M/S ALPINE HOUSING DEVELOPMENT CORPORATION PVT. LTD. versus ASHOK S DHARIWAL AND OTHERS on 19 January 2023

[2023] 1 S.C.R. 991

M/S ALPINE HOUSING DEVELOPMENT CORPORATIONPVT. LTD.

v.

ASHOK S DHARIWAL AND OTHERS

(Civil Appeal No. 73 of 2023)

JANUARY 19, 2023

[M. R. SHAH AND C. T. RAVIKUMAR, JJ.]

Arbitration & Conciliation Act, 1996 – s.34(2)(a) – Prior andpost 2019 Amendment – Whether the applicant can be permitted toadduce evidence to support the ground relating to Public Policy inan application filed u/s. 34 of the Arbitration & Conciliation Act,1996 – Held: In the instant case, the arbitration proceedingscommenced and even the award was declared prior to the amendmentof s.34(2)(a) by Act 33/2019, so s.34(2)(a) pre-amendment shall beapplicable – In s.34(2)(a) pre-amendment, an arbitral award couldbe set aside by the Court if the party making application “furnishesproof” – An application for setting aside the arbitral award will notordinarily require anything beyond the record that was before thearbitrator, however, if there are matters not containing such recordsand the relevant determination to the issues arising u/s. 34(2)(a),they may be brought to the notice of the Court by way of affidavitsfiled by both the parties’ the cross-examination of the personsswearing in to the affidavits should not be allowed unless absolutelynecessary as the truth will emerge on the reading of the affidavitsfiled by both the parties – Respondent permitted to file affidavits/additional evidence in the proceedings u/s.34 of the ArbitrationAct.

Arbitration & Conciliation Act, 1996 : s. 34(2)(b) – When anaward passed could be set aside on the ground of its being in conflictwith the “Public Policy of India” – Scope – The ground that arbitralaward is in conflict with the Public Policy of India, the said groundcould be available only after passing of the award – Therefore, thesame can be permitted to be agitated in an application u/s 34 andthe person shall not have to wait till the execution is filed – Thedefence that the arbitral award is in conflict with the Public Policyof India itself can be a ground to set aside the award in view ofsection 34(2)(b) of the Act.

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ADismissing the appeal, the Court

HELD : 1. The arbitration proceedings commenced andeven the award was declared prior to the amendment of Section34(2)(a) by Act 33/2019, Section 34(2)(a) pre-amendment shallbe applicable. Prior to the amendment of section 34(2)(a), anBarbitral award could be set aside by the Court if the party makingan application “furnishes proof” and the grounds set out insection 34(2)(a) and section 34(2)(b) are satisfied. However,subsequent to the amendment of section 34(2)(a), the words“furnishes proof” have been substituted by the words“establishes on the basis of the record of the arbitral tribunal”.CIn that view of the matter, it is held that in case of arbitrationproceedings commenced and concluded prior to the amendmentof section 34(2)(a) by Act 33/2019, pre-amendment of section34(2)(a) shall be applicable. [Para 6][1000-F-H]

2. The scope and ambit of section 34(2)(a) pre-amendmentDwould be that applications under sections 34 of the Act aresummary proceedings; an award can be set aside only on thegrounds set out in section 34(2)(a) and section 34(2) (b); speedyresolution of the arbitral disputes has been the reason forenactment of 1996 Act and continues to be a reason for addingEamendments to the said Act to strengthen the aforesaid object;therefore in the proceedings under section 34 of the ArbitrationAct, the issues are not required to be framed, otherwise if theissues are to be framed and oral evidence is taken in a summaryproceedings, the said object will be defeated; an application forsetting aside the arbitral award will not ordinarily require anythingFbeyond the record that was before the arbitrator, however, if thereare matters not containing such records and the relevantdetermination to the issues arising under section 34(2)(a), theymay be brought to the notice of the Court by way of affidavitsfiled by both the parties’ the cross-examination of the personsGswearing in to the affidavits should not be allowed unlessabsolutely necessary as the truth will emerge on the reading ofthe affidavits filed by both the parties. Therefore, in an exceptionalcase being made out and if it is brought to the court on the mattersnot containing the record of the arbitrator that certain things arerelevant to the determination of the issues arising under sectionH

34(2)(a), then the party who has assailed the award on the groundsset out in section 34(2)(a) can be permitted to file affidavit in theform of evidence. However, the same shall be allowed unlessabsolutely necessary. [Para 8][1005-H; 1006-A-E]

