Appeal under Section 37 of the Arbitration and Conciliation Act against a Commercial Court order dismissing a petition under Section 34 to set aside an arbitral award. The High Court upheld the Commercial Court's order, finding no illegality, irregularity, or jurisdictional error in the award or the order.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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HONOURABLE SRI JUSTICE P. NAVEEN RAO AND HONOURABLE SRI JUSTICE J. SREENIVAS RAO COMCA.No.34 OF 2022
Date: 10.02.2023
Between:
M/s Sree Durga Estates A registered Partnership Firm With Registration No.2148/2011 Rep. By its Managing Partner Boppana Ramesh, S/o. Sri Sai Chowdhary R/o. Villa No.006, Indu Fortune Fields, 13th Phase KPHB Colony, Kukatpally Hyderabad.
…..Appellant
And J.A.S. Padmaja, W/o. J. Venkata Ramudu Aged about 59 years, Occ : Housewife R/o. Villa No.1018, Mallikarjuna Krinss Villa Sy.Nos.282 & 283, Puppalaguda Village, Gandipet Mandal, Ranga Reddy District And 7 others
…..Respondents
The Court made the following:
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HONOURABLE SRI JUSTICE P. NAVEEN RAO AND HONOURABLE SRI JUSTICE J. SREENIVAS RAO
COMCA.No.34 OF 2022
JUDGMENT : { Per the Hon'ble Sri Justice J. Sreenivas Rao }
The appellant filed this COMCA No.34 of 2022 under Section 13 of the Commercial Courts Act, 2015 R/w Section 37 of the Arbitration and Conciliation Act 1996 (hereinafter referred to as ‘the Act, 1996’) aggrieved by the order dated 12-09-2022 passed by the learned Special Judgefor Trial and Disposal of Commercial Disputes Court, Ranga Reddy District at L.B. Nagar in C.O.P. No.3 of 2022.
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of 2017 dated 30.06.2017 in respect of land to an extent of
Acs.4.24.8 guntas for development of the said land into a gated community with independent villas and another development agreement vide registration document No.6751 of 2017 in respect of land Ac.00-17.2 guntas for development of commercial building. While things stood thus, disputes arose between the parties. The respondent Nos.1 and 2 cancelled the development agreement by issuing a legal notice on 09.12.2019. When the petitioner rejected
the advances by respondent Nos.1 and 2 for cancellation of the development agreement the respondents have invoked arbitration clause and filed Arbitration Application No.43/2020 for seeking appointment of Arbitrator before this Hon’ble Court and the same was allowed and 8th respondent herein was appointed as ‘sole Arbitrator’ for adjudication of the disputes between the parties by its order dated 04.08.2020.
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“(i) Declare the Development Agreement-cum-General Power of Attorney dated 30.06.2017, vide document No.6751/2017 as invalid and cancelled.
(ii) Direct the Respondent to execute a Deed of Cancellation of the Development Agreement-cum-General Power of Attorney, dated 30.06.2017 vide document No.6751/2017.
(iii) Direct the Respondent to deliver the possession of the schedule property to the claimants. (iv) Direct the respondent to pay damages of Rs.2,00,00,000/(Rupees Two Crores only) for breach of contract.
(v) To award costs of this claim and also to pass an order or orders which this Hon’ble Court deem fit in the circumstances of this case”.
4.1. In the said claim petition the respondents stated that
in terms of the DAGPA dated 30-06-2017 the respondent Nos.1 &
2 and Late Inturi Lakshmi Prasanna are the owners and they are
entitled to 50% of built-up area and the petitioner as developer is entitled for the remaining 50% of the built-up area to be constructed over the said property. The petitioner has agreed to
complete the entire project within 30 months with a grace period of 6 months. The petitioner as a professional developer verified
such land use in the proposed master plan which is also evident
from land use information furnished by Hyderabad Metropolitan Development Authority. The petitioner undertook to obtain
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required permissions from all the concerned authorities for deletion of 30 meters road from the proposed master plan.
