1. Challenge to an order permitting the adduction of additional evidence in proceedings to set aside an arbitral award under Section 34, Arbitration and Conciliation Act, 1996. (Para 1 , 2 , 4 )
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2023 Supreme(SC) 44
SUPREME COURT OF INDIA
M.R. SHAH, C.T. RAVIKUMAR, JJ.
M/s Alpine Housing Development Corporation Pvt. Ltd. – Appellant
Versus
Ashok S. Dhariwal and Others – Respondents
Civil Appeal No. 73 of 2023
Decided On : 19-01-2023
Important Points
IMPORTANT POINT
Setting aside of Arbitral award – Section 34 application will not ordinarily require anything beyond record that was before arbitration and cross-examination of persons swearing in to affidavits should not be allowed unless absolutely necessary.
Setting aside of Arbitral award – Section 34 application will not ordinarily require anything beyond record that was before arbitration and cross-examination of persons swearing in to affidavits should not be allowed unless absolutely necessary.
Subject
Arbitration and Conciliation Act, 1996 - Section 34
Act Referred
Headnote
(A) Arbitration and Conciliation Act, 1996 – Section 34 – Arbitral award – Setting aside of – Production of additional evidence – Section 34 application will not ordinarily require anything beyond record that was before arbitration and cross-examination of persons swearing in to affidavits should not be allowed unless absolutely necessary – Applications under Sections 34 of Act are summary proceedings – An award can be set aside only on the grounds set out in Section 34(2)(a) and Section 34(2) (b) – Speedy resolution of arbitral disputes has been reason for enactment of 1996 Act and continues to be a reason for adding amendments to the Act to strengthen that object – In proceedings under Section 34 of Arbitration Act, issues are not required to be framed – Defence that arbitral award is in conflict with Public Policy of India itself can be a ground to set aside award in view of Section 34(2)(b) of Act. (Paras 7, 8, 9 and 10)
(B) Arbitration and Conciliation Act, 1996 – Section 34 – Arbitral award – Setting aside of – Arbitral tribunal has passed decree for specific performance of contract/agreement, subject to amalgamation of plots – Event of refusal to amalgamate plots is subsequent to passing of award and same shall not be forming part of record of arbitral tribunal – Even otherwise, award of arbitral tribunal was an ex-parte award and no evidence was before Arbitral Tribunal on behalf of respondents – Affidavit discloses specific document and evidence requires to be produced – In that view of matter, a strong exceptional case is made out by respondents to permit them to file affidavits/adduce additional evidence – However, appellant also can be permitted to cross-examine and/or produce contrary evidence – High Court has not committed any error in permitting respondents to file affidavits/additional evidence in proceedings under Section 34 of Arbitration Act. (Paras 11, 12 and 13)
Facts of the case:
Original respondent before the High Court and in whose favour the award has been passed by Arbitral Tribunal has preferred the present appeal assailing judgment and order dated 1.9.2021 passed by the High Court of Karnataka at Bengaluru in Writ Petition No. 50799/2019, by which the High Court has allowed the said writ petition and while quashing and setting aside order passed by Additional City Civil and Sessions Judge, Bengaluru, has permitted the respondents – original writ petitioners to adduce evidence in an application under Section 34 of the Arbitration & Conciliation Act, 1996.
Short question which is posed for the consideration of this Court is, whether the applicant can be permitted to adduce evidence to support the ground relating to Public Policy in an application filed under Section 34 of the Arbitration & Conciliation Act, 1996?
Findings of Court:
As and when such evidence is produced/led, the same may also be dealt with by concerned court in accordance with law and on its own merits. However, at the same time, the court dealing with section 34 application shall finally decide and dispose of Section 34 application expeditiously, considering the object and purpose of the Arbitration Act, namely, speedy disposal.
Result : Appeal dismissed.
Legal Category Hierarchy
Advocates appeared:
For Appellant(s) Mr. M. C. Dhingra, AOR Mr. Gaurav Dhingra, Adv. For Respondent(s) Mr. Balaji Srinivasan, AOR Ms. Aakriti Priya, Adv. Ms. Lakshmi Rao, Adv. Mr. Shiva Krishnamurty, Adv. Mr. Devamshu Behl, Adv. Ms. Gauri Pasricha, Adv. Mr. Prateek Yadav, Adv. Mr. Rohan Dewan, Adv.
For Appellant(s) Mr. M. C. Dhingra, AOR Mr. Gaurav Dhingra, Adv. For Respondent(s) Mr. Balaji Srinivasan, AOR Ms. Aakriti Priya, Adv. Ms. Lakshmi Rao, Adv. Mr. Shiva Krishnamurty, Adv. Mr. Devamshu Behl, Adv. Ms. Gauri Pasricha, Adv. Mr. Prateek Yadav, Adv. Mr. Rohan Dewan, Adv.
