(Prayer: Original Petition filed under Section 34(2) of the Arbitration and Conciliation Act, 1996 to set aside the arbitral award dated 23.07.2019 in Arbitration Case No.2 of 2017.)
1. A Telugu feature film titled '1-Nenokkadine' is the fulcrum of lis between adversaries herein and the same shall hereinafter be referred to as 'said movie' for the sake of convenience and clarity. Another Telugu feature film titled 'Dookudu' also has a role in the transaction between the parties herein and therefore, the same shall be referred to as 'another movie' for the sake of convenience and clarity. A Film Distribution Agreement dated 20.12.2013 {Ex.C3 before Arbitral Tribunal} (hereinafter referred to as 'said agreement') is the nucleus around which lis revolves and therefore, said agreement can be described as epicentre of this case. As a sequel to some of the rights and obligations of the parties under said agreement, another 'agreement dated 17.10.2015' {Ex.C15 before Arbitral Tribunal} pertaining to another movie was entered into and this shall hereinafter be referred to as 'another agreement' for the sake of convenience and clarity.
2. There is no disputation or disagreement before me that there is an arbitration agreement being arbitration agreement within the meaning of Section 2(1)(b) read with Section 7 of 'The Arbitration and Conciliation Act, 1996 (Act 26 of 1996)' {hereinafter 'A and C Act' for the sake of brevity} between the parties herein and that the arbitration agreement is in the form of covenants in said agreement and another agreement qua said movie and another movie.
3. Suffice to broadly set out contractual relationship between the parties herein and say that said agreement between the parties pertains to assignment of certain rights in said movie and another agreement pertaining to another movie is in the nature of a lien to ensure performance of rights and obligations under said agreement.
4. Arbitrable disputes arose between the parties and a former Hon'ble Judge of Supreme Court of India was appointed as sole Arbitrator vide an order dated 18.11.2016 made in O.P.No.623 of 2016 by this Court. This is the 'Arbitral Tribunal' and the same shall hereinafter be referred to as 'AT' for the sake of brevity.
5. Though there are very many aspects of the transaction between the parties herein , it will suffice to set out the core dispute essential for the purpose of appreciating this order, as instant application, which has been given the nomenclature 'Original Petition' ('OP' for the sake of brevity) is under Section 34 of A and C Act. In other words, owing to the limited scope and contours of Section 34 of A and C Act, this order need not be burdened with elaborate facts with details and all /every aspect of the disputes between parties.
6. '14 Reels Entertainment Private Limited' (hereinafter '14 Reels' for the sake of brevity) was the respondent before AT and it is the petitioner before me. 'Eros International Movies Limited' was the claimant before the AT and it is the sole respondent before me (hereinafter 'Eros' for brevity). For the sake of convenience, from hereon the parties herein shall be referred to as '14 Reels' and 'Eros'.
7. Before setting out the crux and gravamen of the lis between 14 Reels and Eros in a nutshell, it is necessary to record one obtaining position which unfurled in the hearing. Both sides i.e., learned counsel on both sides submitted without any disputation or disagreement that for a feature film shot in 'United Kingdom' ('UK' from hereon), HMRC of Government of UK gives an incentive if more than certain percentage of the movie is shot in UK. To be noted, this Court is informed that 'HMRC' is abbreviation for 'Her Majesty's Revenue and Customs', which is also known as Her Majesty's Revenue Services, which is the tax authority of UK Government. This Court is also informed that this is intended to promote tourism and is in the nature of a subsidy. It may not be necessary to dilate much on that, but the crux of the lis is whether Eros had received this tax subsidy from the UK Government on the teeth of specific arrangement vide said agreement that one Hobo Pictures (to be noted, this Court is informed that Hobo Pictures is a subsidiary of 14 Reels) passed it on to Eros towards adjustment of liability of Rs.32 Crores ascertained as debt due in said agreement.
8. Eros went before AT as claimant, claiming certain sums of money, essentially on the ground that incentive received from UK Government by Hobo pictures on behalf of 14 Reels has not been passed on to it according to said agreement for adjustment of liability of Rs.32 Crores, which has been ascertained as debt due under said agreement. This claim was resisted by 14 Reels on the principal plank that Eros has received the tax subsidy directly from HMRC. To be noted, as already mentioned supra, said agreement was marked as Ex.C3 before AT and another agreement was marked as Ex.C15 before AT. After detailed oral and documentary evidence, AT made an award in favour of Eros directing 14 Reels to pay a sum of little over Rs.11 Crores (Rs.11,22,95,217/- to be precise) with interest at the rate of 14% p.a and post award interest at the bank rate of interest as on 23.07.2019. AT also directed 14 Reels to handover all the title documents in respect of another movie to Eros. Some other directions qua 14 Reels were also given.
9. It is in the aforesaid backdrop that instant OP under Section 34 of A and C Act has been filed assailing the aforementioned arbitral award of AT being 'award dated 23.07.2019' (hereinafter 'impugned award' for the sake of brevity).
10. Learned counsel for 14 Reels submitted that challenge to impugned award is under Section 34(2)(b)(ii) read with Clauses (ii) and (iii) of Explanation 1 thereunder and Section 34(2A) of A and C Act. To be noted, it is submitted that instant OP is post 23.10.2015 and therefore, the learned counsel would argue on the basis of amended Section 34 of A and C Act as in the statute book post amendment on and from 23.10.2015. Submissions in support of both the points were made in common.
