In this article, we are highlighting some of the recent pronouncements of the Supreme Court of India in the area of arbitration.
1. Mankastu Impex Private Limited v. Airvisual Limited, Arbitration Petition No. 32 of 2018, Judgment dated March 5, 2020
Issue: Whether on facts, the parties had agreed that the seat of arbitration is at Hong Kong? If yes, whether the application filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act') is maintainable to a foreign seated arbitration?
Relevant facts are that Clause 17 of the agreement relating to dispute resolution provided as under:
"17. Governing Law and Dispute Resolution
17.1 This MoU is governed by the laws of India, without regard to its conflicts of laws provisions and courts at New Delhi shall have the jurisdiction.
17.2 Any dispute, controversy, difference or claim arising out of or relating to this MoU, including the existence, validity, interpretation, performance, breach or termination thereof or any dispute regarding non-contractual obligations arising out of or relating to it shall be referred to and finally resolved by arbitration administered in Hong Kong. The place of arbitration shall be Hong Kong. The number of arbitrators shall be one. The arbitration proceedings shall be conducted in English language.
17.3 It is agreed that a party may seek provisional, injunctive, or equitable remedies, including but not limited to preliminary injunctive relief, from a court having jurisdiction, before, during or after the pendency of any arbitration proceeding."
Petitioner had contended that in view of Clause 17.1, the parties had agreed that the proper law of the contract is the laws of India and the same would also govern the curial law as the MoU was silent on that aspect. The Respondent submitted that Clause 17.2 of MoU provides that "all disputes arising out of MoU shall be referred to and finally resolved and administered in Hong Kong. Therefore, the arbitration would be seated at Hong Kong.
Referring to its earlier decision in Enercon (India) Limited v. Enercon GMBH (2014) 5 SCC 1, the Supreme Court observed that the location of the Seat will determine the courts that will have exclusive jurisdiction to oversee the arbitration proceedings and the Seat normally carries with it the choice of that country's arbitration/curial law.
It further held that that mere expression "place of arbitration" cannot be the basis to determine the intention of the parties that they have intended that place as the "seat" of arbitration. The intention of the parties as to the "seat" should be determined from other clauses in the agreement and the conduct of the parties. On facts, the Supreme Court pointed out that the agreement between the parties choosing Hong Kong as the place of arbitration by itself will not lead to the conclusion that parties have chosen Hong Kong as the seat of arbitration. The words, "the place of arbitration" shall be "Hong Kong", have to be read along with Clause 17.2. The Court noted that Clause 17.2 provides that "....any dispute, controversy, difference arising out of or relating to the MoU "shall be referred to and finally resolved by arbitration administered in Hong Kong.....". The Court opined that the reference to Hong Kong as "place of arbitration" is not a simple reference as the "venue" for the arbitral proceedings; but a reference to Hong Kong is for final resolution by arbitration administered in Hong Kong. The agreement between the parties that the dispute "shall be referred to and finally resolved by arbitration administered in Hong Kong" clearly suggests that the parties have agreed that the arbitration be seated at Hong Kong and that laws of Hong Kong shall govern the arbitration proceedings as well as have power of judicial review over the arbitral award. The Court, therefore, held:
"22.... The words in Clause 17.2 that "arbitration administered in Hong Kong" is an indicia that the seat of arbitration is at Hong Kong. Once the parties have chosen "Hong Kong" as the place of arbitration to be administered in Hong Kong, laws of Hong Kong would govern the arbitration. The Indian courts have no jurisdiction for appointment of the arbitrator."
It further held that the words in Clause 17.1 do not suggest that the seat of arbitration is in New Delhi. The Court further referred to its earlier decision in Eitzen Bulk A/S v. Ashapura Minechem Ltd. and another (2016) 11 SCC 508 to iterate that when the parties have chosen a place of arbitration in a particular country, that choice brings with it submission to the laws of that country. It referred to Section 2(2) of the Act and observed that since "Part-I is not applicable to International Commercial Arbitrations, in order to enable the parties to avail the interim relief, Clause 17.3 appears to have been added."
