Delhi District Court
Subhash Nagpal vs Unicon Group Of Companies on 19 April, 2023
IN THE COURT OF SH. GAURAV RAO: ADJ-03 :NEW
DELHI DISTRICT: PATIALA HOUSE COURTS: NEW
DELHI
ARBTN No. 381/18
CNR No. DLND01-001749-2018
Subhash Nagpal
s/o Sh. Prithvi Raj Nagpal
R/o House no. 1932, Sector 28,
Faridabad.
........Petitioner
Versus
1. Unicon Group of Companies
Through its Founder President & Director
Mr. Ram Mohan Gupta,
at 69, Regal Building, 2nd Floor,
Connaught Place,
New Delhi-110001.
2. Mr. S.C. Malik, Retd. (ADJ), Delhi
Sole Arbitrator
Delhi International Arbitration Centre (DAC)
New Delhi.
..........Respondent
Date of institution : 12.03.2018
Date on which reserved for judgment : 19.04.2023
Date of decision : 19.04.2023
Decision : Petition dismissed
ARBTN 381/18 Subhash Nagpal Vs. Unicon Group of Companies and anr 1/22
JUDGMENT
1. The present petition under Section 34 of Arbitration and Conciliation Act, 1996 has been filed against the award dated 07.02.2018.
Petition/Petitioner's version
2. It is the case of the petitioner that he had approached the Hon'ble High Court of Delhi, for appointment of Arbitrator, vide Arbitration petition no. 448 of 2015 and vide its orders dated 23.08.2016, the Hon'ble High Court of Delhi referred the matter to Delhi International Arbitration Centre who appointed respondent no. 2 as an Arbitrator.
2.1 It is his case that respondent no. 1 had many group companies under its umbrella, Unicon Financial Intermediaries Pvt. Ltd. was a parent company and other subsidiaries companies under respondent no. 1 were namely (i) Unicon Securities Pvt. Ltd. (ii) Unicon Commodities Pvt. Ltd. (iii) Unicon Fincap Pvt. Ltd. (iv) Unicon Capital. Services Pvt. Ltd. (v) Unicon Real Estate Pvt. Ltd. (vi) Viganharta Insurance Brokers Pvt. Ltd. and many more.
2.2 It is his case that he served respondent no. 1 in different capacities and performed all the duties assigned to him in all the group companies of respondent no. 1 including Member ARBTN 381/18 Subhash Nagpal Vs. Unicon Group of Companies and anr 2/22 of the Management Council from 02.06.2008 till December 2013 and as Consultant from December 2013 till the last day of his employment & consultancy services i.e.10.07.2014, however, he was not paid the following dues by respondent no. 1:-
Sl No. Head Period Amount
1 Salary September 2013 to Rs. 6.24 Lacs
November 2013 (3 months)
2 Consultancy fee December 2013 to Rs. 10.4 Lacs
10.07.2014 (8 months+ 10
days)
3 Gratuity From 02.06.2008 to Rs. 4.0 Lacs
30.11.2013 (Approx.)
4 Reimbursement Above Service period Rs. 1.72 Lacs
Rs. 0.5 Lacs
Total Rs. 22.86 Lacs
2.3 It is his case that he made several requests, oral as
well as in writing to respondent no. 1's Founder, President & Director Sh. Ram Mohan Gupta and its Chief Financial Officer (CFO) on various occasions i.e. 02.04.2014, 07.04.2014, 16.06.2014, 23.06.2014 and 29.08.2014 but to no avail.
2.4 It is his case that thus he invoked arbitration clause for claim of his legitimate dues and also submitted an application dated 04.01.2017 before the Ld. Arbitrator for pre-decree attachment of income tax refunds of 8 group subsidiaries of respondent no 1, in which income tax refunds worth crores of rupees had come and the said application was taken on the record by the Ld. Arbitrator on 25.03.2017.