Table of Contents
2. Whether the 2019 amendment bars additional evidence and if subsequent events affecting award executability can be proven via evidence under Section 34(2)(b) of the Act. (Para 4 )
3. Pre-amendment law applies to awards passed before 2019; while Section 34 is summary, additional evidence via affidavits is permissible in exceptional circumstances to prove public policy conflicts. (Para 6 , 7 , 8 , 9 , 10 , 11 )
4. In pre-2019 Section 34 proceedings, additional evidence may be permitted in exceptional cases where matters not on the arbitral record are relevant to the grounds for setting aside. (Para 6 , 8 )
5. Appeal dismissed; High Court order permitting additional evidence upheld, with the appellant also granted leave to lead contrary evidence. (Para 12 , 13 , 14 )
6. Does the 2019 amendment to Section 34(2)(a) of the Arbitration and Conciliation Act apply to awards passed before the amendment?
No. For arbitration proceedings commenced and concluded prior to the 2019 amendment, the pre-amendment version of Section 34(2)(a) applies, as the amendment introduced a substantial change regarding the requirement to furnish proof. (Para 6 )
7. Can a party adduce additional evidence in a summary proceeding under Section 34 of the Arbitration and Conciliation Act?
Ordinarily, Section 34 applications require nothing beyond the arbitral record. However, in exceptional cases, parties may bring relevant matters to the court's notice via affidavits, though cross-examination is permitted only when absolutely necessary. (Para 7 , 8 )
8. Is evidence permissible to establish that an arbitral award is in conflict with the public policy of India under Section 34(2)(b)?
Yes. Evidence may be led to prove that an award conflicts with public policy or that the subject matter is not capable of settlement by arbitration, provided such facts are not already established by the arbitral record. (Para 9 )
9. Can subsequent events occurring after the award be agitated under Section 34(2)(b) rather than waiting for execution proceedings?
Yes. Grounds relating to conflict with the public policy of India can be agitated in a Section 34 application immediately after the award is passed; the applicant is not required to wait until execution. (Para 10 )
JUDGMENT :
M.R. SHAH, J.
1. Feeling aggrieved and dissatisfied with the impugned judgment and order dated 1.9.2021 passed by the High Court of Karnataka at Bengaluru in Writ Petition No. 50799/2019, by which the High Court has allowed the said writ petition and while quashing and setting aside the order passed by the learned Additional City Civil and Sessions Judge, Bengaluru, has permitted the respondents-original writ petitioners to adduce evidence in an application under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the ‘Act’) the original respondent before the High Court and in whose favour the award has been passed by the learned Arbitral Tribunal has preferred the present appeal.
2. The facts leading to the present appeal in a nutshell are as under:
That against the award passed by the learned arbitrators dated 12.03.1998, an application under Section 34 of the Act being Arbitration Case No. 38/1998 has been filed by the respondents. That the respondents filed an interim application being I.A. No. 4 in section 34 application to adduce additional evidence. At this stage, it is required to be noted that as such the award passed by the learned arbitrators was an ex-parte award and no evidence was led by the respondents herein, who subsequently assailed the award by way of section 34 application. The appellant herein filed objections to the said interim application seeking permission to adduce evidence on the ground that the same was not maintainable in accordance with the provisions of the Arbitration Act, 1996. The grounds on which the respondents submitted an application to permit them to adduce evidence shall be dealt with and considered hereinafter.
2.1 The Court dealing with interim application being I.A. No. 4 in section 34 application rejected the said interim application and refused to permit the respondents to adduce evidence by observing that if such a permission is granted, it would defeat the object and purpose of early disposal of arbitration proceedings and it would delay further hearing of section 34 application. For that purpose, reliance was placed on the provisions of Section 34(2)(a) of the Act, as amended in the year 2019, by which expression “furnish proof” in section 34(2)(a) came to be substituted with the expression “establish on the basis of record of arbitral tribunal.” Therefore, the Court dealing with section 34 application opined that the said amendment intended to limit the scope of judicial review under Section 34 of the Act only in exceptional circumstances enumerated under Section 34(2)(a) of the Act on the basis of the record available and even if the grounds urged relate to section 34(2)(b) of the Act, the applicants cannot have a right to produce additional evidence. The order passed by the Court dealing with Section 34 application which rejected the interim application being I.A. No. 4 preferred by the respondents permitting them to adduce additional evidence/evidence was the subject matter of writ petition before the High Court.
2.2 Before the High Court, it was conceded on behalf of the appellant herein-original respondent before the High Court, so recorded in paragraph 8 of the impugned judgment, that the provisions of Section 34 (2)(a) of the Act, as it stood prior to Act 33 of 2019 would apply, namely, pre-amendment to section 34(2)(a) of the Act shall be applicable. That thereafter, by the impugned judgment and order, after following the decision of this Court in the case of Fiza Developers and Inter-Trade Private Limited vs. AMCI (India) Private Limited and Another, (2009) 17 SCC 796, the High Court has allowed the said writ petition and set aside the order passed by the court below and has allowed the application preferred by the respondents herein permitting them to adduce evidence in the proceedings under section 34 of the Act. The impugned judgment and order passed by the High Court permitting him respondents to adduce evidence/additional evid
