VENTURE GLOBAL ENGINEERINGversusSATYAM COMPUTER SERVICES LTD. AND ANOTHER.

                         [2010] 9 S.C.R. 858


A               VENTURE GLOBAL ENGINEERING
                                   v.
     SATYAM COMPUTER SERVICES LTD. AND ANOTHER.
              (Civil Appeal No. 6519 of 2010)
                          AUGUST 11, 2010
B
     [P. SATHASIVAM AND ASOK KUMAR GANGULY, JJ.]

        Arbitration and Conciliation Act, 1996: s. 34, Explanation
  - Public policy - Award induced or affected by fraud - Held:
C It falls within the grounds of excess of jurisdiction and lack of
  due process and is opposed to public policy - Concealed
  facts disclosed after passing of award having causative link
  with the facts constituting or inducing the award are relevant
  to demonstrate that there was fraud in making of the award -
D In the instant case, amendment application filed by plaintiff
  for bringing materials on record for seeking the setting aside
  of the award - Ground being that there was fraud in making
  of the award - In the interest ofjustice, plaintiff allowed to bring
  those materials on record as the same were not wholly
E irrelevant and might have bearing on the plaintiff's prayer for
  setting aside the award - Administration of justice - Abuse
  of process of law - Fraud - Code of Civil Procedure, 1908 -
  0.8 r.9.

       Code of Civil Procedure, 1908: 0. 8 r. 9 - Filing of
F amendment petition and additional pleadings - Permissibility
  - Held: In dealing with a prayer for amendment, courts
  normally prefer substance to form and techniques, and
  interests of justice is one of the most relevant considerations
  - Therefore, if a party is entitled to amend its pleadings,
G having regard to the justice of the case, the right of the party
  to amend cannot be defeated just because a wrong section
  or a wrong provision was quoted in the amendment petition -
  In the instant case, High Court erred in rejecting the plaintiff's
  prayer for amendment on a hyper techniool ground that a
H                                 858
     VENTURE GLOBAL ENGINEERING v. SATYAM                859
           COMPUTER SERVICES LTD.

wrong provision was quoted in the amendment petition -          A
Practice and procedure.

     The appellant having its principal office in USA
entered into an agreement with the first respondent for
establishing a company (second respondent). Dispute
                                                                8
arose between them and the matter was referred to
arbitration. An arbitration award was passed on 3rd April,
2006 whereby the appellant was required to transfer its
entire shareholding in the second respondent to the first
respondent. The first respondent filed a petition for
enforcement of award before the U.S. District Court. On         C
28th April, 2006, the appellant filed a suit for declaration
in the civil court to set aside the award and also prayed
for a permanent injunction against the transfer of shares
under the arbitral award. On 7th January, 2009, the
chairman and founder of the first respondent confessed          D
that the balance sheets of the first respondent were
fraudulently inflated. As a result, the auditors of the first
respondent, declared that the financial statements could
no longer be considered accurate or reliable. In the light
of these developments, the appellant filed an interim           E
application before the trial court to bring certain facts on
record and also filed additional pleadings in respect of
the same under Order 8 Rule 9, CPC. The trial court
allowed the application of the appellant. The High Court
allowed the revision petition filed by the first respondent     F
and held that an application under Order 8 Rule 9, CPC
for bringing additional pleadings on record was not
maintainable. The. judgment of High Court was
challenged by filing the instant appeal.
                                                                G
    It was contended for the respondents that the
grounds which were sought to be incorporated by way
of amendment were not relevant and did not come
within the concept of public policy as explained in the
Explanation to Section 34 of the Arbitration and
                                                                H
    860      SUPREME COURT REPORTS             (2010] 9 S.C.R.


A   Conciliation Act, 1996; and that the facts which were
    sought to be brought on record, even if they were
    accepted to be true, had no bearing on the material facts
    on which the award was based.

          Allowing the appeal, the Court
B
       HELD: 1. In dealing with a prayer for amendment,
  courts normally prefer substance to form and
  techniques, and the interest of justice is one of the most
  relevant considerations. Therefore, if a party is entitled to
C amend its pleadings, having regard to the justice of the
  case, the right of the party to amend cannot be defeated
  just because a wrong section or a wrong provision was
  quoted in the amendment petition. The approach of the
  High Court in the instant case, in rejecting the appellant's
o prayer for amendment, inter a/ia, on the ground that a
  wrong provision was quoted in the amendment petition,
  was a very hyper technical one. [Para 22] [867-E-F]

        Venture Global Engineering v. Satyam Computer
    Services Ltd. and another (2008) 4 sec 190; State of
E   Maharashtra v. Mis Hindustan Construction Company Ltd.
    AIR 2010 SC 1299; Pirgonda Hongonda Patil v. Kalgonda
    Shidgonda Patil and ors. AIR 1957 SC 363; L.J. Leach and
    Company Ltd. and another v. Jardine Skinner and Co. AIR
    1957 SC 357 - referred to.
F
       2.1. The concept of public policy, in the realm of
  arbitration law, is a vexed concept, in the sense that
  different countries have different concepts of public
  policy. In view of such varying standards of public policy
G in different countries, an attempt is made to arrive at a
  somewhat acceptable standard by construing that,
  something is opposed to public policy where there is an
  excess of jurisdiction and a lack of due process. The
  concept of public policy in Arbitration and Conciliation
H
     VENTURE GLOBAL ENGINEERING v. SATYAM            861
           COMPUTER SERVICES LTD.

