COMMERCIAL APPELLATE DIVISION v. JAGRATI TRADE SERVICES PVT. LTD & Ors.

27. Mr. S.N Mookherjee, learned Senior Counsel appearing on behalf of the appellants has submitted that the learned arbitrator after arriving at a finding that the claimant has relied on an incorrect, suspicious and doctored agreement and therefore inadmissible document could not have allowed refund of the consideration amount as a party making out a false case cannot be allowed to succeed on the basis of its wrong conduct. Mr. Mookherjee in this regard has referred to various paragraphs of the award to show the findings of the learned arbitrator with regard to the genuineness and authenticity of the SPA agreement being CD-1 annexed to the statement of claim. Moreover, the claimant has not prayed for refund of the consideration amount in terms of Section 22 of the Specific Relief Act.

28. Mr. Mookherjee has submitted that in deciding the admissibility of the SPA as disclosed by the claimant in the arbitration proceeding being marked as CD-1, the learned arbitral tribunal observed that one of the most crucial questions to be decided in this Arbitration proceeding is whether the photocopy of SPA disclosed by the Claimant along with the Statement of Claim, marked as CD-1, is a true version of the SPA or whether the SPA disclosed by the Respondent Nos.1 to 13 in their Statement of Defence cum Counter Claim as Annexure-A is a correct version of the SPA.

29. Mr. Mookerjee has referred to the following observation of the learned arbitrator in the course of deciding the said issue to demonstrate that on the basis of the said findings no award could have been passed at all in favour of Jagrati: “55. The Respondent Nos. 1 to 13 in their SOD while referring to the SPA dated 24th March, in paragraph 6 thereof have referred to it as 10 Annexure-A but the Claimant in its Statement of Claim has referred to the said SPA but has nowhere stated that it is annexing a copy of the SPA as an Annexure to the SOC. The Claimant has merely filed along with the Statement of Claim three volumes of documents and in volume-1, serial no.-1 is the SPA. No one on behalf of the Claimant has pledged his oath that the document which is annexed as SPA and in respect of which the Claimant is seeking specific performance is a true copy of the SPA which was signed and executed between the parties.

56. The Claimant in the SOC has also not given any details of the circumstances how the alleged errors were noticed in the SPA and which were later on rectified and pages after rectification were replaced and why the Claimant's representative Mr.Sarda had to leave the place after such alleged detection of mistakes. All these explanations by the Claimant have been incorporated in the Rejoinder. This Tribunal after hearing the parties and considering the records carefully does not find that the case allegedly made out by the Claimant in its Rejoinder about alleged detection of mistakes in the SPA after its execution and Mr. Sarda's leaving the place in view of an urgent work and subsequent rectification and replacement of the pages is very plausible in view of the reasons discussed hereinbelow.

57. Even if it is accepted that the Agreement namely SPA was drafted by mutually appointed Solicitor, Mr. Sarda's explanation that the Agreement was being drafted when price negotiations were underway is prima-facie not very plausible. In an Agreement of this description where each party is investing several crores of rupees, fixation of price is a very major part of the exercise which is normally finalized before the drafting of the Agreement takes place. This is consistent with normal human conduct. Therefore, the alleged version of the Claimant that fixation of price is still under process while the Agreement was being drafted is an unnatural state of things. Apart from that the version given in paragraph 4 of the 11 Rejoinder Affidavit where Mr. Sarda has stated that after signing of the Agreement it was realized by the parties that price of both the acquisition of share and also the amount of loan to be infused in Respondent No. 13 have been wrongly printed in the Agreement by the concerned advocates is also very strange. Normally these vital things are verified before the document is signed. Mr. Sarda's next version is that pages 13, 14 and 15 of the said Agreement were replaced. Mr. Sarda has not given any explanation when the prices were agreed upon and fixed by the parties and how after fixation of the price by parties it could be wrongly printed in the Agreement and why such wrong printing of price in the Agreement was not detected by the parties prior to the signing of the Agreement. The absence of these explanations by Mr. Sarda appears to any man of ordinary prudence as missing links in the background of the execution of SPA dated 24th March, 2011. The SOC filed in this proceeding wherein specific performance of the SPA is prayed for is totally silent on these circumstances stated above.

