Dismissed

M/s Sree Durga Estates v. J.a.S.Padmaja

Telangana HC10 Feb 2023COMCA/35/2022

Case brief

AI extract

What is this about?

Appeal under Section 13 of the Commercial Courts Act r/w Section 37 of the Arbitration Act against dismissal of a Section 34 petition challenging an arbitral award. The Court found no illegality and dismissed the appeal, answering both issues against the appellant.

What the court decided

AI extract

M/s Sree Durga Estates Vs J.a.S.Padmaja — Arbitration | Telangana HC (2023)

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IN THE HIGH COURT FOR THE STATE OF TELANGANA

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AT HYDERABAD

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FRIDAY, THE TENTH DAY OF FEBRUARY TWO THOUSAND AND TWENTY THREE

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PRESENT

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THE HON'BLE SRI JUSTICE P. NAVEEN RAO AND THE HON'BLE SRI JUSTICE J. SREENIVAS RAO

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COMMERCIAL COURT APPEAL NO: 35 OF 2022

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Commercial Court Appeal Under Section 13 of the Commercial Courts Act, 2015 Rl/w. 37 of Arbitration & Conciliation Act against the Judgment and Decree dated 12-09-2022 in C.O.P.No. 2 of 2022 on the file of the Court of the Special Judge for Trial and Disposal of Commercial Disputes, Ranga Reddy District at L.B.Nagar.

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Between:

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M/s Sree Durga Estates, A registered Partnership Firm With Registration No. 214812011 Rep. By its Managing Partner Sri Boppana Ramesh S/o Sri Sai Chowdhary R/o Villa No.006 lndu Fortune Fields, 13th Phase KPHB Colony, Kukatpally Hyderabad

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...APPELLANT

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AND

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J.A.S.Padma1a,Wlo. J. Venkata Ramudu Aged abbut 59 years, Occ. Housewife R|/o. Villa No. 1018, Mallikarjuna Krinss Vill Sy. Nos. 282 and 283, Puppalaguda Village Gandipet Mandal, Ranga Reddy District-S00089

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lnturi S.N. Prasad, S/o. Late l. Balaiah Aged about 57 Years, Occ. Govt Service Fl/o. Flat No. 633, The Embassy Apartments 15 Aliasagar Road, Vasanthnagar, Bangalore- 560001

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J. Venkata Ramudu, S/o. J. Venkataiah Aged about 66 Years, Occ. Retired F!/o. Villa No. 282 and 283, Puppalaguda Village Gandipet Mandal, RR District-500089

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J. Suhruta, D/o. J. Venkata Ramudu Aged about 25 Years, Occ. Student R:/o. Villa No. 10'18, Mallikarjuna Krinss Villa Sy. Nos. 282 and 283, Puppalaguda Village Gandipet Mandal, Ranga Reddy District-500089

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Vanitha Sharma, Wo. S.N. Prasad Aged about 57 Years, Occ. Govt Service Rl/o. Plat No, 633, The Embassy Apartments 15 Aliasagar Road, Vasanthnagar, Bangalore-560001

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Apoorva Sharma Prasad, S/o. S.N. Prasad Aged about 30 Years, Occ. Employee R/o. Flat No. 633, The Embassy Apartments 15 Aliasgar Road, Vasanthnagar, Bangalore-56000'1

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I I I I

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7- Ananya Sharmr Irra:;ad, D/o. S.N. Prasad Aged abc,ut 24^{Y (:rars, Occ.} Consultant RJo. =l,at^No. 633,^{The EmbassyApartm(,nts1[ /1lias;garRoad,} Vasanthnagar. ,a ng a lore-560001

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The Arbitrator,^, rstice 13. Seshasayana Reddy^{FornrerJu i1:e, lligh Court of} Andhra Pradesi Rlo 10-1-1281111 , Znd Floor Flat N,r.^{203 [:i.alasree} Residency lvlas b Tank, Hyderabad^- 500 028

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( R - 8 not nec( isani partl/)

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..RESPONDENTS

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lA NO: 1 OF 2022

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Petitron under^I ection^'1 51^{CPCprayingthat in tht-' crrcurrstarrcesstatedin} the affidavit filed in sr- rport of the^{petition, the HighCourtmayl;,: pleased to stay} all fu(her^proceedings in^{pursuanceof the Arbitration Award da ed 2'.\l1Ol2O21-}

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Counsel for the Appe lant: SRl.^{V. RavinderRao SeniorCouns'eltor SRl.} SATHVIK MAKUNUR

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Counsel for the Resp >ndent SRI B. ADINARAYANA RAO St.^llor-nselfor SRI SRINIVAS VELAGAPUDI

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The Court made the I rllowing: JUDGMENT

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PNR,J& JSR,J COMCA.No.35 OF 2022

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HONOURABLE SRI JUSTICE P. NAVEEN RAO AND HONOURABLE SRI JUSTICE J. SREENTVAS RAO

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COMCA.No.35 OF 2022

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JUDGMENT: lPer the Hon'ble Sn Justice J- Sreeniuas Raol

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The appellant filed this COMCA No.35 of 2O22 under Section 13 of the Commercial Courts Act, 20 15 R/w Section 37 of the Arbitration and Conciliation Act 1996 (hereinafter referred to as 'the Act, 1996')aggrieved by the order dated 1,2-09-2022 passed by the learned Special Judge, for Trial and Disposal of Commercial Disputes Court, Ranga Reddy District at L.B. Nagar in C.O.P. No.2 of 2022

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For the sake of convenience, hereinafter the parties will be referred to as "petitioner" and "respondents", as they were arrayed before the trial Court.

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That the respondents in COP No.2 of 2022 are the absolute owners of the land admeasuring to an extent of Ac.5-02^gts in Sy.Nos. 128 and 132 situated at Bachupally Village, Quthbullapur Mandal, Ranga Reddy District. Petitioner and^{respondentshave} entered into registered Development Agreement-Cum-General Power

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PNIt,J& JSR,J : lN{a^^{No 35 ol'2022}

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r afier called^{as "DAGPA"vide regts..r',,rticn No'6750} of Attorney,^here of 2017^dated \C:.O6.2O).7 in respect^{of land t.c an extentof} Ac.4.24.Bgts^for rlevelopment of the^{said land :ntc' agated} communitY^witl independent villas^{and anoth€1dr:velopment} :;3ist.ration document^{No.6751 of 201"' irrespcct of} agreement^{vide r} iand Ac.00-^17.21 ts for development^{of commerciallr-rild ngWhile} things stood tl r"r:;, disputes arose^{between the} l^tarr.iesThe I arrd. 2 cancelled^{the develol;ment agleement by} respondent^Nos otice on 10.09.2019.^{When the pe:L'iorerrejected} issuing a legal^r the advances^b' respondent Nos. 1^{and 2 for canc r"llation of the} development^ag' eement the^{respondents have i6'1rl< ed arbitration} clause and^filer Arbitration Application^{No.40/2C12C 'br seeking} l.rbitrator before^{this Hon'ble Court anrl the same} appointment^of was aliowed ar d 8*, respondent^{herein was aptr,() intt:d as 'sole} Arbitrator' for^ac judication of the dispr-rtes betvreen^{tkrt: prrties by its} order dated 04.C a.2020.

