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2020 DIGILAW 1062 (MAD)

Ganesh Babu v. Adventuries India

2020-07-21

M.SUNDAR

body2020
ORDER : M. Sundar, J. 1. Instant application has been given the nomenclature 'Original Petition' ('OP' for brevity) and it is under Section 34 of 'The Arbitration and Conciliation Act, 1996 (Act 26 of 1996)', which shall hereinafter be referred to as 'A and C Act' for the sake of brevity, with a prayer to dislodge/set aside an 'arbitral award dated 17.09.2014' (hereinafter 'impugned award' for brevity) made by an 'Arbitral Tribunal' ('AT' for brevity), constituted by a sole Arbitrator. 2. Today in the web/virtual hearing on a video-conferencing platform, Ms. Preethi S. Arasu, learned counsel representing counsel on record for sole petitioner and Mr. A. Mohan, learned counsel on record for the contesting first respondent are before me. To be noted, sole Arbitrator who instituted AT which made the impugned award has been arrayed as second respondent. 3. Both the learned counsel agreed for the matter being taken up for final hearing. Therefore, the matter was taken up and heard out. 4. Before proceeding further, in the light of the nature of the petition and the nature of grounds raised, the sole Arbitrator, who constituted the AT and who has been arrayed as second respondent, stands deleted. Therefore, the contesting first respondent has now become the sole respondent. 5. Assailing the impugned award, learned counsel for petitioner submitted that it is being challenged by resorting to one slot under Section 34 and that Section is Section 34(2A) of A and C Act. In other words, it is the submission of learned counsel that patent illegality will be the only ground on which arguments would be predicated/ posited. Furthering her submissions in this direction, learned counsel for petitioner adverted to an additional typed-set of papers dated 20.07.2020, which has been e-mail filed and soft copy has been placed before me. Adverting to the typed-set of papers, learned counsel submitted that the documents referred to therein were before the AT, they were marked as exhibits, but the same have not been adverted to. More importantly, it was submitted by learned counsel for petitioner that it all started with the petitioner opening an account with the respondent for a sum of Rs. 25,000/- on 12.06.2013. It was also submitted that petitioner attended a two day training with the representative of the respondent and representative of the respondent promised that investors, who invested more than Rs. 25,000/- on 12.06.2013. It was also submitted that petitioner attended a two day training with the representative of the respondent and representative of the respondent promised that investors, who invested more than Rs. 1 lakh, would be given a separate Login ID and Password, which would enable own trading from home. Furthering her submission in this direction, it was submitted that believing the same, petitioner invested Rs. 5,25,000/-, but no Login ID and password was given as promised/assured. 6. Be that as it may, it was also submitted that the training was initiated even before the investment of the amount. Thereafter, there was a reference to a criminal complaint before the Commissioner of Police and other details pertaining to communication with Multi-Commodity Exchange entity. It may not be necessary to dilate more on facts as this is an application under Section 34 of A and C, which is a summary procedure as laid down by Hon'ble Supreme Court in Fiza Developers and Inter-Trade Private Limited Vs. AMCI (India) Private Limited, (2009) 17 SCC 796 , which was reiterated as a step in the right direction in Emkay Global Financial Services Ltd. v. Girdhar Sondhi, 2019 1 L.W. 626 : (2018) 9 SCC 49 and further reiterated in Canara Nidhi Limited vs. M. Shashikala, (2019) 9 SCC 462 . 7. With regard to legal submissions, learned counsel pressed into service three judgments and they are. Associate Builders Vs. Delhi Development Authority, (2015) 3 SCC 49 ], Ssangyong Engineering and Construction Company Limited Vs. National Highways Authority of India, (2019) 15 SCC 131 and MMTC Ltd. vs. M/S. Vedanta Ltd, (2019) 4 SCC 163 . 8. Adverting to Paragraph 42 of Associate Builders, Paragraph 31 of Ssangyong and Paragraph 15 of Vedanta cases/it was submitted that the case on hand is a clear case of impugned award being vitiated by patent illegality as the AT has not considered the exhibits at all though factual matrix warrants the same and this according to learned counsel is ignoring vital evidence facet of patent illegality. 9. 9. In response to the above submissions made by learned counsel for petitioner, learned counsel for respondent made a two pronged submissions and the same is as follows: a) Petitioner should have resorted to Section 33, more particularly Section 33(1)(b) of A and C Act post award and should have sought clarification from the AT; and b) Reference to various exhibits before the AT and submissions based on the same, tantamount to re-appreciation of evidence, which is clearly impermissible going by the proviso to Section 34(2A). 10. Having set out the rival submissions made by learned counsel on both sides, I now embark upon the exercise of discussing the rival submissions, give my dispositive reasoning and give my conclusion. 11. Before I embark upon the aforementioned exercise of discussion, dispositive reasoning and conclusion, it is deemed pertinent to set put that I noticed from the case file placed before me that instant OP has been presented in this Court on 05.01.2015, which means instant OP is prior to 23.10.2015. Prior to 23.10.2015, there was no Section (2A) in Section 34. In this regard, the law that should be applied can be ascertained from Ssangyong Engineering principle [ (2019) 15 SCC 131 ]. However, absent even sub-section (2A), patent illegality was available to the petitioner by way of a ground having been so added to Section 34 by Saw Pipes principle i.e., Oil and Natural Gas Corporation Ltd. Vs. Saw Pipes Ltd., [2003 4 L.W. 482 : (2003) 5 SCC 705 ]. 12. It is made clear that I am proceeding to test the impugned award on the aforesaid basis. 13. With regard to the exhibits before the AT, what is of utmost significance is, there is no disputation or disagreement that the exhibits were actually before AT, which have been placed before me as part of aforementioned e-mail filed additional typed-set of papers dated 20.07.2020. To be noted, it is on this basis that learned counsel for respondent argued that the submissions made touching upon the exhibits tantamount to re-appreciation of evidence, which is impermissible now. Now that there is no disputation or disagreement that the documents filed as part of additional typed-set of papers were there as exhibits before the AT, the task of testing the impugned award and disposing of instant OP becomes simple. 