Arbitration and Conciliation Act, 1996 - Section 34 - Setting aside of arbitral award - Patent illegality - Appeal against judgment and order passed by High Court setting aside arbitral award - Whether interference by High Court in findings and conclusions of arbitral award sustainable - Held, no - Mere errors on merits of the case do not amount to patent illegality - Narrow scope of patent illegality cannot be breached by mere use of different expressions referring only to error and not patent illegality - Court cannot reassess factual aspects and interfere with arbitral award - Principles laid down by Supreme Court in earlier judgments to be applied by Courts while dealing with arbitral award - Judgment of High Court setting aside arbitral award is not sustainable and is required to be set aside.

Arbitration and Conciliation Act, 1996 - Section 31 - Interest on arbitral award - Reduction of interest rate - Justification for reducing rate of interest - Expression "current rate of interest" under Section 31(7)(b) explained in Explanation to have same meaning as assigned under Section 2(b) of Interest Act, 1978 - High Court may reduce interest awarded by arbitrator only when interest awarded does not reflect prevailing economic condition, is unreasonable or promotes interest of justice - In present case, High Court has not considered relevant factual aspects - Prevailing interest rate at time of award being prime lending rate of State Bank of India in range of 13% to 14% per annum, arbitral tribunal's award of interest at 15% p.a. was justified - High Court had no justification to reduce rate of interest to 10% p.a. - Award of interest at rate of 15% p.a. restored.

Arbitration and Conciliation Act, 1996 - Section 34 - Interference by Courts in award of arbitrator - Restraint to be shown by Courts while examining validity of arbitral award - Otherwise, interference with arbitral award after reassessing factual aspects would be defeating object of Act - Arbitral awards not to be set aside by categorizing them as perverse or patently illegal without appreciating contours of these expressions - Principles expounded by Supreme Court in earlier judgments to be applied while dealing with matter.

Arbitration and Conciliation Act, 1996 - Section 34 - Setting aside of arbitral award - Patent illegality - Appeal against judgment and order passed by High Court setting aside arbitral award - Whether interference by High Court in findings and conclusions of arbitral award sustainable - Held, no - Mere errors on merits of the case do not amount to patent illegality - Narrow scope of patent illegality cannot be breached by mere use of different expressions referring only to error and not patent illegality - Court cannot reassess factual aspects and interfere with arbitral award - Principles laid down by Supreme Court in earlier judgments to be applied by Courts while dealing with arbitral award - Judgment of High Court setting aside arbitral award is not sustainable and is required to be set aside.

Arbitration and Conciliation Act, 1996 - Section 31 - Interest on arbitral award - Reduction of interest rate - Justification for reducing rate of interest - Expression "current rate of interest" under Section 31(7)(b) explained in Explanation to have same meaning as assigned under Section 2(b) of Interest Act, 1978 - High Court may reduce interest awarded by arbitrator only when interest awarded does not reflect prevailing economic condition, is unreasonable or promotes interest of justice - In present case, High Court has not considered relevant factual aspects - Prevailing interest rate at time of award being prime lending rate of State Bank of India in range of 13% to 14% per annum, arbitral tribunal's award of interest at 15% p.a. was justified - High Court had no justification to reduce rate of interest to 10% p.a. - Award of interest at rate of 15% p.a. restored.

Arbitration and Conciliation Act, 1996 - Section 34 - Interference by Courts in award of arbitrator - Restraint to be shown by Courts while examining validity of arbitral award - Otherwise, interference with arbitral award after reassessing factual aspects would be defeating object of Act - Arbitral awards not to be set aside by categorizing them as perverse or patently illegal without appreciating contours of these expressions.

Decision: The Supreme Court reiterated the narrow scope of interference with an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996 and held that the High Court had exceeded its jurisdiction in the present case. The Court also held that the Commercial Court's order suffered from no infirmity and the High Court's comment on it was unjustified. The Court restored the arbitral award in its entirety and allowed the appeal filed by the appellant.

Criminal Procedure Code, 1973 – Section 482 – Recusal of Judge – Request for recusal by petitioner due to a previous stricture made against petitioner’s conduct in a related matter in 2011 – Prayer rejected – Held, request lacked bona fide and seemed to be made with mala fide intention to avoid the Bench for no valid reason – Observations made by the High Court against the petitioner’s conduct in the past could not be a ground to accede to the request made by the petitioner. The prayer for recusal is rejected.