Act, 1996 as given in the Explanation to Section 34         A
virtually adopted the international standard that, if
anything is found in excess of jurisdiction and depicts a
lack of due process, it will be opposed to public policy
of India. When an award is induced or affected by fraud
or corruption, the same will fall within the grounds of     B
excess of jurisdiction and a lack of due process. [Paras
44, 46] [875-F-H; 876-A-C-D]

    Renusagar Power Co. Ltd. v. General Electric Co. AIR
1994 SC 860 - relied on.
                                                            c
    Central Inland Water Transport Corporation Ltd. and
another v. Brojo Nath Ganguly and another AIR 1986 SC
1571 - referred to.

   Richardson v. Mellish (1824-34) All E.R. 258;; Enderby   o
Town Football Club Ltd. v. Football Association Ltd. 1971
Chancery Division 591 - referred .to.

     Redfern and Hunter on International Arbitration, 5th
Edition - referred to.
                                                            E
     2.2. It is well known that fraud cannot be put in a
strait jacket and it has a very wide connotation in legal
parlance. The expression 'fraud in the making of the
award' should not be narrowly construed primarily
because fraud being of 'infinite variety' may take many F
forms, and the expression 'the making of the award' has
to be read in conjunction with whether the award 'was
in~uced or affected by fraud'. There is no substance in
the argument made by the respondents that the facts
which surfaced subsequent to the making of the award, G
and have a nexus with the facts constituting the award,
are not relevant to demonstrate that there has been fraud
in the making of the award. Concealed facts in the very
nature of things surface subsequently. If the concealed
                                                            H
    862     SUPREME COURT REPORTS                   [2010) 9 S.C.R.


A facts, disclosed after the passing of the award, have a
  causative link with the facts constituting or inducing the
  award, such facts are relevant in a setting aside
  proceeding and the award may be set aside as affected
  or induced by fraud. The question in the instant case,
B was regarding the relevance of the materials which the
  appellant wanted to bring on record by way of
  amendment in its plea for setting aside the award. It is
  different question whether the award will be set aside or
  not, and that has to be decided by the appropriate court.
c Judged from that angle, in the interest of justice and
  considering the fairness of procedure, the appellant is
  allowed to bring those materials on record as the same
  are not wholly irrelevant and might have bearing on the
  appellant's plea for setting aside the award. [Paras 47, 51,
D 52, 58- 60] [876-D-E; 878-A-E; 879-G-H; 880-A-B]
        Frank Reddaway and Co. Ltd. v. George Banham, 1896;
    E!ektrim S.A. v. Vivendi Universal S.A. and Ors. (2007) EWHC
    11 (Comm); Profilati Italia S.R.L. v. Painewebber Inc. and Anr.
    (2001) 1 Lloyd's Law Reports 715 - referred to.
E
        Kerr on Fraud and Mistake, 7th Edition; Russell (Russell
    on Arbitration, 23rd Edition) - referred to.

                         Case Law Reference:
F    (2008) 4 sec 190                referred to         Para 11
     AIR 2010 SC 1299                referred to         Para 18
     AIR 1957 SC 363                  referred to        Para 21
     AIR 1957 SC 357                 referred to         Para 21
G
     (1824-34) All E.R. 258          referred to         Para 39
     AIR 1986 SC 1571                referred to         Para 40
     1971 Chancery Division 591 referred to              Para 40
H
      VENTURE GLOBAL ENGINEERING v. SATYAM                 863
            COMPUTER SERVICES LTD.

 AIR 1994 SC 860                relied on           Para 41       A
 (2007) EWHC 11                 referred to         Para 55

 (2001) 1 LLR 715               referred to         Para 56

    CIVIL APPELLATE JURISDICTION : Civil Appeal No.               B
6519 of 2010.

     From the Judgment and order dated 19.02.2010 of the
High Court of Judicature at Andhra Pradesh at Hyderabad in
Civil Revision Petition No. 5712 of 2009.
                                                                  c
    K.K. Venugopal, V.K. Misra, Rajat Taimni, Gopal and
Devendra Singh for the Appellant.

    Harish N. Salve, K. Ramakrishna Reddi, Mohan Rao, S.
Udaya Kumar Sagar, Bina Madhavan, Vivek Reddi, Anindita
                                                                  0
Pujari and Lawyer's Knit & Co. for the Respondents.

    The Judgment of the Court was delivered by

    GANGULY, J. 1. Leave granted.

