimant, for the reason of requirement of ECGC? OPCL C. Whether the respondent, if liable under the terms of its contract with the claimant, to pay the amount reimbursed by ECGC to the claimant, is absolved from the said liability owing to the claimant in spite of having carried out due diligence having not raised the said aspect prior to signing the agreement? OPr D. Whether the claim is barred by time? OPr E. What is the effect if any of the application filed in NCLT, Chandigarh qua the same monies in the Corporate Insolvency Resolution Process with respect to the borrower? OPr F. If any monies are found due from the respondent to the claimant, wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction Ltd. 2022 sec Online SC 1606, Supreme Court held that in administration of contract there is no place for discretion and any argument of discretion is to be rejected. In view thereof, notwithstanding my aforesaid conundrum, I hold that the claimant, in accordance with the Assignment Agreement is entitled to recover from the respondent, the ECGC monies though received by the respondent on 28.09.2013 prior to the cut-off date but admittedly credited by the respondent to the account of ADIL on 30.09.2014 i.e. after the cut-off date. 25. Further, with respect to the issues C D, the learned arbitrator held that: for negligence to constitute an estoppel it is necessary to imply the existence of some duty which the party against whom estoppel is alleged owes to the other party. It was further held that before a plea of estoppel on the ground of negligence can be upheld, negligence on which it is based should not be indirectly or remotely connected with the misleading effect assigned to it but must be the proximate or real cause of that result. Here, save for the provision in the Assignment Agreement of due diligence, no other duty owed by the claimant is pleaded or argued. On the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This court at the stage of challenge under section 34 has to only prima facie see if there is a patent illegality in the impugned award which shocks the conscience of the court. Further, this court cannot appraise the evidence or merits in a challenge under section 34 of the A C Act. The mere fact that another reasonable conclusion can be drawn from the case s merits does not give the power to this court to interfere with the arbitral award. The award passed by the learned arbitrator is found to be correct and in accordance with the law. 30. Therefore, the present petition is dismissed along with the pending applications. O.M.P. (COMM) 119/2023 31. The present petition has been filed on behalf of the petitioner under Section 34 of the Arbitration and Conciliation Act, 1996 (herein referred to as the A C Act ) challenging the impugned arbitral award dated 19.02.2022 passed by the learned arbitrator in the Case Ref No. DAC/3547D/1 2-21. 32. The facts of the present case are the same as in O.M.P. (COMM) 89/2023and hence they are not repeated herein for the sake of brevity. 33. Learned counsel for the petitioner had submitted that way of the instant Petition, the petitioner seeks to o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.6 supra. The clause 2.2.6 reads as under: In the event of delay on the part of a party in making payments to the other party as contemplated in this agreement (including by way of indemnity), such party shall without prejudice to the rights of the other party under this agreement pay the defaulted amounts together with simple interest thereon at the rate of 12% per annum computed from the date of on which such amounts become due and payable till the date of actual payment 38. This court finds the following observation of the learned arbitrator in accordance with law: reasons aforesaid I do not find the claimant to be entitled to interest on Rs. 3.89 crores, from the cut-off date of 18.09.2014 or even from the date when the claimant first made a demand on the respondent therefor or from the date the respondent refused payment. The refusal of the respondent is found bonafide, though has not withstood the test of adjudication in this arbitration. 39. Taking into consideration the discussion made hereinabove, it can be concluded that this court at the stage of challenge under section 34 has to only prima facie see if there is patent illegality in the impugned award. Further, this cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
