SREI EQUIPMENT FINANCE LIMITED v. ROADWINGS INTERNATIONAL PRIVATE LIMITED

purported awards were first disclosed to the petitioner in the NCLT proceedings, and the supplementary affidavit was filed within the additional time of 30 days thereafter, as stipulated in the proviso to the said sub- section. Thus, it is argued that the challenges to the arbitral awards have been made within the prescribed period of limitation. 6

#13. Learned senior counsel next argues that in terms of the language of Section 34(1) of the 1996 Act, recourse to a court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-sections (2) and (3) of the said Section. Conspicuously, the subsequently-introduced sub-section (2-A) was not incorporated in sub- section (1), thereby specifically excluding the necessity of any application to be filed for challenging an award on the ground of patent illegality. It is contended that the Legislature, in its wisdom, omitted to incorporate sub- section (2-A) in sub-section (1) simultaneously with the introduction of sub- section (2-A) by the Amending Act 3 of 2016 (with retrospective effect from October 23, 2015). Hence, a challenge on the ground of patent illegality as envisaged in sub-section (2-A), it is argued, need not be specifically spelt out in an application and the court may itself look into such ground.

#14. Learned senior counsel next distinguishes between the specific language of Clauses (a) and (b) of sub-section (2) of Section 34. Whereas the former starts with the opening words “the party making the application establishes on the basis of the record”, Clause (b) commences with “the Court finds that”.

#15. Similarly, the language used in sub-section (2-A) is also “if the court finds that”. Hence, the distinctive languages of sub-sections (2)(b) and (2-A) on the one hand and sub-section (2)(a) on the other makes it abundantly clear that whereas for the grounds enumerated in Clause (a) of sub-section (2), it is the applicant who has to establish such grounds, in case of the other two 7 Clauses, the burden is not on the applicant but it is open to the court itself to find out from the records the grounds enumerated therein.

#16. Learned senior counsel cites a Division Bench judgment of the Delhi High Court in the matter of Devas Employees Mauritius v. Antrix Corpn. Ltd., reported at 2023 SCC OnLine Del 1608, and a judgment of the Supreme Court in State of Chhattisgarh v. SAL Udyog (P) Ltd., reported at (2022) 2 SCC 275, in support of the contention that for the purpose of Sections 34(2)(b) and 34(2-A), it is open to the court itself to find out whether such grounds are satisfied on the basis of the arbitral records, irrespective of whether such ground is taken in the application.

#17. Even otherwise, it is submitted, the principal grounds covered by the said provisions find place substantially in the instant applications under Section 34 themselves. The supplementary affidavit filed later only supplements the said grounds.

#18. It is argued that apart from the violation of Section 31(5) of the 1996 Act, the fundamental policy of Indian Law has been contravened, since the patent illegality and fraud emanating from the absence of any valid award as asserted by the respondent is opposed to public policy and in conflict with basis notions of morality and justice, which are good grounds of challenge to the impugned awards under Section 34.

#19. Learned senior counsel proceeds to point out several infirmities in the awards. It is conspicuous that the respondent, although placing reliance on the purported awards, did not produce either the originals or signed copies thereof and/or any records of the arbitral proceedings. 8

#20. In the purported awards, it has been mentioned that one Mr. Ayan Chakraborty, learned Advocate for the petitioner, had sent a letter dated May 23, 2018. Accordingly, the petitioner enquired in writing of the said learned Advocate, asking for details of the arbitral proceedings, on April 22,

#2024. In his reply dated April 30, 2024, the said learned Advocate said that he had no knowledge of any such proceeding, nor had he participated therein. This itself, it is submitted, shows that the awards are procured and manufactured.

#21. The stamp papers on which the photocopies of the awards produced by the respondent were printed were apparently purchased in the name of the Arbitrator on March 20, 2020

#22. The impugned awards refer to several pleadings and documents, none of which were disclosed by the respondent. The learned Arbitrator, in the purported awards, speaks about a joint reference by both the parties by a letter dated December 29, 2019. However, there is no document on record to show that there was ever any such joint reference by the parties. The respondent has produced only a purported request under Section 21 of the 1996 dated May 20, 2019 issued by a Chief Manager of the petitioner- Company, who was already serving a notice period upon his resignation at the time of alleged issuance of such request and, as such, did not have the authority to issue such request on behalf of the petitioner-Company.