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4,Beforet-he,ArbitralTribunaltherespondentslrilveltledclaim petition in Arbi :'ation^{Application No'40of 2O2Oi:rr seeking the} following^reliefsI

PNR,J& JSR,J coN,IcA.No.35 0F 2022

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"(i) Declare the Development^{Agreement-cum-GeneralPower} of Attorney dated 30.06.2017,^vide document^No.6750/2017 as invalid and cancelled.

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(ii) Direct the Respondent to exccutc a Deed of Cancellation of the Development Agrcement-cum-General Powcr^o[ Attorney, dated 30.06.2017 vide documcnt^{No.675O/2017.}

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(iii) Direct the Respondent to deliver the^possession of the schedule^property to the claimants.

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(iv) Direct the respondent to^pay damages of^{Rs.2,O0,0O,O00/-} (Rupees Two Crores only) for breach o[ contract.

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(v) To award costs of this claim and also to^{passan order or} orders which this Hon'ble Court^{deemfit in thecircumstances} of this case".

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1. In the said claim petition the^{respondentsstated that} in terms of the DAGPA dated 30-06-2017^{the respondentsNo'1 &} 2 and Late Inturi Lakshmi^{Prasannaare the owners and they are}

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entitled to 5O% of built-up^{area and the petitioneras developeris} entitled for the remaining 50% of^{the built-up area tobe} constructed over the said^{property. The petitioner has agreed to} complete the entire^project within^{30 monthswith a grace period} of 6 months. The petitioner^{as a professional developer verifred} such land use in the^{proposedmaster plan which is alsoevident}

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from land use information furnished^{by Hyderabad Metropolitan} Development Authority.^{The petitioner undertook toobtain}

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t\ti,.J&,.rsll..l ((tl'AN,:j5OI:,102)

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required^{pernlisslllsfroma-11 the concerneclirul-- orl tie sibr} deletion^{of 30 met(} 's^{road from the proposedmastcrJ) r'rn}

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4.2. lt is furt '':r^{stateo that the petitione' promist:dto obtain} al1 such^{required-t:irnissionsfrom the concernt:d autl'Lorlties and} necessarysarLctior[ortheConstructionoftheproprlsedbuilding within a^{perlod 19months from the date of D'(}PA as thc} respondt:n^{tNo. 1 8r' 2:' anc' Late Inturi Lakshrni['t ttl;ar na helve} already^{madellecessaryapplication to theH'"derabad} Metropolitan^{Der:l':pmentAuthority for deletion rI3() metcrs} road. The^{petitir ner as a professional deveLoper promisedto} pursue such^{ap1 lrcationbefore the concemed autllc:rit:'es at his} cost ancl^expens€

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4.3. The^{r :spondents furtherstatedt hat ttie petitroner} failed to^{obtain I ocessa-ry orders for deletionof 30 lt:et road from} the proposed^{mt ster plan though more than 3 years; hzrve lapsed} from the^{date ol DAGPAs' ln the absence of deletiorr of 30 meters} road,^{the said prooerty is not viable for clevelrpme'ntinto a} commercial^{bu,ding and independent villas' T:r'rs' both the}

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t.$

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PNR.J& JSR,J coMCA No.3s oF 2022

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DAGPAs stood frustrated and became unenforceable. The petitroner 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 ca,cel DAGPAs by issuing Notice through their Advocate on 1O_09_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 ciause to resolve the disputes.

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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 2OL9 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 propert5r. In view of the same the

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I)\R,,tail ,tsti..l ( ()M( )\ No 35 OIr 202-?

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responderlts sor 2hL recovery of Possession frorn tht petttioncr and a-lso claimecl riar Lage s an amount of Rs.2 Crorcs.

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4.5 Thr: C a.mants herein are also subjected to st.ch mental agony due to I rt^jnordinaie delay made by Respondent. The Claimant Nos.1 i 2 also plarned to invest the saie proceeds to be realized from tl <: sale .f their share of villas i. a profitable manner but co lcl rot do so due to the breach of ,\greement committcd by Rr spo rdent.. The claimants therefore :rre er-rt1t1ed to claim compensa i()n for such breach of contract corrrrnitted by the Respondent Thr Re:;ponclent is therefore, liable tc pay a sum of Rs.50,00,0007'-F -lper:s Filty Lakhs Only) towards c:ompensation for the breach o{ :r)ntract.

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Before the ,:arned Arbitrator the petitioner fiLr,:l st,rtement of defence denying the claim made by the respond e rtLs, inter alia contending that rt the tirne of execution of DAGIrr\ oniy the respondents har : de.livererd physical possession of r.he property to petitioner and th :y encircled Compound Wall, parrly fenced with Barbed Wire, Cor stnrcted Roorris for Watchmerr anr j Se<:uritv and

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I)NR,J& JSR,J COMCA.No.3J OF 2022

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the petitioner is in physical possession and enjoyment of above said lald in the capacity of its Developer without arry interferences or obstructions from whomsoever. The petitioner further submits ttrat 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 1S waiting for the approvals from the concerned Authorities to commence construction and complete the project at the earliest. But the respondents 1n 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 the petitioner and to cause wrongful loss thereon.

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5.1 That the petitioner further stated that they have filed C.O.P.No.L7 of 2Ol9 on the Ille 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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Pj\R,.j8r.lsk.r iol\4cA.No :1.; r)P 202 ) Inturr Lal<shmi I,ra.sar.rna ar_r cl rhe responden:s I a:td 2 from alienating iu-rd .:trtr:rfering rn,ith the peacelul p or;session aId enJoyment of pe tioner or.er the said property. Uporr :orrsideration the learned judp : was ple:ss6d to passed order clire,: tin;J both the parties to rnain .ain .s/afus quo and, the sard o -,:lers are stiil subsisting ald r rayed for dismissal of the claim rnarle by the respondents

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The learnecl r\rbitral ,lribunal basing on tite cl;rirn ,;tatement and statement o rle[ence ot- the respective partie; fra med the following points of 1i sputes

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Hlfi;i "(i).. rVh, ' lr,^' "., r thc^{,.,, ""',fi"il;i;"0';;:':i:I"f.} rcs.on.t/ ;:i:illl] :'Jl"#[i ;' ll';:::f :fi::.?,:i:..^discharsc i,s L,b,isari, ] ror, ier -, io^-" .,; ; M;';^"R;'; :^{j[T jI;,iX,Tl .J} j :",ffi ;, l}J,, .Y,l:' ;, l" :.. ;";,|,..",.""#, Il;:, ::J1;,Tlsrence or :,, l,"l \Vh( l.cr lhe rcsr)ondcn uu,,Eauons irn( rhus ,-"1-::Tt"l"o the brea.h .)f i f DeveloJrme r.rsreemlii,r#Il1t"o, ^lhe perform.nc,. ; da,ed 30 o r ;l,r;;;;r;; :;:il:;1il:;;;iigl,;y *

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tl u'her r,'r tf e rcsp(,nclenr L-d,r(crilrro o.D:velopnrcnt o"-l-'io]i to execute a Der.d r f Artor'icv d? .a :r.oi}")';LqllTf^{n,-.u--c"n"."r} po*",ii Lng document No.67 5a /20l7i l"il"."Il;' fi."t;.j'.'.:'H:"t't^{is obr,sed} to deriver th(

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PNR,J& JSR,J COMCA.No.35 OF 2022

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(vii) lvherher the respondent is liable to pay damagcs of Rs.2,OO,OO,OOO/- (Rupees Two Crores only) to the claimant for the reason of committing breach of contract?