4.2. It is further stated that the petitioner promised to obtain all such required permissions from the concerned authorities and necessary sanction for the construction of the proposed building within a period of 9 months from the date of DAGPA as the respondent Nos.1 & 2 and Late Inturi Lakshmi Prasanna have already made necessary application to the Hyderabad Metropolitan Development Authority for deletionof 30 meters road. The petitioner as a professional developer promised to pursue such application before the concerned authorities at his cost and expense.
4.3. The respondents further stated that the petitioner failed to obtain necessary orders for deletion of 30 feet road from the proposed master plan though more than 3 years have lapsed from the date of DAGPAs. In the absence of deletion of 30 meters road, the said property is not viable for development into a commercial building and independent villas. Thus, both the
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DAGPAs stood frustrated and became unenforceable. The petitioner always sought time to get the necessary clearances 'and permissions to commence the project citing vague reasons. In those circumstances, the respondents were compelled to cancel DAGPAs by issuing Notice through their Advocate on 09.12.2019. But the petitioner did not give any reply, on the other hand he refused to execute a Registered Deed of Cancellation of Development Agreement Cum General Power of Attorney. At that stage the respondents have invoked Arbitration Clause to resolve the disputes.
4.4. Respondents further stated that basing upon the
DAGPA the petitioner is claiming physical possession of the subject property, though actual physical possession of the property was not delivered to the petitioner. The petitioner however after filing of COP No.17 of 2019 for grant of injunction against the respondents erected a watchman room without the knowledge of the respondents and on such basis claimed possession over the said property. In view of the same the
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respondents sought recovery of possession from the petitioner and also claimed damages an amount of Rs.2,00,00,000/-
4.5 The Claimants herein are also subjected to such mental agony due to the inordinate delay made by Respondent. The Claimant Nos.1 & 2 also planned to invest the sale proceeds to be realized from the sale of their share of villas in a profitable manner but could not do so due to the breach of Agreement committed by Respondent. The claimants therefore are entitled to claim compensation for such breach of contract committed by the Respondent. The Respondent is therefore liable to pay a sum of Rs.50,00,000/- (Rupees Fifty Lakhs only) towards compensation for the breach of contract.
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the petitioner is in physical possession and enjoyment of above said land in the capacity of its Developer without any interferences or obstructions from whomsoever. The petitioner further submits that with an intention to develop the subject property as per the terms of DAGPA, he had applied and approached the Authorities by spending huge amounts apart from securing and safeguarding the said property. Thus, the petitioner all through is waiting for the approvals from the concerned Authorities to commence construction and complete the project at the earliest. But the respondents in spite of having complete knowledge about the persuasion of petitioner having seen the escalation of prices indulged in unlawful acts like issuing the Legal Notices to harass thepetitioner and to cause wrongful loss thereon.
5.1 That the petitioner further stated that they have filed C.O.P.No.17 of 2019 on the file of Hon'ble XIII Additional District
Judge-cum-Commercial Court, Ranga Reddy District at L.B. Nagar U/Sec.9 of the Act, 1996 for grant injunction restraining
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Inturi Lakshmi Prasanna and the respondents 1 and 2 from alienating and interfering with the peaceful possession and enjoyment of petitioner over the said property. Upon consideration
the learned judge was pleased to passed order directing both the parties to maintain status quo and the said orders are still subsisting” and prayed for dismissal of the claim made by the respondents.
“(i) Whether the respondent constructed compound wall(partly) and fenced with barbed wire around the subject Property?
(ii) Whether the respondent failed to discharge its obligation of obtaining necessary orders from the authorities concerned for deletion of 30 Meter Road, and construction permission?
(iii) Whether the respondent knew of the existence of 30 Meter Road in the subject land in the year 2013 itself?
(iv) Whether the respondent committed the breach of its obligations and thus frustrated the performance of Development Agreement-cum-General Power of Attorney dated 30.06.2017 bearing document No.6751/2017?
(v) Whether the respondent is liable to execute a Deed of Cancellation of Development Agreement-cum-General Powerof Attorney dated 30.06.2017 bearing document No.6751/2017?
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(vi) Whether the respondent is obliged to deliver the possession of the subject land?
