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2023 (3) TMI 839
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....Act, 1996 (hereinafter referred to as "the Arbitration Act" or "the A&C Act"), has been filed against the Judgment dated 29.08.2022 ("Impugned Judgment") passed by the Learned Single Judge in O.M.P. (Comm.) No. 11/2021, filed by Respondent No. 1 ("Antrix") under Section 34 of the Arbitration Act (hereinafter referred to as "Section 34 Petition") to challenge the ICC Arbitral Award dated 14.09.2015 (hereinafter referred to as "the ICC Award") passed in favour of the Respondent No. 2 ("Devas"). The Ld. Single Judge, vide the Impugned Judgment has set aside the ICC Award under Section 34 of the Arbitration Act on the grounds that it suffers from fraud, patent illegality and is in conflict with the public policy of India. BRIEF BACKGROUND 2. The Appellant herein ("Devas Employees Mauritius Pvt. Ltd." or "DEMPL") is a company incorporated under the laws of Mauritius and is a shareholder, owning 3.48% of the issued and paid-up equity share capital of Respondent No. 2/ Devas Multimedia Private Limited ("Devas"). Respondent No. 2 is a company incorporated under the Companies Act, 1956 which has since been wound up under the provisions of the Companies Act, 2013 and is represented in ....
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.... and information interactive services, across India that will be delivered via satellite and terrestrial system via fixed, portable mobile receivers including mobile phones, mobile video/audio receivers for vehicles etc. Antrix was to lease out to Devas five numbers of C X S transponders, each of 8.1 MHz capacity, and five numbers of S X C transponders, each of 2.7 MHz capacity, on the Primary Satellite 1 (PS1). It was agreed that the leased capacity would be delivered by Antrix to Devas, i.e. a fully operational and ready PS-1 satellite was to be delivered within 30 months of the agreement, with a further grace period of six months. Devas obtained approvals from the Foreign Investment Promotion Board (FIPB) during the period between May 2006 and September 2009. It is stated that Devas also obtained an Internet Service Provider (ISP) License from the Department of Telecommunications on 02.05.2008. Devas then also obtained permission from the Department of Telecommunications on 31.03.2009 for providing Internet Protocol Television (IPTV) Services within the scope of the terms and conditions of Internet Service Provider (ISP) License. 5. The Agreement dated 28.01.2005 was terminat....
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....s are to pay, in equal shares, the fees and expenses of the arbitrators and the ICC administrative expenses." 8. During the pendency of proceedings before the ICC Arbitral Tribunal, the Central Bureau of Investigation ("CBI") registered an FIR on 16.03.2015 alleging criminal conspiracy, criminal misconduct, cheating and other corrupt practices on the part of Devas and its officers. A charge-sheet in respect of the FIR was filed against Devas, its officers and certain other individuals by the CBI on 11.08.2016. The CBI filed a supplementary charge-sheet in respect of the FIR on 08.01.2019. 9. Subsequent to the publishing of the ICC Award, on 19.11.2015, Antrix filed a petition under Section 34 of the Arbitration Act before the Addl. City Civil and Sessions Judge, Bengaluru, Karnataka, challenging the ICC Award. Subsequently, on 10.11.2016, Antrix filed an amendment application (hereinafter referred to as the "first amendment application") to incorporate subsequent events and take additional grounds. Thereafter, on 04.11.2020, the Hon'ble Supreme Court passed an order in SLP No. 28434/2018 to transfer the Petition filed by Antrix under Section 34 of the Arbitration Act from the....
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....including India. The basic notions of morality and justice are always in conflict with fraud and allowing Devas and its shareholders to reap the benefits of their fraudulent action, would send wrong message to international investors, namely that by adopting fraudulent means and by bringing into India an investment in a sum of INR 579 crores, the investors can hope to get tens of thousands of crores of rupees, even after siphoning off INR 488 crores. 11. It is in the aforestated factual background that the Ld. Single Judge has pronounced the Impugned Judgment under Section 34 of the Arbitration Act by which the ICC Award has been set aside on the grounds that the ICC Award suffers from patent illegality, fraud and is in conflict with the public policy of India. The learned Single Judge has placed reliance upon the Judgment of the Apex Court passed in Civil Appeal No.5766/2021. The learned Single Judge held that the Judgment of the Apex Court passed in Civil Appeal No.5766/2021 deals with the same parties and the finding therein would operate as res judicata. The learned Single Judge also held that the Judgments are admissible and the Court is bound to take judicial notice of the....
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....tion vs. Executive Engineer, Sardar Sarovar Narmada Nigam Limited (2022) 1 SCC 75 and (iii) State of Maharashtra vs. Hindustan Construction Company Limited (2010) 4 SCC 518 relied upon by Mr. Suhail Dutt learned Senior Counsel for DEMPL on the question of delay in seeking amendment of the objections are not applicable to the facts of the present case. 164. The Supreme Court of India in Delhi Airport Metro Express (P) Ltd. v. DMRC, (2022) 1 SCC 131 examined the scope of judicial interference with the arbitral awards and held as under: "27. For a better understanding of the role ascribed to Courts in reviewing arbitral awards while considering applications filed under Section 34 of the 1996 Act, it would be relevant to refer to a judgment of this Court in Ssangyong Engg. & Construction Co. Ltd. v. NHAI [Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131 : (2020) 2 SCC (Civ) 213] wherein R.F. Nariman, J. has in clear terms delineated the limited area for judicial interference, taking into account the amendments brought about by the 2015 Amendment Act. The relevant passages of the judgment in Ssangyong [Ssangyong Engg. & Construction Co. Ltd. v. NHAI, ....
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...., that such award is against basic notions of justice or morality as understood in paras 36 to 39 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204]. Explanation 2 to Section 34(2)(b)(ii) and Explanation 2 to Section 48(2)(b)(ii) was added by the Amendment Act only so that Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12], as understood in Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], and paras 28 and 29 in particular, is now done away with. 37. Insofar as domestic awards made in India are concerned, an additional ground is now available under sub-section (2-A), added by the Amendment Act, 2015, to Section 34. Here, there must be patent illegality appearing on the face of the award, which refers to such illegality as goes to the root of the matter but which does not amount to mere erroneous application of the law. In short, what is not subsumed within "the fundamental policy of Indian law", namely, the contravention of a statute not linked to public policy or public interest, cannot be brought in by the backdoor when it comes to setting aside ....
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.... 28. This Court has in several other judgments interpreted Section 34 of the 1996 Act to stress on the restraint to be shown by Courts while examining the validity of the arbitral awards. The limited grounds available to Courts for annulment of arbitral awards are well known to legally trained minds. However, the difficulty arises in applying the well-established principles for interference to the facts of each case that come up before the Courts. There is a disturbing tendency of Courts setting aside arbitral awards, after dissecting and reassessing factual aspects of the cases to come to a conclusion that the award needs intervention and thereafter, dubbing the award to be vitiated by either perversity or patent illegality, apart from the other grounds available for annulment of the award. This approach would lead to corrosion of the object of the 1996 Act and the endeavours made to preserve this object, which is minimal judicial interference with arbitral awards. That apart, several judicial pronouncements of this Court would become a dead letter if arbitral awards are set aside by categorising them as perverse or patently illegal without appreciating the contours of the said ....
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....sangyong Engg. & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131 : (2020) 2 SCC (Civ) 213] , this Court held that the meaning of the expression "fundamental policy of Indian law" would be in accordance with the understanding of this Court in Renusagar Power Co. Ltd. v. General Electric Co. [Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644]. In Renusagar [Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644], this Court observed that violation of the Foreign Exchange Regulation Act, 1973, a statute enacted for the "national economic interest", and disregarding the superior Courts in India would be antithetical to the fundamental policy of Indian law. Contravention of a statute not linked to public policy or public interest cannot be a ground to set at naught an arbitral award as being discordant with the fundamental policy of Indian law and neither can it be brought within the confines of "patent illegality" as discussed above. In other words, contravention of a statute only if it is linked to public policy or public interest is cause for setting aside the award as being at odds with the fundamental policy of Indian law. If an arbitral awar....