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(viii) To what rclief the claimant is entitled to?".

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7 . Before the Arbitral Tribunal on behalf of the respondents CW. 1 to CW.3 are examined and Exs.Cl to Cl3documents were marked and on behalf of petitioner RW. I to RW.3 are examined and Exs.R. 1 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 O4.O8.2O2O by giving cogent findings in respect of each point. With regard to Point No.l, the learned Arbitral Tribunal held that the petitioner has failed to establish that he constructed compound wall around the subject properly existed on the date of execution of Ex.C.S. Insofar as Point Nos.2 to 4 are concerned the learned Arbitral Tribunal after giving cogent reasons in Paras 6.2.2 to 6.2.74 of the Award, holds that the respondents/claimants have to pay an amount of Rs.2,01,31,497 l- to the petitioner/ developer along with interest @ 18% per annum from O1.LO.2O2O to 22.1O.2021 which comes to Rs.38,42,082/-. In all the respondents/ claimants have to pay Rs.2,39,73,5791-. In respect of Point Nos.5 &

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PNtt, Jlr .JSR,J 1l( )I1(i \ No .l; ai' 2022

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6 are concerncd, the iearned^{Arbitrerl Tribunalrvas plr:zrsed to hold} that Ex.C.5 cler:topment agreement^{DAGPA bt:corrresvoid and} petitioner has to €:)ieoute the deed of cancellation of^{l lx.(15DAGPA} dated 30.06.20 1' and Celiver^possession of the^sulrjt:,.)t [)roperty^to the respondents claimants and further held that^{lfre retitioner/} developer is r')t liable to pay damages zur alnount^of Rs.2,00,00,0O0/' :o the respondcnts/ claimants.^{The learned} Arbitral Tribunal yanted^tl-re follorving relief:

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a).^'l'he petiti rLer/rlevcloper \'ili cxccLlle the dcedof cancclleti(,n^o-Ex.C.5 DAGPA datcd 30.0(,.2017 documenl l)caring^No.675O/1)01 '^{end deliver} possession of sulrject propertY to lllc respondcnts/clarnla lt; ott as is whethcr rs c<ln, i,icn withrn three rnorths from the date of tho \\ ard.

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b). The res r)rdr:nts/ ciaiman ts rr ill^pa-v Rs.2,39 ,7'.i,5';9 I^\r.'ith n three months frorn tl l^(tat,l of award to the^pctitioncr/ developer.^{Iiriirrg w rich the} award anount ;hilll carry irterest (r^L 8'2,^p.a. lrom the date^{o I zrward} to^the date of payrner

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c). The res ondents/claimants and petitioner/develop(ir s ta I bear their own costs.

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Questioninr the award, passed by the leamecl Arl-,itrrrl Tribunal petitioner filed C )P No.2 of 2022 under Section 34 cl the Act, 1996 before Special Cr urt for Trial ald disposal of Comm,:r:ia. Disputes, Ranga Reddy Dis rict at L.B. Nagar. The leamed Sper:L;,rl Judge, after considering the^g. llunds raised by the petitioner, evide:::rce on record, Hon'ble Apex Cot l1^judgments as^u'ell as High Court -'.rdgments and

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E!IICE-

PNR,J& JSR,J COIVlCA. No.35 OF 2o22

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also the provisions of Section 34 of the Act, 1996 dismissed the COp No.2 of 2022 by its order dated t2.O9.2O22.

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9 Aggrieved by the order passed by the principal Special Court for Tribal and Disposal of Commercial 'Disputes, Ranga Reddv District at L.B.Nagar 1n COP.No.2/2O22 dated,t2.Og.2o22 the petitioner filed the above COMC A.No.3S/2022.

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Learned Senior Counsel Sri V. Ravinder Rao appearing on beharf of the petitioner vehementry contended that the court berow without properly appreciating the contentions/grounds raised bv the petitioner, and also evidence on record erroneously dismissed COP.No.2/2022 and simply confirmed the Award of the Arbitral Tribunal' He further submits that the respondents have invoked the provisions of Section 56 of the Indian Contrlct Act, 1g72, though the 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

I'NR..Jtr JSlt,,i , OiU('.\ No ]a ()r'2022

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demonstrates tt rt the applicatior-r under considcrzrtiorL does not result in an im r,:ssibility to perform the cot., trzrc.t ;Ls it had not attained finality. ln.riew of the same, the effecr of S:<:tio:r 56 of the Indian Contract tct, 787.2 could not have been appl.,:ri. He further contended that 1 re Court below ought to have cons i<lere d that the time was not thr ossence of the contract not ,tnly t(.cause Ex.C.5 never contempla ecl such ar-r obligation but thr: j ur:s;:rruclence and past precedents :xpressly hold that time is ne.,-er tlr: essence in a contract relating to al immovable propertv. He further contended that the Court >elow as well as learned Ar bitra Tribunal not appreciated the jr chcial precedents submitted by the I): titi()ner.

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11' In support ' f his contention the learned senior (.ounsel reried upon the followin ;judgments:

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Delhi De'elopment Authority Versus Kcnnetb, Builders and Develope^{.s private} Limited and Othersr

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State of )hhattisgarh and Another Versus Sa l.Idyog private

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Limited2

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3 Ssangyor g Eng.& Construction Company l,i mitr:d Versus National Iighways Authority of India (rtfrai)"

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-n

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r(2016) 13 SCC s61 2(2022) 2 SCC 275 3(2019) 15 SCC 131

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PNR,J& JSR,J COMCA No 35 OF 2022

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4 Associate Builders Versus Delhi Development Authority'

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On the other hand, Sri B. Adinarayana Rao, learned Senior counsel representing on behalf of respondents contended that the appeal frled by the petitioner is not maintainable under law and the Court below after considering the contentions of the respective parties, documentary evidence on record and also after hearing both the parties rightly dismissed the COp.No.2 /2OO2 by giving cogent reasons by its order dated 12.09.2022 and upheld the Award dated 23.12.2021 passed by the Arbirral Tribunal in A.A. No.40 of 2020. He further contended that scope of Section 37 of the Act is very limited. The learned Senior Counsel further contended t]lat the Arbitral Tribunal passed the award dated 23.10.2021 within the parameters of the dispute between the parties only ard the Arbitral Tribunal has not committed any illegality, irregularity in the impugned award. The court below after considering all the grounds raised by the petitioner passed the impugned order confirming the award passed by the Arbitral Tribunal, and there are no grounds to interfere with the impugned order and the appeal liled by the 4(201s) 3 SCC 49

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(. )\l( \ ]o..lr P\tt . i,1.. t)lr .JSR..l:O22 -

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petitioner is not r^{-raintainable} under^{lau' and tl'rc sar r: isiable to be} dismis sed.

