Arbitration: Court Reckoner [June 2020]

By way of the present column, an attempt is made to briefly review the salutary judgments pronounced by the Courts in the month of June 2020 under the Arbitration & Conciliation Act, 1996. That while as many judgments as possible are sought to be reviewed, owing to the limited column space, some judgments would invariably be left out. That also 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. That 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 (1)(e) In Golden Edge Engineering P. Ltd. v Bharat Heavy Electricals Ltd.[1] , the High Court of Calcutta was considering a clause in the contract which provided that "the seat of arbitration shall be Kolkatta (the place from where the contract is issued)". The Court held that the seat would have to be determined taking into account the bracketed portion and the tender being issued from Salt Lake and not Kolkatta (albeit electronically but the Court relied on S. 13(3) of the Information Technology Act), the High Court of Calcutta would not be the competent court for entertaining an application under S. 9 of the Act. SECTION 2(2) In Goodwill Non-woven P. Ltd. v XCoal Energy & Resources LLC[2] High Court of Delhi rejected the contention that in case of an international commercial arbitration, the jurisdiction vested in an Indian Court under proviso to S. 2(2) of the Act for entertaining an application under S. 9 is an asset based jurisdiction, which can be exercised only when the asset(s) of the counter party against which, the order is sought to be enforced are situated in India. It held that the word used in S. 9 is 'a party' which denotes any party can file an application and further held that for the purpose of passing an order/interim measure, the availability of asset in India is irrelevant and sub-sections (a), (b) & (c) of S. 9 contemplate passing of orders for interim measure of protection which do not pre-suppose the existence of asset(s) of a foreign party in India. However, on the facts of the case, the Court declined to pass an interim measure of protection holding that no prima facie case was made out and it is not an exceptional case where there is adequate material on record leading to a definite conclusion that the respondent is likely to render the entire arbitration proceedings infructuous by frittering away the properties or funds. SECTION 7 In Quick heal Technologies Ltd. v NCS Computech P. Ltd.[3] High Court of Bombay held that the use of the word 'may' in the arbitration clause shows that there was no consensus between the parties with regard to arbitration and they only agreed to provide fresh consent (by use of the word "may") in order to proceed with the arbitration and as no fresh consent to proceed with any arbitration has been provided by any of the Respondents, there is no valid arbitration clause under which any Arbitrator can be appointed. SECTION 9 In Bhubaneshwar Expressways P. Ltd. v National Highways Authority of India[4] , the short question before the High Court of Delhi was that could a bank guarantee, which had been directed by the Court to be submitted by the petitioner to secure the claim in arbitration, be furnished by a third party on the Petitioner's behalf, which third party had no connection with the contract with the parties. The Court answered the said question in the affirmative and held that a bank guarantee being a contract between the bankers and the beneficiaries, the Respondent for the purpose of the bank guarantee has to deal with the guarantor, namely, the bankers and not the party, at the instance of whom, the bank guarantee has been given. In Suzlon Energy Ltd. v Zemira Renewable Energy Ltd. & Anr.[5], the High Court of Delhi reiterated the position of law that merely because invocation of bank guarantee would cause financial distress to the Petitioner therein, who was stated to be undergoing Corporate Debt Restructuring Process, cannot be a ground to invoke the exception of irretrievable injury to be entitled for a stay on invocation/encashment of bank guarantee nor could any serious disputes on the merits of respective claims be urged as grounds to seek injunction against invocation. In Overnite Express Limited v Delhi Metro Rail Corporation [6] High Court of Delhi was considering a petition filed under Section 9, inter alia, seeking restraint against taking of coercive steps under a License Agreement and raising of invoices for license fees. The Court, upon consideration of the terms of the license agreements, held that the same are by their nature very determinable and thus no injunction against...

Arbitration: Court Reckoner [June 2020]

Kanika Singh

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