Kal Airways Pvt. Limited v. SpiceJet Ltd & Anr.

15. Therefore, in view of the aforesaid objections, it is prayed that the impugned Award be set aside to the extent as stated above since it is patently illegal and against the fundamental policy of law. On behalf of the Respondents

16. Mr. Abhinav Vashisht, learned senior counsel appearing on behalf of the respondents, per contra, vehemently opposed the instant petition, the averments made on behalf of the petitioners and the contentions raised in the pleadings. It is submitted on behalf of respondents that the petitioners are attempting to re-agitate the contentions raised before the Arbitral Tribunal which is beyond the scope of the mandate of Section 34 of the Act.

17. It is further submitted on behalf of the respondents that the Court, while hearing a petition under Section 34 of the Arbitration Act, is not an appellate court and cannot reappraise the evidence or reasons behind the Arbitral Award. The jurisdiction of the Court in Section 34 is limited and it is not open for the court to attempt to probe the process by which Arbitral Tribunal reached its conclusion.

18. It is further submitted that the learned Arbitral Tribunal recorded the finding that the petitioners were in breach of the Agreement having failed to bring in Rs. 100 Crores, i.e., the Tranche-I of the total amount, in terms of Clause 6.3.[1] of the Agreement. It is submitted that the respondents have been ready and willing to issue CRPS on the same terms as contained in the Agreement subject to the petitioners fulfilling their obligation of bringing in the sum of Rs. 100 Crores as agreed by way of the Agreement. Moreover, the respondents also conveyed their willingness to issue CRPS on the same terms subject to fulfilment of obligations by the petitioners even during the course of arbitral proceedings.

19. It is stated that arbitral award is not liable to be set aside by this Court except to the extent it relates to a refund of Rs. 270,86,99,209/- to the petitioners towards amounts paid for CRPS, which amounts, as per the terms of the SSPA itself are repayable after the expiry of a period of 8 years from the issuance of the instrument and to the extent, it awards interest to the petitioners on the amounts to be refunded towards Warrants and CRPS.

20. It is submitted that the Arbitral Tribunal after considering the submissions of both the parties and taking the evidence on record, specifically the stand taken by Bombay Stock Exchange (hereinafter referred to as “BSE”) in its letters dated 20th April 2016 and 18th May 2016 held that (i) purported lack of diligence by the respondents to seek the approval for issuance of Warrants would not change the foundation of the conclusions/findings of BSE, especially its observations that grant of approval would result in breach of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 ("ICDR Regulations"); and

(ii) that the respondents are not in breach of the SSPA and that no breach can be attributed on the part of the respondents for non-issuance of warrants to the petitioners.

21. It is submitted on behalf of the respondents that while holding that the respondents are not in breach of the SSPA as far as issuance of warrants is concerned, the Arbitral Tribunal held the petitioners to be in breach of the SSPA for their failure to bring in a sum of Rs. 100 Crores towards CRPS out of the committed support of Rs. 450 Crores. However, despite holding that the respondents were not in breach and a categorical finding that the petitioner was in breach, the Award erroneously granted not only refund of the amounts paid towards CRPS but also interests on the same as well as that on the warrants amount.

22. It is stated that before the Arbitral Tribunal, the petitioners had sought restitution of 58.46% shareholding for return of Rs. 2/- advanced to the Ajay Singh as consideration for transfer of shareholding only as an alternate claim. In fact, the petitioners had contended that it was not their case that the contract stood frustrated. Arbitral Tribunal in its impugned Award rejected the alternative prayer of the petitioners for restitution of 58.46% shareholding. However, before this Court the petitioners are seeking the alternative prayer as main relief under Section 34 of the Arbitration Act, which can in no manner whatsoever be allowed to be sustained.

23. In view of the aforesaid, it is stated that the instant case does not warrant the interference of this Court and there is no illegality to the extent which has been impugned on behalf of the petitioners.

ANALYSIS AND FINDINGS

24. Before adjudicating upon the merits of the case, it is essential to recapitulate the idea, purpose, goal and objective of the Arbitration Act as well as Section 34 of the Act to understand the implications the provisions therein have on the powers and jurisdiction of this Court. Spirit of the Arbitration Act

25. The Arbitration Act was enacted for providing a mechanism to the public to resolve their disputes in a process less rigorous, technical and formal than that of litigation. It has proven to be easier, more accessible, efficient and even cost effective for the parties involved, whether at an individual level or at the level of a business or corporation. The alternative dispute mechanism is not only advantageous for the people involved in disputes but has also been aiding the effective disposal and release of burden on the Courts of the Country. The parties have a more hands-on involvement in an Arbitration process and play an active role in the adjudication process.

26. The Hon’ble Supreme Court in Union of India vs. Varindera Constructions Ltd., (2018) 7 SCC 794, while discussing the object of arbitration held as under:-

27. Therefore, expeditious and effective disposal of matters are most certainly considered the primary objectives of the enactment of the Arbitration Act. To fulfil the objective of introducing the Arbitration Act, it has been deemed necessary by the legislature as well as the Hon’ble Supreme Court to limit interference by the Courts in the process of arbitration, whether before, during or after the conclusion of the proceedings.

28. The petitioners before this Court have invoked Section 34 of the Arbitration Act to challenge the impugned Award. The relevant portion of the said provision is reproduced hereunder for perusal and consideration:

29. The contents of the provision clearly show that the intention of legislature while enacting the Arbitration Act, as well as while carrying out amendments to the same, was that there should be limited intervention of the Courts in arbitral proceedings, especially after the proceedings have been concluded and an Award thereto has been made by the concerned Arbitral Tribunal. Any claim brought forth a Court of law under Section 34 of the Arbitration Act shall be in accordance with the principle of the provisions laid down under the Arbitration Act as well as interpreted by the Hon’ble Supreme Court.

30. The Law Commission of India in its 246th Report has also elaborated upon the background of introducing Section 34 of the Arbitration Act and laid down as under:

31. With the repeal of Arbitration and Conciliation Act of 1940 by way of Arbitration Act, 1996, the legislature sought to achieve the objective of reducing the supervisory role of courts in arbitration proceedings. The amendment of Section 34 was also to have the Courts readily and expeditiously adjudicate upon any proceedings arising out of arbitration proceedings. The challenge to an Award also must be disposed of as expeditiously possible by the Courts.

32. It is clear that the speed and efficiency of disposal of disputes between parties are few of the substantial and key purposes of the introduction, development and promotion of resolving disputes by way of alternate mechanisms of dispute resolution. Hence, the objective, goal and purpose of the Act as well as the intention of the legislature have to be given due consideration while adjudicating a petition under Section 34 of the Arbitration Act. Scope of Powers of Arbitrator & Intervention of Courts

33. The Arbitral Tribunal, that in its wisdom, passes an Award, upon conducting the arbitration proceedings with the participation of parties to the dispute, considering the Statement of Claim and Statement of Defence presented by and on behalf of the parties, the relevant documents placed on record by the parties, is considered a Court for the purposes of adjudicating the dispute before him. An unfettered intervention in the Tribunal’s functioning would defeat the spirit and purpose of the Arbitration Act, as discussed in the foregoing paragraphs.