11. It is was submitted that one Mr.Kantham Ananth Shankar was examined as CW1 on behalf of Eros and his answers to question Nos. 63 to 66 in cross-examination run contrary to the pleadings. It was argued that the specific answer of CW1 to Question No.63 shifts the onus of proof on Eros and AT committed patent illegality in ignoring this critical and all too crucial principle in Law of Evidence. It was also argued that it also tantamounts to a finding which is in conflict with public policy of India, as it is in conflict with settled principles in Law of Evidence. It was also argued that vital evidence has been ignored. In this regard, it was submitted that Paragraph 18 of the proof affidavit of Mr.Archanta Gopi Chand of 14 Reels has been ignored besides answers to Question Nos.30 to 33 put to Mr.A.Gopichand, who was examined as RW1 on behalf of 14 Reels.
12. For better appreciation, the aforesaid questions, answers to the same by respective witnesses as well as paragraph 18 of aforementioned proof affidavit areextracted and reproduced infra.
'Question No.63 (CW1 in cross examination):
Does it mean that you have not received any payment from the government of UK towards subsidy?
A.We received subsidy to the extent of Rs.12.01 crores and we have shown the credit in our statement of account which was also admitted by the Respondent.'
Paragraph 18 of Proof Affidavit:
(18) It is submitted that, regarding the payment receivable form U.K, the claimant has taken authorisation from the Respondent to received the amount directly from U.K., but after receipt of the said amount the Claimant has not informed the Respondent till today how much amount they received from them. The said amount was strongly disputed by the Respondent actually the claimant informing trough their mails. In fact as on today there no clairty from the claimant regarding the amount received by them from U.K.,'
Question Nos.30 to 33 and answers of RW1 (in cross examination) to the same:
Q.30.Can you check your records and inform the Tribunal of the total subsidy or tax rebate which Hobo Pictures was liable to receive from HMRC?
A.I don't have all the records. As I was told that all the records were submitted to Eros International in London.
Q.31. Who informed you that all the records were submitted to Eros International in London?
A.Firuzi Khan of accounting firm Ecobride Limited, London.
Q.32.According to you, who gave authority to Ms.Firuzi Khan to hand over the documents to Eros International?
A.I don't know.
Q.33.Can you check the records available with you and inform the Arbitral Tribunal of the total subsidy or tax rebate amount which Hobo Pictures was liable to receive from HMRC?
A. With whatever records I have, I can't tell the total amount of subsidy received from HMRC.'
Q.68. Is it correct that it is your case that Hobo pictures applies for subsidy or tax credit from the Government of UK.
A.Yes.Witness adds: As per the agreement that was dated 20.12.2013 clause 7 says that with a view to effectuate collection and receipt exclusively by Eros of the entie subsidy from Hobo pictures Ltd., in respect of the site film Eros is authorized and empowered to sign all papers and documents with the department of culture, media and sports, UK,further with a view to enable Eros to receive the entire subsidy in respect of the site film and to exclusively appropriate the proceeds thereof 14 reels and Hobo pictures inevocably nominate, constitute and appoint Eros as their true and lawful attorney to do and execute all acts, deeds and things as may be required in out name and our behalf to exclusively sign all documents and papers in respect of the subsidy with the department of culture, media and sports, UK and to exclusively demand and receive the same and 14 reels and Hobo pictures ratify and confirm all the acts done by Eros pursuant to this PoA (Power of Attorney).
13. In support of the contention that onus shifts to the party who made the admission, judgment of Hon'ble Supreme Court in Vathsala Manickavasagam & Orsvs N. Ganesan & Anr reported in (2013) 9 SCC 152 was pressed into service and I was taken through Paragraphs 21 to 27 of this case law, which read as follows:
21. Having heard the learned counsel for the respective parties, we are of the considered opinion that at the forefront, it will be necessary to consider the effect of Ext. A-17, inasmuch as, the said document is fully controlled by Section 17 of the Evidence Act. Section 17 of the Evidence Act reads as under:
“17. Admission defined.—An admission is a statement, oral or documentary or contained in electronic form, which suggests any inference as to any fact in issue or relevant fact, and which is made by any of the persons, and under the circumstances, hereinafter mentioned.”
22. As far as the principle to be applied in Section 17 is concerned, the section as it reads is an admission, which constitutes a substantial piece of evidence, which can be relied upon for proving the veracity of the facts incorporated therein. When once the admission as noted in a statement either oral or documentary is found, then the whole onus would shift to the party who made such an admission and it will become an imperative duty on such party to explain it. In the absence of any satisfactory explanation, it will have to be presumed to be true. It is needless to state that an admission in order to be complete and to have the value and effect referred to therein, should be clear, certain and definite, without any ambiguity, vagueness or confusion. In this context, it will be worthwhile to refer to a decision of this Court in�Union of India�v.�Moksh Builders and Financiers Ltd.�[(1977) 1 SCC 60 : 1977 SCC (Tax) 132 : AIR 1977 SC 409] wherein it is held as under: (SCC p. 68, para 21)
“21.�… It has been held by this Court in�Bharat Singh�v.�Bhagirathi�[AIR 1966 SC 405 : (1966) 1 SCR 606] that an admission is substantive evidence of the fact admitted, and that admissions duly proved are‘admissible evidence irrespective of whether the party making them appeared in the witness box or not and whether that party when appearing as witness was confronted with those statements in case it made a statement contrary to those admissions.’ (AIR p. 410, para 19)
In taking this view this Court has noticed the decision in�Ajodhya Prasad Bhargava�v.�Bhawani Shanker Bhargava�[AIR 1957 All 1] also.”
