| CITATION | Civil Appeal No. 3615 OF 2023 |
| DATE OF JUDGMENT | 10th May,2023 |
| COURT | The Supreme Court of India |
| CASE TYPE | Arbitration and Reconciliation Act,1996 |
| APPELLANT | Reliance Infrastructure Ltd |
| RESPONDENT | State of Goa |
| BENCH | Hon’ble Judge Dinesh MaheshwariHon’ble Judge P.V.Sanjay Kumar |
The arbitrator is a neutral third party which settles arbitration disputes between the parties.Arbitration is the exercise of non-court setting.In this,the parties present the case and arbitrator hear both the sides and make decisions either by writing or oral and the decision is generally binding upon the parties.In the recent case, Reliance Infrastructure won an arbitration dispute against Goa for the slow payment of power plant.
FACTS OF THE CASE
In 1997,Reliance Infrastructure Limited entered into an agreement with the government of Goa to be in charge of power generation stations with 39.8 MW.Several other agreements were made between the parties.The state map out to stop buying power plants from the claimant.After this the power was supplied through Regassified Liquified Natural Gas(RLNG),which lead the way by GAIL in Goa.The state agreed on re-purchasing of power from the claimant.The formula was provided by the claimant for the price of per unit power would be directly billed to the state,the state agreed on the fixed price per unit but when it was made clear that the prices won’t be fixed then state continue on purchasing at the prevailing price of the fuel and dollar till the expiry of Power Purchase Agreements(PPA).The claimant outraged at the non-payment of monthly invoices by the state and so on the plant was winded up.Further, for recovery of its dues claimant seeked before Joint Electricity Regulatory Commission(JERC).On hearing both the parties arbitrator was appointed to look into the dispute.Finally.the Arbitral Tribunal passed an order on 16.02.2018 to pay Rs.278 crore to the claimant with the interest upto the due date 31.10.2017 and further from 31.10.2017 the interest rate would be 15% per annum.through Special Leave Petition the claimant challenged the High Court’s decision before the Supreme Court of India.
IMPORTANT SECTION
Section34 provides that an arbitral award may be set aside by a court on certain grounds specified therein.These grounds are:
1)Incapacity of party(Section 9 of the 1996 Act enables him to apply to the court for appointment of a guardian for a minor or a person of unsound mind for the purpose of arbitral proceedings)
2)Arbitration agreement not being valid
3)Principles of Natural Justice not followed
4)Matter beyond the scope of Arbitration
5)The composition of Arbitral Tribunal not in accordance with requirements
6)The Arbitral award is in conflict with the public policy of India
Steps for setting aside the Award
- Prior notice of appeal/ set aside to the other party
- Application for setting aside with court
- Applicant to satisfy the court about grounds
- Court will issue notice to other party to file its reply
- Rejoinder by Applicant
- Oral arguments
- Pass final judgment for setting aside the award or refusing to set aside the Award
ISSUE RAISED
Does the challenged judgment and order by the Commercial court upholding the impugned Award order interference?
ARGUMENTS OF THE PARTIES
Appellant
- The claimant was represented by the learned Senior Counsel Mr.Parag P.Tripathi.
- The counsel contended that the scope of interference under Section 37 of the Act of 1996 is restricted to the grounds mentioned in Section 34.
- The High Court observed the parties agreed the price of power based on the changing price of fuel and dollar and so the government of Goa continued to have the supply of power from the claimant.
Respondent
- The learned Attorney General of India,Mr.R.Venkatramani,conferred that the High Court correctly interfered with the award.
- Interference under Section 34&37 of the Act of 1996 cites various court decisions.
- Counsel argued that the patent was illegal due to disguised innocence of relevant contractual clauses.
- The state argued that there was a failure in Arbitral Tribunal’s to consider the application for the appointment of an expert violated the principles of natural justice and the state did not get the equal opportunity to present its case to the court.
- The award for illegality of patent should be set aside conferred by the learned Attorney General.
JUDGMENT
While restoring the entirety of the patent,the Justices Dinesh Maheshwari and Sanjay Kumar of the Supreme Court of India ruled in favor of Reliance Infrastructure Limited,that is the claimant.Anil Ambani’s Reliance Infrastructure awarded with arbitral award Rs.278 crore which was won against the Goa government due to due payment of monthly invoices of power supply.The Supreme Court pronounced valuable findings related to “patent illegality”.The Tribunal was well within its jurisdiction and authorisation to award interest at a rate of 10% and not reducing the same to 10%.
An Arbitral award can be challenged in Court if it is opposed to public policy.
Author:Deepika Jain, BM Law College,Jodhpur 5th Semester, Intern at Legal Vidhiya
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