Reliance on Unproven Documents and Improper Invocation of Estoppel and Waiver Constitutes Patent Illegality in Arbitral Awards.

The Petitioner, a power generation company, entered into a Gas Sale Agreement (GSA) dated 18.12.2015 with the Respondent for natural gas supply.

Post-GST implementation, the Respondent raised invoices for reimbursement of GST on gas transmission charges.

The Petitioner paid these for three years but later initiated arbitration seeking a refund, contending that the sale was governed by the AP VAT Act and no GST was leviable on internal transmissions.

The Arbitral Tribunal rejected the claim, holding that the Petitioner waived its rights by not challenging invoices within 14 days (Clause 12.6) and that the Respondent had deposited the collected GST with authorities.

The Petitioner challenged this award under Section 34 of the Arbitration and Conciliation Act, 1996.

Interpretation of contracts is the exclusive domain of the Tribunal unless the view is one no fair-minded person would take under Section 34 of the Arbitration and Conciliation Act, 1996.

The principle that admitting unproven documents is a violation of natural justice and legal misconduct.

Waiver requires "intentional relinquishment of a known right" and the onus of proof lies on the party pleading waiver.

The doctrine of Estoppel requires a five-pronged test, including a representation and a subsequent change in position by the promisee.

The High Court upheld the Tribunal's interpretation of the GSA regarding the Petitioner's liability for tax reimbursement as a "plausible view".

The court found the Tribunal's factual finding that GST was actually deposited to be "perverse" because the Tribunal relied on tax receipts without ever deciding on their admissibility after the Petitioner objected to them.

The court noted that four random receipts do not prove payment for the specific gas supplied to the Petitioner.

Regarding waiver, the court held the Tribunal erred in assuming the parties were ad idem; there was no evidence that the Petitioner consciously abandoned its right to object.

On estoppel, the court found the Respondent failed to show it altered its position based on the Petitioner's payments, as the Respondent's liability to the tax authorities existed independently of the Petitioner's reimbursement.

The court noted that Clause 12.6 (requiring payment before dispute) creates a situation where payment is necessary to avoid disruption of supply, and thus payment alone cannot be the sole factor to debar a claim.

The finding of tax deposit was based on inadmissible/unproven evidence.

The invocation of "estoppel" and "waiver" was patently illegal as the fundamental legal requirements for these doctrines were not met.

Clause 12.6 of the GSA does not act as an absolute bar to claims when payments are made to ensure uninterrupted gas supply.