     2. The judgment and order dated 19th February, 201 O of      E
the Division Bench of the High Court of Andhra Pradesh in Civil
Revision No.5712/2009 has been impugned in this appeal.

     3. The material facts which are required to be considered
to resolve the controversy in this appeal, are as follows.        F

     4. The appellant, Venture Global Engineering, having its
principal office in Michigan, USA, entered into a Shareholders
Agreement and a Joint Venture Agreement on 20th October,
1999 with the first respondent, for establishing a company called G
Satyam Venture Engineering Services (hereinafter, "the second
respondent"). As per the terms of the agreement, the appellant
and the first respondent each held 50 per cent shareholding in ·
the second respondent.
                                                                  H
    864     SUPREME COURT REPORTS                 [2010] 9 S.C.R.


A        5. Article VIII of the Shareholders Agreement contemplates
    certain 'events of default', and in the event of default, non-
    defaulting shareholder has the option to purchase the
    defaulter's shares at book value or cause immediate
    dissolution and liquidation of the second respondent.
B
       6. In the year 2000, the second respondent entered into
  an agreement with TRW, a manufacturer and supplier of
  automotive equipments, to provide engineering and IT services.
  They agreed to sub-contract the automotive engineering works
  to the second respondent. The first respondent levied US $3
C an hour towards administrative charges. According to first
  respondent, they retained US $859,899 from the TRW receipts.
  The appellant disputed the same and alleged that Satyam
  retained a total of US $2, 188,000, and also alleged
  concealment and dereliction of duty as a joint venture partner.
D Thus, disputes cropped-up and were referred to arbitration.

       7. The sole arbitrator gave his award on 3rd April, 2006
  whereby the appellant is to transfer its entire shareholding in
  the second respondent to the first respondent. The first
E respondent filed a petition for the recognition and enforcement
  of the award before the U.S. District Court, Eastern District
  Court of Michigan.

       8. On 28th April, 2006, the appellant filed a suit (O.S. No.
  80/2006) seeking a declaration to set aside the award and also
F prayed for a permanent injunction against the transfer of shares
  under the arbitral award, in the Court of 1st Additional Chief
  Judge, City Civil Court, Secundrabad. The Trial Court
  dismissed the suit of the appellant on the ground that a foreign
  award could not be challenged under Section 34 of the
G Arbitration & Conciliation Act, 1996 (herein after, ABC, 1996).

      9. The appellant appealed against the order of the Trial
  Court before the High Court of Andhra Pradesh at Hyderabad,
  and the said appeal was also dismissed on 27th February,
H 2007.
   . VENTURE GLOBAL ENGINEERING v. SATYAM       865
COMPUTER SERVICES LTD. [ASOK KUMAR GANGULY, J.]

       10. Thereafter, the appellant filed a special leave petition   A
  before this Court and this Court, vide its order dated 15th May,
· 2007, issued notice to the respondents and passed an interim
  order restraining the transfer of shares pending the disposal
  of the special leave petition.
                                                                      B
       11. This Court then finally heard the matter and allowed the
 special leave petition vide its Judgment and Order in Venture
 Global Engineering vs. Satyam Computer Services Ltd. and
 another (2008) 4 SCC 190 and held that a foreign award could
 be challenged under Section 34 of ABC, 1996. In the light of
 this finding, this Court remanded the case to the trial court and    C
 directed that the parties were to maintain status quo with
 respect to transfer of shares. Thus, the case of the appellant
 was transferred to the llnd Additional Chief Judge, City Civil
 Court, Hyderabad.
                                                                      D
       12. Meanwhile, on 7th January, 2009, Mr. Ramalinga Raju,
 Chairman and founder of the first respondent confessed that
 the balance sheets of the first respondent had been fraudulently
 inflated to the tune of Rs.7,080/- crores. As a result, Price
 Waterhouse Cooper (PWC), auditors of the first respondent,           E
 declared that the financial statements could no longer be
 considered accurate or reliable.

       13. In the light of these developments regarding the first
 respondent, the appellant filed an interim application before the
 Trial Court (I.A. No. 1331/2009 dated 12th June, 2009) to bring
                                                                      F
 certain facts on record and also filed additional pleadings in
 respect of the same under Order VIII Rule 9 of the Civil
 Procedure Code, 1908.

      14. The Trial Court, vide its Order dated 3rd November,         G
 2009, allowed the application of the appellant. The first
 respondent challenged the said order of the Trial Court by filing
 a civil revision before the High Court.

                                                                      H
    866     SUPREME COURT REPORTS                  [2010] 9 S.C.R.


A       15. The High Court, vide its order dated 19th February,
  2010, allowed the revision petition of the first respondent. The
  High Court, inter alia, held that a reading of Section 34(1) and
  (3) of the ABC, 1996 indicates that a party could only set aside
  the arbitral award if an application for the same is made within
B a period of 3 months (extendable by another 30 days) from the
  date of making the award; whereas in the present case the new
  grounds of challenge are sought to be brought after the
  limitation period.