(vii) Whether the respondent is liable to pay damages of Rs.2,00,00,000/- (Rupees Two Crore only) to the claimant for the reason of committing breach of contract?
(viii) To what relief the claimant is entitled to?”.
to CW.3 are examined and Exs.C1 to C13 documents were marked and on behalf of petitioner RWs.1 to RW.3 are examined and Exs.R1 to R.29 documents were marked. The learned Arbitral Tribunal after considering the contentions of the respective parties, documentary evidence on record and also after hearing both the parties passed award on 04.08.2020 by giving cogent findings in respect of each point. With regard to Point No.1, the learned Arbitral Tribunal held that the petitioner has failed to establish that he constructed compound wall around the subject property existed on the date of execution of Ex.C.5. Insofar as Point Nos.2 to 4 are concerned the
learned Arbitral Tribunal after giving cogent reasons in Paras 6.2.2 to 6.2.14 of the Award, holds that the respondents/claimants have
to pay an amount of Rs.2,39,79,579/- to the petitioner/developer.
In respect of Point Nos.5 & 6 are concerned, the learned Arbitral Tribunal was pleased to hold that Ex.C.5 development agreement
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DAGPA becomes void and petitioner has to execute the deed of cancellation of the same and deliver the possession of the property to the respondents/claimants and further held that the petitioner/developer is not liable to pay damages an amount of Rs.2,00,00,000/- to the respondents. The learned Arbitral Tribunal
granted the following relief:
a). The petitioner/developer will execute the deed of cancellation ofEx.C.5 DAGPA dated 30.06.2017 document bearing No.6751/2017 and deliver possession of subject property to the respondents/claimants on as is whether is condition within three months from the date of the Award.
b). An order with regard to refund of the advance amount and reimbursement of expenses are considered in Arbitration Application No.40/2020 and therefore, there is no need of giving a separate relief in this A.A. No.43 of 2020.
c). The respondents/claimants and petitioner/developer shall bear their own costs.
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Judgments and also the provisions of Section 34 of the Act, 1996 dismissed the COP No.3 of 2022 by its order dated 12.09.2022.
same is not applicable to the facts and circumstances of the case. He also contended that the Commercial Court as well as learned Arbitrator failed to consider the Ex.R.5 which clearly demonstrates that the application submitted by the respondents for deletion of 30 meter wide road to the HMDA is pending till date and further
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demonstrates that the application under consideration does not result in an impossibility to perform the contract as it had not attained finality. In view of the same, the effect of Section 56 of the Indian Contract Act, 1872 could not have been applied. He further contended that the Court below ought to have considered that the time was not the essence of the contract not only because Ex.C.5 never contemplated such an obligation but the jurisprudence and past precedents expressly hold that time is never the essence in a contract relating to an immovable property. He further contended that the Court below as well as learned Arbitral Tribunal not appreciated the judicial precedents submitted by the petitioner.
1(2016) 13 SCC 561
2(2022) 2 SCC 275
3(2019) 15 SCC 131
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4. Associate Builders Versus Delhi Development Authority4
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petitioner is not maintainable under law and the same is liable to be dismissed.
(1) Whether the order passed by the Commercial Court in COP No.3 of 2022 confirming the Award passed by learned Arbitral Tribunal dated 23.10.2021, is valid under law?
(2) Whether the Court below rightly exercised the powers conferred under Section 34 of the Act while upholding the Award of the learned Arbitral Tribunal?
(3) To what relief?”
POINT NOS.1 AND 2
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dated 30.06.2017 in respect of land to an extent of Acs.4.24.8 guntas for development of the said land into a gated community with independent villas and another development agreement vide registration document No.6751 of 2017 in respect of land Ac.00-17.2 guntas for development of commercial building. While things stood thus, disputes arose between the parties. The respondent Nos.1 and 2 cancelled the development agreement by issuing a legal notice on 09.12.2019. As the petitioner did not accept the cancellation of the development agreement, the respondents have invoked arbitration clause and filed Arbitration Application No.43/2020 for seeking appointment of Arbitrator before this Hon’ble Court and the same was allowed and 8th respondent herein was appointed as ‘sole Arbitrator’ for adjudication of the disputes between the parties by its order dated 04.08.2020.
