Author: KOWSALYA K, Student, GOVERNMENT LAW COLLEGE DHARMAPURI AFFILIATED TO DR. AMBEDKAR LAW UNIVERSITY CHENNAI

Edited by: Gaurav Katiyar, Student, University of Lucknow

• ABSTRACT

Disputes emerged between Alpine Housing Development Corporation Pvt. Ltd. and Ashok S. Dhariwal, and the parties sought arbitrator. The arbitral panel issued an ex-parte award on March 12, 1998. Dhariwal did not present any evidence to the arbitral panel. Dhariwal submitted a petition under Section 34 of the Arbitration Act. Dhariwal filed a writ appeal before the Honorable High Court of Karnataka, citing his dissatisfaction with the order rejecting his application for more papers. The Karnataka High Court granted the writ petition and overturned the ruling denying the appeal for additional documents. Dhariwal was allowed to present further materials. Alpine Housing has petitioned the Supreme Court in the current proceedings.

Keywords : Arbitral panel, Supreme Court, Ex-Parte, Section 34

• CASE DETAILS

• INTRODUCTION AND BACKGROUND OF JUDGEMENT

The respondents filed an application under Section 34 of the Arbitration And Conciliation Act, 1996, in Arbitration Case No. 38/1998, against the award issued by the learned arbitrators on March 12, 1998. The respondents submitted an interim application (IA No. 4 in the section 34 application) to present further evidence. At this point, it is important to remember that the decision passed by the learned arbitrators was an ex-party ruling, and no evidence was presented by the respondents herein, who later challenged the award via a section 34 application.

• FACTS OF THE CASE

  i) Procedural Background of the Case

• The respondents filed an application under section 34 of the Act in response to an arbitral ruling against them. The respondent submitted an interim application under Section 34 to present more evidence. At this point, it should be emphasized that the award passed by the learned arbitrators was ex-parte, and no evidence was presented by the respondents herein, who later challenged the award under section 34.
• The appellant objected to the interim application to adduce evidence, claiming that it was not maintainable under the Arbitration Act of 1996. The grounds on which the respondents submitted an application to allow them to present evidence will be dealt with and examined. As a result, the court dealing with the section 34 application ruled that the amendment intended to limit the scope of judicial review under section 34 of the Act only in exceptional circumstances enumerated in the grounds urged, which relate to section 34(2)(b) of the Act, and that the applicants do not have the right to produce additional evidence.
• ii) Factual Background of the Case

Disputes emerged between Alpine Housing Development Corporation Pvt. Ltd. and Ashok S. Dhariwal, and the parties sought arbitration. The arbitral panel issued an ex-parte award on March 12, 1998. Dhariwal did not provide any evidence before the arbitral tribunal; instead, he filed a petition under Section 34 of the Arbitration Act. The tribunal’s award was for particular performance of the agreement, and liberty was granted to apply for the merger of khata. The award required Alpine Housing to apply for a khata amalgamation. However, because Alpine Housing did not file for merger, Dhariwal had to apply twice for it. The applications were, however, dismissed. During the section 34 proceedings, Dhariwal submitted an application to present supplementary papers. As the petitions for amalgamation had been refused, Dhariwal filed an application for further papers in order to “produce the final endorsement dated 17.03.2003 by which the prayer for amalgamation of khatas to plots were rejected”. Dhariwal sought to rely on the document to claim that the award was incapable of being carried out, was contrary to Indian public policy, and was therefore entitled to be set aside.

• LEGAL ISSUES RAISED

Can an applicant use evidence to establish public policy grounds in an application under section 34 of the Arbitration and Conciliation Act of 1996?

• APPELLANT’S ARGUMENTS
• The appellant’s counsel argued that the High Court made a serious error in allowing respondents to present evidence in an application under section 34 of the Act. If submitting an application under Section 34 of the Act. If an applicant who is aggrieved by the arbitral tribunal’s award is allowed to adduce evidence in an application under section 34 of the act, the object and purpose of amending section 34(2)(a) of the act, which substituted the expression ‘furnishes proof’ with the expression establish on the basis of the arbitral tribunal’s record, would be defeated. The intention and objective of altering Section 34(2)(a) of the Act is to resolve arbitration procedures as soon as possible and to avoid delays. The counsel also contended that section 34 of the Act prior to amendment Amending section 34(2)(a) shall be applicable, that the said concession is not binding because it would be against the law, and that any concession contrary to the law is not binding.

• RESPONDENT’S ARGUMENTS
  • Respondent’s Advocate argued that they did not engage in the arbitration procedures due to their first challenge to the proceedings and the constitutional tribunal. The Arbitral Tribunal then proceeded with the hearing ex parte. As a result, respondents did not present any evidence to the arbitral panel.

• RELATED LEGAL PROVISIONS
• “Section 34 in the Arbitration And Conciliation Act, 1996

Application for setting aside arbitral award.

(1)Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3).(2)An arbitral award may be set aside by the Court only if(a)the party making the application [establishes on the basis of the record of the arbitral tribunal that:] [Substituted ‘furnishes proof that’ by Act No. 33 of 2019, dated 9.8.2019.](i)a party was under some incapacity; or(ii)the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or(iii)the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings 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.”

• JUDGEMENT
  • RATIO DECIDENDI
  • The Supreme Court ruled that Act 2019’s revision to Section 34(2)(a) represents a significant alteration. Prior to the revision to section 34(2)(a), an arbitral award could be set aside by the court if the party filing the application “furnishes proof” and the grounds outlined in sections 34(2)(a) and 34(2)(b) are met. However, if the terms “furnishes proof” and the grounds set out in sections 34(2)(a) and 34(2)(b) are satisfied after the amendment, the pre-amendment section 34(2)(a) will apply, and the appellant may also be permitted to cross-examine and provide contradictory evidence.

• CONCLUSION & COMMENTS

In an exceptional case, if it is brought to the court on matters not containing the arbitrator’s record that are relevant to the determination of the issues that arise under section 34(2)(a), the party who has challenged the award on the grounds outlined in section 34(2)(a) may be permitted to file an affidavit in the form of evidence. However, this is permitted until absolutely essential. The affidavit so discloses a specific document, and the evidence must be supplied. In that regard, the respondents have shown a strong special case that allows them to file affidavits/present further evidence. However, the appellant may also be permitted to cross-examine and/or provide contradictory evidence.

• REFERENCES
  • Important Cases Referred
    • Emkay Global Financial services Limited V. Gridhar sondhi, (2018) 9 SCC 49.
    • Canara Nidhi Limited V. M. Shashikala, (2019) 9 SCC 462.

• Gemini bay transcription private Ltd v. Intagrated sales service Limited, (2022) 1 SCC 753.

• S.P. Singla construction Pvt Ltd v. State of Himachal Pradesh, (2019) 2 SCC 488
• Punjab SIDC Ltd v. K. Kansal, 2012 SCC P&H 19641.

• Important Statutes Referred
  • Section 34(2) of the Arbitration and Conciliation Act, 1996.
    ii. Section 48 (1) of the 1996 Arbitration and Conciliation Act.
    iii. Section 48(2) of the 1996 Arbitration and Conciliation Act.
    iv. Order 14 Rule 1 Civil Procedure Code
    v. Section 5 Arbitration And Conciliation Act of 1996.