When the parties have chosen arbitration as their forum through a valid arbitration clause, the autonomy of the parties must be upheld, and the arbitral tribunal’s decision is final unless it can be overturned on one of the specific grounds provided by Section 34 of the Arbitration and Conciliation Act, 1996 is upheld by the Madras High Court in the case of Macro Marvel Projects Ltd. v. J. Vengatesh (O.S.A. No. 341 of 2019) through Paresh Upadhyay and D. Bharatha Chakravarthy, JJ
FACTS OF THE CASE
In the instant case, an intra-Court appeal was filed, wherein the single judge’s decision to grant the respondents’ initial petition under Section 34 of the Arbitration and Conciliation Act, 1996, and toss the arbitral tribunal’s award in favour of the appellant which was intended to be specific performance of the contract for the sale of plots and substitute an award of Rs. 50,00,000/- for it was challenged.
The issues before the Court were whether the decision by the single judge of ordering a payment of Rs. 50,000 instead of specified performance appropriate and on what grounds an arbitral award can be challenged in the current proceedings, and if it can, whether those grounds fall inside the purview of this Court’s authority to nullify the arbitral award.
The Court cited the ruling in NHAI v. M. Hakeem, (2021), which stated that Section 34 of the Arbitration Act, 1996 cannot be held to include within it a power to modify an award, and stated that the interference with, variance from, or modification of the award as well as the granting of new, additional, or modified reliefs are not permitted while considering this issue. The Court concluded that the single judge erred when it modified the judgement and ordered the appellant to pay Rs. 50,00,000/- since doing so was beyond the authority under Section 34 of the Arbitration and Conciliation Act of 1996.
The Court observed that the appellant had heavily relied on the Act’s proviso and the modified Section 34(2)(a), as well as the court’s ruling in Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (2019). The modification is prospective in nature and will not be applicable to the application for setting aside, which is prior to the amendment, according to Ratnam Sudesh Iyer v. Jackie Kakubhai Shroff, (2022). The original petition in the current case, which is from 2008 and was filed before the amendment, was noted by the court. As a result, the law as it existed before the Arbitration and Conciliation Act’s change will be enforced.
The appellant claimed that the agreement is for the development and sale of land to the appellant or to its nominees, and the court noted that if the respondents wanted to argue that the agreement is not a sale agreement, they would need to make a specific claim that the property was not represented in any way as belonging to the appellant.
It was also noted that the agreement in question clearly states that it is an agreement of sale, as a result, the single judge’s consideration of the ground related to the construction of the agreement and appreciation of the evidence on file and could not be said to relate to any aspect of Indian public policy. Additionally, the Tribunal’s decision could not be described as patent or blatantly illegal in the absence of any pleading or issue-framing.
The sole defence raised is the increase in price and equity, and the respondents themselves did not adopt such a posture in their reply statement. As a result, the Court determined that the ground regarding the nature of the agreement, which the single judge took into consideration, was not raised by the parties before the Arbitrators or the single judge, and that even if it had been, it could not have been a basis for interference under Section 34 of the Arbitration and Conciliation Act, 1996 in the circumstances of the current case.
Furthermore, in relation to the second ground of interference, it was noted that the relief given by the Arbitrators is to sell the land to the appellant or its designees in accordance with Section 14 of the Specific Relief Act. Therefore, it appears that the Court has no basis upon which to regularly monitor the parties’ individual performance. Consequently, the did not concur with the single judge’s conclusions in this matter.
Further, it was believed that the parties’ competing claims required evaluation of the evidence, additionally, it was believed that the case involved specific performance and that any interference on the basis of unfairness or an unfair advantage would only be possible by sitting on an appeal against the arbitral tribunal after the Arbitral Tribunal had evaluated the evidence and made its findings after considering the facts.
The Court further noted that when the parties have chosen arbitration as their forum through a valid arbitration clause, the autonomy of the parties must be upheld, and the arbitral tribunal’s decision is final unless it can be overturned on one of the specific grounds provided by Section 34 of the Act. The Court further noted that it must take a hands-off approach and will not interfere with or overturn the decision simply because another viewpoint may be possible.
Accordingly, in overturning the single judge’s decision to alter the award and order a payment of Rs. 50,00,000/- to the appellant, the Court found that this went beyond the single judge’s authority under Section 34 of the Act, 1996. Further, the parties did not raise the issue of the nature of the agreement before the Arbitrators or the single judge, and even if they had, it could not have been a basis for intervention under Section 34 of the Act, 1996 in the circumstances of the current case.
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JUDGEMENT REVIEWED BY NISHTHA GARHWAL