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....ave and has thus committed a patent illegality in the award. 169. Further, as noticed hereinabove, the Arbitral Tribunal has committed patent illegality in the award as findings on some issues are contradicted by the findings on other issues and are also contradicted by the reasoning given to reach the said conclusions. 170. Additionally, findings on fraud returned by the Supreme Court by its Judgment dated 17.01.2022 clearly establish that award contravenes the fundamental policy of Indian law being in conflict with the most basic notions of justice and is also contrary to the national economic interest having also violated the 'FIPB Policies' and the provisions of 'FIMA' and 'PMLA' and thus antithetical to the fundamental policy of Indian law. 171. The Supreme Court by its judgment dated 17.01.2022 has held that the very seeds of the commercial relationship between Antrix and Devas were a product of fraud perpetrated by Devas and thus every part of the plant that grew out of those seeds, such as the Agreement, the disputes, arbitral awards etc., are all infected with the poison of fraud. 172. It has held that a product of fraud is in conflict w....
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....contents of paragraphs 13.5 and 13.6 of the of the Judgment of the Apex Court are at best obiter dicta and do not constitute ratio decidendi and as a result, are not binding upon the Ld. Single Judge or this Hon'ble Court. In support of this argument, he places reliance upon the decision in State of Gujarat v. Utility Users Welfare Association, (2018) 6 SCC 21. The said Judgment relies upon the inversion test propounded by Professor Wambaugh to identify the ratio decidendi of a judgment. The inversion test has been followed by courts to imply that the ratio decidendi includes those propositions which are absolutely necessary for the decision of the case. He, therefore, contends that paragraphs 13.5 and 13.6 of the judgment of the Apex Court do not constitute ratio decidendi, and hence was not binding upon the learned Single Judge while deciding a challenge to an award under Section 34 of the Arbitration Act. 16. Mr. Dutt further relies upon the decision of the Apex Court in Divisional Controller v. Mahadeva Shetty, (2003) 7 SCC 197, to argue that the scope and authority of a precedent should not be expanded by a court beyond the needs of a given situation and the only thing bind....
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.... the decisions in Srihari Hanumandas Totala v. Hemant Vithal Kamat & Ors., (2021) 9 SCC 99, and Jamia Masjid v. Sri KV Rudrappa, (2022) 9 SCC 225, in support of his contention. 20. Mr. Dutt further submits that every statement made by the Apex Court in Civil Appeal No.5766/2021 would also not be binding upon the High Court under Article 141 of the Constitution of India. He places reliance on the decision of the Apex Court in Municipal Committee, Amritsar v. Hazara Singh, (1975) 1 SCC 794. He states that statements in the Judgment which constitute obiter dicta would not be binding upon the High Court under Article 141 of the Constitution of India. He states that the findings on fraud arrived at by the Supreme Court, being findings of fact would not be binding upon the Ld. Single Judge under Article 141 of the Constitution while dealing with a petition under Section 34 of the Arbitration Act. It is his submission that as a consequence of the aforesaid, the applicability of Section 57 of the Evidence Act to the proceedings under Section 34 of the Arbitration Act would not arise. 21. It is stated by Mr. Dutt that the decision of the Hon'ble Supreme Court in Peerless General Finan....
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.... State of Maharashtra v. Hindustan Construction, (2010) 4 SCC 518, and State of Chhatisgarh v Sal Udyog, (2022) 2 SCC 275. 25. It is submitted by Mr. Dutt that all material facts in relation to fraud were known to Antrix prior to the termination of the Devas Agreement, and the failure of Antrix to make any pleadings regarding the same before the Arbitral Tribunal or in its Petition filed under Section 34 of the Arbitration Act on 19.11.2015, indicate that Antrix had elected not to take fraud as a ground to challenge the ICC Award. 26. It is further submitted by Mr. Dutt that while the CBI registered its FIR against Devas and its officials on 16.03.2015, the Petition under Section 34 was filed by Antrix only on 19.11.2015, that is eight (8) months after the date of registration of the FIR. He states that while the first amendment application was filed on 10.11.2016, the second amendment application was filed on 12.01.2021 to introduce the ground of fraud as a challenge to the ICC Award in the Section 34 Petition, and the same has not been decided by the learned Single Judge. He submits that the FIR registered by the CBI contains all the material facts that Antrix sought to int....
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....nceived in the present case. 29. Mr. Dutt contends that there must be a causative link established between the fraud relied upon and the making of the award under challenge and that Antrix has failed to establish any such causative link. He places reliance upon the decision by the Singapore Court of Appeal in Bloomberry Resorts & Hotels Inc. v. Global Gaming Philippines LLC, (2021) SGCA 9, to buttress his argument. 30. Mr. Dutt argues that the ground of fraud to challenge the ICC Award under the Section 34 Petition has been introduced by Antrix by way of two amendment applications, both of which have been filed beyond the prescribed period of 3 months and 30 days provided for under Section 34(3) of the Arbitration Act has passed, and the applications are thus barred by limitation. He submits that for setting aside an arbitral award under Section 34 of the Arbitration Act, no ground of challenge can be raised after the time limit prescribed under Section 34(3) Arbitration Act. He relies upon the decision in Bhaven Construction v. Sardar Sarovar Narmada Nigam Ltd., (2022) 1 SCC 75, and P. Radha Bai v. P. Ashok Kumar, (2019) 13 SCC 445, in support of this argument. Mr. Dutt subm....
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....relationship between Antrix and Devas was a product of fraud purported by Devas and the plant which has grown out of the fraud including the arbitral award is infected by the poison of fraud. Secondly, the subject matter in both the proceedings are the same and in the present case the winding up proceedings and the petition under Section 34 are primarily dealing with the fraudulent actions of Devas. Thirdly, the contesting parties in both the proceedings are the same since the parties in the winding up proceedings and in the present case are Devas, Antrix and DEMPL. Fourthly, the decision in the former proceedings was made by a competent court. He states that the Apex Court being the highest court in the country was competent to decide the appeal filed against the order of the NCLAT which had upheld the order of the NCLT which in turn had allowed the application under Section 271 of the Companies Act, 2013 for winding up of Respondent No.2 on the ground that the company had been formed for a fraudulent purpose and that the affairs of the company were being conducted in a fraudulent manner. Lastly, the decision of the Hon'ble Supreme Court dated 17.01.2022 in Civil Appeal No.5766....
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....e, states that the contention of the Appellant that these findings are only obiter are erroneous. He further submits that these observations are not standalone observations but rather form part of a string of findings on fraud made by the Hon'ble Supreme Court commencing from paragraph 12.8 of the decision in Civil Appeal No.5766/2021. The said paragraphs should thus be read in the context of the rest of the judgment and not as standalone paragraphs. He places reliance upon the decision in Director of Settlements, A.P. and Others v. M.R. Apparao, (2002) 4 SCC 638, and State of Haryana v. Ranbir Alias Rana, (2006) 5 SCC 167, to buttress his argument. 35. Without prejudice to the aforesaid argument, the Ld. ASG argues that even an obiter of the Hon'ble Supreme Court is binding under Article 141 of the Constitution on the High Courts. He relies upon the decision in Peerless General Finance and Investment Company Ltd. v. CIT, (2020) 18 SCC 625, to support this argument. The learned ASG, therefore, submits that the learned Single Judge was bound by the findings of the Apex Court on fraud under Article 141 of the Constitution of India. He states that the contention of the Appellant th....