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13 . After hear rrg the rival contentions of the 1:^{art ies to the} appeal, the poir t,s t.hat^{predominantlyemerge} fo:'^{corLsideration} are as follows:

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(l) AArclher the order passed bg the⁽ omme":,ol^t)outlttl COP I').:2 of 2O22 confrming the ALuord^{passe'' ltq} leamcd Arbitrt TfiL'unal dated 23.10.2021, is ualid'.truler^l:.*-?

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(2) lVnether the Coutl belou ightlg etr:rc[se I tlt(^poLuers confer za under Section 34 of the Act u hile tL,;:toktutg^lhe Au'ort oJ' the leanted Arbitral TibunaL?

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(3) I'c u.tLnt relief"

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POINT NOS.1 AJ'D 2

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The plead rgs, submissions and docunretrtarl, euidence on record disclose¹ 'rat the respondents are the absolu-,: ou'ners of the land admeasurir g an extent of Acs.5.02 guntas in fi'r.Nos.128 and 132 situated at Bachupally Village, Quthbullapur ,[andal, Ranga Reddy District. Petitioner and respondents ha",: entered into registered Devel 'pment^{Agreement-Cum-GeneralPovr,:rof Attorney,}

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PNR,J& JSR,J COMCA.No.35 OF 2022

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herein after called as "DAGPA'^{vide registration No.675O of 2Ol7} 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 developmentagreement vide} registration document^{No.6751of 2Ol7 in respect of land Ac'OO-I7} '2 guntas for development of^{commercialbuilding. While things stood} thus, disputes arose^{between the parties. The respondent Nos'1 and} 2 cancelled the^{developmentagreementby issuinga legal notice on} 1o'og.2olg.Asthepetitionerdidnotacceptthecancellationofthe developmentagreement,therespondentshaveinvokedarbitration clause and frled^{ArbitrationApplicationNo'40/2020 for seeking} appointment of Arbitrator^{before this Hon'ble Courtand the same} was a-llowed arrd 8th^{respondent herein was appointedas 'sole} Arbitrator,foradjudicationofthedisputesbetweenthepartiesbyits order dated O4.O8.2O2O.

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The respondents^{have frled claim petitionbeforethe learned} Arbitral Tribunal^{seeking (i) todeclare theDAGPAdated} g0.06.2017, as invalid and cancelled;⁽ⁱⁱ⁾ to direct^{the petitionerto}

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'--*EdEl::grr ! - !!!

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;

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a ,.,,, , ,r':*.1: i';.1ill

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cxecutc er Dc€)d >l' Crarrcellation of the DAGp,; (iii) to dirc.t the petitioner to deli' er' the possession of the schetlule r,.op.rty to the responden ts;(iv) to Cirect the respondent to pa.r da magcs of Rs.2,0O,00,000/ r.lRupees Two Crores only) for brea,:Lr of contract

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Petitioner fi :cl clefen<:e statement denying the :lajrr made by the respondents' J'l're learred Arbitrar rribunal after r.,;nsicering the claim statement ancl defence statement of lhc :t:titioner and respondents and erlso after examining the oral anc locumerltarv evidence i.e. CWs 1 tc CW.3 and Exs.C.1 to C.13 rr;rcl RWs. i to RW.3 and Exs. R. I to R.29 and also after heanng parr ir:s passed the Award on 23-1O-2.)21 euestioning the same, pr:titiorr:r Il.ed C.O.p. No.2 of 2022 by i rvoking the provisions of Section 3,1 cf r.he Act to set aside the arbit^.a.l award passed by tlle learned Art,jlral Tribunal. The Court belovr after considering the grounds r.a.rseri by the petitioner, evidenr e on record and after hearing bo:rr ttLe parties dismissed the CO , No.2 of 2022 by its order dated I ,.>_ -O 2022 and upheld the Award rassed by. the Arbitral Tribunat, ho,li,g r.hat there

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'i::tL

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PNR,J& JSR,J COMCA No.35 OF 2022

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is no material irregularity, illegality or error in the impugned award passed by the Arbitral Tribunal

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The scope of consideration of appeal under Section 37 has been lucidly explained by the Honble Supreme Court in the following decisions:

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17.1. In Delhi Development Authorlty(supra) it is observed as

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under:

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The interpretation of Section 56 of the Contract Act came up for . consideration in Sdtgabrqta Ghosev. MugneeramBangur& Co.lsatgabrata Glase v. MugneeramBanryr& Co., eln tSSi sC 44: 1,954 SCR 3l0l It was held by this Courr 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 irom the point oi 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 contempl;ted. However, if the intewening circumstance was contempl,ated by the part'ies, then the contract would stand despite the o"tu..".,t" of such circumstance. In such an event, "there can be no case of Irustration because the basis of the contract being to demand performance despite the happening of a particular evJnt, it cannot disappear when that event happens'. This is what this ilourt had to say: (AIR pp. 46-49, paras 9-10 & t7)

¶156

17.2 In State of Chhattisgarh and Another (supra) v/herein it is observed as under:

¶157

11, Per contra, Mr Pranav Malhotra, Iearned 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

¶158

1!)

¶159

I'NR .ril. .rsR i )\1('\ \o :la ri: lo^)-l

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-I

¶161

r s -ighL to Lakc anV sLlch plca in the llcctro] ij,'p(: iLron lilcC r thc Hieh Court and for that matter, bcr<>re rhi.; i. our t. llc cr l(:d ;lole of Maherashtrd v. Hincjustdi Cor-slri/,r,,on Ca. Ltd I tete of MaharashLra v Hinduslan Con:.ttu.liot ao. Lttl . (20 1( + StC 518 (201O) 2 SCC lciv) 2O7l Lo sul)stirnrirl:,sLrrh ar.l ollec ('rr,

¶162

V : :rrc afraid, the plca of rvaiver taken aglinst ll (. appcllant SIate rn the grour)d that il dil not raise such .tn obje:tion it hc grour ls s[,clt out in the Scction 34 petition and i:, her:forc. cs;top 'co fr-om tal<ing the same in the appcitl prcf( I r,,d ltndcr Sc(:ti r 17 or befo.e this Court, rvould also not be ava ia )lc lo thc r.sp( ldent Company having regard to the languall us(d rrl S,rcti I 3412-A) of the 1996 Act that empowers tile (i)rrrt 1() sct asid€ iln award if it finds that the same is vitiatc( :)-v patenl illcga tv appearing on the face of the samc. ()nce tl(.app,rlant S:ate I ad akcn such a ground in thc Section 37 pc ir tn i nd rr \'irs Lil/ noted in the rmpugned judgmcnt, th( High lc lrt r)ugltt t( ha c int|rfercd li rcsorling to Section 34(2-A ofthe ,,q6 \ci,., p-ovi ion u,,hich uoulcl be cquzrlly available lor appli(.ton o:rl ar )De lirl)lc ordcr L ndcr Ser:rion 37 as tt is k) a )ctitior I cd rrndcr S'rcti r 34 ot th3 1996 Act. In othcr words, '-hc 1 spo[dcnr Com: rny (annot lc heard to state that thc gr,)unds r", LilaLrlc for srrltir I . si(ic an arvard undcr sub-section (2-A) rfsectitr 34 ri th(l 1:l()6 Act c)uld no[ have bccn invoked by thc Court r)tr its or..n, lr-r c:(cr( se of the jurisdrction vested in it under Sectiot 17 r,t the 19(,)6 F.ct. \otably, the exprcssion used in thc sub-ser r rn i;,,thr. Cour ,7td:; fhaf. Thercforc, it does not stan(i tc r.elson t):Lt iL provi i,t-r lhat enables a Court acting on its own ir <lccicling a petit. ,n under Sectjon 34 for setting aside an a.vard, r,, rld r,oibr: avail blr: ir. an apPr:al preferred under Scction 37 of th I 996 Act

