Delhi District Court
Cs No.150/16 vs M/S Emkay Global Financial Services Ltd on 22 September, 2016
IN THE COURT OF MS. NISHA SAXENA: ADJ03: (EAST)
KARKARDOOMA COURTS: DELHI.
CS No.150/16
Mr. Girdhar Sondhi
G9, Plot No.83,
Associated Apartments,
I.P. Extension, Patparganj,
New Delhi110092 ..... Petitioner
Versus
M/s Emkay Global Financial Services Ltd.
118/119, First Floor,
Cama Industrial Estate,
Sun Mill Compound,
Lower Parel (West)
Mumbai400001 ..... Respondent
Date of Institution : 18.03.2010
Date of reserving judgment : 21.09.2016
Date of pronouncement : 22.09.2016
O R D E R :
1. The present petition has been filed by the petitioner under Section 34 of the Arbitration and Conciliation Act, 1996 for setting aside and quashing of the award passed by Hon'ble Mr. Justice Mahmood Ali Khan (Retd.) dated 08.12.2009, in Arbitration Case No. D144/2009.
2. Shorn of unnecessary details, the facts are that the 150/16 1/24 petitioner had filed complaint against the respondent before the Arbitration Department, National Stock Exchange of India, New Delhi, challenging the working and illegalities committed in the nature of malpractices, fraud and misrepresentation. The petitioner and respondent No.1 (Trading member) executed a Member Constituent Agreement on 03.07.2009, for trading in cash and derivative segment. Ld. Arbitrator passed the award dated 08.12.2009 and same is impugned in the present petition on several grounds. Through the present petition the petitioner has prayed for setting aside quashing the Arbitration Award dated 08.12.2009 passed by Hon'ble Mr. Justice M.A. Khan (Retd.) the Sole Arbitrator in the Arbitration Case No.D144/2009 conducted through National Stock Exchange of India Ltd.
3. The respondent filed reply and raised preliminary objections that the petition is liable to be dismissed on the ground that the petitioner has miserably failed to disclose any grounds for setting aside the award in question. It is submitted that the applicant could not establish or prove that:
(i) any party was under any in capacity;
(ii) that arbitration agreement is not valid under any law;
(iii) that applicant was not given proper notice of the appointment of the arbitrator;
(iv) that arbitral award deals with any dispute which has not been contemplated by or not falling within the terms of the submission to arbitration or it contained any 150/16 2/24 decisions on matters beyond the scope of the submission of arbitration;
(v) that the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties.
4. It is alleged that the present application is liable to be dismissed as there is nothing on record on the basis of which Hon'ble Court could find that the subject matter of the dispute was not capable of settlement by arbitration or that the arbitral award was in conflict with the public policy of India; that the Ld. Arbitrator passed the award after appreciating the entire facts and circumstances of the case and after hearing both the parties; that this court has no territorial jurisdiction to try and entertain the present application.
5. On merits, it is submitted that respondent No.1 never committed any illegality or any malpractices or fraud or misrepresentation as alleged, hence the question of challenging the same by the petitioner before arbitration department of NSE does not arise. The date of execution of member constituent agreement which has been mentioned as 03.07.2009 is wrong and denied as factually the MCA was executed on 03.07.2008.
6. I have heard Ld. Counsel for the petitioner Mr. T.P.S. Kang and Ld. Counsel for the respondent Mr. Divyakant Lahoti and 150/16 3/24 gone through the record including written submissions and the rulings filed.
7. One of the preliminary objections taken by the respondent is that the present petition is liable to be dismissed as this Court has no territorial jurisdiction to try and entertain the present petition. It has been pointed out by Ld. Counsel for the respondent that the Agreement between Depository Participant and a Person Seeking to Open a Beneficial Owner's Account dated 03.07.2008 in clause 13 specifically says:
'Jurisdiction:
12. The parties hereto agree to submit to the exclusive jurisdiction of the Courts in MUMBAI in Maharashtra (India).'
8. Ld. Counsel for the petitioner has submitted that since the cause of action arose in Delhi and all the transactions with the respondent took place at Delhi having been handled by their Delhi Branch Office therefore, the only fact that the registered office of the defendant is located at Mumbai would not confer jurisdiction on the Mumbai Courts.
