Delhi High Court
Jpc Infrastrucrure And Constructions … vs Alstom Transport India Limited on 6 July, 2026
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: 12.05.2026
Judgment pronounced on: 06.07.2026
+ O.M.P. (COMM) 124/2024 & I.A. 5694/2024 (Stay)
JPC INFRASTRUCTURE AND CONSTRUCTIONS
PRIVATE LIMITED .....Petitioner
Through: Ms. Manini Brar and Ms.
Muskaan Chawla, Advocates.
versus
ALSTOM TRANSPORT INDIA LIMITED .....Respondent
Through: Mr. Dinesh Pardasani, Mr.
Aishwary Kumar Tiwari, Mr.
Siddharth Chechani and Mr.
Amrit Singh, Advocates.
CORAM:
HON'BLE MR. JUSTICE HARISH VAIDYANATHAN
SHANKAR
JUDGMENT
HARISH VAIDYANATHAN SHANKAR, J.
1. The present Petition, filed by JPC Infrastructure and
Constructions Private Limited1 under Section 34 of the Arbitration
and Conciliation Act, 19962, seeks setting aside of the Arbitral
Award dated 15.11.20233, passed in favour of Alstom Transport
India Ltd.4 by a Three-member Arbitral Tribunal, comprising
Justice D.K. Jain (Retd.) as the Presiding Arbitrator, Justice
1
Petitioner
2
A&C Act
3
Impugned Award
4
Respondent
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Dipak Misra (Retd.) and Justice J.D. Kapoor (Retd.)5, in the matter
titled “JPC Infrastructure & Constructions Pvt. Ltd. And Alstom
Transport India Ltd. (Formerly known as Alstom Systems India Pvt.
Ltd.)”.
2. During the course of hearing before this Court, learned counsel
appearing on behalf of the Petitioner expressly confined the challenge
to the findings returned by the learned Tribunal in respect of Claim
Nos. 2, 3, 13 and 16. The findings returned by the learned Tribunal on
all other claims and counterclaims were not assailed and have
accordingly attained finality.
FACTUAL MATRIX:
3. The present dispute traces its origin to the Eastern Dedicated
Freight Corridor Project being executed by the Dedicated Freight
Corridor Corporation of India Limited6, a Government of India
undertaking, for development of freight railway infrastructure between
Bhaupur and Khurja.
4. Pursuant to a Letter of Acceptance dated 21.07.2015, DFCCIL
awarded to the Respondent the principal contract for design,
construction, supply, installation, testing and commissioning of 2 x 25
KV AC electrification, signalling, telecommunication and allied works
forming part of the said project. The works under the principal
contract were divided into various segments or “Slices”, one of which
was Slice-103.
5. Even prior to the award of the principal contract, the
Respondent had invited quotations from prospective subcontractors
5
learned Tribunal
6
DFCCIL
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for execution of portions of the works contemplated under Slice-103.
The Petitioner submitted its commercial proposal on 31.03.2015,
which was subsequently revised on 26.11.2015. The said proposal was
accepted by the Respondent and culminated in the issuance of a Letter
of Acceptance dated 04.12.2015 in favour of the Petitioner.
Thereafter, the parties executed a Back-to-Back Sub-Contract
Agreement dated 15.12.20157.
6. Under the Contract, the Petitioner was entrusted with the
execution of civil, electrical and associated works relating to fifty-five
structures situated at Daudkhan, Hathras and Khurja. The scope of
work broadly included preparation of designs and drawings,
geotechnical investigations, topographical surveys, construction of
buildings and structures, electrical works and maintenance obligations.
7. The Contract was executed on a lump-sum basis for a
consideration of Rs. 34,09,58,091/- and contemplated completion of
the works within 675 days reckoned from 03.08.2015, being the
commencement date under the principal contract.
8. The Petitioner’s case throughout has been that the execution of
the Contract was dependent upon the Respondent first making
available unhindered and encumbrance-free access to the project sites,
furnishing finalized project particulars, identifying locations of
structures and enabling the Petitioner to undertake the preliminary
investigations and surveys required for preparation of designs.
According to the Petitioner, these foundational requirements were not
fulfilled in a timely manner, thereby preventing it from effectively
carrying out geotechnical investigations, topographical surveys and
7
Contract
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design activities contemplated under the Contract.
9. The Respondent, on the other hand, maintained that all
necessary information and access required for performance of the
Contract were duly made available and that the delays and
deficiencies in execution were attributable solely to the Petitioner.
10. As the project progressed, disputes arose between the parties
regarding responsibility for delays, progress of the works, availability
of sites, preparation and approval of drawings, execution of surveys
and investigations, entitlement to payments, and the consequences of
the Petitioner’s alleged non-performance. Extensive correspondence
was exchanged between the parties, each attributing responsibility for
the delay and disruption of the project to the other.
11. The relationship between the parties deteriorated further when
portions of the work originally entrusted to the Petitioner came to be
descoped and the Contract ultimately stood terminated by the
Respondent.
12. While the Petitioner asserted that the termination and descoping
were wrongful and were themselves a consequence of the
Respondent’s inability to fulfil its reciprocal obligations under the
Contract, the Respondent maintained that the same were necessitated
by the Petitioner’s continuing defaults and inability to execute the
works entrusted to it.
13. The disputes between the parties eventually culminated in
arbitral proceedings being commenced under Clause 29.3 of the
Contract. In accordance with the arbitration agreement, the disputes
were referred to arbitration under the ICC Rules of Arbitration,
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20218 before a three-member Arbitral Tribunal.
14. Before the learned Tribunal, the Petitioner preferred several
claims aggregating substantial amounts under diverse heads, including
reimbursement of expenditure allegedly incurred towards geotechnical
investigations, topographical surveys, consultancy charges, overhead
costs, loss of profit and other contractual entitlements. The
Respondent contested the claims and, in turn, raised multiple
counterclaims arising out of the alleged breaches committed by the
Petitioner.
15. In support of its case, the Petitioner relied, inter alia, upon a
Letter dated 07.06.2017 addressed by the Respondent to
DFCCIL9. The Petitioner contended that the said communication
contained admissions by the Respondent itself acknowledging that
geotechnical investigations, topographical surveys and other
preliminary activities could not commence in the absence of
encumbrance-free access to the sites and availability of necessary
project particulars.
16. According to the Petitioner, the contents of the Rejected Letter
substantiated its defence that the delays and non-performance alleged
against it were attributable to circumstances for which the Respondent
was responsible.
17. The Respondent objected to the reliance placed upon the said
communication on the ground that it formed part of disputes and
arbitral proceedings between the Respondent and DFCCIL arising out
of the principal contract. It was contended that the document was
confidential in nature and could neither be relied upon nor introduced
8
ICC Rules
9
Rejected Letter
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in evidence in the arbitration between the present parties.
18. The learned Tribunal considered the rival contentions
concerning the admissibility of the aforesaid communication and, by
its findings contained in Paragraphs 16.1 to 16.12 of the Impugned
Award, concluded that the document could not be relied upon while
adjudicating the disputes between the parties. Proceeding on that
basis, the learned Tribunal evaluated the claims on the material
otherwise available on record.
19. Upon consideration of the pleadings, documentary evidence,
oral testimony and submissions advanced by the parties, the learned
Tribunal rendered the Impugned Award dated 15.11.2023. While
certain claims of the Petitioner were allowed in part and all
counterclaims of the Respondent came to be rejected, the learned
Tribunal rejected, inter alia, Claim Nos. 2, 3, 13 and 16 relating
respectively to geotechnical investigations, topographical surveys,
overhead costs and loss of profit. Insofar as Claim Nos. 13 and 16 are
concerned, Justice J.D. Kapoor (Retd.) rendered a separate dissenting
opinion.