#23. Conspicuously, the copy of a letter dated December 29, 2019 has been produced by the respondent, which was supposed to have been sent unilaterally by the respondent to the Arbitrator, purportedly giving consent 9 to the request under Section 21. Apart from the said consent letter not being served at any point of time on the petitioner, the same was written about seven months after the alleged request under Section 21, which time- lag itself casts serious suspicion in that regard. Moreover, the said unilateral letter could not, by any stretch of imagination, be construed to be a „joint reference‟.

#24. The petitioner further submits that contradictory findings find place in the latter part of the impugned awards as well. In subsequent portions of the impugned awards, the learned Arbitrator herself recorded that the claimant (present petitioner) sent a letter asking for commencement of arbitration, to which the respondent consented. Such contradictory findings in the impugned awards, it is argued, vitiate the same.

#25. Learned senior counsel appearing for the petitioner points out that although the respondent claims that its Advocate had sent a letter on May 23, 2018 annexing copies of the awards, the same was also purportedly received by an employee of the petitioner-Company who was serving notice period at the relevant juncture. That apart, after the alleged dates of passing of the impugned awards, there was continuous correspondence between the parties regarding the claims covered by the contracts which were allegedly decided by the awards. On June 9, 2021, the petitioner had sent a letter to the respondent alleging Rs. 1,51,43,238.35 p. to be payable by the respondent as on March 31, 2021, even prior to the initiation of proceedings by the Reserve Bank of India (RBI) against the previous management of the petitioner-Company on the ground of defalcation. On October 20, 2021, the 10 petitioner-Company demanded Rs. 92,23,301/- as per the records as they stood on October 19, 2021. Again, on September 20, 2022, the Administrator, who was then in charge of the affairs of the petitioner- Company, sent a letter to the respondent alleging outstanding dues of Rs. 3,01,55,013.98 p. in the petitioner‟s books as on June 30, 2022. The respondent disputed such claim by its letter dated October 7, 2022, written to the Administrator. Subsequently on January 30, 2023, the petitioner- Company (still under the Administrator) made a demand before a proceeding under Section 7 of the Insolvency and Bankruptcy Code, 2016 (for short, “the IBC”) was initiated in respect of the petitioner-Company.

#26. On August 30, 2023, the petitioner‟s advocate issued a letter to the respondent claiming dues in respect of the subject contracts, when the Implementation and Monitoring Committee had taken over the management of the petitioner-Company pursuant to an approved Resolution Plan.

#27. On September 4, 2023, the respondent gave a reply disputing its liability and claiming that the duly added accounts showed that all liabilities had been discharged by it in full.

#28. In none of the communications during the relevant period after the awards did the respondent raise any objection to the petitioner‟s claims on the ground that there were two arbitral awards deciding such claims. Rather, the respondent spoke about “resolution” of the disputes, without a single reference to any arbitral award. Hence, it is evident from the conduct of the respondent itself that there was no arbitral proceeding or any award passed at any point of time in respect of the subject contracts. 11

#29. In the impugned awards, it is pointed out by the petitioner, it was mentioned that one Reach Stacker (one of the secured assets in dispute) was handed over on March 8, 2020. However, claims in respect of the said equipment was included in the petitioner‟s e-mail dated August 20, 2020 and virtually admitted by the respondent in its letter dated October 7, 2022. The October 7, 2022 e-mail refers to a reconciliation statement of August 20, 2020 but such statement does not mention Rs. 75,00,000/-, as mentioned in the awards, as the value of any of the assets as recorded in the award.

#30. Learned senior counsel appearing for the petitioner next contends that even if, for argument‟s sake, it is assumed that a notice under Section 21 was issued by the petitioner, there was no consent to the same on the part of the respondent within a reasonable period. The alleged consent, given 7 months thereafter, was not served on the petitioner itself but allegedly sent to the Arbitrator directly. Thus, there was no „consent‟ at any point of time in respect of appointment of Arbitrator.

