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TMI Blog2023 (1) TMI 795X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 34 of the Act being Arbitration Case No. 38/1998 has been filed by the respondents. That the respondents filed an interim application being IA No. 4 in section 34 application to adduce additional evidence. At this stage, it is required to be noted that as such the award passed by the learned arbitrators was an ex-parte award and no evidence was led by the respondents herein, who subsequently assailed the award by way of section 34 application. The appellant herein filed objections to the said interim application seeking permission to adduce evidence on the ground that the same was not maintainable in accordance with the provisions of the Arbitration Act, 1996. The grounds on which the respondents submitted an application to permit them to adduce evidence shall be dealt with and considered hereinafter. 2.1 The Court dealing with interim application being IA No. 4 in section 34 application rejected the said interim application and refused to permit the respondents to adduce evidence by observing that if such a permission is granted, it would defeat the object and purpose of early disposal of arbitration proceedings and it would delay further hearing of section 34 applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court has committed a very serious error in permitting the respondents to adduce evidence in an application under section 34 of the Act. It is submitted that the impugned judgment and order passed by the High Court permitting the respondents to adduce additional evidence in an application under section 34 of the Act is against the object and purpose of the amending section 34(2)(a), amended vide Act No. 33/2019. It is submitted that if in an application under section 34 of the Act, the applicant who is aggrieved by the award passed by the arbitral tribunal is permitted to adduce evidence, it would defeat the object and purpose of amending section 34(2)(a) of the Act by which the expression "furnishes proof" has been substituted with the expression "establish on the basis of record of the arbitral tribunal". It is submitted that the object and purpose of amending section 34(2)(a) of the Act is to decide and dispose of the arbitration proceedings at the earliest and to avoid delay. 3.2 It is further submitted by Shri Krishnan Venugopal, learned senior counsel appearing on behalf of the appellant that though it was conceded before the High Court by the counsel appearing on beha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted in (2018) 9 SCC 49, this Court has explained the decision in the case of Fiza Developers (supra) and has expressly held that only section 34(2) (a) contemplates furnishing proof. It is submitted that the subsequent decision of this Court in the case of Canara Nidhi Limited v. M. Shashikala, reported in (2019) 9 SCC 462 has approved the interpretation of section 34(2)(a) in Emkay Global (supra). 3.5 It is further submitted that in the case of Gemini Bay Transcription Private Limited v. Integrated Sales Service Limited, reported in (2022) 1 SCC 753, this Court has treated 2019 amendment to section 34(2)(a) as clarificatory, while considering section 48(1) which are broadly in pari materia with section 34(2)(a) and 34(2)(b) as they stood prior to the 2019 amendment. It is submitted that this Court in the aforesaid decision in paragraphs 39 & 40 held that grounds under unamended section 48 including conflict with public policy in section 48(2) are to be established only on basis of "record of arbitral tribunal" in the interest of speedy enforcement of foreign award. 3.6 It is submitted that as such there is no legal bar to the Parliament to provide two different procedures for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allow the respondents to lead evidence, in that case, (a) the appellant may be permitted to lead evidence including the permission for clubbing khatas where there are nalas and the corporation's later endorsement dated 28.6.2004 agreeing to consider clubbing of khatas concealed by the respondents, and (b) the questions of law regarding whether the corporation's refusal falls under section 34(2)(b) may kindly be left open. 4. The present appeal is vehemently opposed by Shri Balaji Srinivasan, learned counsel appearing on behalf of the respondents. It is submitted that in the present case initially the respondents challenged the arbitration proceedings/constitution of the arbitral tribunal and therefore did not participate in the arbitration proceedings. It is submitted that thereafter the arbitral tribunal proceeded with the hearing ex-parte. It is submitted that therefore as such no evidence was adduced or led by the respondents before the arbitral tribunal. 4.1 It is submitted that in the present case the arbitration proceedings begun on 7.2.1997 under old Arbitration Act, 1940 and on 25.03.1997 arbitrators arbitrarily decided to proceed with the arbitration proceedings under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le with respect to arbitration proceedings commenced before the commencement of the amending act, unless the parties otherwise agree. 4.4 Making above submissions, it is prayed to dismiss the present appeal. 5. We have heard learned counsel for the respective parties at length. 