Since the arbitration was held to be seated at Hong Kong, the petition filed by the Petitioner under Section 11(6) of the Act was found not maintainable.
2. Vijay Karia and Others v. Prysmian Cavi E Sistemi SRL and others, Civil Appeal Nos. 1544-45 OF 2020, Judgment dated February 13, 2020
Issue: Scope of challenge to the enforcement of foreign arbitral award under Section 48 of the Arbitration and Conciliation Act, 1996?
Brief facts are that the Joint Venture Agreement (JVA) was entered between Ravin Cables Limited (Ravin), Mr. Vijay Karia and other non-corporate shareholders of Ravin and Prysmian Cavi E Systemi SRL, an Italian based company. Disputes arose and the same were referred to London seated arbitral tribunal governed by English law. The sole arbitrator appointed under the London Court of International Arbitration Rules, 2014, passed an award in favor of Prysmian. Appellants who are shareholders of Ravin represented by Mr. Vijay Karia did not assail the award before the English Courts but approached the Indian courts with objections to the said award made under Section 48 of the Arbitration and Conciliation Act, 1996 when it was brought to India for recognition and enforcement. The High Court found that the award must be recognized and enforced as the objections did not fall under Section 48 of the Act. The Appellants filed Special Leave Petitions against the High Court's order of recognition and enforcement of the foreign award.
The Appellants had challenged the foreign award on the grounds that they were unable to present their case before the arbitral tribunal,1 the tribunal failed to deal with the contentions raised by the Appellants, and the enforcement is against the public policy of India2 as it is in contravention with fundamental policy of Indian law3 and in conflict with basic notions of justice.4
The Supreme Court extensively dealt with the law on Enforcement of Foreign Awards and its development in India and general approach in other jurisdictions. It observed that enforcement of a foreign award may under Section 48 of the Act be refused only if the party resisting enforcement furnishes to the Court proof that any of the stated grounds has been made out to resist enforcement. The said grounds are watertight - no ground outside Section 48 can be looked at. Also, the expression used in Section 48 is "may".
It further held that the grounds for resisting enforcement of a foreign award under Section 48 may be classified into three groups - grounds which affect the jurisdiction of the arbitration proceedings; grounds which affect party interest alone; and grounds which go to the public policy of India, as explained by Explanation 1 to Section 48(2).
Where a ground to resist enforcement is made out, by which the very jurisdiction of the tribunal is questioned - such as the arbitration agreement itself not being valid under the law to which the parties have subjected it, or where the subject matter of difference is not capable of settlement by arbitration under the law of India, there can be no discretion in these matters. Enforcement of a foreign award made without jurisdiction cannot possibly be weighed in the scales for a discretion to be exercised to enforce such award if the scales are tilted in its favour. On the other hand, where the grounds taken to resist enforcement can be said to be linked to party interest alone, for example, that a party has been unable to present its case before the arbitrator, and which ground is capable of waiver or abandonment, or, the ground being made out, no prejudice has been caused to the party on such ground being made out, a Court may well enforce a foreign award, even if such ground is made out. When it comes to the "public policy of India" ground, again, there would be no discretion in enforcing an award which is induced by fraud or corruption, or which violates the fundamental policy of Indian law, or is in conflict with the most basic notions of morality or justice. It can thus be seen that the expression "may" in Section 48 can, depending upon the context, mean "shall" or as connoting that a residual discretion remains in the Court to enforce a foreign award, despite grounds for its resistance having been made out. What is clear is that the width of this discretion is limited to the circumstances pointed out hereinabove, in which case a balancing act may be performed by the Court enforcing a foreign award.