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....by the principle of res judicata. The Hon'ble Supreme Court in paragraph 8 of its decision in Civil Appeal No.5766/2021 has dealt with the question of whether the discovery of fraud being subsequent to the termination of the Devas Agreement would render the proceedings under Section 271 of the Companies Act barred by limitation. He submits that the grounds pertaining to fraud before the Hon'ble Supreme Court and before the learned Single Judge are the same, and if the plea of limitation has been rejected by the Apex Court, the learned Single Judge has not made an error as the question of limitation is a mixed question of fact and law. 39. Learned ASG submits that the initial application under Section 34 of the Arbitration Act was filed within the time period specified under Section 34(3) of the Arbitration Act. He submits that the Arbitration Act does not prescribe a time period within which an amendment application to a Petition under Section 34 of the Arbitration Act must be filed. He submits that the aforesaid provision applies only to the initial application filed under Section 34(1) of the Arbitration Act and not to amendment applications filed subsequently. 40. The Ld. ....
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....on-existent. Devas, by offering these through Devas Agreement when they were non-existent and misrepresenting that the IPR for it exists with Devas, has committed contractual fraud. The Apex Court has also held that the Devas Agreement was in contravention of the SATCOM Policy. b. Statutory Fraud - The Ld. ASG submits that the findings on fraud rendered by the Hon'ble Supreme Court in its decision attract all the five clauses of Section 17 of the Indian Contract Act, 1872 read with Section 271(c) of the Companies Act, 2013, and thus constitutes statutory fraud. c. Public Fraud against the Nation and its exchequer - The Ld. ASG submits that the Apex Court in paragraphs 9.13, 9.15, 13.1 and 13.5 of its Judgment passed in Civil Appeal No.5766/2021 establish that Devas and DEMPL have committed a public fraud against the nation and its exchequer and, thus, cannot be permitted to reap the benefit of their fraud. He, therefore, submits that the findings on fraud rendered by the Apex Court in its Judgment passed in Civil Appeal No.5766/2021 staring at its face, the learned Single Judge was bound by those findings and could not have upheld an award which is the outcome ....
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....record of the Tribunal does not establish a fraud, find that the Arbitral Award is in conflict with the public policy of India. He places reliance upon the decision in State of Chhattisgarh v Sal Udyog, (2022) 2 SCC 275, to buttress his argument. 45. The Ld. ASG further submits that an interpretation where the Court is not permitted to act on its own under Section 34 would run contrary to the intention of the Legislature which has given the power to the Court to go into the question as to whether the making of the award was induced or affected by fraud or corruption or is in contravention with the public policy of Indian law without any pleadings or any findings by the Tribunal or any pleading in the application moved under Section 34 of the Arbitration Act. He suggests that the power of the Court is not circumscribed by pleadings while deciding the question arising under Section 34(2)(b) of the Arbitration Act. He submits that fetters cannot be put upon the exercise of this power when the Parliament has not placed any such limitation on it. He submits that the powers of the Court under Section 34 and 37 are broad and should not be interpreted in a narrow manner. 46. It is su....
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....ent purpose and its affairs were being conducted in a fraudulent manner. Consequently, all actions, transactions and agreements entered into by Devas are also affected by fraud and would stand vitiated. The Hon'ble Supreme Court has made this observation in paragraphs 13.5 & 13.6 of its decision in Civil Appeal No.5766/2021, which as stated earlier, are findings binding upon the Ld. Single Judge and this Court. 50. It is further submitted by the Ld. ASG that if Devas and DEMPL are permitted to reap the benefits of the ICC Award, after the Apex Court has given a finding that Devas was formed for a fraudulent purpose and its affairs were being conducted in a fraudulent manner, it would lead to an absurdity. He submits that the facts surrounding the fraudulent actions of Devas and DEMPL have attained finality and the parties must face the consequences. 51. The learned ASG further contended that Article 144 of the Constitution of India mandates that all authorities shall act in aid of the Supreme Court of India. He states that once the Apex Court had given a finding that the company was incorporated for a fraudulent and unlawful purpose and the affairs of the company have been co....
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.... b. The principle of res judicata is inapplicable in the present case as the issues in the petition under Section 34 of the Arbitration Act were not "directly and substantially" in issue in Civil Appeal No.5766/2021. Further, the Supreme Court while deciding an appeal arising out of proceedings initiated under Section 271(c) of the Companies Act, 2013 cannot be considered to be a Court competent to decide a challenge to enforcement of an award under Section 34 of the Arbitration Act. c. Article 144 of the Constitution of India is inapplicable to the present case. 55. In order to decide the issue at hand in a constructive manner, it is only appropriate that this Court deals with the each of the aforesaid aspects individually. 56. It is the submission of the Appellants that paragraphs Nos.13.5 & 13.6 of the judgment passed by the Apex Court in Civil Appeal No.5766/2021 only constitute obiter dicta and not ratio decidendi. Paragraph 13 of the said judgment reads as under: "13. Miscellenous Grounds 13.1 Apart from the above main grounds of attack, which we have dealt in extenso, the learned senior counsel for the appellants also made a few supplem....
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....ct, 2013 and penal in the criminal proceedings. Moreover, this argument can be reversed like the handle of a dagger. What if the company is allowed to continue to exist and also enforce the arbitration awards for amounts totalling to tens of thousands of crores of Indian Rupees (The ICC award is stated to be for INR 10,000 crores and the 2 BIT awards are stated to be for INR 5,000 crores) and eventually the Criminal Court finds all shareholders guilty of fraud? The answer to this question would be abhorring. 13.4 Lastly, it was contended that the actual motive behind Antrix seeking the winding up of Devas, is to deprive Devas, of the benefits of an unanimous award passed by the ICC Arbitral tribunal presided over by a former Chief Justice of India and the two BIT awards and that such attempts on the part of a corporate entity wholly owned by the Government of India would send a wrong message to international investors. 13.5 We do not find any merit in the above submission. If as a matter of fact, fraud as projected by Antrix, stands established, the motive behind the victim of fraud, coming up with a petition for winding up, is of no relevance. If the seeds of the....
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....ourt on this aspect was delivered by a Constitution Bench in State of Orissa v. Sudhansu Sekhar Misra, (1968) 2 SCR 154, wherein the Court, relying upon the decision of the House of Lords in Quinn v. Leathem, [1901] A.C. 495, stated as under: "12. ... What is of the essence in a decision is its ratio and not every observation found therein nor what logically follows from the various observations made in it. On this topic this is what Earl of Halsbury L.C. said in Quinn v. Leathem [[1901] AC 495]: "Now before discussing the case of Allen v. Flood, [1898] AC 1 and what was decided therein, there are two observations of a general character which I wish to make, and one is to repeat what I have very often said before, that every judgment must be read as applicable to the particular facts proved, or assumed to be proved, since the generality of the expressions which may be found there are not intended to be expositions of the whole law, but governed and qualified by the particular facts of the case in which such expressions are to be found. The other is that a case is only an authority for what it actually decides. I entirely deny that it can be quoted for a p....
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....ulteration Cases Reporter, 1975 Part I, p. 8] itself shows that such distortion of the passage in the judgment did not and could not pass muster. When pressed with such misuse of this ruling, the High Court repelled it. The law of food adulteration, as also the right approach to decisions of this Court, have been set out correctly there: "Judicial propriety, dignity and decorum demand that being the highest judicial tribunal in the country even obiter dictum of the Supreme Court should be accepted as binding. Declaration of law by that Court even if it be only by the way has to be respected. But all that does not mean that every statement contained in a judgment of that Court would be attracted by Article 141. Statements on matters other than law have no binding force. Several decisions of the Supreme Court are on facts and that Court itself has pointed out in Gurcharan Singh v. State of Punjab [1972 FAC 549] and Prakash Chandra Pathak v. State of Uttar Pradesh [AIR 1960 SC 195 : 1960 Cri LJ 283] that as on facts no two cases could be similar, its own decisions which were essentially on questions of fact could not be relied upon as precedents for decision of other cases.......
