THE SCOPE OF AMENDMENT IN A SECTION 34 PETITION IS NARROW

Case Name: Prakash Industries Limited Vs Bengal Energy Limited & Anr.

Court: Calcutta High Court dated 11th June 2020

(Coram: Justice Moushumi Bhattacharya)

Citation: G.A 394 of 2020 with A.P 684 of 2017

Background of the case:

The present application stems out from a Section 34 petition that was filed by the Petitioner in the year 2017 against an arbitral award. The application preferred by the Petitioner now is an amendment application that is seeking to introduce new grounds of defence by the new advocate who came on record adding to the existing grounds of defence on the footing that the same were left out earlier and that the new grounds are not changing the nature and character of the 34 petition and are only an amplification to the existing grounds of defence taken earlier by the Petitioner. In support of his contentions the senior counsel has relied on various judgements Fiza Developers and Inter-Trade Private Limited Vs. AMCI (India) Private Limited reported in (2009) 17 SCC 796, Venture Global Engineering Vs. Satyam Computer Services Ltd. reported in (2010) 8 SCC 660, Emkay Global Financial Services Limited Vs. Girdhar Sondhi reported in (2018) 9 SCC 49 and State of Maharashtra Vs. Hindustan Construction Company Limited WWW.LIVELAW.IN 3 reported in (2010) 4 SCC 518, as instances where the court in Section 34 applications, allowed the grounds to be amended after taking into account all relevant considerations. 

The amendment was opposed by the senior counsel of the Respondent/award holder on the grounds that the amendment brings in absolutely new grounds of defence and will change the entire nature of the 34 petition and allowing the amendment application would allow all litigants to defeat the timelines as prescribed by the legislature to file a section 34 petition as they would then be allowed to amend their petition later. Counsel relies on Bijendra Nath Srivastava (Dead) Vs. Mayank Srivastava reported in (1994) 6 SCC 117 and Vastu Invest & Holdings Pvt. Ltd, Mumbai Vs. Gujarat Lease Financing Ltd., Mumbai reported in (2001) 2 Mah LJ 565/ (2001) 2 Arb LR 315 to show that amendments for introducing new grounds will not be permitted in a section 34 application.

Issues:

  1. What is the permissible range of an amendment and whether the present application can pass the muster under the relevant provisions of the CPC. 
  1. Whether the amendment can be comfortably fitted into the schematic arrangement of the tiers of challenge under section 34 of the 1996 Act.

Held :

The court after hearing the arguments of both sides held as under:

The test whether an amendment is permissible or not, as held in the decisions cited by counsels, is whether the proposed amendments would warrant a fresh application under Section 34. This means that the grounds which are sought to be brought in by way of an amendment would necessarily be new and independent grounds without having a foundation in the original Section 34 application. This also means that each case must be decided on the nature of the amendments whether they are only amplification to the existing grounds or would they be changing the nature of the petition.

The Court also noted that, while section 34 of the Act curtails the scope of judicial intervention by prefacing the grounds with the use of the words “……….may be made only by…………..”, “…………only if…………..”, etc., the section also allows sufficient breadth of interpretation under the ground of public policy of India. The judgment also surveys various precedents on this subject. While dismissing the application seeking amendment, the court said:

“ It should be reiterated that although Hindustan Construction spoke in favour of an expansive view of amendments in the interest of justice, the proposed amendments in that decision were ultimately disallowed since they were found to constitute new grounds which did not have a foundation in the original application. In the present case, the grounds relating to the Sale of Goods Act cannot be traced to the existing grounds and would therefore constitute new grounds in that sense (as opposed to Venture Global, where subsequent facts, disclosed after the passing of the Award, were allowed as having a causative link with the facts, constituting the Award). In the considered view of this court, the test for allowing or rejecting an amendment to existing grounds in an Arbitration Petition is whether the proposed grounds would necessitate filing of a fresh application for setting aside of the Award. As several of the new grounds also do not have a foundational basis in the existing petition, the petitioner cannot enter through the ‘amplification’ route as has been contended and if the amplification recourse fails, the petitioner has no other statutory cushion to fall back on under the existing law.”  

With the said observation the Hon’ble Court was pleased to dismiss the said amendment application.

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