64. What Mr. Sarda has disclosed before this Tribunal is not the original of the document which was forwarded to him but a photocopy of the same. This appears from his answer to Q. no. 65 where the photocopy of the document that is the SPA was marked Exhibit CD-1.

65. In the course of hearing before this Tribunal, Mr. Sarda has never produced the original of the document from which he has made a photocopy. In the course of Claimant's argument, in order to prove what has been disclosed by Mr. Sarda as the SPA is a genuine one, it has been urged that Mr. Sarda has given evidence before this Tribunal as a signatory to the said Agreement along with other signatories except of course not signing those three crucial pages where consideration for share price and loan amount have been mentioned. It was argued on behalf of Mr. Sarda that those three pages where consideration was mentioned was signed by the other parties 12 namely on behalf of Respondent Nos. 1 to 12, and Respondent Nos. 14 and 15. It was argued on behalf of the Claimant, that Mr. Dilip Singh Mehta affirmed the Statement of Defense of Respondent Nos. 1 to 13 but he did not come to give evidence in this Arbitration proceeding. Mr. Prakash Damani who was also a signatory did not come to give evidence, nor did Mr. Deepak Bhargava the signatory in the Agreement, come to give evidence. The Agreement was marked Exhibit CD-1 without any objection of the Respondents. The further arguments of the Claimant is the only other person who signed the Agreement was Sanjit Singh, who was the Escrow Agent and he came to give evidence. Mr. Sanjit Singh specifically denied to produce the Agreement dated 24th March, 2011 when he was called upon to produce the original of the said Agreement being CD-1 which was supposed to be in his possession. But he refused to answer and explained why he did not produce.

66. However, the aforesaid stand of the Claimant in the written- notes of submission is not borne out from the records of this Tribunal. In his Examination-in-Chief, Sanjit Singh, produced the original Share Purchase Agreement before this Tribunal. The said original Share Purchase Agreement which was produced by Shri Sanjit Singh (RW-1) was marked-'A' by this Tribunal subject to objection and is lying in the custody of his Tribunal.(Question 8 of the Examination-in-Chief of Sanjit Kumar Singh, RW-1). Mr. Sanjit Singh was asked how he came to be in possession of the original SPA dated 24th March, 2011, and to that he answered that as the authorized representative of Respondent Nos. 1 to 12, he came to have the original (Q. 9 in Chief). Then he was asked whether he knew of the contents of the Deed and he answered in the affirmative (Q. 10 in Chief). He was also asked whether he was present at the time of execution of the document, to that also he answered in the affirmative (Q. 13 in Chief). He was also asked to identify signatories on the SPA and which he did (Qs. 11 and 12 in Chief). 13

67. While cross-examining Mr. Sanjit Singh (RW-1), the learned Counsel for the Claimant hardly ever questioned him on the SPA which he had filed with the Tribunal and claimed to be the original and which has been marked Exhibit-A. Only once, vide question no. 261, a suggestion was given that too very generally about the genuineness of SPA which he filed as Annexure-A to SOD and to that Mr. Sanjit Singh stood his ground and answered "I do not agree. This is the correct document". Apart from this question Exhibit-A which is at page 75 of the SOD filed by Mr. Sanjit Singh and an original of which has been filed with the Tribunal was not at all assailed by the learned Counsel for the Claimant in his cross-examination of RW-1, Mr. Sanjit Singh.

68. The learned Counsel for the Claimant had only shown RW-1 one page of CD-1 and suggested to the witness that signature which appears at page 32 of CD-1 on behalf of Respondent No. 14, whether that is of Mr. Dilip Singh Mehta and to that RW-1 says "Yes". But by showing only one page of the document its authenticity or genuineness cannot be proved.

69. On the question whether a CD-1 is the correct version of SPA this Tribunal can consider the evidence of Mr. Sarda, the Claimant's witness and which will show that CD-1 apart from being a photocopy, there are various Annexures to it which are admittedly missing from the photocopy but those Annexures are in the original SPA which has been disclosed by the Respondents 1 to 13 in their SOD.

70. About the alleged detection of mistakes in the SPA in respect of which the Claimant made out its case in the Rejoinder Affidavit discussed earlier, Mr. Sarda (CW-1) was asked in question no. 102, when the so called mistakes were noticed by him. To that Mr. Sarda answered that it was at the same moment but because it was taking some time and discussion was going on and the issues were dealt with by the common Solicitors and since he had an urgent work, he had to leave. Then he was asked in question no. 103 whether he 14 recorded such mistakes in any letter or correspondence with the Solicitor or with the parties. To that Mr. Sarda answered that this was not required. Then in question no. 105 Mr. Sarda was positively asked when the mistake that was noticed and who noticed it. To that Mr. Sarda answered that he does not exactly remember and then said obviously the Solicitors have realized the mistake while proof-reading it.

