Arbitration & Conciliation Act, 1996 – s.34(2)(a) – Prior and post 2019 Amendment – Whether the applicant can be permitted to adduce evidence to support the ground relating to Public Policy in an application filed u/s. 34 of the Arbitration & Conciliation Act, 1996 – Held: In the instant case, the arbitration proceedings commenced and even the award was declared prior to the amendment of s.34(2)(a) by Act 33/2019, so s.34(2)(a) pre-amendment shall be applicable – In s.34(2)(a) pre-amendment, an arbitral award could be set aside by the Court if the party making application “furnishes proof” – An application for setting aside the arbitral award will not ordinarily require anything beyond the record that was before the arbitrator, however, if there are matters not containing such records and the relevant determination to the issues arising u/s. 34(2)(a), they may be brought to the notice of the Court by way of affidavits filed by both the parties’ the cross-examination of the persons swearing in to the affidavits should not be allowed unless absolutely necessary as the truth will emerge on the reading of the affidavits filed by both the parties – Respondent permitted to file affidavits/additional evidence in the proceedings u/s.34 of the Arbitration Act.
Arbitration & Conciliation Act, 1996 : s. 34(2)(b) – When an award passed could be set aside on the ground of its being in conflict with the “Public Policy of India” – Scope – The ground that arbitral award is in conflict with the Public Policy of India, the said ground could be available only after passing of the award – Therefore, the same can be permitted to be agitated in an application u/s 34 and the person shall not have to wait till the execution is filed – The defence that the arbitral award is in conflict with the Public Policy of India itself can be a ground to set aside the award in view of section 34(2)(b) of the Act.
Dismissing the appeal, the Court
HELD : 1. The arbitration proceedings commenced and even the award was declared prior to the amendment of Section 34(2)(a) by Act 33/2019, Section 34(2)(a) pre-amendment shall be applicable. Prior to the amendment of section 34(2)(a), an arbitral award could be set aside by the Court if the party making an application “furnishes proof” and the grounds set out in section 34(2)(a) and section 34(2)(b) are satisfied. However, subsequent to the amendment of section 34(2)(a), the words “furnishes proof” have been substituted by the words “establishes on the basis of the record of the arbitral tribunal”. In that view of the matter, it is held that in case of arbitration proceedings commenced and concluded prior to the amendment of section 34(2)(a) by Act 33/2019, pre-amendment of section 34(2)(a) shall be applicable. [Para 6][1000-F-H]
2. The scope and ambit of section 34(2)(a) pre-amendment would be that applications under sections 34 of the Act are summary proceedings; an award can be set aside only on the grounds set out in section 34(2)(a) and section 34(2) (b); speedy resolution of the arbitral disputes has been the reason for enactment of 1996 Act and continues to be a reason for adding amendments to the said Act to strengthen the aforesaid object; therefore in the proceedings under section 34 of the Arbitration Act, the issues are not required to be framed, otherwise if the issues are to be framed and oral evidence is taken in a summary proceedings, the said object will be defeated; an application for setting aside the arbitral award will not ordinarily require anything beyond the record that was before the arbitrator, however, if there are matters not containing such records and the relevant determination to the issues arising under section 34(2)(a), they may be brought to the notice of the Court by way of affidavits filed by both the parties’ the cross-examination of the persons swearing in to the affidavits should not be allowed unless absolutely necessary as the truth will emerge on the reading of the affidavits filed by both the parties. Therefore, in an exceptional case being made out and if it is brought to the court on the matters not containing the record of the arbitrator that certain things are relevant to the determination of the issues arising under section 34(2)(a), then the party who has assailed the award on the grounds set out in section 34(2)(a) can be permitted to file affidavit in the form of evidence. However, the same shall be allowed unless absolutely necessary. [Para 8][1005-H; 1006-A-E]
3. It is required to be noted that even for establishing that the arbitral award is in conflict with Public Policy of India, in a given case, the evidence may have to be led and by leading evidence, the person who is challenging the award on that ground can establish and prove that the arbitral award is in conflict with Public Policy of India and/or the subject matter of dispute is not capable of settlement by arbitration under the law for the time being in force. However, at the same time, from the record before the arbitrator, if the same can be established and proved that the subject matter of the dispute is not capable of settlement by arbitration under the law for the time being in force or the arbitral award is in conflict with the Public Policy of India, in that case, the person may not be permitted to file the affidavit by way of evidence/additional evidence. [Para 9][1006G-H; 1007-A-B]
4. It is required to be noted that so far as one of the grounds set out in section 34(2)(b), namely, that the arbitral award is in conflict with the Public Policy of India, the said ground could be available only after passing of the award. Therefore, the same can be permitted to be agitated in an application under section
34 of the Act and the person shall not have to wait till the execution is filed. The defence that the arbitral award is in conflict with the Public Policy of India itself can be a ground to set aside the award in view of section 34(2)(b) of the Act.[Para 10] [1007-C-D] Fiza Developers and Inter-Trade Private Limited v. AMCI (India) Private Limited & Another, (2009) 17 SCC
796 : [2009] 12 SCR 1; Canara Nidhi Limited v. M. Shashikala (2019) 9 SCC 462 : [2019] 15 SCR 637; Emkay Global Financial Services Limited v. Girdhar Sondhi, (2018) 9 SCC 49 : [2018] 10 SCR 937 referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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