9. It has been contended that no jurisdiction can be fastened upon Mumbai Court as no transaction between the parties had taken place beyond Delhi. Jurisdiction of Mumbai Court was maliciously invoked by creating transaction at Mumbai. The complaint case filed by the respondent u/s 138 N.I. Act against the 150/16 4/24 petitioner was dismissed by the Court of Ld. M.M. and was confirmed by the Hon'ble Mumbai High Court. There is no justification or ground available to the respondent to challenge the jurisdiction of Delhi Court. It has been reiterated that all the transactions have taken place between the petitioner and the respondent in Delhi where the respondent had a branch office.
None of the transactions concerning the petitioner had ever taken place in Mumbai. Once that is the case, the respondent having branch office in Delhi, only the Courts at Delhi have jurisdiction and not the Court at Mumbai and thus, the terms of Agreement are in contradiction to law of land and also against the public policy.
10. It would be apposite to refer to Section 20 of the Civil Procedure Code which is as under:
"20. Other suits to be instituted where defendants reside or cause of action arises. Subject to the limitations aforesaid, every suit shall be instituted in a Court within the local limits aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction
(a) the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or
(b) any of the defendants, where there are more than one, at the time of the commencement of 150/16 5/24 the suit, actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the Court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or
(c) the cause of action, wholly or in part, arises.
{Explanation}. A corporation shall be deemed to carry on business at its sole or principal office in {India} or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place."
11. As borne out from the records, it cannot be said that the cause of action arose only at Delhi as the trades were executed in Mumbai also through the registered office of the respondent and all the servers were installed in Mumbai where the actual transaction of shares and securities took place. The documents placed on record are admitted by both the parties. Annexure A to the Statement of Defence filed by the respondent before the Ld. Arbitrator shows that the Stock Exchange/segment on which the petitioner wanted to trade was BSE & NSE and the market segments that the petitioner wished to trade was CASH/CAPITAL MARKET & DERIVATIVES and the other services included were DEMAT and BROKING. Annexure B which is giving details of the transactions done at the orders and on the account of the petitioner says 'Contract NoteSubject to jurisdiction of the Courts in Mumbai.
150/16 6/24Annexure C shows Simple Mail Transfer Protocol confirmation on 10.11.2008 at 17:11:56 regarding the transactions done. Payments were also made by the respondent to the petitioner through cheques drawn on HDFC Bank, Branch at Maneckji Wadia Building, Ground Floor, Mumbai. The instructions received by the respondent regarding execution of trade were executed from the Head Office situated in Mumbai and the contract notes were also generated from Mumbai. Hence it cannot be said that no cause of action arose at Mumbai. In view of the observations, I am of the considered opinion that cause of action arose at Delhi as well as Mumbai.
12. Now the question arises if both the Courts i.e. Delhi as well as Mumbai have jurisdiction can the parties by way of Agreement ouster/exclude the jurisdiction of one of the Courts. There is no denial on the part of the petitioner that there was no such term in the Agreement which vested exclusive jurisdiction to the Courts in Mumbai. The only objection is that such term of Agreement was in contradiction to the law of land and against the public policy.
13. Nonetheless, I do not find any violation of law of land and public policy in such an agreement between the parties. If the parties to an agreement voluntarily agree to fix jurisdiction at one of the places where the jurisdiction would fall at two or more places then such an agreement or contract cannot be said to be invalid, 150/16 7/24 against law of land or against public policy. This can be distinguished from a case where the parties are conferring jurisdiction upon a place where it has none. If the parties by way of Agreement confer jurisdiction at a place where no cause of action arose or where the respondent did not reside or work for gain in such a case such a conferment of jurisdiction by the parties would be in violation of law or public policy.