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....ding of facts is the inference which the Judge draws from the direct, or perceptible facts; (ii) statements of the principles of law applicable to the legal problems disclosed by the facts; and (iii) judgment based on the combined effect of the above. A decision is only an authority for what it actually decides. What is of the essence in a decision is its ratio and not every observation found therein nor what logically follows from the various observations made in the judgment. Every judgment must be read as applicable to the particular facts proved, or assumed to be proved, since the generality of the expressions which may be found there is not intended to be exposition of the whole law, but governed and qualified by the particular facts of the case in which such expressions are to be found. It would, therefore, be not profitable to extract a sentence here and there from the judgment and to build upon it because the essence of the decision is its ratio and not every observation found therein. The enunciation of the reason or principle on which a question before a court has been decided is alone binding as a precedent. The concrete decision alone is bindi....
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....s binding is the principle underlying a decision. A judgment of the Court has to be read in the context of questions which arose for consideration in the case in which the judgment was delivered. An "obiter dictum" as distinguished from a ratio decidendi is an observation by the Court on a legal question suggested in a case before it but not arising in such manner as to require a decision. Such an obiter may not have a binding precedent as the observation was unnecessary for the decision pronounced, but even though an obiter may not have a binding effect as a precedent, but it cannot be denied that it is of considerable weight. The law which will be binding under Article 141 would, therefore, extend to all observations of points raised and decided by the Court in a given case. So far as constitutional matters are concerned, it is a practice of the Court not to make any pronouncement on points not directly raised for its decision. The decision in a judgment of the Supreme Court cannot be assailed on the ground that certain aspects were not considered or the relevant provisions were not brought to the notice of the Court (see Ballabhadas Mathurdas Lakhani v. Municipal Committee, Malk....
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.... "2. Most of the petitioners/applicants before us are unaided professional educational institutions (both minority and non-minority). On behalf of the petitioners/applicants it was submitted that the answers given to the questions, as set out at the end of the majority judgment, lay down the true ratio of the judgment. It was submitted that any observation made in the body of the judgment had to be read in the context of the answers given. We are unable to accept this submission. The answers to the questions, in the majority judgment in Pai case [(2002) 8 SCC 481] are merely a brief summation of the ratio laid down in the judgment. The ratio decidendi of a judgment has to be found out only on reading the entire judgment. In fact, the ratio of the judgment is what is set out in the judgment itself. The answer to the question would necessarily have to be read in the context of what is set out in the judgment and not in isolation. In case of any doubt as regards any observations, reasons and principles, the other part of the judgment has to be looked into. By reading a line here and there from the judgment, one cannot find out the entire ratio decidendi of the judgment. We, there....
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....settled theory of precedents, every decision contains three basic postulates : (i) findings of material facts, direct and inferential. An inferential finding of facts is the inference which the Judge draws from the direct, or perceptible facts; (ii) statements of the principles of law applicable to the legal problems disclosed by the facts; and (iii) judgment based on the combined effect of the above. A decision is an authority for what it actually decides. What is of the essence in a decision is its ratio and not every observation found therein nor what logically flows from the various observations made in the judgment. The enunciation of the reason or principle on which a question before a court has been decided is alone binding as a precedent. (See State of Orissa v. Sudhansu Sekhar Misra [(1968) 2 SCR 154 : AIR 1968 SC 647] and Union of India v. Dhanwanti Devi [(1996) 6 SCC 44].) A case is a precedent and binding for what it explicitly decides and no more. The words used by Judges in their judgments are not to be read as if they are words in an Act of Parliament. In Quinn v. Leathem [1901 AC 495 : 85 LT 289 : (1900-03) All ER Rep 1 (HL)....
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....atio decidendi; he may not be sufficiently convinced of their cogency as to want them to have the full authority of the precedent, and yet may wish to state them so that those who later may have the duty of investigating the same point will start with some guidance. This is the matter which the judge himself is alone capable of deciding, and any judge who comes after him must ascertain which course he has adopted from the language used and not by consulting his own preference." 15. Although the said observation of Devlin, J. has been subjected to some criticism, it throws some light on the subject; but may not be treated to be an authority." (emphasis supplied) 66. In Laxmi Devi v. State of Bihar, (2015) 10 SCC 241, apropos the principles relevant in ascertaining ratio decidendi and obiter dictum, the Hon'ble Supreme Court has stated as under: "21. Since heavy reliance has been placed by the State on Satendra Prasad Jain v. State of U.P. [Satendra Prasad Jain v. State of U.P., (1993) 4 SCC 369] and Lt. Governor of H.P. v. Avinash Sharma [Lt. Governor of H.P. v. Avinash Sharma, (1970) 2 SCC 149], we must sedulously determine their ratios. This would, therefor....
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....st" or "the Inversion Test" as the means of judicial interpretation. "the Inversion Test" is used to identify the ratio decidendi in any judgment. The central idea, in the words of Professor Wambaugh, is as under: "In order to make the test, let him first frame carefully the supposed proposition of law. Let him then insert in the proposition a word reversing its meaning. Let him then inquire whether, if the court had conceived this new proposition to be good, and had it in mind, the decision could have been the same. If the answer be affirmative, then, however excellent the original proposition may be, the case is not a precedent for that proposition, but if the answer be negative the case is a precedent for the original proposition and possibly for other propositions also. [ Eugene Wambaugh, The Study of Cases (Boston: Little, Brown & Co., 1892) at p. 17.]" 114. In order to test whether a particular proposition of law is to be treated as the ratio decidendi of the case, the proposition is to be inversed i.e. to remove from the text of the judgment as if it did not exist. If the conclusion of the case would still have been the same even without examining the propo....
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.... General Finance& Investment Co. Ltd. [Peerless General Finance & Investment Co. Ltd. v. RBI, (1992) 2 SCC 343 : (1992) 75 Comp Cas 12] , and then held as follows : (Sahara Investment case [CIT v. Sahara Investment (India) Ltd., 2003 SCC OnLine All 1688 : (2004) 266 ITR 641] , SCC OnLine All paras 12-15 & 19)" 69. From a reading of the aforesaid decisions, the following principles emerge pertaining to the contours, connotations, meaning, ambit, scope and binding nature of ratio decidendi and obiter dicta: 69.1 It is the ratio decidendi of a judgment which has the binding force of law under Article 141 of the Constitution of India and not obiter dicta. An obiter may however carry considerable weight which ought to be examined by the subsequent judge. 69.2 The ratio of a decision must be understood within the context of the facts of the decision, and it is essentially the application of law to the facts of a particular case. An observation on facts by a Court cannot be considered to be the ratio of a judgment. It is the general principles on which the decision is based and would include a pre-existing rule/law, which may be statutory or judge-made, and a minor premise of the....
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.... Devas of the benefit of the unanimous award passed by the ICC Arbitral Tribunal presided over by a former Chief Justice of India and two BIT awards, and such attempts on the part of a corporate entity, wholly owned by the Government of India, would send a wrong message to international investors. This argument was specifically rejected by the Apex Court by holding that if the seeds of the commercial relationship between Antrix and Devas were a product of fraud perpetrated by Devas, then every part of the plant that grew out of those seeds, such as the agreement, disputes, awards, etc., would be infected with the poison of fraud. It can, therefore, be said that the observations made by the Supreme Court in paragraph 13 of its Judgment passed in Civil Appeal No.5766/2021 were made in response to issues which were raised and agitated before it. 71. It is also pertinent to mention at this juncture that the Apex Court had also analysed the facts and the documents which were placed before the NCLT/NCLAT, the authenticity of which were never questioned or denied by Devas. This is apparent from a reading of Paragraph 12.8 of the Apex Court's Judgment passed in Civil Appeal No.5766/....
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....ferent from mobile phones, which are capable of providing a two way communication. The technology for providing the services through mobile phones was not in existence at that time, which is why the proposal made by Forge Advisors included an expectation that such a service may be launched by the end of 2006. It was with this expectation/promise that an Agreement was entered into on 28.01.2005 but this so-called new national service was never launched as promised in 2006. The launch of the services was not linked to the provision of a S-band satellite by Antrix, at least at the time when negotiations took place; ***** (vi) Therefore, the finding of the Tribunal, (a) that a public largesse was doled out in favour of Devas, in contravention of the public policy in India; (b) that Devas enticed Antrix/ISRO to enter into an MoU followed by an Agreement by promising to provide something that was not in existence at that time and which did not come into existence even later; (c) that the licenses and approvals were for completely different services; and (d) that the services offered were not within the scope of SATCOM Policy etc. are ....
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....r. Thus, the second limb of Section 271(c), namely, the conduct of the affairs of the company in a fraudulent manner, also stood established. (xi) SATCOM Policy perceived telecommunication and broadcasting services to be independent of each other and also mutually exclusive. Therefore, a combination of both was not permitted by law. It is especially so since no deliberation took place with the Ministry of Information and Broadcasting. Moreover, unless ICC allocates space segment, to a private player, the same becomes unlawful. This is why the conduct of the affairs of the company became unlawful; **** (xiii) It is on record that the minutes of the meeting of the Sub Committee dated 06.01.2009 were manipulated and the experimental licence was granted on 07.05.2009. Only thereafter, the original minutes were restored on 20.11.2009 and that too after protest......." (emphasis supplied) 72. In order to determine as to what is the ratio of a particular decision, the Courts have applied the "inversion test" which has been propounded by Eugene Wambaugh, a Professor at the Harvard Law School, who published a classic text book called The Study of Cases....
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....Devas was filed only to deprive Devas of the benefits of the Arbitral Award. Reading paragraphs 13.5 and 13.6 with paragraph 12.8 and within the larger context of the judgment as a whole, it is apparent that the observations made in paragraphs 13.5 and 13.6 are an application of law to the facts of the case, and thus ought to be construed as being a part of the ratio decidendi. The observations made by the Apex Court cannot be considered to be stray observations on issues which were not necessary to be adjudicated upon by the Court while dealing with the issues which were under consideration before the Apex Court. The observations of the Apex Court in paragraph Nos.13.5 & 13.6 are, therefore, in the nature of ratio and are binding on the learned Single Judge under Article 141 of the Constitution of India. 75. In view of the above, the submission of the learned Senior Counsel for the Appellant herein that the findings in Civil Appeal No.5766/2021 have been rendered in the context of deciding an application under Section 271(c) of the Companies Act, 2013, and, therefore, were in a completely different context which are inapplicable while deciding an application under Section 34 of....
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....roceeding between the same parties where the cause of action is the same, for the expression "the matter in issue" in Section 11 of the Code of Civil Procedure means the right litigated between the parties i.e. the facts on which the right is claimed or denied and the law applicable to the determination of that issue. Where, however, the question is one purely of law and it relates to the jurisdiction of the Court or a decision of the Court sanctioning something which is illegal, by resort to the rule of res judicata a party affected by the decision will not be precluded from challenging the validity of that order under the rule of res judicata, for a rule of procedure cannot supersede the law of the land." 78. Recently, the Apex Court in Jamia Masjid (supra) has laid down the twin test to determine whether an issue has been conclusively decided in the previous suit/proceeding. The relevant paragraphs of the aforesaid decision are reproduced as under: "48. In view of the authorities cited above, the twin test that is used for the identification of whether an issue has been conclusively decided in the previous suit is: A. Whether the adjudication of the issue wa....
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....taining to fraud, fundamental policy of Indian law, notions of morality or justice in its Judgment passed in Civil Appeal No.5766/2021. Therefore, upon applying the well-established stated above, to the facts of the present case, it is clear that the principle of res judicata will apply in the present case and is binding upon the parties. 81. As a natural consequence of the principle of res judicata in the present case, the findings and observations of the Supreme Court in Paragraphs No.12 and 13 of its Judgment passed in Civil Appeal No.5766/2021, pertaining to the fraudulent actions and affairs of Devas and its shareholders would become binding between the parties and cannot be brought into question in the present proceedings. The relevants extracts of Paragraphs No.12 of the said Judgment are reproduced as under: "12.4 On the basis of the pleadings, the documents produced and the submissions made, NCLT recorded the following findings namely, (i) that the incorporation of Devas was with fraudulent intention to grab the prestigious contract in question, in connivance and collusion with the then officials of Antrix; (ii) that it is not in dispute that ....
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.... from the requirement; (viii) that after objections about the manipulations, the original minutes of the meeting came to be restored, on 20.11.2009, but this happened only after the grant of experimental licence on 07.05.2009; (ix) that in any case the experimental licence was to establish Wireless Telegraph Station in India under the India Telegraph Act, 1885, without which experimental trials could not have been conducted; (x) that Devas obtained IPTV licence as part of ISP licence, which has nothing to do with what was offered as DEVAS services; (xi) that the agreement dated 28.01.2005 made no reference of IPTV; (xii) that undeniably, Devas services cannot be provided with ISP licences; (xiii) that after bringing an amount of Rs 579 crores into India, a major portion was taken out of India; (xiv) that the only business activity carried on by Devas was to provide ISP services in a particular locality in Bangalore for a few residents and that too for a short duration, which made Devas earn a revenue of Rs. 80,000/; (xv) that the diversion of Rs. 489 crores and Rs. 58 crores for non ISP purposes is violat....
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.... to this Court to reappreciate evidence. Realising this constraint, the learned Senior Counsel for the Appellant sought to project the case as one of perversity of findings. But we do not find any perversity in the findings recorded by both the Tribunals. These findings are actually borne out by documents, none of which is challenged as fabricated or inadmissible. Though it is sufficient for us to stop at this, let us go a little deeper to find out whether there was any perversity in the findings recorded by the Tribunals and whether such findings could not have been reached by any reasonable standards. 12.8. The following undisputed facts emerge from the documents placed before the Tribunal. The authenticity of these documents were never in question or denied: (i) An agreement of a huge magnitude, for leasing out five numbers of C X S transponders each of 8.1 MHz capacity and five numbers of S X C transponders each of 2.7 MHz capacity on the Primary Satellite-I (PS-I), was surprisingly and shockingly entered into by Antrix with Devas, without same being preceded by any auction/tender process. It appears from the letter dated 27.09.2004 sent by DEVAS LLC, USA to S....
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.... the lease of nearly the entire space of such satellite to a joint venture, should have come to the public domain, to see, (a) if the technology existed; and (b) if the proposal was commercially viable. But it was not done; (iv) On 14.05.2004, a Committee headed by one Dr. K.N. Shankara, Director, Space Applications Centre was constituted purportedly to examine the technical feasibility, risk management including possibilities of alternate uses of space segment, financial and market aspects and time schedule. According to the Report submitted by this Committee, DEVAS was conceived as a new national service expected to be launched by the end of 2006 that would deliver video, multimedia and information services via high powered satellite to mobile receivers in vehicles and mobile phones across India. The catch here lies in the fact that while it was possible to deliver some of these services via terrestrial mode, it was not possible at that point of time to provide this bouquet of services via satellite. Even today satellite phones are beyond the reach of a common man. Mobile receivers or devices which can simply receive audio and video content are different from mobile phon....
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....the MoU on 28.07.2003, the presentation made on 22.03.2004 and the discussions held thereafter. The ground work was clearly done during the period from March-2003 to December-2004 before the company was formally incorporated. Immediately after incorporation, the Agreement dated 28.01.2005 was signed. Therefore, the first ingredient of Section 271(c) of the Companies Act, 2013, namely, the formation of the company for a fraudulent and unlawful purpose was clearly made out; (x) The kind of licenses obtained such as ISP and IPTV licenses and the object for which FIPB approvals were taken but showcased as those sufficient for fulfilling the obligations under the Agreement dated 28.01.2005 demonstrated that the affairs of the company were conducted in a fraudulent manner. This is fortified by the fact that a total amount of Rs.579 crores was brought in, but almost 85% of the said amount was siphoned out of India, partly towards establishment of a subsidiary in the US, partly towards business support services and partly towards litigation expenses. We do not know if the amount of Rs.233 crores taken out of India towards litigation services, also became a part of the investment i....