Constitution of India – Article 142 – Forum Shopping and Bench Hunting – Attempt to indulge in – Held, strongly deprecated.

Criminal Appeal – Probation - Essential Commodities Act, 1955 - Violation of West Bengal Pulses, Edible Oil (Dealers Licensing) Order, 1978 - Conviction and sentence - Appellant found guilty of possessing mustard oil and vegetable oil in excess of permissible limit - Appellant convicted under Section 7(1)(a)(ii) of Essential Commodities Act - Trial Court sentenced appellant to rigorous imprisonment and imposed fine - High Court upheld conviction but reduced sentence - Appeal to Supreme Court - Appellant on bail throughout proceedings - Argument raised on time lapse and request for imposition of fine instead of imprisonment - Proviso of Section 7(1)(a)(ii) allows for lesser sentence for adequate and special reasons - Appellant found guilty on merits - Benefit of probation under Probation of Offenders Act granted - Appellant released on probation.

Validity of Tamil Nadu Highways Act, 2001 - Attack on the ground of manifest arbitrariness and discrimination when compared to the Right to Fair Compensation and Transparency in Land Acquisition; Rehabilitation and Resettlement Act, 2013 - Comparison of two legislations by different governments and by different legislatures - Held, Article 14 of the Constitution of India does not authorize the striking down of a law of one State on the ground that, in contrast with a law of another State on the same subject, its provisions are discriminatory.

Application of Article 254(2) of the Constitution of India - Held, once a State law has received the assent of the President under Article 254(2), any repugnant provision in the State law would continue to operate notwithstanding the contrary provision in the Central legislation on the same subject.

Discretion of the State of Tamil Nadu in adopting legislation for acquiring lands – Held - the Validation Act of 2019 expressly excludes the operation of the Right to Fair Compensation and Transparency in Land Acquisition; Rehabilitation and Resettlement Act, 2013 for the purposes contained in the State Acts which stood revived owing to the assent of the President of India. Therefore, the State of Tamil Nadu would be bound to apply only the Tamil Nadu Highways Act, 2001 for acquiring lands for the purposes reserved thereunder.

Appeals Dismissed.

Arbitration and Conciliation Act, 1996 — Section 34 — Challenge to award — Scope of interference with findings of fact recorded by an arbitrator — Perverse or patently illegal findings of fact, only exception to court’s limited jurisdiction of interference — Merely because different views are possible, court cannot interfere with the findings of fact recorded by an arbitrator — Held, award of arbitrator does not suffer from any patent illegality or perversity so as to call for interference by the court.

Appealable orders — Interference with findings of fact recorded by an arbitrator — When permissible — Held, court cannot interfere with the findings of fact recorded by an arbitrator unless it is shown that such findings are perverse or suffer from a patent illegality.

Contract Act, 1872 — Section 2(h) — Contract — Essential elements of — Held, one of the essential elements of a contract is the presence of mutual assent or consensus ad idem of the contracting parties.

Contract Act, 1872 — Section 31 — Novation of contract — Essential requirements of — Held, novation of contract requires mutual agreement of the parties and new agreement in place of the old one.

Contract Act, 1872 — Section 32 — Alteration of contract — Essential requirements of — Held, any alteration in a contract must be done with the consent of the parties.

Contract Act, 1872 — Section 56 — Agreement to do impossible act — Doctrine of — Held, an agreement to do an act which is impossible in itself is void.

Petroleum and Natural Gas Regulatory Board (Marketing Discipline Guidelines for Petroleum Products) — 2002 — Clause 10 — Termination of dealership — Termination of dealership by either party by giving three months’ notice — Held, the clause permits either party to bring about a premature termination of the contract by giving a notice of three months, enabling the notice to make alternate arrangements so that essential services provided by the dealer do not suffer abrupt disruption.

Termination of dealership — Acceptance of notice of termination — Whether necessary for termination — Held, in the present case, the clause in question, which permits either party to bring about a premature termination of the contract, does not require acceptance of the notice of termination for it to be effective.

Communication of notice of termination — Contents of — Held, it is not necessary that a communication of notice of termination be couched in any specific words or language, but must convey the intention to terminate the agreement.