       16. Further, the High Court also held that an application
C under Order VIII Rule 9 of the Civil Procedure Code, 1908 for
  bringing additional pleadings on record would not lie. The High
  Court held, relying on Rule 12(1) of the Andhra Pradesh
  Arbitration Rules, 2000, that Rule VIII of Civil Procedure Code
  is not applicable, so a petition for additional pleading is not
D maintainable under Order VIII of Civil Procedure Code.
  Therefore, the High Court did not allow the appellant to file
  additional pleadings on record.

        17. Aggrieved by the impugned judgment and order of the
E High Court, the appellant has approached this Court by way of
  filing a special leave petition.

         18. In the course of argument before this Court, Mr. Harish
    N. Salve, learned senior counsel appearing for the respondents
F   did not make any attempt to defend the order of the High Court
    on the question of limitation as the learned counsel was
    obviously conscious of the decision of this Court in the State
    of Maharashtra Vs. Mis Hindustan Construction Company
    Ltd. - AIR 2010 SC 1299.
G     • 19. This Court In Mis. Hindustan Construction (supra)
    made it clear that it cannot be the intention of the Legislature
    to shut out amendments, as a result of which incorporation of
    relevant materials in a pending setting aside proceeding is
    prevented.
H
    VENTURE GLOBAL ENGINEERING v. SATYAM        867
COMPUTER SERVICES LTD. [ASOK KUMAR GANGULY, J.]

     20. In Mis. Hindustan Construction (supra) this Court          A
considered the provision in Section 34(2)(b) of ABC, 1996 and
while considering the ambit of the expression "the Court finds
that" in Section 34(2)(b), this Court opined that where
application under Section 34 has been made within the
prescribed time, leave to amend grounds, in such an                 B
application, if the peculiar circumstances of the case and the
interest of justice so warrant, can be granted.

     21. In saying so, this Court in paragraph 25 of the report,
relied on the decisions of this Court in the case of L.J. Leach     C
and Company Ltd. and another Vs. Jardine Skinner and Co.
- AIR 1957 SC 357 and Pirgonda Hongonda Patil Vs.
Ka/gonda Shidgonda Patil and ors. - AIR 1957 SC 363 and
held where it is required in the interest of justice, the Court
always has the power to grant leave to amend and this power
to grant an amendment is not affected under Section 34.             D

  · 22. We are of the opinion that in dealing with a prayer for
amendment, Courts normally prefer substance to form and
techniques and the interest of justice is one of most relevant
considerations. Therefore, if a party is entitled to amend its      E
pleadings, having regard to the justice of the case, the right of
the party to amend cannot be defeated just because a wrong
Section or a wrong provision has been quoted in the
amendment petition. The approach of the High Court in this
case, in rejecting the appellant's prayer for amendment, inter      F
alia, on the ground that a wrong provision has been quoted in
the amendment petition, is obviously a very hyper technical one.
ML Salve rightly did not even try to defend the impugned order
on the aforesaid technical ground adopted by the High Court.

      23. Mr. Salve, learned senior counsel argued on a different   G
line. The learned counsel submitted that the grounds which are
sought to be incorporated by way of amendment are not
relevant and do not come within the concept of public policy
which has been explained in the Explanation to Section 34 of
                                                                    H
    868      SUPREME COURT REPORTS                   [2010] 9 S.C.R.


A   ABC, 1996. The learned counsel took us through the award and
    tried to demonstrate that the facts which are sought to be
    brought on record, even if they are accepted to be true, have
    no bearing on the material facts on which the award is based.
    The learned counsel urged that the Explanation under Section
B   34 of ABC, 1996 has to be strictly construed and the
    expression "in the making of the award" must be confined to
    mean any fraud committed before the arbitrator in the course
    of the arbitral proceedings. According to the learned counsel
    that expression will not take within its sweep anything which
c   happened after the making of the award. In other words the
    learned counsel repeatedly urged that the expression "making
    of the award" must be confined to facts anterior to the delivery
    of the award and not anything which happened subsequent to
    that.
D        24. Mr. K.K. Venugopal, learned senior counsel appearing
   for the appellant and contradicting the aforesaid contentions
  ·submitted that facts which are sought to be incorporated by
   amendment are only those which have been disclosed by the
   first respondent on its own. Prior to such disclosure, they were
E not in public domain and naturally could not be included in the
   original petition to set aside the award. Without disclosure of
   those facts by the first respondent, the appellant could not have
   known them. It is submitted that in any event those facts are
   relevant for the purpose of being put on record by amendment.
F
        25. Learned counsel further submitted that the award has
  been obtained by the first respondent by suppressing those
  facts, which on disclosure show a clear connection with the facts
  in issue, in the award. In such a case fraud as is understood
  in civil law, has been committed in the making of the award. It
G was further submitted that the interest of justice in such a case
  would demand that amendment should be allowed.

