MMTC LTD. versus M/S VEDANTA LTD.

Citation: [2019] 3 S.C.R. 1023 · Decided: 18-02-2019 · Supreme Court of India · Bench: MOHAN M. SHANTANAGOUDAR · Disposal: Dismissed

Cited by 14 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

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1023
MMTC LTD.
v.
M/S VEDANTA LTD.
(Civil Appeal No. 1862 of 2014)
FEBRUARY 18, 2019
[MOHAN M. SHANTANAGOUDAR AND
VINEET SARAN, JJ.]
Arbitration and Conciliation Act, 1996: s.34, 37 – Scope of
interference with an arbitral award in India – Pre and Post
amendment made to s.34 in 2015, position explained.
Arbitration and Conciliation Act, 1996: s.34, 37 – In terms of
Arbitration agreement dated 14.12.1993, the appellant was
appointed as a consignment agent from whom respondent could
avail services such as storage, handling and marketing of the copper
rods produced by the respondent – Appellant used to raise invoices
in the name of customers and remit the sum received to the respondent
after deducting its services charges – The agreement was altered
later, and the amendment enabled appellant to supply goods to
customers against the letter of credit and it was total responsibility
of the appellant to credit the sale proceeds to the respondent –
Dispute in the instant matter pertains to supplies made by the
appellant to Hindustan Transmission Products Ltd. (HTPL) after
the amendment of the arbitration agreement – Since the payment
was not made by HTPL to appellant and who also subsequently did
not make payment for the supplied goods to the respondent, the
respondent invoked the arbitration clause under agreement dated
14.12.1993 – Arbitral tribunal passed award in favour of the
respondent which was confirmed by the High Court – In the instant
appeal, the case of the appellant was that it used to supply the
goods of the respondent to customers as per agreement dated
14.12.1993 only – However, the appellant had to make deviation
from this procedure at the request of the respondent by allowing the
customers arranged by the respondent to lift its goods stored in the
appellant’s godown and in such case, the appellant was not bound
by the contract since such contract was independent from the
agreement dated 14.12.1993 – Held: It is evident from the subsequent
[2019] 3 S.C.R. 1023
1023
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1024                    SUPREME COURT REPORTS            [2019] 3 S.C.R.
agreement between HTPL and the respondent that a direct agreement
existed between them – However, the appellant received its
commission in its entirety for the HTPL transaction, and thus clearly
was a beneficiary of the agreement between the respondent and
HTPL – Series of correspondences amongst appellant, respondent
and HTPL also revealed that the appellant was also actively involved
in the transaction in question entered into between the respondent
and HTPL, and as such was a beneficiary under their agreement –
The issuance of letters of credit in the name of the appellant with
respect to the HTPL transaction was similar to the practice adopted
in case of letters of credit or demand drafts issued in all other
transactions, whether directly negotiated by the respondent, or
procured through the appellant, which suggested that it was the
duty of the appellant in this case as well to ensure that letter of
credits issued were bona fide, and in case of stand-by letters of
credit, that they were negotiated in time in case of failure of payment
on the due date, in terms of agreement dated 14.12.1993 – In this
view of the matter, it is not open to the appellant to argue that the
agreement between the Respondent and HTPL was independent of
the agreement dated 14.12.1993 between the appellant and the
respondent and that the latter did not apply to such transaction –
Thus, there was no reason to disturb the award on the ground that
the subject matter of the dispute was not arbitrable.
Dismissing the appeal, the Court
HELD:  1.1 Interference with an arbitral award may be
undertaken in terms of Section 34 or Section 37 of the Arbitration
and Conciliation Act, 1996. While the former deals with challenges
to an arbitral award itself, the latter, inter alia, deals with appeals
against an order made under Section 34 setting aside or refusing
to set aside an arbitral award. As regards Section 34, the Court
does not sit in appeal over the arbitral award and may interfere
on merits on the limited ground provided under Section
34(2)(b)(ii), i.e. if the award is against the public policy of India.
Prior to the amendments to the 1996 Act in 2015, a violation of
Indian public policy, in turn, includes a violation of the fundamental
policy of Indian law, a violation of the interest of India, conflict
with justice or morality, and the existence of patent illegality in

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