23.�Keeping the said statutory provision in mind, when we consider the contents of Ext. A-17, which is in Tamil, is a letter written by the first respondent himself on 24-6-1974. The said letter was addressed to the third plaintiff Mr Manickavasagam. The contents of the said letter read as under:
“The second plaintiff Saravanamurthi came to my house the day before yesterday at around 9.30 p.m. He stated that something should be immediately arranged, as regards the house properties. He also asked what is the justification in all the three house properties in my name. I told him that you can be called and some arrangement can be made. I am not able to explain everything in this letter. He was in a very rash mood and was behaving in an unruly manner. At one stage, I was driven to the position that he can do whatever he likes. At 10.00 o'clock in the night, I told him what arrangement could be made. But he was not in a sane mood. However much I told him that it was not my fault in purchasing all the three properties in my name and that I am not keen to have all the three properties. I was terribly upset by his behaviour. At one stage I asked him to get out. While going out he expressed that the relationship cannot be continued thereafter. About this you need not inform mother or Murthi himself.”
24. While examining the contents of the said letter, the trial court concluded that the three house properties referred to therein only related to the suit scheduled properties. Going by the statements made by the first respondent himself in the said letter, Ext. A-17, it was explicit and apparent that the first respondent was fully aware that even though the properties were in his name, he was not responsible for purchasing the same in his name and that he was not interested in having all the three properties for himself.
25. When we examine the said document, we find that the conclusions arrived at by the trial court based on the contents of Ext. A-17 cannot be found fault with. In fact, Ext. A-17 came into existence only on 24-6-1974. It is not as if the first respondent disowned the said document. The contents of the said document were also not disputed by the first respondent. It is not the case of the first respondent that the three houses referred to in the said document related to any other properties other than the suit scheduled properties. It is also not his case that the name and persons mentioned therein related to somebody else other than his own brother, the second plaintiff and his mother. The first respondent had also not led any evidence to disprove Ext. A-17.
26.�Keeping the above factors in mind, when we apply Section 17 of the Evidence Act, we find that Ext. A-17 is a statement and the details contained therein, which pertain to the suit scheduled properties, constituted a tacit admission at the instance of the first respondent. If after Ext. A-3, release deed of 1959 and the partition deed, Ext. A-28 of 1973, in 1974, the first respondent on his own came forward with the said letter to the third plaintiff admitting in so many words as to the status of the suit scheduled properties vis-�-vis the parties concerned themselves, we fail to understand as to what wrong was committed by the trial court in placing reliance upon the same to decree the suit. If in reality, the first respondent had his own reservations as to the ownership of the suit scheduled properties, in particular Items 1 and 2, no one prevented him from stating so in uncontroverted terms, while communicating the same in the form of writing to one of his own brothers. In fact, the grievance of the second plaintiff Saravanamurthi was that since the properties were purchased in the name of the first respondent and he being the eldest son of the family, was having an upper hand over all the others and was trying to snatch away the properties. The tone and tenor of the letter viz. Ext. A-17 authored by the first respondent discloses that he too was not very keen to grab all the three properties simply because those properties were purchased in his name. He went to the extent of stating that he was not responsible for purchasing all the three house properties in his name. He went one step further and stated that he did not want to possess all the three properties for all time to come. If such a clear-cut mindset was expressed by the first respondent through Ext. A-17, it was futile on his part to have come forward with any other story after the suit came to be filed by the plaintiffs.
27.�As rightly pointed out by the learned counsel for the appellants, the stand of the first respondent in his statement as regards the second item of the suit scheduled property was that the sale consideration of Rs 18,200 was paid partly from a sum of Rs 10,000, paid to him by his father-in-law and the remaining sum by disposing of his wife's jewels. The trial court has noted that in support of the said stand, no piece of evidence was led before it. On the other hand, giving a go-by to the said stand that the balance sale consideration was met by disposing of his wife's jewels, evidence was led to show as though the remaining sale consideration was paid by his father-in-law and brother-in-law in instalments. The above stand contained in the written statement and led by way of oral evidence, were fully contradictory and, therefore, the one belied the other.'
14. Besides Vathsala case law, judgment of a Hon'ble Division Bench of this Court in Vijay Packaging Case [Vijay Packaging v. Spectra Packs Pvt. Ltd. reported in 2002 (2) CTC 705] was pressed into service, Paragraph 12 of Vijay Packaging case law was read to me and the same reads as follows:
'12. The submission made by placing reliance on Section 34of the Evidence Act is not very well founded as Section 1of the Indian Evidence Act 1872 provides that the Act applies to judicial proceedings in or before any Court, including Courts-martial. The Actin terms does not apply to arbitral proceedings. It is clear that the arbitrator is not confined by the technical rules of evidence and so long as the basic principle of fairness and the well established principles of evidence are not violated, it cannot be held that the arbitrator has failed to act in accordance with law.'
15. To be noted, aforementioned case laws were pressed into service to buttress the argument that principles of Evidence Act given a goby by AT which has been delineated supra elsewhere in this order.
16. According to learned counsel for 14 Reels, principles of Evidence Act, which are well settled and which have become time honoured principles, have been ignored and this tantamounts to ignoring a binding precedent.
17. In an attempt to fit in the above argument within the contours and confines of Section 34 of A and C Act, learned counsel for 14 Reels pressed into service a recent of judgment of Hon'ble Supreme in Ssangyong Engineering and Construction Company Limited Vs. National Highways Authority of India reported in (2019) 15 SCC 131 and submitted that Paragraph 36 of Ssangyong should be read in conjunction with Paragraph 27 of the Associate Builders case[Associate Builders Vs. Delhi Development Authority reported in (2015) 3 SCC 49]. It is deemed appropriate to extract , reproduce these two paragraphs, this Court does so and the same read as follows:
'Paragraph 36 of Ssangyong case law:
36. Thus, it is clear that public policy of India is now constricted to mean firstly, that a domestic award is contrary to the fundamental policy of Indian law, as understood in paras 18 and 27 of Associate Builders v. Delhi Development Authority ., (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , or secondly, that such award is against basic notions of justice or morality as understood in paras 36 to 39 of Associate Builders v. Delhi Development Authority ., (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] . Explanation 2 to Section 34(2)(b)(ii) and Explanation 2 to Section 48(2)(b)(ii) was added by the Amendment Act only so that Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12] , as understood in Associate Builders v. Delhi Development Authority ., (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , and paras 28 and 29 in particular, is now done away with.