          26. These are basically the rival contentions of the parties.

H         27. Now let us consider the facts which the appellant
VENTURE GLOBAL ENGINEERING v. SATYAM COMPUTER 869
     SERVICES LTD. [ASOK KUMAR GANGULY, J.]

wanted to incorporate by way of amendment in the petition for       A
additional pleading filed in the Court of Additional Chief Judge,
City Civil Court at Hyderabad (I.A. No. 1331/2009). Those facts
are:

             (a)   On or after 7th January, 2009, a letter was
                                                                    B
                   written by 8. Ramalinga Raju, CEO of
                   respondent no. 1 to the Board of respondent
                   no. 1, wherein Mr. Raju confessed that the
                   financial statements and books of accounts
                   of respondent no. 1 were exaggerated and
                   overstated. Along with the application for
                                                                    c
                   additional pleading, relevant paragraphs of
                   Raju's statements have been enclosed.

             (b)   On 7.1.2009, it was reported that the
                   Securities and Exchange Board of India           D
                   (SEBI) directed an investigation in the entire
                   matter. Along with the additional pleadings
                   were annexed extracts from press clippings
                   about the said investigation by SEBI.
                                                                    E
             (c)   On 8.1.2009, Government of India directed
                   an inspection of the financial statements and
                   books of 8 su~.;idiaries of first respondent.
                   Such inspection was to be conducted in
                   accordance with section 209A of the
                   Companies Act, and the second respondent         F
                   is one of those subsidiaries in respect of
                   which inspection was thus ordered.

             (d)   On 13.1.2009, Price Waterhouse Coopers
                   (PWC), which acted as the statutory auditor      G
                   of the first respondent, wrote to the Board of
                   the first respondent that in the light of
                   statements made 1by Mr. Raju, the financial
                   statements for the period from June 2000 to
                   30th September, 2008 could no longer be          H
    870   SUPREME COURT REPORTS                 [2010] 9 S.C.R


A                 considered reliable. Extracts from the said
                  opinion of PwC are also enclosed with the
                  additional pleading.

            (e)   On 13.1.2009, the Government of India
                  directed the Serious Fraud Investigation
B
                  Office (SFIO) to investigate the matter. SFIO
                  is a multi-functional investigating agency
                  representing the Ministry of Home Affairs,
                  Enforcement Directorate and the Intelligence
                  Department.
c
            (f)   Such order by Government of India came on
                  the basis of a report from the Registrar of
                  Companies, Hyderabad.

D           (g)   On 21.1.2009, Mr. Raju reportedly admitted
                  diversion of funds from the first respondent,
                  which was widely published in newspapers
                  across India. Mr. Raju confessed diversion
                  of funds of the first respondent to two real
                  estate firms held by his family and others.
E
            (h)   On being questioned by criminal
                  investigation department of the Andhra
                  Pradesh police, Mr. Raju reportedly admitted
                  to using Satyam (respondent no.1) money for
F                 buying prime land in and around Hyderabad
                  and Mr. Raju admitted in answer to
                  interrogation that funds of the first respondent
                  were being diverted for the last 4-5 years.

G           (i)   It was reported on 25.1.2009, that partners
                  of PWC (statutory auditors of the first and
                  second respondent) were arrested for their
                  alleged role in the misstatement of the
                  accounts of the first respondent.
H           0)    On 27.1.2009, the Income Tax department
 I
V~NTURE GLOBAL ENGINEERING v. SATYAM COMPUTER 871
     SERVICES LTD. [ASOK KUMAR GANGULY, J.]

               reportedly directed an investigation in the       A
               operations of the first respondent. In this
               matter the Income Tax department was
                                     I
               making an independent probe about the
               alleged fraud of about Rs. 7800 crores in the
               first respondent.                                 8

         (k)   On 8.2.2009, it 1was reported that a
               confession was made by PWC before the
               police that Mr. Raju employed an elaborate
               scheme to exaggerate the accounts of the          C
               first respondent.

         (I)   Mr. Talluri Srinivas and S. Gopalakrishnan,
               two persons associated with PWC, and
               arrested in connection with the Satyam
               scam, admitted to the police that meetings        0
               were arranged at the instance of the first
               respondent with the motive of falsifying
               accounts, and such meetings were chaired
               by Mr. Raju himself.

         (m)   On 17 .2.2009, Central Bureau of                  E
               Investigation (CBI) was asked to probe the
               Satyam scam.

         (n)   On 22.3.2009, it was reported that the extent
               of fraud relating to the first respondent could   F
               be over Rs. 9600 crores.

         (o)   On 5.4.2009, it was reported that the
               Enforcement Directorate also directed an
               investigation in the matter for alleged money     G
               laundering.