14. It has also been contended on behalf of the petitioner that since the arbitral proceedings were conducted at Delhi and that the impugned award was made in Delhi, the courts in Delhi would have jurisdictions to entertain the petition u/s 34 of Arbitration and Conciliation Act. Nevertheless, the holding of arbitration at a particular place would not confer the jurisdiction upon the courts in that particular place, therefore, this submission of the Counsel does not hold much water. To ascertain whether a particular court has jurisdiction for the purposes of Section 34, it is the subject matter of arbitration which has to be looked into and not the place where the arbitration took place. The situs of arbitral proceedings cannot confer jurisdiction upon the court. It is only the subject matter of an arbitration which would be determinative of the jurisdiction.
15. The reliance is placed upon Apparel Export Promotion Council Vs. Prabhati Patni, Proprietor Comfort Furnishers & Anr., 2006 (86) DRJ 48, in which High Court of Delhi has referred to ABC Laminart Pvt. Ltd. & Anr. Vs. A.P. 150/16 8/24 Agencies, Salem (1989) 2 SCC 163, wherein it has been held as under: "16. So long as the parties to a contract do not oust the jurisdiction of all the courts which would otherwise have jurisdiction to decide the cause of action under the law it cannot be said that the parties have by their contract ousted the jurisdiction of the court. If under the law several courts would have jurisdiction and the parties have agreed to submit to one of these jurisdictions and not to other or others of them it cannot be said that there is total ouster of jurisdiction. In other words, where the parties to a contract agreed to submit the disputes arising from it to a particular jurisdiction which would otherwise also be a proper jurisdiction under the law their agreement to the extent they agreed not to submit to other jurisdictions cannot be said to be void as against public policy. If on the other hand the jurisdiction they agreed to submit to would not otherwise be proper jurisdiction to decide disputes arising out of the contract it must be declared void being against public policy. Would this be the position in the instant case?
17. In S. Manuel Raj & Co. v. J. Manilal & Co., AIR 1963 Guj 148, where one of the parties to the contract signed an order form printed by the other party containing the words "subject to Madras jurisdiction and sent the order form to the other party it was held that the party must be assumed to have agreed that Madras was the place for settlement of the dispute and it was not open to that person who signed the order form of the opposite party containing the printed words to show that printed words were not part of the contract and that those words in the contract was to exclude the jurisdiction of other courts and to 150/16 9/24 keep sole jurisdiction to one court. It was observed that the object of printing such words, as "subject to Madras jurisdiction" in the contract was to exclude the jurisdiction of other courts and to give sole jurisdiction to one court and it was in consonance with the commercial practice in India. Similarly in Sri Rajendra Mills v. H.V.M. Hazi Hassan Dada where there was a contract between the plaintiff and defendant 1 under which the parties agreed that all suits arising on or out of the contract, would be instituted in the court at Salem, the Division Bench held that it was true that the suit could have been instituted either at Salem or at Howrah under Section 20 (c) of the Code of Civil Procedure, as the cause of action, admittedly arose in part in both the places and it was therefore a case where two courts had concurrent jurisdiction and, in such a case, it was open to the parties to make a choice restricting the court in which the suit under or upon the contract could be instituted. In other words, both the courts having territorial jurisdiction, the parties by their agreement waived their right, to institute any action, as aforesaid except at Salem. It was observed that under those circumstances it was not open to the plaintiff to object to the order for return of the plaint for presentation to the court at Salem as the choice of forum in case of alternative forums lies with the plaintiff and the plaintiff having debarred or precluded itself from going to any other court except at Salem which would not be just to allow the plaintiff at the instance of any other party or under cover of its objection to institute the suit except in the court at Salem.