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respondents; (iv) to direct the respondent to pay damages of Rs.2,00,00,000/- (Rupees Two Crores only) for breach of contract.
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been lucidly explained by the Hon’ble Supreme Court in the following decisions:
17.1. In Delhi Development Authority (supra) it is observed as
under:
30. The interpretation of Section 56 of the Contract Act came up for consideration in Satyabrata Ghose v. MugneeramBangur& Co. [ Satyabrata Ghose v. MugneeramBangur& Co. , AIR 1954 SC 44: 1954 SCR 310] It was held by this Court that the word “impossible” used in Section 56 of the Contract Act has not been used in the sense of physical or literal impossibility. It ought to be interpreted as impracticable and useless from the point of view of the object and purpose that the parties had in view when they entered into the contract. This impracticability or uselessness could arise due to some intervening or supervening circumstance which the parties had not contemplated. However, if the intervening circumstance was contemplated by the parties, then the contract would stand despite the occurrence of such circumstance. In such an event, “there can be no case of frustration because the basis of the contract being to demand performance despite the happening of a particular event, it cannot disappear when that event happens”. This is what this Court had to say: (AIR pp. 46-49, paras 9-10 & 17)
17.2 In State of Chhattisgarh and Another (supra) wherein it is observed as under:
11. Per contra, Mr Pranav Malhotra, learned counsel for the respondent Company argued that the appellant State having failed to raise any objection relating to deduction of “supervision charges” in its Section 34 petition, it must be assumed that it had waived its right to take any such plea in the Section 37 petition filed in the High Court and for that matter, before this Court. He cited State of Maharashtra v. Hindustan Construction Co. Ltd. [ State of Maharashtra v. Hindustan Construction Co. Ltd. , (2010) 4 SCC 518: (2010) 2 SCC (Civ) 207] to substantiate such an objection.
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24. We are afraid, the plea of waiver taken against the appellant State on the ground that it did not raise such an objection in the grounds spelt out in the Section 34 petition and is, therefore, estopped from taking the same in the appeal preferred under Section 37 or before this Court, would also not be available to the respondent Company having regard to the language used in Section 34(2-A) of the 1996 Act that empowers the Court to set aside an award if it finds that the same is vitiated by patent illegality appearing on the face of the same. Once the appellant State had taken such a ground in the Section 37 petition and it was duly noted in the impugned judgment, the High Court ought to have interfered by resorting to Section 34(2-A) of the 1996 Act, a provision which would be equally available for application to an appealable order under Section 37 as it is to a petition filed under Section 34 of the 1996 Act. In other words, the respondent Company cannot be heard to state that the grounds available for setting aside an award under sub-section (2-A) of Section 34 of the 1996 Act could not have been invoked by the Court on its own, in exercise of the jurisdiction vested in it under Section 37 of the 1996 Act. Notably, the expression used in the sub-section is “ the Court finds that ”. Therefore, it does not stand to reason that a provision that enables a Court acting on its own in deciding a petition under Section 34 for setting aside an award, would not be available in an appeal preferred under Section 37 of the 1996 Act.