¶163

17.3 In Ssang; ong Eng..& Construction Company L imitr:d (supra) it is held as under:

¶164

Ir i: Iir-st necessrlry to survey the latv insofar as it rt..rtcs .o thc grou c of ,;etting aside al award if it is. in conflict wil t: I he r)ublic polic r f India, as it cxisted before thc Amerdmen ,(.t, 20lS. In A. ;otia'te Builcl.ers ! . DDA lAssociate Build.ers v . ,t ,1 (2C t 5) 3 +9 : (2015) 2 SCC (Civ) 2O4) (Assoctate Build.erc, rhis Courr reler 3C to the judgment rn Renusagar power Co Lti r. G ?neral Eleci ic Co lRenusagar Pouer Co. Ltd.. v. Generdl Elecl T C.o.. lgg4 Supl l) SCC 6441 lRenusagoi, as follows I lAssac.t,, Bt idet\ case l!:t:oc1a19^{Buildersv. DDA, (2OtS)3 SCC49 : (,.o I 5)1r SCC} (Civ) llll . SCC pp. 67-68, para I8)

¶165

Yet .rnother expansion of the phrase "public polit/ of Indta" conl i13d in Section 34 of the 1996 Act was bv anotter Judilmenl

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I'NR,J& JSR,J COMCA NO.35 OF 2022

¶168

of this Court rn Westetl Aeco IONGC^{v. Westem Gecolntematnnal} Ltd., l2}l4l 9 SCC 263 : {2014) 5^SCC {Civ)¹²¹ ,^{rvhich rvas} explained in Associate Builders lAssociate^{Buildersv. DDA, (2015)} 3 SCC 49 : (2ol5l 2 SCC^(Civ) 2041^{as follorvs : (SCC pp 73'77,} paras 28-34)

¶169

"28. In a recent^{judgment, ONOCv. westem Ge@} Inter,r.c,ttonc'l Ltd. IONGC^{v. Westem Geq) IntemationqlLtd-,} (2014) 9 SCC 263 (2Ol4l5 SCC^(Civ) 121 , this^{Court addcd} three other distinct and^{fundamentaljuristic principles} which must be understood as a^{part and parcel of the} fundamental^policy of^{Indian law. TheCourt held: (SCC pp'} 278-80,^paras 35 &^38-40)

¶170

'35. What then^{wouldconstitute the "fundamentalpolicy of} Indian law" is the question The^decision in O/VGC [OIVGC^v . Sanu^PipesLtd., l2OO3)^{5 SCC7051 docs} not elaborate that aspect.^{Even so, the expressionmust,in} our opinion, include all such^{fundamentalprinciples} 'ls providing a basis for administration^ofjusticeand Lnforcement of law in this^{country.withoutmcaningto} exhaustively enumerate^{the purport oftheexprcssiotr} "fundamental^policy of^{lndian law', we may refer Lo thrcc} distinct and fundamental^{juristicprinciplesthat must} necessarily be understood^{as a part and parcelof the} fundamenlal^policy of^{Indian law Tlne} first^and Ioremost^is the principle that^{in every determination, whether by a court} or oiher authority that^{alfectsthe rights of a citizenor leads} to any civil consequences,^{the court or authorityconcerned} is bound to adopt^{whatis in tegal parlance called a "iudicial} approoclf in the matter.^{The duty to adopta judicial} approach arises from^{the verynature of thepower exercised} by'the court or the authority^{does nothave to be separately} oi additionally enjoined uPon^{the fora concemed.What} must be remimbered is that^{theimportanceof a judicial} approach in^{judicial and quasi-judicial determinationlies in} thi fact ttrat so^{long as the court, tribunal or the authority} exercising^powers that^{alTectthe rights or obligations of the} parties bifore them shows^{ftdelity to judicial approach,they} iannot act in^{an arbitrary, capricious or whimsical manner'} Judicial approach^{ensures that the authorityactsbonafide} and deals Gth the subject^{in a fair, reasonable and objective} manner and that its^{decisionisnotactuated by any} extraneous consideration.^{Judicialapproachin that sense} acts as a check against^{flawsandfaults t}lat can renderthc} decision of a court, tribunal^{or authorityvulnerableto} challenge.

¶171

3a Equally important^{and indeedfundamentalto the policy of} lndian law-is the^{principlethat a court andso also a quasi-} judicial authority must,^{while determining the rightsand}

¶172

r- tf .iCS.,.r.'.

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:*ir.:i-Ea+.

¶174

l,Nh,-ii,JSR.,l io\f( \ No .,,3 t: 2O2.)

¶175

ol)irsl i) 1{ cf l)arti(:i belore it. do so in accorcla.tcc lriti hc Pr^{rc rlcs} of nalural justicc. Ber ides i-rc c( lcbr rrcd titdiolteram pafien rule. one of Lhc ac(ts r)j l-te prrnc rlcs ,)f natrral justicc is Lhat thc cotrt/,lutlr)rit]. d( cid rll thr matt( r must apply rts mind to tlrc . ttcri,lllni fa:ts rrcl c rcumstances u.hile taking a view on,) *au ,, h" orh.r N,,n rpplicari,,n ot mrnd is ir def(.ct rhaL i. faril t,. rry acjud :r iorr. ,{ppl.cation of mind is best demonstrat,:rl lti, dr srlc rLre ()[ thc nund and disc]osure of mind ,s best rl, ,n'e br re trrling reasons in support of the decision .r.l-r;c f,. ne court ()r authoritr' is taking. The requirem(.nt thzt an a( jud r.t-_oF.'authority must lrpply its mind is, ,, rat ri,,*u, s(' dr irlv lml)r.ddid in our jurisprudence thi I i. ,..i l b; or s.r ,r{t .r., a lun(lamenlcl policy of Indian law.