Freezing of Assets - Imposition of Bank Guarantee - The second freeze order had incapacitated the appellant from repatriating an amount of Rs. 38.52 crores - Lower courts had imposed a bank guarantee equivalent to the amount sought to be withdrawn, which the appellant had challenged. (Paragraphs 4-9)

Investigation - Redundancy - Dharmesh Doshi was in no way connected to the appellant company - The said Dharmesh Doshi, on the basis of whom the condition of bank guarantee was imposed, has now been discharged of the alleged offences by the Trial Court - No criminal proceedings whatsoever are pending against the appellant company pertaining to the dispute at hand. (Paragraphs 11-16)

Freezing of Assets - Redundancy - The operation of the freeze order against the appellant company's properties is not legally tenable since the appellant company was not connected to the alleged crime and had not been named in the FIR or chargesheet - The freeze order against the appellant company's assets was redundant - The bank guarantee imposed in furtherance of the freeze order also became redundant. (Paragraphs 17-19)

Relief - Appeal allowed - The condition imposed upon the appellant to furnish a bank guarantee by the Courts below is set aside - The orders impugned herein are modified to that extent - The appellant shall be permitted to withdraw the aforesaid amount along with 4% simple interest, which shall be payable from 08.05.2006 till the date of actual payment. (Paragraph 20)

In the present case, an arbitration agreement was entered into between the parties in the year 2007, prior to the Amendment Act, 2015 coming into force. A dispute arose between the parties, and a notice invoking arbitration was issued on 28.05.2015. The application under Section 11(6) of the Act was filed by the appellant on 10.08.2015, after the Amendment Act, 2015 had come into force. The respondent filed a reply contending that there was an accord and satisfaction, which was upheld by the High Court. The appellant approached the Supreme Court challenging the decision of the High Court.

Issues:

Whether the Amendment Act, 2015 is prospective or retrospective in nature?

What is the effect of Section 21 of the principal Act, 1996 and Section 26 of the Amendment Act, 2015?

Whether the old Act or the Amended Act, 2015 will be applicable in a case where the notice invoking arbitration is issued prior to the Amendment Act, 2015, but the application under Section 11(6) is filed post amendment?

Whether accord and satisfaction is permissible under the Amendment Act, 2015?

Ratio:

• The Amendment Act, 2015 is prospective in nature, and will apply to those arbitral proceedings that are commenced as understood by Section 21 of the principal Act, 1996, on or after the Amendment Act, 2015 and to court proceedings which have commenced on or after the Amendment Act, 2015 came into force.

• The effect of Section 21 of the principal Act, 1996 read with Section 26 of the Amendment Act, 2015 is that the provisions of the Amendment Act, 2015 shall not apply to such of the arbitral proceedings which have commenced in terms of the provisions of Section 21 of the principal Act, 1996, unless the parties otherwise agree.

• In a case where notice invoking arbitration is issued prior to Amendment Act, 2015 and the application under Section 11(6) is filed post amendment, as per Section 21 of the principal Act, the date of issuance of the notice invoking arbitration shall be considered as the commencement of the arbitration proceedings, and therefore as per Section 26 of the Amendment Act, 2015, the Amended Act, 2015 shall not be applicable, and the parties shall be governed by the pre-amendment Act, 1996.

• Accord and satisfaction is permissible under the Amendment Act, 2015, and the High Court was right in holding so.

Decision: The appeal was dismissed, and the decision of the High Court was upheld. The parties were directed to refer the disputes to arbitration as per the pre-amendment Act, 1996.

Criminal Appeal – Narcotics Drugs and Psychotropic Substances Act, 1985 – Conviction under Section 15 – Drawing of Samples at the time of seizure – Compliance with Section 52A(2) – Procedure for drawing samples in the presence of a Magistrate – Effect on prosecution’s case – Doubt about the nature of seized substance. (Para 3)

Criminal Procedure – Narcotics Drugs and Psychotropic Substances Act, 1985 – Drawing of Samples – Compliance with Section 52A(2) – Samples to be drawn in the presence of a Magistrate – Primary evidence for the purpose of trial – Non-compliance with prescribed procedure raises doubt about the prosecution’s case. (Para 8)

Criminal Appeal – Reasonable Doubt – Standard of Proof – Narcotics Drugs and Psychotropic Substances Act, 1985 – Section 15 – Case not established beyond a reasonable doubt – Serious doubt about the nature of seized substance due to improper procedure of drawing samples. (Para 9-10)

Criminal Procedure – Seizure of Contraband – Drawing of Samples – Time of drawing samples – Absence of provision mandating samples to be taken at the time of seizure – Samples to be drawn as per procedure under Section 52A(2) in the presence of a Magistrate – No provision for drawing samples at the time of seizure. (Para 17)