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.... was for ISP services. But they entered into a Share Subscription Agreement on 06.03.2006 for Devas services. The Share Subscription Agreement discloses that they were aware of the false statements contained in the Agreement dated 28.01.2005. Therefore, the shareholders, who now want to reap the fruits of a tree, fraudulently planted and unlawfully nurtured, cannot feign ignorance and escape the allegations of fraud. 12.9. An argument was advanced by the learned senior counsel for the appellants, on the basis of a statement contained in the order of NCI.AT that the allegations are prima facie made out, that a company cannot be ordered to be wound up on the basis of prima facie findings. The standard of proof required for winding up of a company cannot be prima facie." 82. The last aspect of the argument put forth by Mr. Dutt on the binding nature of the Civil Appeal No.5766/2021 pertains to the applicability of Article 144 of the Constitution of India in the present case. Article 144 reads as under: "All authorities, civil and judicial, in the territory of India shall act in aid of the Supreme Court." 83. Article 144 of the Constitution of India mandates that all ....
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....e would be against the spirit of Article 144 of the Constitution of India. Analysis of the power of the Court under Section 34(2)(b) of the Arbitration Act to set aside an award without any specific pleadings. 85. It has been argued by the Learned Senior Counsel for the Appellant herein that in a proceeding instituted under Section 34 of the Arbitration Act, the grounds for challenging an arbitral award must be specifically pleaded and the Court cannot suo motu discover grounds of fraud and public policy. His contention is that Antrix has sought to introduce the grounds of challenge to the arbitral award relating to fraud and public policy of India by way of two amendment applications, which are barred by limitation and have not been decided by the Ld. Single Judge. He therefore has argued that it is erroneous on the part of the Ld. Single Judge to set aside the ICC Award on the grounds of fraud or the award being in conflict with the public policy of India. 86. Per contra, the ld. ASG, arguing for Respondent No. 1, has stated that the two amendment applications are not barred by limitation and the Courts have adequate power to exercise discretion and allow the amendment a....
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....t in accordance with this Part; or (b) the Court finds that- (i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or (ii) the arbitral award is in conflict with the public policy of India. [Explanation 1.--For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,-- (i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or (ii) it is in contravention with the fundamental policy of Indian law; or (iii) it is in conflict with the most basic notions of morality or justice. Explanation 2.--For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.] [(2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award: Pr....
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....ege, in the language of s 24(a) of the IAA, that the making of the Award had been "induced or affected by fraud or corruption. 41 In this respect we agree with the appellants' submission that the "fraud" referred to in the section must include procedural fraud, that is, when a party commits perjury, conceals material information and/or suppresses evidence that would have substantial effect on the making of the award: see BVU v BVX [2019] SGHC 69 at [47] ("BVU"). We further note, however, that in the same paragraph, BVU states that there must be a causative link between any concealment aimed at deceiving the arbitral tribunal and the decision in favour of the concealing party. The appellants say that this link relates to the word "induced" in s 24(a) of the IAA and that therefore the word "affected" that follows "induced" must necessarily cover different and likely broader situations such as where an award is "tainted" by fraud (a) either in relation to the arbitration; or (b) where there is potentially fraud in the performance of the underlying contract. We comment that these two examples given by the appellants are in fact quite different: the first one is just a rephrasi....
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.... 90. From a bare perusal of the said provision, it is apparent that the said provision is drafted in similar terms as Explanation 1(i) of Section 34(2)(b)(ii) of the Arbitration and Conciliation Act, 1996, which is applicable to domestic arbitration between two Indian parties, such as the present case. However, under the Arbitration Act, 1996, this provision has to be read as a part of the ground provided for under Section 34(2)(b)(ii), i.e., an arbitral award being in conflict with the public policy of India. On the other hand, Section 24 of the SIAA, is an additional ground, separate from the ground of "award is in conflict with the public policy of this State" which is provided for under Article 34(2)(b)(ii) of the UNCITRAL Model Law on International Commercial Arbitration. Thus, the two provisions, while couched in similar terms, are different in their meaning, scope and applicability. Therefore, in light of the same, we find that the Appellants reliance upon the decision in Bloomberry Resorts and Hotels (supra) is misplaced, and the same is not applicable to the facts of the present case. 91. Having said that, it would be appropriate to understand how Courts in India, have int....
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....71 & 572; Cheshire & North, Private International Law, 12th Edn., pp. 446-447). The English courts would not refuse to recognise or enforce a foreign award merely because the arbitrators (in its view) applied the wrong law to the dispute or misapplied the right law. (See : Dicey & Morris, The Conflict of Laws, 11th Edn., Vol. II, p. 565.) **** 45. We are, therefore, of the view that the words "public policy" used in Section 7(1)(b)(ii) of the Foreign Awards Act refer to the public policy of India and the recognition and enforcement of the award of the Arbitral Tribunal cannot be questioned on the ground that it is contrary to the public policy of the State of New York. IV. Meaning of „public policy‟ in Section 7(1)(b)(ii) of the Act 46. While observing that "from the very nature of things, the expressions 'public policy', 'opposed to public policy' or 'contrary to public policy' are incapable of precise definition" this Court has laid down: (SCC p. 217, para 92) "Public policy ... connotes some matter which concerns the public good and the public interest. The concept of what is for the public good or in the public interest o....
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....e of public policy is applied in the field of private international law. Applying the said criteria it must be held that the enforcement of a foreign award would be refused on the ground that it is contrary to public policy if such enforcement would be contrary to (i) fundamental policy of Indian law; or (ii) the interests of India; or (iii) justice or morality." 93. In Associated Builders v. Delhi Development Authority, (2015) 3 SCC 49, the Court expounded upon the meaning of "public policy" under Section 34 of the Arbitration Act. The relevant extracts of the decision are reproduced as under: "17. It will be seen that none of the grounds contained in sub-section (2)(a) of Section 34 deal with the merits of the decision rendered by an arbitral award. It is only when we come to the award being in conflict with the public policy of India that the merits of an arbitral award are to be looked into under certain specified circumstances. 18. In Renusagar Power Co. Ltd. v. General Electric Co. [Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644] , the Supreme Court construed Section 7(1)(b)(ii) of the Foreign Awards (Recognition and Enforcement) ....
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....ectric Co., 1994 Supp (1) SCC 644] it is required to be held that the award could be set aside if it is patently illegal. The result would be- award could be set aside if it is contrary to: (a) fundamental policy of Indian law; or (b) the interest of India; or (c) justice or morality, or (d) in addition, if it is patently illegal. Illegality must go to the root of the matter and if the illegality is of trivial nature it cannot be held that award is against the public policy. Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the court. Such award is opposed to public policy and is required to be adjudged void. *** 74. In the result, it is held that: (A)(1) The court can set aside the arbitral award under Section 34(2) of the Act if the party making the application furnishes proof that: (i) a party was under some incapacity, or (ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or (iii) the party making the applicat....
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....NGC informed specifically that time was extended but stipulated liquidated damages as agreed would be recovered; (v) liquidated damages for delay in supply of goods were to be recovered by paying authorities from the bills for payment of cost of material supplied by the contractor; (vi) there is nothing on record to suggest that stipulation for recovering liquidated damages was by way of penalty or that the said sum was in any way unreasonable; (vii) in certain contracts, it is impossible to assess the damages or prove the same. Such situation is taken care of by Sections 73 and 74 of the Contract Act and in the present case by specific terms of the contract." ***** 27. Coming to each of the heads contained in Saw Pipes [(2003) 5 SCC 705 : AIR 2003 SC 2629] judgment, we will first deal with the head "fundamental policy of Indian law". It has already been seen from Renusagar [Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644] judgment that violation of the Foreign Exchange Act and disregarding orders of superior courts in India would be regarded as being contrary to the fundamental policy of Indian law. To this it co....