Paragraph 27 of Associate Builders Case law:
27. Coming to each of the heads contained in Saw Pipes [(2003) 5 SCC 705 : AIR 2003 SC 2629] judgment, we will first deal with the head “fundamental policy of Indian law”. It has already been seen from Renusagar Power Co. Ltd. v. General Electric Co. ., 1994 Supp (1) SCC 644] judgment that violation of the Foreign Exchange Act and disregarding orders of superior courts in India would be regarded as being contrary to the fundamental policy of Indian law. To this it could be added that the binding effect of the judgment of a superior court being disregarded would be equally violative of the fundamental policy of Indian law.
18. In response to the above submissions, learned counsel for respondent argued on the following lines:
a) At the outset learned counsel for Eros laid emphasis on the limited scope of Section 34 of A and C Act. In this regard, learned counsel for Eros drew the attention of this Court to paragraphs 36 and 37 of Dyna Technologies Pvt. Ltd. (S) v. Crompton Greaves Ltd. (S). in 2019 SCC OnLine SC 1656], which read as follows:
'36. The mandate under Section 31(3) of the Arbitration Act is to have reasoning which is intelligible and adequate and, which can in appropriate cases be even implied by the Courts from a fair reading of the award and documents referred to thereunder, if the need be. The aforesaid provision does not require an elaborate judgment to be passed by the arbitrators having regards to the speedy resolution of dispute.
37. When we consider the requirement of a reasoned order three characteristics of a reasoned order can be fathomed. They are: proper, intelligible and adequate. If the reasoning in the order are improper, they reveal a flaw in the decision-making process. If the challenge to an award is based on impropriety or perversity in the reasoning, then it can be challenged strictly on the grounds provided under Section 34 of the Arbitration Act. If the challenge to an award is based on the ground that the same is unintelligible, the same would be equivalent of providing no reasons at all. Coming to the last aspect concerning the challenge on adequacy of reasons, the Court while exercising jurisdiction under Section 34 has to adjudicate the validity of such an award based on the degree of particularity of reasoning required having regard to the nature of issues falling for consideration. The degree of particularity cannot be stated in a precise manner as the same would depend on the complexity of the issue. Even if the Court comes to a conclusion that there were gaps in the reasoning for the conclusions reached by the Tribunal, the Court needs to have regard to the documents submitted by the parties and the contentions raised before the Tribunal so that awards with inadequate reasons are not set aside in casual and cavalier manner. On the other hand, ordinarily unintelligible awards are to be set aside, subject to party autonomy to do away with the reasoned award. Therefore, the courts are required to be careful while distinguishing between inadequacy of reasons in an award and unintelligible awards.'
b) Furthering his submissions on the lines of limited scope of A and C Act, learned counsel for Eros emphasised and highlighted that in the case on hand, 14 Reels as protagonist of challenge to the impugned award or in other words 14 Reels in its campaign against the impugned award, has predicated / posited the entire matter on two slots, namely conflict with public policy of India / patent illegality within the meaning / scope of Section 34(2)(b)(ii) [clauses (ii) and (iii) of Explanation 1] and Section 34(2A) respectively of A and C Act. Thereafter, learned counsel for Eros went on to say that if the crux and gravamen of the lis before AT is to be further narrowed down and set out as a clincher issue, that would be whether Eros has received any tax subsidy from HMRC i.e., UK Government.
(c) Thereafter, learned counsel for Eros drawing the attention of this Court to Section 1 of the Indian Evidence Act, 1872 and Section 19 of A and C Act submitted that Evidence Act ratio cannot be construed as a binding precedent qua A and C Act and consequently Vathsala case Law [Vathsala Manickavasagam & Ors vs N. Ganesan & Anr reported in (2013) 9 SCC 152 ] pressed into service by 14 Reels will not qualify as a binding precedent qua the case on hand. It was also argued that shifting of onus also form part of appreciation of evidence and any re-look at the same is impermissible owing to the proviso to Section 34(2A).
(d) Thereafter, learned counsel for Eros drew the attention of this Court to pleadings before AT. Specific reference was drawn to paragraphs 19, 25 to 27 of Statement of Defence of 14 Reels which read as follows:
'(19). In regard to para 18, it is true the Respondent has addressed a letter dated 18.03.2015 to the Claimant and requested some time to repay the amount though the process applying for subsidy to the department of culture, media and sports U.K and has requested not issued any legal proceedings. It is further submit that, it is true that the Claimant has filed a case under Section 138 of NI Act, before the court of Metropolitan Magistrate, 28th Court, Mumbai and thereafter the same was transferred to 63rd Metropolitan Magistrate, Andheri, Mumbai and the same was pending under disposal.
'25. In regard to para 24, it is not true that the Respondent never defaulted the repayment of the sum of Rs.32 crores as per the agreement dated 20/12/2013 and further never committed the breaches of the Assignment Agreement cum Undertaking dated 17/10/2015. In-fact the claimant the has suppressed the payments made by the Respondent after execution of Assignment Agreement cum dated 17/10/2015, and further the Respondent shown the statement of Account only up-to 17/10/2015 and further they intentionally suppressed payments made by the Respondent in the present claim petition, and further the Claimant has not clearly stated as on today how much amount they received from UK, the said amount they intentionally suppressed to the Respondent or to this Tribunal also.
