TaxTMI 
TaxTMI 
2024 (7) TMI 459
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....Mr. Mukul Rohatgi, Sr. Adv. Mr. C.U. Singh, Sr. Adv. Mr. Mahesh Agarwal, Adv. Mr. Parimal Shroff, Adv. Mr. Rishi Agrawala, Adv. Mr. Ankur Saigal, Adv. Mr. Victor Das, Adv. Mr. Anirudh Bhatia, Adv. Mr. Devansh Srivastava, Adv. Ms. Vidisha Swarup, Adv. Mr. E. C. Agrawala, AOR Mr. Maninder Singh, Sr. Adv. Mr. Anup Jain, AOR Ms. Meenakshi Arora, Sr. Adv. Ms. Anushree Prashit Kapadia, AOR Mr. Nishant Chothani, Adv. Mr. R. Gopalakrishnan, AOR Mr. Murtaza Kachwalla, Adv. Mr. S. M. Algaus, Adv. Mr. Palash Moolchandani, Adv JUDGMENT ABHAY S. OKA, J. 1. The application for permission to file special leave petition is allowed. Leave granted. FACTUAL ASPECTS 2. These appeals take exception to the same judgment and order dated 7th July 2023 passed by the High Court of Judicature at Bombay. Therefore, the same are being decided together. We are setting out a few factual aspects necessary for deciding the appeals. 3. On 31st March 1993, the Maharashtra Housing and Area Development Authority (MHADA) executed a lease agreement in respect of the subject property in favour of Andheri Kamgar Nagar Cooperative Housing Society Limited (for short, 'the Society'). It is stated to be a society of ....
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.... the respondent filed a petition before the High Court under Section 11 of the Arbitration and Conciliation Act, 1996 (for short, 'the Arbitration Act'). An Arbitrator was appointed. The arbitral proceedings concluded in the form of an award made by the Arbitral Tribunal on 7th September 2018 in favour of the respondent (the claimant before the Arbitral Tribunal). Most of the claims made by the respondent were granted. The counterclaim made by the appellant was rejected. The appellant filed a petition under Section 34 of the Arbitration Act before the High Court to challenge the award. By the judgment dated 13th September 2019, the learned Single Judge of the High Court allowed the petition under Section 34 of the Arbitration Act and proceeded to set aside the award on various grounds, such as perversity, patent illegality, etc. The respondent filed an appeal under Section 37(1)(c) of the Arbitration Act to challenge the judgment of the learned Single Judge. By the impugned judgment, which set aside the judgment of the learned Single Judge, the Division Bench of the High Court passed an order of remand to the learned Single Judge on the ground that the learned Single Judge did not ....
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....r before the Division Bench in the appeal under Section 37 of the Arbitration Act has preferred a Civil Appeal arising out of Special Leave Petition (C)Diary No.40494 of 2023. The plea by the respondent is naturally for restoration of the award of the Arbitral Tribunal. We have heard the detailed submissions of the learned senior counsel representing the respondent (the claimant) and the intervenors. We are not referring to the submissions made by them relating to the merits of the Award, considering the limited scope of these appeals. CONSIDERATION OF SUBMISSIONS 7. After considering the submissions made across the Bar, we find that the issue revolves around the power of the Appellate Court dealing with the appeal under Section 37(1)(c) of the Arbitration Act to pass an order of remand to Section 34 Court. Before we address the issue regarding the power of the Appellate Court, we will need to refer to the award made by the Arbitral Tribunal. There are six different parts of the award by the Arbitral Tribunal. The operative part of the award of the Arbitral Tribunal reads thus : ".. .. .. .. .. .. .. .. .. .. .. .. .. 203. In view of the foregoing discussion, the following ....
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....premium, before issuance of OC for Wing C, the Respondent shall comply with such condition or direction with utmost expedition and within one month from the date of receipt of such communication; II (j) The Respondent shall pay the Claimant Rs.67,00,000/( Rupees Sixty Seven lakhs) along with Rs.26,00,000/( Rupees Twenty Six Lakhs) being interest @ 18% p.a. from 19th July, 2016 till the date of this Award and further interest @ 18% p.a. from the date of this Award till the date of payment / realization, within 3 months from the date of this Award; (k) The Respondent shall also pay the Claimant Rs.53,00,00,000/(Rupees Fifty Three Crores) as compensation for the period from 19th July 2016 till the date of this Award, being compensation for the delay on the part of the Respondent in not obtaining further CC for Wing C, within 4 months from the date of this Award; (I) The Respondent shall further pay the Claimant Rs.50,00,00,000/(Rupees Fifty Crores) as compensation for delay in obtaining further CC for Wing C for the period of 24 months from the date of this Award till issuance of OC for Wing C, within 4 months from the date of issuance of OC for Wing C; III (m) The Res....