The Court further held that given the fact that the object of Section 48 is to enforce foreign awards subject to certain well-defined narrow exceptions, the expression "was otherwise unable to present his case" occurring in Section 48(1)(b) cannot be given an expansive meaning and would have to be read in the context and colour of the words preceding the said phrase. In short, this expression would be a facet of natural justice, which would be breached only if a fair hearing was not given by the arbitrator to the parties. Read along with the first part of Section 48(1)(b), it is clear that this expression would apply at the hearing stage and not after the award has been delivered, as has been held in Ssangyong.5 A good working test for determining whether a party has been unable to present his case is to see whether factors outside the party's control have combined to deny the party a fair hearing. Thus, where no opportunity was given to deal with an argument which goes to the root of the case or findings based on evidence which go behind the back of the party and which results in a denial of justice to the prejudice of the party; or additional or new evidence is taken which forms the basis of the award on which a party has been given no opportunity of rebuttal, would, on the facts of a given case, render a foreign award liable to be set aside on the ground that a party has been unable to present his case. This must, of course, be with the caveat that such breach be clearly made out on the facts of a given case, and that awards must always be read supportively with an inclination to uphold rather than destroy, given the minimal interference possible with foreign awards under Section 48.
However, if a foreign award fails to determine a material issue which goes to the root of the matter or fails to decide a claim or counter-claim in its entirety, the award may shock the conscience of the Court and may be set aside on the ground of violation of the public policy of India, in that it would then offend a most basic notion of justice in this country. It must always be remembered that poor reasoning, by which a material issue or claim is rejected, can never fall in this class of cases. Also, issues that the tribunal considered essential and has addressed must be given their due weight - it often happens that the tribunal considers a particular issue as essential and answers it, which by implication would mean that the other issue or issues raised have been implicitly rejected. For example, two parties may both allege that the other is in breach. A finding that one party is in breach, without expressly stating that the other party is not in breach, would amount to a decision on both a claim and a counter-claim, as to which party is in breach. Similarly, after hearing the parties, a certain sum may be awarded as damages and an issue as to interest may not be answered at all. This again may, on the facts of a given case, amount to an implied rejection of the claim for interest. The important point to be considered is that the foreign award must be read as a whole, fairly, and without nit-picking. If read as a whole, the said award has addressed the basic issues raised by the parties and has, in substance, decided the claims and counter-claims of the parties, enforcement must follow.
The Court further held that a rectifiable breach under FEMA can never be held to be a violation of the fundamental policy of Indian law. The Court rejected all the grounds of challenge made against the foreign award and dismissed the appeals.
3. Dyna Technologies Pvt. Ltd v. Crompton Greaves Ltd, Civil Appeal No. 2153 of 2010, Judgment dated December 18, 2019
Issue: Whether the Arbitral Award is required to state the reasons on which it is based in view of Section 31(3) of the Arbitration and Conciliation Act, 1996?
The brief facts of the case are that there was a contract between the Principal i.e. DCM Shriram Aqua Foods Limited and Crompton Greaves Limited for an aquaculture unit to be set up by the former. Crompton Greaves Limited issued a work order to the Appellant Dyna Technologies Pvt Ltd. regarding construction of ponds, channels, drains and associated works. After the commencement of work, Crompton Greaves terminated the contract. Dyna Technologies claimed compensation for such premature termination of contract and ultimately the dispute was referred to Arbitral Tribunal. The controversy revolved around the Claim No.2 related to losses due to unproductive use of machineries which was accepted by the Arbitral Tribunal in its award.
The said award was challenged under Section 34 of the Act by Crompton Greaves Ltd before the Single Judge of Madras High Court who had upheld the award. In appeal before the Division Bench, the award was set aside as the same was found deficient due to lack of reasoning. The option of Section 34(4) of the Act was found not necessary as the compensation could not be claimed in terms of the provisions of the work order. Being aggrieved, Dyna Technologies approached the Supreme Court.