34. An Arbitrator has wide powers while adjudicating arbitration proceedings. There is, undoubtedly, a scrutiny on the Arbitrator and the Awards passed by him, which has been stipulated under the Arbitration Act. However, there is a deemed privilege of limited intervention from the Courts which the Arbitrators have. The same has been reiterated by the Hon’ble Supreme Court time and again. There is, thus, an extent to the accountability put upon an Arbitrator while passing an Award. This is evident from the fact that with the enforcement of the Arbitration Act an Arbitrator needs only to adhere to and fulfil the requirements under Section 31 of the Arbitration Act.

35. In addition to the requirements laid down under the provision, an Arbitrator, although acting in accordance with the requirements of the Arbitration Act, need not act as a formal Court while adjudicating a dispute and pass an Award which is lengthy, detailed or speaking. The Hon’ble Supreme Court has reiterated that an Award which is not speaking shall be set aside by the Court only in exceptional cases.

36. In Anand Brothers (P) Ltd. vs. Union of India & Ors., (2014) 9 SCC 212, the Hon’ble Supreme Court on the question of a reasoned or speaking Award observed and held as under:-

9. Reference may also be made to the Arbitration and Conciliation Act, 1996 which has repealed the Arbitration Act, 1940 and which seeks to achieve the twin objectives of obliging the Arbitral Tribunal to give reasons for its arbitral award and reducing the supervisory role of courts in arbitration proceedings. Section 31(3) of the said Act obliges the Arbitral Tribunal to state the reasons upon which it is based unless the parties have agreed that no reasons be given or the arbitral award is based on consent of the parties. There is, therefore, a paradigm shift in the legal position under the new Act which prescribes a uniform requirement for the arbitrators to give reasons except in the two situations mentioned above. The change in the legal approach towards arbitration as an alternative dispute resolution mechanism is perceptible both in regard to the requirement of giving reasons and the scope of interference by the court with arbitral awards. While in regard to requirement of giving reasons the law has brought in dimensions not found under the old Act, the scope of interference appears to be shrinking in its amplitude, no matter judicial pronouncements at time appear to be heading towards a more expansive approach that may appear to some to be opening up areas for judicial review on newer grounds falling under the caption “public policy” appearing in Section 34 of the Act. We are referring to these developments for it is one of the well-known canons of interpretation of statutes that when an earlier enactment is truly ambiguous in that it is equally open to diverse meanings, the later enactment may in certain circumstances serve as the parliamentary exposition of the former.

14. It is trite that a finding can be both: a finding of fact or a finding of law. It may even be a finding on a mixed question of law and fact. In the case of a finding on a legal issue the arbitrator may on facts that are proved or admitted explore his options and lay bare the process by which he arrives at any such finding. It is only when the conclusion is supported by reasons on which it is based that one can logically describe the process as tantamount to recording a finding. It is immaterial whether the reasons given in support of the conclusion are sound or erroneous. That is because a conclusion supported by reasons would constitute a "finding" no matter the conclusion or the reasons in support of the same may themselves be erroneous on facts or in law. It may then be an erroneous finding but it would nonetheless be a finding. What is important is that a finding presupposes application of mind. Application of mind is best demonstrated by disclosure of the mind; mind in turn is best disclosed by recording reasons. That is the soul of every adjudicatory process which affects the rights of the parties….”

37. Therefore, while considering a challenge to an Arbitral Award where private parties are involved, the Court need not examine the validity of the findings or the reasoning behind the findings given by an Arbitrator. The extent to which a Court may exercise supervisory powers in this respect is limited to examining whether the Award and the conclusion drawn therein are supported by findings and not whether the findings themselves are erroneous or sound.

38. It has also been reiterated that, while adjudicating a challenge under Section 34 of the Arbitration Act, the Courts must limit themselves to examining the Award itself and not the merits or facts of the case. A Court shall in no manner conduct a roving enquiry into the facts and evidence of the matter and neither shall the Court sit in appeal against the Award of the Arbitrator.

39. The powers of Court under Section 34 to set aside award do not include power to modify such an award. Given the limited scope of judicial interference with award under Section 34 on extremely limited grounds not dealing with merits of an award, “limited remedy” under Section 34, is coterminous with “limited right”, namely, either to set aside an award or remand matter under circumstances mentioned in Section 34. Section 34 jurisdiction cannot be assimilated with revisional jurisdiction under Section 115 of the CPC. This position has been laid down in the case of NHAI v. M. Hakeem, (2021) 9 SCC 1 in the following terms:

18. Redfern and Hunter on International Arbitration (6th Edn.), states that the Model Law does not permit modification of an award by the reviewing court (at p. 570) as follows: “10.06. The purpose of challenging an award before a national court at the seat of arbitration is to have that court declare all, or part, of the award null and void. If an award is set aside or annulled by the relevant court, it will usually be treated as invalid, and accordingly unenforceable, not only by the courts of the seat of arbitration, but also by national courts elsewhere. This is because, under both the New York Convention and the Model Law, a competent court may refuse to grant recognition and enforcement of an award that has been set aside by a court of the seat of arbitration. It is important to note that, following complete annulment, the claimant can recommence proceedings because the award simply does not exist—that is, the status quo ante is restored. The reviewing court cannot alter the terms of an award nor can it decide the dispute based on its own vision of the merits. Unless the reviewing court has a power to remit the fault to the original tribunal, any new submission of the dispute to arbitration after annulment has to be undertaken by commencement of a new arbitration with a new Arbitral Tribunal.”

19. The statutory scheme under Section 34 of the Arbitration Act, 1996 is in keeping with the Uncitral Model Law and the legislative policy of minimal judicial interference in arbitral awards.

23. It is settled law that a Section 34 proceeding does not contain any challenge on the merits of the award. This has been decided in MMTC Ltd. v. Vedanta Ltd. [MMTC Ltd. v. Vedanta Ltd., (2019) 4 SCC 163: (2019) 2 SCC (Civ) 293], as follows: (SCC p. 167, para 14)

24. Likewise, in Ssangyong Engg. & Construction Co. Ltd. v. NHAI [Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131: (2020) 2 SCC (Civ) 213], this Court under the caption “Section 34(2)(a) does not entail a challenge to an arbitral award on merits” referred to this Court's judgment in Renusagar Power Co. Ltd. v. General Electric Co. [Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644], the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (“the New York Convention”) and various other authorities to conclude that there could be no challenge on merits under the grounds mentioned in Section 34 — (see paras 34 to 48). This Court also held, in Maharashtra State Electricity Distribution Co. Ltd. v. Datar Switchgear Ltd. [Maharashtra State Electricity Distribution Co. Ltd. v. Datar Switchgear Ltd., (2018) 3 SCC 133: (2018) 2 SCC (Civ) 65] (at p. 170), that the court hearing a Section 34 petition does not sit in appeal (see para 51).”

