Summary
An ex parte award of 1998 decreed specific performance of a property agreement, subject to the plots being amalgamated. In their Section 34 challenge, the objectors sought to produce the authority's later refusal to amalgamate, to argue that the award conflicted with public policy. The Karnataka High Court allowed them to adduce that evidence, and the Supreme Court upheld the order. Section 34(2)(a) as it stood before the 2019 amendment applies to proceedings begun and concluded earlier. Evidence by affidavit may be admitted in exceptional cases on matters outside the arbitral record, including for Section 34(2)(b) grounds. The refusal postdated the award, so it was a strong exceptional case. The appellant was allowed to cross-examine and lead rebuttal evidence.
Issues
- Whether, in an application under Section 34 of the Arbitration and Conciliation Act, 1996 against an award passed before the 2019 amendment, the applicant can be permitted to adduce evidence to support a ground under Section 34(2)(b) that the award conflicts with the public policy of India.
Provisions considered
- Section 34(2)(a) (before and after Act 33 of 2019), Arbitration and Conciliation Act, 1996The 2019 substitution of 'establishes on the basis of the record of the arbitral tribunal' for 'furnishes proof' is a substantial change, so the unamended provision governs arbitrations commenced and concluded before it. (¶ 6)
- Section 34(2)(b), Arbitration and Conciliation Act, 1996Conflict with public policy may in a given case require evidence; where it can be shown from the arbitral record no affidavit evidence is permitted, and the ground can be raised under Section 34 without waiting for execution. (¶¶ 9, 10)
Held
- Since the arbitration commenced and the award was passed before Act 33 of 2019, the pre-amendment Section 34(2)(a), requiring the applicant to 'furnish proof', applies, independently of the appellant's concession before the High Court. (¶ 6)
- Reading Fiza Developers, Emkay Global and Canara Nidhi together, Section 34 proceedings are summary and ordinarily confined to the arbitral record; in an exceptional case, matters outside the record relevant to the grounds may be brought by affidavit, with cross-examination only if absolutely necessary. (¶¶ 7, 8)
- Conflict with public policy can arise only after the award and may be agitated under Section 34 rather than left to execution; where it cannot be shown from the arbitral record, evidence may be led. (¶¶ 9, 10)
- The refusal to amalgamate the plots occurred after the ex parte award and was not part of the arbitral record, so a strong exceptional case was made out for affidavit evidence, with the appellant permitted to cross-examine and lead contrary evidence, including the corporation's endorsement dated 28.06.2004. (¶¶ 11, 12, 13)
Result
Civil Appeal No. 73 of 2023 against the Karnataka High Court judgment dated 01.09.2021 in W.P. No. 50799 of 2019 dismissed; the appellant permitted to cross-examine and lead contrary evidence, and the Section 34 application to be decided expeditiously; no costs.