#31. The respondent has heavily relied on the fact of an application under Section 9 of the 1996 Act having been filed by the petitioner in July, 2018 and the withdrawal of the same on August 14, 2018. However, it is submitted by the petitioner that such withdrawal, by itself, does not necessarily lead to the automatic conclusion that arbitral proceedings were initiated on the dispute subsequently or that the petitioner participated therein. The petitioner categorically denies that the reach tracker machines, which were the secured assets, were ever handed over to the petitioner. 12 Thus, the findings of the learned Arbitrator in that regard, it is submitted, are incorrect.

#32. Learned senior counsel for the petitioner further points out that the impugned awards recorded that the parties are to bear their own costs. However, the learned Arbitrator, by her letter dated March 5, 2024, demanded the entire costs in respect of both the arbitral proceedings from the claimant/petitioner, which is ex facie contradictory and illegal.

#33. It is submitted that the purported arbitral proceedings allegedly went on during a period when the Covid-19 Pandemic was in full swing and the ensuing lockdowns were in place. Yet, in her letter to the petitioner, the learned Arbitrator mentioned about venue charges and conveyance expenses, which were evidently not based on facts.

#34. It is thus argued that the above circumstances unerringly indicate that no award was passed at any point of time in any arbitration proceeding between the parties.

#35. Dealing with the challenge thrown by the respondent to the effect that the pleadings of fraud in the Section 34 applications do not contain any particulars and are not properly verified, learned senior counsel for the petitioner argues that a Board Resolution of the petitioner-Company duly authorised the Constituted Attorney, who affirmed the affidavits supporting the said applications, to do so. In view of the change of management after the date of the purported awards, the knowledge of the petitioner and the deponent in the affidavits could only be on the basis of information received from the records. In the applications, it is categorically alleged that there is 13 no existence of the awards in the records of the Company. The contention of the respondent that the current management did not write to the previous one is absurd, since the previous management was removed on the ground of financial irregularities, leading to an Administrator being appointed by the RBI and ultimately a Corporate Insolvency Resolution Process being initiated in respect of the petitioner-Company. Thus, it is irrelevant whether the current management wrote to the previous one. The petitioner does not dispute the proposition of law that mere change of management or shareholding does not change the juristic entity of the Company, but such proposition has no manner of application in the present case. The reliance on the change of management by the petitioner was merely for the purpose of elaborating the circumstances of the case.

#36. Learned senior counsel further argues that the contention of the respondent, that all documents were not disclosed in the Section 34 applications but some were produced subsequently by way of a supplementary affidavit filed by the petitioner, is incorrect, since some of the documents were traced out only subsequently and in any event, during the pendency of the present matter, all documents at the disposal of the petitioner have been disclosed.

#37. Learned senior counsel argues that the purported awards are not only vitiated by fraud but also suffer from patent illegality and ought to shock the conscience of the court and, as such, ought to be set aside.

#38. In respect of the conduct of the respondent, it is submitted that the letter dated September 20, 2020 annexed at Page 31 of GA 1 of 2025 shows that 14 the respondent demanded removal of the ROC (Registrar of Companies) charges. It is doubtful as to how such demand could be made even before the date of passing of the second award, that is, September 21, 2020.

#39. Moreover, in the said application, filed at the stage of hearing of the Section 34 applications, the respondent has not sought to rely on the supplementary affidavit which was initially sought to be filed but not accepted by the court, including its annexures, although such supplementary affidavit and its annexures have been annexed to the application nonetheless. Yet, at the time of arguments, the respondent sought to rely on the supplementary affidavit and its annexures, which cannot be looked into by the court.

#40. Learned senior counsel also points out that there is serious doubt as to whether reliance can be placed on the purported documents of repossession of the equipment-in-question from the customer site at Nagalapalli on March 9, 2020 since, if the recovery took place on such date, there could not have been any valuation at the instance of the respondent on the previous day, that is, March 8, 2020 at the Concord Yard, Hyderabad.

#41. Thus, the petitioner seeks that the impugned awards be set aside on the above grounds.

#42. Learned senior counsel appearing for the respondent, on the other hand, contends that the material averments with regard to fraud are verified in the Section 34 applications as “submissions”. The deponent of the said affidavits is one Sohan Kumar Jha, an alleged Power of Attorney holder of the petitioner-Company. No responsible/authoritative person of the 15 petitioner-Company takes responsibility for the serious allegations of fraud. Thus, the grounds taken in the Section 34 applications ought to be overlooked altogether. In any event, it is argued that particulars of fraud have not been pleaded in the Section 34 applications, as required in law.