20. In the present proceedings under Section 34 of the A&C Act,
the challenge initially laid to several portions of the Impugned Award
stands substantially narrowed. As noted earlier, during the course of
hearing, learned counsel for the Petitioner confined the challenge
exclusively to the findings returned in respect of Claim Nos. 2, 3, 13
and 16 and, more particularly, to the learned Tribunal’s decision
declining to admit and rely upon the Rejected Letter.
21. According to the Petitioner, the exclusion of the said document
vitiated the adjudication of the aforesaid claims. The Respondent,
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however, supports the reasoning and conclusions contained in the
Impugned Award and submits that no ground for interference within
the limited scope of Section 34 of the A&C Act is made out.
22. It is in the aforesaid factual backdrop that the rival submissions
fall for consideration.
CONTENTIONS ON BEHALF OF THE PETITIONER:
23. Learned counsel appearing on behalf of the Petitioner would, at
the outset, fairly submit that the present challenge is confined to the
findings returned by the learned Tribunal in relation to Claim Nos. 2,
3, 13 and 16. According to the learned counsel, the rejection of the
aforesaid claims is fundamentally traceable to the learned Tribunal’s
decision to exclude from consideration a communication dated
07.06.2017, i.e., the Rejected Letter, addressed by the Respondent to
DFCCIL.
24. Learned counsel would submit that the Petitioner’s case before
the learned Tribunal was that various contractual activities, including
Geotechnical Investigations and Topographical Surveys, could not be
effectively undertaken owing to the non-availability of unhindered and
encumbrance-free access to the project site. In support of the said
case, reliance would be placed upon the Rejected Letter, wherein the
Respondent itself allegedly acknowledged before DFCCIL that the
requisite surveys could not commence until free access to the site was
made available and that certain essential project particulars had not
been furnished.
25. According to the learned counsel for the Petitioner, the contents
of the Rejected Letter constituted admissions directly supporting the
Petitioner’s case that the delays and deficiencies attributed to it were
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occasioned by prevailing site conditions and circumstances beyond its
control. It would therefore be contended that the document went to the
root of the controversy concerning responsibility for delay,
performance of contractual obligations and the consequent rejection of
the claims in question.
26. Learned counsel would submit that notwithstanding the
materiality of the said document, the learned Tribunal declined to
admit or rely upon the same on the ground that it formed part of
arbitral proceedings between the Respondent and DFCCIL and was
therefore protected by the confidentiality obligation embodied in
Section 42A of the A&C Act.
27. Assailing the aforesaid approach, learned counsel for the
Petitioner would submit that the learned Tribunal committed a
manifest error in treating the Rejected Letter as confidential and
consequently inadmissible. It would be contended that the document
had already formed part of proceedings before this Court and had
thereby entered the public domain. According to the learned counsel,
once a document ceases to retain its confidential character, the
protection contemplated under Section 42A of the A&C Act cannot
continue to operate in respect thereof.
28. Learned counsel would submit that the confidentiality
contemplated under Section 42A of the A&C Act operates only in
relation to material which continues to retain the character of
confidentiality. The learned Tribunal, according to the learned
counsel, failed to examine whether confidentiality in fact subsisted in
relation to the Rejected Letter and instead proceeded on the
assumption that confidentiality attached to the document merely
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because it originated from another arbitral proceeding.
29. Learned counsel would further contend that the arbitration
between the parties was conducted under the ICC Rules of
Arbitration, 202110 and that the learned Tribunal failed to appreciate
the contractual framework governing confidentiality between the
parties. Particular reliance would be placed upon Article 22(3) of the
ICC Rules, which merely empowers an arbitral tribunal, upon request,
to issue appropriate directions concerning confidentiality and
protection of confidential information.
30. Learned counsel for the Petitioner would contend that Article
22(3) does not impose an absolute prohibition against the use or
consideration of documents emanating from arbitral proceedings. The
confidentiality regime contemplated under the ICC Rules is
discretionary and procedural in nature and cannot be construed as
creating a blanket embargo against consideration of otherwise relevant
and material evidence.
31. Learned counsel would therefore submit that neither the ICC
Rules nor the factual circumstances of the present case justified the
learned Tribunal in excluding the Rejected Letter altogether. At the
highest, the learned Tribunal could have adopted appropriate
safeguards while considering the document. The learned Tribunal,
however, erroneously proceeded on the footing that confidentiality
itself rendered the document incapable of consideration.
32. Proceeding further, learned counsel would submit that even
assuming that the Rejected Letter remained subject to confidentiality
obligations, Section 42A of the A&C Act merely imposes an
10
ICC Rules
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obligation of confidentiality and does not prescribe inadmissibility as
a consequence of any alleged breach thereof. It would be contended
that the provision does not create an exclusionary rule of evidence.
33. Learned counsel would submit that the learned Tribunal
effectively read into Section 42A of the A&C Act a consequence
which the legislature has consciously not enacted. Learned counsel for
the Petitioner would submit that a document otherwise relevant and
material does not become inadmissible merely because a
confidentiality obligation is asserted in respect thereof.
34. In support of the aforesaid submission, learned counsel would
place reliance upon the decision of the Bombay High Court in Global
Aviation Services Private Limited v. Airport Authority of India11 to
contend that where a statute imposes an obligation but does not
prescribe any consequence for non-compliance, a Court or Tribunal
cannot create a disqualification or disability not contemplated by the
legislative scheme. Particular reliance would be placed upon
Paragraph Nos. 115, 118 and 121 thereof.
35. Learned counsel would further place reliance upon paragraphs
84 to 86 of the Constitution Bench decision in Interplay Between
Arbitration Agreements under Arbitration Act, 1996 and Stamp Act,
1899, In re12. It would be submitted that the Supreme Court has held
that the operation of a non-obstante clause must be confined to the
legislative purpose underlying the provision in which it appears and
cannot be extended beyond the field intended by Parliament.
36. According to the learned counsel, the non-obstante clause
contained in Section 42A of the A&C Act is intended only to secure
11
2018 SCC OnLine Bom 233
12
(2024) 6 SCC 1
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confidentiality in arbitral proceedings. The provision cannot be
expanded so as to create a substantive rule rendering documents
inadmissible in evidence when the statute itself contains no such
stipulation.
37. Learned counsel would additionally submit that the learned
Tribunal erred in extending the operation of Section 42A of the A&C
Act to legal counsels and in concluding that the manner in which the
document came into the possession of the Petitioner justified its
exclusion from consideration. According to the learned counsel, such
consequences do not flow from the text of Section 42A of the A&C
Act.
38. Proceeding on the aforesaid basis, learned counsel would
submit that the exclusion of the Rejected Letter materially affected the
adjudication of Claim Nos. 2 and 3 relating to Geotechnical
Investigations and Topographical Surveys. It would be contended that
had the contents of the said communication been considered, the
learned Tribunal could not have attributed responsibility for failure to
undertake the said activities to the Petitioner.
39. Learned counsel would further submit that the findings recorded
in relation to Claim Nos. 13 and 16 concerning overhead costs and
loss of profit are likewise vitiated. According to the learned counsel,
those findings are substantially founded upon conclusions regarding
the Petitioner’s alleged defaults and breaches, which stand materially
undermined by the contents of the Rejected Letter.
40. It would accordingly be contended that exclusion of the
Rejected Letter resulted in the learned Tribunal disregarding material
evidence having a direct bearing on the disputes between the parties.
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The Award, according to the learned counsel, therefore suffers from
patent illegality appearing on the face of the Award and is further
liable to be interfered with under Section 34 (2A) of the A&C Act.
41. Learned counsel would therefore pray that the impugned Award
be set aside insofar as it rejects Claim Nos. 2, 3, 13 and 16.