16. In ABC Laminart Pvt. Ltd. (supra), the Hon'ble Court 150/16 10/24 further observed as under: "Thus it is now a settled principle that where there may be two or more competent Courts which can entertain a suit consequent upon a part of the cause of action having arisen therewithin, if the parties to the contract agreed to vest jurisdiction in one such Court or to try the dispute which might arise as between themselves the agreement would be valid. If such a contract is clearly, unambiguous and explicit and not vague it is not hit by Ss. 23 and 28 of the Contract Act. This cannot be understood as parties contracting against the Statute, Mercantile law and practice permit such agreements..........The meaning therefore, is clear that while a contract to oust absolutely the jurisdiction of the court would be unlawful and void being against the public policy, restricting jurisdiction in one of the many courts which would otherwise have jurisdiction would not be opposed to public policy.
"......... where such an ouster clause occurs, it is pertinent to see whether there is ouster of jurisdiction of other courts. When the clause is clear, unambiguous and specific accepted notions of contract would bind the parties and unless the absence of ad idem can be shown, the other courts should avoid excercising jurisdiction. As regards construction of the ouster clause when words like 'alone', 'only', 'exclusive' and the like have been used there may be no difficulty. Even without such words in appropriate cases the maxim 'expressio unius est exclusio alteriusexpression of one is the exclusion of another - may be applied. What is an appropriate case shall depend on the facts of the case. In such a case mention of 150/16 11/24 one thing may imply exclusion of another. When certain jurisdiction is specified in a contract an intention to exclude all others from its operation may in such cases be inferred. It has therefore to be properly construed."
17. Besides ABC Laminart Pvt. Ltd. , Ld. Counsel for the petitioner has also placed reliance upon other judgments i.e.: (1) ABB India Ltd. v. Isolux Corsan India Engineering & Constructions & Ors.
(2) Globe Congeneration Power v. Sri Hiranyakeshi Sahkari, Karnataka High Court (3) M/s Patel Roadways Ltd. Bombay v. M/s Prasad Trading Company with M/s Patel Roadways Ltd., Bombay v. Tropical Agro Systems Pvt. Ltd. & Anr., AIR 1992 Supreme Court, 1514.
18. With due deference, there is no dispute about the proposition of law laid down in above referred cases. However, the same are not applicable to the instant case, as in the case in hand jurisdiction arose at Delhi as well as Mumbai and by way of agreement the exclusive jurisdiction was vested in the Courts at Mumbai. In the instant case, the parties have used exclusionary words and excluded jurisdiction of Delhi Courts.
150/16 12/2419. From this it becomes clear that the referred decision does not help the petitioner and accordingly, I hold that this court has no jurisdiction to entertain the present petition.
20. Coming to the second limb of the case wherein the petitioner has challenged the award u/s 34 of Arbitration and Conciliation Act, 1996, it would be appropriate to reproduce the relevant portion of Section 34 of the Arbitration and Conciliation Act which is as under: "S.34. Application for setting aside arbitral award:
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; on
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling 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 150/16 13/24
(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 pubic policy of India."
21. In the petition u/s 34 of the Arbitration Act, the petitioner has taken the following grounds challenging the award which are as under: (A) That the Sole Arbitrator has completely lost sight of the accountancy principles while co elating the statement of accounts filed as AnnexureD in the proceedings by the Respondents. The observation and finding arrived at by the Sole Arbitrator is in contradiction to the fact of the case in as much as learned Arbitrator misinterpreted the entries whereby has come to a conclusion, which is wrong, erroneous and against the actual facts of the case.
(B) The Sole Arbitrator gave a wrong conclusion that the cheque for Rs.32,370/ which was deposited by the applicant on 10.07.2008 is 150/16 14/24 against the debit balance of Rs.33,277.65 whereas the said cheque was issued by the Applicant for purchase of shares, which is borne out of the records of the case and especially the corelation which was made by the petitioner during the course of trial which has been totally lost sight off.