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.... of Police [(1999) 2 SCC 10 : 1999 SCC (L&S) 429] , it was held: (SCC p. 14, para 10) "10. A broad distinction has, therefore, to be maintained between the decisions which are perverse and those which are not. If a decision is arrived at on no evidence or evidence which is thoroughly unreliable and no reasonable person would act upon it, the order would be perverse. But if there is some evidence on record which is acceptable and which could be relied upon, howsoever compendious it may be, the conclusions would not be treated as perverse and the findings would not be interfered with." 33. It must clearly be understood that when a court is applying the "public policy" test to an arbitration award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. Thus an award based on little evidence or on evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on this score [ Very often an ....
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.... justice or morality. These are two different concepts in law. An award can be said to be against justice only when it shocks the conscience of the court. An illustration of this can be given. A claimant is content with restricting his claim, let us say to Rs 30 lakhs in a statement of claim before the arbitrator and at no point does he seek to claim anything more. The arbitral award ultimately awards him Rs 45 lakhs without any acceptable reason or justification. Obviously, this would shock the conscience of the court and the arbitral award would be liable to be set aside on the ground that it is contrary to "justice". Morality 37. The other ground is of "morality". Just as the expression "public policy" also occurs in Section 23 of the Contract Act, 1872 so does the expression "morality". Two illustrations to the said section are interesting for they explain to us the scope of the expression "morality": "(j) A, who is B's Mukhtar, promises to exercise his influence, as such, with B in favour of C, and C promises to pay 1000 rupees to A. The agreement is void, because it is immoral. (k) A agrees to let her daughter to hire to B for concubina....
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....tted by Williams, J., in Hodgkinson v. Fernie [(1857) 3 CB (NS) 189 : 140 ER 712] , but is now well established." 41. This, in turn, led to the famous principle laid down in Champsey Bhara Co. v. Jivraj Balloo Spg. and Wvg. Co. Ltd. [AIR 1923 PC 66 : (1922-23) 50 IA 324 : 1923 AC 480 : 1923 All ER Rep 235 (PC)] , where the Privy Council referred to Hodgkinson [(1857) 3 CB (NS) 189 : 140 ER 712] and then laid down: (IA pp. 330-32) "The law on the subject has never been more clearly stated than by Williams, J. in Hodgkinson v. Fernie [(1857) 3 CB (NS) 189 : 140 ER 712] : [CB(NS) p. 202 : ER p. 717] 'The law has for many years been settled, and remains so at this day, that, where a cause or matters in difference are referred to an arbitrator, whether a lawyer or a layman, he is constituted the sole and final Judge of all questions both of law and of fact. ... The only exceptions to that rule are cases where the award is the result of corruption or fraud, and one other, which, though it is to be regretted, is now, I think firmly established viz. where the question of law necessarily arises on the face of the award or upon some paper accompanying and forming p....
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....the Arbitration Act by tracing the history of the provision and various developments the provision had undergone, by way of judicial decisions, legislative amendments and suggestions by the Law Commission. Analysing the same, the Court then stated the following, apropos Section 34(2)(b)(ii) of the Arbitration Act: "34. What is clear, therefore, is that the expression "public policy of India", whether contained in Section 34 or in Section 48, would now mean the "fundamental policy of Indian law" as explained in paras 18 and 27 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] i.e. the fundamental policy of Indian law would be relegated to "Renusagar" understanding of this expression. This would necessarily mean that Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12] expansion has been done away with. In short, Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12], as explained in paras 28 and 29 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], would no longer obtain, as under the guise of interfering w....
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.... In short, what is not subsumed within "the fundamental policy of Indian law", namely, the contravention of a statute not linked to public policy or public interest, cannot be brought in by the backdoor when it comes to setting aside an award on the ground of patent illegality. 38. Secondly, it is also made clear that reappreciation of evidence, which is what an appellate court is permitted to do, cannot be permitted under the ground of patent illegality appearing on the face of the award. 39. To elucidate, para 42.1 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , namely, a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an arbitral award. Para 42.2 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , however, would remain, for if an arbitrator gives no reasons for an award and contravenes Section 31(3) of the 1996 Act, that would certainly amount to a patent illegality on the face of the award. 41. What is important to note is that a decision which is perverse, as understood in paras 31 and 32 of Associate Bui....
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.... reassessing factual aspects of the cases to come to a conclusion that the award needs intervention and thereafter, dubbing the award to be vitiated by either perversity or patent illegality, apart from the other grounds available for annulment of the award. This approach would lead to corrosion of the object of the 1996 Act and the endeavours made to preserve this object, which is minimal judicial interference with arbitral awards. That apart, several judicial pronouncements of this Court would become a dead letter if arbitral awards are set aside by categorising them as perverse or patently illegal without appreciating the contours of the said expressions. 29. Patent illegality should be illegality which goes to the root of the matter. In other words, every error of law committed by the Arbitral Tribunal would not fall within the expression "patent illegality". Likewise, erroneous application of law cannot be categorised as patent illegality. In addition, contravention of law not linked to public policy or public interest is beyond the scope of the expression "patent illegality". What is prohibited is for Courts to reappreciate evidence to conclude that the award suffers....
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....enacted for the "national economic interest", and disregarding the superior Courts in India would be antithetical to the fundamental policy of Indian law. Contravention of a statute not linked to public policy or public interest cannot be a ground to set at naught an arbitral award as being discordant with the fundamental policy of Indian law and neither can it be brought within the confines of "patent illegality" as discussed above. In other words, contravention of a statute only if it is linked to public policy or public interest is cause for setting aside the award as being at odds with the fundamental policy of Indian law. If an arbitral award shocks the conscience of the court, it can be set aside as being in conflict with the most basic notions of justice. The ground of morality in this context has been interpreted by this Court to encompass awards involving elements of sexual morality, such as prostitution, or awards seeking to validate agreements which are not illegal but would not be enforced given the prevailing mores of the day. [Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131 : (2020) 2 SCC (Civ) 213]" 96. The question of the power of a Court deali....
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....: 1957 SCR 595] , seem to enshrine clearly that courts would, as a rule, decline to allow amendments, if a fresh claim on the proposed amendments would be barred by limitation on the date of application but that would be a factor for consideration in exercise of the discretion as to whether leave to amend should be granted but that does not affect the power of the court to order it, if that is required in the interest of justice. There is no reason why the same rule should not be applied when the court is called upon to consider the application for amendment of grounds in the application for setting aside the arbitral award or the amendment of the grounds in appeal under Section 37 of the 1996 Act. 32. It is true that, the Division Bench of the Bombay High Court in Vastu Invest & Holdings (P) Ltd. [(2001) 2 Arb LR 315 (Bom)] held that independent ground of challenge to the arbitral award cannot be entertained after the period of three months plus the grace period of thirty days as provided in the proviso to sub-section (3) of Section 34, but, in our view, by "an independent ground" the Division Bench meant a ground amounting to a fresh application for setting aside an arbi....
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.... is sought to be effected is not even to the grounds contained in the application under Section 34 but to the memo of appeal. In the circumstances, it cannot be said that discretion exercised by the learned Single Judge in refusing to grant leave to the appellant to amend the memorandum of arbitration appeal suffers from any illegality." 98. In Sal Udyog (supra), the Court was concerned with the question of whether a party waives off its right to plead a specific ground in an appeal under Section 37 of the Arbitration Act if it has not pleaded the same in its application under Section 34. In the facts of that particular case, the ground of patent illegality was pleaded by the Appellant therein in its appeal under Section 37 but not in its Section 34 application. The Court in that case has observed: "24. We are afraid, the plea of waiver taken against the appellant State on the ground that it did not raise such an objection in the grounds spelt out in the Section 34 petition and is, therefore, estopped from taking the same in the appeal preferred under Section 37 or before this Court, would also not be available to the respondent Company having regard to the langua....