¶176

39 Nol j:j rnrportant is the p.inciple now recorlnised .r:i a sa lu tz r' .1u: istir: fundamental in administrativ( law t tt. a

¶177

dccisi r r+hi, h i\ pcrvcrs| or So irration rl lha no re lso 3l--lc person uould havc a.rived at, thc s rmc. rvi I rrot bt su l.l ncC in a lourl of la\u. pe.versity or irrationa)ir1. of dc cisi rs is testcd on the touch;l ne ol l{,€ r'( sb /ry lAs]iociafed prouincial pictute ,l r tl;es ol L|.l rcaI oDallLcness. 11 ednesburg Corpn., I)ccrsions lhaL (1918) fall | KB short 223 of Ltc stanrlrrcls{C)l prir (:r )lc of re: ,, r..llcncss .rtr. opcn t. challenge in a ou:1 rl r\, olrcn l \vrir jurisdictiot.t of thc supcrior courts b tt no l( r s rn StiII UI I1' processes r,.,herever the Same are availt,ble

¶178

10 It rs r,-trhIr nCces:sitry nur proper fC,r US tO attemlt an exhaL lr'e enumerJlion of what would .ot slilul; rhc fu nda re']tal policy of tndian law nor is it possrble to DI,ce Lhi e-, lr,rssion in the straitjacket of a definiti,;n. Wtet is irrpor rnl ir the context of lhe case at hand is that i-on facls rl.c,verl before them thc arbitrators fail to dra 1 an in;cre: ce wnich ought to have been drawn or rf they hr ve drarvr ;rn inference which is on the face of ir, uniertlrle res ult rq .in miscarriage of justice, the adjudii:ation <r,en u,hc n n.tde by an Arbitral Tribunal that enjoys (.onsiciertl)le lalilu( : z,nd play a1. the joints in making awa;ds will be cl)en to oha l:rgr and may be casl away or modille,l deper,,i,ng upon ,r.thcr thc ,rffending part is or is not sererable fr:,ri

¶179

th. re t'

¶180

Itrsc .rr ttrat the.iuristic principle of a "judicial appr(rar:h,

¶181

demar ls that a decision be fair, reasonable and oble:.i,re. On tl r. ob,/crse side, anything arbitrary ancl whinsir;al wc,uld rt)viously nct be a determination which rvould r i _l.Ler be fair r(.astnable ()r objective.

¶182

3o. 'f.hr: or. lt oltera.m pd.tlem principle which undol.btedly sla lultda r,. 1al juristic principle in Indian k.w is : lso

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r' I 1 LL^''- L---I

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-d: ;:_aL-=---i;iti4t

r.,r--

).)

-r

PNIt,J& JSR,J coN{cA No.35 0F 2022

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contained in Sections I6 and 3a(2)(o)(ii0 of the Arbitration and Conciliation Act. Thcse sections read as follows:

¶191

S.18. Itgadl treqtnent oJ partles.The parties shall be treated with equality and each party shall be given a full opportunity to present his case.

¶192

s.34. Applicqtloln lor setanng asld.e arbltrdl q.udrd.. -

¶193

(1) l2l An arbitral award may be set aside by the court onty if(") the party making the application furnishes proof that-

¶194

(in) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or waS otherwiSe unable to present his case;,

¶195

3I" The third juristic principle is that a decrsion which is perversc or so irrational that no reasonable person would have arrived at the same is important and requires some degree of explanation. It is settled law that where:

¶196

(r) a finding is based on no evidence, or

¶197

(t) an Arbitral Tribunal takes into account something irrelevant to the decision which it arrives at; or

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(it) ignores vital eyidence in arriving at its decision,

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such decision would necessarily be perverse.

¶200

A good working test of perversity is contained in two judgments. In Excise and Tqxo,tion Offrcer-cllm-Assessing AuthoitV v. Gopi Nath & Sons lExcise and Taxation Olficer_ cum'Assessing Authoitg v. Gopi Nath & Sons, 1992 Supp (2) SCC 3121 , it was hetd : (SCC p. 317, para 7)

¶201

'Z ... It is, no doubt, true that if a hnding 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 uice of irrationality incurring the blame of being perverse, then, the hnding is rendered inhrm in law.'

¶202

ln Kuldeep Singh v. Commr. ol hli@ lKuld.eep Stnghv. Commr. of Police, (t999) 2 SCC tO : 1999 SCC (L&S) 4291 , it was held : (SCC p. 14, para 10)

¶203

'lO A broad distinction has, therefore, to be maintained between the decisions which are pewerse and those which are not. If a decision is arrived at on no evidence or evidence which is thoroughly unreliable and no reasonable person

¶204

':,,*".

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¶206

PNli,.rl,, .istl,,l l, )'lC \ No.:15 a)l: 2O22-

¶207

!',,)ul( i(L r.pon it, Ihc order would be pcNcrsc BLrt if tlrcrc is so: r: cYrdencc^()rr rccord \'hich is ircceptabl 'ard rlrich could ce rc ied upr,n, hou'socver compcndLous rl mzLy be, the c(^)11C1 si,)Dr. \voul(l Dot bc treated zls pcn,e'se ait I rhc [indir 1r:^{rvouldnotbe interlcred rvith.'}

¶208

It mr ;r clcrrl-v bc understood that when a court is apll.ing tlLc " r-tr1ic polrcy' test to an arbitration arvarc., it do(.r oot a(1 a .r court oI appcal and consequently errors (i thct c:lnn | ')c corrccL,rd. A possible vicw by the rrbilratcr on facts rrs necessarlly to pass muster as the arbttrator ii the u Ltirr 1c m lster of thc quantity and quality of eridcnce :r be r( lie( uoon whcn hc delivcrs his arbitral award. TItr.l; an a ,var Jas(d on littlc evidencc or on evLdence wrrich dols not meas, Lr€ ul rn qurlity to a trained legal mind xould rll bc hcld c be invalid on Lhis scorc. Once it is foLlnd thtt thc a^-bit rlors appro.rch is not arbitrary or capric,ous, tt(r. he i: tL lasr rvord on facts- In PR. Shah Shrrres &^jiock I:rok, ..; (P) I.td. v. f)HH Sea)ities (P) Ltd. lP R. Shoh t;1./res d, sr r,( B,oke,s (D) ].td v. BHH Sec ities (P) ).td., (21)t.,.) I SCC ;')+: (2O) 2) I SCC {CirJ 3421 , this Cour h(lc (.rCC pP( )t 02, para ill)

¶209

(ourl does lloL sit in appeai or,er the awrrrtl ,rl an Arbil arl Tribunal by reasscssirrg or reapp,ectatrng the evrdr r,r(:. An aw.r].d can be challenged onlv undrr the grou (s rentioned rn Scction 34(2) of the Act The Arc tral '1 r-ibt 'tal tras cxamined the facts and held that bo h the scco C rcspondenl and the appellant are liable. The cas,: as put l rr...arl by thc first respoltdent has becn a(:ccpted. Ilrven t:rc r inori:y view','as that thc second respond()nt was Li.rble as c r)ne(L by the lirst respondent, but the appella . was not rble^,rnly on the ground that the arbitrat,)rs appcirrted bv1 L<: Stock Exchange under Bye-law 248. in a claim agall st a ,ron-mcmber, had no jurisdiction to (iecide . c aim agair st another member. The finding of the majoritv i$ Lhat thc i cpellrnt did thc transacLion in the name o[ the x:i ond resp rcLent and is therefore, liable along with the ;t:, ond resp riclenL. Thcrefore, in the absencc of any ground rrnder Scct r.r 34(2) of the Act, it is not possible to r(i-exam rro the facts to find out rvhether a different decision can be r--ived €rt.' 34. It is r ilh ttLis very important caveat that the two funda 1t(, ntal prin il)les which form part of the fundamerrtal pclr:y ol Indi, n au (that the arbitrator musl have a judrcial aprroach and hi t t.e must not act pen ersely) are to be undersl tc I "