40. In UHL Power Co. Ltd. vs. State of Himachal Pradesh, (2022) 4 SCC 116, the Hon’ble Supreme Court reiterated the narrow scope under Section 34 of the Arbitration Act and held as under:-

41. In Delhi Airport Metro Express Pvt Ltd vs. Delhi Metro Rail Corporation, (2022) 1 SCC 131, the Hon’ble Supreme Court to this aspect observed as under:- 42.“28. This Court has in several other judgments interpreted Section 34 of the 1996 Act to stress on the restraint to be shown by Courts while examining the validity of the arbitral awards. The limited grounds available to Courts for annulment of arbitral awards are well known to legally trained minds. However, the difficulty arises in applying the well established principles for interference to the facts of each case that come up before the courts. There is a disturbing tendency of Courts of setting aside arbitral awards, after dissecting and reassessing factual aspects of the cases to come to a conclusion that the award needs intervention and thereafter, dubbing the award to be vitiated by either perversity or patent illegality, apart from the other grounds available for annulment of the award. This approach will lead to corrosion of the object of the 1996 Act and the endevours made to preserve this object, which is minimal judicial interference with arbitral awards. That apart, several judicial pronouncements of this Court would become a dead letter if arbitral awards are set aside by categorizing them as perverse or patently illegal without appreciating the contours of the said expressions.”

43. Further, in State of Jharkhand vs. HSS Integrated DSN, (2019) 9 SCC 798, the Hon’ble Supreme Court held that even when there are more than one plausible view and the Arbitrator, in his wisdom, adopts one of them, having given reasons for his findings, the Courts shall not interfere with such an Award. It was observed as under:- “6.1. In Progressive-MVR[3], after considering the catena of decisions of this Court on the scope and ambit of the proceedings under Section 34 of the Arbitration Act, this Court has observed and held that even when the view taken by the arbitrator is a plausible view, and/or when two views are possible, a particular view taken by the Arbitral Tribunal which is also reasonable should not be interfered with in a proceeding under Section 34 of the Arbitration Act.

6.2. In Datar Switchgear Ltd., this Court has observed and held that the Arbitral Tribunal is the master of evidence and the findings of fact which are arrived at by the arbitrators on the basis of the evidence on record are not to be scrutinised as if the Court was sitting in appeal. In para 51 of the judgment, it is observed and held as under: (SCC pp. 169-70) “51. ….. The proposition of law that the Arbitral Tribunal is the master of evidence and the findings of fact which are arrived at by the arbitrators on the basis of evidence on record are not to be scrutinised as if the Court was sitting in appeal now stands settled by a catena of judgments pronounced by this Court without any exception thereto.”

44. Hence, the law which has been settled by the Hon’ble Supreme Court is that the scope of interference with an Arbitral Award under Section 34 of the Arbitration Act is fairly limited and narrow. The Courts cannot sit in an appeal while adjudicating a challenge to an Award which is passed by an Arbitrator, who is the master of evidence, after due consideration of facts, circumstances, evidence and material before him. Therefore, it is clear that this Court shall also limit itself to the Award in question and not re-appreciate evidence and all material before the Arbitrator. Consideration of the Impugned Award

45. This court has duly considered the facts and circumstances of the instant case, judicial pronouncements relied on by the parties, pleadings presented, and arguments advanced by the learned counsel of the parties. After carefully analyzing the materials relied on by the parties, this Court has framed the following issue for its consideration: - Whether the impugned award in question dated 20th July 2018 suffers from patent illegality and/or is in conflict with the public policy or fundamental policy of Indian law and thus is liable to be set aside under the provisions of Section 34 of the Arbitration and Conciliation Act, 1996, warranting interference of this Court.

46. As discussed above, there are limited grounds upon which a challenge under Section 34 of the Arbitration Act can be raised. Therefore, while adjudicating the challenge to the impugned Award dated 20th July 2018, this Court needs to be satisfied that the petitioners had rightly and successfully invoked the limited grounds so available.

47. On a bare reading of the invoked provision Section 34 of the Arbitration Act as quoted above, it has become evident the words used therein are that “An arbitral award may be set aside by the Court only if”, which signifies the intent of limiting the scope of interference by Courts in an Arbitral Award, passed after thorough procedure, involvement of parties, and appreciation of facts, evidence and law, “only” in the event of the circumstances delineated in the provision being met. The limited grounds which may invite the intervention and action thereupon by the Courts are explicitly laid down under the provision. What is to be seen by a Court exercising jurisdiction under Section 34 of the Arbitration Act is that an Award passed by an Arbitral Tribunal may only be set aside if it is patently illegal, against the public policy of India and fundamental policy of law, based on no evidence and delineates no reason for passing the Award.

48. The grounds taken by the petitioners while assailing the Arbitral Award is that the impugned Arbitral Award is ex-facie erroneous and suffers from patent illegality and by extension is contrary to public policy of India. The law regarding patent illegality, public policy of India and fundamental policy remains no more res integra and has been categorically dealt with, elaborated upon and clarified by the Hon’ble Supreme Court by way of extensive judicial pronouncements and observations therein. The implications and bearing of the principles laid down by extensive deliberation by the Courts of the Country shall also effect the adjudication in the instant matter, hence, the sum and substance of the principles is reiterated in order to test the impugned Award in its entirety under the provisions of the Arbitration Act. Patent Illegality

49. While adjudicating a challenge under Section 34, it is to be borne in the mind of the Court that only an illegality which goes to the root of the matter and is apparent on the face of the record shall be considered a patent illegality and would lead to an intervention by this Court.

50. The Hon’ble Supreme Court in the landmark case of Patel Engg. Ltd. v. North Eastern Electric Power Corpn. Ltd., (2020) 7 SCC 167 construed the ambit of patent illegality as a ground for setting aside the Arbitral Award under Section 34 of the Arbitration Act and observed as under:

51. This Court has looked into the discussion of patent illegality ground in the case of Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131, wherein the Hon’ble Supreme Court relied upon the decision of Associate Builders v. Delhi Development Authority, (2015) 3 SCC 49, wherein, it was held that the construction of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator construes a contract in a manner which no fair-minded or reasonable person would take i.e., if the view taken by the arbitrator is not even a plausible view to take. While discussing the fundamentals of patent illegality, the Hon’ble Supreme Court, taking in view the judgments passed in Ssangyong Engg. & Construction Co. Ltd. (Supra) as well as Associate Builders (Supra), in State of Chhattisgarh v. Sal Udyog (P) Ltd., (2022) 2 SCC 275 held as under:-

52. The abovementioned precedents have settled the position of a challenge to an Arbitral Award. The facets under Section 34 of the Arbitration Act, specifically under Sub-section 2, provide the limited purview of such a challenge.

