The Delhi High Court on Wednesday refrained from issuing any interim order restraining AgustaWestland from continuing with arbitration proceedings against the Union government for cancelling the scam-tainted helicopter deal.
A bench of Justice Pratibha M Singh, however, agreed to examine whether arbitral proceedings in the case ought to be terminated, owing to the nature of allegations raised, including corruption and fraud.
The court will also examine whether time limits prescribed under Section 29A of Arbitration and Conciliation Act will apply to pending proceedings where arbitral proceedings have already begun.
Directing that a copy of the order be placed before the Arbitration Tribunal, Justice Singh noted, “This court agrees with the view of Madhya Pradesh High Court that Section 29A of the Act does not apply to arbitral proceedings commenced prior to the coming into force of the Amendment Act of 2015. Thus, the mandate of the Arbitral Tribunal, constituted under the Agreement dated 8th February, 2010, in the present case, does not stand terminated”.
The court said the arbitral record should be placed before it on the next date of hearing – February 28.
The court also sought within three weeks reply from Agusta Westland International Limited (AWIL), which had initiated proceedings before the Arbitration Tribunal in October 2013.
The court was hearing the government’s plea, praying for a permanent injunction order to restrain AWIL from continuing with the arbitration process due to the ongoing criminal cases before the trial court.
AWIL contends that the Ministry of Defence (MoD) cannot unilaterally freeze payments in the Rs 3,600-crore deal.
The government had initially refused to be drawn into the arbitration process, but decided to participate in it in January 2014.
Appearing for MoD, Additional Solicitor General (ASG) Pinky Anand and advocate Rajesh Ranjan sought permanent injunction restraining AWIL from continuing with the arbitration proceedings, as the mandate of Arbitral Tribunal has been terminated in terms of Section 29A of Arbitration and Conciliation Act, 1996.
After the amendment in October 2015, Section 29A makes it mandatory to complete arbitration proceedings within 12 months – an additional six months, in some circumstances – from the date arbitral tribunal enters upon the reference.
Questioning the tribunal’s jurisdiction, the government argued that it cannot go into various allegations raised regarding the transaction, as also allegations of corruption, fraud, and bribery. Thus, the government submitted, the arbitral proceedings deserve to be stayed since the disputes are not arbitable.
Appearing for AWIL, senior advocate Arun Kathpalia submitted that this case is not governed by the provisions of Section 29A, as arbitral proceedings had begun much before the 2015 Amendment Act came into force.
The court noted: “…as to whether the contract, which includes arbitration agreement, is vitiated by fraud, as also allegations of bribery and corruption are concerned, in order for this court to decide the said question, the nature of the claims raised by the defendant (AWIL) and the nature of objections and allegations raised by the plaintiff (MoD) need to be considered.”
“The arbitral record is not before the court and the defendant has also not yet been given an opportunity to respond to the case set out by the plaintiff…”