3. It is required to be noted that even for establishing thatthe arbitral award is in conflict with Public Policy of India, in agiven case, the evidence may have to be led and by leadingevidence, the person who is challenging the award on that groundcan establish and prove that the arbitral award is in conflict withPublic Policy of India and/or the subject matter of dispute is notcapable of settlement by arbitration under the law for the timebeing in force. However, at the same time, from the record beforethe arbitrator, if the same can be established and proved that thesubject matter of the dispute is not capable of settlement byarbitration under the law for the time being in force or the arbitralaward is in conflict with the Public Policy of India, in that case,the person may not be permitted to file the affidavit by way ofevidence/additional evidence. [Para 9][1006G-H; 1007-A-B]

4. It is required to be noted that so far as one of the groundsset out in section 34(2)(b), namely, that the arbitral award is inconflict with the Public Policy of India, the said ground could beavailable only after passing of the award. Therefore, the samecan be permitted to be agitated in an application under section34 of the Act and the person shall not have to wait till the executionis filed. The defence that the arbitral award is in conflict with thePublic Policy of India itself can be a ground to set aside the awardin view of section 34(2)(b) of the Act.[Para 10] [1007-C-D]

Fiza Developers and Inter-Trade Private Limited v.AMCI (India) Private Limited & Another, (2009) 17 SCC796 : [2009] 12 SCR 1; Canara Nidhi Limited v. M.Shashikala (2019) 9 SCC 462 : [2019] 15 SCR 637;Emkay Global Financial Services Limited v. Girdhar-Sondhi, (2018) 9 SCC 49 : [2018] 10 SCR 937referred to.

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A[2018] 10 SCR 937referred toPara 7(iii)

CIVIL APPELLATE JURISDICTION : Civil Appeal No.73 of

2023.

From the Judgment and Order dated 01.09.2021 of the High Courtof Judicature of Karnataka at Bangalore in W.P. No.50799 of 2019(GM/BCPC).

Krishnan Venugopal, Sr. Adv., Ms. Shobha Gupta, Ms. SanskritiGupta, Krishnan Agarwal, M. C. Dhingra, Advs. for the Appellant.

Balaji Srinivasan, Ms. Lakshmi Rao, Ms. Aakriti Priya, AbdulCSaleem, Advs. for the Respondents.

The Judgment of the Court was delivered by

M. R. SHAH, J.

1. Feeling aggrieved and dissatisfied with the impugned judgmentand order dated 1.9.2021 passed by the High Court of Karnataka atDBengaluru in Writ Petition No. 50799/2019, by which the High Court hasallowed the said writ petition and while quashing and setting aside theorder passed by the learned Additional City Civil and Sessions Judge,Bengaluru, has permitted the respondents – original writ petitioners toadduce evidence in an application under Section 34 of the Arbitration &EConciliation Act, 1996 (hereinafter referred to as the ‘Act’), the originalrespondent before the High Court and in whose favour the award hasbeen passed by the learned Arbitral Tribunal has preferred the presentappeal.

2. The facts leading to the present appeal in a nutshell are asFunder:

That against the award passed by the learned arbitrators dated12.03.1998, an application under Section 34 of the Act being ArbitrationCase No. 38/1998 has been filed by the respondents. That the respondentsfiled an interim application being IA No. 4 in section 34 application toGadduce additional evidence. At this stage, it is required to be noted thatas such the award passed by the learned arbitrators was an ex-parteaward and no evidence was led by the respondents herein, whosubsequently assailed the award by way of section 34 application. Theappellant herein filed objections to the said interim application seekingpermission to adduce evidence on the ground that the same was notH

maintainable in accordance with the provisions of the Arbitration Act,1996. The grounds on which the respondents submitted an application topermit them to adduce evidence shall be dealt with and consideredhereinafter.

2.1 The Court dealing with interim application being IA No. 4 insection 34 application rejected the said interim application and refusedto permit the respondents to adduce evidence by observing that if such apermission is granted, it would defeat the object and purpose of earlydisposal of arbitration proceedings and it would delay further hearing ofsection 34 application. For that purpose, reliance was placed on theprovisions of Section 34(2)(a) of the Act, as amended in the year 2019,by which expression “furnish proof” in section 34(2)(a) came to besubstituted with the expression “establish on the basis of record of arbitraltribunal”. Therefore, the Court dealing with section 34 application opinedthat the said amendment intended to limit the scope of judicial reviewunder Section 34 of the Act only in exceptional circumstances enumeratedunder Section 34(2)(a) of the Act on the basis of the record availableand even if the grounds urged relate to section 34(2)(b) of the Act, theapplicants cannot have a right to produce additional evidence. The orderpassed by the Court dealing with Section 34 application which rejectedthe interim application being IA No. 4 preferred by the respondentspermitting them to adduce additional evidence/evidence was the subjectmatter of writ petition before the High Court.