SUBMISSIONS ON BEHALF OF THE RESPONDENT:
42. Per contra, learned counsel appearing on behalf of the
Respondent would submit that the present Petition is entirely
misconceived and seeks to challenge a reasoned arbitral award by
inviting this Court to undertake a re-appreciation of matters which
were fully considered and adjudicated upon by the learned Tribunal.
43. Learned counsel would submit that the challenge raised by the
Petitioner proceeds upon an incorrect premise that the learned
Tribunal ignored or refused to consider the Rejected Letter. According
to the learned counsel, the Award itself demonstrates that the learned
Tribunal specifically examined the said document, considered the rival
submissions advanced by the parties regarding its provenance,
admissibility and confidentiality, and thereafter rendered a reasoned
determination declining to rely upon the same.
44. It would therefore be contended that this is not a case where
material evidence was overlooked or excluded without consideration.
On the contrary, the issue formed the subject matter of detailed
adjudication and the learned Tribunal consciously concluded that the
document ought not to be relied upon while deciding the disputes
between the parties.
45. Learned counsel would further submit that the Rejected Letter
admittedly originated from arbitral proceedings between the
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Respondent and DFCCIL. The learned Tribunal examined the
circumstances in which the document came into the possession of the
Petitioner and ultimately concluded that the same formed part of
confidential arbitral proceedings governed by the confidentiality
obligations applicable thereto.
46. According to the learned counsel, the finding returned by the
learned Tribunal on the issue of confidentiality is a finding rendered
within its jurisdiction after appreciation of the material placed before
it. Merely because another view may also be possible would not
furnish a ground for interference under Section 34 of the A&C Act.
47. Learned counsel would further submit that the Petitioner cannot
derive any assistance from the fact that the arbitration between the
parties was conducted under the ICC Rules. It would be contended
that Article 22(3) of the ICC Rules merely enables the arbitral tribunal
to adopt measures concerning confidentiality and protection of
confidential information. The said provision cannot dilute or override
a statutory mandate contained in the A&C Act.
48. According to the learned counsel, once Parliament has enacted
Section 42A in the A&C Act and imposed a statutory obligation of
confidentiality in relation to arbitral proceedings, the same cannot be
curtailed or diluted by reference to institutional rules. It would be
contended that institutional rules operate within the framework of the
governing statute and cannot prevail over an express legislative
command.
49. Responding to the contention that the Rejected Letter had
entered the public domain, learned counsel would submit that the
learned Tribunal considered and rejected the said contention. It would
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be contended that mere production of a document in separate judicial
proceedings does not automatically establish loss of confidentiality,
particularly when the document originates from arbitral proceedings
protected by statutory confidentiality obligations.
50. Learned counsel would further submit that the Petitioner is
effectively inviting this Court to re-examine the correctness of the
factual conclusions drawn by the learned Tribunal regarding
confidentiality, provenance and admissibility of the document. Such
an exercise, according to the learned counsel, lies wholly beyond the
limited scope of jurisdiction under Section 34 of the A&C Act.
51. Without prejudice to the aforesaid submissions, learned counsel
would contend that the entire challenge raised by the Petitioner
proceeds on an erroneous assumption that rejection of the Rejected
Letter automatically vitiates the findings returned in relation to Claim
Nos. 2, 3, 13 and 16.
52. It would be submitted that the learned Tribunal rejected the
aforesaid claims on the basis of detailed and independent findings
arising from the evidence on record. The Award records separate
reasons in relation to each of the claims and does not rest solely upon
the exclusion of the Rejected Letter.
53. Learned counsel would submit that significantly, the Petitioner
has not assailed the independent findings recorded by the learned
Tribunal while rejecting Claim Nos. 2, 3, 13 and 16. No challenge has
been mounted to the Tribunal’s appreciation of the documentary
evidence, findings on proof of expenditure, findings regarding
performance of work, findings concerning entitlement to overheads or
findings relating to loss of profit.
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54. According to the learned counsel, the Petition proceeds entirely
on the footing that once the Rejected Letter is taken into account, the
conclusions reached by the learned Tribunal must necessarily fail.
Such a contention, it would be submitted, overlooks the fact that the
Award contains several independent and self-sustaining reasons
supporting rejection of the claims.
55. It would therefore be contended that even assuming, without
admitting, that the learned Tribunal could have adopted a different
view regarding the Rejected Letter, the Petitioner has failed to
demonstrate how the independent findings recorded against Claim
Nos. 2, 3, 13 and 16 are liable to be interfered with under Section 34
of the A&C Act.
56. Learned counsel would submit that the Petition discloses no
patent illegality or violation of the public policy of India. At its
highest, the Petitioner seeks substitution of the Tribunal’s view with
another possible view on a matter squarely falling within the
Tribunal’s domain. Learned counsel would accordingly pray that the
present Petition be dismissed.
ANALYSIS:
57. This Court has heard the learned counsel for the parties at
length and, with their able assistance, perused the material available
on record and the Judicial precedents relied upon.
58. At the outset, it is apposite to note that this Court is conscious
of the limited scope of its jurisdiction while examining an objection
petition under Section 34 of the A&C Act. The contours of judicial
intervention in such proceedings have been authoritatively delineated
and settled by a consistent and evolving line of precedents of the
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Hon’ble Supreme Court.
59. In this regard, a three-Judge Bench of the Hon’ble Supreme
Court, after an exhaustive consideration of a catena of earlier
decisions, in OPG Power Generation (P) Ltd. v. Enexio Power
Cooling Solutions (India) (P) Ltd.13, while dealing with the grounds
of conflict with the public policy of India and patent illegality,
grounds which have also been urged in the present case, made certain
pertinent observations, which are reproduced hereunder:
“Relevant legal principles governing a challenge to an arbitral
award
30. Before we delve into the issue/sub-issues culled out above, it
would be useful to have a look at the relevant legal principles
governing a challenge to an arbitral award. Recourse to a court
against an arbitral award may be made through an application
for setting aside such award in accordance with sub-sections (2),
(2-A) and (3) of Section 34 of the 1996 Act. Sub-section (2) of
Section 34 has two clauses, (a) and (b). Clause (a) has five sub-
clauses which are not relevant to the issues raised before us.
Insofar as clause (b) is concerned, it has two sub-clauses,
namely, (i) and (ii). Sub-clause (i) of clause (b) is not relevant to
the controversy in hand. Sub-clause (ii) of clause (b) provides
that if the Court finds that the arbitral award is in conflict with
the public policy of India, it may set aside the award.
Public policy
31. “Public policy” is a concept not statutorily defined, though it
has been used in statutes, rules, notification, etc. since long, and
is also a part of common law. Section 23 of the Contract Act,
1872 uses the expression by stating that the consideration or
object of an agreement is lawful, unless, inter alia, opposed to
public policy. That is, a contract which is opposed to public
policy is void.
*****
35. In Renusagar Power Co. Ltd. v. General Electric Co., 1994
Supp (1) SCC 644, a three-Judge Bench of this Court observed
that the doctrine of public policy is somewhat open–textured
and flexible. By citing earlier decisions, it was observed that
there are two conflicting positions which are referred to as the
“narrow view” and the “broad view”. According to the narrow
view, courts cannot create new heads of public policy whereas13
(2025) 2 SCC 417
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the broad view countenances judicial law making in these areas.
In the field of private international law, it was pointed out,
courts refuse to apply a rule of foreign law or recognise a
foreign judgment or a foreign arbitral award if it is found that
the same is contrary to the public policy of the country in which
it is sought to be invoked or enforced. However, it was clarified,
a distinction is to be drawn while applying the rule of public
policy between a matter governed by domestic law and a matter
involving conflict of laws. It was observed that the application
of the doctrine of public policy in the field of conflict of laws is
more limited than that in the domestic law and the courts are
slower to invoke public policy in cases involving a foreign
element than when a purely municipal legal issue is involved. It
was held that contravention of law alone will not attract the bar
of public policy, and something more than contravention of law
is required.