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....flat in Wing B (Flat No.4 on the pt floor) and 3 flats in Wing B, out of the following 9 flats: ► 2 Flats purportedly transferred by the Respondent to Mr. Kiran H.Hemani M. D. of the Respondent, ► 7 flats purportedly transferred by the Respondent to Mr. Priyank K. Hemani Director of the Respondent; (u) The Respondent and the persons claiming through the Respondent are hereby restrained from selling/reselling, or in any other manner disposing of or encumbering or parting with possession of or creating any third party rights, in the flats in Wing B purportedly transferred to Mr. Kiran H. Hemani and Mr. Priyank K. Hemai till identification and intimation of 3 flats out of those 9 flats in Wing B is conveyed by the Respondent to the Claimant for the purpose of being available for sale by the Claimant for recovery Rs.54.03 crores as directed in (h), (i) & (r) hereinabove and explained in detail para 199 hereinabove; (v) In case the Respondent does not obtain further CC for Wing C within 4 months from the date of this Award, the Claimant shall be entitled to sell the 15 flats in Wing A (earmarked for the Respondent) and adjust the sale proceeds thereof against the....
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....Arbitral Tribunal that 31 agreements/allotment letters for the sale of flats were sham and bogus and were not binding on the respondent. The learned Single Judge found that no persons shown as purchasers under the agreement were parties to the proceedings before the Arbitral Tribunal. The learned Single Judge also noted that these 31 flats were mortgaged in favour of various Banks and Financial Institutions. Therefore, the learned Single Judge held that even the Banks and Financial Institutions would be affected by the finding of the Arbitral Tribunal that 31 flats under the sale agreements were sham, bogus, null, and void. Therefore, the learned Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 14 of 35 Single Judge held that the Arbitral Tribunal had exceeded its jurisdiction. The learned Single Judge also held that the respondent before the Arbitral Tribunal (the appellant herein) was entitled to sell the said 31 flats, and the purchasers thereof were neither parties to the agreement containing the arbitration clause nor claiming under the said agreement. 9. The learned Single Judge also referred to that part of the arbitral award, which provided that there would be a charge o....
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....ld that the respondent herein had not proved his readiness and willingness to perform his obligations. The learned Single Judge held that since the relief of specific performance is discretionary, the conduct of the respondent ought to have been taken into consideration by the Arbitral Tribunal. 11. The learned Single Judge dealt with the award of damages in the sum of Rs.53 crores for the period from 19th July 2016 till the date of the award on account of the alleged delay by the respondent. The learned Single Judge held that the evidence on record had been completely overlooked while granting the relief of damages in the sum of Rs.53 crores. The learned Single Judge recorded that the Arbitral Tribunal referred to only a part of the depositions of the witnesses and ignored the rest. Further, the learned Single Judge held that the delay on the part of the appellant in completing other projects was neither pleaded nor proved. Moreover, the learned Single Judge held that even assuming that there was a delay in completion of other projects on the part of the appellant, that would be no ground for grant of relief for specific performance. The learned Single Judge recorded something ab....
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....en. The Appellant was ready but the Respondent was not ready. Therefore, we are required to give elaborate reason why remand is necessary. In this context, we have briefly referred to the core facts of the case, the rival contentions, the award and the impugned order. The factual backdrop leading to the dispute is narrated in detail in the Award and by the learned Single Judge. The summary of the factual position is as follows. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .." (emphasis added) In paragraphs 42 and 43, the Division Bench held thus: "42. Even otherwise, question would arise as to whether such a detailed factual enquiry can be made to set aside the award. To reach such a conclusion that it suffers from perversity, the Award had to be carefully analyzed to rule out other possibilities. It is not enough to merely state a conclusion. Further, when such a conclusion can be reached under Section 34 of the Act is a debatable issue that also needs to be addressed. 43. In the impugned order in paragraphs 161 and 162 reference is made to the principle of law governing the discretion to be used for grant of specific performance. In paragraph 163, it is stated tha....
