Arbitration Monthly Digest: August 2023
Ausaf Ayyub
5 Sep 2023 10:30 AM GMT
Supreme Court: Court Has No Power To Modify Award Under S. 34 Arbitration & Conciliation Act : Supreme Court Case Title: Larsen Air Conditioning and Refrigeration Company vs Union of India The Supreme Court reiterated that a court, under Section 34 of the Arbitration and Conciliation Act, has no power to modify an arbitration award. The limited and extremely...
Supreme Court:
Court Has No Power To Modify Award Under S. 34 Arbitration & Conciliation Act : Supreme Court
Case Title: Larsen Air Conditioning and Refrigeration Company vs Union of India
The Supreme Court reiterated that a court, under Section 34 of the Arbitration and Conciliation Act, has no power to modify an arbitration award. The limited and extremely circumscribed jurisdiction of the court under Section 34 of the Act, permits the court to interfere with an award, sans the grounds of patent illegality, the bench of Justices S Ravindra Bhat and Dipankar Datta said.
Case Title: Konkan Railway Corporation Limited vs Chenab Bridge Project Undertaking
The Supreme Court observed that Arbitration awards cannot be set aside on mere possibility of an alternative view on facts or interpretation of the contract. The jurisdiction under Section 34 of the Arbitration and Conciliation Act is exercised only to see if the Arbitral Tribunal’s view is perverse or manifestly arbitrary, the bench of CJI DY Chandrachud, Justices PS Narasimha and JB Pardiwala said.
Case Title: M/s S.D. Shinde vs Govt. of Maharashtra & Ors.
The Supreme Court, while restoring an arbitral award passed in 1997 which was set aside by the Trial Court and the High Court under the Indian Arbitration Act, 1940, has emphasised that the court’s jurisdiction under Section 30/33 of the 1940 Act never extended beyond discerning whether the award discloses an “error apparent on the face of the award” or not.
Case Title: Hindustan Construction Company Limited vs National Highways Authority of India
The Supreme Court held that a dissenting opinion cannot be treated as an award if the majority award is set aside. In this case, a three member arbitration tribunal passed an award in a dispute between Hindustan Construction Company Limited and National Highways Authority of India.
High Courts:
Allahabad High Court:
Case Title: Gurucharan Das vs Tribhuvan Pal & Ors.
The Allahabad High Court recently dismissed an application for the appointment of an arbitrator filed under Section 11(4) of the Arbitration and Conciliation Act, 2016 holding that such application being filed after 20 years of occurrence of dispute is barred by delay and laches.
Case Title: Anand Agarwal and Anr. vs Dr. Narendra Malhotra and Anr.
The Allahabad High Court has held that the intent of the parties to submit their dispute to arbitration can be derived from the clauses of their agreement read along with the letters exchanged between them.
Case Title: Purvanchal Vidyut Vitaran Nigam Ltd. (Puvvnl) vs M/S Prabha Mvomni (Jv)
The Allahabad High Court has recently held that to challenge the jurisdiction of the arbitrator, once the same has been rejected by the Tribunal, the aggrieved party has to challenge the final award. Application under Section 11 of the Arbitration and Conciliation Act, 1996 before the High Court is not maintainable to that effect.
Bombay High Court:
Case Title: Mahaveer Realities & Ors. vs Shirish J. Shah
The Bombay High Court has ruled that even though the parties had participated in the arbitral proceedings continued by the Arbitrator after his mandate had expired, the same cannot amount to a waiver under Section 4 of the Arbitration and Conciliation Act, 1996 (A&C Act). The court remarked that Section 29A of the A&C Act that provides the time limit for passing the award, is a non-derogable provision and thus, Section 4 of the Act has no application.
Case Title: 22Light vs OESPL Pvt Ltd
The High Court of Bombay has held that despite the limited scope of judicial scrutiny under Section 11 of the A&C Act, the Court would refuse to appoint the arbitrator when on a prima facie scrutiny of the material on record, it can come to a conclusion that claims sought to be arbitrated are frivolous and meritless.
Calcutta High Court:
Case Title: Union of India and Anr. vs Rashmi Metaliks Limited
The Calcutta High Court unconditionally stayed an award granted in favour of the South Eastern Railways (“SER”) under the Arbitration & Conciliation Act, 1996 on grounds of fraud and corruption perpetrated by collusion between the parties in obtaining the impugned award.
Case Title: Uphealth Holdings Inc. vs Glocal Healthcare Systems Pvt Ltd
The Calcutta High Court has held that an order of the Emergency Arbitrator in a foreign-seated arbitration, while not directly enforceable under the Arbitration and Conciliation Act (A&C Act) due to the absence of a provision akin to Section 17(2) of the Act in Part II, should nonetheless be considered by the Court as a supplemental factor under Section 9 of the Act.