6. The short question which is posed for the consideration of this Court is, whether the applicant can be permitted to adduce evidence to support the ground relating to Public Policy in an application filed under Section 34 of the Arbitration & Conciliation Act, 1996? At the outset, it is required to be noted that in the present case the arbitration proceedings commenced and even the award was declared/passed by the arbitral tribunal in the year 1998, i.e., prior to section 34(2)(a) came to be amended vide Act 33/2019. Apart from the fact that it was conceded by the learned counsel appearing on behalf of the appellant before the High Court that the law prevailing prior to the amendment of Section 34(2)(a) by Act 33/2019 shall be applicable, even otherwise, we are of the opinion that the arbitration proceedings commenced and even the award was declared prior to the amendment of Section 34(2)(a) by Act 33/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other law for the time being in force, in matters governed by Part I of the Act, no judicial authority shall intervene except where so provided in the Act. XXXXXXX 21. We may therefore examine the question for consideration by bearing three factors in mind. The first is that the Act is a special enactment and Section 34 provides for a special remedy. The second is that an arbitration award can be set aside only upon one of the grounds mentioned in sub- section (2) of Section 34 exists. The third is that proceedings under Section 34 requires to be dealt with expeditiously. 22. The scope of enquiry in a proceeding under Section 34 is restricted to consideration whether any one of the grounds mentioned in sub-section (2) of Section 34 exists for setting aside the award. We may approvingly extract the analysis relating to "grounds of challenge" from The Law & Practice of Arbitration and Conciliation by Shri O.P. Malhotra [1st Edn., p. 768, Para (I) 34-14]: "Section 5 regulates court intervention in arbitral process. It provides that notwithstanding anything contained in any other law for the time being in force in India, in matters governed by Part I of this Act, the court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court cannot, on the basis of the averments contained in the application, set aside the award. Whether there is contest or not, the applicant has to prove one of the grounds set out in Sections 34(2)(a) and (b). Even if the applicant does not rely upon the grounds under clause (b), the court, on its own initiative, may examine the award to find out whether it is liable to be set aside on either of the two grounds mentioned in Section 34(2)(b). It is perhaps in this sense, the High Court has stated that the proceedings may not be adversarial. Be that as it may. XXXXXXXX 31. Applications under Section 34 of the Act are summary proceedings with provision for objections by the respondent-defendant, followed by an opportunity to the applicant to "prove" the existence of any ground under Section 34(2). The applicant is permitted to file affidavits of his witnesses in proof. A corresponding opportunity is given to the respondent-defendant to place his evidence by affidavit. Where the case so warrants, the court permits cross-examination of the persons swearing to the affidavit. Thereafter, the court hears arguments and/or receives written submissions and decides the matter. This is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t ordinarily require anything beyond the record that was before the arbitrator. However, if there are matters not contained in such record, and are relevant to the determination of issues arising under Section 34(2)(a), they may be brought to the notice of the Court by way of affidavits filed by both parties. Cross-examination of persons swearing to the affidavits should not be allowed unless absolutely necessary, as the truth will emerge on a reading of the affidavits filed by both parties. We, therefore, set aside the judgment [Girdhar Sondhi v. Emkay Global Financial Services Ltd., 2017 SCC OnLine Del 12758] of the Delhi High Court and reinstate that of the learned Additional District Judge dated 22-9-2016. The appeal is accordingly allowed with no order as to costs." (iii) The decision of this Court in the case of Fiza Developers(supra) again fell for consideration of this Court in the subsequent decision in the case of Canara Nidhi (supra). After taking note of the observations made in paragraph 21 in Emkay Global (supra), thereafter it is observed by this Court in the case of Canara Nidhi (supra) that the legal position is thus clarified that section 34 application will not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicants to point out in the execution proceedings that the award is not capable of being executed is concerned, at the outset, 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. 10. Now so far as the submission on behalf of the appellant that the subsequent development of refusing to grant permission by the appropriate authority to amalgamate the plots can be cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he arbitral tribunal was justified in proceeding with the further proceedings ex-parte or not. Suffice it to record that before the arbitral tribunal, such evidence was not there and nothing was on record on the amalgamation of the plots. The affidavit thus discloses specific document and the evidence requires to be produced. In that view of the matter, a strong exceptional case is made out by the respondents to permit them to file affidavits/adduce additional evidence. However, at the same time, the appellant also can be permitted to cross-examine and/or produce contrary evidence. 12. In view of the above and for the reasons stated above, we are of the opinion that the High Court has not committed any error in permitting the respondents to file affidavits/additional evidence in the proceedings under section 34 of the Arbitration Act. 13. In view of the above and for the reasons stated above, the present appeal fails and the same deserves to be dismissed and is accordingly dismissed. However, it is observed that the appellant herein may also be permitted to cross-examine and/or lead contrary evidence including the permission for clubbing khatas where there are nalas as it is the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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