₹71.25-Crore Gold Refinery Fee Dispute: Delhi HC Sets Aside Part Of Award After Tribunal Failed To Decide MMTC’s Good-Faith Challenge

MMTC and PAMP entered into a Share Purchase and Shareholders Agreement (SPSHA) to establish MPIPL as a gold and silver refinery.

MMTC alleged that PAMP’s group companies charged MPIPL approximately ₹71.25 crore for dore sourcing and process know-how that PAMP was obliged to assist with under the SPSHA, and that the transactions breached the agreement’s good-faith requirement.

The Arbitral Tribunal dismissed MMTC’s claims, finding that the SPSHA did not require the services to be free of charge, the agreements were on arm’s-length terms, and MMTC could not seek restitution on MPIPL’s behalf.

MMTC challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996

Section 34(2)(b)(ii) permits setting aside an award that conflicts with the public policy of India, which is confined to the grounds in Explanation 1; Explanation 2 bars review of the merits when assessing contravention of the fundamental policy of Indian law.

Patent illegality under Section 34(2A) is unavailable for international commercial arbitrations.

Under Section 34(2)(a)(iv), an award may be challenged where the tribunal fails to decide a matter submitted to it; failure to address every issue is not sufficient by itself, and the omission must cause real or actual prejudice.

The Court also considered Sections 34(2)(a)(iii) and 34(2)(b)(ii), and relied on the Division Bench decision in Ssangyong Engineering & Construction Co. Ltd. v. NHAI (2026:DHC:6687-DB), which distinguishes non-adjudication of a material issue from an erroneous decision on that issue.

Article 34.1 of the SPSHA required covered transactions to be conducted in good faith and, where their terms were not otherwise agreed, on an arm’s-length basis.

The Tribunal found that the agreements were on arm’s-length terms but did not independently determine MMTC’s material allegation that PHML had used its majority control to procure the agreements in breach of Article 34’s good-faith requirement.

The Court held that this was not merely a challenge to the correctness of the Tribunal’s reasoning: the good-faith allegation was a distinct contractual issue, supported by pleaded circumstances including the DSA’s execution without MMTC’s prior knowledge and objections to the licence fees.

Because the Tribunal’s failure to decide that issue could affect the outcome, it caused material prejudice and fell within the permissible grounds for Section 34 interference.

The award concerning prayers (a), (b), and (c), which MMTC had not pursued before the Tribunal, remained undisturbed.

The parties were left free to pursue available contractual or other legal remedies concerning the surviving dispute.