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Case Law Details

Case Name : Friends & Friends Shipping Private Limited Vs Central Warehousing Corporation (Bombay High Court)
Appeal Number : Writ Petition No. 6501 of 2022
Date of Judgement/Order : 12/07/2022
Related Assessment Year :
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Friends & Friends Shipping Private Limited Vs Central Warehousing Corporation (Bombay High Court)

In the matter of Hindustan Construction Ltd (supra) it has been held that in an appropriate case amendment of an application under Section 34 can be allowed even beyond the period provided that is three months under sub Section 3 of Section 34 and a further period of one month as provided under the proviso to that subsection. However, it has also been made clear that such amendment cannot be allowed if it constitutes a fresh challenge. While interpreting the ratio in the matter of Hindustan Construction Ltd (supra) it has been observed in the matter of M/s. Sal Udyog Private Limited (supra) as under :

“24. Reliance placed by learned counsel for the respondent-Company on the ruling in the case of Hindustan Construction Company Limited (Supra) 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 Courts find 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 what has been observed in the preceding paragraph with reference to Section 34 (2A) of the 1996 Act.

25. To sum up, existence of Clause 6(b) in the Agreement governing the parties, has not been disputed, nor has the application of Circular dated 27th July, 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 21st October, 2009 is modified to the aforesaid extent.”

Understood in the light of the above observations it is abundantly clear that under the garb of amendment of the application preferred under Section 34, absolutely new grounds to challenge the award are being sought to be incorporated without there being any foundation, beyond the statutory period prescribed under Section 34(3) of the Arbitration Act. This certainly cannot be permitted to happen.

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July 2024