(C) Ld. Arbitrator has not disclosed which tradings were carried on 04.08.2008, and for that purpose what kind of communications were made by the parties prior to the tradings in as much as the trading member has to disclose and prove beyond doubt that he had got the consent of the applicant for tradings in those shares.
(D) The finding arrived by Ld. Arbitrator in relation to Rs.35012/ on 04.08.2008 and Rs.5,120/ received on 27.08.2008 relate to a different subject matter rather than to what has been interpreted and presumed by the Sole Arbitrator while passing the order. There is no proper application of mind while passing the said order and the Arbitrator complete lost sight of the nature of entries which should have been clarified by Sole Arbitrator in writing from the present petitioner atleast during the course of arbitration proceedings. By denying such an opportunity to the petitioner the order so passed is against the principles of natural justice wherein all these queries should have been put to the applicant / petitioner before forming any opinion from the entries shown by the Respondent.
(E) Ld. Sole Arbitrator failed to practically look into the entries from the perspective of both the sides because relying on the entries as shown by the Respondent, does not mean that those entries are made in a manner which reflects the correct position visavis the present petitioner/ applicant.
150/16 15/24Had the Sole Arbitrator gone into the statement of accounts filed by the Petitioner and further probed the necessary entries in a manner as is done by a Chartered Accountant or a Company Secretary during audit conducted, the Ld. Sole Arbitrator would not have come to the finding so arrived at because the Sole Arbitrator himself not being an expert in accounts should have understood those entries after taking proper help from both the parties rather than simply relying upon the statement of accounts of the Respondent during the proceedings. The Ld. Arbitrator has acted in a superficial manner and casually while making an attempt to interpret the entries whereby he has arrived at a wrong conclusion since he did not avail the benefit of the statement of accounts filed by the Petitioner which did not find any mention in the proceedings.
(F) The Sole Arbitrator acted against the principles of law, and rule of equity while disposing of the issue in relation to the PODs which were questioned by the applicant / petitioner during the course of arbitration proceedings wherein he admitted five PODs and denied the signatures on 12 PODs. It is not expected during these proceedings for the Ld. Arbitrator to take help of the handwriting expert when the allegation has been made by the Petitioner Applicant but it was for the Ld. Arbitrator to look into the other evidences and should have called for the records of the agency / office and should have enquired into the genuineness of the PODs. Had he found at that time that the discrepancy in the PODs prima facie is in favour of the Petitioner / Applicant he should have directed for further investigation by taking help of handwriting expert and other agencies as per law and possibly should have recommended 150/16 16/24 for criminal proceedings since prima facie the allegation is a serious one and once the signatures have been questioned there was no reason and ground for the Ld. Arbitrator to look into the aspects in a casual and light manner but should have gone into the matter deeply to understand the deep rooted nexus of such trading members with the other agencies whereby they are hoodwinking public at large and siphoning out crores of rupees belonging to them.
(G) The Petitioner / Applicant had explained satisfactorily the grounds and reasons for issuing the cheques to the Respondent and had further explained that he had been trying all the time how the transactions have taken place without his consent. To circumvent these aspects and to preempt the petitioner / applicant to know the fallacies and malpractices being committed and further to know about the frauds being committed during the course of trading activities, the PODs were fabricated which had infact actually caused loss to the petitioner / applicant which amounted to Rs.7,36,620/ on the date of filing the claim with the NSE apart from other compensations which the complainant/ petitioner / applicant is entitled. As a matter of fact apart from the actual sums receivable, the petitioner / applicant further deserves a compensation to the tune of Rs.25.00 lakhs and another additional sums of Rs.25 lakhs for causing harassment mentally and physically to the petitioner / applicant wherein a false criminal case had been filed against him which has been conceded during the crossexamination and the necessary records of the proceedings of the criminal court i.e. 33rd Court of M.M. Ballard Pier are annexed with the paper book being filed separately as additional documents.