53. In order to succeed in a challenge against an Award under Section 34 the petitioners must show that there is a patent illegality in the impugned Award which goes to the root of the matter and is not an illegality of trivial nature. In absence of the same the impugned Award cannot be held to be against the public policy. Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the court. Such award is opposed to public policy and is required to be adjudged illegal.

54. To argue that the impugned Award before this Court is liable to be set aside in the instant petition, the learned senior counsel for the petitioners submitted that the findings of the learned Arbitral Tribunal were patently illegal. As stipulated by the aforementioned precedents, the words are not to be construed in their plain meaning, but the essence to be appreciated while adjudicating a challenge under Section 34 of the Arbitration Act is that the illegalities or deficiencies are such that they are apparent on the face of record and/or shock the conscience of the Court and can in no manner be sustained.

55. The petitioners in the instant case have pressed the objection to the impugned Award on the ground of patent illegality and the same shall be tested keeping in view the well-established principles of law settled by the provision itself and by the Hon’ble Supreme Court. Fundamental Policy of Law

56. As has been laid down under the provision and its expansive interpretation by the Courts of the Country time and again, it is for the Court exercising powers under Section 34 of the Arbitration Act to test whether the arbitral award under challenge is contrary to the fundamental policy of law.

57. The Hon’ble Supreme Court in ONGC Ltd. vs. Western Geco International, (2014) 9 SCC 263, deliberated and elaborated upon the concept of fundamental policy of Indian law and the implications of its contravention under Section 34 of the Arbitration Act. The relevant portion of the judgment is reproduced hereunder:

37. The view taken by Lord Reid was relied upon by a Constitution Bench of this Court in A.C. Companies Ltd vs. P.N. Sharma and Anr. (AIR 1965 SC 1595) where Gajendragadkar, C.J. speaking for the Court observed: “In other words, according to Lord Reid‟s judgment, the necessity to follow judicial procedure and observe the principles of natural justice, flows from the nature of the decision which the watch committee had been authorised to reach under S.191(4). It would thus be seen that the area where the principles of natural justice have to be followed and judicial approach has to be adopted, has become wider and consequently, the horizon of writ jurisdiction has been extended in a corresponding measure. In dealing with questions as to whether any impugned orders could be revised under A. 226 of our Constitution, the test prescribed by Lord Reid in this judgment may afford considerable assistance.”

38. Equally important and indeed fundamental to the policy of Indian law is the principle that a Court and so also a quasi-judicial authority must, while determining the rights and obligations of parties before it, do so in accordance with the principles of natural justice. Besides the celebrated „audi alteram partem‟ rule one of the facets of the principles of natural justice is that the Court/authority deciding the matter must apply its mind to the attendant facts and circumstances while taking a view one way or the other. Non-application of mind is a defect that is fatal to any adjudication. Application of mind is best demonstrated by disclosure of the mind and disclosure of mind is best done by recording reasons in support of the decision which the Court or authority is taking. The requirement that an adjudicatory authority must apply its mind is, in that view, so deeply embedded in our jurisprudence that it can be described as a fundamental policy of Indian Law.

39. No less important is the principle now recognised as a salutary juristic fundamental in administrative law that a decision which is perverse or so irrational that no reasonable person would have arrived at the same will not be sustained in a Court of law. Perversity or irrationality of decisions is tested on the touchstone of Wednesbury‟s principle of reasonableness. Decisions that fall short of the standards of reasonableness are open to challenge in a Court of law often in writ jurisdiction of the Superior courts but no less in statutory processes where ever the same are available.

40. It is neither necessary nor proper for us to attempt an exhaustive enumeration of what would constitute the fundamental policy of Indian law nor is it possible to place the expression in the straitjacket of a definition. What is important in the context of the case at hand is that if on facts proved before them the arbitrators fail to draw an inference which ought to have been drawn or if they have drawn an inference which is on the face of it, untenable resulting in miscarriage of justice, the adjudication even when made by an arbitral tribunal that enjoys considerable latitude and play at the joints in making awards will be open to challenge and may be cast away or modified depending upon whether the offending part is or is not severable from the rest.”

58. Thus, the limited yet expansive interpretation stipulates that while adjudicating a challenge under Section 34 of the Arbitration Act the Court may examine the impugned award on the following aspects: a. Whether a judicial approach has been adopted by the Arbitrator while passing the Award. b. Whether the principles of natural justice have been observed. c. Whether the Arbitrator has reached a conclusion which no reasonable person would reach at.

59. Therefore, the petitioners, in the instant case, to successfully establish their case shall also convince this Court of the said principles and show that the impugned Award has been passed by the Tribunal without application of mind and taking a judicial approach, without observing the principles of natural justice and that the conclusion drawn by the Tribunal is one which no reasonable person could draw in the facts and circumstances of the case. Public Policy of India

60. The contravention of public policy of India is also an indispensable consideration while adjudging an arbitral award and a challenge thereto. The Hon’ble Supreme Court in BCCI vs. Cricket Association & Ors. (2015) 3 SCC 251, on the question of public policy, passed extensive observations and held as under:- “90. The validity of Rule 6.2.[4] as amended can be examined also from the standpoint of its being opposed to "public policy". But for doing so we need to first examine what is meant by "public policy" as it is understood in legal parlance. The expression has been used in Section 23 of the Contract Act, 1872 and in Section 34 of the Arbitration and Conciliation Act, 1996 and host of other statutes but has not been given any precise definition primarily because the expression represents a dynamic concept and is, therefore, incapable of any straitjacket definition, meaning or explanation. That has not, however, deterred jurists and courts from explaining the expression from very early times.

91. Mathew, J. speaking for the Court in Murlidhar Aggarwal v. State of U.P. 27 referred to Winfield's definition in Public Policy in English Common Law 42 Harvard Law Review 76 to declare that: (SCC p. 482, para 31) “31. Public policy does not remain static in any given community. It may vary from generation to generation and even in the same generation. Public policy would be almost useless if it were to remain in fixed moulds for all time.”

92. The Court then grappled with the problem of ascertaining public policy if the same is variable and depends on the welfare of the community and observed: (Murlidhar Aggarwal case, SCC pp. 482-83, para 32) “32. If it is variable, if it depends on the welfare of the community at any given time, how are the courts to ascertain it? The Judges are more to be trusted as interpreters of the law than as expounders of public policy. However, there is no alternative under our system but to vest this power with Judges. The difficulty of discovering what public policy is at any given moment certainly does not absolve the Judges from the duty of doing so. In conducting an enquiry, as already stated, Judges are not hidebound by precedent. The Judges must look beyond the narrow field of past precedents, though this still leaves open the question, in which direction they must cast their gaze. The Judges are to base their decisions on the opinions of men of the world, as distinguished from opinions based on legal learning. In other words, the Judges will have to look beyond the jurisprudence and that in so doing, they must consult not their own personal standards or predilections but those of the dominant opinion at a given moment, or what has been termed customary morality. The Judges must consider the social consequences of the rule propounded, especially in the light of the factual evidence available as to its probable results. Of course, it is not to be expected that men of the world are to be subpoenaed as expert witnesses in the trial of every action raising a question of public policy. It is not open to the Judges to make a sort of referendum or hear evidence or conduct an inquiry as to the prevailing moral concept. Such an extended extra-judicial enquiry is wholly outside the tradition of courts where the tendency is to 'trust the Judge to be a typical representative of his day and generation'. Our law relies, on the implied insight of the Judge on such matters. It is the Judges themselves, assisted by the Bar, who here represent the highest common factor of public sentiment and intelligence. No doubt, there is no assurance that Judges will interpret the mores* of their day more wisely and truly than other men. But this is beside the point. The point is rather that this power must be lodged somewhere and under our Constitution and laws, it has been lodged in the Judges and if they have to fulfil their function as Judges, it could hardly be lodged elsewhere.”

