Facts: Neha Yogesh Sachde ("Sachde") filed a claim against Jinam Arihant Realtors And Ors. ("Jinam"), a partnership firm in which she held a 15% interest. The dispute arose from a Memorandum of Understanding ("MOU") executed between Sachde and other partners, where Sachde agreed to retire from the firm for Rs. 1.17 crores. Sachde claimed that only Rs. 46.50 lakhs had been paid, and she sought accounts and invoked arbitration. Jinam contended that Sachde's investment was only Rs. 12 lakhs, and the MOU superseded the Partnership Deed. Sachde, however, claimed her actual investment was Rs. 60 lakhs, including Rs. 48 lakhs in cash. She submitted audio recordings as evidence of cash transactions.
Procedural Posture: Sachde's claim was allowed by a Learned Arbitrator. Jinam challenged the arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996, before the High Court of Bombay.
Issue: Was the arbitral award, which held Sachde had invested Rs. 60 lakhs (including Rs. 48 lakhs in cash) and directed Jinam to render accounts and pay Rs. 1.17 crores as per the MOU, sustainable under Section 34 of the Arbitration and Conciliation Act, 1996, considering the evidence of cash transactions and public policy concerns?
Holding: No, the arbitral award was set aside.
Reasoning: The Court found the arbitral award to be perverse and in conflict with public policy. The Court noted that the audio recordings, on which the award heavily relied, did not specifically prove the Rs. 48 lakhs cash investment. The Court observed that the parties were engaged in undocumented cash dealings, which raised concerns about illegality and the enforcement of an illegal bargain. The Court cited Supreme Court precedents, including Narayanamma, Kedar Nath Motani, and Immani Appa Rao, emphasizing that courts should not actively assist in enforcing agreements tainted by fraud or illegality. The Court concluded that enforcing the Partnership Deed, given the undocumented cash transactions, would be contrary to public policy and basic notions of justice and morality. The court held that the arbitral award reflected an "unpardonable perversity" under Section 34 of the Arbitration and Conciliation Act, 1996.