India: Dispute Resolution & Arbitration Monthly Update | June 2023

Department of Transport, GNCTD v. Star Bus Services Pvt Ltd

Delhi High Court | 2023 SCC OnLine Del 2890

Background facts

• Star Bus Services Pvt Ltd (Respondent) invited bids for the provision of bus services via Request for Qualification (RFQ) for private stage carriage buses through corporate entities. After due evaluation of proposals, GNCTD (Petitioner) accepted the proposal of the Respondent and in furtherance of the same, issued a Letter of Acceptance (LoA).
• Thereafter, a Concession Agreement (CA) was entered into between the Petitioner and the Respondent, whereby the Respondent was to induct low-floor CNG buses for a period of 10 yea. As per the terms set out therein, the Respondent was required to provide a consolidated Depot at Gadaipur, Delhi, with certain civil infrastructure facilities stipulated therein. However, during the subsistence of the contract, issues arose between the parties due to the termination of the said contract by the Respondent.
• The lis regarding the provision of buses in the CA underwent a series of litigations. The Delhi High Court (HC) with the consent of the parties, terminated the mandate of the Sole Arbitrator and appointed Justice R.C. Lahoti (Retd.), as the Sole Arbitrator to adjudicate the disputes.
• The Arbitral Tribunal reserved the Award on September 8, 2018 and finally, the Award was rendered on June 9, 2020. The Award was passed in favor of the Respondent Awarding it an amount of INR 57,04,47,373 with interest at 9% per annum from June 5, 2016 till the date of payment (Impugned Award).

Issues at hand?

• Whether the Impugned Award is vitiated by fraud, patently illegal, and in conflict with the public policy of India?
• Whether the delay in the pronouncement of the Impugned Award after final arguments have concluded has vitiated the Award?

Decision of the Court

• At the outset, the High Court (HC) noted that the main issue before the Arbitral Tribunal was whether the Petitioner committed a fundamental breach of the contract by failing to provide the contractually stipulated depot to the Respondent. In this regard, HC observed that Arbitrator had considered the contentions of the Petitioner and the responses of the Respondent and had given detailed reasons in support of his finding as to fundamental breach by the Petitioner, which left the Respondent with no option except, or at least entitled it, to terminate the contract.
• Concerning the Petitioner's allegation that the Respondent committed fraud by diverting INR 26,73,29,885 to Argentum Auto Pvt Ltd for the purchase of 100 buses, the HC noted that the Respondent had voluntarily disclosed the transaction in question, and the Petitioner was aware of the same much before that. Thus, HC opined that on perusal of the records and the submissions made by the parties, it is established that the Arbitral Tribunal had given a reasoned Award. Further, HC noted that the Petitioner was not able to establish a ground for setting aside the Award on merits so far. Therefore, HC did not find any merit in the Petitioner's contentions that the Impugned Award is unintelligible and contrary to the public policy of India.
• HC relied on its judgment in the case of Harji Engg Work Pvt Ltd v. Bharat Heavy Electricals Ltd¹ and noted that since the Arbitration Act provided only for limited grounds on which an Award can be set aside, the Arbitrator is additionally responsible for rendering a prompt Award. Abnormal delays without any explanation from the Arbitrator, as was the scenario in the present case, would cause prejudice and such an Award would be unjust.
• HC carefully perused the provision on setting aside the Award and noted that the scope of interference under Section 34 of the Arbitration Act is limited. The HC placed reliance on its judgment in the case of Director General, Central Reserve Police Force v. Fibroplast Marine Pvt Ltd² and observed that the inordinate and unexplained delay in rendering the Award makes it amenable to challenge under Section 34(2)(b)(ii) of the Arbitration Act, that is, conflicting with the public policy of India.
• Thereafter, HC observed that while jurisdictions like Turkey, Taiwan, Egypt, Syria, Sudan, and even India have incorporated time limits into their national laws within which an Award must be rendered, jurisdictions like Italy and Belgium have provisions granting parties the autonomy to decide the time limit within which Arbitral Tribunals must make an Award. HC perused Section 29A (1) and noted that the Arbitral Tribunal must render an Award within 12 months from the date on which the Tribunal entered a reference. Thus, HC concluded that by applying the aforementioned position of law to the facts and circumstances of the case, it is clear that there is a substantial gap of 1.5 years between the date of reserving the Award and the date of the Award.
• Therefore, HC held that the Impugned Award stands vitiated on two terms, firstly for an inordinate, unexplained, and substantial delay of more than 1.5 years from the date on which the Award was reserved, thus being in contravention of the public policy of India; and secondly, under the provision of Section 29A(1) r/w Section 29A(4) of the Act, the Impugned Award is in the teeth of law due to the lack of jurisdiction of the Arbitrator which stood terminated per the said provisions. Accordingly, the HC set aside the Impugned Award.