#43. Placing reliance on A.L.N. Narayanan Chettyar and another v. Official Assignee of the High Court, Rangoon and another, reported at AIR 1941 PC 93 [= (1941) 54 LW 606], it is argued that there cannot be any finding of fraud on the basis of mere suspicion and conjecture. Placing reliance on Ranganayakamma v. K.S. Prakash, reported at (2008) 15 SCC 673, and Union of India v. K.C. Sharma & Co., reported at (2020) 15 SCC 209, it is argued that allegations such as fraud are to be proved beyond reasonable doubt as well as the particulars thereof are to be specifically pleaded in the pleadings. Learned senior counsel also cites Union of India v. Chaturbhai M. Patel & Co., reported at (1976) 1 SCC 747 for the self-same proposition.

#44. A judgment of this Court in Avijhit Ghosh v. State of West Bengal, reported at 2022 SCC OnLine Cal 1822, is also relied on for the purpose of arguing that allegations of fraud cannot be based on surmise. Mere allegations of fraud are not enough but it has to be proved beyond doubt, it is argued, in support of which proposition the respondent cites Raj Kumar Dhar v. A. Stuart Lewis, reported at AIR 1958 Cal 104.

#45. Dwelling on the question as to whether the court of its own, under Section 34 of the 1996 Act, can come to findings on the grounds stipulated in sub- sections (2)(b) and (2-A) of the said Section, learned senior counsel cites Welspun Specialty Solutions Ltd. v. ONGC, reported at (2022) 2 SCC 382, and 16 Ssangyong Engg. & Construction Co. Ltd. v. NHAI, reported at (2019) 15 SCC 131, where the restrictive operation of Section 34 was highlighted. The last above-mentioned citation also took note of the 246th Law Commission Report, in which it was opined that Section 34(2-A) is to be read into Section 34(1), thus necessitating an application under Section 34(1) in the first place even to raise grounds specified in sub-section (2-A) thereof. A restrictive interpretation of the powers of court to intervene was stressed and expansive arguments in that regard were negated in the Law Commission Report as well.

#46. Learned senior counsel appearing for the respondent next cites a Division Bench judgment of this Court in Anil Kumar Bhandari v. Kolkata Municipal Corporation, reported at (2009) 2 CHN 56, in order to highlight the importance of verifications.

#47. Regarding limitation, learned senior counsel for the respondent submits that the bogey of „new management‟ has been raised by the petitioner, without even caring to write to the past management to confirm as to whether there was any reference to arbitration in respect of the contracts-in-question or any awards were passed therein. Thus, it is argued that adverse presumption ought to be drawn against the petitioner.

#48. Inasmuch as some of the additional grounds of challenge were raised in the supplementary affidavit of the petitioner for the first time, the respondent submits that such affidavit was filed beyond the limitation period of three months as stipulated in Section 34(3), without any explanation to come 17 within the proviso thereto; therefore such additional grounds ought not to be permitted to be raised by the petitioner.

#49. The plinth of the petitioner‟s case is that the new management did not find any arbitral award or records in respect thereof. In the Section 34 applications, it was sought to be made out that after a search of all the documents of the petitioner-Company, no such award could be found. However, in the supplementary affidavit later, certain further documents were disclosed, thus belying the petitioner‟s stand that it had disclosed all papers lying with it. Hence, it is contended, no credence can be lent to the premise of challenge in the Section 34 applications, that despite thorough search no award could be found lying in the records of the petitioner-Company.

#50. Again, when the respondent annexed certain further documents in its applications, bearing GA Nos. 1 of 2025, the petitioner did not deny the existence of those, but merely set up a lame excuse as to the persons issuing the request under Section 21 of the 1996 Act and receiving the communication annexing copies of the awards respectively to have been under notice period at the relevant point of time. However, no document of resignation of the author of the Section 21 notice has been produced, thereby belying such excuse.