ARBTN 381/18 Subhash Nagpal Vs. Unicon Group of Companies and anr 3/22 2.5 It is his case that respondent no. 1 had failed to appear, before the Ld. Arbitrator, despite the service of notice of claim petition firstly through e-mail at [email protected], followed by speed post and then by way of publication in the newspaper Jansatta on 14.06.2017 as it was fully aware that his claim is absolutely legitimate, it has no defence whatsoever to counter his legitimate claim and thus respondent no. 1 preferred not to join arbitration proceedings. It is further his case that respondent no. 1 was fully aware of the legal status & liabilities of all its subsidiaries as mentioned in the pre-decree attachment application.
2.6 It is his case that respondent no. 1 was proceeded ex parte vide order dated 26.07.2017 and he led his evidence on 26.07.2017 & 17.10.2017 as well as filed an affidavit on 12.12.2017 regarding different subsidiaries of respondent no. 1, however, on 07.02.2018, Ld. Arbitrator passed the impugned award dismissing his claim.
2.7 It is his case that award dated 07.02.2018 is liable to be set aside on the following grounds:-
a) That the award passed by the sole Arbitrator is without any basis, is bad & perverse in law as the same is based on surmise & conjecture and is liable to be set aside.
ARBTN 381/18 Subhash Nagpal Vs. Unicon Group of Companies and anr 4/22
b) That the respondent no 1 preferred to remain ex-parte, knowing well that his claim is absolutely legitimate and respondent no 1 has no defence whatsoever to counter the same.
c) That the Ld. Arbitrator dismissed the claim while holding that he had never worked with respondent no. 1 and failed to appreciate that Unicon Securities Pvt. Ltd. and Unicon Financial Intermediaries Pvt. Ltd. are part & parcel of respondent no 1, thus failed to appreciate that he had privity of contract with respondent no 1 and his claim was dismissed solely on the ground that he has not mentioned the status of respondent no 1 i.e. whether it is a company or a partnership firm or consortium etc.
d) That the Ld. Arbitrator failed to appreciate the affidavit dated 12.12.2017 wherein it was specifically stated that Unicon Securities Pvt. Ltd. and Unicon Financial Intermediaries Pvt. Ltd.
are part of respondent no. 1.
e) That the Ld. Arbitrator has not disputed the legitimate claim raised by him but declined the claim only on the unsustainable ground of legal status of respondent no 1.
f) That the Ld. Arbitrator failed to appreciate that the Hon'ble High Court of Delhi never raised any concern about the status of respondent no. 1 while deciding Arbitration petition no. 448/2015.
ARBTN 381/18 Subhash Nagpal Vs. Unicon Group of Companies and anr 5/22
g) That the Ld. Arbitrator also mis-conducted the proceedings as he did not frame any reference of the dispute from 25.03.2017 (first date of hearing) till 07/02/2018 (the date of award) and passed an arbitrary & unjust order without considering its merits.
h) That the Ld arbitrator did not grant him any opportunity to explain that Unicon Securities Pvt. Ltd. and Unicon Financial Intermediaries Pvt. Ltd. are part & parcel of respondent no 1.
i) That the Ld. Arbitrator also failed to appreciate the information available within the public domain, orders from Securities Exchange Board of India (SEBI) and National Stock Exchange (NSE) that Unicon group of companies is comprising of many subsidiaries, as also mentioned in his affidavit dated 12/12/2017.
Findings
4. I have heard the petitioner as well as Ld. counsel for the petitioner, given due consideration to the contentions raised at bar and have carefully gone through the record.
4.1 Section 34 of The Arbitration and Conciliation Act 1996 deals with setting aside of an arbitral award. The scope and ambit of court's jurisdiction under section 34 has been dealt with and explained in detail by the Hon'ble Apex Court in Delhi ARBTN 381/18 Subhash Nagpal Vs. Unicon Group of Companies and anr 6/22 Airport Metro Express Pvt. Ltd. Vs. Delhi Metro Rail Corporation Ltd. (2022) 1 SCC 131 wherein it has been held as under:-
"22. The 1996 Act was enacted to consolidate and amend the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards and also to define the law relating to conciliation and for matters connected therewith, by taking into account the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration and the UNCITRAL Conciliation Rules. One of the principal objectives of the 1996 Act is to minimize the supervisory role of courts in the arbitral process. With respect to Part I of the 1996 Act, Section 5 imposes a bar on intervention by a judicial authority except where provided for, notwithstanding anything contained in any other law for the time being in force. An application for setting aside an arbitral award can only be made in accordance with provisions of Section 34 of the 1996 Act.