93. In Central Inland Water Transport Corpn. this Court was also considering the import of the expression "public policy" in the context of the service conditions of an employee empowering the employer to terminate his service at his sweet will upon service of three months' notice or payment of salary in lieu thereof. Explaining the dynamic nature of the concept of public policy this Court observed: (SCC pp. 217- 18, para 92) “92.... Public policy, however, is not the policy of a particular Government. It connotes some matter which concerns the public good and the public interest. The concept of what is for the public good or in the public interest or what would be injurious or harmful to the public good or the public interest has varied from time to time. As new concepts take the place of old, transactions which were once considered against public policy are now being upheld by the courts and similarly where there has been a well recognised head of public policy, the courts have not shirked from extending it to new transactions and changed circumstances and have at times not even flinched from inventing a new head of public policy.... It is thus clear that the principles governing public policy must be and are capable, on proper occasion, of expansion or modification. Practices which were considered perfectly normal at one time have today become obnoxious and oppressive to public conscience. If there is no head of public policy which covers a case, then the court must in consonance with public conscience and in keeping with public good and public interest declare such practice to be opposed to public policy. Above all, in deciding any case which may not be covered by authority our courts have before them the beacon light of the Preamble to the Constitution. Lacking precedent, the court can always be guided by that light and the principles underlying the fundamental rights and the directive principles enshrined in our Constitution.”

94. We may also refer to the decision of this Court in ONGC Ltd. v. Saw Pipes Ltd., wherein this Court was considering the meaning and import of the expression "public policy of India" as a ground for setting aside an arbitral award. Speaking for the Court M.B. Shah, J. held that the expression "public policy of India" appearing in the Act aforementioned must be given a liberal meaning for otherwise resolution of disputes by resort to arbitration proceedings will get frustrated because patently illegal awards would remain immune to court's interference. This Court declared that what was against public good and public interest cannot be held to be consistent with public policy. The following passage aptly summed up the approach to be adopted in the matter: (Saw Pipes Ltd. case, SCC pp. 727-28, para 31) “31. Therefore, in our view, the phrase 'public policy of India' used in Section 34 in context is required to be given a wider meaning. It can be stated that the concept of public policy connotes some matter which concerns public good and the public interest. What is for public good or in public interest or what would be injurious or harmful to the public good or public interest has varied from time to time. However, the award which is, on the face of it, patently in violation of statutory provisions cannot be said to be in public interest. Such award/judgment/decision is likely to adversely affect the administration of justice. Hence, in our view in addition to narrower meaning given to the term 'public policy' in Renusagar case it is required to be held that the award could be set aside if it is patently illegal. The result would be-award could be set aside if it is contrary to: (a) fundamental policy of Indian law; or (b) the interest of India; or

(c) justice or morality, or

(d) in addition, if it is patently illegal.

Illegality must go to the root of the matter and if the illegality is of trivial nature it cannot be held that award is against the public policy. Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the court. Such award is opposed to public policy and is required to be adjudged void.”

96. To sum up: public policy is not a static concept. It varies with times and from generation to generation. But what is in public good and public interest cannot be opposed to public policy and vice versa. Fundamental Policy of Law would also constitute a facet of public policy. This would imply that all those principles of law that ensure justice, fair play and bring transparency and objectivity and promote probity in the discharge of public functions would also constitute public policy. Conversely, any deviation, abrogation, frustration or negation of the salutary principles of justice, fairness, good conscience, equity and objectivity will be opposed to public policy. It follows that any rule, contract or arrangement that actually defeats or tends to defeat the high ideals of fairness and objectivity in the discharge of public functions no matter by a private non-governmental body will be opposed to public policy. ….”

61. Further, in the landmark judgment passed by the Hon’ble Supreme Court in Ssangyong Engineering and Construction Co. Ltd. (Supra), it was held as under: “34. What is clear, therefore, is that the expression “public policy of India”, whether contained in Section 34 or in Section 48, would now mean the “fundamental policy of Indian law” as explained in paragraphs 18 and 27 of Associate Builders (supra), i.e., the fundamental policy of Indian law would be relegated to the “Renusagar” understanding of this expression. This would necessarily mean that the Western Geco (supra) expansion has been done away with. In short, Western Geco (supra), as explained in paragraphs 28 and 29 of Associate Builders (supra), would no longer obtain, as under the guise of interfering with an award on the ground that the arbitrator has not adopted a judicial approach, the Court‟s intervention would be on the merits of the award, which cannot be permitted post amendment. However, insofar as principles of natural justice are concerned, as contained in Sections 18 and 34(2)(a)(iii) of the 1996 Act, these continue to be grounds of challenge of an award, as is contained in paragraph 30 of Associate Builders (supra).

35. It is important to notice that the ground for interference insofar as it concerns “interest of India” has since been deleted, and therefore, no longer obtains. Equally, 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”. This again would be in line with paragraphs 36 to 39 of Associate Builders (supra), as it is only such arbitral awards that shock the conscience of the court that can be set aside on this ground.

36. Thus, it is clear that public policy of India is now constricted to mean firstly, that a domestic award is contrary to the fundamental policy of Indian law, as understood in paragraphs 18 and 27 of Associate Builders (supra), or secondly, that such award is against basic notions of justice or morality as understood in paragraphs 36 to 39 of Associate Builders (supra). Explanation 2 to Section 34(2)(b)(ii) and Explanation 2 to Section 48(2)(b)(ii) was added by the Amendment Act only so that Western Geco (supra), as understood in Associate Builders (supra), and paragraphs 28 and 29 in particular, is now done away with.”

62. A conjoint reading of the precedents reproduced makes it clear that the concept of public policy is not static but is dynamic. The dynamism is such that all what may be considered against the public good may be considered to be in contravention of the public policy. Application of the principles to test validity of the Arbitral Award

63. Keeping in view the entirety of the principles settled under law and interpreted by the Hon’ble Supreme Court the impugned Award and the observations of the Arbitral Tribunal therein shall be considered. The Arbitral Tribunal while considering the disputes between the parties had framed the following broad issues for consideration, as mentioned in the impugned award: “POINTS FOR DETERMINATION

1. Whether any of the parties is in breach of SSPA dated 29.01.2015:

2. If answer to Issue No.1 is in the affirmative, what is the quantum of damages the party in question is entitled to?

3. Whether the Respondents are liable to pay interest on the aforesaid amounts, and if yes, at what rate?

4. Whether the SSPA dated 29.01.2015 stood frustrated on account of impossibility entitling the Claimants to restitution and if so, what are the consequences including maintainability of the Claim therefor?