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....of power by the court under Section 34 has not exceeded the scope of the provision. Thus, it is evident that in case an arbitral award has been confirmed by the court under Section 34 and by the court in an appeal under Section 37, this Court must be extremely cautious and slow to disturb such concurrent findings." (emphasis added) In another decision of this Court in the case of UHL Power Company Limited v. State of Himachal Pradesh (2022) 4 SCC 116, in paragraph 16, it was held thus: "16. As it is, the jurisdiction conferred on courts under Section 34 of the Arbitration Act is fairly narrow, when it comes to the scope of an appeal under Section 37 of the Arbitration Act, the jurisdiction of an appellate court in examining an order, setting aside or refusing to set aside an award, is all the more circumscribed. In MMTC Ltd. v. Vedanta Ltd. [MMTC Ltd. v. Vedanta Ltd., (2019) 4 SCC 163 : (2019) 2 SCC (Civ) 293] , the reasons for vesting such a limited jurisdiction on the High Court in exercise of powers under Section 34 of the Arbitration Act have been explained in the following words : (SCC pp. 16667, para 11) "11. As far as Section 34 is concerned, the position is wellse....
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....ion 37 against the judgment in a petition under Section 34 is more constrained than the jurisdiction of the Court dealing with a petition under Section 34. It is the duty of the Appellate Court to consider whether Section 34 Court has remained confined to the grounds of challenge that are available in a petition under Section 34. The ultimate function of the Appellate Court under Section 37 is to decide whether the jurisdiction under Section 34 has been exercised rightly or wrongly. While doing so, the Appellate Court can exercise the same power and jurisdiction that Section 34 Court possesses with the same constraints. 17. In the facts of the case in hand, while deciding the petition under Section 34 of the Arbitration Act, the learned Single Judge has made a very elaborate consideration of the submissions made across the Bar, the findings recorded by the Arbitral Tribunal and the issue of illegality or perversity of the award. Detailed reasons while dealing with the alleged patent illegalities associated with the directions issued under the arbitral award have been recorded. Considering the nature of the findings recorded by the learned Single Judge, the job of the Appellate Cou....
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....ecific arbitration; (iii) to provide that the arbitral tribunal gives reasons for its arbitral award; (iv) to ensure that the arbitral tribunal remains within the limits of its jurisdiction; (v) to minimise the supervisory role of courts in the arbitral process; ......................................." (emphasis added) While coming out with the 2015 Amendment Bill, the legislature has noted in the objects and reasons that a lot of delay is involved in concluding the arbitral proceedings. In paragraphs 6 and 7 of the objects and reasons of the Bill, the Legislature has stated thus: "6. It is proposed to introduce the Arbitration and Conciliation (Amendment) Bill, 2015, to replace the Arbitration and Conciliation (Amendment) Ordinance, 2015, which inter alia, provides for the following, namely- (i) to amend the definition of "Court" to provide that in the case of international commercial arbitrations, the Court should be the High Court; (ii) to ensure that an Indian Court can exercise jurisdiction to grant interim measures, etc., even where the seat of the arbitration is outside India; (iii) an application for appointment of an arbitrator shall be disposed....
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....ect of the Arbitration Act. Therefore, an order of remand by Section 37 Court can be made only in exceptional cases where remand is unavoidable. As observed earlier, the scope of interference in a petition under Section 34 is very narrow. The jurisdiction under Section 37 of the Arbitration Act is narrower. Looking to the objects of the Arbitration Act and the limited scope available to the Courts to interfere with the award of the Arbitral Tribunal, this Court, while dealing with the decisions under Sections 34 and 37 of the Arbitration Act, in its jurisdiction under Article 136 of the Constitution of India, has to be circumspect. By their own volition, the parties choose to go before the Arbitral Tribunal instead of availing remedy before the traditional civil courts. Therefore, Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 30 of 35 the Courts must be very conservative when dealing with arbitral awards and confine themselves to the grounds strictly available under Section 34 of the Arbitration Act. 20. In the facts of the case, the remand was completely unwarranted. The reason is that the learned Single Judge has elaborately dealt with the merits of the challenge in the Sec....
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....ounds in a petition under Section 34 and 164 grounds in an appeal under Section 37. It is not surprising that this appeal has a synopsis running into 45 pages, and it contains as many as 54 grounds of challenge. 23. In many cases, the proceedings under Sections 34 and 37 are being treated as if the same are appeals under Section 96 of the CPC. When members of the bar take up so many grounds in petitions under Section 34, which are not covered by Section 34, there is a tendency to urge all those grounds which are not available in law and waste the Court's time. The time of our Courts is precious, considering the huge pendency. This is happening in a large number of cases. All this makes the arbitral procedure inefficient and unfair. It is high time that the members of the Bar show restraint by incorporating only legally permissible grounds in petitions under Section 34 and the appeals under Section 37. Everyone associated with the arbitral proceedings must remember that brevity will make the arbitral proceedings and the proceedings under Sections 34 and 37 more effective. All that we say is that all the stakeholders need to introspect. Otherwise, the very object of adopting the UNC....