Case Title: The Board of Major Port Authority for the Shyama Prasad Mookerjee Port, Kolkata. vs Marine Craft Engineers Private Limited
The Calcutta High Court recently dismissed an application filed by the Board of Major Port Authority for the Shyama Prasad Mookerjee Port, Kolkata, for staying the operation of an arbitral award passed by the West Bengal State Micro Small Enterprises Facilitation Council (MSME Council).
In refuting the petitioner’s contention that filing an application under Section 34 of the Arbitration & Conciliation Act, 1996 (1996 Act) would be sufficient for the Court to deliberate on the question of stay, a single bench of Justice Moushumi Bhattacharya held, that in the absence of a pre-deposit of 75% of the award, in compliance with Section 19 of the MSMED Act, the application under Section 34 of the 1996 Act would remain “stillborn” for the purpose of stay of the award.
Case Title: The West Bengal Small Industries Development Corporation Limited WBSIDC vs Kaushalya Infrastructure Development Corporation Limited KIDCO
The Calcutta High Court has dismissed a plea filed by petitioners West Bengal Small Industries Development Corporation Limited (“WBSIDC”) for unconditional stay of an arbitral award passed against it in 2019, on the grounds of fraud and corruption, under Section 36(3) of the Arbitration & Conciliation Act, 1996 (“Act”).
The single-bench of Justice Moushumi Bhattacharya observed that the petitioners had not managed to discharge their burden under the statute, and that there was no fraud or corruption in the present case, which would satisfy the twin-benchmark under the second proviso to Section 36(3) of the Act.
Case Title: M/s. Gammon Engineers and Contractors Pvt. Ltd. vs The State of West Bengal
The Calcutta High Court recently dismissed an application filed by M/S Gammon Engineers and Contractors Private Limited (“petitioners”) u/s 11(6), 14 and 15 of the Arbitration and Conciliation Act, 1996 (‘Act’), for removal of arbitrator while challenging their unilateral appointment. In dismissing the application, a single-bench of Justice Shekhar B Saraf held that a challenge for withdrawal/removal of arbitrator would not be maintainable before the High Court, since an earlier Section 9 application for interim relief had been filed before the Jalpaiguri District court.
Case Title: Kobelco Construction Equipment India Private Limited vs Lara Mining & Anr.
The Calcutta High Court recently dismissed applications for interim relief filed by Kobelco Construction Equipment India Private Limited under Section 9 of the Arbitration and Conciliation Act, 1996 (“Act”).
The single-bench of Justice Moushumi Bhattacharya dismissed the prayer for an interim injunction on the respondents, holding that the petitioners could not be allowed to incorporate an arbitration clause by-reference from the ‘Master’ agreement to the ‘Settlement’ agreement in the absence of unambiguous intention of both parties.
Case Title: Case: Uphealth Holdings Inc. vs Glocal Healthcare Systems Pvt Ltd & Ors.
The Calcutta High Court while exercising its admiralty jurisdiction, recently allowed an application for interim relief by Uphealth Holdings Inc. a wholly owned subsidiary of Uphealth Inc., a US-based healthcare company under section 9 of the Arbitration & Conciliation Act, 1996. Justice Ravi Kishan Kapur observed that the applicant had made out a prima facie case for interim relief regarding an arbitrable dispute over its Share-Purchase Agreement (“SPA”) with the respondent.
Delhi High Court:
Case Title: CASA2 STAYS PVT LTD vs BBH COMMUNICATIONS INDIA PVT LTD
The High Court of Delhi has held that the principles of natural justice are not violated when the opportunity to make oral submissions on an issue was granted but not availed by the party. It held that no party has the absolute right to insist on his convenience in every respect.
Case Title: Amit Guglani vs L&T Housing Finance
The Delhi High Court has held that Section 21 notice is a mandatory pre-requisite for invoking jurisdiction of the Arbitrator under Section 21 of the A&C Act.
Case Title: Amit Guglani vs L&T Housing Finance
The Delhi High Court has held that when there are two interconnected agreements with conflicting arbitration clauses, the arbitration clause contained in the main/umbrella agreement should be given primacy over the other clause.
Case Title: Liberty Footwear Co. vs Liberty Shoes Ltd
The Delhi High Court has decided that if a petition under Section 9 is submitted to any court other than the one where the initial application was made, Section 42 of the A&C Act will prevent it.
Case Title: National Seeds Corporation Ltd vs Ram Avtar Gupta
The Delhi High Court has held that Section 14 of the Limitation Act, which provides for exclusion of time consumed in civil proceedings initiated before a Court not having the jurisdiction, applies to proceedings under Section 34 of the A&C Act.
Case Title: Ministry of Youth Affairs and Sports vs ERNST and YOUNG PVT LTD
The Delhi High Court has reiterated that a Section 34 petition filed unaccompanied by the impugned award and without the statement of truth would not constitute a valid filing.