71. Mr. Sarda was then asked question on a comparison between the SPA disclosed by the Claimant (CD-1) and the SPA disclosed by the Respondents Nos. 1 to 13 in their SOD. Mr. Sarda was asked with reference to Annexure-B of CD-1 at page 35. The said Annexure-B is referred to in paragraph (vii) (page 10 of CD-1). Mr. Sarda was asked with reference to said Annexure-B in question no. 246 and in question no.247. Mr. Sarda was asked, whose signatures are at the bottom of page 35. To that he answered it is the signature of Mr. Bhargava, Mr. Damani and probably the third signature is of Mr. Mehta. Mr. Sarda admits that photocopies are not very legible. Then Mr. Sarda was asked vide question no. 248 why only three persons signed Annexure-B which formed part of the SPA relied on by the Claimant. Mr. Sarda could not give any answer and replied "I cannot recall whether it was missed or it was amended by the common Solicitors". Then Mr. Sarda was confronted with Annexure-B of SPA disclosed and relied on by the Respondents and he was asked whether he finds that all five persons including himself had signed Annexure-B. To that Mr. Sarda could not give any satisfactory answer except by saying that he cannot comment on the document which the Claimant had not relied upon and the document should not have been existing. Mr. Sarda was also asked vide question no. 252 to tell the Tribunal whether his signature appears on Annexure-B of the SPA disclosed by the Respondent Nos. 1 to 13 at page 114 of SOD and Mr. Sarda refused to answer that question. 15

72. It will thus appear that the SPA allegedly relied upon by the Claimant does not contain signatures of all the parties on Annexure- B which is part of SPA whereas the one which has been filed by the Respondent vide Annexure-A to SOD of Respondents 1 to 13, contains the signature of all the parties. From this unimpeachable piece of evidence it is clear to this Tribunal that the version of the SPA which the Claimant has annexed as CD-1 to the SOC is not a correct version of the SPA.” (emphasis supplied)

30. The underlined highlighted portions are the portions of the award on which Mr. Mookherjee has emphasised in contending that having regard to the aforesaid finding no award could have been passed in favour of Jagrati.

31. Mr. Mookherjee has submitted that the aforesaid paragraphs would clearly show that there is a definite finding that no one had alleged that the SPA in the statement of claim is a true copy. The witness of Jagrati could not state the urgent reason for which he had to leave the place of execution after signing the agreement inasmuch as an attempt was made to explain about the error in the respondent No.1’s copy of SPA in rejoinder and not prior thereto. During the proceeding Jagrati had never produced the original copy of the share agreement of its Share Purchase Agreement but the other version has been produced by Sanjit Singh (RW1). In view of such unreliable testimony coupled with the fact that the document was held to be doctored, no relief could have been granted to the respondent No.1 in the said proceeding.

32. Mr. Mookherjee submits that allowing any such relief in the aforesaid background facts would likely to shock the conscience of the court 16 and is against the fundamental policy of Indian law and most and basic notions of justice as reiterated in various decisions of the Hon’ble Supreme Court including the following: a) S.P Chengalvaraya Naidu (Dead) by LRS vs. Jagannath (Dead) by LRS & Ors. reported in (1994) 1 SCC 1 (paragraph 6). b) Dalip Singh vs. State of Uttar Pradesh & Ors. reported in (2010) 2 SCC 114, paragraphs 1, 2, 4, 7, 10. c) Associated Builders v. DDA reported in (2015) 3 SCC 49 (Paragraphs18, 27 & 36-39). d) Ssangyong Engineering and Construction Company Limited v. National Highways Authority of India (NHAI) reported in (2019) 15 SCC 131 (Paragraphs 36, 37, 70-77). e) The learned Senior Counsel has submitted that it is a trite law that a party cannot take advantage of his own wrong and in this regard he has referred to the decision of the Hon’ble Supreme Court in Devendra Kumar v. State of Uttaranchal & Ors. reported in(Paragraphs 18 to 26), 2007 12 SCC 621 (Paragraph 14).