150/16 17/24(H) The Sole Arbitrator in the present case has not been bothered to understand the contentions in their true perspective and form which were placed by the Respondent to prove their case especially in relation to the contract notes and power of attorney. The case of the Petitioner/ Applicant that nothing was placed on record to substantiate their case by the respondents before the Ld. Sole Arbitrator.
(I) The Ld. Sole Arbitraror failed to appreciate the facts and circumstances of the case while holding the Petitioner / applicant being responsible for sleeping over till Dec., 2008,it is the case of the Petitioner /Applicant that the Ld Sole Arbitrator has arrived at a finding which is contrary to the facts of the case, erroneous and against the principles enunciated in such kinds of cases the Ld Sole Arbitrator has not even looked into the averments made by the Petitioner / applicant wherein he had categorically stressing upon the fact that he had been demanding all the requisites from date one and on one ground or the other the Respondents have been delaying the matter which is proved when the PODs were challenged and the Ld. Sole Arbitrator failed to act in accordance with the law while looking into the said issue.
(J) The Petitioner / Applicant during the course of trial has especially pleaded and put on record as follows: "It is not understood how and from where the balance has been made without my knowledge.......... for an amount which does not match to the amount claimed...........".
150/16 18/24(K) The balance of convenience in the present is in favour of the Petitioner / applicant and against the Respondents since the petitioner has prima facie case."
22. Nevertheless, the petitioner has not mentioned even a single ground which is available to it u/s 34 of the Arbitration and Conciliation Act. No specific grounds have been mentioned for challenging the impugned arbitral award. There is no pleading that the impugned award is vitiated by any of the grounds stated under Section 34 of the Arbitration and Conciliation Act. However, towards the end of the proceedings and during the arguments as well as in the submissions made, the petitioner took the ground that the award is against public policy.
23. Ld. Counsel for the respondent submits that the petitioner is taking such ground after more than six years from the date of filing of the petition and this is a malafide attempt to amend or add a ground for the setting aside of arbitral award. Explanation
(ii) under Clause (b) of subsection 2 of Section 34 of the Arbitration & Conciliation Act, 1996 says that: "Explanation. Without prejudice to the generally of subclause (ii), it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81.
150/16 19/24Legal Glossary published by Ministry of Law & Justice has defined the expression 'public policy' as under: "Principles in accordance with which actions of men and communities need to be regulated to achieve the good of the entire community or public."
This definition is based on sec. 171 of I.P.C.
In Egerton v. Brownlow (1853) 4 HLCL, held 'Public Policy' is that principle of law which holds that no subject can lawfully do which has tendency to be injurious to the public or against public good. (Followed in Central Water Corpn. v. Brojo Nath AIR 1986 SC 1571 and in Renusagar Power Co. v. G.E.C. AIR 1994 SC
860).
In Deutsche Schachtbanund MBH v. Ras AI Khaimath Oil Co. 1987 ALL ER 769, the court defines the doctrine of 'public policy' as under: "Considering that public policy cannot be exhaustively defined, it should be approached with extreme caution". It has to be shown that there is some element of illegality or that the enforcement of the award would be clearly injurious to the public good or, possibly, that enforcement would be wholly offensive to the ordinary, reasonable and fully informed member of the public on whose behalf the powers of the State are exercised' - Richardson v. Mellish (182434) All ER Rep 258.
In Toyo Eng. Corpn. V CIMMCO Birla (2004) 1 Raj 337 (Del), the concept 'public policy 150/16 20/24 in India' was held to connote
(a) what conforms to fundamental policy of Indian law;
(b) what is in interest of India;
(c) what constitutes justice and morality;
(d) what is not patently illegal."
In Renusagar Power Co. v. G.E.C. AIR 1994 SC
860. While observing that "from the very nature of things, the expressions 'public policy' 'opposed to public policy' or 'contrary to public policy' are incapable of precise definition" this court had laid down "Public policy 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 and what would be injurious or harmful to the public good or the public interest has varied from time to time."