26. It is further submit that, regarding the payment receivable form U.K., the claimant has taken authorisation from the Respondent to received the amount directly from U.K., but after receipt of the said amount the Claimant has not informed the Respondent till today how much amount they received from them. The said amount was strongly disputed by the Respondent actually the claimant informing trough their mails, in-fact as on today there no clarity from the claimant regarding the amount received by them from U.K.,
27. In regard to para 25, the statement shown by the claimant is false and fabricated and the same was prepared only for the purpose of filing the present claim statement by suppressing all the payments made by the Respondent after execution of the Assignment Agreement cum undertaking dated 17/10/2015, In fact As on the date of Assignment Agreement the principle outstanding of Rs.17,17,48,550/- (Rupees Seventeen Crores and Seventeen Lakhs forty eight lakhs and five hundred and fifty only) and further the payments made by the Respondent to the Claimant as follows:
SI.No.
| Date
| Details
| Amount
| Mode of Payment
|
1
| 17/10/2015
| Dookudu rights
| 9,00,00,000
| Refer in Agreement dated 17/10/2015
|
2
| 28/01/2016
| Received an amount from HMRC London 30,363,75 @96.5
| 3,28,45,294
| From HMRC London
|
3
| 08/02/2016
| Amount paid during release of KVPG Cheque No.936
| 10,00,000
| Bank Transfer
|
4
| 09/02/2016
| Amount paid during release of KVPG Cheque No.1
| 90,00,000
| Bank Transfer
|
5
| 10/02/2016
| Amount paid during release of KVPG Cheque No.3
| 32,00,000
| Bank Transfer
|
6
| 10/02/2016
| Amount paid during release of KVPG Cheque No.4
| 20,00,000
| Bank Transfer
|
7
| 10/02/2016
| Amount paid during release of KVPG Cheque No.5
| 25,00,000
| Bank Transfer
|
8
| 11/02/2016
| Amount paid during release of KVPG Cheque No.6
| 23,00,000
| Bank Transfer
|
9
| 08/05/2017
| Paid as per direction of this Tribunal
| 50,00,000
| Demand Draft
|
10
| 12/06/2017
| Paid As per direction of this Tribunal
| 50,00,000
| Demand Draft
|
| � | � | Total
| 15,28,45,294
| � |
�Out of the Total due amount of Rs.17,17,48,550/- (Rupees Seventeen Crores and Seventeen Lakhs forty eight lakhs and five hundred and fifty only) the Respondent has paid the amount of Rs.15,28,45,294/- (Rupees Fifteen Crores and twenty eight lakhs forty five thousand two hundred and ninety four only). The said fact intentionally suppressed the claimant before filing the claim statement which the respondent made the payments respectively. The Attested Copy of Statement is filed herewith as Ex.R7.'
(e) Attention of this Court was also drawn to Paragraphs 23 to 26 of the rejoinder before AT, which reads as follows:
'23.With reference to paragraph 24 of the Counter Affidavit, the Claimant reiterates the contents of paragraph 23 of its Statement of Claim. The e-mail 4
th July 2016 was indeed sent by the representative of the Respondent through the Respondent's official e-mail id. The aforesaid email dated 4
th July 2016 was also annexed by the Claimant in its Affidavit in Reply to the criminal Application no.1397 of 2016 filed by the Respondent and its directors in the Hon'ble Bombay High Court. Before the Hon'ble Bombay High Court, the Respondent did not dispute the email dated 4
th July 2016 was addressed on behalf of the Respondent. The Respondent also did not dispute that the Respondents and its directors had offered to transfer some of their assets as more particularly stated in email dated 4
th July 2016.
24. With reference to paragraph 25 of the counter affidavit the Claimant reiterates the contents of paragraph 24 of the Statement of Claim. It is denied that the Respondent never defaulted the repayment of Rs.32 Crores as per the Agreement dated 28
th December 2013. It is reiterated that the Respondent committed breaches of the assignment Agreement cum undertaking 17
th December 2013. It is denied that the Claimant has suppressed the payment made by the Respondent after execution of the Assignment Agreement 17
th October 2015. It is denied the Claimant intentionally suppressed payments made by the Respondent as alleged or otherwise. The Claimant has not received any amount from Govt. of United Kingdom. The Respondent is misleading the Hon'ble Tribunal on the issue of subsidy. It is pertinent to note that the Respondent being the producer of the film would be aware of all the details of the subsidies. It is denied that the Claimant has suppressed any information of this Tribunal.
25. With reference to paragraph 26 of the Counter Affidavit, it is denied that the Claimant has taken authorisation from the Respondent to receive the amount directly from the HMRC, Government of UK. The Respondent has not given such authorisation to the Claimant. The Claimant has not received any amounts from UK. The Claimant calls upon the Respondent to produce any document which authorizes the Claimant to receive subsidy from UK. It is denied that the subsidy amount was strongly disputed by the Respondent by addressing emails to the Claimant.
26. With reference to paragraph 27 of the counter affidavit the Claimant reiterates the contents of paragraph 25 of the Statement of Claim. It is denied that the Claimant has suppressed all payments made by the Respondent after execution of the Assignment Agreement cum undertaking dated 17
th October 2015. The Claimant denies that sum of Rs.15,28,45,294/- was received by the Claimant as alleged or other wise. The Claimant puts the Respondent to strict proof thereof.'