The Supreme Court noted that India adopts a default rule to provide for reasons unless the parties agree otherwise. It observed that the mandate under Section 31(3) of the Act is to have reasoning which is intelligible and adequate and, which can in appropriate cases be even implied by the Courts from a fair reading of the award and documents referred to thereunder, if the need be. The aforesaid provision does not require an elaborate judgment to be passed by the arbitrators having regard to the speedy resolution of dispute. It further observed:
"37. When we consider the requirement of a reasoned order three characteristics of a reasoned order can be fathomed. They are: proper, intelligible and adequate. If the reasoning in the order are improper, they reveal a flaw in the decision-making process. If the challenge to an award is based on impropriety or perversity in the reasoning, then it can be challenged strictly on the grounds provided under Section 34 of the Arbitration Act. If the challenge to an award is based on the ground that the same is unintelligible, the same would be equivalent of providing no reasons at all. Coming to the last aspect concerning the challenge on adequacy of reasons, the Court while exercising jurisdiction under Section 34 has to adjudicate the validity of such an award based on the degree of particularity of reasoning required having regard to the nature of issues falling for consideration. The degree of particularity cannot be stated in a precise manner as the same would depend on the complexity of the issue. Even if the Court comes to a conclusion that there were gaps in the reasoning for the conclusions reached by the Tribunal, the Court needs to have regard to the documents submitted by the parties and the contentions raised before the Tribunal so that awards with inadequate reasons are not set aside in casual and cavalier manner. On the other hand, ordinarily unintelligible awards are to be set aside, subject to party autonomy to do away with the reasoned award. Therefore, the courts are required to be careful while distinguishing between inadequacy of reasons in an award and unintelligible awards.
38. At this juncture it must be noted that the legislative intention of providing Section 34(4) in the Arbitration Act was to make the award enforceable, after giving an opportunity to the Tribunal to undo the curable defects. This provision cannot be brushed aside and the High Court could not have proceeded further to determine the issue on merits.
39. In case of absence of reasoning the utility has been provided under Section 34(4) of the Arbitration Act to cure such defects. When there is complete perversity in the reasoning then only it can be challenged under the provisions of Section 34 of the Arbitration Act. The power vested under Section 34(4) of the Arbitration Act to cure defects can be utilized in cases where the arbitral award does not provide any reasoning or if the award has some gap in the reasoning or otherwise and that can be cured so as to avoid a challenge based on the aforesaid curable defects under Section 34 of the Arbitration Act. ....."
The Court observed that the award is confusing and has jumbled the contentions, facts and reasoning, without appropriate distinction. It observed that the Arbitral Tribunal abruptly concluded at the end of the factual narration, without providing any reasons and given the complexity of the subject matter, the award was found unintelligible and could not be sustained.
4. BGS SGS SOMA JV (Joint Venture) V. NHPC Limited Civil Appeal Nos. 9307-09 of 2019, Judgment dated December 10, 2019
- Whether appeal is maintainable under Section 37 of the Arbitration and Conciliation Act, 1996 against the order of return of the petition filed under Section 34 of the Act directing such petition to be presented before the court having jurisdiction to entertain the same?
- Whether the venue of arbitration proceedings, as agreed by the parties in an agreement, can be considered as the 'seat' of arbitral proceedings?
The brief facts are that a construction contract was issued by the Respondent National Hydroelectric Power Corporation Limited (NHPC) to the Petitioner BGS SGS SOMA JV for the hydroelectric power plant on the Subansri River in Assam. The contract contained an Arbitration clause which stated that "Arbitration proceedings shall be held at New Delhi/Faridabad". Disputes arose and arbitration clause was invoked accordingly. The Arbitral Tribunal held at New Delhi passed an award in favor of the Petitioner. Aggrieved by the award, Respondent filed an application under Section 34 of the Act before the District Courts at Faridabad (which was later transferred to the Commercial Court at Gurugram). The Petitioner filed an application under Section 151 read with Order VII Rule 10 of the CPC and Section 2(1)(e)(i) of the Arbitration Act, 1996, seeking a return of the petition filed under Section 34 for presentation before the appropriate Court at New Delhi and/or the District Judge at Dhemaji, Assam.