5. Whether the parties are entitled to the reliefs as prayed for in their respective pleadings, including costs?

6. Whether the SSPA dated 29.01.2015 constitutes the „entire agreement' between the parties and, therefore, the claims arising wherefrom are within the jurisdiction of this Hon'ble Arbitral Tribunal?”

64. The major contention that is before this Court, raised on behalf of the petitioners is that the substantial claims raised on behalf of the petitioners/claimants before the Arbitral Tribunal were not considered and awarded in their favour.

65. A thorough consideration of the principles laid down in the foregoing paragraphs makes it abundantly and unequivocally clear that this Court, while adjudicating the challenge brought forth under Section 34 of the Arbitration Act, cannot enter into the merits of the case, claims or objections raised before the Tribunal, neither can the evidence or material be appreciated as this Court were sitting in an appeal. The Court is barred by law from re-appreciating the material and even the claims raised qua the disputes between the parties.

66. The prayers made on behalf of the petitioners to the extent that the Arbitral Tribunal may be set aside since it failed to make an award qua restitution of the petitioners’ shareholding in the respondent Company, and that the Award does not direct the respondents to comply with obligation under Clause 12.[3] of the Agreement and letter dated 24th February 2015, are the objections that are beyond the scope of consideration under section 34 of the Arbitration Act and hence, shall not be entered into by this Court. This Court is to uphold the spirit and intent of the Arbitration Act, as has been discussed in the foregoing paragraphs, and hence, an inquiry or examination into the merits of the case shall not be carried out while adjudicating upon the Arbitral Award dated 20th July

2018.

67. The only limited consideration before this Court, in view of the principles elucidated above, pertains to the content of the impugned Award to test the veracity of the same and adjudge as to whether the ingredients, as laid down under the Arbitration Act and expensively interpreted and settled by the Hon’ble Supreme Court, have been satisfied in the instant case preferred by the petitioners. The issues pertaining to the counter-claim of Rs. 100 Crores, which was allowed by the Arbitral Tribunal in favour of the respondents, and interest, are the only limited objections which have ultimately been pressed on behalf of the petitioners and which shall be looked into by this Court.

68. While making the Award, the Arbitral Tribunal observed that the respondents were entitled to a sum Rs. 100 Crores, since the petitioners failed to deposit the said sum as per the agreed terms under the SSPA. It was found by the learned Tribunal that merely making a fixed deposit of the like amount did not amount to depositing the same in favour of the respondents. The Arbitral Tribunal, to the extent of counter-claim of Rs. 100 Crores, held as under:

69. The learned Tribunal, while referring to the claims of the petitioners, observed that the petitioners were required to make the payment of Rs. 220,02,93,039/-, which stood paid. While coming to conclusion the Arbitral Tribunal also noted that out of the total consideration of Rs. 220,02,93,093/- to be paid by the petitioners towards the Tranche-I CRPS amount, the petitioners had made a total payment of Rs. 120,02,83,038/-, leaving Rs. 100 Crores to be payable. The Arbitral Tribunal was of the view that since, the payment towards Tranche-I of the total consideration was made by the petitioners herein in part, however, the supplementary obligation of issuance of the CRPS was not fulfilled by the respondents, the respondents were liable to pay back and refund the sum so deposited by the petitioners after deducting the sum of the amount which remained uncredited, i.e., Rs. 100 Crores.

70. In accordance with the Agreement, the petitioners herein were to fulfil the obligation of bringing in the amount of Rs. 100 Crores. However, it was observed that the said amount was never found to be deposited in the designated bank account in terms of the agreed mutual terms of the Agreement between the parties. The counter-claim pertaining to the said amount was, hence, decided in the favour of the respondents herein and was deducted from their liability towards the petitioners amounting to Rs. 370,86,99,209/-. From a bare perusal of the aforesaid, it is evident that the learned Tribunal has provided adequate reasoning for allowing the counter-claim of the respondents and deducting the sum of Rs. 100 Crores thereto.

71. It is pertinent to reiterate here that the scope of adjudication under Section 34 of the Arbitration Act is fairly limited to the extent that where the Arbitrator concerned takes a view which is plausible and supports the view with reasoning, the Court need not enter the merits and analyse or examine the validity of the reasons so provided, unless there is an error which is so apparent and deeply rooted that interference is unavoidable. Even in the case at hand, there is nothing which suggests that such kind of interference is required by this Court.

72. The course of procedure taken by the Arbitral Tribunal as well as the findings as reproduced above are evidently not in contravention of any of the provisions under the Arbitration Act or even any substantive law. There is nothing in the observations in the impugned Award to suggest that the Tribunal contravened or went beyond the terms of Agreement executed between the parties. The Tribunal provided reasons for the findings delivered and there is no perversity which is either apparent on the face of the record or which goes to the root of the matter. Therefore, the impugned Award cannot said to be patently illegal.

73. To test the validity and legality of the impugned Award and the observations made therein the test of fundamental policy of law was also before this Court, however, upon a perusal of the Award, this Court does not find that the Award suffers from non-application of mind. Not only did the Tribunal go into elaborate details of the claims raised and submissions thereto made by the parties, it also appreciated the material on record and passed an Award which is supported by reasons. The inference drawn by the Tribunal based on the reasons provided by it does not constitute an inference which on the face of it is untenable or unreasonable. Under the scope of Section 34 of the Arbitration Act, this Court is to be concerned only about the aforementioned considerations to make an observation qua the impugned Award, without entering the merits of the case and the evidence in the matter, and in view of the findings of the Arbitral Tribunal with respect to the claims raised against refund of the amount, this Court is of the opinion that there is nothing perverse in the impugned Award to say that it is against the fundamental policy of law.

74. Furthermore, the observations of the Arbitral Tribunal and the conclusion drawn in the impugned Award do not signify anything which is against the settled principles of law or against the public good or interest. There is no deviation from the fair and just principles of morality, equity, objectivity in the impugned Award or even the course taken by the Tribunal in conducting and concluding the proceedings. Hence, the Award is not against the public policy of the Country.

75. To sum up, none of the ingredients under Section 34 of the Arbitration Act are made out against the Arbitral Award at hand.