19. The above mentioned portions of the pleadings were referred to or in other words, attention of this Court was drawn to the above mentioned portions of the pleadings in an effort to say that answer to question No.63 are not to be read in isolation and that it should be read in tandem / tune with aforementioned pleadings. In other words, it is the stated position and specific case of learned counsel for Eros that if answer to Question No.63 is read in tandem with the aforementioned pleadings, other answers and other portions of depositions, it cannot be gainsaid that the onus shifted. Learned counsel for Eros also submitted that post Ssangyong, the argument of giving a go by to binding precedent vitiating an award may not be available to a protagonist of Section 34 petition.
20. Before I proceed to embark upon the exercise of discussing and giving reasoning, it is made clear that there is absolutely no difficulty in accepting the argument that scope of challenge to an Arbitral Award under Section 34 of A and C Act is very limited in its scope. This Court has repeatedly held that challenge to an arbitral award under Section 34 of A and C is neither an appeal nor a revision and that it is not even a full-fledged review. It is a limited judicial review within the 8 slots adumbrated in sub-section (2) of Section 34 and elucidation of various facets of these slots. It is also to be noticed that it is clear from Ssangyong that the expanded elucidation of 'public policy' as in Western Geco [ONGC Ltd. v. Western Geco International Ltd., reported in(
2014) 9 SCC 263]reiterated in
Associate Builders case[Associate Builders Vs. Delhi Development Authority reported in (
2015) 3 SCC 49] is no more extant post 23.10.2015 amendment, whereas it may well be available in the form of patent illegality ground vide simultaneously introduced sub-section (2A) albeit circumscribed by a proviso constituted by two limbs. This is evident from a reading of Paragraphs 19 and 34 of Ssangyong,which read as follows:
19. There is no doubt that in the present case, fundamental changes have been made in the law. The expansion of “public policy of India” in
ONGCv.Saw Pipes Ltd.[ONGC v. Saw Pipes Ltd., (
2003) 5 SCC 705] [“Saw Pipes”] and ONGC v. Western Geco International Ltd. [ONGCv.Western Geco International Ltd., (
2014) 9 SCC 263 : (
2014) 5 SCC (Civ) 12] [“Western Geco”] has been done away with, and a new ground of “patent illegality”, with inbuilt exceptions, has been introduced. Given this, we declare that Section 34, as amended, will apply only to Section 34 applications that have been made to the Court on or after 23-10-2015, irrespective of the fact that the arbitration proceedings may have commenced prior to that date.
34. What is clear, therefore, is that the expression “public policy of India”, whether contained in Section 34 or in Section 48, would now mean the “fundamental policy of Indian law” as explained in paras 18 and 27 of
Associate Builders v. Delhi Development Authority ., (
2015) 3 SCC 49 : (
2015) 2 SCC (Civ) 204] i.e. the fundamental policy of Indian law would be relegated to “Renusagar” understanding of this expression. This would necessarily mean that
Western Geco [ONGC v. Western Geco International Ltd., (
2014) 9 SCC 263 : (
2014) 5 SCC (Civ) 12] expansion has been done away with. In short,�
Western Geco [ONGC v. Western Geco International Ltd., (
2014) 9 SCC 263 : (
2014) 5 SCC (Civ) 12] , as explained in paras 28 and 29 of
Associate Builders v. Delhi Development Authority ., (
2015) 3 SCC 49 : (
2015) 2 SCC (Civ) 204] , would no longer obtain, as under the guise of interfering with an award on the ground that the arbitrator has not adopted a judicial approach, the Court's intervention would be on the merits of the award, which cannot be permitted post amendment. However, insofar as principles of natural justice are concerned, as contained in Sections 18 and 34(2)(a)(iii) of the 1996 Act, these continue to be grounds of challenge of an award, as is contained in para 30 of�
Associate Builders�[Associate Builders�v.�DDA, (
2015) 3 SCC 49 : (
2015) 2 SCC (Civ) 204] .
21. Though paragraph 27 of Associate Builders has already been extracted and reproduced elsewhere supra in this order, for the purpose of ease of reference it is deemed appropriate to re-produce Paragraph 18 and 27 of Associate Builders, which read as follows:
18. In Renusagar Power Co. Ltd.v.General Electric Co.[Renusagar Power Co. Ltd.v.General Electric Co., 1994 Supp (
1) SCC 644] , the Supreme Court construed Section 7(1)(b)(ii) of the Foreign Awards (Recognition and Enforcement) Act, 1961:
“7. Conditions for enforcement of foreign awards.—(1) A foreign award may not be enforced under this Act—
***
(b) if the Court dealing with the case is satisfied that—
***
(ii) the enforcement of the award will be contrary to the public policy.”
In construing the expression “public policy” in the context of a foreign award, the Court held that an award contrary to
(i) The fundamental policy of Indian law,
(ii) The interest of India,
(iii) Justice or morality, would be set aside on the ground that it would be contrary to the public policy of India. It went on further to hold that a contravention of the provisions of the Foreign Exchange Regulation Act would be contrary to the public policy of India in that the statute is enacted for the national economic interest to ensure that the nation does not lose foreign exchange which is essential for the economic survival of the nation (see�
SCC p. 685, para 75). Equally, disregarding orders passed by the superior courts in India could also be a contravention of the fundamental policy of Indian law, but the recovery of compound interest on interest, being contrary to statute only, would not contravene any fundamental policy of Indian law (see�
SCC pp. 689 & 693, paras 85 & 95).
