M/S Maverick Innovation PVT. LTD. vs. Bptp PVT. LTD.

Facts

The appellant, M/s Maverick Innovation Pvt. Ltd., filed an appeal against an order of the Commercial Court dated December 6, 2023. This order had set aside an Arbitral Award dated October 15, 2022, which was rendered in favour of the appellant. The dispute arose from a Service Provider Agreement dated January 6, 2021. The appellant claimed unpaid amounts for services rendered, totaling ₹6,36,654/- including interest, plus costs and future interest. The respondent, BPTP Pvt. Ltd., contended that a settlement was reached where the appellant agreed to accept 50% of the outstanding amount (₹5,90,000/-) as full and final settlement. The appellant acknowledged receipt of this amount. The Arbitral Tribunal had awarded the full claim, reasoning that the respondent claimed GST input credit on the total billing and there was no issue with service quality.

Held

The High Court held that the Commercial Court's decision to set aside the Arbitral Award was correct. The Court found no infirmity in the impugned order. The reasoning was that the appellant had admittedly signed a settlement letter acknowledging the receipt of ₹5,90,000/- as full and final settlement of a total billing of ₹11,80,000/-. The Statement of Claims filed by the appellant before the Arbitral Tribunal did not disclose this settlement, nor did it assail the settlement on grounds of coercion or undue influence. Crucially, the Arbitral Tribunal had not returned any finding to invalidate the settlement. The Court agreed with the Commercial Court that the respondent's availing of input credit for GST did not vitiate the settlement agreement. Therefore, the Arbitral Tribunal's award, which disregarded the admitted settlement, was indeed vitiated by patent illegality.

Key Issues

1. Whether the Arbitral Tribunal's award, which disregarded a settlement agreement between the parties, was vitiated by patent illegality, as held by the Commercial Court? (Mixed question of law and fact, concerning Section 34 of the Arbitration and Conciliation Act, 1996 and principles of contract law). Petitioner's arguments: The judgment does not explicitly record arguments from the appellant (M/s Maverick Innovation Pvt. Ltd.) in the High Court. However, their prior stance before the Arbitral Tribunal was that the settlement was not legally tenable because the respondent had claimed GST input credit on the total billing and there were no issues with service quality. Respondent's arguments: The respondent (BPTP Pvt. Ltd.) argued that a settlement was reached where the appellant agreed to accept 50% of the outstanding amount as full and final settlement, and this amount was paid and acknowledged. They contended that the Arbitral Tribunal erred in ignoring this settlement, and the Commercial Court correctly identified this as a patent illegality.