76. The petitioners also raised an objection with regard to the issue of interest. The Tribunal awarded interest in favour of the respondents herein as under: “(3) Since the amount covered by conclusion (1) was with the Respondents since November 2015, they would have become liable to pay interest on the same. Though, interest at the rate of 18% per annum has been claimed, we are of the view that since Respondent No.1 Company took over a huge liability and also paid interest on the tax amount payable by the Claimants, interest at the rate of 12% on Rs.308,21,89,461/- would be appropriate. The amount has to be accordingly calculated for about 30 months. Additionally, in view of the finding relating to the CRPS claim and the proved position that the Respondents have paid interest / servicing charges of around Rs.29 Crores, the counter claim to that extent is allowed. (5) In case the payments, as directed, to be made by the Respondents are not so made within two months from the relevant date, the Claimants shall be entitled to interest @ 18% from the last date of the due date in terms of this Award.

77. There is no dispute to the fact that an Arbitral Tribunal has the jurisdiction and power to make an award pertaining to interest. The Hon’ble Supreme Court has time and again reiterated that an Arbitrator has sufficient powers to pass an Award on the question of interest. In Delhi Airport Metro Express (P) Ltd. (Supra), the Hon’ble Supreme Court held as under:

3. Sub-section (7) of Section 31 of the Act, which deals with the power of the Arbitral Tribunal to award interest, reads as follows: „31. (7)(a) Unless otherwise agreed by the parties, where and insofar as an arbitral award is for the payment of money, the Arbitral Tribunal may include in the sum for which the award is made interest, at such rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made. (b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of eighteen per centum per annum from the date of the award to the date of payment.‟

4. Clause (a) of sub-section (7) provides that where an award is made for the payment of money, the Arbitral Tribunal may include interest in the sum for which the award is made. In plain terms, this provision confers a power upon the Arbitral Tribunal while making an award for payment of money, to include interest in the sum for which the award is made on either the whole or any part of the money and for the whole or any part of the period for the entire pre-award period between the date on which the cause of action arose and the date on which the award is made. To put it differently, sub-section (7)(a) contemplates that an award, inclusive of interest for the pre-award period on the entire amount directed to be paid or part thereof, may be passed. The “sum” awarded may be the principal amount and such interest as the Arbitral Tribunal deems fit. If no interest is awarded, the “sum” comprises only the principal. The significant words occurring in clause (a) of sub-section (7) of Section 31 of the Act are “the sum for which the award is made”. On a plain reading, this expression refers to the total amount or sum for the payment for which the award is made. Parliament has not added a qualification like “principal” to the word “sum”, and therefore, the word “sum” here simply means “a particular amount of money”. In Section 31(7), this particular amount of money may include interest from the date of cause of action to the date of the award.

5. Oxford Dictionary gives the following meaning to the word “sum”: Sum, “if noun”.—A particular amount of money. Sum, “if verb”.—The total amount resulting from the addition of two or more numbers, amounts, or items.

6. In Black's Law Dictionary, the word “sum” is given the following meaning: „Sum.—In English law—A summary or abstract; a compendium; a collection. Several of the old law treatises are called “sum”. Lord Hale applies the term to summaries of statute law. Burrill. The sense in which the term is most commonly used is “money”; a quantity of money or currency; any amount indefinitely, a sum of money, a small sum, or a large sum. United States v. Van Auken [United States v. Van Auken, 24 L Ed 852: 96 US 366 (1877)] and Donovan v. Jenkins [Donovan v. Jenkins, 52 Mont 124: 155 P 972 (1916)], P at p. 973.‟

7. Thus, when used as a noun, as it seems to have been used in this provision, the word “sum” simply means “an amount of money”; whatever it may include — “principal” and “interest” or one of the two. Once the meaning of the word “sum” is clear, the same meaning must be ascribed to the word in clause (b) of subsection (7) of Section 31 of the Act, where it provides that a sum directed to be paid by an arbitral award „shall … carry interest …‟ from the date of the award to the date of the payment i.e. post-award. In other words, what clause (b) of sub-section (7) of Section 31 of the Act directs is that the “sum”, which is directed to be paid by the award, whether inclusive or exclusive of interest, shall carry interest at the rate of eighteen per cent per annum for the post-award period, unless otherwise ordered.

8. Thus, sub-section (7) of Section 31 of the Act provides, firstly, vide clause (a) that the Arbitral Tribunal may include interest while making an award for payment of money in the sum for which the award is made and further, vide clause (b) that the sum so directed to be made by the award shall carry interest at a certain rate for the post-award period.

9. The purpose of enacting this provision is clear, namely, to encourage early payment of the awarded sum and to discourage the usual delay, which accompanies the execution of the award in the same manner as if it were a decree of the court vide Section 36 of the Act.

10. In this view of the matter, it is clear that the interest, the sum directed to be paid by the arbitral award under clause (b) of sub-section (7) of Section 31 of the Act is inclusive of interest pendente lite.

11. At this juncture, it may be useful to refer to Section 34CPC, also enacted by Parliament and conferring the same power upon a court to award interest on an award i.e. post-award interest. While enacting Section 34CPC Parliament conferred power on a court to order interest “on the principal sum adjudged” and not on merely the “sum” as provided in the Arbitration Act. The departure from the language of Section 34CPC in Section 31(7) of the 1996 Act is significant and shows the intention of Parliament.

12. It is settled law that where different language is used by Parliament, it is intended to have a different effect. In the Arbitration Act, the word “sum” has deliberately not been qualified by using the word “principal” before it. If it had been so used, there would have been no scope for the contention that the word “sum” may include “interest”. In Section 31(7) of the Act, Parliament has deliberately used the word “sum” to refer to the aggregate of the amounts that may be directed to be paid by the Arbitral Tribunal and not merely the “principal” sum without interest.

13. Thus, it is apparent that vide clause (a) of subsection (7) of Section 31 of the Act, Parliament intended that an award for payment of money may be inclusive of interest, and the “sum” of the principal amount plus interest may be directed to be paid by the Arbitral Tribunal for the pre-award period. Thereupon, the Arbitral Tribunal may direct interest to be paid on such “sum” for the post-award period vide clause (b) of sub-section (7) of Section 31 of the Act, at which stage the amount would be the sum arrived at after the merging of interest with the principal; the two components having lost their separate identities.

14. In fact this is a case where the language of subsection (7) clauses (a) and (b) is so plain and unambiguous that no question of construction of a statutory provision arises. The language itself provides that in the sum for which an award is made, interest may be included for the pre-award period and that for the post-award period interest up to the rate of eighteen per cent per annum may be awarded on such sum directed to be paid by the arbitral award.”

15. It could thus be seen that the majority view of this Court in Hyder Consulting (UK) [Hyder Consulting (UK) Ltd. v. State of Orissa, (2015) 2 SCC 189: (2015) 2 SCC (Civ) 38] is that the sum awarded may include the principal amount and such interest as the Arbitral Tribunal deems fit. It is further held that, if no interest is awarded, the “sum” comprises only the principal amount. The majority judgment held that clause (a) of sub-section (7) of Section 31 of the 1996 Act refers to the total amount or sum for the payment for which the award is made. As such, the amount awarded under clause (a) of sub-section (7) of Section 31 of the 1996 Act would include the principal amount plus the interest amount pendente lite. It was held that the interest to be calculated as per clause (b) of sub-section (7) of Section 31 of the 1996 Act would be on the total sum arrived as aforesaid under clause (a) of sub-section (7) of Section 31 of the 1996 Act. S.A. Bobde, J. in his judgment, has referred to various authorities of this Court as well as Maxwell on the Interpretation of Statutes. He emphasised that the Court must give effect to the plain, clear and unambiguous words of the legislature and it is not for the courts to add or subtract the words, even though the construction may lead to strange or surprising, unreasonable or unjust or oppressive results.

