Arbitration – Contractual dispute does not become non-arbitrable because it involves serious fraud.
Arbitral Award – Whether the dispute involving allegations of serious fraud by the claimant renders it as non-arbitrable and Whether difference in nature of fraud i.e. simple or serious makes a dispute non-arbitrable?
The respondent – claimant is the importer of coal for industrial purposes. The petitioner requires coal for its Thermal Power Stations.
By the letter dated 30.7.2013, the petitioner had awarded tender of 1.148 MMT coal to the respondent.
By the impugned Arbitral Award dated 21.4.2021, the Arbitral Tribunal awarded Rs.22,06,47,321/- to the respondent – claimant and by the impugned order dated 20.7.2020 the preliminary issue was decided against the petitioner.
By the notice dated 31.8.2017, the respondent invoked the arbitration. The High Court appointed Arbitral Tribunal for adjudicating the dispute vide order dated 30.10.2018.
The petitioner had given application raising preliminary issue that since the dispute involves case of serious fraud, it is not arbitrable. However, the Tribunal, on appreciation of the material on record, held that the dispute is purely a contractual dispute, at the highest it is simple fraud and not of serious allegation of fraud.
HELD that the Court cannot interpret the contracts for the Arbitrator. No interference is called for if view of Arbitrator on interpretation of contract is possible. The finding of the Arbitral Tribunal that the dispute is a contractual dispute and therefore, arbitrable cannot be faulted under Section 34 of the AA.
Judgment dated 8.11.2023 in Commercial Arbitration Petition (L) No.18419 of 2019 in the case of Maharashtra Power Generation Company Ltd Vs. Knowledge Infrastructure Systems Pvt Ltd with connected matter.