Captain Manjit Singh Virdi (Retd) v. Hussain Mohammed Shattaf & Ors

Supreme Court of India | Criminal Appeal No. 1399 of 2023 and 2023 SCC OnLine SC 653)

Background facts

• An FIR dated May 14, 2006 was lodged at Lonawala City Police Station for the murder of Manmohan Singh Sukhdev Singh Virdi, whose body was found lying in a pool of blood in his bedroom.
• After the FIR was registered, investigation was conducted and statements of a number of persons were recorded under Sections 161 and 164 of the Criminal Procedure Code (CrPC). Even a psychological evaluation including Psychological Profiling, Polygraph Testing and Brain Electrical Oscillations Signature Profiling (BEOS) of Hussain Mohammed Shattaf i.e. (Respondent No. 1) was conducted on May 31, 2007 and similar tests were conducted on the other four persons who were close aides of Respondent No. 1.
• After the completion of investigation, a charge-sheet dated December 9, 2009 was filed against the Respondent No. 1 and Waheeda Hussain Shattaf i.e. (Respondent No. 2) stating while Respondent No. 1 was staying in Dubai for the purpose of his business, his wife Respondent No. 2 came in contact with the deceased and developed friendship.
• It was further stated in the charge-sheet that the said friendship turned into physical relationship and when Respondent No. 1 returned from Dubai, he came to know about the same. It was stated that to take revenge, Respondent No. 1 in connivance with Respondent No. 2 and another person conspired to kill the deceased through his assailants.
• The case was executed by the Magistrate to the Sessions Court. The accused persons (Respondent No. 1 and 2) filed Revision Application for discharge before the Sessions Court which was dismissed vide order dated February 21, 2012.
• However, the Bombay High Court vide Impugned Order dated July 17, 2013 set aside the order passed by the Trial Court and discharged Respondent No. 1 and 2. The Impugned Order of the High Court was challenged by the Appellant before the Supreme Court.
• The Counsel appearing for the Appellant submitted that the High Court had conducted a mini trial merely by referring to some of the statements recorded by the police during investigation, which were forming part of the charge-sheet which was beyond the scope of jurisdiction of the Court at the time of consideration of the application for discharge and HC failed to take in cognizance that there was psychological evaluation including Polygraph Testing and BEOS conducted on Respondent No. 1 and four other aides of him, which lead towards the accusation of Respondent No. 1 and 2 in the crime.
• On the other hand, the Counsel appearing for the Respondent No. 1 and 2 submitted that it is a case of blind murder and there was no eye-witness. It was further contended that a false story was built up by the prosecution for which there is no material to support and the Trial Court had failed to exercise jurisdiction vested in it to discharge the Respondents.

Issue at hand?

• Whether an accused can be discharged on an application made by the accused without referring to the evidence in its entirety and without framing of charges?

Decision of the Court

• At the outset, the Division Bench of Supreme Court held that if the facts of the case are examined in the light of law laid down by this Court on the subject, it is evident that the High Court has not even referred to the evidence collected by Investigating Agency produced along with the charge-sheet in its entirety. Rather there is selective reference to the statements of some of the persons recorded during the investigation. It shows that there was total non-application of mind, and the High Court had exercised the jurisdiction in a manner which is not vested in it.
• The Court further observed that though psychological evaluation test report only may not be sufficient to convict an accused but is certainly a material piece of evidence. Despite this material on record, the High Court could not have opined that the case was not made out even for framing of charge, for which only prima facie case is to be seen.
• The Supreme Court relied on various cases such as the State of Rajasthan v. Ashok Kumar Kashyap³ where in was observed that the sufficiency of grounds would take within its fold the nature of the evidence recorded by the police or the documents produced before the Court which ex facie disclose that there are suspicious circumstances against the accused so as to frame a charge against him. It is further observed that if the Judge comes to a conclusion that there is sufficient ground to proceed, he will frame a charge under Section 228 of Criminal Procedure Code, if not, he will discharge the accused.
• The Court relied on the case of State of Karnataka v. MR Hiremath⁴ in which it was held that It is a settled principle of law that at the stage of considering an application for discharge the Court must proceed on the assumption that the material which has been brought on the record by the prosecution is true and evaluate the material in order to determine whether the facts emerging from the material, taken on its face value, disclose the existence of the ingredients necessary to constitute the offence.
• The Supreme Court also relied on the judgement of the State of TN v. N Suresh Raja⁵ in which it was held that at this stage, probative value of the materials has to be gone into and the Court is not expected to go deep into the matter and hold that the materials would not warrant a conviction. In the Court's opinion, what needs to be considered is whether there is a ground for presuming that the offence has been committed and not whether a ground for convicting the accused has been made out. To put it differently, if the Court thinks that the accused might have committed the offence on the basis of the materials on record on its probative value, it can frame the charge; though for conviction, the Court has to come to the conclusion that the accused has committed the offence. The law does not permit a mini trial at this stage.
• The HC vide Impugned Order had summed up the entire evidence in two paras without even referring to the psychological evaluation including Psychological Profiling, Polygraph Testing and BEOS tests of the accused and the other aides of Respondent No. 1 and ordered discharge of Respondent No. 1 and 2. Thus for the above reasons stated, the Appeal was allowed and the Impugned Order of the High Court was set aside.

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Footnotes

1. 2008 SCC OnLine Del 1080

2. 2022 SCC OnLine Del 1335

3. (2021) 11 SCC 191

4. (2019) 7 SCC 515

5. (2014) 11 SCC 709

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