23. Relevant provisions of Section 34 (as they were prior to the Arbitration and Conciliation (Amendment) Act, 2015) read as under:-
"34. Application for setting aside arbitral award. -- (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-
section (3).
(2) An arbitral award may be set aside by the Court only if--
(a) the party making the application furnishes proof that--
(i) a party was under some incapacity, or
(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; or
(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 ARBTN 381/18 Subhash Nagpal Vs. Unicon Group of Companies and anr 7/22
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the Court finds that--
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India.
Explanation.--Without prejudice to the generality of sub- clause (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.
24. An amendment was made to Section 34 of the 1996 Act by the Arbitration and Conciliation (Amendment) Act, 2015 (hereinafter, 'the 2015 Amendment Act'). A perusal of the statement of objects and reasons of the 2015 Amendment Act would disclose that the amendment to the 1996 Act became necessary in view of the interpretation of the provisions of the 1996 Act by courts in certain cases which had resulted in delay of disposal of arbitration proceedings and increase in interference by courts in arbitration matters, which had the tendency to defeat the object of the 1996 Act. Initially, the matter was referred to the Law Commission of India to review the shortcomings in the 1996 Act in detail. The Law Commission of India submitted its 176th Report, recommending various amendments to the 1996 Act. However, the Justice Saraf Committee on Arbitration constituted by the Government, was of the view that the proposed amendments gave room for substantial intervention by the court and were also contentious. Thereafter, on reference, the Law Commission undertook a comprehensive study of the amendments proposed by the Government, keeping in mind the views of the Justice Saraf Committee and other stakeholders. The 246th Report of the Law Commission was submitted on 05.08.2014. Acting on the recommendations made by the Law Commission in its 246th Report, amendments by way of the 2015 Amendment Act were made to several provisions of the 1996 Act, including Section
34.
25. The amended Section 34 reads as under: -
ARBTN 381/18 Subhash Nagpal Vs. Unicon Group of Companies and anr 8/22 "34. Application for setting aside arbitral award. -- (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and subsection (3).
(2) An arbitral award may be set aside by the Court only if--
(a) the party making the application furnishes proof that--
(i) a party was under some incapacity, or
(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; or
(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
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the Court finds that--
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India.
Explanation 1. --For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,--
(i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or
(ii) it is in contravention with the fundamental policy of Indian law; or
(iii) it is in conflict with the most basic notions of morality or justice.
Explanation 2. --For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute. (2-A) An arbitral award arising out of arbitrations ARBTN 381/18 Subhash Nagpal Vs. Unicon Group of Companies and anr 9/22 other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award:
Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by re- appreciation of evidence."
26. A cumulative reading of the UNCITRAL Model Law and Rules, the legislative intent with which the 1996 Act is made, Section 5 and Section 34 of the 1996 Act would make it clear that judicial interference with the arbitral awards is limited to the grounds in Section 34. While deciding applications filed under Section 34 of the Act, courts are mandated to strictly act in accordance with and within the confines of Section 34, refraining from appreciation or re-appreciation of matters of fact as well as law. (See: Uttarakhand Purv Sainik Kalyan Nigam Limited. v. Northern Coal Field Limited. 2 , Bhaven Construction Through Authorised Signatory Premjibhai K. Shah v. Executive Engineer Sardar Sarovar Narmada Nigam Ltd. and Another 3 and Rashtriya Ispat Nigam Limited v. Dewan Chand Ram Saran 4 ).