The Commercial Court, Gurugram allowed the application and returned the Section 34 petition to NHPC, to be filed before the proper court in New Delhi. NHPC filed an appeal under Section 37 of the Act before the Punjab and Haryana High Court. Allowing the appeal, the High Court held that the appeal filed under Section 37 of the Act was maintainable and that Delhi being only a convenient venue where arbitral proceedings were held and not the seat of the arbitration proceedings, Faridabad would have jurisdiction on the basis of the cause of action having arisen in part in Faridabad. It set aside the District Judge's order of return of the Section 34 Petition. The Petitioner moved before the Supreme Court against the High Court's judgment.
The Supreme Court formulated the following issues for its consideration:
- Whether the appeal against the order of return of the petition filed under Section 34 is maintainable under Section 37 of the Act?
- Given the arbitration clause in these proceedings, whether the "seat" of the arbitration proceedings is New Delhi or Faridabad, consequent upon which a petition under Section 34 of the Act may be filed dependent on where the seat of arbitration is located?
After referring to the interplay between Section 37 of the Arbitration Act, 1996 and Section 13 of the Commercial Courts Act, 2015, as laid down in its earlier judgment in Kandla Export Corporationv.OCI Corporation,(2018) 14 SCC 715, the Supreme Court observed that there is no independent right of appeal under Section 13(1) of the Commercial Courts Act, 2015, which merely provides the forum of filing appeals. The parameters of Section 37 of the Arbitration Act, 1996 alone would have to be looked at in order to determine whether the appeals were maintainable. It further held that the refusal to set aside an arbitral award must be under Section 34, i.e., after the grounds set out in Section 34 have been applied to the arbitral award in question, and after the Court has turned down such grounds. In the present case, there was no adjudication under Section 34 of the Arbitration Act, 1996. The Court also agreed with the reasoning given in the Delhi High Court's decision in Hamanprit Singh Sidhuv.Arcadia Shares & Stock Brokers Pvt. Ltd., (2016) 234 DLT 30 (DB) in this regard. It further went on to observe the settled law that the right to appeal is not an inherent right but a creature of statute i.e. an appeal can be preferred only where expressly permitted by law. Hence, it was concluded that the appeals were not maintainable under Section 37 of the Act.
On the second issue, the Supreme Court scrutinized the paragraph 96 of BALCO case6 and observed that merely relying on paragraph 96 would not be enough as it is not in accordance with the rest of the judgment. It further referred to its earlier decisions in Enercon (India) Ltd. v. Enercon GmbH, (2014) 5 SCC 1 and Reliance Industries Ltd. v. Union of India, (2014) 7 SCC 603 and observed that once the seat of arbitration is chosen, it amounts to an exclusive jurisdiction clause for courts at that seat. It further observed that BALCO had placed reliance upon the English judgment of Roger Shashoua & others v. Mukesh Sharma  EWHC 957 (Comm) and the principle laid down by the said judgment that wherever there is an express designation of a "venue," and no designation of any alternative place as the "seat," combined with a supranational body of rules governing the arbitration, and no other significant contrary indicia, the inexorable conclusion is that the stated venue is actually the juridical seat of the arbitral proceeding.
It further held that the 3-judge bench decision in Union of India v Hardy Exploration (2019) 13 SCC 472 was contrary to the 5-judge BALCO as it did not apply the English principle laid down in Roger Shashoua (which was approved in BALCO).
The Supreme Court finally held that the parties had agreed the arbitration proceedings to be held at New Delhi and, therefore, New Delhi would be the seat of arbitration and it would have exclusive jurisdiction to hear the application filed under Section 34 of the Act.