14. First point raised by learned counsel for respondent turns on Section 33(1)(b). Now that there is no disputation or disagreement that the documents filed as part of additional typed-set of papers were there as exhibits before the AT, the task of testing the impugned award and disposing of instant OP becomes simple. 14. First point raised by learned counsel for respondent turns on Section 33(1)(b). Section 33 and the scope of Section 33 is now well settled and the same can be invoked when correction, interpretation of an award or an additional award becomes necessary. In the instant case, the submission tantamounts to saying that a review of the impugned award by the AT should have been resorted to under Section 33, but this is impermissible under Section 33. Therefore, the submission posited on Section 33(1)(b) does not help the respondent. 15. This takes us to the second submission made by learned counsel for respondent. As already alluded to supra, the second submission is predicated and posited on re-appreciation of evidence being impermissible. It is not necessary to enter into this arena as it is the stated position of respondent counsel that exhibits forming part of additional typed-set were in fact before the AT and there is no disputation or disagreement in this regard. This being the case there is no reference to even a single exhibit in the impugned award and it does not even say that exhibits are not relevant qua factual matrix. This is the reason, why this Court has observed elsewhere supra in this order that the task of disposing of instant OP has become fairly simple. 16. This Court is of the considered view that Section 31(3) is of relevance. Section 31(3) of A and C Act reads as follows: '(3) The arbitral award shall state the reasons upon which it is based, unless-- (a) the parties have agreed that no reasons are to be given, or (b) the award is an arbitral award on agreed terms under section 30.' 17. From the submissions made, it is clear that the parties have not agreed that no reasons are to be given. It is also clear that the impugned award is not an arbitral award on agreed terms under Section 30. 18. From the submissions made, it is clear that the parties have not agreed that no reasons are to be given. It is also clear that the impugned award is not an arbitral award on agreed terms under Section 30. 18. As it is the undisputed position before me that the parties have neither agreed that ho reasons are to be given nor is the impugned, award is one on agreed terms under Section 30, Section 31(3) operates and it becomes necessary for the AT to give reasons upon which the award is passed. 19. A careful perusal of the impugned award reveals that it merely talks about preponderance of probabilities and does not advert to a single exhibit, though exhibits were admittedly before the AT. If the exhibits were admittedly before the AT, there should have been a reference to the same and there should have been a discussion on the same and reasons ought to be given for either accepting or negativing any of the exhibits, none of which is articulated in the impugned award. Therefore, the impugned award in my considered view is hit by sub-section (3) of Section 31 of A and C Act, besides being vitiated by ignoring vital evidence facet of patent illegality slot. 20. In the celebrated Associate Builders case, as applicable to the instant case in the light of Ssangyong principle, one of the three distinct juristic principles that have been culled out is judicial approach and the test for judicial approach is fidelity of judicial approach. Besides this, in Associate Builders case, it has also been laid down by Hon'ble Supreme Court that contravention of substantive law of India (in this case violation of provisions of A and C Act, i.e., Section 31(b)) would sound the death knell of an arbitral award. This is contained in paragraph 12 of the celebrated Associate Builders case. Hon'ble Supreme Court after adverting to evolution of law in England qua this phenomena in English setting laid down that violation of provisions of A and C Act would sound the death knell of an arbitral award. The most relevant part of paragraph 12, after tracing the English setting and English judgments, reads as follows: '...... This judgment has been consistently followed in India to test awards under Section 30 of the Arbitration Act, 1940. The most relevant part of paragraph 12, after tracing the English setting and English judgments, reads as follows: '...... This judgment has been consistently followed in India to test awards under Section 30 of the Arbitration Act, 1940. In the 1996 Act, this principle is substituted by the 'patent illegality' principle which, in turn, contains three sub heads - (a) a contravention of the substantive law of India would result in the death knell of an arbitral award. This must be understood in the sense that such illegality must go to the root of the matter and cannot be of a trivial nature. 21. In the instant case, as already delineated supra, sub-section (2A) of Section 34 may not be available to the petitioner in its present form. Be that as it may, patent illegality as added as a ground by Saw Pipes principle is available to the petitioner. In this view of the matter, if that is done, I am of the considered view that there is lack of judicial approach besides the impugned award being clearly hit by Section 31(3); To be noted, this is more so, as there is no disputation or disagreement before me that documents forming part of additional typed-set of papers were there as exhibits before AT. 22. In my considered view impugned award is terse. When I say terse, I am constrained to observe with due respects to AT that it is not epigrammatic and it is rather laconic. Following is a scanned reproduction of impugned award in its entirety: “IMAGE” 23. As the impugned award is hit by Section 31(3), as it lacks judicial approach and as it is vitiated by ignoring vital evidence facet of patent illegality slot owing to not referring to a single exhibit before it in any manner, I am of the view that the impugned award is liable to be set aside/dislodged. 24. In the light of the narrative thus far, instant OP is allowed. There shall be no order as to costs.