         (p)   On 7.4.2009, CBI filed its charge sheet
               against several persons, including Mr. Raju,
               Mr. Gopalakrishnan and Mr. Talluri.
                                                                 H
    872    SUPREME COURT REPORTS                  [2010) 9 S.C.R


A              (q)   Mr. Gopalakrishnan is alleged to be a partne
                     of the firm PWC BangalorR

               (r)   On 13.4.2009. SFIO submitted its report tc
                     the Government of India.
B
               (s)   On 17.4.2009, it was reported in the press
                     that PwC is guilty of wrong doing in the multi-
                     crore Satyam scam.

               (t)   On 20.4.2009, SFIO alleged to have found
c                    evidence that the first respondent diverted
                     foreign earnings even before they reached
                     India. Such diversion was made to tax
                     havens like Mauritius before routing it back
                     to Maytas Infrastructure and other entities
D                    owned by Mr. Raju and his relations.

       28. Relying on the aforesaid materials which werf!! sought
  to be incorporated by way of amendment, it was urged by the
  appellant fhat the aforesaid materials go to show that the very
E basis of the fiduciary duties of the first respondent to the
  appellant was breached, even prior to the Shareholders
  Agreement between the parties. The first respondent on
  concealment of these facts induced the appellant to enter into
  an agreement with it.

F      29. It appears that the first respondent did not make
  available to the appellant verified financial statements to show
  the amount of TRW revenue which was diverted, and the
  appellant was thus left to assess such amount based on various
  representations of the financial statements made by the first
G respondent to the appellant. But the facts which the appellant
  wanted to bring on record by way of amendment would show
  that the representations made by the first respondent about its
  financial position were prima facie unreliable.

      30. It was also urged that the valuation of the shares of the
H second respondent is fundamentally important in the decision-
    VENTURE GLOBAL ENGINEERING v. SATYAM        873
COMPUTER SERVICES LTD. [ASOK KUMAR GANGULY, J.]

making process relating to the award. Such valuation is based           A
on unreliable financial statements.

     31. Under these circumstances, a prayer was made in the
amendment petition to bring the aforesaid facts on record in
the pending proceeding for setting aside the award.                     B

     32. Learned counsel for the appellants also urged that in
the statement of claim filed by the first respondent, it has been
stated that the first respondent is a "solvent shareholder" as
defined in the agreement, and on that statement, the first
respondent claimed that they have either: (a) the right of C
purchasing the shares held by the appellants, or (b) causing
immediate liquidation of the second respondent.

     33. Learned counsel contended that the aforesaid claim
of the first respondent that it is a solvent shareholder is based       o
on concealment of the facts stated above. He further submitted
that any person, on a bonafide consideration of the facts stated
above would prima facie form an opinion that the claim of the
respondents as a solvent shareholder is fraudulent. The award
has been obtained by the first respondent on the basis of such          E
fraudulent claim. Therefore, in the interest of justice and having
regard to the public policy of India, the High Court should have
allowed the appellant to bring those facts on record by way of
amendment, in the pending proceeding for setting aside the
award.
                                                                        F
     34. In the context of the aforesaid issues involved in this
appeal, the provision of Section 34 of ABC, 1996, especially
explanation to Section 34(2)(b)(ii), calls for interpretation by this
court.
                                                                        G
     35. Section 34 of ABC, 1996, has four sub-sections.   In
this case we are not concerned with sub-sections (3) and (4).

    36. Sub-section (1) provides for an application for setting
aside arbitral award. Sub-section (2)(a) provides for the grounds
                                                                        H
    874         SUPREME COURT REPORTS                     [2010] 9 S.C.R


A   for setting aside an arbitral award as grounds (i) to (v).

         37. Section 34(2)(b), with which we are concerned here,
    provides as follows:

          "34. Application for setting aside arbitral award.-
B
          (1)    )()()(

          (2)    )()()(

                    (a)   xxx
c
                    (b)   the Court finds that- (i) the subject-matter of
                          the dispute is not capable of settlement by
                          arbitration under the law for the time being
                          in force, or (ii) the arbitral award is in conflict
D                         with the public policy of India.

          Explanation.-Without prej~dice to the generality of sub-
          clause (ii) it is hereby declared, for the avoidance of any
          doubt, that an award is in conflict with the public policy of
          India if the making of the award was induced or affected
E
          by fraud or corruption or was in violation of section 75 or
          section 81."

        38. The explanation is very crucial in the context of the
    present case.
F
       39. The concept of public policy, in view of century old
  decision of Lord Justice Burrough in Richardson vs. Mellish
  (1824-34) All E.R. 258, conjures up to our mind an equine
  image of a high and unruly horse. The consensus of opinion
G amongst judges is that concept of public policy is incapable of
  precise definition.

       40. In Central Inland Water Transport Corporation Ltd.
  and another vs. Brojo Nath Ganguly and another reported in
  AIR 1986 SC 1571 at 1612, this Court discussed the concept
H of public policy elaborately in the context of Section 23 of the
    VENTURE GLOBAL ENGINEERING v. SATYAM        875
COMPUTER SERVICES LTD. [ASOK KUMAR GANGULY, J.]