27. For a better understanding of the role ascribed to courts in reviewing arbitral awards while considering applications filed under Section 34 of the 1996 Act, it would be relevant to refer to a judgment of this Court in Ssangyong Engineering and Construction Company Limited v. National Highways Authority of India (NHAI) 5 wherein R.F. Nariman, J. has in clear terms delineated the limited area for judicial interference, taking into account the amendments brought about by the 2015 Amendment Act. The relevant passages of the judgment in Ssangyong (supra) are noted as under: (SCC pp. 16971, paras 34-41) "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 paras 18 and 27 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49:
(2015) 2 SCC (Civ) 204] i.e. the fundamental policy of Indian law would be relegated to "Renusagar"
understanding of this expression. This would necessarily mean that Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12] expansion has been done away with. In short, Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12], as explained in paras 28 and 29 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], would no ARBTN 381/18 Subhash Nagpal Vs. Unicon Group of Companies and anr 10/22 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 para 30 of Associate Builders Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204].
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 paras 36 to 39 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , 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 paras 18 and 27 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49: (2015) 2 SCC (Civ) 204], or secondly, that such award is against basic notions of justice or morality as understood in paras 36 to 39 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204]. 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 [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12] ,as understood in Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 :
(2015) 2 SCC (Civ) 204] , and paras 28 and 29 in particular, is now done away with.
37. Insofar as domestic awards made in India are concerned, an additional ground is now available under sub-section (2-A), added by the Amendment Act, 2015, to Section 34. Here, there must be patent illegality appearing on the face of the award, which refers to such illegality as goes to the root of the matter but which does not amount to mere erroneous application of the law. In short, what is not subsumed within "the fundamental policy of Indian law", namely, the contravention of a statute not linked to public ARBTN 381/18 Subhash Nagpal Vs. Unicon Group of Companies and anr 11/22 policy or public interest, cannot be brought in by the backdoor when it comes to setting aside an award on the ground of patent illegality.
38. Secondly, it is also made clear that reappreciation of evidence, which is what an appellate court is permitted to do, cannot be permitted under the ground of patent illegality appearing on the face of the award.
39. To elucidate, para 42.1 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , namely, a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an arbitral award. Para 42.2 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , however, would remain, for if an arbitrator gives no reasons for an award and contravenes Section 31(3) of the 1996 Act, that would certainly amount to a patent illegality on the face of the award.
40. The change made in Section 28(3) by the Amendment Act really follows what is stated in paras 42.3 to 45 in Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], namely, that the construction of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator construes the contract in a manner that no fair-minded or reasonable person would; in short, that the arbitrator's view is not even a possible view to take. Also, if the arbitrator wanders outside the contract and deals with matters not allotted to him, he commits an error of jurisdiction. This ground of challenge will now fall within the new ground added under Section 34(2-A).
41. What is important to note is that a decision which is perverse, as understood in paras 31 and 32 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 :
(2015) 2 SCC (Civ) 204] , while no longer being a ground for challenge under "public policy of India", would certainly amount to a patent illegality appearing on the face of the award. Thus, a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality. Additionally, a finding based on documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties, and therefore, would also have to be characterised as perverse."
ARBTN 381/18 Subhash Nagpal Vs. Unicon Group of Companies and anr 12/22
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 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 would lead to corrosion of the object of the 1996 Act and the endeavours 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 categorising them as perverse or patently illegal without appreciating the contours of the said expressions.
29. Patent illegality should be illegality which goes to the root of the matter. In other words, every error of law committed by the Arbitral Tribunal would not fall within the expression 'patent illegality'. Likewise, erroneous application of law cannot be categorised as patent illegality. In addition, contravention of law not linked to public policy or public interest is beyond the scope of the expression 'patent illegality'. What is prohibited is for courts to re-appreciate evidence to conclude that the award suffers from patent illegality appearing on the face of the award, as courts do not sit in appeal against the arbitral award. The permissible grounds for interference with a domestic award under Section 34(2-A) on the ground of patent illegality is when the arbitrator takes a view which is not even a possible one, or interprets a clause in the contract in such a manner which no fair-minded or reasonable person would, or if the arbitrator commits an error of jurisdiction by wandering outside the contract and dealing with matters not allotted to them. An arbitral award stating no reasons for its findings would make itself susceptible to challenge on this account. The conclusions of the arbitrator which are based on no evidence or have been arrived at by ignoring vital evidence are perverse and can be set aside on the ground of patent illegality. Also, consideration of documents which are not supplied to the other party is a facet of perversity falling within the expression 'patent illegality'.
