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Meera Goyal Vs Pritisaraf: For An Order To Qualify As An Award, The Test Of Finality Is Essential

Prahalad B ,
  06 November 2021       Share Bookmark

Court :
High Court of Delhi
Brief :

Citation :
OMP 2/2020

Date of Judgement:
25 February 2020

Coram:
Justice Rekha Palli

Parties:
Appellant – Meera Goyal
Respondent – Priti Saraf

Subject

In orderto ascertain whether an order is an interim award or partial award, the two most important factors that would weigh upon the Court are the concepts of “finality” and “issue”.

Legal Provisions

  • Section 9 of the Arbitration and Conciliation Act, 1996 - Interim measures by Court.
  • Section 12 of the Arbitration and Conciliation Act, 1996 – Grounds for challenge.
  • Section 15 of the Arbitration and Conciliation Act, 1996 - Termination of mandate and substitution of arbitrator.
  • Section 17 of the Arbitration and Conciliation Act, 1996 - Interim measures ordered by arbitral tribunal.
  • Section 34 of the Arbitration and Conciliation Act, 1996 - Application for setting aside arbitral awards

Overview

  • The petitioner is the owner of the property, who entered into an agreement to sell with the respondent for Rs. 63 Crore. Rs 12 Crore was paid as earnest money. Subsequently, the petitioner alleged that the respondent failed to pay the rest of the amount towards the sale consideration and the transaction was abandoned. The respondent invoked the arbitration clause and prayed for appointing an arbitrator before this court on grounds that the petitioner had not responded. An arbitrator was appointed by this court.
  • The petitioner contended that the claim of respondent is not covered under the agreement to sell. The arbitrator stated that it will be considered when a separate application is made.
  • The petitioner objected that portions of respondent’s witness were out of scope of the pleadings. But later the petitioner withdrew his objection stating that this issue will be raised during final arguments. The arbitrator accepted the application of the respondent to submit additional documents and held that the authenticity of such document will be looked into at a later stage and rejected the application of the petitioner.
  • The counsel for the petitioner contended before the court that the order of the arbitrator in refusing the application of the petitioner’s objection under section 16(2) and 16(3) is an interim order which can be challenged under section 34 of the Act. It was also contended that questions of jurisdiction must be decided as preliminary issue. It was also further submitted that accepting the respondent witness’s affidavit, which was outside the scope of the agreement to sell, amounted to the arbitrator exceeding the authority.
  • It was also contended that the objections of the petitioner under section 16(2) and 16(3) cannot be rejected stating that it was raised belatedly is erroneous as the objections arose only after the examination of witnesses and the documents submitted. Finally, it was also argued that the arbitrator did not adhere to the fee structure laid down by the Delhi International Arbitration Centre.
  • The counsel for the respondent contended that if the objections of the petitioners have not been decided as the trial was about to be concluded cannot be termed as an interim award. Hence, the application under section 34 is liable to be dismissed. It was submitted that an arbitrator becomes ineligible only when it attracts section 12(5) read with schedule VII. It was also submitted that the submission of petitioner is hit by rule of estoppel as the petitioner cannot raised same issue which he had given up earlier.

Issue

  • Whether the order can be termed as an interim order?

Judgement Analysis

  • This court held that where there was no determination on the objections raised, it cannot be termed as rejected. The arbitrator has only deferred the adjudication of the objections at a later stage. In this case, it was done as the proceedings were about to be concluded. Hence, it cannot be an interim award and cannot be challenged under section 34 of the Act.
  • The court agreed with the arbitrator’s decision to defer the adjudication of objections raised by the petitioner regarding limitation as it was made at the far end of the proceedings. The petitioner had raised these objections after evidence had been laid and the arguments were closed. The petitioner should have raised these issues when the arbitration proceedings were initiated.
  • Regarding the submission of the petitioner that the arbitrator has not adhered to the stipulated fee structure, this court agreed with the respondent that since he had given up this before the arbitrator, he is estopped from raising in this court. Hence, finding no merit in the petition, the petition was dismissed.

Conclusion

Section 5 of the Act stipulates that in an arbitral proceeding, there should beno judicial intervention unless it is provided in the Act. It is also settled law and norm that judicial interference in arbitral proceedings on a mere allegation of bias and impartiality at the pre-award stage is not allowed and encouraged and all such objections can be raised after the Award has been published.

Click here to download the original copy of the judgement

Questions:
1. Which section in the Arbitration and Conciliation Act, 1996 provides for interim measures ordered by arbitral tribunal?
2. Which section in the Act provides for Application for setting aside arbitral award on the ground that the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration?

 
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