#51. The petitioner, it is further argued, is guilty of suppression of several important documents, including the letter dated May 23, 2018, which has been annexed to the supplementary affidavit, the filing of the Section 9 application by it, the respondent‟s letter offering return of financial assets, 18 the orders passed in the Section 9 proceeding as well as the Section 21 notice issued by the petitioner. Thus, the entire endeavour of the petitioner is to rely on conjecture and surmise, without any specific particulars being disclosed as to how and by whom fraud was perpetrated. Relying on the judgments cited by it, the respondent reiterates that the serious ground of fraud has to be established beyond doubt and cannot be based on mere conjecture and surmise.

#52. The petitioner, it is contended, never explained as to how further new documents were discovered by the new management after the filing of the Section 34 applications, which falsifies the claim in the Section 34 applications that the new management had no other records or documents than those disclosed in such applications. Thus, the petitioner is guilty of selective disclosure only upon being called out on their suppression of relevant documents.

#53. Learned senior counsel for the respondent further submits that no criminal action was initiated by the petitioner against its erring officers who had respectively issued the Section 21 notice and received the communication of the respondent dated December 8, 2020, along with which copies of the arbitral awards were served. The petitioner merely relies on its internal memos in that regard but has not disclosed as to what steps were taken against its said employees.

#54. It is argued that that mere non-reference to the awards in the reconciliation statement dated October 7, 2022 does not indicate any admission on the part of the respondent as to non-existence of the awards. Mere failure to 19 refer to the awards in the communication of even date by a layman dealing with several contracts does not vitiate the awards.

#55. Learned senior counsel contends that nothing has been shown by the petitioner to establish that copies of the awards were not served on it, particularly since copies thereof were served on it as long back as on December 8, 2020, with the letter of the respondent. It is stressed that the entire challenge under Section 34 is based on conjecture and surmise without anybody taking responsibility on behalf of the petitioner for the serious allegations of fraud made therein, not only against the respondent but also casting aspersions against the Arbitrator, without even any attempt to ascertain from the previous management as to the veracity of the arbitral awards or the arbitral proceedings leading thereto.

#56. Learned senior counsel for the respondent relies on Ramesh B. Desai v. Bipin Vadilal Mehta, reported at (2006) 5 SCC 638, and Ranganayakamma (supra)1 in support of the proposition that particulars in the pleadings is a sine qua non for allegations of fraud.

#57. Lastly, learned senior counsel cites Green Hut Pvt. Ltd v. State of W.B., reported at 2010 SCC OnLine Cal 610, for the proposition that change in shareholding does not change the company and, as such, the distinction sought to be created by the petitioner between the new management and the old management of the petitioner-Company is artificial and not tenable in law. 1 Ranganayakamma v. K.S. Prakash, reported at (2008) 15 SCC 673 20

#58. Thus, it is submitted that the applications under Section 34 as well as the applications for stay under Section 36(2) of the 1996 Act ought to be dismissed.

#59. Upon hearing learned counsel for the parties and appreciation of the materials on record as well as the relevant provisions of the 1996 Act, the Court comes to the following conclusions: (i) Verification

#60. The respondent argues that the applications under Section 34 of the 1996 Act ought to be dismissed inter alia on the ground that the allegations made therein, particularly pertaining to fraud, have been verified as „true to records‟ and „submissions‟ and not „true to knowledge‟, thus, any person of authority of the petitioner-Company refusing to take responsibility for such allegations.

#61. However, in view of the peculiar nature of the allegations made in the said applications, primarily on the ground that there was no award at all, there is little or no possibility of there being direct knowledge as such on the part of the current dispensation in charge of the petitioner-Company, which has taken over pursuant to a successful Resolution Plan much after the impugned awards were alleged to be passed. The allegations of fraud in the instant lis are based on negative assertions as to there being no award at all. One can vouchsafe the truth of the existence of something, for example, that there is an award. However, a negative fact, such as there being no award at all, cannot strictly be said to be „true‟ to one‟s knowledge. It can at best be 21 said that as per the available records, no such awards, or documents directly related to the proceedings leading to such awards, can be traced out. For enquiring into the sufficiency of pleadings with regard to assertions of such negative nature, the court is to ascertain whether the foundational facts leading to the same have been pleaded.