16. Sub-section (7) of Section 31 of the 1996 Act is already reproduced in the judgment of S.A. Bobde, J. in Hyder Consulting (UK) [Hyder Consulting (UK) Ltd. v. State of Orissa, (2015) 2 SCC 189: (2015) 2 SCC (Civ) 38]. Applying the principle of plain interpretation of the language employed by the legislature, the position that would emerge, on an analysis of clause (a) of sub-section (7) of Section 31 of the 1996 Act, is as under:

(i) It begins with the words “Unless otherwise agreed by the parties”.

(ii) Where and insofar as an arbitral award is for the payment of money, the Arbitral Tribunal may include interest component in the sum for which the award is made.

(iii) The interest may be at such rate as the Arbitral

(iv) The interest may be on the whole or any part of the money.

(v) The interest may be for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made.

17. It could thus be seen that the part which deals with the power of the Arbitral Tribunal to award interest, would operate if it is not otherwise agreed by the parties. If there is an agreement between the parties to the contrary, the Arbitral Tribunal would lose its discretion to award interest and will have to be guided by the agreement between the parties. The provision is clear that the Arbitral Tribunal is not bound to award interest. It has a discretion to award the interest or not to award. It further has a discretion to award interest at such rate as it deems reasonable. It further has a discretion to award interest on the whole or any part of the money. It is also not necessary for the Arbitral Tribunal to award interest for the entire period between the date on which the cause of action arose and the date on which the award is made. It can grant interest for the entire period or any part thereof or no interest at all.

20. If clause (a) of sub-section (7) of Section 31 of the 1996 Act is given a plain and literal meaning, the legislative intent would be clear that the discretion with regard to grant of interest would be available to the Arbitral Tribunal only when there is no agreement to the contrary between the parties. The phrase “unless otherwise agreed by the parties” clearly emphasises that when the parties have agreed with regard to any of the aspects covered under clause (a) of subsection (7) of Section 31 of the 1996 Act, the Arbitral Tribunal would cease to have any discretion with regard to the aspects mentioned in the said provision. Only in the absence of such an agreement, the Arbitral Tribunal would have a discretion to exercise its powers under clause (a) of sub-section (7) of Section 31 of the 1996 Act. The discretion is wide enough. It may grant or may not grant interest. It may grant interest for the entire period or any part thereof. It may also grant interest on the whole or any part of the money.

78. Therefore, it is apparent that the Arbitral Tribunal had the jurisdiction and the power to grant and award an interest while passing the Award, since there existed no prior agreement between the parties pertaining to such interest. Along with such power and jurisdiction, there is a vast degree of discretion which is vested with the Arbitral Tribunal. The Hon’ble Supreme Court explicitly stated in the aforesaid judgment that “It has a discretion to award the interest or not to award”. Hence, there is not dispute to this effect that since there were no explicit terms pertaining to the issue of interest decided and agreed between the parties before this Court, the Arbitral Tribunal was free to exercise its discretion and grant or not grant an award of interest to the best of its judgment, upon looking into the entirety of the material before it, while also ensuring that such an award does not render the Award patently illegal.

79. In the instant case, the discretionary power of awarding interest was exercised by the Arbitral Tribunal and the award of interest was made while keeping in view that there was a default on the part of the parties. It was also observed that the interest on the amount would have been accruable in the month of November in the year 2015, and hence, it was found just to allow an award of interest @12% per annum, as opposed to the original claim of 18% raised on behalf of the petitioners/claimants.

80. Such an interest was granted by the Arbitral Tribunal, in its wisdom being the master of evidence, after appreciation of the objections, claims and material adduced by the parties. Since, there was no stipulation regarding interest in the Agreement between the parties, the Arbitral Tribunal duly exercised its powers as well as the discretion bestowed upon it and only then the Award regarding interest was made.

81. This observation of the Tribunal also does not invite the vigours of the principles set out above that warrant an intervention under Section 34 of the Arbitration Act. While passing the Award, on merits as well as on the issue of interest, Arbitral Tribunal has taken a judicial approach while passing the Award and has given sufficient reasoning, backed by the facts and material. There is also nothing to show that the principles of natural justice were not observed by the Tribunal since the parties were given sufficient opportunity to put forth their case and further the Arbitral Tribunal has also considered and appreciated the entirety of the matter while passing the impugned Award, which is backed by reasons.

82. There is also nothing in the Award which would lead this Court to take the view that there is any gross illegality which goes to the root of the matter or error apparent on the face of the record which would render the Arbitral Award patently illegal. Furthermore, the conclusions drawn and findings given are not of the nature that would shock the conscience of this Court.

CONCLUSION

83. As discussed in the foregoing paragraphs, this Court is barred from entering into the merits of an Award unless there is an error that is apparent on the face of the record or an illegality that goes to the root of the matter. As per the mandate of law, settled by the Hon’ble Supreme Court, this Court shall also not look into the merits of the reasoning and findings given by the Arbitral Tribunal, as long as there are reasoned findings given by the Tribunal while passing the Award, which is clearly the case in the instant matter.

84. The Arbitral Tribunal considered the submissions and objections of the parties, framed issues, considered and appreciated the material facts and evidence and then passed the Award which was supported by reasoning. Further, the Arbitral Tribunal considered the pleadings and evidence placed before it and arrived at a conclusion that is plausible. There is nothing in the impugned Award to suggest otherwise.

85. There is also nothing in the impugned Award to suggest that it suffers from patent illegality and the findings therein are perverse and will shock the conscience of this Court. In the instant case, the petitioners have not been able to show that the impugned Arbitral Award is patently illegal, against public policy of India or fundamental policy of law and have, thus, failed to make out a case for the award to be set aside.

86. Therefore, in the light of such circumstances, the pleadings before this Court and submissions therein, the contentions raised during the course of arguments and the law surrounding Section 34 of the Arbitration Act being settled as well as the contents of the impugned Award, this Court is of the considered view that the petitioners have failed to substantiate the grounds for setting aside the impugned Arbitral Award.

87. After consideration of the entirety of the matter this Court does not find any cogent reason to interfere in the impugned Award dated 20th July 2018 passed by the Arbitral Tribunal in the arbitration proceedings initiated between the parties before this Court.

88. Accordingly, the instant petition is dismissed along with pending applications, if any.

89. The judgment be uploaded on the website forthwith.

JUDGE JULY 31, 2023 gs/ms