*****
37. What is clear from above is that for an award to be against
public policy of India a mere infraction of the municipal laws of
India is not enough. There must be, inter alia, infraction of
fundamental policy of Indian law including a law meant to serve
public interest or public good.
*****
40. In ONGC Ltd. v. Western Geco International Ltd., (2014) 9
SCC 263, paras 35, 38 & 39, which also related to the period
prior to the 2015 Amendment of Section 34(2)(b)(ii), a three-
Judge Bench of this Court, after considering the decision
inONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705, without
exhaustively enumerating the purport of the expression
“fundamental policy of Indian law”, observed that it would
include all such fundamental principles as providing a basis for
administration of justice and enforcement of law in this country.
The Court thereafter illustratively referred to three fundamental
juristic principles, namely:
(a) that in every determination that affects the rights of a citizen
or leads to any civil consequences, the court or authority or
quasi-judicial body must adopt a judicial approach, that is, it
must act bona fide and deal with the subject in a fair, reasonable
and objective manner and not actuated by any extraneous
consideration;
(b) that while determining the rights and obligations of parties
the court or Tribunal or authority must act in accordance with
the principles of natural justice and must apply its mind to the
attendant facts and circumstances while taking a view one way
or the other; and
(c) that its decision must not be perverse or so irrational that no
reasonable person would have arrived at the same.
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41. In Associate Builders v. DDA, (2015) 3 SCC 49, a two-
Judge Bench of this Court, held
that audialterampartem principle is undoubtedly a fundamental
juristic principle in Indian law and is enshrined in Sections 18
and 34(2)(a)(iii) of the 1996 Act. In addition to the earlier
recognised principles forming fundamental policy of Indian law,
it was held that disregarding:
(a) orders of superior courts in India; and
(b) the binding effect of the judgment of a superior court would
also be regarded as being contrary to the fundamental policy of
Indian law.
Further, elaborating upon the third juristic principle (i.e. qua
perversity), as laid down in ONGC Ltd. v. Western Geco
International Ltd., (2014) 9 SCC 263, it was observed that
where:
(i) a finding is based on no evidence; or
(ii) an Arbitral Tribunal takes into account something irrelevant
to the decision which it arrives at; or
(iii) ignores vital evidence in arriving at its decision, such
decision would necessarily be perverse [Associate Builders
case, (2015) 3 SCC 49, para 31].
To this a caveat was added by observing that when a court
applies 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; and 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. It was also
observed that 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 that score. Thus, once it is
found that the arbitrator’s approach is not arbitrary or capricious,
it is to be taken as the last word on facts.
The 2015 Amendment in Sections 34 and 48
42. The aforementioned judicial pronouncements were all prior
to the 2015 Amendment. Notably, prior to the 2015 Amendment
the expression “in contravention with the fundamental policy of
Indian law” was not used by the legislature in either Section
34(2)(b)(ii) or Section 48(2)(b). The pre-amended Section
34(2)(b)(ii) and its Explanation read:
*****
44. By the 2015 Amendment, in place of the old Explanation to
Section 34(2)(b)(ii), Explanations 1 and 2 were added to remove
any doubt as to when an arbitral award is in conflict with the
public policy of India.
45. At this stage, it would be pertinent to note that we are
dealing with a case where the application under Section 34 ofSignature Not Verified
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the 1996 Act was filed after the 2015 Amendment, therefore the
newly substituted/added Explanations would apply
[SsangyongEngg. & Construction Co. Ltd. v. NHAI, (2019) 15
SCC 131].
46. The 2015 Amendment adds two Explanations to each of the
two sections, namely, Section 34(2)(b)(ii) and Section 48(2)(b),
in place of the earlier Explanation. The significance of the newly
inserted Explanation 1 in both the sections is two-fold. First, it
does away with the use of words : (a) “without prejudice to the
generality of sub-clause (ii)” in the opening part of the pre-
amended Explanation to Section 34(2)(b)(ii); and (b) “without
prejudice to the generality of clause (b) of this section” in the
opening part of the pre-amended Explanation to Section
48(2)(b); secondly, it limits the expanse of public policy of India
to the three specified categories by using the words “only if”.
Whereas, Explanation 2 lays down the standard for adjudging
whether there is a contravention with the fundamental policy of
Indian law by providing that a review on merits of the dispute
shall not be done. This limits the scope of the enquiry on an
application under either Section 34(2)(b)(ii) or Section 48(2)(b)
of the 1996 Act.
47. The 2015 Amendment by inserting sub-section (2-A) in
Section 34, carves out an additional ground for annulment of an
arbitral award arising out of arbitrations other than international
commercial arbitrations. Sub-section (2-A) provides that the
Court may also set aside an award if that is vitiated by patent
illegality appearing on the face of the award. This power of the
Court is, however, circumscribed by the proviso, which states
that an award shall not be set aside merely on the ground of an
erroneous application of the law or by reappreciation of
evidence.
48. Explanation 1 to Section 34(2)(b)(ii), specifies that an
arbitral 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.
49. In the instant case, there is no allegation that the making of
the award was induced or affected by fraud or corruption, or was
in violation of Section 75 or Section 81. Therefore, we shall
confine our exercise in assessing as to whether the arbitral award
is in contravention with the fundamental policy of Indian law,
and/or whether it conflicts with the most basic notions of
morality or justice. Additionally, in the light of the provisions of
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sub-section (2-A) of Section 34, we shall examine whether there
is any patent illegality on the face of the award.
50. Before undertaking the aforesaid exercise, it would be
apposite to consider as to how the expressions:
(a) “in contravention with the fundamental policy of Indian
law”;
(b) “in conflict with the most basic notions of morality or
justice”; and
(c) “patent illegality” have been construed.
In contravention with the fundamental policy of Indian law
51. As discussed above, till the 2015 Amendment the expression
“in contravention with the fundamental policy of Indian law”
was not found in the 1996 Act. Yet, in Renusagar Power Co.
Ltd. v. General Electric Co., 1994 Supp (1) SCC 644, in the
context of enforcement of a foreign award, while construing the
phrase “contrary to the public policy”, this Court held that for a
foreign award to be contrary to public policy mere contravention
of law would not be enough rather it should be contrary to:
(a) the fundamental policy of Indian law; and/or
(b) the interest of India; and/or
(c) justice or morality.
*****
55. The legal position which emerges from the aforesaid
discussion is that after “the 2015 Amendments” in Section
34(2)(b)(ii) and Section 48(2)(b) of the 1996 Act, the phrase “in
conflict with the public policy of India” must be accorded a
restricted meaning in terms of Explanation 1. The expression “in
contravention with the fundamental policy of Indian law” by use
of the word “fundamental” before the phrase “policy of Indian
law” makes the expression narrower in its application than the
phrase “in contravention with the policy of Indian law”, which
means mere contravention of law is not enough to make an
award vulnerable. To bring the contravention within the fold of
fundamental policy of Indian law, the award must contravene all
or any of such fundamental principles that provide a basis for
administration of justice and enforcement of law in this country.
56. Without intending to exhaustively enumerate instances of
such contravention, by way of illustration, it could be said that:
(a) violation of the principles of natural justice;
(b) disregarding orders of superior courts in India or the binding
effect of the judgment of a superior court; and
(c) violating law of India linked to public good or public
interest, are considered contravention of the fundamental policy
of Indian law.
However, while assessing whether there has been a
contravention of the fundamental policy of Indian law, the
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extent of judicial scrutiny must not exceed the limit as set out
in Explanation 2 to Section 34(2)(b)(ii).