#62. The statements that the Monitoring Committee, after the approval of the Resolution Plan has handed over the documents of the company to the new management and/or Board of the petitioner-Company and that the new management of the petitioner-Company, after making necessary searches, came to learn the facts mentioned in the applications, has been pleaded as “true to knowledge”. The relevant facts regarding an Administrator being appointed by the RBI due to the fraudulent activities of the previous management of the petitioner-Company and the initiation of a CIRP before the NCLT, Kolkata have been pleaded as „true to knowledge derived from the records‟. Similar oath has been rendered in the jurat portion of the affidavit supporting the Section 34 applications in respect of the petitioner coming to know for the first time about the alleged awards from the affidavit filed by the respondent before the NCLT and regarding the new management having enquired from the Administrator and written a letter to the learned Advocate mentioned in the awards, in reply to which the said learned Advocate claimed ignorance of the arbitral proceedings or the awards as well as the reply of the learned Arbitrator dated March 14, 2024 where she stated that she had returned all the documents to the parties and retained the original awards with her. 22

#63. The allegation of fraud, to the extent that there is no existence of any of the impugned awards, necessarily has to rely on „submissions‟ of the petitioner, based on the aforementioned facts. Hence, the defect of pleadings alleged by the respondent is not acceptable.

#64. This Court does not find any irregularity in the affirmance of the affidavits supporting the Section 34 applications to the effect that the foundational facts as pleaded by the deponent are true to his information as derived from the records, since it is obvious that a company is a juristic entity and the new management can only rely on the records to ascertain the state of affairs. The deponent need not have direct knowledge of the facts but it would suffice if he has knowledge from the records available with the Company. Since a Board resolution of the petitioner-Company duly authorised the deponent to affirm the affidavits supporting the Section 34 applications, there cannot be said to be any illegality in presenting the applications in their present form.

#65. The reliance of the respondent on Anil Kumar Bhandari (supra)2, to the effect that an affidavit must be properly verified and must clearly state what is based on knowledge and what is based on belief, rendered in the context of a writ petition, where both pleadings and evidence are to be stated clearly, is of no direct relevance to the present case.

#66. Hence, the applications cannot be said to be not maintainable on the ground of defect in verification. 2 Anil Kumar Bhandari v. Kolkata Municipal Corporation, reported at (2009) 2 CHN 56 23 (ii) Limitation

#67. Section 34(3) of the 1996 Act is set out hereinbelow: “34(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under Section 33, from the date on which that request had been disposed of by the arbitral tribunal: Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.”

#68. In Tecco Trichy Engineers & Contractors (supra)3, the Hon‟ble Supreme Court categorically observed that the delivery of an arbitral award under Section 31(5) is a matter of substance and not a mere formality and it is only after the stage under Section 31 has passed that the stage of termination of arbitral proceedings within the meaning of Section 32 of the 1996 Act arises. The delivery of arbitral award to the party, to be effective, was held to have been received by the party. It was further observed by the Hon‟ble Supreme Court that this delivery by the Arbitral Tribunal and the receipt by the party of the award set in motion several periods of limitation, including an application for setting aside an award under Section 34(3). The provisions of Sections 31(5) and 34(3) were dealt with in extenso in the said judgment. Section 31(5) of the 1996 Act provides that after the arbitral award is made, a “signed copy” shall be delivered to each party, obviously referring to a copy 3 Union of India v. Tecco Trichy Engineers & Contractors, reported at (2005) 4 SCC 239 24 of the award duly signed by the Arbitrator; whereas Section 34(3) uses the expression “arbitral award” (as opposed to “a copy of the arbitral award”), the date of receipt of which is the starting point of limitation.

#69. In the present case, the reply of the learned Arbitrator to the letter of the petitioner asking for copies of the award and relevant documents clearly discloses that, as per the Arbitrator, all documents and records of the case had been handed over to the parties and that the learned Arbitrator retained the original awards.

#70. It has not been established at all that any signed copy of the awards were delivered to either of the parties. It is conspicuous to note that even the respondent served only photocopies of the awards on the petitioner at different points of time, without producing a signed copy of the same even before this Court. Thus, in the absence of proof of delivery of a signed copy and receipt of the same by the petitioner, the starting point of limitation never commenced inasmuch as the petitioner is concerned.

#71. The issue of limitation is, thus, decided in favour of the petitioner, holding that the applications under Section 34 of the 1996 Act are not barred by limitation.