Contract Act. The discussion, however, was not confined to A
Section 23 of Contract Act alone but was on a general
jurisprudential concept of public policy, and it referred to the
opinion of Lord Denning, where the Master of Rolls said with
characteristic clarity- "With a good man in the saddle, the unruly
 horse can be kept in control. It can jump over obstacles." (See B
 Enderby Town Football Club Ltd. vs. Football Association Ltd.
- 1971 Chancery Division 591 at 606).

     41. A three judge Bench in Renusagar Power Co. Ltd. vs.
General Electric Co. reported in AIR 1994 SC 860, after
referring to Brojo Nath (supra), dealt with the concept of public       C
policy while construing the provisions of Foreign Awards
(Recognition and Enforcement) Act, 1961.

     42. It may be mentioned in this connection that the present
ABC, 1996 is a consolidating statute and it has also repealed           D
the aforesaid 1961 Act (Section 85 of ABC, 1996). Therefore,
the discussion on public policy in Renusagar (supra) is of some
relevance in the present context.

     43. In Renusagar (supra), after a fairly elaborate                 E
consideration of concept of public policy in various jurisdictions,
this Court came to hold that an award is considered contrary
to public policy if it is opposed to: (a) fundamental policy of India
law, (b) interests of India and (c) justice or morality (See
paragraph 86 on page 888).
                                                                        F
      44. This concept of public policy, in the realm of arbitration
 law, is a rather vexed concept, in the sense that different
 countries have different concepts of public policy. Say for
 instance, some countries which do not countenance gambling,
 an award arising out of a gambling dispute may be set aside G
 on the ground that it offends public policy of the State. But in a
 country where gambling is legalized in some form, the award
 will not offend public policy. Similarly, a dispute between a
 producer of wine and its distributor is arbitrable in countries
 which are not governed by a strict Islamic Code. But a country H
    876      SUPREME COURT REPORTS                    [2010] 9 S.C.R.


A   with such a Code may hold the award contrary to public policy.

       45. In view of such varying standards of public policy in
  different countries, an attempt is made to arrive at a somewhat
  acceptable standard by construing that something is opposed
B to public policy where there is an excess of jurisdiction and a
  lack of due process. (See Redfern and Hunter on International
  Arbitration, 5th Edition, paragraphs 10-80 to 10-86).

       46. The concept of public policy in ABC, 1996 as given in
  the explanation has virtually adopted the aforesaid international
C standard, namely if anything is found in excess of jurisdiction
  and depicts a lack of due process, it will be opposed to public
  policy of India. When an award is induced or affected by fraud
  or corruption, the same will fall within the aforesaid grounds of
  excess of jurisdiction and a lack of due process. Therefore, if
D we may say so, the explanation to Section 34 of ABC is like 'a
  stable man in the saddle' on the unrulv horse of public policy .

        .47. It is well known that fraud cannot be put in a strait jacket
    and it has a very wide connotation in legal parlance.

E         48. In the decision of the House of Lords in Frank
    Reddaway and Co. Ltd. vs. George Banham, 1896 Appeal
    Cases 199, Lord Macnaghten explained the multifarious
    aspects of fraud very lucidly, and which we quote: "But fraud is
    infinite in variety; sometimes it is audacious and unblushing;
F   sometimes it pays a sort of homage to virtue, and then it is
    modest and retiring; it would be honesty itself if it could only
    afford it. But fraud is fraud all the same; and it is the fraud, not
    the manner of it, which calls for the interposition of the Court."
    (Page 221 of the report).
G
       49. The aforesaid elucidation by the learned Law Lord has
  also been accepted in celebrated treaties on fraud (see Kerr
  on Fraud and Mistake, 7th Edition, pg. 1). Kerr has also
  referred to Story's Equity Jurisprudence and defined fraud as:
H "Fraud, in the contemplation of a civil court of justice, may be
VENTURE GLOBAL ENGINEERING v. SATYAM COMPUTER 877
     SERVICES LTD. [ASOK KUMAR GANGULY, J.]

said to include properly all acts, omissions, and concealments        A
which involve a breach of legal or equitable duty, trust or
confidence, justly reposed, and are injurious to another, or by
which an undue or unconscientious advantage is taken of
another."
                                                                      B
    50. In Indian law, namely the Indian Contract Act, the said
common law doctrine of fraud has been assimilated in Section
17 of the said Act. A very wide definition of fraud has been
given, which is as under:

     "17. 'Fraud' defined.-'Fraud' means and includes any of C
     the following acts committed by a party to a contract, or
     with his connivance, or by his agent, with intent to deceive
     another party thereto or his agent, or to induce him to enter
     into the contract:-
                                                                      D
             (1)   the suggestion, as a fact, of that which is not
                   true, by one who does not believe it to be
                   true; .

             (2)   the active concealment of a fact by one
                   having knowledge or belief of the fact;            E

             (3)   a promise made without any intention of
                   performing it;

             (4)   any other act fitted to deceive;                   F
             (5)   any such act or omission as the law specially
                   declares to be fraudulent.

