Arbitral Awards Can Be Granted On The Basis Of Evidentiary Admissions: Delhi High Court

The Delhi High Court bench of Justice Prateek Jalan has observed that the power to pass an award on admissions is wide, and evidentiary admissions (admissions contained outside pleadings) can also form the basis of an arbitral award. The Court observed that while it is true that admissions in pleadings are placed on a higher footing to the extent that they may require nothing more for a decree to follow, those outside of pleadings must be considered contextually. However, to hold that there is a bar on granting an award of admissions in the case of evidentiary admissions would be inconsistent with the text of Order XII Rule 6 of the CPC. Background Facts The arbitral proceedings arose from a Letter of Award [“LOA”] dated 11.10.2010, by which the Respondent was entrusted with the task of design, engineering, manufacturing, inspection, testing, etc. of a Boiler Turbine Generator for the Petitioner's 5x270 MW Thermal Power Plant at Amravati, Maharashtra. Pursuant to the LoA, a supply contract and a services contract were signed by the parties on 26.05.2011. Disputes arose between the parties because the Respondent claimed that the Petitioner had failed to discharge its payment obligations for plant, machinery, equipment and services supplied by the Respondent. The contract was terminated vide a communication of the Respondent dated 27.11.2015. The impugned interim award dated 27.07.2017 arose out of the applications filed by both the parties for interim awards on the basis of alleged admissions made by the other. The Respondent relied on minutes of meetings between the parties on 21.11.2012, 09.04.2013, 06.09.2013 and 15.01.2014, to submit that its dues of Rs. 115 crores were admitted by the Petitioner. After a perusal of the record, the Arbitral Tribunal allowed the application of the Respondent and dismissed the application of the Petitioner. The Tribunal accordingly passed an interim award which has been challenged in the present case by the Petitioner under Section 34, Arbitration and Conciliation Act. Contentions The Counsel for Petitioner assailed the award both on factual and legal grounds. He submitted that the minutes of the meeting had been wrongly construed to constitute unequivocal admissions. According to him, in the meetings, at best, the Petitioner accepted that the goods had been delivered and the invoices had been received but this could not be construed as admissions of liability on part of the Petitioner. The Petitioner's contention that the goods had been supplied non-sequentially was raised in contemporaneous correspondence but was overlooked by the Tribunal. As the matter of law, it was submitted that an award passed on the basis of such alleged admissions which were evidentiary and not admissions in pleadings was inappropriate. It was argued that evidentiary admissions could not form the basis of a final award unless they had been put to the concerned party in cross- examination. This was because such admissions could always be clarified and explained, or even demonstrated to have been made in error. It was pointed out that the issues framed in the arbitral proceedings included these very aspects, which have been prematurely decided in the impugned award and thus the Arbitral Tribunal has committed a manifest error. The Senior Counsel for the Respondent argued that court had limited jurisdiction under Section 34, Arbitration and Conciliation Act. The impugned award was based on an interpretation of the pleadings and evidence placed by the parties. The material had been fully considered by the Tribunal and exercise of jurisdiction at this stage would be tantamount to invoking an appellate jurisdiction which setting aside court does not possess. It was further argued, that the Petitioner's insistence upon sequential supply was not a bonafide defence but a moonshine, which ought not absolve it of its liability to pay for goods supplied, received and accepted. Observations The Court began by reiterating the well settled legal principles with respect to its jurisdiction under Section 34, Arbitration and Conciliation Act – a) appreciation of evidence falls in the domain of the arbitrator, b) the court does not sit as an appellate court, c) if the view taken by the arbitrator is plausible, the court will not set aside the award. The Court discussed several case laws on the power of court to pass a judgment on admissions under Order XII Rule 6, CPC. The Court relied on the judgment of the Supreme Court in Karam Kapahi v. Lal Chand Public Charitable Trusts (2010) 4 SCC 753, wherein the court after considering Uttam Singh Duggal & Co. v. United Bank of India (2000) 7 SCC 120, held that the scope of Order XII Rule 6 is not limited to admissions contained in pleadings in view of the expression “or otherwise” used therein. Several judgments including Nimbus Communications Ltd. v. Prasar B. ...

Arbitral Awards Can Be Granted On The Basis Of Evidentiary Admissions: Delhi High Court

Arpita Pande

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