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M/s Alpine Housing Development Corporation Pvt. Ltd. vs Ashok S. Dhariwal & Ors.

Civil Appeal · 2023 INSC 57Decided 19 Jan 2023
Civil Appeal No. 73 of 2023
M.R. Shah · C.T. Ravikumar · Hima Kohli

Background

An arbitral tribunal passed an ex-parte award on 12 March 1998 in favour of Alpine Housing, directing specific performance of a land agreement subject to the amalgamation of certain plots; the respondents (Dhariwal and others) had led no evidence before the arbitrators. They challenged the award under Section 34 before the City Civil Court, Bengaluru, and applied to place on record a later communication from the municipal authority refusing permission to amalgamate the plots, arguing that this made the award contrary to public policy and incapable of execution. The Section 34 court refused to allow any evidence, but the Karnataka High Court reversed that and permitted the respondents to file affidavits, relying on the Supreme Court's decision in Fiza Developers. The award-holder appealed.

Decision Breakdown

The Supreme Court dismissed the appeal. It reaffirmed the law from Fiza Developers, Emkay Global and Canara Nidhi: a Section 34 challenge is a summary proceeding, no issues need be framed, and it will "not ordinarily require anything beyond the record that was before the arbitrator", but in exceptional cases, matters not on that record and relevant to the grounds of challenge may be brought in by affidavits, with cross-examination only if absolutely necessary. The Court rejected the argument that a "public policy" objection under Section 34(2)(b) can never require evidence, and also rejected the suggestion that such an objection must wait for execution proceedings: conflict with public policy is itself a ground to set aside an award. Here, the refusal of amalgamation was an event after the award, so it could not have been on the arbitral record, and the award itself had been passed ex-parte with no evidence from the respondents; that made out a "strong exceptional case" for allowing affidavits. The Court permitted the appellant to cross-examine and lead contrary evidence, and directed the Section 34 court to decide the matter expeditiously.

Lesson Learnt

A court hearing a challenge to an arbitral award normally decides only on the record that was before the arbitrator, but where a genuinely new and relevant fact arises after the award (or the award was passed without the challenger's evidence), the court can allow affidavits so that justice is not defeated by procedure, while still keeping the process quick.

Official source (sci.gov.in)View Judgment (PDF)

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