'Fundamental Policy of Indian Law
27.�Coming to each of the heads contained in�Saw Pipes�[(
2003) 5 SCC 705 :
AIR 2003 SC 2629] judgment, we will first deal with the head “fundamental policy of Indian law”. It has already been seen from�
Renusagar�[Renusagar Power Co. Ltd.�v.�General Electric Co., 1994 Supp (
1) SCC 644] judgment that violation of the Foreign Exchange Act and disregarding orders of superior courts in India would be regarded as being contrary to the fundamental policy of Indian law. To this it could be added that the binding effect of the judgment of a superior court being disregarded would be equally violative of the fundamental policy of Indian law.
22. Therefore, the obtaining position of law as elucidatively laid down by Hon'ble Supreme Court is instructive and for this purpose one has to read Paragraph 34 of Ssangyong along side paragraphs 18, 27 and 30 of Associate Builders.
23. This takes us to the three juristic doctrines culled out in Western Geco and reiterated in Associate Builders qua conflict with public policy slot. Besides culling out three distinct juristic doctrines, the tests to be applied for testing an arbitral award qua each of these juristic doctrines have also been laid down by Hon'ble Supreme Court. The three juristic doctrines are a) judicial approach, b) 'Natural Justice Principle' ('NJP' for brevity) and c) irrationality/perversity. The tests are a) fidelity of approach; b) audi alteram partem and c) celebrated wednesbury principle of reasonableness respectively.
24. A conjoint reading of Paragraphs 18, 27 and 30 of Associate Builders and Paragraph 34 of Ssangyong make it clear that NJP juristic doctrine to be tested on the time honoured audi alteram partem is still available. Besides this, it also becomes clear that patent illegality continues to be available qua pre and post 23.10.2015 regimes for a person embarking upon the exercise of challenging an arbitral award under Section 34 of A and C Act. There shall be discussion on this infra.
25. As already alluded to supra, instant OP is post 23.10.2015 and both counsel agreed that they would argue on amended Section 34 of A and C Act as in the statute book post amendment. Therefore, what would be available to the protagonist of instant OP is Section 34(2A). Section 34(2A) which deals with 'patent illegality' was available prior to 23.10.2015 amendment not by way of a statutory provision, but by way of a ground added to Section 34 by judge made law vide Saw Pipes principle being law laid down by Hon'ble Supreme Court in Oil and Natural Gas Corporation Ltd. Vs. Saw Pipes Ltd., reported in(
2003) 5 SCC 705.Vital difference between patent illegality ground available under Saw Pipes principle and sub-section (2A) of Section 34 is a two limbed proviso to Section 34(2A) as mentioned earlier in this order. The two limbed proviso to Section 34 restricts the test for patent illegality, by circumscribing the test by saying that mere erroneous application of law cannot be a ground to hold that an award is vitiated by the vice of patent illegality and that while testing an award for patent illegality, there can be no re-appreciation of evidence. In the instant case, in the considered view of this Court in attempt to get over the rigour of this proviso, learned counsel for 14 Reels ingeniously argued that settled principles of Law of Evidence have been given a go by and therefore, this ignoring of a binding precedent would fall under conflict with public policy facet. Though this argument is very attractive on a panoramic perception, a close clinical examination of the argument leaves me with the considered view that this argument cannot be sustained as that would tantamount to completely undoing the constriction of Section 34 post amendment. Re-appreciation of evidence is not permissible while testing an award for patent illegality and mere erroneous application of law cannot by itself does not constitute patent illegality as delineated elsewhere supra in this order. When re-appreciation of evidence cannot be done, if an award is dislodged in the garb of well settled principles of Evidence Law being ignored, in my considered view that would tantamount to re-appreciation of evidence albeit in another garb. To be noted, this view is owing to the peculiar facts and circumstances of this case as entire gamut of campaign of protagonist of instant OP turns on appreciation of evidence. In the case on hand, it is amply clear from the rival submissions (captured, encapsulated and set out supra) that it is a case of sifting oral /documentary evidence on both sides. Therefore, the caveat is this view shall not be construed as the slots being watertight compartments making overlaps completely impermissible. There is one more reason as to why I am unable to accept this argument in this case. To fall under conflict with public policy ground and clause (ii) of Explanation 1 thereto, an impugned award should be such that it shocks the conscience of this Court, but this impugned award certainly does not fall in that category. Therefore, what is not available for a protagonist of a OP to canvass qua patent illegality cannot be permitted to be brought in under the garb of conflict with public policy when the plea turns completely on appreciation of evidence.
26. This takes us to the question of what is appreciation and re-appreciation of evidence. Learned counsel on both sides very fairly submitted that they were unable to find a direct case law with regard to what is appreciation and re-appreciation of evidence at least in the context of Section 34 of A and C Act. Saying so, learned counsel submitted that it is desirable that this principle is discussed in the case on hand. This Court considers it appropriate to do so and for this purpose, this Court considers it appropriate to adopt an illustrative approach.
