Delhi High Court - Orders
Outotec Gmbh And Co Kg vs Steel Authority Of India Limited on 3 January, 2024
Author: Jasmeet Singh
Bench: Jasmeet Singh
$~25
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ OMP (ENF.) (COMM.) 231/2023 & EX.APPL.(OS) 1547/2023
OUTOTEC GMBH AND CO KG ..... Decree Holder
Through: Mr Sulabh Rewari and Ms Mansvini
Jain, Advs.
versus
STEEL AUTHORITY OF INDIA LIMITED ..... Judgement Debtor
Through: Mr. Mukul Gupta, Senior Advocate
with Mr. Sunil Kumar Jain, Mr.
Shaantanu Jain and Ms. Reeta
Chaudhary, Advocates (through VC)
CORAM:
HON'BLE MR. JUSTICE JASMEET SINGH
ORDER
% 03.01.2024
1. This is a petition under section 36 of the Arbitration and Conciliation Act, 1996 seeking enforcement of the Arbitral Award dated 17.03.2023 made by International Court of Arbitration („ICC‟). As per the Award, the claims of the decree-holder were allowed and the total amount awarded in favor of the decree-holder is EUR 17,365,866.94 and USD 1,60,385.38. The total Award debt, with post-award interest at the rate of LIBOR + 3% is EUR 1,80,65,702.24 and USD 1,68,559.47 (as of 2 November 2023). Interest continues to run on the Awarded Amount till date of full payment by the Respondent.
2. It is stated by Mr Rewari, learned counsel appearing for the decree- holder that no amounts have been paid.
3. Mr Gupta, learned senior counsel appears for the judgment-debtor and This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 05/01/2024 at 21:59:51 has not filed any reply. The respondent has in fact filed a copy of the petition under section 34 of the Arbitration and Conciliation Act, 1996 filed by the judgment-debtor and has drawn my attention to Clauses W, X, Y, Z, DD, EE, LL and MM of the Grounds in the petition, which reads as under:
"W. Because the claim of Respondent no.1 with respect to Engineering expenses is based on false and fabricated documents and as such has played fraud upon the Arbitral Tribunal and the Tribunal without recording a finding as to the authenticity of such invoices, the "Fundamental Policy of India" has been violated and the Award is in conflict with the most basic notions of morality and justice.
X. Because the claim of Respondent no. 1 with respect to Engineering expenses (allegedly Respondent no.1 only did Basic Engineering) is of Rs.71.74 Crores while the contract price of total Engineering (includes Basic as well as Detailed Engineering) is Rs.22.7 Crores. Despite the same and beyond the contractual terms, the Arbitral Tribunal has awarded the full amount of Rs.71.74 Crores to Respondent no.1 and that too on the basis of false and fabricated documents/ invoices.
Y. Because the Arbitral Tribunal has given total perverse findings on the face of it with respect to the errors in the invoices related to Engineering expenses. The witness of Respondent no. 1 has categorically admitted that there are errors in such invoices and despite the same the Arbitral Tribunal has rendered a finding that the said witness did not accept any error in such invoices. Z. Because on the basis of fake and fabricated invoices, huge sum of Rs.71.74 crores is awarded to the Respondent no. 1, which is against the fundamental policy of India and also the most basic notions of morality and justice.
DD. Because the Arbitral Tribunal has wrongly allowed various claims of the Respondent no. 2 just on the basis of some entries in the SAP system and without there being any corroborative evidence on record despite the same being unreliable and manipulated document.
EE. Because the witness of Respondent no. 2 has admitted in his This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 05/01/2024 at 21:59:51 statement that the column of "WBS Element" is the most important column in the SAP sheets which is missing in those documents and without which such sheets could not be related to the instant project and further also admitted that the SAP sheets can be manipulated. Despite the same the huge claims of Respondent no. 2 have been allowed.