2.2 Before the High Court, it was conceded on behalf of theappellant herein – original respondent before the High Court, so recordedin paragraph 8 of the impugned judgment, that the provisions of Section34 (2)(a) of the Act, as it stood prior to Act 33 of 2019 would apply,namely, pre-amendment to section 34(2)(a) of the Act shall be applicable.That thereafter, by the impugned judgment and order, after following thedecision of this Court in the case of Fiza Developers and Inter-TradePrivate Limited v. AMCI (India) Private Limited & Another, reportedin (2009) 17 SCC 796, the High Court has allowed the said writ petitionand set aside the order passed by the court below and has allowed theapplication preferred by the respondents herein permitting them to adduceevidence in the proceedings under section 34 of the Act. The impugnedjudgment and order passed by the High Court permitting him respondentsto adduce evidence/additional evidence in the proceedings under Section34 of the Act is the subject matter of present appeal before this Court.

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A3. Shri Krishnan Venugopal, learned Senior Advocate hasappeared on behalf of the appellant and Shri Balaji Srinivasan, learnedAdvocate has appeared on behalf of the respondents – original writpetitioners.

3.1Shri Krishnan Venugopal, learned senior counsel appearingBon behalf of the appellant has vehemently submitted that in the facts andcircumstances of the case, the High Court has committed a very seriouserror in permitting the respondents to adduce evidence in an applicationunder section 34 of the Act. It is submitted that the impugned judgmentand order passed by the High Court permitting the respondents to adduceadditional evidence in an application under section 34 of the Act is againstCthe object and purpose of the amending section 34(2)(a), amended videAct No. 33/2019. It is submitted that if in an application under section 34of the Act, the applicant who is aggrieved by the award passed by thearbitral tribunal is permitted to adduce evidence, it would defeat theobject and purpose of amending section 34(2)(a) of the Act by whichDthe expression “furnishes proof” has been substituted with the expression“establish on the basis of record of the arbitral tribunal”. It is submittedthat the object and purpose of amending section 34(2)(a) of the Act is todecide and dispose of the arbitration proceedings at the earliest and toavoid delay.

E3.2 It is further submitted by Shri Krishnan Venugopal, learnedsenior counsel appearing on behalf of the appellant that though it wasconceded before the High Court by the counsel appearing on behalf ofthe appellant that section 34 of the Act prior to amendment amendingsection 34(2)(a) shall be applicable, the said concession is not binding asthe same would be against the law and any concession contrary to lawFshall not be binding. It is submitted that therefore according to him theprovisions of section 34(2)(a) post amendment shall be applicable bywhich in the proceedings under section 34 of the Act, the applicant is notrequired to furnish proof on the grounds set out in section 34 (2)(a) to setaside the award and the court dealing with section 34 application has toGdecide the same only on exceptional circumstances enumerated undersection 34(2)(a) of the Act on the basis of the record available. It issubmitted that therefore the applicants cannot have a right to produceadditional evidence/evidence.

3.3 It is further submitted that even otherwise and assuming thatHthe provisions applicable prior to amendment (Act 33 of 2019) are

applicable, in that case also, as the respondents – original applicantshave assailed the award on the grounds enumerated under section 34(2)(b) of the Act, the expression “furnish proof” in section 34(2)(a) cannotapply to section 34(2)(b). It is submitted that the award passed by thearbitral tribunal can be assailed either on the grounds enumerated undersection 34(2)(a) or under section 34(2)(b). It is submitted that the groundsenumerated under section 34(2)(a) and section 34(2)(b) are separategrounds/clauses. It is submitted that therefore “furnish proof” in section34(2)(a) of the Act cannot apply to section 34(2)(b) because if theParliament intended so, Section 34(2) would have applied the proofrequirement to all seven grounds, without any need for separate clauses(a) and (b). It is submitted that the effect of “the court finds that” insection 34(2)(b) is that the court can on its own decide based on thearbitral award that the dispute was not arbitrable or that award conflictswith public policy. It is submitted that therefore, the disjunctive “or”between clauses (a) and (b) of section 34(2) cannot be read as theconjunctive “and”.