ARBTN 381/18 Subhash Nagpal Vs. Unicon Group of Companies and anr 13/22
30. Section 34 (2) (b) refers to the other grounds on which a court can set aside an arbitral award. If a dispute which is not capable of settlement by arbitration is the subject-matter of the award or if the award is in conflict with public policy of India, the award is liable to be set aside. Explanation (1), amended by the 2015 Amendment Act, clarified the expression 'public policy of India' and its connotations for the purposes of reviewing arbitral awards. It has been made clear that an award would be in conflict with public policy of India only when it is induced or affected by fraud or corruption or is in violation of Section 75 or Section 81 of the 1996 Act, if it is in contravention with the fundamental policy of Indian law or if it is in conflict with the most basic notions of morality or justice.
31. In Ssangyong (supra), this Court held that the meaning of the expression 'fundamental policy of Indian law' would be in accordance with the understanding of this Court in Renusagar Power Co. Ltd. v. General Electric Co. 6 In Renusagar (supra), this Court observed that violation of the Foreign Exchange Regulation Act, 1973, a statute enacted for the 'national economic interest', and disregarding the superior courts in India would be antithetical to the fundamental policy of Indian law. Contravention of a statute not linked to public policy or public interest cannot be a ground to set at naught an arbitral award as being discordant with the fundamental policy of Indian law and neither can it be brought within the confines of 'patent illegality' as discussed above. In other words, contravention of a statute only if it is linked to public policy or public interest is cause for setting aside the award as being at odds with the fundamental policy of Indian law. If an arbitral award shocks the conscience of the court, it can be set aside as being in conflict with the most basic notions of justice. The ground of morality in this context has been interpreted by this Court to encompass awards involving elements of sexual morality, such as prostitution, or awards 6 1994 Supp (1) SCC 644 seeking to validate agreements which are not illegal but would not be enforced given the prevailing mores of the day."
4.2 In Patel Engineering Ltd. Vs. North Eastern Electric Power Corporation Ltd. (2020) 7 SCC 167 it has been held as under:-
"15. In BCCI v. Kochi Cricket (P) Ltd., 2018 (6) SCC 287, the Supreme Court held that the Amendment Act, 2015 would apply ARBTN 381/18 Subhash Nagpal Vs. Unicon Group of Companies and anr 14/22 to Section 34 petitions that are made after 23.10.2015 (the day on which the Amendment Act came into force). In the present case, admittedly, after the arbitral awards are dated 29.03.2016, the applications under Section 34 of the Act were filed before the Judicial Commissioner, Shillong as per the decision in BCCI, the provisions of the Amendment Act would apply.
16. Patent illegality as a ground for setting aside a domestic award was first expounded in the judgment of Saw Pipes Ltd.16 where this Court was dealing with a domestic award. This Court gave a wider interpretation to the 'public policy of India' in Section 14 Board of Control for Cricket in India v. Kochi Cricket Private Limited and Others (2018) 6 SCC 287 15 Board of Control for Cricket in India v. Kochi Cricket Private Limited and Others (2018) 6 SCC 287 16 Oil & Natural Gas Corporation Ltd. v. Saw Pipes Ltd. (2003) 5 SCC 705 34(2)(b)
(ii) in Part I of the 1996 Act. The Court held that an award would be "patently illegal", if it is contrary to the substantive provisions of law; or, provisions of the 1996 Act; or, terms of the contract.
