18 December 2021, Saturday

1 year ago

Unless expressly authorized, a tribunal cannot decide ex aequo et bono or as amiable compositeur. Award set aside because there was no adjudication on the principal issue and parties were directed to equally bear the responsibility: Delhi High Court

22 November 2021 | DMRC v. Kone Elevators India (P) Ltd. | OMP (Comm.) 227 of 2021 | Vibhu Bakhru J | Delhi High Court | 2021 SCC OnLine Del 5048

The principal issue in the arbitration was whether Kone had erred in not claiming the Input Tax Credit in respect of the excise duty paid for the elevators it had supplied to DMRC. So, the tribunal was required to answer if Kone was entitled to claim Input Tax Credit and, if so, whether DMRC was obliged to reimburse the GST, notwithstanding that Kone had not availed of such benefits.

The tribunal found both the parties wanting for not engaging in joint discussions to explore the possibility of availing Input Tax Credit. Accordingly, it directed that both the parties should equally bear the amount that may have been possibly available.

Bakhru J set aside the award because it did not address the dispute. He also reasoned that given Section 28(2) ACA, the tribunal could not decide ex aequo et bono (according to equity and conscience) or as amiable compositeur (an unbiased third party not bound to apply strict rules of law and who may decide a dispute according to justice and fairness) unless expressly authorized by the parties.

Read the judgment here.

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