3.4 It is further submitted that the ratio of this Court in the case ofFiza Developers(supra) was for framing of issues which is not requiredin section 34(2) proceedings. It is submitted that in the case of EmkayGlobal Financial Services Limited v. Girdhar Sondhi, reported in(2018) 9 SCC 49, this Court has explained the decision in the case ofFiza Developers (supra) and has expressly held that only section 34(2)(a) contemplates furnishing proof. It is submitted that the subsequentdecision of this Court in the case of Canara Nidhi Limited v. M.Shashikala, reported in (2019) 9 SCC 462 has approved theinterpretation of section 34(2)(a) in Emkay Global (supra).

3.5 It is further submitted that in the case of Gemini BayTranscription Private Limited v. Integrated Sales Service Limited,reported in (2022) 1 SCC 753, this Court has treated 2019 amendmentto section 34(2)(a) as clarificatory, while considering section 48(1) whichare broadly in pari materia with section 34(2)(a) and 34(2)(b) as theystood prior to the 2019 amendment. It is submitted that this Court in theaforesaid decision in paragraphs 39 & 40 held that grounds underunamended section 48 including conflict with public policy in section48(2) are to be established only on basis of “record of arbitral tribunal”in the interest of speedy enforcement of foreign award.

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A3.6 It is submitted that as such there is no legal bar to the Parliamentto provide two different procedures for two different sets of grounds ina proceeding or even having two different procedures for the same relief.It is submitted that the Parliament intended that grounds in section 34(2)(b) must be established on the basis of the record of the arbitral tribunal.It is submitted that even assuming proof is required under section 34(2)B(b), it does not apply to a case of alleged conflict of an award withstatute. Being a pure question of law, it can be considered on the findings/directions recorded in the award.

3.7 It is further submitted that even otherwise on merits also,general rule is that unless exceptional circumstances are made out, noCadditional evidence is permissible. It is submitted that the present casedoes not fall within the meaning of “exceptional circumstances” as heldby this Court in the case of Canara Nidhi (supra). It is submitted thatthe directions in the award that the parties shall apply for statutorypermissions is the legally correct decree to pass in a suit for specific Dperformance. Therefore, the award cannot be said to be in conflict with“public policy of Indian law.”

3.8 It is submitted that the respondents’ contention that the awardis frustrated because corporation refused permission for clubbing of khataswhich is the basis for award to be executed does not fall within theEconflict with public policy ground under section 34(2)(b) because it isthe award and not its execution that must conflict with the public policyof India. It is submitted that apart from the fact that the respondentscontention is premised on his having accepted the award, the corporation’salleged refusal is admittedly a subsequent event after the award. It issubmitted that it is the executing court that would determine that theFdecree is inexecutable due to change in circumstances. It is submittedthat the evidence can be led during execution. It is submitted that therespondents are bound to suffer the consequence of their wilful failureto participate in the arbitration proceedings before the arbitral tribunal,despite attending them after the rejection of their objection to theGjurisdiction of the Tribunal. It is submitted that therefore the respondentscannot be allowed to lead evidence by taking advantage of their ownwrong.

3.9 It is further urged by the learned senior counsel appearing onbehalf of the appellant that if this Court is inclined to allow the respondentsHto lead evidence, in that case, (a) the appellant may be permitted to lead evidence including the permission for clubbing khatas where there arenalas and the corporation’s later endorsement dated 28.6.2004 agreeingto consider clubbing of khatas concealed by the respondents, and (b) thequestions of law regarding whether the corporation’s refusal falls undersection 34(2)(b) may kindly be left open.

4. The present appeal is vehemently opposed by Shri BalajiSrinivasan, learned counsel appearing on behalf of the respondents. It issubmitted that in the present case initially the respondents challengedthe arbitration proceedings/constitution of the arbitral tribunal andtherefore did not participate in the arbitration proceedings. It is submittedthat thereafter the arbitral tribunal proceeded with the hearing ex-parte.It is submitted that therefore as such no evidence was adduced or led bythe respondents before the arbitral tribunal.

4.1 It is submitted that in the present case the arbitrationproceedings begun on 7.2.1997 under old Arbitration Act, 1940 and on25.03.1997 arbitrators arbitrarily decided to proceed with the arbitrationproceedings under the Arbitration Act, 1996. It is submitted that therespondents withdrew from the arbitration. That thereafter therespondents filed an application challenging the bias and higher feesbefore the arbitral tribunal. However, ex-parte award dated 12.03.1998came to be passed for specific performance of the agreement reservingliberty to apply for amalgamation of khatas. It is submitted that in factthough it was for the appellant to apply for amalgamation of khatas butit did not and it was the respondents who applied for the same twice. Itis submitted that applications for amalgamation of khatas made byrespondents twice have been rejected due to presence of RzajaKaluveor rain water drain. It is submitted that therefore the respondents madean application to produce the evidence in section 34 application to producethe final endorsement dated 17.03.2003 by which the prayer foramalgamation of khatas to plots were rejected and thereafter it is requiredto examine the concerned officer. It is submitted that therefore it is thecase on behalf of the respondents that the award is incapable of beingimplemented and/or executed in view of section 34(2)(b) (i) & (ii) of theArbitration Act, 1996 and section 56 of the Indian Contract Act. It issubmitted that therefore according to the respondents the enforcementof the award is contrary to Public Policy, Local Law & void arbitrationproceedings further leading to Section 56 of the Indian Contract Act.