*****
Patent illegality
65. Sub-section (2-A) of Section 34 of the 1996 Act, which was
inserted by the 2015 Amendment, provides that an arbitral
award not arising out of international commercial arbitrations,
may also be set aside by the Court, if the Court finds that the
award is visited by patent illegality appearing on the face of the
award. The proviso to sub-section (2-A) states that an award
shall not be set aside merely on the ground of an erroneous
application of the law or by reappreciation of evidence.
66. In ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705, while
dealing with the phrase “public policy of India” as used in
Section 34, this Court took the view that the concept of public
policy connotes some matter which concerns public good and
public interest. If the award, on the face of it, patently violates
statutory provisions, it cannot be said to be in public interest.
Thus, an award could also be set aside if it is patently illegal. It
was, however, clarified that 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 public policy.
67. In Associate Builders v. DDA, (2015) 3 SCC 49, this Court
held that an award would be patently illegal, if it is contrary to:
(a) substantive provisions of law of India;
(b) provisions of the 1996 Act; and
(c) terms of the contract [See also three-Judge Bench decision of
this Court in State of Chhattisgarh v. SAL Udyog (P) Ltd.,
(2022) 2 SCC 275].
The Court clarified that if an award is contrary to the substantive
provisions of law of India, in effect, it is in contravention of
Section 28(1)(a) of the 1996 Act. Similarly, violating terms of
the contract, in effect, is in contravention of Section 28(3) of the
1996 Act.
68. In SsangyongEngg. & Construction Co. Ltd. v. NHAI,
(2019) 15 SCC 131 this Court specifically dealt with the 2015
Amendment which inserted sub-section (2-A) in Section 34 of
the 1996 Act. It was held that “patent illegality appearing on the
face of the award” refers to such illegality as goes to the root of
matter, but which does not amount to mere erroneous
application of law. It was also clarified that what is not
subsumed within “the fundamental policy of Indian law”,
namely, the contravention of a statute not linked to “public
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 [See SsangyongEngg. & Construction Co.
Ltd. v. NHAI, (2019) 15 SCC 131]. Further, it was observed,
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reappreciation of evidence is not permissible under this category
of challenge to an arbitral award [See SsangyongEngg. &
Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131].
Perversity as a ground of challenge
69. Perversity as a ground for setting aside an arbitral award was
recognised inONGC Ltd. v. Western Geco International Ltd.,
(2014) 9 SCC 263. Therein it was observed that an arbitral
decision must not be perverse or so irrational that no reasonable
person would have arrived at the same. It was observed that if an
award is perverse, it would be against the public policy of India.
70. In Associate Builders v. DDA, (2015) 3 SCC 49 certain tests
were laid down to determine whether a decision of an Arbitral
Tribunal could be considered perverse. In this context, it was
observed that where:
(i) a finding is based on no evidence; or
(ii) an Arbitral Tribunal takes into account something irrelevant
to the decision which it arrives at; or
(iii) ignores vital evidence in arriving at its decision, such
decision would necessarily be perverse.
However, by way of a note of caution, it was observed that when
a court applies these tests it does not act as a court of appeal and,
consequently, errors of fact cannot be corrected. Though, 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. It was also observed that
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 that score.
71. In SsangyongEngg. & Construction Co. Ltd. v. NHAI,
(2019) 15 SCC 131, which dealt with the legal position post the
2015 Amendment in Section 34 of the 1996 Act, it was observed
that a decision which is perverse, 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. It was pointed out that an award based on no
evidence, or which ignores vital evidence, would be perverse
and thus patently illegal. It was also observed that 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 [See SsangyongEngg. & Construction Co.
Ltd. v. NHAI, (2019) 15 SCC 131].
72. The tests laid down in Associate Builders v. DDA, (2015) 3
SCC 49 to determine perversity were followed
in SsangyongEngg. & Construction Co. Ltd. v. NHAI, (2019)
15 SCC 131 and later approved by a three-Judge Bench of this
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Court in Patel Engg. Ltd. v. North Eastern Electric Power
Corpn. Ltd., (2020) 7 SCC 167.
73. In a recent three-Judge Bench decision of this Court in
DMRC Ltd. v. Delhi Airport Metro Express (P) Ltd., (2024) 6
SCC 357, the ground of patent illegality/perversity was
delineated in the following terms: (SCC p. 376, para 39)
“39. In essence, the ground of patent illegality is available
for setting aside a domestic award, if the decision of the
arbitrator is found to be perverse, or so irrational that no
reasonable person would have arrived at it; or the
construction of the contract is such that no fair or
reasonable person would take; or, that the view of the
arbitrator is not even a possible view. 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 under the head of “patent illegality”.
An award without reasons would suffer from patent
illegality. The arbitrator commits a patent illegality by
deciding a matter not within its jurisdiction or violating a
fundamental principle of natural justice.”
Scope of interference with an arbitral award
74. The aforesaid judicial precedents make it clear that while
exercising power under Section 34 of the 1996 Act the Court
does not sit in appeal over the arbitral award. Interference with
an arbitral award is only on limited grounds as set out in Section
34 of the 1996 Act. A possible view by the arbitrator on facts is
to be respected as the arbitrator is the ultimate master of the
quantity and quality of evidence to be relied upon. It is only
when an arbitral award could be categorised as perverse, that on
an error of fact an arbitral award may be set aside. Further, a
mere erroneous application of the law or wrong appreciation of
evidence by itself is not a ground to set aside an award as is
clear from the provisions of sub-section (2-A) of Section 34 of
the 1996 Act.
75. In Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd.,
(2019) 20 SCC 1, paras 27-43, a three-Judge Bench of this
Court held that courts need to be cognizant of the fact that
arbitral awards are not to be interfered with in a casual and
cavalier manner, unless the court concludes that the perversity of
the award goes to the root of the matter and there is no
possibility of an alternative interpretation that may sustain the
arbitral award. It was observed that jurisdiction under Section 34
cannot be equated with the normal appellate jurisdiction. Rather,
the approach ought to be to respect the finality of the arbitral
award as well as party’s autonomy to get their dispute
adjudicated by an alternative forum as provided under the law.
*****
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Scope of interference with the interpretation/construction of a
contract accorded in an arbitral award
84. An Arbitral Tribunal must decide in accordance with the
terms of the contract. In a case where an Arbitral Tribunal
passes an award against the terms of the contract, the award
would be patently illegal. However, an Arbitral Tribunal has
jurisdiction to interpret a contract having regard to terms and
conditions of the contract, conduct of the parties including
correspondences exchanged, circumstances of the case and
pleadings of the parties. If the conclusion of the arbitrator is
based on a possible view of the matter, the Court should not
interfere [See: SAIL v. Gupta Brother Steel Tubes Ltd., (2009)
10 SCC 63; Pure Helium India (P) Ltd. v. ONGC, (2003) 8
SCC 593; McDermott International Inc. v. Burn Standard Co.
Ltd., (2006) 11 SCC 181; MMTC Ltd. v. Vedanta Ltd., (2019)
4 SCC 163]. But where, on a full reading of the contract, the
view of the Arbitral Tribunal on the terms of a contract is not a
possible view, the award would be considered perverse and as
such amenable to interference [South East Asia Marine Engg.
& Constructions Ltd. v. Oil India Ltd., (2020) 5 SCC 164].
Whether unexpressed term can be read into a contract as an
implied condition
85. Ordinarily, terms of the contract are to be understood in the
way the parties wanted and intended them to be. In agreements
of arbitration, where party autonomy is the grund norm, how the
parties worked out the agreement, is one of the indicators to
decipher the intention, apart from the plain or grammatical
meaning of the expressions used [BALCO v. Kaiser Aluminium
Technical Services Inc., (2016) 4 SCC 126].
