Furthermore, the court observed that the use of the word “however” does not mean that the decision that the steering group did not have jurisdiction to extend the concession period becomes redundant. The arbitral tribunal found that the decision of the steering group relating to the extension of the concession is binding on the parties. Contrary to the judgment of the High Court is patently illegal.

Brief facts:

The appellant filed an appeal under Section 37 of the Arbitration and Conciliation Act, 1996, challenging the order passed by the Commercial Court, Jaipur. The commercial court rejected the application filed under Article 34 and upheld the award rendered by the arbitral tribunal. The dispute arose between the parties regarding a Construction, Operation and Transfer (“BOT”) Contract with a duration of 11 years and 8 months, including the 18-month construction period.

The appellant argued that the respondent had filed a claim which was successful. Also, the current price overlaps with the previous price. Further, it was submitted that the respondent had concealed the material fact that the petition filed before the High Court had been dismissed and the same was not brought to the notice of the arbitrator. This results in serious misconduct on the part of the defendant, and this would be the only reason for dismissal of the award. However, the defendant opposed the appeal and argued that new grounds cannot be raised on appeal under Section 37. Furthermore, the defendant contends that the scope of Section 34 is limited.

Court observation:

The court observed that the use of the word “however” does not mean that the decision that the steering group had no jurisdiction to extend the concession period becomes redundant. The arbitral tribunal found that the decision of the steering group relating to the extension of the concession is binding on the parties. Contrary to the judgment of the High Court is patently illegal.

The court noted that the current award clearly overlapped with the earlier award. Since, in the earlier award, the concession period had been extended, if the period was not extended, the respondent would receive compensation of Rs.15,184 million.

The court ruled that the respondent made a serious error in concealing the material fact. Since in this order, it was clearly laid down that the concession period could not be extended on the basis of the steering group report, and the State had to issue a notification in this regard. Therefore, the award was patently illegal, contrary to public policy and a total violation of the order of the High Court.

Subsequently, the court held that it was the compelling duty of the plaintiff to submit the order passed before the arbitral tribunal and before the commercial court. Since then, the respondent has not done so and has concealed the material fact. Therefore, the award cannot stand as it was manifestly illegal and contrary to public policy.

Ultimately, the court allowed the appeal under Section 37, setting aside the order passed by the commercial court and the impugned award passed by the arbitral tribunal.

Case title: State of Rajasthan cM/s Atlanta Ltd.

File number: 2024:RJ-JP:41526-DB

Petitioner’s advice: Mr. Rajesh Maharshi, Adv. with Mr. Lakshya Sharma, Adv.