LL. Because the impugned award has been obtained by playing fraud and as such the impugned award is liable to be set aside. It is well settled that no Court will allow the person to get an advantage which he has obtained by fraud. No Award of the Arbitral Tribunal can be allowed to stand if it has been obtained by fraud. Fraud unveils everything. The Court should find the fraud and once it is proved it vitiates judgment, contract and the transactions whatsoever.
MM. Because various Hon'ble Courts has held as under with regard to if any party plays fraud upon Court:........."
4. Mr Gupta, learned Senior Counsel states that detailed instances of fraud have been highlighted by the JD and has drawn my attention to Section 36(3) 2nd Proviso of the Arbitration and Conciliation Act, 1996 which reads as under:
"36......
(3) Upon filing of an application under sub-section (2) for stay of the operation of the arbitral award, the Court may, subject to such conditions as it may deem fit, grant stay of the operation of such award for reasons to be recorded in writing:
Provided that the Court shall, while considering the application for grant of stay in the case of an arbitral award for payment of money, have due regard to the provisions for grant of stay of a money decree under the provisions of the Code of Civil Procedure, 1908 (5 of 1908).] [Provided further that where the Court is satisfied that a Prima facie case is made out that,--
(a) the arbitration agreement or contract which is the basis of the award; or
(b) the making of the award, was induced or effected by fraud or corruption, it shall stay This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 05/01/2024 at 21:59:52 the award unconditionally pending disposal of the challenge under section 34 to the award."
5. Mr Gupta, learned counsel further states that a perusal of the grounds in the section 34 petition filed by the respondent shows that the Arbitral Award was induced by fraud and hence this Court is required to stay the Arbitral Award unconditionally pending disposal of the challenge under the Section 34. He further states that notice has been issued in the Section 34 petition filed by the respondents which prima facie show that the Arbitral Award is based upon fraud.
6. I have heard learned counsel for the parties.
7. Section 36(2) of the Arbitral Award reads as under:
"(2) Where an application to set aside the arbitral award has been filed in the Court under section 34, the filing of such an application shall not by itself render that award unenforceable, unless the Court grants an order of stay of the operation of the said arbitral award in accordance with the provisions of sub-
section (3), on a separate application made for that purpose."
8. A perusal of sub-section 3 read with sub-section 2 of Section 36 of the Arbitration and Conciliation Act, 1996 demonstrates that it would only be the court which is hearing the petition under Section 34 of the Arbitration and Conciliation Act, 1996, which upon satisfaction that the Arbitral Award was induced by fraud or corruption, shall stay the Arbitral Award.
9. The Executing Court under the second proviso of section 36(3) of the Arbitration and Conciliation Act, 1996 will not be the competent court to stay execution of the Arbitral Award, even if it is alleged to have been procured by fraud. The "Court" mentioned in Section 36 of the Arbitration and Conciliation Act, 1996 will be the Court hearing objections under This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 05/01/2024 at 21:59:52 Section 34 and not the Court hearing the execution petition. Section 36(2), Section 36(3) and provisos are to be read in conjunction with each other and not in isolation of each other.
10. In addition, the paragraphs reproduced above in the Section 34 petition are arguments on merits which the competent court under Section 34 is hearing and shall adjudicate the same.
11. This Court in a petition under Section 36 of the Arbitration and Conciliation Act for enforcement of the Arbitral Award is not required to go into the said allegations.
12. For the said reasons, I am inclined to allow the Execution petition. The respondent is directed to deposit the awarded amount within a period of six weeks from today with the Registrar General, Delhi High Court and in case the same is not done, the decree-holder will be entitled to seek attachment of the bank account and the assets of the judgment-debtor.
13. The observations in the order are only for the purposes of adjudicating the Execution petition and will have no bearing on the pending Section 34 petition.
14. List on 09.04.2024.
JASMEET SINGH, J JANUARY 3, 2024 sr Click here to check corrigendum, if any This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 05/01/2024 at 21:59:52