     Explanation.-Mere silence as to facts likely to affect the
     willingness of a person to enter into a contract is not fraud,   G
     unless the circumstances of the case are such that, regard
     being had to them, it is the duty of the person keeping
     silence to speak, or unless his silence, is, in itself,
     equivalent to speech.
                                                                      H
    878      SUPREME COURT REPORTS                   (2010] 9 S.C.R.


A         51. Therefore, this Court is unable to accept the contention
    of the learned counsel for the respondent that the expression
    'fraud in the making of the award' has to be narrowly construed.
    This Court cannot do so primarily because fraud being of
    'infinite variety' may take many forms, and secondly, the
B   expression 'the making of the award' will have to be read in
    conjunction with whether the award 'was induced or affected
    by fraud'.

         52. On such conjoint reading, this Court is unable to accept
C   the contentions of the learned counsel for the respondents that
    facts which surfaced subsequent to the making of the award,
    but have a nexus with the facts constituting the award, are not
    relevant to demonstrate that there has been fraud in the making
    of the award. Concealment of relevant and material facts, which
    should have been disclosed before the arbitrator, is an act of
D   fraud. If the argument advanced by the learned counsel for the
    respondents is accepted, then a party, who has suffered an
    award against another party who has concealed facts and
    obtained an award, cannot rely on facts which have surfaced
    subsequently even if those facts have a bearing on the facts
E   constituting the award. Concealed facts in the very nature of
    things surface subsequently. Such a construction would defeat
    the principle of due process and would be opposed to the
    concept of public policy incorporated in the explanation.

F        53. In English Arbitration Law, a somewhat similar
    provision for challenging an award is contained in Section
    68(2)(g) of the 1996 Arbitration Act, which reads as follows:

         "6B(2)(g).- The award being obtained by fraud or the way
    in which it was procured being contrary to public policy."
G
         54. Commenting on the said provision, Russell (Russell on
    Arbitration, 23rd Edition) stated that an "award will be obtained
    by fraud if the consequence of deliberate concealment is an
    award in favour of the concealing party." (P. 497, Para 8-100)
H
 VENTURE GLOBAL ENGINEERING v. SATYAM COMPUTER 879
      SERVICES LTD. [ASOK KUMAR GANGULY, J.]

     55. In Elektrim S.A. vs. Vivendi Universal S.A. and Ors.          A
(2007) EWHC 11 (Comm), Mr. Justice Aikens held that the
words 'obtained by fraud' must refer to an award being obtained
by the fraud of the party to the arbitration or by the fraud of
another to which the party to the arbitration was a privy. The
learned Judge at page 82 of the report held that "an award will        8
only be obtained by fraud if the party which has deliberately
concealed the document has, as a consequence of that
concealment, obtained an award in its favour. The party relying
on Section 68(2}(g) must therefore also prove a causative link
between the deliberate concealment of the document and a               C
decision in the award in favour of the other successful party."

       56. In Profilati Italia S.R.L. vs. Painewebber Inc. and Anr.
  [(2001) 1 Lloyd's Law Reports 715], while construing Section
  68(2)(g) of the English Arbitration Act, it has been held that
  where an important document which should have been                   D
  disclosed has been deliberately withheld resulting in the party
  withholding obtaining the award, the Court may consider that
· the award was 'procured' in a manner contrary to public policy
  and such conduct is not far removed from fraud. (para 19, pg.
  720)                                                                 E

      57. This Court also holds that the facts concealed must
 have a causative link. And if the concealed facts; disclosed after
 the passing of the award, have a causative link with the facts
 constituting or inducing the award, such facts are relevant in a
                                                                       F
 setting aside proceeding and award may be set aside as
 affected or induced by fraud.

       58. The question in this case, is therefore one of relevance
  of the materials which the appellaht wants to bring on record
  by way of amendment in its plea for setting aside the award.         G

       59. Whether the award will be set aside or not is a different
  question and that has to be decided by the appropriate Court.
  In this appeal, this Court is concerned only with the question
  whether by allowing the amendment, as prayed for by the              H
    880      SUPREME COURT REPORTS                    [2010] 9 S.C.R.


A appellant, the Court will allow material facts to be brought on
  record in the pending setting aside proceeding.

         60. Judging the case from this angle, this Court is of the
    opinion that in the interest of justice and considering the fairness
    of procedure, the Court should allow the appellant to bring those
8
    materials on record as those materials are not wholly irrelevant
    or they may have a bearing on the appellant's plea for setting
    aside the award.

       61. Nothing said in this judgment will be construed as even
C remotely expressing any opinion on the legality of the award.
  That question will be decided by the Court where setting aside
  proceeding is pending. The proceeding for setting aside the
  award may be disposed of as early as possible, preferably
  within 4 months.
D
       62. For the reasons aforesaid, this appeal succeeds. The
  order of the High Court is set aside and .that of the court below
  is restored. No order as to costs.

    D.G.                                             Appeal allowed.