5. Perkins Eastman Architects Dpc & Another v. HSCC (India) Limited, Arbitration Application No. 32 of 2019, Judgment dated November 26, 2019
Issue: Whether a party having an interest in the outcome or decision of a dispute can appoint a Sole Arbitrator for the adjudication of the dispute?
The brief facts are that the Applicants were appointed as Design Consultants for comprehensive planning and designing by the Respondent and the contract was entered into between the parties. Respondent issued termination notice to Applicants alleging non-compliance of contractual obligations on the part of Applicants, which assertions were denied. Clause 24 of the agreement with respect to the arbitration was invoked relevant part of which stated that disputes or difference shall be referred for adjudication through arbitration by a sole arbitrator appointed by the Chairman and Managing Director, HSCC within 30 days from the receipt of request from the designing consultant. It further stated that no other person other than a person appointed by such CMD as aforesaid should act as arbitrator. The Chairman and Managing Director of the Respondent appointed a sole arbitrator, after 30 days of receipt of request.
After deciding on facts that the application filed under Section 11(6) of the Act is maintainable before it, the Supreme Court observed that as per Clause 24 of the agreement, only the Chairman and Managing Director (CMD) of HSCC has an authority to appoint a sole arbitrator. It referred to its earlier decisions in TRF Limited v Energo Engineering Projects Limited (2017) 8 SCC 377 wherein it was held that the Managing Director of a party himself was disqualified to act as an arbitrator by operation of law under Section 12(5) of the Act.
The Supreme Court further observed:
"20. We thus have two categories of cases. The first, similar to the one dealt with in TRF Limited where the Managing Director himself is named as an arbitrator with an additional power to appoint any other person as an arbitrator. In the second category, the Managing Director is not to act as an arbitrator himself but is empowered or authorised to appoint any other person of his choice or discretion as an arbitrator. If, in the first category of cases, the Managing Director was found incompetent, it was because of the interest that he would be said to be having in the outcome or result of the dispute. The element of invalidity would thus be directly relatable to and arise from the interest that he would be having in such outcome or decision. If that be the test, similar invalidity would always arise and spring even in the second category of cases. If the interest that he has in the outcome of the dispute, is taken to be the basis for the possibility of bias, it will always be present irrespective of whether the matter stands under the first or second category of cases. We are conscious that if such deduction is drawn from the decision of this Court in TRF Limited, all cases having clauses similar to that with which we are presently concerned, a party to the agreement would be disentitled to make any appointment of an Arbitrator on its own and it would always be available to argue that a party or an official or an authority having interest in the dispute would be disentitled to make appointment of an Arbitrator.
21. But, in our view that has to be the logical deduction from TRF Limited. Paragraph 50 of the decision shows that this Court was concerned with the issue, "whether the Managing Director, after becoming ineligible by operation of law, is he still eligible to nominate an Arbitrator" The ineligibility referred to therein, was as a result of operation of law, in that a person having an interest in the dispute or in the outcome or decision thereof, must not only be ineligible to act as an arbitrator but must also not be eligible to appoint anyone else as an arbitrator and that such person cannot and should not have any role in charting out any course to the dispute resolution by having the power to appoint an arbitrator. The next sentences in the paragraph, further show that cases where both the parties could nominate respective arbitrators of their choice were found to be completely a different situation. The reason is clear that whatever advantage a party may derive by nominating an arbitrator of its choice would get counter balanced by equal power with the other party. But, in a case where only one party has a right to appoint a sole arbitrator, its choice will always have an element of exclusivity in determining or charting the course for dispute resolution. Naturally, the person who has an interest in the outcome or decision of the dispute must not have the power to appoint a sole arbitrator. That has to be taken as the essence of the amendments brought in by the Arbitration and Conciliation (Amendment) Act, 2015 and recognised by the decision of this Court in TRF Limited."