86. However, reading an unexpressed term in an agreement
would be justified on the basis that such a term was always and
obviously intended by the parties thereto. An unexpressed term
can be implied if, and only if, the court finds that the parties
must have intended that term to form part of their contract. It is
not enough for the court to find that such a term would have
been adopted by the parties as reasonable men if it had been
suggested to them. Rather, it must have been a term that went
without saying, a term necessary to give business efficacy to the
contract, a term which, although tacit, forms part of the contract
[Adani Power (Mundra) Ltd. v. Gujarat ERC, (2019) 19 SCC
9].
87. But before an implied condition, not expressly found in the
contract, is read into a contract, by invoking the business
efficacy doctrine, it must satisfy the following five conditions:
(a) it must be reasonable and equitable;
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(b) it must be necessary to give business efficacy to the contract,
that is, a term will not be implied if the contract is effective
without it;
(c) it must be obvious that “it goes without saying”;
(d) it must be capable of clear expression;
(e) it must not contradict any terms of the contract [Nabha
Power Ltd. v. Punjab SPCL, (2018) 11 SCC 508, followed
in Adani Power case, (2019) 19 SCC 9].
(emphasis supplied)
60. In the present case, learned counsel for the Petitioner has
expressly confined the challenge to Claim Nos. 2, 3, 13 and 16. A
careful reading of the pleadings, written submissions and oral
arguments advanced before this Court demonstrates that the challenge
to all four claims ultimately rests upon a single foundational
grievance, namely, that the learned Tribunal erred in declining to rely
upon the Rejected Letter addressed by the Respondent to DFCCIL and
that such exclusion materially affected the adjudication of the
aforesaid claims.
61. The first aspect which this Court deems apposite to note is that
this is not a case where the learned Tribunal overlooked, ignored or
failed to notice the said communication. On the contrary, the
Impugned Award contains a separate and detailed discussion
regarding the provenance, admissibility and permissible use of the
said document. The issue was specifically raised before the learned
Tribunal and was adjudicated upon after considering the rival
submissions advanced by the parties.
62. The Impugned Award records that the learned Tribunal
examined the competing explanations regarding the manner in which
the Petitioner came into possession of the document and also
considered the implications of Section 42A of the A&C Act.
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63. The learned Tribunal, after an exhaustive discussion and
analysis, ultimately concluded that the communication formed part of
arbitral proceedings between DFCCIL and the Respondent and that
the circumstances indicated that the document had come into the
hands of the Petitioner through access obtained in relation to those
proceedings. The learned Tribunal therefore held that admitting and
relying upon the said communication would be inconsistent with the
confidentiality obligations governing the arbitral process under
Section 42A of the A&C Act.
64. The relevant findings and discussion of the learned Tribunal,
with regard to the aforesaid discussion, may be reproduced for the
sake of clarity. The same reads as follows:
“16.7. In the light of the said statutory provision, the Tribunal has
no hesitation in holding that the letter dated 07.06.2017 which was
produced by the Respondent in arbitration with the Employer
cannot be introduced in these proceedings in breach of
confidentiality of the proceedings in that arbitration.
16.8. Now comes the question as to whether the Claimant got the
copy of letter dated 7.6.2017 from officials of the Respondent and
not from its Counsel and, if so, whether the provisions of Section
42-A of the 1996 Act are not attracted.
16.9. It needs to be appreciated that while denying that the letter
was made available by the Counsel, the Claimant came up with
specific plea that it was provided to it by the employees of the
Respondent in one of the meetings. However, neither in pleadings
nor in evidence there was reference as to when that meeting was
held and what was the context. In the absence of these details the
bald plea of the Claimant cannot be accepted. Even otherwise it is a
matter of fact that the Sub-Contract was terminated on 28.01.2017.
The Jetter in question was written on 07.06.2017. There is nothing
on record to show that after 28.4.2017, specifically after 7.6.2017
any meeting between the Claimant and the Respondent was held.
Therefore, the Tribunal is not convinced that the letter was
provided to the Claimant by the employees of the Respondent.
16.10. The plea of the Respondent, on the other hand, viz. that the
Claimant got access to the letter through the office of the Counself
highly probable. Isis a matter of fact that in the dispute between the
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the same Counsel who is representing the Claimant in these
proceedings, had appeared before the Hon’ble High Court of Delhi
for the Employer. There is no denial that the same Counsel was
representing the Employer in the Arbitration proceedings. In that
capacity he/his office must have had access to the letter which, in
all likelihood, was made available to the Claimant. This being so,
breach of confidentiality occurred Admitting the letter in evidence
in such a situation will not be legal and proper.
16.11. While holding so, the Tribunal is conscious of the fact that
Section 42A of the 1996 Act takes in its fold the arbitrator, the
arbitration institute and the parties. This, however, does not mean
that the Counsel and their office are immune. There is no
gainsaying that the lawyer is an agent of the party and hence what a
party is prohibited from, cannot be done through the Counsel.
Therefore, even if the Counsel are not specifically mentioned in
Section 42A of the 1996 Act, they being agents of the parties are
equally bound to follow the mandate of law in the same manner as
the parties are.
16.12. As a consequence of the foregoing discussion, the objection
as to admission of the letter dated 07.06.2017 is sustained.”
65. The controversy before this Court therefore narrows down to a
singular question as to whether the learned Tribunal committed any
jurisdictional, legal or patent error in declining to rely upon the
Rejected Letter.
66. The Petitioner has contended that Section 42A merely imposes
a duty of confidentiality and does not prescribe exclusion of evidence
as a consequence of breach. This Court is unable to accept the
aforesaid submission.
67. Before adverting to the discussion on this aspect, this Court
deems it apposite to take note of Section 42A of the A&C Act, which
reads as follows:
“42A. Confidentiality of information. – Notwithstanding anything
contained by any other law for the time being in force, the
arbitrator, the arbitral institution and the parties to the arbitration
agreement shall maintain confidentiality of all arbitral proceedings
except award where its disclosure is necessary for the purpose of
implementation and enforcement of award.”
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68. On a bare perusal of Section 42A of the A&C Act, it may be
noted that it begins with a non-obstante clause and provides that
“notwithstanding anything contained in any other law for the time
being in force,……”. Therefore, the legislative object underlying the
provision is manifest. Confidentiality constitutes one of the
fundamental features of the arbitral process and the provision seeks to
preserve the integrity of that process by ensuring that materials
forming part of arbitral proceedings are not freely disseminated or
utilised outside the proceedings for which they were produced.
69. In the considered opinion of this Court, the submission
advanced on behalf of the Petitioner proceeds on an unduly narrow
construction of Section 42A of the A&C Act. It is true that the
provision does not expressly employ the expression “inadmissibility”.
However, the provision cannot be interpreted in a manner that renders
the statutory protection of confidentiality illusory. The interpretation
of a statutory provision must further the object sought to be achieved
by the legislature and not defeat it.
70. Section 42A of the A&C Act was introduced to statutorily
recognise and preserve one of the defining attributes of arbitration,
namely, confidentiality. The legislative intent is to ensure that
pleadings, documents, evidence and materials forming part of arbitral
proceedings are not freely disseminated or utilised outside the arbitral
process except to the limited extent contemplated by law. If the
interpretation canvassed by the Petitioner were to be accepted, a party
would be free to procure documents originating from a separate
arbitration and deploy them in collateral proceedings on the ground
that Section 42A of the A&C Act merely creates an obligation but
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carries no practical consequence. Such a construction would
substantially erode the protection intended by Parliament and reduce
the statutory mandate to a mere formality devoid of effective content.
