Double Payment For Same Claim Violates Public Policy U/S 34 Of Arbitration Act: Karnataka High Court

The Karnataka High Court Bench of Chief Justice N. V. Anjaria and Justice K. V. Aravind held that the issue of double payment for the same claim would undoubtedly be in direct conflict with the Public Policy of India and would violate the Fundamental Policy of Indian Law, as well as the basic principles of morality and justice. Additionally, the court held that it is well established in law that double payment for the settlement of a single claim is impermissible. Brief Facts: Respondent No.1 was the claimant, and the appellant was the respondent before the Arbitral Tribunal. The appellant invited tenders for 12 projects to set up and operate biomethanization plants and the respondent was the successive bidder and was awarded the contract. The dispute arose between the parties about the non-availability of land, delay in the issue of work orders, etc. and the claimant invoking the arbitration clause filed a petition before the court for the appointment of an arbitrator. Then, the court appointed the Arbitrator and the claims were filed. The respondent filed a statement of defence contending that the claims are excessive, repetitive, fanciful and imaginary. The appellant contended before the Arbitral Tribunal that an Expert Committee was appointed to examine the claims of the claimant. The Committee has recommended paying Rs.6 crores as against a claim of Rs.27.04 crores, whereas the Executive Engineer was of the view that the claimant was entitled to Rs.3 crores only. The Arbitral Tribunal passed an award holding that the claimant is entitled to compensation. It was said that the respondent filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996. The Commercial Court dismissed the petitions by a common order. Aggrieved by this, the respondent filed an appeal under Section 37 of the Act. Observation of the court: The court relied on the judgment in MMTC Limited Vs. Vedanta Limited (2019), wherein the court held that jurisdiction under Section 37 of the Act is akin to the jurisdiction of the Court under Section 34 of the Act. While entertaining an appeal under Section 37 of the Act, the interference is restricted and subject to the grounds enumerated in Section 34 of the Act. It was further held that the scope of jurisdiction under Sections 34 and 37 of the Act is not akin to normal appellate jurisdiction and Courts ought not to interfere with the Arbitral Award in a casual and cavalier manner. Further, the mere possibility of an alternative view on facts or interpretation of a contract does not entitle Courts to reverse the findings of the Arbitral Tribunal. The court observed that if the facts of the present case are evaluated in light of Section 34 of the Act, the issue at hand pertains to a double payment for the same claim. Additionally, the court held that the issue of double payment for the same claim would undoubtedly be in direct conflict with the Public Policy of India and would violate the Fundamental Policy of Indian Law, as well as the basic principles of morality and justice. Consequently, the court allowed the appeal in part. Case Title: BRUHAT BENGALURU MAHANAGARA PALIKE v. M/S ASHOKA BIOGREEN PVT. LTD.Citation No: 2025 LiveLaw (Kar) 36 Case Number: COMMERCIAL APPEAL No. 427 OF 2024 Counsel for the Appellant: SRI SATYANAND B. S., ADVOCATE Counsel for the Respondent No. 1: SRI KAMLESH GHUMRE, ADVOCATE, SRI A.L. PARASHURAM, ADVOCATE Date of Judgment: 23.01.2025 Click Here To Read/Download The Order

Double Payment For Same Claim Violates Public Policy U/S 34 Of Arbitration Act: Karnataka High Court

Soumya Chakrabarti

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