17.3 In Ssangyong Eng..& Construction Company Limited (supra)
it is held as under:
20. It is first necessary to survey the law insofar as it relates to the ground of setting aside an award if it is in conflict with the public policy of India, as it existed before the Amendment Act, 2015. In Associate Builders v. DDA [ Associate Builders v. DDA , (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] ( Associate Builders ), this Court referred to the judgment in Renusagar Power Co. Ltd. v. General Electric Co. [ Renusagar Power Co. Ltd. v. General Electric Co. , 1994 Supp (1) SCC 644] ( Renusagar ), as follows : ( Associate Builders case [ Associate Builders v. DDA , (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , SCC pp. 67-68, para 18)
24. Yet another expansion of the phrase “public policy of India” contained in Section 34 of the 1996 Act was by another judgment of this Court in Western Geco [ ONGC v. Western Geco International Ltd. , (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12] , which was explained in Associate Builders [ Associate Builders v. DDA , (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] as follows : (SCC pp. 73-77, paras 28-34)
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(2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12] , this Court added three other distinct and fundamental juristic principles which must be understood as a part and parcel of the fundamental policy of Indian law. The Court held : (SCC pp. 278-80, paras 35 & 38-40)
‘ 35 . What then would constitute the “fundamental policy of Indian law” is the question. The decision in ONGC [ ONGC v. Saw Pipes Ltd. , (2003) 5 SCC 705] does not elaborate that aspect. Even so, the expression must, in our opinion, include all such fundamental principles as providing a basis for administration of justice and enforcement of law in this country. Without meaning to exhaustively enumerate the purport of the expression “fundamental policy of Indian law”, we may refer to three distinct and fundamental juristic principles that must necessarily be understood as a part and parcel of the fundamental policy of Indian law. The first and foremost is the principle that in every determination, whether by a court or other authority that affects the rights of a citizen or leads to any civil consequences, the court or authority concerned is bound to adopt what is in legal parlance called a “ judicial approach ” in the matter. The duty to adopt a judicial approach arises from the very nature of the power exercised by the court or the authority does not have to be separately or additionally enjoined upon the fora concerned. What must be remembered is that the importance of a judicial approach in judicial and quasi-judicial determination lies in the fact that so long as the court, tribunal or the authority exercising powers that affect the rights or obligations of the parties before them shows fidelity to judicial approach, they cannot act in an arbitrary, capricious or whimsical manner. Judicial approach ensures that the authority acts bona fide and deals with the subject in a fair, reasonable and objective manner and that its decision is not actuated by any extraneous consideration. Judicial approach in that sense acts as a check against flaws and faults that can render the decision of a court, tribunal or authority vulnerable to challenge.
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by recording reasons in support of the decision which the court or authority is taking. The requirement that an adjudicatory authority must apply its mind is, in that view, so deeply embedded in our jurisprudence that it can be described as a fundamental policy of Indian law.
S.18. Equal treatment of parties .The parties shall be treated with equality and each party shall be given a full opportunity to present his case.
***
(1) * * *
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‘ 7 . … It is, no doubt, true that if a finding of fact is arrived at by ignoring or excluding relevant material or by taking into consideration irrelevant material or if the finding so outrageously defies logic as to suffer from the vice of irrationality incurring the blame of being perverse, then, the finding is rendered infirm in law.’
In Kuldeep Singh v. Commr. of Police [ Kuldeep Singh v. Commr. of Police , (1999) 2 SCC 10 : 1999 SCC (L&S) 429] , it was held : (SCC p. 14, para 10)
‘ 10 . A broad distinction has, therefore, to be maintained between the decisions which are perverse and those which are not. If a decision is arrived at on no evidence or evidence which is thoroughly unreliable and no reasonable person would act upon it, the order would be perverse. But if there is some evidence on record which is acceptable and which could be relied upon, howsoever compendious it may be, the conclusions would not be treated as perverse and the findings would not be interfered with.’
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facts has necessarily to pass muster as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. Thus, an award based on little evidence or on evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on this score. Once it is found that the arbitrator's approach is not arbitrary or capricious, then he is the last word on facts. In P.R. Shah Shares & Stock Brokers (P) Ltd. v. BHH Securities (P) Ltd. [ P.R. Shah Shares & Stock Brokers (P) Ltd. v. BHH Securities (P) Ltd. , (2012) 1 SCC 594 : (2012) 1 SCC (Civ) 342] , this Court held : (SCC pp. 601-02, para 21)
34. What is clear, therefore, is that the expression “public policy of India”, whether contained in Section 34 or in Section 48, would now mean the “fundamental policy of Indian law” as explained in paras 18 and 27 of Associate Builders [ Associate Builders v. DDA , (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] i.e. the fundamental policy of Indian law would be relegated to “Renusagar” understanding of this expression. This would necessarily mean that Western Geco [ ONGC v. Western Geco International Ltd. , (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12] expansion has been done away with. In short, Western Geco [ ONGC v. Western Geco International Ltd. , (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12] , as explained in paras 28 and 29 of Associate
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Builders [ Associate Builders v. DDA , (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , would no longer obtain, as under the guise of interfering with an award on the ground that the arbitrator has not adopted a judicial approach, the Court's intervention would be on the merits of the award, which cannot be permitted post amendment. However, insofar as principles of natural justice are concerned, as contained in Sections 18 and 34(2)( a )( iii ) of the 1996 Act, these continue to be grounds of challenge of an award, as is contained in para 30 of Associate Builders [ Associate Builders v. DDA , (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] .