33. The said decision is cited in the context of allowing the claim for refund by the learned arbitrator in favour of the respondent No.1 inspite of a finding that CD-1 is a suspicious agreement.

34. Mr. Mookherjee submits that in any event and in any view of the matter having regard to the fact that the respondent No.1 had failed to make 17 payment of Rs.29.52 crores in terms of the SPA and a memorandum of understanding dated 21st June, 2012 had been signed between Jagrati and one Tirupati Vancom Private Limited for assigning its rights for 18% out of 36% of share transferred to it at a consideration of Rs.14.76 crores that is exactly 50% of the obligation under the SPA, the claimant could not have proceeded with the reference and no award could have been passed in favour of the claimant. It is further argued even after assigning, Jagrati paid only Rs.19.92 crores out of the stipulated Rs.29.52 crores as per its payment obligations. Out of the total amount paid by Jagrati, a substantial part of it was paid by Tirupati Vancom Private Limited Rs.4.73 crores to the appellant no.11 company and Rs.1.84 crores to individual shareholders of the said company. A further sum of Rs.69 lakhs was paid by one Goldsmith Infrabuild Private Ltd. to the shareholders of appellant no.11 company.

35. Therefore, since Jagrati was in breach of its obligations, the said respondent was not entitled to any equitable consideration in its favour. Accordingly, it is submitted that no relief could have been granted to Jagrati.

36. It is submitted that the learned Single Judge however, negated the aforesaid argument of the appellants with regard to refund based on the finding of the learned arbitrator that during the arbitration proceeding the appellants have offered to refund the said sum of Rs.19.92 cores.

37. It is submitted that the appellant's offer to refund was conditional that it would not pay any interest, if called upon to refund. The Tribunal could not have accepted a part offer and rejected a portion of the same. The offer, if at all, ought to have been taken as a whole. 18

38. The statement made in paragraph 6 of the application for modification of the order dated 13 September, 2023 was made in a post Award Section 9 application. The appellants were faced with an order of injunction attaching their bank account the extent of Rs. 26,34,82,336.25/-. The statement made in the application under Section 36 was required to have been viewed in such background and not as an acknowledgment of the portion of the Award directing refund of principle with interest. Thus, there is no question of volunteering to give up such right and/or waiver and/or estoppel.

39. In questioning the discretion and wisdom of the ld. Arbitrator in allowing refund Mr. Mookherjee has submitted that the finding of the Learned Arbitrator that it has a discretion to give a refund even though there was no prayer for amendment is against the basic notion of justice merely as Jagrati as a claimant had relied upon a fraudulent document before the Tribunal. The discretion to the Court/Tribunal to direct refund is essentially to balance the equities. Both the Tribunal and the Learned Single Judge erred in not appreciating that fraud and equity do not dwell together.

40. It is submitted that the arbitral tribunal and also the learned Single Judge have failed to take into consideration that in the statement of claim the appellants have not prayed for refund. Even the concession made during the arbitration proceeding with regard to refund of the said sum was hedged with condition and after the said offer was not accepted by Jagrati, the appellants have made it clear that they would argue on the entire claim of the claimant on merits. Even at that stage no attempt was made to amend the statement of claim. In absence of any pleadings to that effect in the 19 statement of claim the appellant could not deal with the said issue in its rejoinder. In fact, no issue was framed by the learned arbitrator in this regard. The learned arbitrator in allowing the said claim for refund had travelled beyond the pleadings and submissions made by either party. The same is a valid and just ground for setting aside the award. The said direction in the award violates Section 28(2) read with Section 34(2)(a)(iv) of the Arbitration and Conciliation Act, 1996.

41. The appellants have never authorised the learned Arbitrator to adopt such a procedure.

42. Mr. Mookherjee has submitted that in Ssangyong (supra) and PSA Sical Terminals Pvt. Ltd. vs. Board of Trustee of V.O. Chidambranar Port Trust Tuticorin & Ors.,2 the law has been clearly laid down with regard to the power of the arbitrator to decide the dispute. It has to be in accordance with the agreement and the arbitrator cannot travel beyond the scope of reference. The said two decisions are in the context of the learned tribunal allowing refund although such issue was never raised or referred to for arbitration. The issue was limited to the claim for specific performance of SPA.

