Case Note & Summary
The petitioner, Sushma B. Chandak, filed an arbitration petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging an arbitral award passed by a Panel of Arbitrators and confirmed by the appellate tribunal in an arbitration reference under the Byelaws, Rules and Regulations of the National Stock Exchange of India Ltd. The respondent, SMC Global Securities Ltd., opposed the petition on the ground that after the award, the parties entered into a deed of settlement. Under the settlement, the petitioner, along with others, agreed to pay Rs.46,25,657.56 in full and final settlement of the award, and the respondent accepted this payment in full settlement of all claims, including the debit balance outstanding in UCC No.ZAN0001, which was the subject matter of the arbitration reference. Both parties agreed that no further claims or disputes would lie and that they would unconditionally withdraw all claims against each other, including the present arbitration petition. The petitioner did not dispute the execution of the deed but argued that she never personally signed it, though her name was mentioned as 'first party'. The petitioner's counsel submitted that the compromise was void because one of the considerations was withdrawal of a criminal prosecution involving charges under Sections 467 and 468 of the Indian Penal Code, which are non-compoundable. The Court considered the submissions and the deed of settlement. The Court noted that the settlement was entered into after the award and that the parties had agreed to settle all disputes. The Court held that the consideration for the settlement was not unlawful; the withdrawal of criminal prosecution was a lawful consideration. The Court distinguished the cases cited by the petitioner, noting that in those cases, the compromise was entered into before the award or the consideration was directly for stifling prosecution. Here, the settlement was a bona fide compromise of civil disputes, and the withdrawal of prosecution was incidental. The Court dismissed the arbitration petition as having become infructuous in view of the settlement. The Notice of Motion also stood disposed of.
Headnote
A) Arbitration Law - Settlement Agreement - Challenge to Award - Section 34 of the Arbitration and Conciliation Act, 1996 - The petitioner challenged an arbitral award under Section 34. The respondent contended that the parties had entered into a deed of settlement after the award, whereby the petitioner agreed to pay a sum in full settlement and both parties agreed to withdraw all claims, including the arbitration petition. The petitioner argued that the settlement was void because one of the considerations was withdrawal of a criminal prosecution for non-compoundable offences under Sections 467 and 468 IPC. The Court held that the settlement was not void as the consideration was not unlawful; the withdrawal of prosecution was a lawful consideration. The petition was dismissed as settled. (Paras 1-4)
Issue of Consideration
Whether a deed of settlement, which includes withdrawal of criminal prosecution for non-compoundable offences as part of consideration, is void and consequently, whether the arbitration petition challenging the award survives.
Final Decision
The arbitration petition is dismissed as having become infructuous in view of the deed of settlement. The Notice of Motion also stands disposed of.
Law Points
- Settlement agreement
- Compromise of non-compoundable offence
- Section 34 Arbitration and Conciliation Act
- 1996
- Deed of settlement
- Withdrawal of criminal prosecution as consideration