35. It is important to notice that the ground for interference insofar as it concerns “interest of India” has since been deleted, and therefore, no longer obtains. Equally, the ground for interference on the basis that the award is in conflict with justice or morality is now to be understood as a conflict with the “most basic notions of morality or justice”. This again would be in line with paras 36 to 39 of Associate Builders [ Associate Builders v. DDA , (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , as it is only such arbitral awards that shock the conscience of the court that can be set aside on this ground.
37. Insofar as domestic awards made in India are concerned, an additional ground is now available under sub-section (2-A), added by the Amendment Act, 2015, to Section 34. Here, there must be patent illegality appearing on the face of the award, which refers to such illegality as goes to the root of the matter but which does not amount to mere erroneous application of the law. In short, what is not subsumed within “the fundamental policy of Indian law”, namely, the contravention of a statute not linked to public policy or public interest, cannot be brought in by the backdoor when it comes to setting aside an award on the ground of patent illegality”.
39. To elucidate, para 42.1 of Associate Builders [ Associate Builders v. DDA , (2015) 3 SCC 49: (2015) 2 SCC (Civ) 204] ,namely, a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an arbitral award. Para 42.2 of Associate Builders [ Associate Builders v. DDA , (2015) 3 SCC 49: (2015) 2 SCC (Civ) 204], however, would remain, for if an arbitrator gives no reasons for an award and contravenes Section 31(3) of the 1996 Act, that would certainly amount to a patent illegality on the face of the award.
40. The change made in Section 28(3) by the Amendment Act really follows what is stated in paras 42.3 to 45 in Associate Builders [ Associate Builders v. DDA , (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , namely, that the construction of the terms of a contract is primarily for an arbitrator to decide, unless the
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arbitrator construes the contract in a manner that no fair-minded or reasonable person would; in short, that the arbitrator's view is not even a possible view to take. Also, if the arbitrator wanders outside the contract and deals with matters not allotted to him, he commits an error of jurisdiction. This ground of challenge will now fall within the new ground added under Section 34(2-A).
41. What is important to note is that a decision which is perverse, as understood in paras 31 and 32 of Associate Builders [ Associate Builders v. DDA , (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , while no longer being a ground for challenge under “public policy of India”, would certainly amount to a patent illegality appearing on the face of the award. Thus, a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality. Additionally, a finding based on documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties, and therefore, would also have to be characterised as perverse.
44. In Renusagar [ Renusagar Power Co. Ltd. v. General Electric Co. , 1994 Supp (1) SCC 644] , this Court dealt with a challenge to a foreign award under Section 7 of the Foreign Awards (Recognition and Enforcement) Act, 1961 (the Foreign Awards Act). The Foreign Awards Act has since been repealed by the 1996 Act. However, considering that Section 7 of the Foreign Awards Act contained grounds which were borrowed from Article V of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (the New York Convention), which is almost in the same terms as Sections 34 and 48 of the 1996 Act, the said judgment is of great importance in understanding the parameters of judicial review when it comes to either foreign awards or international commercial arbitrations being held in India, the grounds for challenge/refusal of enforcement under Sections 34 and 48, respectively, being the same.