71. The question before the learned Tribunal was therefore not
whether Section 42A of the A&C Act expressly creates a rule of
inadmissibility in every case. The real issue was whether a document
found to have originated from confidential arbitral proceedings and
procured in circumstances inconsistent with the confidentiality
obligation recognised under Section 42A of the A&C Act could
legitimately be relied upon in a separate arbitration.
72. In the considered view of this Court, the answer returned by the
learned Tribunal accords with both the language and the underlying
purpose of the provision. The learned Tribunal was justified in
holding that permitting reliance upon such material would undermine
the very confidentiality regime which Section 42A of the A&C Act
seeks to protect. To hold otherwise would substantially undermine the
confidentiality obligation recognised under Section 42A of the A&C
Act and render the statutory protection susceptible to circumvention.
73. Even assuming that Section 42A of the A&C Act does not, by
itself, create a rigid rule of inadmissibility, the learned Tribunal was
not divested of its authority to regulate the evidentiary record before
it. The Tribunal was entitled to examine the provenance of the
document, the circumstances in which it came into the possession of
the Petitioner and the implications of permitting reliance upon
material originating from a separate confidential arbitral proceeding.
The decision to decline reliance on the document was therefore an
exercise of evidentiary discretion and cannot, in the facts of the
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present case, be characterised as a jurisdictional error, patent illegality
or perversity.
74. This Court also finds no merit in the submission that the
communication dated 07.06.2017 was required to be considered
merely because it was allegedly material to the Petitioner’s case.
Relevance of a document and its permissible use are distinct
considerations. A party cannot claim an unrestricted right to rely upon
a document solely on the ground that it may support its case,
irrespective of the circumstances in which such document was
obtained or the legal obligations governing its disclosure. The learned
Tribunal was therefore justified in first examining the permissibility of
reliance upon the document before considering its evidentiary value.
75. In this regard, learned counsel for the Petitioner has also sought
to derive support from the decision of the Bombay High Court in
Global Aviation Services Private Limited (supra), particularly
Paragraph Nos. 115, 118 and 121 thereof, to contend that where a
statute does not prescribe any consequence for breach of an obligation,
a Court or Tribunal ought not to create one by judicial interpretation.
There can be no quarrel with the said proposition. The aforesaid
paragraphs, being Paragraph Nos. 115, 118 and 121, are reproduced
herein below for ready reference:
“115. The said provision also is silent on the issue i.e. if there are
office objections raised by the office of this Court and if the
petitioner is required to make any changes in the petition in the
format or in the contents of the petition for the purposes of removal
of such objections raised by the office, whether the petitioner is
required to issue a fresh notice along with the papers with the
corrections in the petition or not. Section 34(6) provides that such
petition has to be disposed of within one year from the date on
which the notice referred to in sub section 5 of section 34 is served
upon the other party. If after giving the notice on the first day itself
upon the receipt of the signed copy of the award from the arbitral
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tribunal, if the petitioner issues such notice as referred to in sub
section 5 of section 34 and does not file the petition for the next
three months or even within 30 days after expiry of three months
and if filed within the time prescribed under section 34(3), the
petition remains in the office objections for another six months, an
application filed under section 34(1) obviously cannot be disposed
of within a period of one year from the date on which a notice
referred to in sub section 5 of section 34 is served upon the other
party. No consequence is provided in section 34(6) also if the
arbitration petition is not disposed of by the Court within one year
from the date of service of notice under section 34(5) of the
Amendment Act. For this reason also, I am of the view that the
provisions of section 34(5) and 34(6) cannot be construed as
mandatory but has to be construed as directory. In my view, the
requirement of the notice under section 34(5) of the Amendment
Act is procedural in nature and not a substantive provision. The
compliance of such procedural provision without providing any
consequences in case of defiance thereof thus cannot be construed
as mandatory and has to be construed as directory. Even if a notice
is not given prior to the date of filing of the petition, the right of
challenging an award vested in section 34 of the Arbitration &
Conciliation Act, 1996 cannot be taken away.
***
118. In my view, Mr. Mehta, learned senior counsel and Mr. Jain,
learned counsel have rightly contended that issuance of such notice
under section 34(5) is a requirement however, not mandatory. The
discretionary power is given to the Courts to look into the facts in
each case and decide if the same has to be made mandatory or not.
If the provision of section 34(5) is construed as mandatory, it
would take away the discretionary powers from the Court. Any
strict interpretation of such procedural provision will cause
inconvenience to the parties and would result in lengthening the
procedure and defeating the entire purpose of the Act itself. High
Court (Original Side) Rules already provides sufficient protection
to the other party for issuance of a notice before the matter is heard
by the Court with a view to obviate any delay in the matter.
***
121. In my view since there is no consequence provided in section
34(5) as well as section 34(6) for non-compliance of the
requirement mentioned therein, the Court has to balance the
situation and exercise its discretionary power to permit the
petitioner to issue notice along with papers and proceedings upon
the other party even after the petition is filed to avoid any delay in
disposal of such application. In my view section 34(5) cannot be
equated with section 80 of the Code of Civil Procedure, 1908. In
view of the fact that now by virtue of the amendment to section 36,
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award under section 34, there is no automatic stay, the petitioner
who challenges the arbitral award by filing an application under
section 34 would not wait and would not cause any delay by not
issuing notice upon the other party to obviate any situation of
execution of award under the provisions of the Code of Civil
Procedure, 1908. For this reason also, I am of the view that the
requirement under section 34(5) has to be construed as directory
and nor mandatory.”
76. However, the reliance placed upon the aforesaid decision is
misplaced. The controversy before the Bombay High Court concerned
the interpretation of Section 34(5) of the A&C Act and whether the
requirement of prior notice before institution of a petition under
Section 34 was mandatory or merely directory. The Court was
therefore examining whether non-compliance with a procedural
statutory requirement carried the consequence of invalidating the
proceedings, despite the statute itself being silent in that regard.
77. The issue before the learned Tribunal in the present case stood
on an entirely different footing. The Tribunal was not concerned with
imposing any statutory consequence for breach of Section 42A of the
A&C Act, nor did it proceed on the basis that Section 42A itself
creates a rule rendering every document obtained in breach of
confidentiality inadmissible in evidence. The learned Tribunal merely
examined the circumstances in which the document dated 07.06.2017
came into the possession of the Petitioner and, having concluded that
its disclosure would constitute a breach of confidentiality arising from
separate arbitral proceedings, declined to place reliance upon it.
78. The decision, therefore, was rooted in the Tribunal’s assessment
of the provenance and evidentiary propriety of the document and not
in the creation of a statutory disqualification not contemplated by
Section 42A of the A&C Act.
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79. Equally unpersuasive is the reliance placed upon Interplay
Between Arbitration Agreements under Arbitration Act, 1996 and
Stamp Act, 1899 (supra). The observations of the said Judgment,
relied upon by the Petitioner, were rendered in the context of
determining the legal effect of a non-obstante clause and the extent to
which one statutory regime excludes or overrides another. The
controversy therein concerned the interpretive operation of competing
statutory provisions and not the admissibility of evidence allegedly
sourced in breach of arbitral confidentiality. The paragraphs relied
upon, being Paragraph Nos. 84 to 86, are reproduced herein under for
ready reference:
“84. Although a non obstante clause must be allowed to operate
with full vigour, its effect is limited to the extent intended by the
legislature. In Icici Bank Ltd. v. Sidco Leathers Ltd., (2006) 10
SCC 452 a two-Judge Bench of this Court held that a non obstante
clause must be interpreted by confining it to the legislative policy.
Thus, even if a non obstante clause has wide amplitude, the extent
of its impact has to be measured in view of the legislative intention
and legislative policy. [JIK Industries Ltd.v. Amarlal V.