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A4.2 It is submitted that as such in the present case the provisionsprior to the amendment to section 34(2)(a) of the Act, i.e., prior to Act33/2019 shall be applicable in which the words used are “furnish proof”.It is submitted that as such the words “ furnish proof” shall be applicablewith respect to an application to set aside the award on the grounds setout in section 34(2)(a) & 34(2)(b) and not section 34(2)(a) alone, asBsought to be contended on behalf of the appellant.

4.3 Learned counsel appearing on behalf of the respondents hasheavily relied upon the decisions of this Court in the cases of FizaDevelopers (supra); Emkay Global (supra); and Canara Nidhi(supra). He has also relied upon the decision of this Court in the case ofCS.P. Singla Constructions Pvt. Ltd. v. State of Himachal Pradesh,reported in (2019) 2 SCC 488 in support of his submission that theamending arbitration Act shall not be applicable with respect to arbitrationproceedings commenced before the commencement of the amendingact, unless the parties otherwise agree.

D4.4 Making above submissions, it is prayed to dismiss the presentappeal.

5. We have heard learned counsel for the respective parties atlength.

6. The short question which is posed for the consideration of thisECourt is, whether the applicant can be permitted to adduce evidence tosupport the ground relating to Public Policy in an application filed underSection 34 of the Arbitration & Conciliation Act, 1996?

At the outset, it is required to be noted that in the present case thearbitration proceedings commenced and even the award was declared/Fpassed by the arbitral tribunal in the year 1998, i.e., prior to section34(2)(a) came to be amended vide Act 33/2019. Apart from the factthat it was conceded by the learned counsel appearing on behalf of theappellant before the High Court that the law prevailing prior to theamendment of Section 34(2)(a) by Act 33/2019 shall be applicable, evenotherwise, we are of the opinion that the arbitration proceedingsGcommenced and even the award was declared prior to the amendmentof Section 34(2)(a) by Act 33/2019, Section 34(2)(a) pre-amendmentshall be applicable. The view which we are taking is because byamendment of section 34(2)(a) by Act 33/2019, there is a substantialchange. Prior to the amendment of section 34(2)(a), an arbitral awardcould be set aside by the Court if the party making an application “furnishesH

proof” and the grounds set out in section 34(2)(a) and section 34(2)(b)are satisfied. However, subsequent to the amendment of section 34(2)(a),the words “furnishes proof” have been substituted by the words“establishes on the basis of the record of the arbitral tribunal”. In thatview of the matter, we hold that in case of arbitration proceedingscommenced and concluded prior to the amendment of section 34(2)(a)by Act 33/2019, pre-amendment of section 34(2)(a) shall be applicable.

7. Now so far as the question, whether in an application filedunder section 34(2)(a) pre-amendment where the requirement is thatthe party making an application has to “furnish proof”, whether such anapplicant can be permitted to adduce evidence by way of affidavit orotherwise is concerned, few decisions of this Court are required to bereferred to.

(i) In the case of Fiza Developers (supra), the question that wasposed by the Court was, whether issues as contemplated underOrder 14 Rule 1 CPC should be framed in applications underSection 34 of the Act. Answering the same, this Court observedand held in paragraphs 14, 17, 18, 21, 22, 24, 29 & 31 as under:

“14. In a summary proceeding, the respondent is given anopportunity to file his objections or written statement.Thereafter, the court will permit the parties to file affidavits inproof of their respective stands, and if necessary permit cross-examination by the other side, before hearing arguments.Framing of issues in such proceedings is not necessary. Wehasten to add that when it is said issues are not necessary, itdoes not mean that evidence is not necessary.

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17. The scheme and provisions of the Act disclose twosignificant aspects relating to courts vis-à-vis arbitration. Thefirst is that there should be minimal interference by courts inmatters relating to arbitration. Second is the sense of urgencyshown with reference to arbitration matters brought to court,requiring promptness in disposal.

