This case is a part of our Annual Arbitration Review 2020.
Judgment Name: Prakash Industries Limited v. Bengal Energy Limited & Anr.
Citation: AIR 2020 Cal 279
Court: High Court of Calcutta
Coram: Moushumi Bhattacharya, J.
Date: 11th June 2020
Keywords: Setting Aside, Section 34, Amendment, Scope and Effect, Amplicifcation.
Overview: This judgment looks at the scope for amendment of grounds after an initial petition with a given set of grounds under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter ‘the Act’) has already been made.
What is the permissible range of an amendment?
Whether the amendment comes within the scope of Section 34 of the 1996 Act?
The following case arose after the Petitioners filed a petition in front of the High Court of Calcutta (hereinafter ‘the Court’) for setting aside of an Arbitral Award dated 31st March 2017. The Arbitral Tribunal consisted of three arbitrators and the petition was filed within the statutory period in Section 34(3) of the Act. After filing the initial petition, the Petitioner sought to amend the grounds through what was termed as ‘amplification’ of the ground.
Firstly, the Court looks at Order VI Rule 17 of the Code of Civil Procedure, 1908 (CPC) to state that an amendment that changes the nature and character of the original pleading cannot be admitted. The Court then goes on to compare the initial set of grounds and the newly added set of grounds. It finds that there are 26 additional grounds with respect to the Sale of Goods Act, 1930 that are added.
Next, the Court looks at whether said grounds can fit within Section 34 of the Act. After detailing the various requirements of Section 34(2), the Court states that the test of a permissible amendment is whether the proposed amendments would warrant a fresh application under Section 34. It is noted by the Court that the new grounds which relate to the Sale of Goods Act have not been stated in the initial amendment and thus, would warrant a fresh application. However, the Court states that the grounds which are with respect to a pure question of law can be argued as submissions before the Court as per Order XLI Rule 1(2) and Rule 2 of the CPC.
The Court looked at precedent where amendment was allowed and rejected. In Fiza Developers and Inter-Trade Private Limited v. AMCI (India) Private Limited and Emkay Global Financial Services Limited v. Girdhar Sondhi it was noted that ‘framing of issues’ would be disallowed as they would interfere with the summary nature of a proceeding. Further, these cases held that the Court was ‘ordinarily’ not required to look at anything that was not in the record of the Arbitrator.
Most notably, the case of State of Maharashtra v. Hindustan Construction Company Limited was cited which allowed for incorporation of additional grounds to a Section 34 petition when there are ‘very peculiar circumstances’. Further, other cases which Hindustan cited were discussed to state that:
i) the Court had the power to grant amendment in interests of justice; and
ii) that there was no absolute rule that amendment would not be allowed even after the limitation period provided in Section 34(3).
However, the Court in the current case declined to allow such an expansive construction in the current case since several of the amended grounds did not have any foundation in the previous grounds.
This judgment clarified the position of the law with respect to an amendment of grounds in Section 34(3) application. It unequivocally followed the Fiza Developers and Emkay cases by preventing the addition of any new grounds that did not have any basis in the grounds stated in the original application.