TaxTMI 
TaxTMI 
2024 (7) TMI 1464
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....rower') to the Respondent by way of an agreement dated 26.09.2014.As per the said Assignment Agreement, the Petitioner inter alia assigned in favour of the Respondent, all its rights, title, interest in the financing documents, and all agreements, deeds, and documents related thereto inter alia the Borrower. 3. A sum of INR 4.55 crores (approx.) ('Aggregate ECGC Amount') was received by the Petitioner from Export Credit Guarantee Corporation of India Limited ('ECGC'). Such Aggregate ECGC Amount was received by the Petitioner towards the claim made by it in respect of the packing credit facilities which had been availed by the Borrower from the Petitioner and in respect of which the Petitioner had availed a Whole Turnover packing Credit Guarantee from ECGC. 4. Through subsequent communications, it was discovered by the Respondent that although the said amount had been received by the Petitioner from ECGC on 28.09.2013, an amount of INR 3,89,05,457/ ('ECGC Claim Amount')was appropriated towards the dues of the Borrower by the Respondent on 30.09.2014 i.e., after the Cut-off Date. 5. The Respondent sought the payment of the ECGC Claim Amount from the Petitioner under the Assi....
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.... are not relevant in respect of a Petition filed under Section 34 of the Act. 12. Learned counsel for the respondent submitted that the Petitioner has failed to discharge the burden of establishing as to how the interpretation rendered by the Arbitral Tribunal in respect of the relevant clauses of the Assignment Agreement in relation to the Cut- Off Date and Due Diligence is vitiated by non-consideration of the facts, and/or is in conflict with the public policy/basic notions of justice and/or is vitiated by patent illegality appearing on face of the award. 13. Learned counsel for the respondent submitted that the learned Arbitral Tribunal has dealt with the arguments raised by the Petitioner on Section 60(5) (c) of the IBC Code in detail wherein it was, inter alia, clearly recorded as under: (i) The Petitioner was not able to show any provision of the Insolvency and Bankruptcy Code, 2016 (IBC Code) where under NCLT has jurisdiction to adjudicate the inter se dispute between the Petitioner and the Respondent with respect to the ECGC Claim Amount, and accordingly, the question of keeping the arbitration in abeyance does not arise. (ii) The award in the arbitr....
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....ceedings or was otherwise unable to present his case; or (iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or (v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not 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. 1[Explanation 1.--For the avoidance of any doubt, it is clarified that an award is in conflict with th....
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....on the other party.]" 17. It is clear from the plain reading of the above proviso that the scope and ambit of challenging the arbitral award is limited. This principle is succinctly outlined in numerous cases. The Supreme Court in PSA SICAL Terminals (P) Ltd. v. Board of Trustees of V.O. Chidambranar Port Trust Tuticorin, 2021 SCC OnLine SC 508, inter-alia held that: "43. It will thus appear to be a more than settled legal position, that in an application under Section 34, the court is not expected to act as an appellate court and reappreciate the evidence. The scope of interference would be limited to grounds provided under Section 34 of the Arbitration Act. The interference would be so warranted when the award is in violation of "public policy of India", which has been held to mean "the fundamental policy of Indian law". A judicial intervention on account of interfering on the merits of the award would not be permissible. However, the principles of natural justice as contained in Section 18 and 34(2)(a)(iii) of the Arbitration Act would continue to be the grounds of challenge of an award. The ground for interference on the basis that the award is in conflict with just....
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....anesh Petroleum, (2022) 4 SCC 463 it was inter-alia held that: "45. The Court does not sit in appeal over the award made by an Arbitral Tribunal. The Court does not ordinarily interfere with interpretation made by the Arbitral Tribunal of a contractual provision, unless such interpretation is patently unreasonable or perverse. Where a contractual provision is ambiguous or is capable of being interpreted in more ways than one, the Court cannot interfere with the arbitral award, only because the Court is of the opinion that another possible interpretation would have been a better one." 21. It is important to remember that the position with respect to the limited interference of the courts has changed slightly in light of the 2015 Amendment to Section 34 of the A&C Act. The scope of violating Indian public policy has been expanded to include fraud or corruption in the award-making process, violating Sections 75 or 81 of the Act, violating the fundamental policy of Indian law, and going against the most fundamental ideas of justice or morality as a result of the addition of Explanation 1 to Section 34(2). Furthermore, Section 34 now contains sub-section (2-A), which states ....
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.... agreed to be paid and paid by the claimant for each of the three loan accounts and mentions only the consolidated consideration paid by the claimant to the respondent for all the 3 loan accounts, but the respondent in its letter dated 22.09.2014 to ECGC, while informing ECGC of assignment of the loan account of ADIL to the claimant, stated the said assignment to be for a consideration of Rs. 4 crores. What troubles me is, that the claimant has paid a consideration of Rs.4 crores only for acquiring the loan account of ADIL and is now seeking to recover 3.89 crores, reducing the consideration paid by the claimant for acquiring the loan account of ADIL to Rs.11 lakhs only. If the claim of the claimant for interest were also to be allowed, the claimant would end up recovering more than has paid for acquiring the loan account and would end up acquiring the loan account of ADIL for free. I am conscious that an ARC may end up recovering more from the borrower than the consideration paid to the bank for acquiring the loan account. However the present is not a case of ARC recovering from the securities of the borrower and which the bank for various reasons did not desire to. The p....
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....ndent to the account of ADIL on 30.09.2014 would accrue to the claimant on learning of the same during the meeting of CoC and on the respondent denying payment thereof to the claimant. Counted therefrom, the claim is admittedly within time." 26. With respect to the issue E, the learned Arbitrator has rightly held as under: "the award in this arbitration would be as to whether the said monies are to be in the pocket of the claimant or in the pocket of the respondent. If any other party, which is not participating in this arbitration, has any claim for the said monies, any award in this arbitration would not bind the said party and that party would remain free to agitate its remedies therefor, whether against the claimant or against the respondent, and nothing observed in this award would affect or prejudice the rights of the said party." 27. With respect to issue F and its finding of the learned arbitrator, it would be appropriate to deal with it in O.M.P. (COMM) 119/2023 as the respondent in the said petition has predominantly challenged the issue of payable interest prior to the date of the award. Also in regard to issue G, no consideration is required. 28. Learn....
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.... Indian law as provided in Explanation 1 (ii) to Section 34(2)(b)(ii) of the Act, and further, it is in conflict with the most basic notions of morality or justice as provided in Explanation 1 (iii) to Section 34(2)(b)(ii)); and Section 34(2A) of the Act as it is vitiated by patent illegality appearing on the face of the Award. 35. Per contra, the learned counsel for the respondent submitted that the rate of interest that was agreed to between the parties was in Clause 2.2.6 of the Assignment Agreement. The said clause is read as under: "In the event of delay on the part of a party in making payments to the other party as contemplated in this agreement (including by way of indemnity), such party shall without prejudice to the rights of the other party under this agreement pay the defaulted amounts together with simple interest thereon at the rate of 12% per annum computed from the date of on which such amounts become due and payable till the date of actual payment" 36. Further, it was submitted that from the date of the award, till the date of payment, interest at the rate of 2% higher than the current rate of interest is payable, as provided in section 31 (7)(b) of ....