20. In Ssangyong Engineering and Construction Company Limited19, this Court was considering a challenge to an award passed in an international commercial arbitration, between the Appellant - company a foreign entity registered under the laws of Korea, and the Respondent, a Government of India undertaking. In paragraph (19) of the judgment, this Court noted that the expansive interpretation given to "public policy of India" in the Saw Pipes (supra) and Western Geco International Limited 20 cases, which had been done away with, and a new ground of "patent illegality" was introduced which would apply to applications under Section 34 made on or after 23.10.2015. In paragraphs (36) and (37) of the judgment, this Court held that insofar as domestic awards are concerned, the additional ground of patent illegality was now available under sub-section (2A) to Section 34. However, reappreciation of evidence was not permitted under the ground of "patent illegality" appearing on the face of the award.
21. In paragraphs (39) and (40) of Ssangyong Engineering (supra), the Court reiterated paragraphs (42.2) and (42.3) of Associate Builders (supra) 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 possible view to take. In paragraphs (39) and (40), the Supreme Court held as under:-
ARBTN 381/18 Subhash Nagpal Vs. Unicon Group of Companies and anr 15/22 "39. To elucidate, para 42.1 of Associate Builders v. Delhi Development Authority (2015) 3 SCC 49, namely, a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an arbitral award. Para 42.2 of Associate Builders v. Delhi Development Authority (2015) 3 SCC 49, however, would remain, for if an arbitrator gives no reasons for an award and contravenes Section 31(3) of the 1996 Act, that would certainly amount to a patent illegality on the face of the award.
40. The change made in Section 28(3) by the Amendment Act really follows what is stated in paras 42.3 to 45 in Associate Builders v. Delhi Development Authority (2015) 3 SCC 49, namely, that the construction of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator construes the contract in a manner that no fair-minded or reasonable person would; in short, that the arbitrator's view is not even a possible view to take. Also, if the arbitrator wanders outside the contract and deals with matters not allotted to him, he commits an error of jurisdiction. This ground of challenge will now fall within the new ground added under Section 34(2-A)." (emphasis supplied)"
4.3 In Associate Builders Vs. Delhi Development Authority (2015) 3 SCC 49 it has been held as under:-
"17. It will be seen that none of the grounds contained in sub- clause 2 (a) deal with the merits of the decision rendered by an arbitral award. It is only when we come to the award being in conflict with the public policy of India that the merits of an arbitral award are to be looked into under certain specified circumstances.
.......33. It must clearly be understood that when a court is applying the "public policy" test 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[1]. Once it is found that the arbitrators approach is not arbitrary or capricious, then he is the last word on facts."
ARBTN 381/18 Subhash Nagpal Vs. Unicon Group of Companies and anr 16/22 4.4 A bare reading of Section 34 and the law propounded by the Hon'ble Apex Court makes it crystal clear that the scope of inquiry, the grounds on which an award can be set aside is/are quite limited. This is because the Arbitrator is a Judge of the choice of the parties and his decision unless there is an error apparent on the face of the award which makes it unsustainable, is not to be set aside even if the court, as a court of law would come to a different conclusion on the same set of facts. The court cannot reappraise the evidence and it is not open to the court to sit in appeal over the conclusion of the arbitrator. It is not open to the court to set aside a finding of fact arrived at by the arbitrator and the only grounds on which the award can be set aside are those mentioned in the Arbitration Act.
4.5 Where the arbitrator has assigned cogent grounds and sufficient reasons and no error of law or misconduct is cited, the award will not call for interference by the court in exercise of the power vested in it. Where the arbitrator is a qualified technical person and expert, who is competent to make assessment by taking into consideration the technical aspects of the matter, the court would generally not interfere with the award passed by the arbitrator.
4.6 The interference with an arbitral award is permissible only when the findings of the arbitrator are arbitrary, capricious or perverse or when conscience of the Court is shocked or when illegality is not trivial but goes to the root of the ARBTN 381/18 Subhash Nagpal Vs. Unicon Group of Companies and anr 17/22 matter. Once it is found that the arbitrator's approach is neither arbitrary nor capricious, no interference is called for on facts. The arbitrator is ultimately a master of the quantity and quality of evidence while drawing the arbitral award. Patent illegality must go to the root of the matter and cannot be of trivial nature.
