TaxTMI 
TaxTMI 
TaxTMI 
2024 (2) TMI 1404
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....due to the respondent/award-holder. 3. The petitioner prays for unconditional stay on the ground that the Arbitration Agreement was induced by fraud. 4. Learned counsel appearing for the petitioner/award-debtor makes the argument under 2 heads, namely, that the Agreement dated 11.5.2011 was executed in violation of the order passed by the Petroleum and Natural Gas Regulatory Board (PNGRB) and an order dated 25.3.2011 passed by the Delhi High Court. Counsel submits that any act done in violation of order of Court is non est. The second argument is that the GSPA is vitiated by fraud and misrepresentation as the respondent/award-holder deliberately failed to disclose show-cause notices of 3.12.2010 and 15.12.2010 which were issued to the respondent to stop any incremental activity with immediate effect till the matter was decided by the PNGRB. Counsel submits that the petitioner was hence fraudulently induced to enter into the GSPA with the respondent which was clearly voidable on the ground of fraud. It is also submitted that fraud cannot be put into any straight jacket definition and that the facts of the present case must be seen in the context of the order passed by the PNGRB an....
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....the respondent to stop supply of CBM to its customers including the petitioner. 11. The parties executed the GSPA on 11.5.2011 in the meantime whereby the respondent was to supply CBM to the petitioner for 25 years till May, 2036. Admittedly, as on the date of execution of the agreement, the penalty imposed by PNGRB by the order dated 18.3.2011 was stayed by the Delhi High Court on 25.3.2011. There was no other direction on the respondent to stop supply of CBM or remove CBM supply line except a monetary penalty which the respondent complied with by depositing Rs. 50 lakhs. The later orders of the Delhi High Court also did not prohibit the respondent either from entering into CBM supply agreements or supply CBM to its customers including the petitioner. It is relevant to mention that the petitioner obtained CBM from the respondent and also paid for the same during the period of the contract i.e. from 11.5.2011 till the date when the petitioner terminated the Agreement on 7.7.2014. 12. It is also relevant that the subsequent order of PNGRB dated 31.3.2014 continued to allow the respondent without any restraint from supplying CBM to its customers and only imposed a monetary penalty.....
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....39;s website, but were also part of the Balance Sheets of the respondent which were in possession of the petitioner at least in 2017. 17. For a contract to be treated as voidable at the option of one of the parties to the contract, it must be shown that the consent to the agreement was obtained by coercion, fraud or misrepresentation. The exception to section 19 of The Contract Act, 1872 would apply where the party alleging fraud had the means of discovering the truth with ordinary diligence. Since the orders of the Delhi High Court and the PNGRB were in the public domain and were also disclosed by the respondent in its Balance Sheets and the petitioner had itself relied on through its witness, the case of the petitioner would fall (also as in collapse) within the exception to section 19 of the Contract Act, 1872. 18. The petitioner's argument of the Arbitration Agreement being induced or effected by fraud is hence without substance and is accordingly rejected. The second proviso to section 36(3) of the 1996 Act requires a prima facie case for fraud 19. The second proviso to section 36(3) of The Arbitration and Conciliation Act, 1996, inserted into the Act in 2021 with retr....
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.... contract. 24. In the present case, the petitioner seeks to make out a case of fraud on the part of the respondent on account of the respondent's alleged non-disclosure of the orders passed by the PNGRB ad the Delhi High Court at the relevant point of time. The presumption is that the petitioner would not have entered into the agreement with the respondent had the respondent disclosed these orders. The case argued is that the petitioner was induced into executing the Arbitration Agreement/GSPA with the respondent on the fraudulent misrepresentation that the respondent was free to supply CBM gas to the petitioner for 25 years. Conclusion 25. To sum up, the series of orders passed by the PNGRB and the Delhi High Court shows that first, there was, in fact, no restraint on the respondent at any point of time, material or otherwise, to perform or continue to perform the Agreement in the terms thereof. Second, the petitioner was all along aware of the orders of the PNGRB and the Delhi High Court from 2010-11 onwards as would appear from the respondent's Balance Sheets for relevant years. Even if it is assumed that the petitioner/ or its witness did not check the particular pag....
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.... the Bombay High Court in Ganesh Benzoplast Ltd. v. Union of India; 2021(2) Mh.L.J 213, i.e that when an order is set aside by a superior authority it is erased from the record book as if it was never passed. These decisions are relevant in the context of the Delhi High Court setting aside the order of the PNGRB on 11.11.2013 whereby the PNGRB had imposed a monetary penalty on the respondent. 30. The decisions cited on behalf of the petitioner are required to be dealt with. Martin Burn Ltd. v. R. N. Banerjee; 1957:INSC:76 : AIR 1958 SC 79 is distinguishable on facts since prima facie, there is no case of non-disclosure against the respondent. 31. Surjit Singh v. Harbans Singh; 1995:INSC:539 : (1995) 6 SCC 50, Bijali Naskar v. Amalendu Saha; (1999) 2 CHN 704 were concerned with transfer of interest in a property to a suit in the teeth of a subsisting order of restraint and specific performance of a transfer of property, respectively. These decisions lose relevance in view of the specific finding of the Court that there was no order of restraint on the respondent from performing the terms of the agreement. Venture Global Engineering v. Satyam Computer Services Limited; 2010:INSC:50....