30 April 2021 | Madhya Pradesh Madhya Kshetra Vidyut Vitran Co. Ltd. v M/s. Shyam Indus Power Solution Pvt. Ltd. | Arbitration Appeal No. 34/2014 | Vishal Dhagat J

The Madhya Pradesh High Court has said that the arbitral tribunal’s decision to allow amendment of the statement of claim at a late stage into the arbitration proceedings did not amount to patent illegality.

A dispute arose on a formula set out under a distribution agreement. The respondent, the claimant in the arbitration, wanted to follow the formula set out earlier in the tender documents different from the contract. It made an amendment application proposing to challenge the agreement on the ground of coercion and economic duress. By this time, the documentary and oral evidence had been adduced by both parties. The tribunal allowed the amendment, framed additional issues, and gave the parties an opportunity to present further evidence. It said that no new pleas had been introduced, and the amendment was an elaboration of an existing plea. Eventually, ruling that the clause in question was unenforceable, the tribunal made an award ignoring the contractual formula.

The set-aside court upheld the award.

In appeal, the High Court reasoned that it was not for it to examine if there had been an erroneous application of the law. It also rejected an argument that the tribunal exceeded its jurisdiction by travelling beyond the contract, concluding that once the agreement was hit by duress and coercion, it was open for the tribunal to consider the parties’ conduct and correspondence.

Access the judgment here. Note that the decision does not rely on Section 23 (3) ACA.