¶210

/hat is cleiu-, thcrefore, is that the exprcssion ':r.rblic ooli I of India", whether contained in Seclion 34 r:r ir Scc' rn 48, would now mean the 'fundamentai p(,lii:y o' lnd i n la\v" as cxplained in paras 18 ar,d 27 ol Ass(,.taf(,

¶211

--.-*rs fr

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PNR,J& JSIt,J COMCA.No.35 O1. 2022

¶214

Buiders lAssociate Buildersv. DDA, l2ol5) 3 SCC 49; (2015) 2 SCC (Civ) 20al i.e. the fundamcntal policy of lndian law would be relegated to "Renusagad understanding of this cxprcssion. This would nccessarily mean lhaL Weslem Gecn loN GC v . Westem Aeco International Ltd. ,^(2O I 4) 9 SCC 263 : l2Ol4) 5 SCC (Civ) 121 expansion has been done away with- In short, l.Uesrem Ge<n IONGC v. Westem Gect International Ltd., (2014) 9 SCC 263 : l2O14l 5 SCC^{(Civ) 121} ,^{asexplainedinparas 28 and 29of Associafe} Builders lAssociate Butldersv. DDA, l2Ol5l 3 SCC 49^: (2015) 2 SCC (Civ) 2oal , 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 concemed, as contained in Sections 18 and 34(2)(a)(it) of the 1996 Act, these continue to be grounds of challenge of an award, as is containedⁱⁿ para 30 of,4ssociate Butlders lAssoctate Builders v. DDA, (20Is) 3 SCC a9 : (2O15) 2 SCC (Civ) 2O4l .

¶215

It is important to notice that the^{groundforinterference insofar} as rt concerns "intercst of India" has since been deleted,^and thereforc, no longer obtains. Equally, the^ground for^interfcrencc on the basis that the award is in connict^{with justice} or^moralityis now to be understood as a conflict with the "most^{basic notions of} morality or^justice". This again would be in line wittt^paras 36^to 39 of Assocrate Builders lAssoctate^{Builders v. DDA,(2015) 3 SCC} 49 : (2015) 2 SCC (Civ) 2041 , as it is only such arbitral^awards that shock the conscience of t}Ie court that^{canbe setaside on} this ground.

¶216

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 mustbe} 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^{thelaw. In short, what is} not subsumed within 'the fundamental^policy of Indian^law", namely, the contravention of a statute not linked to^publicpolicy or public interest, cannot be brought in by the backdoor^when it comes to setting aside an award on the^ground of^patent illegalit/.

¶217

39.To etucidate, para 42.1 of Assooate Builders lAssociate Builders v. DDA, (2015) 3 SCC 49: (29l5l 2 SCC^(Civ) 20al , namely, a mere contravention of the substantive^taw of^{India, by} itself, is no longer a ground available to set aside an^arbitral

¶218

- award. Para 42.2 of Associate Builders lAssociate^{Builders't.DDA'} (2oI5) 3 SCC 49: (2015) 2 SCC (Civ) 2041, however, would remain, for if an arbitrator gives no reasons for an award and^contravenes

¶219

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I'NR,.J3:.]SII..J (l )\1C,. No 33 t)t 2A ).2

¶221

Scctr⁽ . :il(:)) ol thc 19(16 Acr, that !()uld ccrlirinli a r.(.Ll,tt io rl Pa^Ltn i.l g. lit-v on Ire lr. e ul Irc .,\r'.rr(,.

¶222

40.^'I hc hi nge madc in ScctioD 28(3) by the Am€ ndmen t -',ct re.rliy folLrs !rhat is statcd in paras 42.3 to 4a ir .l-sscciole Build' 1i l,4ssociate Buiklers v. DDA, l2ol5) 3 SCC 49 (20r5) 2 SCC )r) 20al , namely, thar the construction of thc .t:rms ofa conLri r: rs primarily for an arhitralor to drjcide, !r'less the arbitr tcr c)nstrues the contract in a manncr tltat n() ?ti-,mi-ldcd or rez x)natt,le pcrson s,ould; in short, Lhat the ilrbitratcr s virt\ is not c ln a possible view to Lake Also, if the rrrbiLrat:)r rtarLders oLltsi( ) thc contra(t and deals with matters nol allotte( to hir1, he cc mn Is an er.or cfjurisdiction. This ground of chall(ir [;(: wll] no(, fa ll rv hin tne new ground addccl under Section l4(:l r)

¶223

Wh. s inlportanL [o notc is that a decision rvfich is r:r1,crse, as undc' ilcod in paras 31 and 32 of Associate Brriidr:rs [A.ssrciole B:tild ..; , DDA. (2015) 3 SCC a9 : (201s) 2 SC(l (Civ) .tt,4l . .vhitc no lc g(I- l)cing .1 ground ft)r challengc unde: "publ r: poli:,r' of Irdia \ould ccrt.inlv arnount [o i] p.rtcnt ille!alil\r a )rr'-lr t:EI or-l tl-e fr ri ol Lhe :lq,zLr-d. Thus, a finding based on no evt ic rcc it all of an r,,rarrl rvhich ignorcs viral evidcnL-c in arri",inli et itr (1<.(ision rvou lt r: [)cncrsc and liablc Lo bc set aside on t]-rr l:rouild of Pilr.crl Lltcgrlity Adclilior):rlll, il hnding basecl ot. d.icllrrc.tts takcn behir I thc back oi the p.rrtics by thc arbitrator rvould i1r;o rl,ralify as a eclsi()n bascd on no evi(lcncc inasmuch :rs sucl i.:ciston is n,lt b sed cn evidcnce led bl Lhe parties, and thcrclbre !.oui( also have ) I)e charactcrised as pcrversc

¶224

)o t rutsagar lRenusagar Power Co. Ltd.v. Ge.neral lt,;. cli< Co_, 1,194 SLpp (1) SCC 6441 , this Court dealt wilh a chrll:ng( to a fc,rcil r €-\r,'€.rd under Section 7 of the Foreign Arvards ll cog itiori and I oforcement) Act, 1961 (the Foreign Awards Act). Itre Fcreign Awar s Ac has sincc bcen repealed by thc 1996 A(t. Ho,,ever, consi erinF that Section 7 of the Foreign Awards A([ ,]ontincd grour ls which weac borrowed from Article V of the Co..cnti,)n on the R cognition and Enforcement of Foreign Arbitral A.va rds, 1958 (the I eu.Yrrk Convention), which is almost in the sal.€.tenns as Sccti ns 3.1 and 48 of the 1996 Act, the said judgrner t is of great irnpo :i1r1ce in undcrstanding the parameters of juci:ial review \ her il :omes to either forcign awards or intcmational (:r, mmercial arbit' rtions being held in India, the grounds for chall rr;;e/rr:fusal ol er r.oemcnt u.dcr Sections 34 and 48, resrectivel/, beirg the sam(

¶225

:ra':--:--.#-rtEF !f rtF -1itll^j.ji.; -jri .-sgp --ff -" I

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-*-ffi.l=-.w'' :.k---;Y.-4.