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....s the Court to grant leave to amend the Section 34 application if the circumstances of the case so warrant and it is required in the interest of justice. This is what has been observed in the preceding paragraph with reference to Section 34(2-A) of the 1996 Act." 99. In both the above cases, the Apex Court has looked at the language of the provision under Section 34 of the Arbitration Act and laid emphasis upon the phrase "the Court finds that" that occurs in Section 34(2)(b) and 34(2A) of the Arbitration Act. This phrase has been interpreted by the Court, as an enabling provision, allowing the Court while deciding an application under Section 34 of the Arbitration Act to grant leave to amend an application under Section 34 of the Arbitration Act, if the peculiar circumstances of the case so warrant and it is so required in the interest of justice. The Court has held that the phrase enables a Section 34 Court to discover on its own, patent illegality in the award and set it aside under Section 34(2A). It has further held that the provision, which enables a Court to act on its own in deciding an application under Section 34, would also be available in an appeal under Section 37 o....
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....eferences to the Devas Agreement. The Cabinet Note dated 17.11.2005, which were prepared ten (10) months after the signing of the Devas Agreement, did not make any mention about Devas or the Agreement, but the cabinet proceeded on the basis that ISRO had received multiple expressions of interest from various entities. Therefore, the Cabinet was kept completely in the dark and material information was suppressed by Devas when Cabinet approval was obtained by Devas. Further, the Cabinet was misled to believe there are several firm expressions of interest before ISRO, even though the agreement was granted only to Devas. Devas has thus not only suppressed, but also misrepresented information in order to pursue its fraudulent activities in India. 101.2. The Devas Agreement is an agreement of huge magnitude pertaining to the leasing out of transponders by Antrix, to Devas, on the Primary Satellite-I, without the same being preceded by any auction or tender process. It is also established that the minutes of the meeting of the Sub Comittee dated 06.01.2009 were manipulated and an experimental license was granted on 07.05.2009 and the original minutes were restored on 20.11.2009 after p....
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....the Apex Court, which is the highest Court of the land, could not have been ignored by the learned Single Judge and those findings would automatically become the findings of the learned Single Judge while considering an application under Section 34 of the Arbitration Act for which there was no necessity of a specific pleading. In any event, applications have been filed, though belatedly, and the Apex court in Hindustan Construction Company (supra) and Sal Udyog (supra) has held that the Courts, while dealing with an application under Section 34 of the Arbitration Act, have the power to discover grounds under Section 34(2)(b) and 34(2A) of the Arbitration Act. The learned Single Judge, in paragraphs No.162 & 163 of the Impugned Judgment, has rejected the contention of the Appellants herein that the application cannot be considered because it is barred by limitation. The learned Single Judge, therefore, has applied his mind to the amendment application also and has taken it into consideration while deciding the application under Section 34 of the Arbitration Act and the issue as to whether the making of award was vitiated by fraud or corruption. 104. We therefore see no perversity....
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....engine of fraud in the hands of dishonest litigants. The courts of law are meant for imparting justice between the parties. One who comes to the court, must come with clean hands. We are constrained to say that more often than not, process of the court is being abused. Property-grabbers, tax-evaders, bank-loan-dodgers and other unscrupulous persons from all walks of life find the court-process a convenient lever to retain the illegal gains indefinitely. We have no hesitation to say that a person, who's case is based on falsehood, has no right to approach the court. He can be summarily thrown out at any stage of the litigation." (emphasis supplied) 107. Following the decision in S.P. Chengalvaraya Naidu (supra), in Ram Chandra Singh v. Savitri Devi, (2003) 8 SCC 319, the Apex Court has held as under: "15. Commission of fraud on court and suppression of material facts are the core issues involved in these matters. Fraud as is well known vitiates every solemn act. Fraud and justice never dwell together. 16. Fraud is a conduct either by letter or words, which induces the other person or authority to take a definite determinative stand as a response to ....
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.... with the design of securing something by taking unfair advantage of another. It is a deception in order to gain by another's loss. It is a cheating intended to get an advantage. (See S.P. Chengalvaraya Naidu v. Jagannath [(1994) 1 SCC 1].) 11. "Fraud" as is well known vitiates every solemn act. Fraud and justice never dwell together. Fraud is a conduct either by letters or words, which induces the other person or authority to take a definite determinative stand as a response to the conduct of the former either by words or letters. It is also well settled that misrepresentation itself amounts to fraud. Indeed, innocent misrepresentation may also give reason to claim relief against fraud. A fraudulent misrepresentation is called deceit and consists in leading a man into damage by wilfully or recklessly causing him to believe and act on falsehood. It is a fraud in law if a party makes representations, which he knows to be false, and injury ensues therefrom although the motive from which the representations proceeded may not have been bad. An act of fraud on court is always viewed seriously. A collusion or conspiracy with a view to deprive the rights of others in relation....
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.... appellants, reliance has been placed on the definition of "fraud" as defined in Black's Law Dictionary, which is as under: "Fraud : (1) A knowing misrepresentation of the truth or concealment of a material fact to induce another to act to his or her detriment. Fraud is usually a tort, but in some cases (esp. when the conduct is wilful) it may be a crime. ... (2) A misrepresentation made recklessly without belief in its truth to induce another person to act. (3) A tort arising from a knowing misrepresentation, concealment of material fact, or reckless misrepresentation made to induce another to act to his or her detriment. (4) Unconscionable dealing; esp., in contract law, the unconscientious use of the power arising out of the parties' relative positions and resulting in an unconscionable bargain." (emphasis supplied) 110. It is now well settled that the principle of "fraud vitiates all solemn acts" is applicable not only to the primary proceedings, but also to all collateral proceedings that arise out of the same facts and circumstances. The act of fraud is an anathema to all equitable principles and every trans....
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....CONCLUSION: 114. To summarize: a) The findings of the Apex Court in its Judgment in Civil Appeal No.5766/2021 while upholding the findings of the NCLT and NCLAT, noted that Devas was incorporated for a fraudulent purpose and that its affairs were being conducted in a fraudulent manner. The Apex Court has given these findings after being aware of the fact that an arbitral award has been passed in favour of Devas and the same is under challenge in a petition under Section 34 of the Arbitration Act. The Apex Court has repelled the contention of Devas that the application for winding up was filed only to circumvent the enforcement of the arbitral award. Without the findings rendered by the Apex Court regarding fraud, the Apex Court could not have come to the conclusion that Devas had been incorporated for fraudulent purposes and that its affairs were being conducted in a fraudulent manner and, therefore, the order of winding up Devas under Section 271(c) of the Companies Act, 2013 was correct. These findings, therefore, become the ratio and not the obiter of the case and therefore, were binding on the learned Single Judge under Article 141 of the Constitution of India. It i....
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....ion 75 or 81 of the Arbitration Act. This phrase has been interpreted by the Court, as an enabling provision, allowing the Court while deciding an application under Section 34 of the Arbitration Act to grant leave to amend an application under Section 34 of the Arbitration Act, if the peculiar circumstances of the case so warrant and it is so required in the interest of justice. e) In view of the various Judgments of the Hon'ble Supreme Court interpreting Section 34 of the Arbitration Act, the amendments to Section 34 of the Arbitration Act and in view of the categorical findings of the Apex Court in its Judgment passed in Civil Appeal No.5766/2021, nothing prevented the learned Single Judge from relying on those findings and using them for the purpose of setting aside the ICC Award under Section 34 of the Arbitration Act on the ground that the agreement itself was a product of fraud and, therefore, the making of award is automatically induced by fraud and corruption. The findings by the Apex Court, which is the highest Court of the land, could not have been ignored by the learned Single Judge and those findings would automatically become the findings of the learned Si....