9911796707
TMI Blog2024 (7) TMI 1464X X X X Extracts X X X X X X X X Extracts X X X X ..... nt dated 26.09.2014.As per the said Assignment Agreement, the Petitioner inter alia assigned in favour of the Respondent, all its rights, title, interest in the financing documents, and all agreements, deeds, and documents related thereto inter alia the Borrower. 3. A sum of INR 4.55 crores (approx.) ('Aggregate ECGC Amount') was received by the Petitioner from Export Credit Guarantee Corporation of India Limited ('ECGC'). Such Aggregate ECGC Amount was received by the Petitioner towards the claim made by it in respect of the packing credit facilities which had been availed by the Borrower from the Petitioner and in respect of which the Petitioner had availed a Whole Turnover packing Credit Guarantee from ECGC. 4. Through subsequent communications, it was discovered by the Respondent that although the said amount had been received by the Petitioner from ECGC on 28.09.2013, an amount of INR 3,89,05,457/ ('ECGC Claim Amount')was appropriated towards the dues of the Borrower by the Respondent on 30.09.2014 i.e., after the Cut-off Date. 5. The Respondent sought the payment of the ECGC Claim Amount from the Petitioner under the Assignment Agreement and the same was refused by the Pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. 12. Learned counsel for the respondent submitted that the Petitioner has failed to discharge the burden of establishing as to how the interpretation rendered by the Arbitral Tribunal in respect of the relevant clauses of the Assignment Agreement in relation to the Cut- Off Date and Due Diligence is vitiated by non-consideration of the facts, and/or is in conflict with the public policy/basic notions of justice and/or is vitiated by patent illegality appearing on face of the award. 13. Learned counsel for the respondent submitted that the learned Arbitral Tribunal has dealt with the arguments raised by the Petitioner on Section 60(5) (c) of the IBC Code in detail wherein it was, inter alia, clearly recorded as under: (i) The Petitioner was not able to show any provision of the Insolvency and Bankruptcy Code, 2016 (IBC Code) where under NCLT has jurisdiction to adjudicate the inter se dispute between the Petitioner and the Respondent with respect to the ECGC Claim Amount, and accordingly, the question of keeping the arbitration in abeyance does not arise. (ii) The award in the arbitration between the Petitioner and the Respondent would decide which of the two would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling 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. 1[Explanation 1.--For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,-- (i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or (ii) it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P) Ltd. v. Board of Trustees of V.O. Chidambranar Port Trust Tuticorin, 2021 SCC OnLine SC 508, inter-alia held that: "43. It will thus appear to be a more than settled legal position, that in an application under Section 34, the court is not expected to act as an appellate court and reappreciate the evidence. The scope of interference would be limited to grounds provided under Section 34 of the Arbitration Act. The interference would be so warranted when the award is in violation of "public policy of India", which has been held to mean "the fundamental policy of Indian law". A judicial intervention on account of interfering on the merits of the award would not be permissible. However, the principles of natural justice as contained in Section 18 and 34(2)(a)(iii) of the Arbitration Act would continue to be the grounds of challenge of an award. The ground for interference on the basis that the award is in conflict with justice or morality is now to be understood as a conflict with the "most basic notions of morality or justice". It is only such arbitral awards that shock the conscience of the court, that can be set aside on the said ground. An award would be set aside on the groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or perverse. Where a contractual provision is ambiguous or is capable of being interpreted in more ways than one, the Court cannot interfere with the arbitral award, only because the Court is of the opinion that another possible interpretation would have been a better one." 21. It is important to remember that the position with respect to the limited interference of the courts has changed slightly in light of the 2015 Amendment to Section 34 of the A&C Act. The scope of violating Indian public policy has been expanded to include fraud or corruption in the award-making process, violating Sections 75 or 81 of the Act, violating the fundamental policy of Indian law, and going against the most fundamental ideas of justice or morality as a result of the addition of Explanation 1 to Section 34(2). Furthermore, Section 34 now contains sub-section (2-A), which states that in the event of domestic arbitrations, patent illegality appearing on the face of the verdict also constitutes a breach of Indian public policy. The aforementioned caveat stipulates that an award cannot be annulled just due to a misapplication of the law or a change in the value of the evidence or a divergent perspectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 4 crores. What troubles me is, that the claimant has paid a consideration of Rs.4 crores only for acquiring the loan account of ADIL and is now seeking to recover 3.89 crores, reducing the consideration paid by the claimant for acquiring the loan account of ADIL to Rs.11 lakhs only. If the claim of the claimant for interest were also to be allowed, the claimant would end up recovering more than has paid for acquiring the loan account and would end up acquiring the loan account of ADIL for free. I am conscious that an ARC may end up recovering more from the borrower than the consideration paid to the bank for acquiring the loan account. However the present is not a case of ARC recovering from the securities of the borrower and which the bank for various reasons did not desire to. The present is a case of the claimant as ARC recovering from the respondent i.e. the bank what was already with the bank prior to the assignment but which the bank had not credited to the loan account. I have wondered whether the said consideration / factor should lead me to a different finding. However I am acting as an arbitrator and an arbitrator, it has recently been reiterated in Indian Oil C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be in the pocket of the claimant or in the pocket of the respondent. If any other party, which is not participating in this arbitration, has any claim for the said monies, any award in this arbitration would not bind the said party and that party would remain free to agitate its remedies therefor, whether against the claimant or against the respondent, and nothing observed in this award would affect or prejudice the rights of the said party." 27. With respect to issue F and its finding of the learned arbitrator, it would be appropriate to deal with it in O.M.P. (COMM) 119/2023 as the respondent in the said petition has predominantly challenged the issue of payable interest prior to the date of the award. Also in regard to issue G, no consideration is required. 28. Learned arbitrator has adjudicated on the basic premises that arbitration is creature of agreement between the parties and not based on the equity. The parties were free to formulate the terms and conditions of the agreement, taking into account their commercials. The petitioner herein is a bank and expected to have acted with due diligence. In view of the discussion made herein above it can be concluded that the learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreed to between the parties was in Clause 2.2.6 of the Assignment Agreement. The said clause is read as under: "In the event of delay on the part of a party in making payments to the other party as contemplated in this agreement (including by way of indemnity), such party shall without prejudice to the rights of the other party under this agreement pay the defaulted amounts together with simple interest thereon at the rate of 12% per annum computed from the date of on which such amounts become due and payable till the date of actual payment" 36. Further, it was submitted that from the date of the award, till the date of payment, interest at the rate of 2% higher than the current rate of interest is payable, as provided in section 31 (7)(b) of the A&C Act. 37. Having perused the available record and the arbitral award, the learned arbitrator has correctly dealt with Issue F i.e., with respect to the interest payable prior to the date of award. The learned arbitrator has rightly recorded that since the petitioner had agreed to "pass on" all economic benefits pertaining to the loan, including all realizations and recoveries made after the cut-off date of 18.9.2020 to the respond ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
