In Appeal Proceedings, Legal Issues Can Be Raised For The First Time Depending On Facts

CASE TITLE:  

Gaursons Promoters Pvt Ltd. Vs. Aakash Engineers and Contractors 

DATE OF ORDER:  

May 08, 2024

BENCH:

Hon’ble Mr. Chief Justice Arun Bhansali 

Hon’ble Mr. Justice Vikas Budhwar

PARTIES:

Appellant: Gaursons Promoters Pvt Ltd.

Respondent: Aakash Engineers and Contractors 

SUBJECT: 

The case concerned payments and completion of work for construction projects in Greater Noida and included Gaursons Promoters Pvt. Ltd. And Akash Engineers and Contractors. While Akash Engineers asserted unpaid invoices, Gaursons argued they had met their payment commitments. The Arbitration and Conciliation Act  appeals, arbitration procedures, and the ensuing court review with an emphasis on procedural issues, financial disputes, and contractual interpretations were among the important legal components.

IMPORTANT PROVISIONS:

 Arbitration and Conciliation Act:

• Section 34: Lists grounds for setting aside arbitral awards.
• Section 37: It specifies appealable orders in arbitration proceedings.
• Section 11(4): It deals with the appointments of arbitrators.
• Section 31(7): It concerns the format and content of arbitral awards.
• Section 75: It grants court’s power to issue interim measures.
• Section 81:It gives courts authority to order protective measures.
• Section 8: It authorises courts to refer parties to arbitration if there is an arbitration agreement.
• Section 9: It addresses interim measures by courts during arbitration.
• Section 17: It deals with the arbitral tribunal’s power to issue interim measures.

Income Tax Act:

• Section 194C: It requires tax deduction at source on payments to contractors for work contracts, with specified rates and conditions.

Indian Evidence Act:

• Section 101: It deals with the burden of proof .
• Section 102: It specifies the burden of proof regarding particular fact.
• Section 114: It discusses the presumption as to documents.
• Section 21: It pertains to relevancy of facts forming part of the same transaction.

Code of Civil Procedure:

• Order XI Rule 12: If a party skips providing a document mentioned in their pleading, the court might see it as important unless there is a valid reason for omission.

OVERVIEW:

A rejection of the application to set aside an arbitration verdict was the subject of an appeal under section 37 of the Arbitration and Conciliation Act, 1996.

• The parties had a disagreement on construction projects in Noida.
• While the appellant disputed the amount owed, the claimant claimed there was no payment for labour that was accomplished.
• The claimant had received INR 25,00,000 with interest from a loan arbitrator, along with INR 12,00,000 in fees.
• The appellant had submitted a section 34 application, which the Commercial Court had denied, to have the award set aside.
• The ruling of the court as well as the award had both been appealed by the applicant.
• Alleged patent illegality in the verdict and flaws in the arbitration process were grounds for appeal.
• Arguments had centred on disparities in payment records, disregard for supporting documentation, and denial of account discovery for the claimant.
• The respondent questioned the appellant’s assessment for the facts and maintained that the scope of review under Section 34 was narrow.
• The appeal had been waiting for the court’s final ruling.

ISSUE RAISED:

What issue prompted the appellant-objector to contest the arbitration award issued in this case?

ARGUMENTS ADVANCED BY THE APPELLANT 

• The appellant contended that by establishing a new case and making an inflated award devoid of supporting documentation, the lone arbiter had overreached his authority.
• The appellant contended that the arbitrator had disregarded their payment of the entire outstanding amount, including TDS.
• The appellant contended that the arbitrator disregarded their counterclaims.
• The appellant claimed that the claimant’s books of accounts were not appropriately addressed in the application for discovery.
• The appellant challenged the award, citing inconsistencies in the ward and disparities in the payment amounts.
• They stressed how crucial it is to follow legal obligations, such as section 194C of the Income Tax Act’s tax deductions.
• Based on purported procedural anomalies, such as the non-disposal of their application for the discovery of the claimant’s books of accounts/ledgers under Order XI Rule 12 CPC, the appellant attempted to contest the award.

ARGUMENTS ADVANCED BY THE RESPONDENT:

• The respondent argued that the appellant was not permitted to re-argue the facts and that the Arbitration and Conciliation Act section 34 restricted the extent of interference.
• The respondent stated that the appellant’s assertions lacked consistency, rendering them untrustworthy.
• The appellant claimed to have paid the entire outstanding sum, including TDS, but the respondent disagreed.
• According to the respondent, the appellant’s counterclaims were without merit and had no bearing on the arbitral result.
• The respondent indicated the clarity of their case and the lack of any substantive challenge to the arbitral tribunal’s findings on the quantum awarded.
• Respondent defended the validity of the arbitral award, stating that the appellant failed to demonstrate any patent illegality justifying interference with the award.
• They also emphasised the importance of admissions made during cross examination and cited inconsistent appellant positions throughout the proceedings.

JUDGEMENT ANALYSIS:

• The appeal was denied by the court due to its lack of merit.
• The interim order was overturned.
• The appellant-objector was unable to provide evidence of any patent infringement that would have justified interfering with the appeal 
• The court had stressed that only the grounds listed in the Act could be the subject of interference under Section 34.
• The court determined that the legal question was irrelevant even though it was brought up for the first time in the appellate procedures for a number of reasons, including the appellant’s inconsistent position and the admission of the evidence as the best piece of evidence.
• Another factor working against the appellant-objector was their failure to contest the quantum granted to the respondent under several headings.
• The counterclaim was waived, and the appellant-objector accepted paying incentives to the respondent, as the court had observed.
• The appellant’s witness Rohit Sharma’s unedited deposition was emphasised in the conclusion, as was the appellant’s failure to provide an explanation for the inconsistent positions taken 

CONCLUSION:

In conclusion, the appeal was denied by the court because it determined that there was inadequate proof of patent infringement, inconsistent arguments made by the appellant, and the appeal lacked substance. This choice showed a dedication to upholding the law, as did the revocation of the temporary order. Insisting on the value of reliable evidence such as Rohit Sharma’s deposition highlighted the requirement for a well organised case in court.