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24 December 2021| Dinesh Gupta and others v. Rajesh Gupta and others | Arb. A. 06 of 2020 | Dinesh Gupta and others v. Bechu Singh and others | Arb. A. 05 of 2020 | C Hari Shankar J | Delhi High Court
While considering orders of an arbitral tribunal directing a party to deposit sums of money, the Delhi High Court has reiterated the scope of its appellate jurisdiction under Section 37 (2) (b) ACA. The court noted that “the restraints which operate on the Court, while exercising jurisdiction under Section 34 of the 1996 Act, would apply with equal, if not greater force while exercising” the appellate jurisdiction.
It also added that because it is “essentially a matter to be assessed by the arbitral tribunal” when considering an order of deposit, the appellate court should be additionally circumspect. Unless the tribunal’s “assessment is perverse or suffers from manifest illegality, the approach of the court, ordinarily, should be one of restraint.”
The court found that the tribunal’s direction to pay sums of INR 6.6 crores, 11.28 cores, and 12 crores respectively were all found based on admissions or were justified conditions imposed on the paying party for granting reliefs he had sought.
The court reminds in the order that the directions were pro tem measures subject to the outcome of the arbitral proceedings and not an interim award.
However, considering that unlike in the set-aside jurisdiction, the court could “modify the impugned order ex debito justitiae,” it directed the petitioner to deposit with the tribunal rather than the party [citing Augmont Gold 2021 SCC OnLine Del 4484 and Edelweiss MANU/DE/2017/2020].
In the other appeal before it [prior numbered Arb. A. 05/ of 2020], the court reversed the deposit of INR 2 crores. Though, citing his earlier decision, Hari Shankar J noted that “the absence of such a prayer may not necessarily be fatal … there must be due justification …”. There was no justification because the interest of the party (in certain shareholding) was already secured by a status quo order [citing Dinesh Gupta 273 (2020) DLT 381].
[Editor's Note: In Soma Enterprises v. Rotec, Arb. Appeal 70 of 2021 (16.12.21), another bench of the Delhi High Court of Sanjeev Narula J also modified a tribunal’s deposit order by directing the party to deposit to the court.]
Read the decision here.
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