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Arbitration Cases Monthly Round-up: July 2022

Ausaf Ayyub
2 Aug 2022 3:30 AM GMT
Arbitration Cases Monthly Round-up: July 2022
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Supreme Court:

Court Under Section 34,37 Arbitration Act Cannot Modify An Award ; It Can Only Remand: Supreme Court

Case Title: National Highways Authority of India versus P. Nagaraju @ Cheluvaiah

Citation: 2022 LiveLaw (SC) 584

The Supreme Court observed that, under Section 34 or 37 of Arbitration and Conciliation Act, a Court cannot modify the award passed by the Arbitrator.

The option would be to set aside the award and remand the matter, the bench comprising Justices Indira Banerjee and AS Bopanna said.

Counter-Claim Cannot Be Rejected Merely Because The Claims Thereunder Were Not Notified At The Pre-Arbitral Stage: Supreme Court

Case Title: NHAI versus Transstroy (India) Limited

Citation: 2022 LiveLaw (SC) 586

The Supreme Court has held that the counter-claim of a party cannot be dismissed merely because the claims were not notified before invoking the arbitration.

The Division Bench of Justice M.R. Shah and Justice Sanjiv Khanna held that there is a difference between the word "Claim" and "Dispute", where the former may be a one-sided thing while the latter by its definition has two sides. It observed that once the conciliation failed, the entire gamut including the counter-claim/set off would form the subject matter of arbitration.

There Cannot Be Two Arbitration Proceedings With Respect To Same Contract/Transaction: Supreme Court

Case Title: M/S Tantia Constructions Limited v. Union Of India

Citation: 2022 LiveLaw (SC) 624

Observing that it is of the "firm opinion that there cannot be two arbitration proceedings with respect to the same contract/transaction", the Supreme Court stated that when a dispute has earlier been referred to arbitration and an award was passed on the claims made, then it is "rightful" to refuse to refer to arbitration- in exercise of Section 11(6) of the 1996 Arbitration Act- a fresh arbitration proceeding sought to be initiated with respect to some further claims.

Section11(6A) Arbitration Act Does Not Prevent Courts From Considering Issue Of Arbitrability: Supreme Court

Case Title: Indian Oil Corporation Limited vs NCC Limited

Citation: 2022 LiveLaw (SC) 616

Despite the insertion of Section 11(6A) in the Arbitration and Conciliation Act 1996, the Courts are not denuded of the power to examine the issue of non-arbitrability and jurisdiction at the stage of considering application of appointment of arbitrators under Section 11, held the Supreme Court recently.

Court While Deciding 'Section 11' Application Seeking Appointment Of Arbitrator Can Consider Whether Dispute Falls Within 'Excepted Clause' : Supreme Court

Case Title: Indian Oil Corporation Limited vs NCC Limited

Citation: 2022 LiveLaw (SC) 616

The Supreme Court held that, at the stage of deciding application for appointment of arbitrator, a Court can consider whether the dispute falls within the excepted clause.

The Court observed that the question of jurisdiction and non-arbitrability can be considered by a Court at the stage of deciding an application under Section 11 of Arbitration and Conciliation Act if the facts are very clear and glaring.

High Courts:

Andhra Pradesh High Court:

The Arbitration Clause Contained In A Manual Issued By The Government As A Generic Guideline Is Not Binding: Andhra Pradesh High Court

Case Title: TBS India Telematic and Biomedical Services Pvt. Ltd. versus Commissioner of Health and Family Welfare

The Andhra Pradesh High Court Bench of Chief Justice Prashant Kumar Mishra has held that arbitration clause contained in a government manual as generic guidelines cannot be invoked by the parties.

The Court also observed that there cannot be an arbitration clause in a sub-contract, or in a separate document when there is no binding agreement between the parties in the first place.

Bombay High Court:

Invocation Of Arbitration Has To Be In Clear Terms;Merely Stating Claims Would Not Suffice: Bombay High Court

Case Title: M/s. D.P. Construction versus M/s. Vishvaraj Environment Pvt. Ltd.

The Bombay High Court has ruled that invocation of arbitration has to be in clear terms, as specified in Section 21 of the Arbitration and Conciliation Act, 1996 (A&C Act), and that a mere reference to the claims and disputes sought to be raised by a party, and the existence of an arbitration clause, would not itself mean that arbitration has been invoked by such a party.

The Single Bench of Justice Manish Pitale observed that Section 21 of the A&C Act specifically refers to a request for the dispute to be referred to arbitration as regards the commencement of the arbitral proceedings. Hence, the Court ruled that unless there is a request by a party that the dispute is to be referred to arbitration, merely stating the claims and disputes in a notice would not suffice.

Place Designated As The "Venue" Of Arbitration In Its Entirety, Is The "Seat" Of Arbitration: Bombay High Court

Case Title: Priya Malay Sheth versus VLCC Health Care Ltd.