24. It has been pointed out by Ld. Counsel for respondent that it is well settled principle that the court should approach the award with the desire to support it if it is reasonably possible rather than to destroy by calling it illegal. Ld. Counsel for both the parties have relied upon a recent judgment of Hon'ble Supreme Court Associate Builders Vs. Delhi Development Authority, (2015) 3 SCC 49, wherein it has been held as under: "33. It must clearly be understood that when a court is applying the "public policy"
150/16 21/24test to an arbitration award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. Thus, an award based on little evidence or on evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on this score. Once it is found that the arbitrators approach is not arbitrary or capricious, then he is the last word on facts. In P.R. Shah, Shares & Stock Brokers (P) Ltd. v. B.H.H. Securities (P) Ltd., this Court held:
(SCC pp. 60102, para 21) "21. A court does not sit in appeal over the award of an Arbitral Tribunal by reassessing or reappreciating the evidence. An award can be challenged only under the grounds mentioned in Section 34(2) of the Act. The Arbitral Tribunal has examined the facts and held that both the second respondent and the appellant are liable...........Therefore, in the absence of any ground under Section 34(2) of the Act, it is not possible to reexamine the facts to find out whether a different decision can be arrived at."
34. It is with this very important caveat that the two fundamental principles which form part of the fundamental policy of Indian law (that the arbitrator must have a judicial approach and that he must not act perversely) are to be understood."
Head of " Public Policy of India" ( with their subheads) are: I. Fundamental policy of Indian Law: (i) 150/16 22/24 Compliance with statutes and judicial precedents;(ii) Need for judicial approach; (iii) Natural justice compliance; (iv) Wednesbury reasonableness;
II. Interest of India;
III. Justice or Morality; and IV. Patent Illegality: (I) Contravention of substantive law of India;(ii) Contravention of A & C Act, 1996; (iii) Contravention of the terms of the contract When any of the heads/subheads of test of " public policy" is applied to an arbitral award, court does not act as court of appeal Interference is permissible only when findings of arbitrator are arbitrary, capricious or perverse, or when conscience of court is shocked,or when illegality is not trivial but goes to root of the matter Not when merely another view is possible Furthermore, arbitrator being ultimate master of quantity and quality of evidence while drawing arbitral award, award based on little evidence or on evidence which does not measure up in quality to a trained legal mind cannot be held invalid Once it is found that arbitrator's approach is neither arbitrary nor capricious, no interference is called for on facts.
25. The court cannot function like an appellate court while entertaining a petition u/s 34 of the Arbitration and Conciliation Act. The court has no power to reevaluate, reappreciate, reconsider or reassess the evidence brought before an arbitrator during the arbitration proceedings to find out faultlessness, accuracy and preciseness in the order passed by Ld. Arbitrator. This court cannot substitute or replace the findings given by Ld. 150/16 23/24 Arbitrator unless it is covered by any of the grounds mentioned under Section 34 of Arbitration and Conciliation Act. In the case in hand, there is nothing on record to suggest that the Ld. Arbitrator did not follow the established norms of conducting an arbitral proceedings nor does it shock the conscience of the Court. Since the impugned award dated 08.12.2009, passed by Ld. Arbitrator shows that he gave due consideration to all the evidence produced by the parties and applied his mind, this court cannot make a roving inquiry and act as a court of appeal and going beyond the scope of Section 34 of the Arbitration and Conciliation Act, 1996.
26. The petitioner has miserably failed to make out a case u/s 34 of the Arbitration and Conciliation Act for setting aside the arbitral award passed by Ld. Arbitrator on 08.12.2009. I do not find any illegality, unreasonableness in the arbitral award. The petition u/s 34 of the Arbitration and Conciliation Act, accordingly, stands dismissed.
Announced in open court (NISHA SAXENA) Dated: 22.09.2016 ADDL. DISTRICT JUDGE03(E) KARKARDOOMA COURTS:DELHI.
150/16 24/24