Arbitration Court Reckoner : April & May 2021

By way of the present column, an attempt is made to briefly review the salutary judgments pronounced by the Courts in the month of April & May 2021 under the Arbitration & Conciliation Act, 1996 (hereinafter referred to as the 'Act'). While as many judgments as possible are sought to be reviewed, owing to the limited column space, some judgments would invariably be left out. Further, while an attempt is made to include and review some judgments of various other High Courts, the emphasis is essentially on the judgments of the High Court of Delhi and Supreme Court of India. The judgments have been compiled for review with reference to the Section of the Act that they are primarily dealing with and a detailed analysis has been forgone in favour of succinctness. Section 2(4) S. 2(4) would not offer protection against rigors of limitation if the relevant statutory enactment has introduced a period of limitation In Satish K. Narang & Co. v Jamnadas Morarje Secs. Ltd.[1]¸High Court of Bombay held that in view of S. 2(4) of the Act, period of limitation for arbitration was not applicable to the transactions entered into between the appellant and the respondent, being an arbitration under a different enactment, prior to 29th August, 1998 when the provisions of Limitation Act, 1963 were extended to the arbitral proceedings under the Stock Exchange Bye-laws. However, it rejected appellant's contention that even after applicability of the provisions of the Limitation Act, appellant would be continued to be governed by no period of limitation in view of S. 2(4). The Court held that since the period of limitation was prescribed by amendment to Bye-laws on 29th August, 1998, the appellant ought to have filed arbitral proceedings within three years from the date of amendment of the Bye-laws framed by the Stock Exchange, Mumbai which are statutory bye-laws. Held, alleged rights, if any, in favour of the appellant in view of S. 2(4) of the Act to file claim without period of limitation stood abrogated in view of the amendment to Bye-law 252(2). Court held that even though cause of action arose before the said amendment but as no arbitration had been instituted, the provisions of amendment would apply with respect to limitation. Section 7 Doctrine of estoppel, implied consent & alter ego pressed into service to bind non-signatory to arbitration In Shapoorji Pallonji and Co. Pvt. Ltd. v Rattan India Power Ltd. and Ors.[2] High Court of Delhi examined the evolution of the jurisprudence by which non-signatories to arbitration agreement could be made parties to arbitration under certain circumstances. In the facts of the case before it, the Court found that the non-signatory had fully participated in contract formation and had in fact invited tenders and bank guarantees were issued in its favour; the non-signatory was the direct beneficiary of the contract and the signatory was an alter ego of the non-signatory. The Court further found that even doctrine of estoppel would apply to make the non-signatory a party to arbitration in as much as the non-signatory had not objected to certain amendments in the contract that made reference to it and in fact even final bills under the contract were submitted to non-signatory. The Court observed that estoppel principles have frequently been applied by Courts in the United States of America to hold that a party is bound by the arbitration clause associated with the substantive contractual agreement. Thus, applying the alter ego, implied consent and estoppel principles, the Court held the non-signatory bound by the arbitration agreement. Section 8 Appeal from an order referring parties to arbitration u/s 8 – distinction drawn between scope of interference in an order of Arbitrator and that of a Civil Court In Sagar Ratna Restaurants Pvt. Ltd. v D S Foods & Ors.[3], High Court of Delhi was dealing with a petition under Article 227 against the order of the District Court allowing the application u/s 8. The Court took note of the fact that the Respondent/applicant itself had stated that the disputes were not arbitrable which had constrained the Petitioner to withdraw arbitration proceedings and institute a suit. The Court held arbitration is an Alternate Dispute Resolution mechanism which is resorted to by the parties with their consent. It observed that the respondents have, in the earlier instance, clearly envisaged an intent not to be bound by the Arbitration Agreement stating claim is not arbitrable and the petitioner has now accepted that opposition and has invoked the ordinary jurisdiction of a Civil Court seeking enforcement of its rights in the trademark. It held that where both the parties have become ad idem that the dispute raised by the petitioner is not arbitrable in nature, the parties could not have been referred to arbitration. The Court further made distinction between...

Arbitration Court Reckoner : April & May 2021

Kanika Singh

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