The Calcutta High Court has recently observed that the test for allowing or rejecting an amendment to the existing grounds under Section 34 of Arbitration and Conciliation Act is whether the proposed grounds would necessitate filing of a fresh application for setting aside of the Award.
The court was dealing with an application filed by a party seeking to amend the grounds contained under Section 34 of the Arbitration and Conciliation Act.
Justice Moushumi Bhattacharya, in the present case, discussed the legal issue whether the amendment can be comfortably fitted into the schematic arrangement of section 34 of the 1996 Act.
The court observed:
“The test whether an amendment is permissible or not, as held in the decisions cited by counsel, 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.”
The Court also noted that, while section 34 of the Act curtails the scope of judicial intervention by use of the words “……….may be made only by…………..”, “…………only if…………..”, etc., the section allows sufficient breadth of interpretation under the ground of public policy of India. The judgment also surveyed various precedents on this subject. While dismissing the application seeking amendment, the court said:
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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.
Case no.: G.A. 394 of 2020 With A.P. 684 of 2017
Case name: Prakash Industries Limited. vs. Bengal Energy Limited. &Anr.
Coram: Justice Moushumi Bhattacharaya
Read the order here: