VENTURE GLOBAL ENGINEERING LLC versus TECH MAHINDRA LTD. & ANOTHER ETC.

Citation: [2017] 12 S.C.R. 259 · Decided: 01-11-2017 · Supreme Court of India · Bench: JASTI CHELAMESWAR · Disposal: Matter referred to larger bench

Cited by 1 judgment(s) · cites 8 · see the full citation network in Lexace

Judgment (excerpt)

[2017) 12 S.C.R. 259 
VENTURE GLOBAL ENGINEERING LLC 
v. 
TECH MAHINDRA LTD. & ANOTHER ETC. 
(Civil Appeal Nos. 17753-17755 of2017) 
A 
NOVEMBER 01, 2017 
B 
[J. CHELAMESWAR AND ABHAY MANOHAR SAPRE, JJ.] 
Arbitration and Conciliation Act, 1996 -
s. 34 - Arbitral 
award - Joint Venture between two companies for incorporating 
Joint Venture Company wherein entire shareholding of JVC to be 
held between two collaborating companies equally - In event of C 
default, non-defaulting shareholder to purchase the defaulting 
shareholders shares at book value - Appellant company declared 
bankrupt - Jn vocation of arbitration clause -Award passed in favour 
of non-defaulting company, directing the defaulting company to 
transfer their 50% shares of JVC to non-defaulting company at D 
book value - Rounds of litigation in US and Indian Courts -
Challenge to foreign arbitral award in India u/s. 34 - Subsequent 
thereto, disclosure by chairman and founder of non-defaulting 
company that balance sheet of the company had been manipuluted, 
inflating the profit - Said additional facts brought on record -
Thereafter, as regards application by defaulting company u/s. 34, 
E 
trial court set aside the award since it violates the provisions of 
FEMA Act and is against the public policy - However, High Court 
held that award is not against the public policy and restored the 
award - Whether the award impugned in s. 34 proceedings is 
vitiated on account of fraud, misrepresentation and suppression of F 
material facts played by the chairman and founder of 
non-defaulting company in the affairs of the company - Held: Per 
Sapre, !.-Award was obtained by misrepresentation and 
suppression of material facts having bearing over the proceedings, 
thus, arbitral proceedings including the award being in violation 
of public policy of India u!s. 34(2)(b)(ii) read with Explanation l(i), 
G 
(ii) and (iii), not legally sustainable and set aside - Per Chelameswar, 
I-Except mechanically repeating that the non-disclosure or 
concealment of the material facts before the arbitrator is m1 act of 
fraud, no discussion as to how the concealed facts are material 
facts whose concealment resulted in inducing the making of the H 
. 259 
260 
A 
B 
c 
D 
E 
I 
F 
SUPREME COURT REPORTS 
[2017] 12 S.C.R. 
award by fraud or affected by fraud, thus, restoration of the award 
upheld - In view of difference of opinion, matter referred to larger 
Bench. 
While directing the matter to be placed before the Hon'ble 
the Chief .Justice of India, the Court 
HELD: Per Ab hay Manohar Sa pre, .J: 
1.1 This Court, in earlier round of litigation in two decisions, 
namely, Venture I and II, permitted the V company to raise the 
additional plea in Section 34 of the Arbitration and Conciliation 
Act, 1996 proceedings to challenge the arbitral proceedings 
including the Award on the basis of 'R's confessional statement 
made on 07.01.2009. It was held by this Court that such being a 
material fact which came into existence as a subsequent event 
had a direct bearing over the issues arising in the case, the legality 
and correctness of arbitral proceedings including the Award could, 
thus, be tested in the light of this material subsequent event. It 
was also held that since the case on hand relates to the period 
prior to Balco's regime, it would be governed by Bhatia's regime 
and, in consequence, fall in Part I of the Act. It was held that, as 
a result, the legality of the Award, though foreign in nature, could 
still be decided under Section 34 of the Act by the Indian Courts. 
These findings attained finality being rendered inter se parties in 
this very case, are binding on the parties. [Para 99] [294-G-H; 
295-A-B] 
1.3 The existence of letter, its contents and signature of R 
on the letter were never doubted and nor its author-'R' at any 
point of time retracted from his confessional statement made 
therein or denied having written such letter. Therefore, the letter 
was rightly received in evidence without requiring any further 
formal proof to corroborate its existence and contents. That apart, 
it being a "notorious fact" being in the knowledge of the whole 
world and especially those in the trade, the Courts could take 
judicial notice of such evidence. The letter did not require any 
G more formal proof. [Paras 101-103] [298-G-H; 299-A-B] 
Onkar Nath & Ors. v. Delhi Administration (1977) 2 
SCC 611 : [1977] 2 SCR 991 - relied on. 
1.4 The acts of 'R' in the affairs of 

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