A & C Act | Contours Of Proceedings U/S 37 Is Limited To Scope & Ambit Of Challenge U/S 34: Allahabad HC
The Allahabad High Court observed that contours of the proceedings under Section 37 of the Arbitration and Conciliation Act, 1996 (A&C Act) is limited to the scope and the ambit of challenge under Section 34 of the said Act.
The Court noted that a legal issue can be raised for the first time in the appellate proceedings but the question is dependent upon the facts of a particular case.
The Court observed thus in an appeal under Section 37 of A&C Act against the order of the Presiding Officer, Commercial Court, by which the application of the objector under Section 34 of A&C Act for setting aside the award of the Sole Arbitrator was rejected.
A Division Bench comprising Chief Justice Arun Bhansali and Justice Vikas Budhwar said, "Nonetheless, while assailing the order passed under Section 34 of the Act either setting aside the award or upholding the award an appeal is provided under Section 37 of the Act, however, the contours of the proceedings under Section 37 also is limited to the scope and the ambit of challenge under Section 34 of the Act."
“There is no quarrel to the proposition of law that a legal issue going into the root of the matter can be raised for the very first time in the appellate proceedings. However, the question is dependent upon the facts of a particular case. Here, the Court finds that the said principle would not apply and make any difference for the variety of reasons: (i) admission is best piece of evidence; (ii) the deposition of the witness, Rohit Sharma on behalf of the appellant-objector which remains intact; (iii) inconsistency in the stand of the appellant-objector which has not been explained; (iv) non-challenge to the quantum awarded to the claimant-respondent under various heads; (v) waving of counter claim; (vi) acceptance of the fact that incentives were paid to the claimant-respondent for the works executed by it and of course; (vii) resiling from the admissions at appellate stage”, it also observed.
Senior Advocate Shashi Nandan represented the appellant while Advocate Vinayak Mithal represented the respondent.
Brief Facts -
The case projected by the claimant-respondent before the Sole Arbitrator was that it claimed to be a sole proprietorship firm by the name and style of Akash Engineers and Contractors. According to the claimant, the appellant-objector, Gaursons Promoters Pvt. Ltd. which was a company incorporated under the provisions of the Companies Act, 1956, engaged in the constructions of commercial and residential project in an around the National Capital Region (N.C.R.) approached the claimant sometime in the year 2011-12 with relation to the advertised projects for the construction of residential township.
Since, according to the claimant, the objector did not honour its commitment as per the work order and the agreement executed between them, the disputes and differences occurred which occasioned the claimant to take recourse to the proceedings under Section 11(4) of the Act. Pursuant to the orders passed by the High Court under Section 11(4), the Sole Arbitrator was appointed. The claim set up by the claimant before the Arbitrator was contested by the objector while filing statement of fact and counter claim. The Sole Arbitrator pronounced the award and being aggrieved by the same, the objector approached the Commercial Court. However, the application was rejected and hence, the objector was before the High Court.
The High Court in view of the above facts noted, “So far as the next issue regarding non-disposal of the application under Order XI Rule 12 CPC for discovery of the books of accounts/ledgers of claimant-respondent rendering the award to be fatal and vitiated is concerned, the same at first blush appears to be attractive but it may not have any substance for the simple reason that Sri Rohit Sharma in his cross examination had given a specific figure of the amount paid to the claimant-respondent.”
The Court further noted that it is also not the case of the appellant-objector either before the Arbitral Tribunal or in the proceedings under Section 34 of the Act or before the High Court that the deposition made during cross examination was actuated by fraud, coercion or misconception or he was not authorized and not competent to make the said statement and also there was no application even for recalling the said statements also.
“The position might have been different, in case, the appellant-objector would have demonstrated from the record that the INR 5,70,00,000/- was paid to the claimant-respondent, but, since the same is lacking, thus, mere irregularity of non-disposal of the said application would not render the award to be suffering from patent illegality making it vitiated”, it added.
The Court said that the appellant-objector miserably failed to show any patent illegality warranting interference in the appeal and moreso, when the scope of interference under Section 34 is limited and within the contours of the ground specified under Section 34 of the Act.
Accordingly, the High Court dismissed the appeal.
Cause Title- Gaursons Promoters P. Ltd. v. Aakash Engineers And Contractors (Neutral Citation: 2024:AHC:82292-DB)
Appearance:
Appellant: Senior Advocate Shashi Nandan, Advocates Mayank Yadav, Nikhil Agrawal, Sanjay Kumar Mishra, and Vivek Kumar Singh.
Respondent: Advocates Vinayak Mithal, Abhay Mishra, Nirendra Mohan, Prateek Srivastava, Shailesh Kumar Tripathi, Shashank Dwivedi, and Syed Safdar Ali Kazmi.