Jumani, (2012) 3 SCC 255] In view of this settled legal position,
the issue that arises for our consideration is the scope of the non
obstante clause contained in Section 5 of the Arbitration Act.
85. In Morgan Securities & Credit (P) Ltd. v. Modi Rubber
Ltd., (2006) 12 SCC 642, the issue before the two-Judge Bench
was whether the provisions of the Arbitration Act would prevail
over the provisions of the Sick Industrial Companies (Special
Provisions) Act, 1985 (SICA). While noting the non obstante
clause contained in Section 5 of the Arbitration Act, this Court held
that the non obstante clause has “limited application aiming at the
extent of judicial intervention”. It was held that the Arbitration Act
would not prevail over SICA since the latter enactment seeks to
“achieve a higher goal”. In other words, the scope of the non
obstante clause is limited to prohibiting the intervention of judicial
authorities, unless it has been expressly provided for under Part I of
the Arbitration Act.
86. Similar to Article 5 of the Model Law, Section 5 uses the
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matters expressly governed by Part I of the Arbitration Act. The
matters governed by Part I inter alia include:
86.1. Section 8 which mandates judicial authorities to refer parties
to arbitration when prima facie there is a valid arbitration
agreement;
86.2. Section 9 which allows Courts to issue interim measures on
an application made by a party to an arbitration agreement;
86.3. Section 11 which empowers the Supreme Court or the High
Courts to appoint arbitrators on an application made by parties to
an arbitration agreement;
86.4. Section 27 which allows the Arbitral Tribunal to request the
Court for assistance in taking evidence; and
86.5. Section 34 which empowers the Court to set aside an arbitral
award on the basis of the limited grounds mentioned therein.”
80. Far from assisting the Petitioner, the observations in Interplay
Between Arbitration Agreements under Arbitration Act, 1996 and
Stamp Act, 1899 (supra) reinforce the principle that a non-obstante
clause must be construed in a manner that advances the legislative
purpose underlying the provision in which it occurs. As already noted
hereinabove, the legislative purpose underlying Section 42A of the
A&C Act is preservation of arbitral confidentiality. The interpretation
canvassed by the Petitioner would substantially diminish the efficacy
of that protection. The reliance placed upon the aforesaid Judgment is
therefore misconceived.
81. Further, equally unpersuasive is the submission founded upon
the premise that since the present Arbitral proceeding was governed
by the ICC Rules, under which the rule of confidentiality is
discretionary, the strict rules of confidentiality as envisaged under
Section 42A of the A&C Act shall be inapplicable.
82. This Court is of the considered view that even though the
arbitration may have been conducted under the ICC Rules, however
the seat of arbitration being in India, the arbitral proceedings remained
subject to the mandatory provisions of the A&C Act. The rules of
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institutionalised arbitral proceedings derive their efficacy from party
autonomy, but operate subject to the governing law.
83. A statutory mandate enacted by Parliament therefore cannot be
diluted, displaced or overridden by institutional rules framed by an
arbitral institution. Consequently, the learned Tribunal was fully
justified in treating Section 42A of the A&C Act as controlling and
binding irrespective of any interpretation sought to be placed upon the
ICC Rules.
84. There is yet another reason why the Petitioner cannot succeed.
85. A substantial part of the challenge now advanced before this
Court proceeds upon factual assertions regarding the manner in which
the document allegedly entered the public domain and the legal
consequences flowing therefrom. The Respondent has specifically
contended that several of these contentions were never urged before
the learned Tribunal.
86. A Section 34 proceeding cannot be converted into a forum for
reconstructing the arbitral case on an altogether different factual
foundation. A party which had the opportunity to place a contention
before the Tribunal but failed to do so cannot be permitted to invite a
Court exercising jurisdiction under Section 34 to set aside an award on
the basis of a case never presented before the arbitral forum.
87. Now adverting to the next submission advanced on behalf of the
Petitioner that the Rejected Letter had already entered the public
domain because it formed part of proceedings before this Court. In the
considered opinion, this submission is equally liable to be rejected.
88. Merely because a document forms part of judicial proceedings
does not automatically result in the document losing every attribute of
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confidentiality. Whether a document can be said to have entered the
public domain is a question dependent upon the circumstances in
which access thereto is obtained and the legal regime governing such
access. The learned Tribunal was not presented with any material
conclusively establishing that the confidentiality attaching to the
document had ceased to exist. On the contrary, the Tribunal returned a
factual finding that the explanation furnished by the Petitioner
regarding the source of the document was not worthy of acceptance
and accepted the Respondent’s version regarding its provenance.
89. Such findings are findings of fact based upon appreciation of
the material before the Tribunal. No perversity has been demonstrated
in the said findings. This Court therefore finds no reason to interfere
with the same.
90. Ultimately, what emerges from the record is that the learned
Tribunal was alive to the controversy surrounding the Rejected Letter,
considered the rival submissions advanced by the parties, examined
the circumstances in which the document came into the possession of
the Petitioner, analysed the effect of Section 42A of the A&C Act and
thereafter arrived at a reasoned conclusion that the document ought
not to be relied upon. The decision was thus neither rendered without
consideration of the issue nor founded upon an omission to notice
relevant material.
91. It is also significant that the Petitioner has not independently
assailed the merits of the findings returned by the learned Tribunal in
relation to Claim Nos. 2, 3, 13 and 16. The challenge is founded
entirely upon the exclusion of the communication dated 07.06.2017.
Consequently, once this Court finds no infirmity in the learned
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Tribunal’s approach towards the said document, the very foundation
of the challenge to the rejection of the aforesaid claims necessarily
falls. In the absence of any independent challenge to the merits of the
findings recorded on the said claims, this Court is not called upon to
examine the correctness thereof.
92. Having considered the scheme, object and purpose of Section
42A of the A&C Act, this Court is of the considered opinion that the
interpretation adopted by the learned Tribunal accords with the
legislative intent underlying the provision. The challenge mounted by
the Petitioner proceeds upon an interpretation which, if accepted,
would substantially dilute the statutory protection of confidentiality
recognised by Parliament. The Court therefore finds no error in the
legal approach adopted by the learned Tribunal while declining to rely
upon the said communication.
93. This Court is also unable to discern any conflict with the public
policy of India or any contravention of the fundamental policy of
Indian law within the meaning of Section 34(2)(b)(ii) of the A&C Act.
The challenge mounted by the Petitioner essentially invites this Court
to undertake a re-examination of the correctness of the learned
Tribunal’s evidentiary determination. Such an exercise would fall
outside the permissible confines of judicial review under Section 34 of
the A&C Act.
94. Likewise, no patent illegality appearing on the face of the
Award within the meaning of Section 34(2A) of the A&C Act has
been demonstrated. The Impugned Award neither disregards any
binding statutory provision nor adopts an interpretation contrary to the
scheme, object or purpose of the A&C Act. The challenge, in
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substance, seeks reconsideration of a reasoned determination rendered
by the learned Tribunal on the admissibility and use of material arising
from separate arbitral proceedings, which falls beyond the permissible
scope of interference under Section 34 of the A&C Act.
95. In view of the aforesaid discussion, this Court is of the
considered opinion that the Petitioner has failed to establish any
ground falling within the limited parameters of interference available
under Section 34 of the A&C Act. The Impugned Award reflects due
consideration of the pleadings, evidence and submissions advanced
before the learned Tribunal and does not suffer from any infirmity
warranting interference by this Court.
DECISION:
96. Accordingly, the present Petition is dismissed, and
consequently, the Impugned Award shall remain undisturbed.
97. The present Petition, along with pending Application(s), if any,
stands disposed of in aforesaid terms.
98. There shall be no Order as to the costs.
HARISH VAIDYANATHAN SHANKAR, J.
JULY 06, 2026|DJ
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