The Supreme Court also made reference to sub-para (vii) of paragraph 48 of its earlier decision in Indian Oil Corporation Ltd. v. Raja Transport (P) Ltd (2009) 8 SCC 520 laying down that if there are justifiable doubts as to the independence and impartiality of the person nominated, and if other circumstances warrant appointment of an independent arbitrator by ignoring the procedure prescribed, such appointment can be made by the Court.
The Apex Court further referred to Voestapline Schienen Gmbhv.Delhi Metro Rail Corpn. Ltd. (2017) 4 SCC 665 and the 246th Report of the Law Commission of India and allowed the application filed under Section 11(6) of the Act by appointing a Sole Arbitrator to decide the disputes between the parties arising out of the agreement.
6. M/s Canara Nidhi Limited v. M Shashikala And Others, Civil Appeal Nos. 7544-45 of 2019, Judgment dated September 23, 2019
Issue: Whether the parties can adduce evidence to prove the specified grounds under Section 34(2) in an application filed under Section 34 of the Arbitration and Conciliation Act, 1996?
Brief facts are that the Appellant Financial Institution advanced a loan to the Respondent No.1 and the other respondents stood as guarantors. Dispute arose as the Respondent failed to repay the loan and it was referred to arbitration as per the arbitration clause in the agreement. The Arbitrator, after the submission of oral and documentary evidence, passed an award and directed the Respondents to pay the principal amount along with the interest. Assailing the award, Respondents filed an application under Section 34 of the Act before the District Judge. Respondents also filed an Application under Section 151 of CPC to permit the Respondents to adduce fresh evidence. The said application was was dismissed by the court stating that there is no necessity of adducing fresh evidence. Aggrieved by the dismissal of the application, Respondent No.1 moved to the High Court and filed a writ petition. The High Court, after referring to the judgment in Fiza Developers and Inter Trade Private Limited v AMCI (India) Private Limited and Another (2009) 17 SCC 796, directed the District Judge to "recast the issues" and allowed the Respondents to file affidavits of their witnesses with corresponding opportunity to the Appellant. Aggrieved by the High Court decision, Appellant moved to the Supreme Court and filed an appeal under the same.
The Supreme Court observed that in Fiza Developers, the question which arose for consideration by the Court was whether issues as contemplated under Order XIV Rule 1 of the CPC should be framed in the application under Section 34 of the Act and the Court had answered the same in the negative. The Supreme Court further observed legislative changes after the decision in Fiza Developers and noted that Section 34 of the Act was amended with insertion of sub-section (5) and (6) w.e.f. 23.10.2015. It further referred to the Report of Justice B.N Srikrishna Committee and the amendment made to Section 34 by the Amendment Act of 2019 which had substituted the words 'furnishes proof that' with the words 'establishes on the basis of Arbitral Tribunal's record that' in Section 34(2)(a) of the Act. The Court further referred to its earlier decision in Emkay Global Financial Services Ltd v. Girdhar Sondhi (2018) 9 SCC 49 which had held that the decision in Fiza Developers must be read in the light of the amendment made in Section 34(5) and 34(6).
The Supreme Court clarified the legal position that the application filed under Section 34 will not ordinarily require anything beyond the record that was before the arbitrator and the cross-examination of persons swearing into the affidavits should not be allowed unless absolutely necessary. Applying the above principles, the Supreme Court found no exceptional circumstance to grant opportunity to the Respondents to file affidavits and to cross examine the witnesses and allowed the appeal.
1. Section 48(1)(b)
2. Section 48(2)(b) of the Arbitration and Conciliation Act, 1996.
3. Explanation 1(ii) to Section 48(2) of the Arbitration and Conciliation Act, 1996.
4. Explanation 1(iii) to Section 48(2) of the Arbitration and Conciliation Act, 1996.
5. Ssangyong Engineering & Construction Co. Ltd. v. National Highways Authority of India (NHAI) Civil Appeal No. 4779 of 2019
6. Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552.
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