Arbitral Award In One Proceeding Can Be Used As Evidence In Another: Allahabad High Court Upholds ₹126 Cr Award To Adani
The Allahabad High Court has held that an arbitral award given in one proceedings can be used as evidence in other arbitral proceedings, though the weightage given to it may vary on case to case basis.While dealing with an arbitral award of more than Rs. 126 crores in favour of Adani Enterprises Ltd., the bench of Chief Justice Arun Bhansali and Justice Jaspreet Singh held“An Arbitral...
The Allahabad High Court has held that an arbitral award given in one proceedings can be used as evidence in other arbitral proceedings, though the weightage given to it may vary on case to case basis.
While dealing with an arbitral award of more than Rs. 126 crores in favour of Adani Enterprises Ltd., the bench of Chief Justice Arun Bhansali and Justice Jaspreet Singh held
“An Arbitral Award, which is placed on record of another arbitral proceedings, can be a highly important piece of evidence. Though, its evidentiary value and weight given to such evidence may differ from case to case but the fact remains that it is not as if the said document does not have any evidentiary value at all.”
Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd., Chhatisgarh Mineral Development Corporation and Maharashtra State Power Generation Corporation Limited entered into a joint venture and incorporated UCM Coal Company Ltd. for development, exploration and mining of coal blocks allotted to them.
UCM Coal-appellant floated tenders for mine developer and operator, and respondent-Adani Enterprises was the successful bidder. At the clearance stage, a PIL was filed before the Supreme Court, which cancelled the allocation of coal blocks to UCM.
Respondent raised a dispute for recovering expenses incurred by the claimant in the process of acquisition of land in the coal block, expenses incurred towards setting up of mine infrastructure and for mobilising movable and immovable assets, and such amount which was paid or committed as advances, including for capital commitments.
An arbitral tribunal was formed, which, after adjudication, allowed the respondent's claims and awarded Rs. 126,63,21,44/- along with the interest at the rate of 11% per annum. Respondent was supposed to pay PMC Projects (India) Pvt. Ltd Rs. 126 crores as per the award in another arbitral proceedings. Payment of interest to the respondent was delayed till the challenge to the other award was finalised.
Commercial Court-I, Lucknow dismissed the challenged under Section 34 of the Arbitration and Conciliation Act, 1996. Thereafter, the appellant approached the High Court on grounds that the contractual interpretation by the Arbitral Tribunal was misconstrued, and certain documents which were relied could not be the basis for deciding the claims.
Referring to the decisions of the Supreme Court in Batliboi Environmental Engineers Ltd. v. Hindustan Petroleum Corpn. Ltd. and AC Chokshi Share Broker (P) Ltd. v. Jatin Pratap Desai, the Court held that though the embargo was on respondent from hiring sub-contractors, there was no bar in hiring consultants, which the respondent had done. Even in cross-examination, witnesses had stated the agencies hired by the respondent where consultants and not sub-contractors. It was also observed that at no point did the appellant raise any objection regarding hiring of the consultant agency without it's prior written consent.
Observing that the Tribunal had referred to oral and documentary evidence for coming at the conclusion as above, the Court held
“In light of the said overwhelming evidence indicating the manner in which the contract was understood and acted upon by the parties, a view has been subscribed by the Tribunal which cannot be said to be without supporting evidence or it is a view which cannot be culled out from the terms of the contract by any prudent person.”
It further held that, “Merely because another view may be possible it will not persuade this Court to overstep its jurisdiction to enter into the arena of re- appraisal and re-appreciation of evidence and interfere with a pure finding of fact, which relates to the construction of a contract entered between the parties, moreso when the oral evidence and the cross- examination of the witnesses clearly amplified the manner in which both the contracting parties understood and proceeded with the contract.”
Accordingly, the Court held that the Tribunal had not overwritten the terms of the contract.
Further, the Court observed that the reliance placed on the award in favour of PMC and against the respondent herein was rightly made as it crystalised the liability of the respondent-Adani Enterprises to the tune of at least Rs. 125 crores. It held that it was a credible piece of evidence for showing that the amount claimed by the respondent was for the work carried out.
“In light of the aforesaid documentary evidence, there was ample material before the Arbitral Tribunal which has been considered and it is not the case of the appellant that the aforesaid documents were not connected by the respondent in their evidence. It is also not the case of the appellant that they were not permitted to cross-examine the respondent-witness. Thus, in case if the opportunity was granted which was not availed or even if availed, nothing substantial could be elicited which could cast a doubt over the said documents, in such circumstances, it cannot be said that it is a case of no evidence.”
Accordingly, it was held that the arbitral award between PMC and Adani was correctly relied on by the Arbitral Tribunal.
Holding that the Arbitral Tribunal is not bound by strict rules of procedure or evidence, the Court dismissed the appeal by UMC Coal and upheld the Award.
Case Title: UCM Coal Company Ltd. v. Adani Enterprises Ltd. [APPEAL UNDER SECTION 37 OF ARBITRATION AND CONCILIATION ACT 1996 No. - 52 of 2023]