18. Section 5 of the Act provides that notwithstanding anythingcontained in any other law for the time being in force, in mattersgoverned by Part I of the Act, no judicial authority shall interveneexcept where so provided in the Act.

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21. We may therefore examine the question for considerationby bearing three factors in mind. The first is that the Act is aspecial enactment and Section 34 provides for a specialremedy. The second is that an arbitration award can be setaside only upon one of the grounds mentioned in sub- section(2) of Section 34 exists. The third is that proceedings underSection 34 requires to be dealt with expeditiously.

22. The scope of enquiry in a proceeding under Section 34 isrestricted to consideration whether any one of the groundsmentioned in sub-section (2) of Section 34 exists for settingaside the award. We may approvingly extract the analysisrelating to “grounds of challenge” from The Law & Practiceof Arbitration and Conciliation by Shri O.P. Malhotra [1stEdn., p. 768, Para (I) 34-14]:

“Section 5 regulates court intervention in arbitral process.It provides that notwithstanding anything contained in anyother law for the time being in force in India, in mattersgoverned by Part I of this Act, the court will not interveneexcept where so provided in this Part. Pursuant to this policy,Section 34 imposes certain restrictions on the right of thecourt to set aside an arbitral award. It provides, in all, sevengrounds for setting aside an award. In other words, anarbitral award can be set aside only if one or more of theseseven grounds exists.

The first five grounds have been set forth in Section34(2)(a). In order to successfully invoke any of thesegrounds, a party has to plead and prove the existence ofone or more of such grounds. That is to say, the partychallenging the award has to discharge the burden of proofby adducing sufficient credible evidence to show theexistence of any one of such grounds. The rest two groundsare contained in Section 34(2)

(b) which provides that an award may be set aside by thecourt on its own initiative if the subject-matter of the disputeis not arbitrable or the impugned award is in conflict withthe public policy of India.”

M/S ALPINE HOUSING DEVELOPMENT CORPORATIONPVT. LTD. v. ASHOK S. DHARIWAL [M. R. SHAH, J.]

The grounds for setting aside the award are specific. Therefore,necessarily a petitioner who files an application will have toplead the facts necessary to make out the ingredients of anyof the grounds mentioned in sub-section (2) and prove the same.Therefore, the only question that arises in an application underSection 34 of the Act is whether the award requires to be setaside on any of the specified grounds in sub-section (2) thereof.Sub-section (2) also clearly places the burden of proof on theperson who makes the application. Therefore, the questionarising for adjudication as also the person on whom the burdenof proof is placed is statutorily specified. Therefore, the needfor issues is obviated.

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24. In other words, an application under Section 34 of the Actis a single issue proceeding, where the very fact that theapplication has been instituted under that particular provisiondeclares the issue involved. Any further exercise to frame issueswill only delay the proceedings. It is thus clear that issues neednot be framed in applications under Section 34 of the Act.

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29. In a regular civil suit, in the event of failure to file a defence,it will be lawful for the court to pronounce the judgment on thebasis of facts contained in the plaint [vide Order 8 Rule 5(2) ofthe Code]. But in an application under Section 34, even if thereis no contest, the court cannot, on the basis of the avermentscontained in the application, set aside the award. Whether thereis contest or not, the applicant has to prove one of the groundsset out in Sections 34(2)(a) and (b). Even if the applicant doesnot rely upon the grounds under clause (b), the court, on itsown initiative, may examine the award to find out whether it isliable to be set aside on either of the two grounds mentioned inSection 34(2)(b). It is perhaps in this sense, the High Courthas stated that the proceedings may not be adversarial. Bethat as it may.

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31. Applications under Section 34 of the Act are summaryproceedings with provision for objections by the respondent-defendant, followed by an opportunity to the applicant to“prove” the existence of any ground under Section 34(2). Theapplicant is permitted to file affidavits of his witnesses in proof.A corresponding opportunity is given to the respondent-defendant to place his evidence by affidavit. Where the caseso warrants, the court permits cross-examination of the personsswearing to the affidavit. Thereafter, the court hears argumentsand/or receives written submissions and decides the matter.This is of course the routine procedure. The court may varythe said procedure, depending upon the facts of any particularcase or the local rules. What is however clear is that framingof issues as contemplated under Rule 1 of Order 14 of theCode is not an integral part of the process of a proceedingsunder Section 34 of the Act.”