Case Title: Ministry of Youth Affairs and Sports vs ERNST and YOUNG PVT LTD
The Delhi High Court has held that an email sent by the arbitral tribunal to the parties wherein the scanned copy of the signed award is attached constitutes a valid delivery of the award under Section 31(5) of the A&C Act.
Case Title: Splendor Landbase Ltd vs Aparna Ashram Society
The Delhi High Court has held that the Court exercising power under Section 11 of the A&C Act has the power to issue time bound directions to Collector of Stamps to decide on unstamped arbitration agreements to ensure that the mandate of Section 11(13) of the A&C Act that provides for expeditious disposal of Section 11 petition should not be defeated.
Case Title: Landmark Property Development and Company Limited & ORS. vs Ansal Properties & Infrastructure Limited & Ors.
The Delhi High Court has directed release of over Rs. 16 Crores deposited with the court Registry, in favour of the Landmark Group in the execution petition filed by it seeking enforcement of the arbitral award passed against the Ansal Group.
In 2018, an Arbitral Tribunal had awarded a sum of Rs. 46.01 Crores in favour of the Landmark Group against the Ansals in a dispute between the two business groups.
Case Title: Mrs. Vinnu Goel vs Mr. Santosh Goel and Ors.
The High Court of Delhi has held that all the members of the families would be bound by the terms and conditions of a settlement agreement executed between the heads of the two branches of families if they have signed the said agreement that pertains to the properties owned by them.
The bench of Justice Navin Chawla held that a party appending its signature on an MoU is bound by the terms and conditions of such an agreement, including the arbitration agreement. It held that a party cannot escape the agreement merely on the ground that it was not expressly made a party under the agreement.
Case Title: B L Kashyap and Sons Ltd vs Emaar India Ltd
The Delhi High Court has ruled that alleged liquidity crunch of the award debtor cannot be a sufficient cause under Order XXI Rule 26(1) of the Code of Civil Procedure, 1908 (CPC) to grant stay of the enforcement proceedings in relation to an arbitral award.
The bench of Justice Yogesh Khanna made the observation while hearing a plea seeking modification of the court’s order in the execution petition filed by the award holder, where the court had directed the award debtor to deposit the entire award amount of Rs.165 crores. The award debtor sought to modify the court’s order so as to enable him to furnish bank guarantee instead of cash deposit, on the ground that the same shall lead to liquidity crunch in its company.
Case Title: SpiceJet Limited vs Kal Airways Pvt Ltd & Ors.
The Delhi High Court has upheld the 2018 arbitral award passed in favour of Kalanithi Maran, former promoter of SpiceJet, and his firm Kal Airways Pvt Ltd, in a share transfer dispute with the airline and its current promoter, Ajay Singh. The bench of Justice Chandra Dhari Singh has also dismissed Maran’s challenge to the award where his claim for damages and restitution of 58.46% shareholding in SpiceJet was rejected by the Tribunal.
Case Title: NHAI vs Trichy Thanjavur Expressway Ltd
The High Court of Delhi has held that the recourse to Section 34(4) of the A&C Act, that grants court the authority to remit an arbitral award to the Arbitral Tribunal, can only be taken for correcting the curable defects such as filling the gaps in reasoning, correct typographical and arithmetical errors and not to allow the tribunal to do a review of the award.
Case Title: NHAI vs Trichy Thanjavur Expressway Ltd
The Delhi High Court has held that the Courts exercising powers under Section 34 of the A&C Act has the power to partially set aside an arbitration award to strike off the offending portion of the award while retaining the remaining award.
Case Title: Splendor Landbase Ltd vs Aparna Ashram Society
The Delhi High Court while reiterating that it is mandatory for the Court exercising power under Section 11 of the A&C Act to impound the non-stamped or insufficiently stamped agreement held that the Court can itself collect the deficient/requisite stamp duty under Section 35 of the Stamps Act, 1899 and enable deposit of the requisite stamp duty along with penalty as contemplated under proviso (a) to Section 35 of the Stamp Act.
Case Title: Splendor Landbase Ltd vs Aparna Ashram Society
The Delhi High Court has held that the true or certified copy of the agreement containing the arbitration agreement would be sufficient for the purpose of Section 11 petition when on the face of it, the same is duly stamped and a statement to this effect is made in the petition under Section 11 of the Act, and the same is not controverted by the opposite party.
Case Title: Steelman Telecom Limited vs Power Grid Corporation of India Limited
The Delhi High Court has held that the equilibrium is disturbed where the party drawing up the panel of arbitrator is given a further right to accord its “confirmation” to nomination made by the other party. The bench of Justice Sachin Datta held that in terms of the judgment of the Supreme Court in Central Organisation for Railway Electrification (CORE), the appointment of an arbitrator from a panel maintained by the other party is not invalid as it seeks to counterbalance the right of one party to draw a panel of arbitrator with the right of the other party to make the appointment from such a panel, however, it must be a broad panel as held by the Apex Court in Voestalpine Schienen.
