2017 Supreme(SC) 1055

SUPREME COURT OF INDIA
J. CHELAMESWAR, ABHAY MANOHAR SAPRE, JJ.
Venture Global Engineering LLC – Appellant
Versus
Tech Mahindra Ltd. & Anr. Etc. – Respondents
Civil Appeal Nos. 17753-17755 of 2017 (Arising out of SLP(C) Nos. 29747-29749 of 2013)
With
Tech Mahindra Ltd. & Anr. Etc. – Respondents
Versus
Venture Global Engineering LLC – Appellant
Civil Appeal No. 17756 of 2017 (Arising out of SLP(C) No. 8298 of 2014)
Decided On : 01-11-2017

Headnote:Per J. Chelameswar, J.

       (a) Arbitration and Conciliation Act, 1996 – Section 36 – Even a foreign award, if anterior to BALCO – Would be enforceable as if it were a decree of a civil court – Satyam, the beneficiary, need not have approached the foreign court for enforcement of the award – Venture on the other hand, against whom the award was passed, could avoid it by invoking section 34 or any other applicable procedure. (Para 9, 10)

       (2002) 4 SCC 105; (2012) 9 SCC 552 (CB); (2008) 4 SCC 190 – Relied upon

       (b) Arbitration and Conciliation Act, 1996 – Section 34(2)(b)(ii) – Public policy of India – Trial court setting aside the award on ground that direction for transfer of shares at book value is opposed to FEMA and hence to public policy of India – Neither discussing any regulation requiring transfer of shares at ‘fair value’ nor provisions of FEMA nor scheme of the Regulations – Not sustainable. (Para 36, 37, 38)

       (c) Administration of justice – Judicial propriety – Practice of pronouncing decisions without settling the facts in issue and identifying the questions of law relevant in the context – Deprecated. (Para 38)

       (d) Arbitration and Conciliation Act, 1996 – Section 34(2) – Fraud – Definition of fraud in section 17, Contract Act – Not applicable in context of section 34(2), Explanation. (Para 44)

       (e) Arbitration and Conciliation Act, 1996 – Section 34(2) – Fraud – Fudging of accounts of Satyam – Venture neither pleading nor trial court analyzing how these are material facts nondisclosure of which would amount to fraud in context of section 34 – High Court rightly reversing the decision. (Para 45, 47)

       (2010) 8 SCC 660 – Relied upon

       Per Abhay Manohar Sapre, J.

       (f) Arbitration and Conciliation Act, 1996 – Section 34(2)(b)(ii) r/w Explanation (1)(i)(ii) and (iii) – Fraud – Section 17, Contract Act, 1872 – Making a false representation knowingly or without belief in its truth or recklessly, carelessly – So also suppressing material facts – Keeping silent when one is required to speak truth also fraud – Award obtained on such basis liable to be set aside. (Para 84, 85, 86, 89)

       (2003) 8 SCC 319 – Relied upon

       (2008) 4 SCC 190 (Venture-I); (2002) 4 SCC 105; (2010) 8 SCC 660 (Venture II); (2012) 9 SCC 552 (BALCO) – Referred

       (g) Arbitration and Conciliation Act, 1996 – Section 34 – Public policy of India – Includes violation of provisions of Foreign Exchange Act, disregarding orders of superior Courts in India and their binding effect – The decision, however, should be fair, reasonable and objective – Therefore an arbitral award against justice or morality or containing patent illegality would be against public policy – Such award liable to be set aside. (Para 91)

       1994 Suppl(1) SCC 644; (2003) 5 SCC 705; (2014) 9 SCC 263; (2015) 3 SCC 49 – Relied upon

       (h) Arbitration and Conciliation Act, 1996 – Section 34 – Instant case relating to period prior to BALCO – Therefore governed by BHATIA – Part I of the Act would apply to foreign award. (Para 99)

       (2012) 9 SCC 552; (2002) 4 SCC 105 – Relied upon

       (i) Arbitration and Conciliation Act, 1996 – Section 34 – Material facts – Admissibility as evidence – Confessional letter of Ramalinga Raju – Its existence, content and signature of author not disputed by anybody, including author – Held, does not require any more formal proof. (Para 103)

       (1977) 2 SCC 611 – Relied upon

       (j) Companies Act, 1956 – Section 209, 211 – Conduct of Ramalinga Raju as revealed in his confession – In breach of Sections 209 and 211 – Having adverse impact on affairs of Satyam, its affiliates and on those who were dealing with Satyam – Constituting act of misrepresentation and suppression of material facts. (Para 109, 110)

       Interpretation – Contract – Sections 8.01 and 11.05(c), Agreement-I – Event of default – Section 11.05(c) applicable to shareholders of JVC including Satyam and Venture required to comply with all laws of India – Non-compliance of any law would constitute ‘event of default’ – Held, breach on the part of Satyam clearly made out – Acts of Mr. Raju, in affairs of Satyam having direct bearing in arbitration proceedings. (Para 114, 115, 116, 117, 123)

       (k) Arbitration and Conciliation Act, 1996 – Section 34 – Arbitral award obtained by Satyam by committing fraud – Award void ab intito. (Para 124)

       (l) Arbitration and Conciliation Act, 1996 – Section 34 – Award obtained by Satyam by misrepresentation and suppression of material facts – Such acts violating provisions of IPC, Companies Act and FEMA thereby against public policy of India – Arbitral proceedings vitiated. (Para 125, 126)

       (2015) 3 SCC 49 – Relied upon

       (m) Arbitration and Conciliation Act, 1996 – Section 34(2)(b)(ii) r/w Explanation I (i)(ii) and (iii) – U/s 34 court cannot act as appellate tribunal – Cannot examine merit od claims – Enquiry limited only as to whether any ground specified in Section 34 of AAC Act is made out or not – Instantly, held, award not sustainable. (Para 127, 128)

       (n) Issue estoppel – Applies only to criminal proceedings and not any other – Arbitral proceedings being civil proceeding, High Court erred in applying principle of issue estoppel. (Para 130, 131, 132)

       (1974) 3 SCC 469 – Relied upon

       (2008) 4 SCC 190; (2010) 8 SCC 660; (2015) 10 SCC 213; 2016(2) Scale 60; (2003) 5 SCC 705 (19970 3 SCC 540; (1993) 2 SCC 507; (1996) 4 SCC 622; 1972 Appeal Cases 153; (2015) 4 SCC 609; (1995) 2 SCC 513; (2010) 8 SCC 665; (1994) 1 SCC 1; (2000) 3 SCC 581; (1964) 4 SCR 19; (1974) 1 SCC 242; (2003) 8 SCC 673; (1955) 2 SCR 271; (1969) 1 SCR 1006; (1977) 2 SCC 611; (2010) 8 SCC 660; (1995) 1 SCC 478; (2005) 4 SCC 605; (2005) 4 SCC 530; (2015) 4 SCC 609; (2010) 8 SCC 44; (2011) 1 SCC 74; (2009) 10 SCC 259; (2016) 4 SCC 126; (1955) 1 SCR 206; (1966) 3 SCC 527; (2010) 4 SCC 491; (1972) 2 SCR 646; (1968) 3 SCR 1; (2012) 8 SCC 148; AIR 1971 SC 1949; (1972) 4 SCC 562; (2013) 10 SCC 758; (1966) 3 SCR 283; (1996) 4 SCC 622; (2010) 7 SCC 1; (1977) 2 SCC 611; (1977) 8 SCC 683; (2003) 11 SCC 405; (1996) 6 SCC 665; (2005) 4 SCC 530; (2006) 6 SCC 94; (2009) 17 SCC 796; 1951 SCR 548; (1998) 4 SCC 577; (1996) 5 SCC 550 – Referred

       Facts of the case:

       An Arbitral Award dated 3rd April, 2006 was passed in an arbitration between VENTURE and SATYAM.

       The dispute leading to the Arbitration and the AWARD arose out of the Agreement dated 20th October, 1999 (Agreement I) entered into between VENTURE and SATYAM.

       Award was passed against Venture in USA. Satyam filed petition for enforcement of the award whereas Venture filed application for declaration that award was not enforceable in USA. This application was dismissed.

       Then Venture filed OS in civil court, Secunderabad. The suit was converted into an application under Section 34 of the ACT.

       VENTURE filed an application under Order VIII Rule 9 of the CPC seeking permission to plead additional facts by amending the pleadings in the suit which was allowed.

       The revision petition thereagainst filed by Satyam was allowed by the High Court.

       Appeal thereagainst was allowed by Supreme Court.

       Thereafter the trial court allowed the suit/OP and set aside the award.

       The High Court by impugned order has reversed the decision of the trial court.

       Finding of the Court:

       The Hon’ble Judges differed in their views. While one dismissed the appeal of Venture, the other allowed it.

       Result: The Judges have given differing opinions.