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II I i

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PNR,J& JSR,J COMCA.No.35^Ol'2022

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17 .4 ft't^{Associate Builders(supra)it is observed as under:}

¶231

'27.^{Comingto each of the headscontaincd inf:wPipes[(2003)' 5} SCC 7o5 : mn^{zoos SCzLzel} it]ag*"nt'^{wewillfirst deal rvith the} head "fundamcntat^{policyof l'ndianlaw' lt has already beenseen} from Renusagar tprlii:,"g"'^{Power Co Ltd v} -General^{Electric Co '} 1994 Supp ttl^{sccZ+iiluagmentthat violationof the Foreign} -aisregaidin"g orders of.superior courts in India Exchange^{ect ana} wouldberegardedt"it--g"i'""t'l'totheiundamentalpolicyof Indian law.^{ro tnis iitouia"ueaddeithat the binding effect of the} 'Jor?iiu. iudernent or oi tn" " fundamental "tlpoi"t "L"rt policy of^{being lndian disregarded lau/''wouldbe equally}

¶232

17.5. The^{Hon'lcle SupremeCourt in the caseof MMTC Ltd' v'} Vedanta Ltd-,s^{discussed the scope of interference of the Courts} under^{Section37 of Arbitrationand Conciliation Act' 1996'Wherein} the Hon'ble^{Apex Court held that Courtunder Section 37 cannot} travel beyond^{the restrictions laid downby the Section 34' That the} jurisdiction of the^{Section37 Court is only limited to determining the} legality^{of the order passed under Section 34 of the Act' The relevant}

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portions of^{the judgmentare extracted as under:}

¶234

13' tt is relevant^{to note that after the2015 amendments to Section 34' the} modihed^{Pursuantto the insertionof} above Exolanation position I to "t"a"'"Jett^i^{Sectlon 34(2)'the scopeof contravenlionof tndian public} il,ffi'^{;i'J.:J;;ir*;'t;iiri'extent that it.no*-mean'rraudor comrption} in the makins^{or tnt} "J-i'^{tioi"iioi of section 75 or section81 of the Act'} contravention "r^{tn" r'ltJt""1J'ptii"vtr llgli" liy' andconflict with the} most basic^{,rotio.," or jrlii.J;;"I;iiy.} Additionally,^{sub-section(2A)has} been inserted^irl ="<:iil"'"io]-^{*ii"tt!""tiat"thai in case of domestic} arbitrations,^{l,iot^tiorr oi'inii^t' p"url" i'arcyalso includespatent illegality} appearing^{on the face ti i'i"'"*JJ ittiprwisoto the same statesthat an} awardshall.,otuesetasidemerelyon'the.groundofanerroneous ,ppfi""tit.^{of the lawor by re-aPpreciationof evidence'}

s (2o19) 4 scc 163

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PNii,lllr,lSR,J ,1. ))l(l , lio .li^{L)l lOz'l}

¶242

Scction Section 14. As^{37, 37 farr.rscanrrs c} ,,',."",i :: ,111f11,1,r'^l:; ,i.,, i".1^{c.rnnut 'llh 'rll ,"J} 'n'^{bc r'srrtr ur'lr'l'} 'litPure'l^{rions m:rde rlrtr'su' laid undrr: et' t '] dorrr unJ''r h 'n"rl(rI lr t r' rr'} "^'r rrd'rnr'r^3a ' In other^words 1.,'i:;,.,;'i.;;;",^{Lrnrt,rr;ke rn indcpen, ^nr 'rsr''-Tl} ]1.:: the merits^{('f tl} ' ,,-"r,i. ""a must^{onl\asccrlaitrIlrJl tl) '>cl',: ( il :ir'\lr'l'} bv thc T"hus, it^{CouI is t:ridt u} :i',i^ii;:,;" al."i"iir".i* an^n.; arbitrl^{noicxcecded a}'ardl.ras Lhc sco )c bec. cr)nll cf tL '1^{tpr.'rsrorr'cd l)! thc} Court Cour t^{undc. musL Stb'} lr(,n 'l'.1'.,,. 14 and lt''.rr,i.u" b<sup>lh( Courl ar'd^rn tlotu^{nn appcal un to distttr lcr} '^{sd(f S((''n t'onr' t rrrelll} -lh.l: findings.

¶243

From^{the ple(redentdecisionsitemergcs th:'t tLLe scope of} application^{undr r Section 37 of the Act is very limiteclan(1 this Court} cannot^{re-exilmrlo ()r re assess the evidenceAs 1l'r th: provlsions} of Sec.37^{of thr Ac;, this Court has to examit.reu'.lt thr:r the Court} below^{u,hile ex( llisingthe powers conferred u.der :;:)ction 34 of the} Act, rightly^{co Isidered the grounds raisedby tL r: pe titioner and} A]1Y ilb1;rr^{litY, irregularitY} whether^{the A bitra'lTribunalcommitted} while^{passing t -re arbitral award'}

¶244

In the^{-rstant case' the learned Arbitrti'Tl ibunala-fter} considering^{tl e contentions of the parties' aft:r' e;<aminingthe} evidence^{on r€ )ord and also after hearing both the 1l;erties passed the} Award^{dated 2i,'lO'2O21in AA No'4O of 2O2O by givingcogent} reasons^{holdi Lg that as per Ex C5 DAGPAczrnnot be proceeded with} unless^{(30 m, tef u4ide proposedMaster Plan roac' 's realigned' The}

¶245

;r+:i&tde

¶246

PNR,J& JSR,J COMCA.No.35 OF 2022

¶247

parties to the Ex.CS DAGPA are not in a position to get^.30 rneter wide proposed Master PIan road' realigned and in view of the same, the Ex.CS DAGPA has become frustrated because the 3O-meter wide proposed Master Plal road is passing through the subject property and hence the Ex.CS DAGPA becomes void. The Arbitral Tribunal further held that the petitioner has to execute the deed of carcellation of the same and deliver the possession of property to the respondents/claimants and that since the petitioner has invested amounts for various works, the respondents/claimants have to pay an amount of Rs.2,39,73 ,579 l-.

¶248

On due consideration of all aspects the Commercial Court rightly conhrmed the award of the learned Arbitral Tribunal.

¶249

2I. We see no illegality, irregularity, jurisdictional error in the impugned - order passed by the Commercial Court upholding the Award passed by the Arbitral Tribunal and this Court finds no merit in the appeal filed by the petitioner and the same is liable to be dismissed. Both Point Nos.1 & 2 are answered against the petitioner and in favour of the respondents.

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PNtI,J& JSR,J l( )MC,.No 35 OIr 2022

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POINT NO.3

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