(ii) The decision of this Court in the case of FizaDevelopers(supra) has been subsequently considered by thisCourt in the case of Emkay Global (supra) and in paragraph 21,it is observed and held as under:

“21. It will thus be seen that speedy resolution of arbitraldisputes has been the reason for enacting the 1996 Act, andcontinues to be the reason for adding amendments to the saidAct to strengthen the aforesaid object. Quite obviously, if issuesare to be framed and oral evidence taken in a summaryproceeding under Section 34, this object will be defeated. It isalso on the cards that if Bill No. 100 of 2018 is passed, thenevidence at the stage of a Section 34 application will bedispensed with altogether. Given the current state of the law,we are of the view that the two early Delhi High Courtjudgments [Sandeep Kumar v. Ashok Hans, 2004 SCCOnLine Del 106 : (2004) 3 Arb LR 306] [,] [Sial Bioenergie v.SBEC

Systems, 2004 SCC OnLine Del 863 : AIR 2005 Del 95] , citedby us hereinabove, correctly reflect the position in law as tofurnishing proof under Section 34(2)(a). So does the CalcuttaHigh Court judgment [WEB Techniques & Net Solutions (P)Ltd. v. Gati Ltd., 2012 SCC OnLine Cal 4271] . We may hasten

to add that if the procedure followed by the Punjab and HaryanaHigh Court judgment [Punjab SIDC Ltd. v. Sunil K. Kansal,2012 SCC OnLine P&H 19641] is to be adhered to, the time-limit of one year would only be observed in most cases in thebreach. We therefore overrule the said decision. We areconstrained to observe that Fiza Developers [FizaDevelopers & Inter-Trade (P) Ltd. v. AMCI (India) (P) Ltd.,(2009) 17 SCC 796 : (2011) 2 SCC (Civ) 637] was a step inthe right direction as its ultimate ratio is that issues need not bestruck at the stage of hearing a Section 34 application, whichis a summary procedure. However, this judgment must nowbe read in the light of the amendment made in Sections 34(5)and 34(6). So read, we clarify the legal position by stating thatan application for setting aside an arbitral award will notordinarily require anything beyond the record that was beforethe arbitrator. However, if there are matters not contained insuch record, and are relevant to the determination of issuesarising under Section 34(2)( a), they may be brought to thenotice of the Court by way of affidavits filed by both parties.Cross-examination of persons swearing to the affidavits shouldnot be allowed unless absolutely necessary, as the truth willemerge on a reading of the affidavits filed by both parties. We,therefore, set aside the judgment [Girdhar Sondhi v. EmkayGlobal Financial Services Ltd., 2017 SCC OnLine Del 12758]of the Delhi High Court and reinstate that of the learnedAdditional District Judge dated 22-9-2016. The appeal isaccordingly allowed with no order as to costs.”

(iii) The decision of this Court in the case of FizaDevelopers(supra) again fell for consideration of this Court inthe subsequent decision in the case of Canara Nidhi (supra).After taking note of the observations made in paragraph 21 inEmkay Global (supra), thereafter it is observed by this Court inthe case of Canara Nidhi (supra) that the legal position is thusclarified that section 34 application will not ordinarily requireanything beyond the record that was before the arbitration andthat cross-examination of persons swearing in to the affidavitsshould not be allowed unless absolutely necessary.

8. The ratio of the aforesaid three decisions on the scope andambit of section 34(2)(a) pre-amendment would be that applications under AB

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Asections 34 of the Act are summary proceedings; an award can be setaside only on the grounds set out in section 34(2)(a) and section 34(2)(b); speedy resolution of the arbitral disputes has been the reason forenactment of 1996 Act and continues to be a reason for addingamendments to the said Act to strengthen the aforesaid object; thereforein the proceedings under section 34 of the Arbitration Act, the issues areBnot required to be framed, otherwise if the issues are to be framed andoral evidence is taken in a summary proceedings, the said object will bedefeated; an application for setting aside the arbitral award will notordinarily require anything beyond the record that was before thearbitrator, however, if there are matters not containing such records andCthe relevant determination to the issues arising under section 34(2)(a),they may be brought to the notice of the Court by way of affidavits filedby both the parties’ the cross-examination of the persons swearing in tothe affidavits should not be allowed unless absolutely necessary as thetruth will emerge on the reading of the affidavits filed by both the parties.Therefore, in an exceptional case being made out and if it is brought toDthe court on the matters not containing the record of the arbitrator thatcertain things are relevant to the determination of the issues arising undersection 34(2)(a), then the party who has assailed the award on thegrounds set out in section 34(2)(a) can be permitted to file affidavit inthe form of evidence. However, the same shall be allowed unlessEabsolutely necessary.