Designation Of Venue Would Override A Generic ‘Exclusive Jurisdiction’ Clause: Delhi High Court
Case Title: Reliance Infrastructure Ltd vs Madhyanchal Vidhyut Vitran Nigam Ltd
The High Court of Delhi has held that a venue where the arbitral proceedings were anchored is essentially the ‘seat of arbitration’ and it would override a generic exclusive jurisdiction clause. It held that a generic exclusive jurisdiction clause is not a contrary indicia that prevents the venue from becoming the seat of arbitration.
Case Title: Y.K. Goyal vs Delhi Urban Shelter Improvement Board
The High Court of Delhi has held that in a multi-tier dispute resolution clause which provides for pre-arbitration reference to Dispute Resolution Committee (DRC), the failure to refer the dispute to DRC would not be a ground to refuse appointment of arbitrator when the Chief Engineer against whose decision an appeal was to be filed before DRC failed to respond to notice of dispute.
Case Title: M/s G.S. Express Pvt Ltd vs NTPC Ltd
The High Court of Delhi has reiterated that an arbitration clause that restricts the right of a party to invoke arbitration to a mere 6 months is invalid. The bench of Justice Yogesh Khanna held that the right to invoke arbitration cannot be restricted to a period lesser than that provided under the Limitation Act, 1963.
Case Title: Gannon Dunkerley and Co Ltd vs Zillion Infraprojects Pvt Ltd,
The High Court of Delhi has held that a contractor cannot deny payments to the ‘Sub-contractor’ merely on the ground that the contract is on back-to-back basis and it has not received the payments from the main employer.
Case Title: NHAI vs M/s. T.K. Toll Private Limited
The High Court of Delhi has held that a supplementary agreement executed by a contractor whereby it agrees to forego its claims cannot preclude him from claiming damages against the employer if the execution of such agreement was a pre-condition to the issuance of PCC necessary for collection of toll taxes in BOT contracts.
Case Title: Jaiprakash Associates Limited vs MSEFC
The High Court of Delhi has held that an issue whether an agreement is in the nature of works contract and the consequent issue of applicability of MSMED Act to such contracts is to be decided by the arbitrator.
Case Title: National Projects Constructions Corporation Ltd vs M/s Interstate Construction
The High Court of Delhi has held that the arbitrator cannot add the amount of pre-reference interest to the principal amount while determining pendente lite interest as the same would amount to levying interest on a compounded basis. It held that the principal amount has to remain static throughout.
Himachal Pradesh High Court:
Case Title: Balak Ram vs NHAI
The Himachal Pradesh High Court has clarified the interpretation of Section 29A(3) of the Arbitration and Conciliation Act, 1996 and maintained that consent from the parties to extend the arbitral period need not be expressly stated in writing. Instead, consent can be inferred from the parties’ acts and conduct during the arbitration proceedings, it emphasised.
Case Title: M/s Kundlas Loh Udhyog vs M/s SRMB Srijan Pvt Ltd.
The Himachal Pradesh High Court has stayed the arbitration proceedings that were unilaterally commenced by a party without complying/fulfilling the precondition of negotiation as mandated by the terms of the agreement between the parties. The bench of Justice Tarlok Singh Chauhan observed that when the dispute resolution clause in the agreement mandates the parties to explore negotiation before resorting to arbitration, and the arbitration would commence only on the failure of the negotiation, the parties have to act in terms of the agreement and not directly invoke the arbitration.
Orissa High Court:
Case Title: National Aluminium Company Ltd vs Orissa Coal Chem Pvt Ltd.
The High Court of Orissa has held that the failure of the MSEF Council to refer the parties to ‘Conciliation’ as provided under Section 18(2) of the MSMED Act renders the award passed by it under Section 18(3) susceptible to setting aside under Section 34 of the A&C Act.
Karnataka High Court:
Case Title: Nova Medical Centres Pvt Ltd vs Sowmya & Anr.
The Karnataka High Court has set aside a trial court order dismissing a suit filed by Nova Medical Centers Pvt Ltd. on the premise that the dispute is arbitrable. Court noted that the defendant had failed to raise objection as to the jurisdiction of Civil Court.
Rajasthan High Court:
Case Title: Kapil Jain & Ors. vs Khosla Electronics Pvt Ltd
The Rajasthan High Court at Jaipur recently allowed an application under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of an arbitrator, on the ground that the Lease Agreement entered between the parties provided the mechanism to resolve the dispute by ‘friendly consultation’ and the respondent did not participate and make any effort to resolve the dispute by way of ‘friendly consultation’.
