Delhi High Court Sets Aside Arbitral Award Over Tribunal's Failure To Decide MMTC's Good Faith Claim

The Delhi High Court has partly set aside an arbitral award rejecting MMTC Limited's surviving claims arising from payments of ₹71.25 crore made by its joint venture company, MMTC-PAMP India Private Limited (MPIPL), to PAMP and MKS Switzerland SA for gold-sourcing services and licence fees.

The court found that the arbitral tribunal had failed to independently examine MMTC's allegation that PAMP's majority shareholder, PAMP Holding Mauritius Limited (PHML), had breached its good-faith obligations under the shareholders' agreement.

Justice Om Prakash Shukla observed that the tribunal's failure to decide this issue caused material prejudice to MMTC.

“MMTC's clear plea regarding the breach of 'Good faith' was never independently adjudicated. Even if one were to accept the Tribunal's view that the services in question were not intended to be gratuitous, the total non-adjudication of his independent contractual breach has caused grave material prejudice to MMTC, thereby rendering the findings of the tribunal unsustainable.”, it observed.

The dispute arose from a shareholders' agreement between MMTC, PAMP and MPIPL, which was established to operate a gold and silver refinery in India.

MMTC alleged that PAMP was required to provide technical expertise, refining know-how and assistance in sourcing raw materials without charging MPIPL separately. It claimed that PHML used its majority control to facilitate payments to PAMP and its associated companies.

MPIPL had paid ₹51.44 crore to MKS Switzerland under a gold-sourcing agreement and ₹19.80 crore to PAMP under a process know-how licence agreement.

The arbitral tribunal rejected MMTC's claims, holding that the shareholders' agreement did not require PAMP to provide these services free of charge. It also found that the agreements were entered into on arm's-length terms.

The High Court clarified that it was not deciding whether PAMP was contractually entitled to charge for these services. Instead, it examined whether the tribunal had addressed MMTC's separate allegation that PHML used its majority control in breach of the good-faith requirement under Article 34.

The court set aside the award to the extent that it rejected MMTC's surviving claims for breach of the shareholders' agreement and related monetary relief. The portions concerning claims that MMTC did not pursue before the tribunal were left undisturbed.

For Petitioner (MMTC Ltd.): Advocates Ravi Gupta, Tarang Narang, Muskan Mehra, S. Gupta.

For Respondent (PAMP Holding Mauritius Ltd.): Advocates Zorawar Singh, Jayant Rastogi, Shubham.

For Respondent (MMTC-PAMP India Private Limited): Senior Advocate Jayant Mehta with Advocates Abhishek Mishra, Mansvini Jain.