9. Now so far as the submission on behalf of the appellant thatthe requirement of “furnishing proof” as per pre-amendment of section34(2)(a) of the Arbitration Act shall not be applicable to the applicationfor setting aside the award on the grounds set out in section 34(2)(b) andFthe submission that in the execution proceedings the subsequentdevelopment of refusing to grant permission for amalgamation of theplots can be considered and it will be open for the applicants to point outin the execution proceedings that the award is not capable of beingexecuted is concerned, at the outset, it is required to be noted that even for establishing that the arbitral award is in conflict with Public Policy ofGIndia, in a given case, the evidence may have to be led and by leadingevidence, the person who is challenging the award on that ground canestablish and prove that the arbitral award is in conflict with Public Policyof India and/or the subject matter of dispute is not capable of settlementby arbitration under the law for the time being in force. However, at theHsame time, from the record before the arbitrator, if the same can be established and proved that the subject matter of the dispute is not capableof settlement by arbitration under the law for the time being in force orthe arbitral award is in conflict with the Public Policy of India, in thatcase, the person may not be permitted to file the affidavit by way ofevidence/additional evidence.

10. Now so far as the submission on behalf of the appellant thatthe subsequent development of refusing to grant permission by theappropriate authority to amalgamate the plots can be considered in theexecution proceedings , a person against whom the award is passed andwho alleges on the grounds set out in section 34(2)(b) before the executingcourt, the executing court may hold that the award is not capable ofbeing executed is concerned, it is required to be noted that so far as oneof the grounds set out in section 34(2)(b), namely, that the arbitral awardis in conflict with the Public Policy of India, the said ground could beavailable only after passing of the award. Therefore, the same can bepermitted to be agitated in an application under section 34 of the Act andthe person shall not have to wait till the execution is filed. The defencethat the arbitral award is in conflict with the Public Policy of India itselfcan be a ground to set aside the award in view of section 34(2)(b) of theAct. Therefore, the aforesaid submission has no substance.

11. Now the next question fell for consideration is, whether thepresent case is such an exceptional case that it is necessary to grantopportunity to the respondents to file affidavits and adduce evidenceand whether any case is made out for the same.

From the affidavit, which is sought to be placed in the proceedingsunder Section 34 of the Act, it is seen that the respondents want to placeon record the communication from the appropriate authority by whichthe application for amalgamation of the plots is rejected. At this stage, itis required to be noted that the arbitral tribunal has passed the decree forspecific performance of the contract/agreement, subject to theamalgamation of the plots. Therefore, it is the case on behalf of therespondents that in view of the refusal of the permission by theappropriate authority to amalgamate the plots, the case falls under section34(2)(b), namely, that the dispute is not capable of settlement under thelaw for the time being in force and that the arbitral award is in conflictwith the Public Policy of India, namely, against the relevant land laws.The event of refusal to amalgamate the plots is subsequent to the passingof the award and therefore naturally the same shall not be forming part A

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Aof the record of the arbitral tribunal. Even otherwise, it is required to benoted that the award of the arbitral tribunal was an ex- parte award andno evidence was before the arbitral tribunal on behalf of the respondents.We are not opining on whether the arbitral tribunal was justified inproceeding with the further proceedings ex-parte or not. Suffice it torecord that before the arbitral tribunal, such evidence was not there andBnothing was on record on the amalgamation of the plots.

The affidavit thus discloses specific document and the evidencerequires to be produced. In that view of the matter, a strong exceptionalcase is made out by the respondents to permit them to file affidavits/adduce additional evidence. However, at the same time, the appellantCalso can be permitted to cross-examine and/or produce contrary evidence.

12. In view of the above and for the reasons stated above, we areof the opinion that the High Court has not committed any error inpermitting the respondents to file affidavits/additional evidence in theproceedings under section 34 of the Arbitration Act.D

13. In view of the above and for the reasons stated above, thepresent appeal fails and the same deserves to be dismissed and isaccordingly dismissed. However, it is observed that the appellant hereinmay also be permitted to cross-examine and/or lead contrary evidenceincluding the permission for clubbing khatas where there are nalas as itEis the case of the appellant that thereafter the corporation videendorsement dated 28.6.2004 has agreed to consider clubbing of khatas.As and when such evidence is produced/led, the same may also be dealtwith by the concerned court in accordance with law and on its ownmerits. However, at the same time, the court dealing with section 34Fapplication shall finally decide and dispose of section 34 applicationexpeditiously, considering the object and purpose of the Arbitration Act,namely, speedy disposal.

14. With these observations, the present appeal is dismissed. Thereshall be no order as to costs.

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Ankit Gyan

Appeal dismissed.

(Assisted by : Abhishek Agnihotri and Mahendra Yadav, LCRAs)

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