#72. In fact, going by the ratio of Tecco Trichy Engineers & Contractors (supra) 4, in the absence of delivery of signed copies of the awards-in-question and receipt thereof by the petitioner, the period of limitation for the applications for setting aside such purported awards under Section 34(3) has not been set in motion at all. 4 Union of India v. Tecco Trichy Engineers & Contractors, reported at (2005) 4 SCC 239 25

#73. This takes us to the next important question as to whether the court, under Section 34 of the 1996 Act, has the power to declare that there was no award at all. (iii) Scope of declaring “no award” in a proceeding under Section 34 of the 1996 Act

#74. A conundrum of seminal importance has fallen for consideration before this Court. A thorough perusal of the language of Section 34 indicates that the recourse contemplated therein is against “an arbitral award”, which expression has been used throughout the said provision. Thus, on a plain reading of the said Section, there has to exist an otherwise valid arbitral award for it to be challenged under the said provision.

#75. Drawing analogy from an entirely different species of proceedings, in view of the issue at hand being somewhat pari materia therewith, it is to be noted that a similar situation sometimes arises in matrimonial proceedings. Under the matrimonial laws in India, in particular, the Hindu Marriage Act and the Special Marriage Act, an appeal lies to the District Court under the said statutes when an application contemplated under those is filed, for divorce, judicial separation, restitution of conjugal rights and the like. However, courts have consistently held that if the plaintiff bases his/her case on there being no marriage between the parties at all and does not invoke the grounds for divorce etc. provided under the said Acts, the relief available in such a suit is in the nature of a declaration of the status of the parties and the suit lies before the ordinary Civil Court having jurisdiction, 26 as a declaratory suit outside the purview of the matrimonial laws, which will be the civil court at the base of the hierarchy of courts having pecuniary jurisdiction and not the District Court. Such a suit, thus, will be tried as an ordinary civil suit under the general civil law and not as a proceeding under the matrimonial statutes.

#76. However, if the same principle is applied to a challenge to an arbitral award on the ground that there is no award in existence at all, the parties would be relegated to a regular declaratory suit before a Civil Court, complete with all its procedural paraphernalia. Such a construction of Section 34 of the 1996 Act would be patently contrary to the very purpose of enactment of the said Act.

#77. In the Statement of Objects and Reasons of the 1996 Act, as originally promulgated, one of the main objectives enumerated was to minimise the supervisory role of courts in the arbitral process.

#78. Again, in the Statement of Objects and Reasons of the Amending Act 3 of 2016 to the 1996 Act, it was stated that the UNCITRAL Model Law on International Commercial Arbitration, as adopted in 1985 by the United Nations Commission on International Trade Law, was the guiding light of the 1996 Act. It was further specified that with the passage of time, some difficulties in the applicability of the Act had been noticed to the effect that interpretation of the provisions of the Acts by the courts in some cases had resulted in delay in disposal of arbitration proceedings and increase in interference of courts in arbitration matters, which tended to defeat the object of the Act. It was further elaborated that with a view to overcome the 27 difficulties, the matter was referred to the Law Commission of India which, in its 246th Report, proposed the 2016 Amendments to “facilitate” and “encourage” Alternative Dispute Mechanism, especially arbitration, for settlement of disputes in a more user friendly, cost effective and expeditious disposal of cases since India is committed to improve its legal framework to obviate in disposal of cases. The declared purpose of the 2016 Amendment was to facilitate quick enforcement of contracts, easy recovery of monetary claims and award of just compensation for damages suffered and to reduce the pendency of cases and hasten the process of dispute resolution through arbitration, so as to encourage investment and economic activity.

#79. Thus, speedy disposal of cases relating to arbitration with least court intervention was highlighted as one of the declared objects of the 1996 Act.

#80. It is such aspiration which is also reflected in Section 5 of the 1996 Act, which provides that no judicial authority shall intervene “except where so provided in this Part”, referring to Part I of the Act, relating to domestic arbitrations.

#81. The principle of least judicial interference and restrictive interpretation of Section 34 were, thus, highlighted in the 246th Law Commission Report, as recognized in Ssangyong Engg. & Construction Co. Ltd. (supra)5 as well as Welspun Specialty Solutions Ltd. (supra)6.

#82. However, if a restrictive interpretation is to be given to Section 34 in the context under discussion, it has to be held that a party to an arbitration agreement cannot challenge an award passed in an arbitral proceeding on