43. Mr. Mookherjee submits that the award is in conflict with the justice and morality as it has not only granted relief for refund on the basis of a SPA which was held to be inadmissible and suspicious but without any pleading for refund. In this regard Mr. Mookherjee has referred to Ssangyong (supra) and relied upon the following paragraphs: 2AIR 2021 SC 4661:2021 SCC OnLine SC 508. 20 “35. It is important to notice that the ground for interference insofar as it concerns “interest of India” has since been deleted, and therefore, no longer obtains. Equally, the ground for interference on the basis that the award is in conflict with justice or morality is now to be understood as a conflict with the “most basic notions of morality or justice”. This again would be to 39 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , as it is only such arbitral awards that shock the conscience of the court that can be set aside on this ground. line with paras 36 27 18

36. Thus, it is clear that public policy of India is now constricted to mean firstly, that a domestic award is contrary to the fundamental policy of Indian law, as understood in of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , or secondly, that such award is against basic notions of justice or morality as understood in paras 36 to 39 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] . Explanation 2 to Section 34(2)(b)(ii) and Explanation 2 to Section 48(2)(b)(ii) was added by the Amendment Act only so that Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) in Associate Builders [Associate 12] Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , and paras 28 and 29 in particular, is now done away with. , as understood

37. Insofar as domestic awards made in India are concerned, an additional ground is now available under sub-section (2-A), added by the Amendment Act, 2015, to Section 34. Here, there must be patent illegality appearing on the face of the award, which refers to such illegality as goes to the root of the matter but which does not amount to mere erroneous application of 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.” (emphasis supplied) law. In short, what

44. The learned Senior Counsel has submitted that the learned Single Judge has completely misconstrued Section 34 (2)(b)(i) and Section 21 34(2)(a) of the Arbitration and Conciliation Act, 1996 in deciding the objections raised by the appellants with regard to the arbitral award being in conflict with the public policy of India and was passed in contravention with the fundamental policy of Indian law and the most basic motions of morality or justice. The power of the court is not denuded if the court “finds” that the award is vitiated by patent illegality appearing on the face of the award. Mr. Mookherjee submits that the application for modification of the award was made before the expiry of the time limit prescribed for setting aside of the award. The award was passed on 29th June, 2023. The additional award was passed pursuant of an application under Section 33 of the 1996 Act on 21 August, 2023. The application under Section 34 was filed by Deepak on 18th October, 2023 though the time period available to do the same was till 17th November, 2024 extendable by another 30 days to 17th December, 2023. The said time period of 90 days extendable to 120 days is given by the statute to the aggrieved party to take legal advice and challenged the award on any and all grounds available to do. The modification application was filed on 10th October, 2023 that is before the time period on expiry for filing the application for setting aside of the award under Section 34 of the 1996 Act. In view thereof it was neither proper nor legally permissible for the Hon’ble Single Judge to rely upon any statement made by Deepak in connection with the application for modification of an order dated 13th September, 2023 in connection with a best award under Section 9 of the application.

45. Mr. Mookherjee submits that once it is eminently clear that the award contravenes public policy and fundamental policy of Indian law there 22 can be no estoppel against statute or against grounds related to public policy being raised.

46. Mr. Mookherjee submits that the finding of the learned Single Judge that since an aggrieved party can choose whether or not to file a Section 34 application and this in turn makes the right of challenge under the said provision waivable militates against the principle that there cannot be any estoppel against the statute. The claim of the Appellants is that the award is contrary to public policy of India and against the fundamental policy of Indian Law. The said ground does not confer any discretion on the Court to exercise or not to exercise discretion under Section 34. “May” in Section 34 must be read as “shall” when public policy is involved. It therefore becomes a mandatory provision. Therefore, there cannot be an estoppel against law/statute. There cannot be waiver on the ground of public policy.

