In its judgment dated June 11, 2020 in the matter of Prakash Industries Limited v. Bengal Energy Limited, Justice Moushumi Bhattacharya of the Calcutta High Court disallowed the amendment of an application filed under section 34 of the Arbitration and Conciliation Act, 1996 (“Act”) seeking ‘amplification’ of the grounds set out in the original application.
Facts of the Case:
The applicant sought amendment of an application filed by it under s. 34 of the Act for the setting aside of the order passed by the arbitral tribunal. It was the case of the applicant that it had only appointed the present counsel subsequent to the filing of the s. 34 application, as a result of which new grounds were sought to incorporated by them for amplification of the grounds contained in the original s. 34 application.
Arguments forwarded by the parties:
It was argued by the Applicant that the grounds, which were sought to be brought in by way of amendment, had only been taken by way of abundant caution and would not change the nature and character of the application originally filed under s.34 of the Act. The counsel for the respondent (award holder) opposed the application, and argued that amendments can only be allowed to a limited extent where the arbitration petition (under section 34 of the Act) already contains the basic grounds of challenge which are sought to be elaborated or amplified and that the present application, which was not the case in the instant matter.
Issue:
The issue before the Calcutta High Court was whether or not the amendment to the arbitration application under s. 34 Act was permissible.
Decision:
On the facts of the case, the Calcutta High Court rejected the application, and held that the additional grounds which were being presented by the applicant, were not mere ‘amplifications’ and would require the filing of a new application.
While deciding against the applicant, the Calcutta High Court laid down the test for permitting an amendment to s. 34 of the Act. The High Court held that the test whether an amendment is permissible or not, is whether the proposed amendments would warrant a fresh application under Section 34. It was held that this would mean 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. It was observed - “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.”
This update has been contributed by Adity Chaudhury (Partner) & Kshitija Naik (Associate).
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