Arbitration Annual Digest 2025- Part 1

Supreme Court Clause Saying Arbitration "May Be Sought" Doesn't Constitute A Binding Arbitration Agreement : Supreme Court Cause Title: Bgm And M-Rpl-Jmct (Jv) Versus Eastern Coalfields Limited Citation : 2025 LiveLaw (SC) 731 The Supreme Court held that a clause in an agreement that arbitration "may be sought" to resolve disputes between the parties will not constitute a binding arbitration agreement. Approving the refusal of the High Court to refer the parties to arbitration, the Supreme Court observed that the phraseology of the clause did not indicate that the parties were bound to go for arbitration. "...clause 13 does not bind parties to use arbitration for settlement of the disputes. Use of the words “may be sought”, imply that there is no subsisting agreement between parties that they, or any one of them, would have to seek settlement of dispute(s) through arbitration. It is just an enabling clause whereunder, if parties agree, they could resolve their dispute(s) through arbitration. In our view, the phraseology of clause 13 is not indicative of a binding agreement that any of the parties on its own could seek redressal of inter se dispute(s) through arbitration," the Court observed. The bench comprising Justices PS Narasimha and Manoj Misra heard the case where the dispute occurred due to a different interpretation of clause 13 in a contract entered into between the parties. Clause 13 provides an arbitration to be a permissive (or optional) mode of dispute settlement rather than a mandatory one, as it says that the parties 'may' opt for arbitration. Sec 34(3) Arbitration Act | Application Filed On Next Working Day After 90 Day Period Is Within Limitation : Supreme Court Case Title: M/S R. K. Transport Company Versus M/S Bharat Aluminum Company Ltd. (Balco) Citation : 2025 LiveLaw (SC) 391 A bench of Justices PS Narasimha and Prashant Kumar Mishra held that the three-month limitation period under Section 34(3) of the Arbitration & Conciliation Act, 1996 (“Arbitration Act”) for challenging an arbitral award should not be rigidly interpreted as exactly 90 days, rather it should be interpreted as three calendar months. The Court upheld the filing of an application under Section 34 of the Arbitration Act on 11.07.2022 to set aside an arbitral award passed on 09.04.2022, despite it being beyond the 90-day period. It noted that the limitation period ended on 09.07.2022, which was a court holiday (second Saturday), followed by Sunday. Therefore, the application filed on the next working day, Monday (11.07.2022), was held to be within limitation. Relying on State of Himachal Pradesh v. Himachal Techno Engineers, (2010) 12 SCC 210 and applying Section 12 of the Limitation Act, 1963, the Court reiterated that for calculating limitation under Section 34(3), the date on which the arbitral award is passed must be excluded. Accordingly, the limitation period begins from the day following the date of the award. Supreme Court Holds Chandigarh Authorities Liable For Delay In Film City Project, Directs Refund Of 47.75 Crores To Successful Bidder Case Title: M/S. Parsvnath Film City Ltd. Versus Chandigarh Administration & Others, Civil Appeal No.6162 Of 2016 (And Connected Case) Citation : 2025 Livelaw (Sc) 422 The Supreme Court upheld an arbitral award passed in favor of a company engaged by the Chandigarh Administration to establish a Multimedia-cum-Film City in the Union Territory, holding the authorities liable to refund a forfeited bid amount of Rs.47.75 crores. A bench of Justices BV Nagarathna and Satish Chandra Sharma delivered the verdict, being of the view that the Punjab and Haryana High Court wrongly set aside the arbitral award. It opined that though time was of the essence to the project sought to be developed, there was a clear and unreasonable delay (of over 16 months) attributable to the authorities in handing over encumbrance-free land to the appellant-Company. Arbitral Tribunal Can Proceed Against Party Though They Weren't Served With S.21 Notice Or Made Party In S.11 Application : Supreme Court Case Title: Adavya Projects Pvt. Ltd. Versus M/S Vishal Structurals Pvt. Ltd. & Ors., Civil Appeal No. 5297 Of 2025 Citation : 2025 Livelaw (Sc) 439 The Supreme Court observed that not being served with the notice invoking arbitration under Section 21 of the Arbitration and Conciliation Act, and not being made a party in the Section 11 application (for appointment of arbitrator), are not sufficient grounds to hold that a person cannot be made party to arbitral proceedings. "A notice invoking arbitration under Section 21 of the ACA is mandatory...and it is a prerequisite to filing an application under Section 11. However, merely because such a notice was not issued to certain persons who are parties to the arbitration agreement does not denude the arbitral tribunal...

Arbitration Annual Digest 2025- Part 1

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