47. For the proposition that the court may have the suo motu power in an application for setting aside the award on grounds following under Section 34 (2)(b) and 34 (2A) Mr. Mookherjee has referred to State of Chhattisgarh vs. Sal Udyog Private Limited3. Our attention has been drawn to paragraphs 24 to 26 of the said report which reads as follows:- “24. We are afraid, the plea of waiver taken against the appellant State on the ground that it did not raise such an objection in the grounds spelt out in the Section 34 petition and is, therefore, estopped from taking the same in the appeal preferred under Section 37 or before this Court, would also not be available to the respondent Company having regard to the language used in Section 34(2-A) of the 1996 Act that empowers the Court to set aside an award if it finds that the 3(2022) 2 SCC 275 23 same is vitiated by patent illegality appearing on the face of the same. Once the appellant State had taken such a ground in the Section 37 petition and it was duly noted in the impugned judgment, the High Court ought to have interfered by resorting to Section 34(2-A) of the 1996 Act, a provision which would be equally available for application to an appealable order under Section 37 as it is to a petition filed under Section 34 of the 1996 Act. In other words, the respondent Company cannot be heard to state that the grounds available for setting aside an award under sub- section (2-A) of Section 34 of the 1996 Act could not have been invoked by the Court on its own, in exercise of the jurisdiction vested in it under Section 37 of the 1996 Act. Notably, the expression used in the sub-section is “the Court finds that”. Therefore, it does not stand to reason that a provision that enables a Court acting on its own in deciding a petition under Section 34 for setting aside an award, would not be available in an appeal preferred under Section 37 of the 1996 Act. the ruling

25. Reliance placed by the learned counsel for the respondent in Hindustan Construction Co. Company on Ltd. [State of Maharashtra v. Hindustan Construction Co. Ltd., (2010) 4 SCC 518 : (2010) 2 SCC (Civ) 207] is found to be misplaced. In the aforesaid case, the Court was required to examine whether in an appeal preferred under Section 37 of the 1996 Act against an order refusing to set aside an award, permission could be granted to amend the memo of appeal to raise additional/new grounds. Answering the said question, it was held that though an application for setting aside the arbitral award under Section 34 of the 1996 Act had to be moved within the time prescribed in the statute, it cannot be held that incorporation of additional grounds by way of amendment in the Section 34 petition would amount to filing a fresh application in all situations and circumstances, thereby barring any amendment, however material or relevant it may be for the consideration of a Court, after expiry of the prescribed period of limitation. In fact, laying emphasis on the very expression “the Court finds that” applied in Section 34(2)(b) of the 1996 Act, it has been held that the said provision empowers the Court to grant leave to amend the Section 34 application if the circumstances of the case so warrant and it is required in the interest of justice. This is 24 what has been observed in the preceding paragraph with reference to Section 34(2-A) of the 1996 Act.

26. To sum up, existence of Clause 6(b) in the agreement governing the parties, has not been disputed, nor has the application of the Circular dated 27-7-1987 issued by the Government of Madhya Pradesh regarding imposition of 10% supervision charges and adding the same to cost of the Sal seeds, after deducting the actual expenditure been questioned by the respondent Company. We are, therefore, of the view that failure on the part of the learned sole arbitrator to decide in accordance with the terms of the contract governing the parties, would certainly attract the “patent illegality ground”, as the said oversight amounts to gross contravention of Section 28(3) of the 1996 Act, that enjoins the Arbitral Tribunal to take into account the terms of the contract while making an award. The said “patent illegality” is not only apparent on the face of the award, it goes to the very root of the matter and deserves interference. Accordingly, the present appeal is partly allowed and the impugned award, insofar as it has permitted deduction of “supervision charges” recovered from the respondent Company by the appellant State as a part of the expenditure incurred by it while calculating the price of the Sal seeds, is quashed and set aside, being in direct conflict with the terms of the contract governing the parties and the relevant circular. The impugned judgment dated 21-10-2009 is modified to the aforesaid extent.”(emphasis supplied)

48. Mr. Mookherjee has referred to following observation in Bani Prasad (Dead) through Legal Representatives vs. Durga Devi4, in furtherance of the aforesaid submission: “19. In the decision in R.S. Maddanappa v. Chandramma [R.S. Maddanappa v. Chandramma, AIR 1965 SC 1812], this Court considered the object of estoppel. It was held that its object is to prevent fraud and secure justice between the parties by promotion of honesty and good faith. It was therefore, that when one party makes a representation to the other about a fact he would not be shut out by the rule of estoppel if that other person knew the true further held 42023 (6) SCC 708 25 state of facts and must consequently not have been misled by the misrepresentation. one party the decision should make a