27. Solely for the sake of illustration, let us take a case where the issue to be tested is whether jural relationship between two parties is that of lessor and lessee or licensor and licensee. Let us assume that a document i.e., contract between parties which is inter alia an adumberation of covenants and clauses between the contracting parties is available before the Adjudicating Authority and that both sides have let-in oral evidence. The witnesses are inter alia the contracting parties and that deposition of these parties to the document turn on jural relationship between the parties. Proceeding with this illustration, one has to bear in mind that a mere caption to a document on hand will not conclusively decide the jural relationship between the parties. Likewise, one should also bear in mind that the contents of the document by themselves do not prove a fact. In this backdrop, the Adjudicating Authority, which has the task of decoding and deciphering this document in the light of the document itself, which is an exhibit before it in conjunction with oral evidence, which is the deposition inter-alia of contracting parties to the document, examines at the question of whether there has been transfer of possession of demised portion from one party to the other, as this would be one of the extremely critical questions to decide whether the jural relationship is one of lease or licence. Let us assume that the deposition is to the effect that the demised portion is part of a larger property and that the question as to who controls the ingress and egress to the demised property also forms part of deposition. Let us also assume that there are some other exhibits in the form of sketches / photographs besides a topography sketch, which describe these aspects of the matter and that witnesses, who are inter alia contracting parties to the contentious document, speak about all this. If the Adjudicating Authority deploys a clinical, forensic approach, sifts through, analyses / scrutinizes all these oral/documentary evidence and comes to the conclusion that the ingress and egress to the immovable property (of which the demised portion is a part) is controlled by one party and that there is no transfer of possession by this party to the other party qua demised portion, the Adjudicating Authority may come to the conclusion that the jural relationship between the contracting parties is a license and not a lease. If sifting and scrutiny of oral/documentary evidence leaves the Adjudicating Authority with a contrary conclusion, the Adjudicating Authority may hold that the jural relationship between the parties is that of a lease. In this illustration, when the matter is carried in appeal, it may well be possible for the protagonist of the appeal to point out certain inconsistencies in the oral evidence and contradictions qua evidence before the Adjudicating Authority. While sifting and scrutinizing of oral and documentary evidence by the original Adjudicating Authority to come to a conclusion about jural relationship between the contracting parties can be described as 'appreciation of evidence', the exercise of Appellate Authority going into the inconsistencies and contradictions in evidence pointed out by the appellant and having a clinical, forensic relook at the oral/documentary evidence before original Adjudicating Authority can be described as 're-appreciation of evidence'. This is a second bite at the cherry by the protagonist.
28. Continuing with the above mentioned illustration let us assume that the original Adjudicating Authority completely ignored all the exhibits i.e., documentary evidence before it and the oral evidence before it though the contracting parties themselves have deposed as witnesses, merely looks at the contentious document in isolation, goes by the caption, adumbration of covenants and terms used therein, it may well be possible for Appellate forum to hold that original Adjudicating Authority has committed patent illegality without any re-appreciation of evidence. This can be done by holding that the original Adjudicating Authority has ignored vital evidence before it and for this re-appreciation of evidence is not required. In contradistinction, this is a case of campaign by a protagonist for whom a second bite at the cherry is legally forbidden.
29. Reverting to the case on hand, without stepping into the forbidden area of re-appreciation of evidence, even on first principles of Evidence Law, I am unable to sustain the submission of 14 Reels as though there can be no two opinions about the obtaining position of law that burden of proof does not shift, but the onus of proof shifts like a pendulum from one end of the lis to another, the principles that any amount of oral evidence cannot undo the pleadings and a party cannot be called upon to prove the negative are two other principles which are incontestable and stair at 14 Reels in the case on hand. In this view of the matter also I find no patent illegality in the impugned award. However, if I start applying these principles of Evidence Law to the award, that would tantamount to making forays into the forbidden area of re-appreciation of evidence. I have already opined and taken the view that this cannot be done by taking umbrage under the garb of ignoring binding precedent owing to the peculiar facts and circumstances of OP on hand.
30. In any event this Court is unable to convince itself that binding precedents have been ignored owing to two other aforementioned fundamental principles of Evidence Law neutralising this plea. In other words, owing to the principles of Evidence Law which I have delineated supra i.e., any amount of oral evidence cannot dislodge pleadings and that a party cannot be called upon to prove the negative, I am unable to sustain the submission that settled principles of Evidence Act have been given a go by. This entire issue has been very pithily and succinctly set out in Paragraph 74 of the award, which reads as follows:
'(74) Therefore what transpires from the above documents
Exs.C-2, R-25, C-3 and R-26, are that there was a clear understanding between the Claimant and the Respondent that whatever subsidy claimed by Hobo pictures on behalf of the Respondent, as and when sanctioned by the UK Government, would be passed on to the Claimant for adjustment of the liability of Rs.32 Crores ascertained as a “debt due” under Ex.C-3 dated 20.12.2013.'
31. A careful perusal of the rest of the impugned award leaves this Court with the considered view that AT has taken into account, clinically sifted through the mass of evidence (documentary and oral evidence) before it, returned findings and merely because the protagonist of this OP on hand considers certain documents should have been taken into account and it should have been held that onus shifted, this Court examining the impugned award under Section 34 cannot have a re-look at evidence before AT. This will tantamount to having a second bite at a cherry, which is clearly forbidden, in the light of one of the limbs to proviso to Section 34(2A). The further reason is, on the facts and circumstances of the case on hand, this Court is convinced that no case has been made out to show that vital evidence has been ignored.
32. This takes us to the question of disregarding a binding precedent. Law can be codified or it can be declared by a competent Court of law. When there is a declaration of law and when there is a ratio that also becomes law notwithstanding not being codified. Therefore, this Court is unable to accept the plea that disregarding a binding precedent cannot vitiate an award. After all, law declared by a competent Court can on a any given day be an expression of public policy of India and/or fundamental policy of Indian Law besides laying down basic notions of justice. However, in the case on hand, the argument predicated on Vathsalsamanickavasagam principle being disregarded which was buttressed by pressing into service Vijay Packaging case law does not find favour with this Court as shifting of onus is also in the domain of appreciation of evidence and there is nothing in the impugned award, which is so unreasonable that no reasonable person could have arrived at that conclusion on the basis of evidence before it.
33. In the light of the narrative thus far, discussion and dispositive reasoning, there is no ground for judicial intervention qua the impugned award under Section 34 of A and C Act.
Therefore, instant OP is dismissed and there shall be no order as to costs.