4.7 At the outset in view of law laid down in BCCI v. Kochi Cricket (P) Ltd., 2018 (6) SCC 287 as the award was passed on 07.02.2018 and the objections were filed on 12.03.2018, the Amendment Act 2015 would apply.
4.8 After going through the award not only I find no infirmity whatsoever in the award but the challenge to the award is not even remotely covered within the scope & ambit of section 34 of the Act. In fact a bare glance at the petition would reveal that the petitioner has miserably failed to explain or justify as to under which clause of section 34, the objections are maintainable, have been filed. It is not the petitioner's case that the award is in conflict with the public policy of India i.e. same has been obtained by inducement or fraud or corruption or that it is in contravention of the fundamental policy of law or is in conflict with the most basic notions of morality or justice.
4.9 The approach of the Ld. Arbitrator was a reasonable and judicious one. It was not even remotely arbitrary or whimsical. The Ld. Arbitrator had given reasonable opportunity to the petitioner to put in his best evidence and passed the award ARBTN 381/18 Subhash Nagpal Vs. Unicon Group of Companies and anr 18/22 after fair appreciation of the evidence and the arguments advanced by the petitioner. There is no violation of statutory provisions or of the decisions of the Hon'ble Apex Court or the Hon'ble High Court. Neither is the award unfair or unreasonable to the extent that it shocks the conscience of the court. There is no illegality much least patent illegality which goes to the root of the matter. It is not the petitioner's case and otherwise also not borne out from the award that the same is against the justice or morality or the interest of India.
4.10 There is no infirmity or illegality much least perversity in the above finding, of the Ld. Arbitrator, whatsoever. Even otherwise this court cannot substitute its own view/interpretation of the agreement with that of the Ld. Arbitrator nor re-appreciate or re-evaluate the evidence.
4.11 The reason for dismissal of the claim has been detailed in the award as under:-
"11. The claimant has further stated that he has served several requests, oral as well as in writing to the Founder, President and Director Mr. Ram Mohan Gupta and Chief Financial Officer of Unicon Group of Companies at various occasions. The claimant has claimed interest at the rate of 18% per annum as mentioned in Annexure-3 of the Statement of Facts of Claim along with litigation expenses, arbitration expenses, for mental harassment, in all totaling to Rs. 45.37 lacs. The claimant further stated that he has made communications to Mr Ram Mohan Gupta and CFO Pawan Kumar Dhanuka of Unicon Group of Companies and has given details in the Statement of Facts of Claim.
12. The affidavit filed by the claimant is Ex.CW1/A in which the claimant has deposed that he served the respondent, Unicon Group of Companies in different capacities and has reiterated ARBTN 381/18 Subhash Nagpal Vs. Unicon Group of Companies and anr 19/22 the contents of the Statement of Claim in his affidavit. The claimant has placed on record and proved 'Letter of Intent' Ex.CW1/A-1 as his Letter of Appointment to prove his employment and this Letter of Intent was issued to the claimant by Unicon Securities Pvt. Ltd. who has not been impleaded as respondent in the present Claim Petition. The claimant has also placed on record and proved Consultancy Agreement Ex.CW1/A-2 executed between him and Unicon Financial Intermediaries Pvt. Ltd. to prove his having rendered services as a Consultant but even Unicon Financial Intermediaries Pvt. Ltd. has not been impleaded as respondent in the present Claim Petition.
Letter of Intent Ex.CW1/A-1 contains no arbitration clause for relationship between the parties while Consultancy Agreement Ex.CW1/A-2 only contains an arbitration clause in respect of relationship between the parties to the Consultancy Agreement.
