The High Court at Calcutta has set aside two purported arbitral awards in a dispute between Srei Equipment Finance Limited and Roadwings International Private Limited, ruling that the enforcement of awards for which no verifiable records exist is contrary to the public policy of India. Justice Sabyasachi Bhattacharyya held that the “utter absence of any relevant document” regarding the arbitral proceedings “shocks the judicial conscience” and renders the awards invalid and unenforceable under the Arbitration and Conciliation Act, 1996.
Background
The petitioner, Srei Equipment Finance Limited, challenged two purported awards dated September 17, 2020, and September 21, 2020, relating to equipment finance contracts dated April 15, 2017, and July 15, 2017. The petitioner alleged that it only discovered the existence of these awards in January 2024, when photocopies were annexed to an affidavit filed by the respondent before the National Company Law Tribunal (NCLT).
The challenge arose following a significant change in the petitioner’s management. After the Reserve Bank of India (RBI) detected financial irregularities by the previous management, an Administrator was appointed, followed by a Corporate Insolvency Resolution Process (CIRP). The new management claimed that despite a thorough search of the company’s records, no traces of the arbitral proceedings or the final awards could be found.
Arguments of the Parties
Petitioner’s Case: Represented by Senior Advocates Jayanta Kumar Mitra and Tilak Kumar Bose, the petitioner argued that the awards were “products of fraud.” Their contentions included:
- Section 31(5) Violation: No signed copy of the award was ever delivered to the petitioner as mandated by law.
- Lack of Arbitral Record: The learned Arbitrator, in a written reply, stated she retained the original awards but had returned all other documents to the parties; however, the petitioner found no such records.
- Denial by Counsel: A learned Advocate mentioned in the awards as representing the petitioner denied any knowledge of or participation in the proceedings.
- Contradictory Conduct: Extensive correspondence between the parties regarding the claims continued long after the alleged award dates, with the respondent discussing “reconciliation” but never mentioning the existence of any arbitral award.
Respondent’s Case: Represented by Senior Advocate Ranjan Bachawat, the respondent contended:
- Limitation: The applications were time-barred under Section 34(3).
- Vague Allegations: The fraud claims lacked specific particulars and were based on “mere suspicion and conjecture.”
- Entity Continuity: The change in management did not alter the juristic entity of the company; thus, the knowledge of previous officers should bind the current management.
- Initiation Proof: The petitioner had issued a Section 21 notice in 2019, which the respondent argued proved the commencement of arbitration.
Court’s Analysis
On Limitation and Receipt of Award: The Court referred to the Supreme Court rulings in Union of India v. Tecco Trichy Engineers & Contractors and Dakshin Haryana Bijli Vitran Nigam Ltd. v. Navigant Technologies (P) Ltd., emphasizing that the delivery of a “signed copy” is a matter of substance. Since the respondent failed to prove the delivery of signed copies, the Court held that the limitation period under Section 34(3) “never commenced.”
On the Scope of Section 34: The Court addressed whether a “non-existent” award could be challenged under Section 34. Justice Bhattacharyya observed:
“In order to give full effect to Section 5 of the 1996 Act and to preclude dilution of the very purpose of enactment of the said Act… a challenge under Section 34 has to be construed to include a challenge on the ground that there was no valid award at all.”
On Fraud and Public Policy: The Court found it “conspicuous” that the respondent produced no minutes of sittings, pleadings, evidence, or notices of hearing. It also noted the “gross contradiction” within the awards regarding how the Arbitrator was appointed. The Court remarked that claiming “venue charges” for sittings during the COVID-19 pandemic, without supporting evidence, further damaged the credibility of the proceedings.
The Court held:
“The nature of fraud found herein is not by commission but by omission, since the court comes to the conclusion that there was no existence of the alleged arbitral proceedings and/or arbitral awards… at all.”
Regarding the conflict with public policy, the Court stated:
“It would be a gross perpetration and perpetuation of injustice, quite antithetical to notions of due process of law, if the non-existent purported awards which are assailed herein are upheld to be valid and enforceable awards in the eye of law.”
Decision
The Court concluded that the purported awards were induced and affected by fraud and were in conflict with the public policy of India. Justice Sabyasachi Bhattacharyya allowed AP-COM No. 529 and 530 of 2024, setting aside the purported awards dated September 17, 2020, and September 21, 2020. The Court held the awards to be “invalid and unenforceable in the eye of law” and subsequently disposed of the connected stay applications as the question of enforcement no longer existed.
Case Details:
- Case Title: Srei Equipment Finance Limited vs. Roadwings International Private Limited
- Case No: AP-COM No. 529 of 2024 & AP-COM No. 530 of 2024
- Bench: Justice Sabyasachi Bhattacharyya
- Date: March 13, 2026
