Supreme Court Upholds Appeal Dismissal Setting Aside ICC Award

The appeal was dismissed, and the judgment of the learned Single Judge setting aside the ICC Award on the grounds of fraud and it being in conflict with the public policy of India was upheld. The Supreme Court's findings regarding Devas being incorporated for fraudulent purposes and conducting affairs fraudulently were deemed binding under Article 141 of the Constitution of India. The principle of res judicata applied as the same parties and issues were involved in both the Supreme Court proceedings and the arbitration case under Section 34 of the Arbitration Act.

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Issues Involved:
1. Binding Nature of Supreme Court's Findings
2. Principle of Res Judicata
3. Article 144 of the Constitution of India
4. Power of Court under Section 34(2)(b) of the Arbitration Act
5. Principle of "Fraud Vitiates All Solemn Acts"

Summary:

1. Binding Nature of Supreme Court's Findings
The findings of the Supreme Court in Civil Appeal No.5766/2021, which upheld the findings of the NCLT and NCLAT that Devas was incorporated for fraudulent purposes and its affairs were conducted fraudulently, are binding on the learned Single Judge under Article 141 of the Constitution of India. These findings are not obiter dicta but form the ratio decidendi of the case, as the Supreme Court could not have concluded that Devas was incorporated for fraudulent purposes without these findings.

2. Principle of Res Judicata
The principle of res judicata applies in the present case as the proceedings before the Supreme Court in Civil Appeal No.5766/2021 and the proceedings under Section 34 of the Arbitration Act involve the same parties and arise from the same factual matrix. The issue of fraud was directly and substantially in issue before the Supreme Court, and its findings are binding on the parties in subsequent proceedings.

3. Article 144 of the Constitution of India
Article 144 mandates that all authorities, civil and judicial, act in aid of the Supreme Court. The learned Single Judge could not have come to a different conclusion regarding the enforceability of the arbitral award, which was found to be a product of fraud by the Supreme Court. Any contrary finding would be against the spirit of Article 144.

4. Power of Court under Section 34(2)(b) of the Arbitration Act
The phrase "the Court finds that" in Section 34(2)(b) of the Arbitration Act allows the Court to discover on its own whether an award is in conflict with the public policy of India, including whether it was induced or affected by fraud. The Court has the discretion to grant leave to amend an application under Section 34 if the circumstances warrant it and it is in the interest of justice.

5. Principle of "Fraud Vitiates All Solemn Acts"
The principle that "fraud vitiates all solemn acts" applies to both primary and collateral proceedings. The Supreme Court's findings that Devas was incorporated for fraudulent purposes and that its affairs were conducted fraudulently extend to the Devas Agreement and the arbitral award. Permitting Devas to benefit from the arbitral award would perpetuate the fraud, which is against principles of justice, equity, and good conscience.

Conclusion:
The appeal is dismissed, and the judgment of the learned Single Judge setting aside the ICC Award on the grounds of fraud and it being in conflict with the public policy of India is upheld.

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