13. From these two documents i.e. Letter of Intent Ex.CW1/A- 1 and Consultancy Agreement Ex.CW1/A-2, it is clear that the claimant was firstly appointed by Unicon Securities Pvt. Ltd. as Director-Strategic Planning & Distribution and thereafter the claimant was appointed as Consultant by Unicon Financial Intermediaries Pvt. Ltd. w.e.f. 01.12.2013 to 30.11.2014. The claimant has placed on record one notice dated 31.12.2014 addressed to Unicon Group of Companies for recovery of the amount of Rs. 22.86 lacs. From Ex.CW1/A-1 and Ex.CW1/A-2, it is clear that the claimant was previously in the employment of Unicon Securities Pvt. Ltd. and thereafter was employed as Consultant by Unicon Financial Intermediaries Pvt. Ltd. The amount if any, due to the claimant could be against these two companies only but the claimant has not at all lodged his claim against any of these two companies or even otherwise impleaded either of them as respondents in the present claim petition whereas they were necessary parties to it.
14. The claimant has also not mentioned in respect of status of the present respondent, Unicon Group of Companies who is actually impleaded as respondent in the present Claim Petition, whether it is a company registered under the Companies Act or a firm registered under the Partnership Act or it is an association of persons registered under the Societies Registration Act or even otherwise a Consortium etc. The claimant has not at all lodged his claim against the proper respondents. There is no privity of contract between the claimant and the present respondent and therefore, the present ARBTN 381/18 Subhash Nagpal Vs. Unicon Group of Companies and anr 20/22 claim of the claimant against the present respondent is not at all sustainable or maintainable in the eyes of law."
4.12 Admittedly the petitioner was never an employee of respondent no. 1 i.e. Unicon Group of Companies. The petitioner's employment as per Ex. CW1/A-1 and Ex. CW1/A-2 was with Unicon Securities Pvt. Ltd. and Unicon Financial Intermediaries Pvt. Ltd respectively. Petitioner miserably failed to prove, before the Ld. Arbitrator, as to the connection, relation between Unicon Securities Pvt. Ltd. & Unicon Financial Intermediaries Pvt. Ltd and respondent no. 1. In fact as held by the Ld. Arbitrator petitioner even failed to prove the legal status of respondent no. 1 i.e. whether it was a company or a partnership or a proprietorship etc. It has to be seen that as the petitioner failed to bring on record the exact legal status, identity of respondent no. 1, respondent no. 1 remained unserved even before the Ld. Arbitration in the truest sense of term. Even if the petitioner had been able to prove any connection between Unicon Securities Pvt. Ltd. & Unicon Financial Intermediaries Pvt. Ltd. and respondent no. 1, still no claim would have been maintainable against respondent no. 1 as there is no privity of contract between the petitioner and respondent no. 1. There is no relation of employer or employee and no other contractual obligation whatsoever binding the two of them. Thus the claim was rightly rejected.
4.13 The impugned award is thus based upon due appreciation of facts, evidences & law. Not only the reasonings ARBTN 381/18 Subhash Nagpal Vs. Unicon Group of Companies and anr 21/22 of Ld. Arbitrator are logical but all the material documents and evidences were taken note of by the Ld. Arbitrator at the time of the passing of the impugned award. Cogent grounds, sufficient reasons have been assigned by the Ld. Arbitrator in reaching the just conclusion and no error of law or misconduct is apparent on the face of the record. This Court cannot re-appraise the evidence and it is not open to this Court to sit in the appeal over the conclusion/findings of facts arrived at by Ld. Arbitrator. The impugned award does not suffer from vice of irrationality and perversity. No error is apparent on the fact of the impugned award. The award is not against any public policy nor against the terms of contract of the parties. No ground for interference is thus made out.
4.14 For the foregoing reasons, the petition is hereby dismissed.
4.15 The parties are left to bear their own costs.
4.16 File be consigned to record room after necessary compliance.
Announced in the open court on 19th April 2023 (Gaurav Rao) ADJ-03/ New Delhi District Patiala House Courts, New Delhi.
ARBTN 381/18 Subhash Nagpal Vs. Unicon Group of Companies and anr 22/22