20. In in Pratima Chowdhury v. Kalpana Mukherjee [Pratima Chowdhury v. Kalpana Mukherjee, (2014) 4 SCC 196 : (2014) 2 SCC (Civ) 504] , while considering Section 115 of the Evidence Act, this Court held that four salient conditions are to be satisfied before invoking the rule of estoppel. Firstly, factual representation to the other party. Secondly, the other party factual should accept and representation. Thirdly, having relied on the aforesaid factual representation, should alter his position. Fourthly, the instant altering a position, should be such, that it would be iniquitous to require him to revert back to the original position. After holding so, it was further held that the doctrine of estoppel would apply only when, based on a representation by the first party, the second party alters his position, in such manner, that it would be unfair to restore the initial position. the aforesaid rely upon second

21. In the decision in B.L. Sreedhar v. K.M. Munireddy [B.L. Sreedhar v. K.M. Munireddy, (2003) 2 SCC 355] , this Court held that when rights are invoked estoppel may with equal justification be described both as a rule of evidence and as a rule creating or defeating rights. The appellant relies on this decision, more particularly para 30 of the said decision and it reads thus : (SCC p. 370) “30. If a man either by words or by conduct has intimated that he consents to an act which has been done and that he will not offer any opposition to it, although it could not have been lawfully done without his consent, and he thereby induces others to do that which they otherwise might have abstained from, he cannot question the legality of the act he had sanctioned to the prejudice of those who have so given faith to his words or to the fair inference to be drawn from his conduct.” It is to be noted that in the said decision this Court clarified that a legal status expressly denied by a statute could not be conferred on the basis of estoppel.” (emphasis supplied) 26

49. Mr. Mookherjee submits that the learned arbitrator as well as the learned Single Judge have failed to take into consideration that even if it is considered for the sake of argument that a concession was made on behalf of the appellants to refund the consideration, it was incumbent upon the claimant Jagrati to show that based on such representation it has altered its position to its detriment and it would be inequitable to require him to revert back to the original position. There is no pleading or finding of the learned arbitrator to that effect.

50. The statutory right to raise such dispute is even preserved under Section 34 of the Arbitration and Conciliation Act as Section 34(2)(b) and Section 34(2A) clearly mandate that if the court finds that the arbitral award is in conflict with the public policy of India and is vitiated by patent illegality appearing on the face of the award the court can on its own set aside the award. This statutory right cannot be diluted even if it is considered that the appellant had agreed to refund the consideration. In this regard Mr. Mookherjee has referred to the following decisions: 1) Bhau Ram vs. Baij Nath Singh &Ors. reported in AIR 1961 SC 1327 paragraphs 6,7,8,12 2) Prashant Ramchandra Deshpande v. Maruti Balaram Haibatti reported in1995 Supp (2) SCC 539 paragraphs 2,3,5 3) P.R Deshpande vs. Maruti Balaram Haibatti reported in (1998) 6 SCC 507 paragraphs 9,11, 12

51. Mr. Mookherjee has submitted that both the learned arbitrator and learned Single judge have relied upon the decision of the Shenbagam 27 & Ors. v. K.K Rathinavel5 in overruling the objection that without specific pleading no refund can be allowed overlooking the fact that in the said decision in a suit for specific performance the respondent in the alternative prayed for a refund of the advance amount. The effect of pleading for refund according to Mr. Mookherjee has been conclusively settled in Desh Raj & Ors. v. Rohtash Singh6 in which in paragraphs 33 to 36 the legal position was discussed and it has held that:“In the absence of such a prayer, it is difficult to accept that the courts would suo motu grant the refund of earnest money irrespective of the fact as to whether Section 22(2) of the SRA Act is to be construed directory or mandatory in nature.”(emphasis supplied)

52. In so far as the claim for interest is concerned Mr. Mookherjee has submitted that the claim for refund arose in the course of arbitration proceeding and even if it is assumed that it give rise to a cause of action the claim for such amount would only arise once the bargain/contract between the parties fail. Mr. Mookherjee has placed reliance upon a decision of the Hon’ble Supreme Court in Revanasiddayya v. Gangamma Alias Shashikala & Anr.7 in this regard and has drawn our attention to Paragraphs 23 to 25 of the said judgment and more particularly the second sentence in paragraph 24 which reads: “One cannot dispute the legal position that once the bargain to sale/purchase of any land fails, the unsuccessful buyer becomes entitled in law to claim refund of earnest money from the seller under Section 22 of the Specific Relief Act, 1963.” In the instant case, the