17.4 In Associate Builders (supra) it is observed as under:
“27. Coming to each of the heads contained in Saw Pipes [(2003) 5 SCC 705 : AIR 2003 SC 2629] judgment, we will first deal with the head “fundamental policy of Indian law”. It has already been seen from Renusagar [ Renusagar Power Co. Ltd. v. General Electric Co. , 1994 Supp (1) SCC 644] judgment that violation of the Foreign Exchange Act and disregarding orders of superior courts in India would be regarded as being contrary to the fundamental policy of Indian law. To this it could be added that the binding effect of the
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judgment of a superior court being disregarded would be equally violative of the fundamental policy of Indian law”.
17.5 The Hon’ble Supreme Court in the case of MMTC Ltd. v. Vedanta Ltd.,5 discussed the scope of interference of the Courts under Section 37 of Arbitration and Conciliation Act, 1996. Wherein the Hon’ble Apex Court held that Court under Section 37 cannot travel beyond the restrictions laid down by the Section 34. That the jurisdiction of the Section 37 Court is only limited to determining the legality of the order passed under Section 34 of the Act. The relevant portions of the judgment are extracted as under:
13. It is relevant to note that after the 2015 amendments to Section 34, the above position stands somewhat modified. Pursuant to the insertion of Explanation 1 to Section 34(2), the scope of contravention of Indian public policy has been modified to the extent that it now means fraud or corruption in the making of the award, violation of Section 75 or Section 81 of the Act, contravention of the fundamental policy of Indian law, and conflict with the most basic notions of justice or morality. Additionally, sub-section (2A) has been inserted in Section 34, which provides that in case of domestic arbitrations, violation of Indian public policy also includes patent illegality appearing on the face of the award. The proviso to the same states 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.
14 . As far as interference with an order made under Section 34, as per Section 37, is concerned, it cannot be disputed that such interference under Section 37 cannot travel beyond the restrictions laid down under Section 34. In other words, 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. Thus, it is evident that in case an arbitral award has been confirmed by the Court under Section 34 and by the Court in an appeal under Section 37, this
5 (2019) 4 SCC 163
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Court must be extremely cautious and slow to disturb such concurrent findings.
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the Ex.C.5 DAGPA has become frustrated because the 30-meter wide
proposed Master Plan road is passing through the subject property and hence the Ex.C5 DAGPA becomes void. The Arbitral Tribunal further held that the petitioner has to execute the deed of cancellation of the same and deliver the possession of property to the respondents.
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POINT NO.3
___________________________ JUSTICE P. NAVEEN RAO
JUSTICE J. SREENIVAS RAO
10-02-2023
Skj
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HONOURABLE SRI JUSTICE P. NAVEEN RAO AND HONOURABLE SRI JUSTICE J. SREENIVAS RAO
COMCA.NO.34 OF 2022
Date : 10-02-2023.
Skj
2 issues framed by the court
Whether the order passed by the Commercial Court in COP No.3 of 2022 confirming the award of the Arbitral Tribunal is valid under law?
Whether the Court below rightly exercised powers under Section 34 of the Act while upholding the award of the Arbitral Tribunal?
Colour shows how this judgement treated each authority
Delhi Development Authority v. Kenneth Builders and Developers Private LimitedReferred¶96
Delhi Development Authority Versus Kenneth Builders and Developers Private Limited and Others (2016) 13 SCC 561 · Who else cites this
State of Chhattisgarh v. Sal Udyog Private LimitedReferred¶97
State of Chhattisgarh and Another Versus Sal Udyog Private Limited (2022) 2 SCC 275 · Who else cites this
Ssangyong Eng. & Construction Company Limited v. National Highways Authority of IndiaReferred¶98
Ssangyong Eng.& Construction Company Limited Versus National Highways Authority of India (NHAI) (2019) 15 SCC 131 · Who else cites this
Associate Builders v. Delhi Development AuthorityReferred¶104
Associate Builders Versus Delhi Development Authority (2015) 3 SCC 49 · Who else cites this
MMTC Ltd. v. Vedanta Ltd.Referred¶196
MMTC Ltd. v. Vedanta Ltd., (2019) 4 SCC 163 · Who else cites this
4 provisions across 3 enactments
M/s Sree Durga Estates
J.A.S. Padmaja
7 others
P. Naveen Rao
J. Sreenivas Rao
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