Citation: 2022 LiveLaw (Bom) 242

The Bombay High Court has reiterated that whenever a place is designated as the "venue" of the arbitration proceedings in its entirety in an Arbitration Clause, the said place would necessarily be the "seat" of the arbitral proceedings.

The Single Bench of Justice G.S. Kulkarni held that such part of the Arbitration Agreement wherein the parties had agreed upon the venue of the arbitration proceedings, would be required to be read as distinct and independent from the arbitral mechanism agreed between the parties.

Amendment To Section 34 Application Of The A&C Act Would Not Be Permissible If It Intends A New Challenge: Bombay High Court

Case Title: Friends & Friends Shipping Pvt. Ltd versus Central Warehousing Corporation

The Aurangabad Bench of Bombay High Court has held that an amendment to the application under Section 34 of the A&C Act would not be allowed if it leads to absolutely new grounds to challenge the award.

The Single Bench of Justice Mangesh S. Patil held that in an appropriate case it is permissible to allow the amendment to application under Section 34 even beyond the period provided under Section 34(3) of the Act, however, the amendment can only add some facts to the pending challenge but it cannot be allowed if it constitutes a fresh challenge.

An Enabling Clause Does Not Constitute A Binding Arbitration Agreement Between The Parties: Bombay High Court

Case Title: Derivados Consulting Pvt. Ltd. versus Pramara Promotions Pvt. Ltd.

The Bombay High Court has ruled that once the parties have agreed to use the word 'may', the parties have conferred a discretion to enter into an arbitration agreement in the future; and that such an enabling clause does not constitute any binding arbitration agreement between the parties.

The Single Bench of Justice G. S. Kulkarni held that the use of the word "may" does not bring about any arbitration agreement between the parties, when tested on the touchstone of Section 7(1) of the Arbitration and Conciliation Act, 1996 (A&C Act), which defines the arbitration agreement

Pendency Of Arbitration Is Not A Bar To The Maintainability Of An Admiralty Suit For Arrest Of The Ship: Bombay High Court

Case Title: Vision Projects Technologies Pvt. Ltd. versus OSV Crest Mercury 1

Citation: 2022 LiveLaw (Bom) 270

The High Court of Bombay has held that the pendency of an arbitration proceeding between the parties on the same cause of action is not a bar to the institution of an admiralty suit.

The Bench of Justice N.J. Jamadar held that merely because the vessel owner has instituted an arbitration against the charterer, the same would not preclude the charterer from filing an admiralty suit for recovery of its dues and arrest of the vessel in an action in rem.

Section 29A Of The A&C Act Applies Prospectively, Does Not Apply To Arbitration That Commenced Before The 2015 Amendment: Bombay High Court

Case Title: Meenanath Fatarpekar versus MicroStrategy India Pvt. Ltd.

Citation: 2022 LiveLaw (Bom) 268

The High Court of Bombay has held that Section 29A of the A&C Act that provides a timeline of 12 months for passing an arbitral award would not apply to arbitration that commenced before the 2015 Amendment to the Act.

The Bench of Justice G.S. Kulkarni held that provisions of Section 29A of the A&C Act, which was incorporated into the principal act via the 2015 Amendment Act, would not apply to an arbitration proceeding commenced on 3rd Feb 2015 as in terms of Section 26 of the 2015 Amendment Act, the amendment came in to force on 23rd October 2015.

Calcutta High Court:

"Interim Award Is A Stopover En-Route To The Destination To Final Adjudication Of The Dispute": Calcutta High Court Explains

Case Title: Lindsay International Private Limited versus IFGL Refractories Limited

Recently, the Calcutta High Court has discussed the concept of interim award under the Arbitration Act. The court was hearing a plea by Lindsay International seeking to set aside an order which the petitioners pleaded was an interim order in terms of the Act.

Single judge bench of Justice Moushumi Bhattacharya held that the impugned decision did not qualify to be nor did it have the trappings of an interim award under Section 2(1)(c) or Section 31(6) of the Arbitration Act, 1996; hence, the impugned order could not be challenged under Section 34 of the Arbitration Act.

No Claim Certificate Is Invalid If It Is A Pre-Condition To The Release Of Final Payment: Calcutta High Court

Cast Title: West Bengal Tourism Development Corporation Ltd. v. Supratik Banerjee and Anr.

The Calcutta High Court has held that a discharge voucher or No Claim Certificate would be invalid on account of 'Coercion' if it is submitted as a pre-condition to the release of final payment.

The Bench of Justice Krishna Rao held that a situation where the employer denies the payment of dues to the contractor unless it submits an undertaking to the employer not to make any further claims would fulfil the ingredients of Section 15 of the Indian Contract Act and the obtained undertaking would be invalid.

Delhi High Court:

Objection Regarding 'Excepted Matter' Would Be An After-Thought If It Was Not Raised Before The Arbitrator: Delhi High Court

Case Title: DSIIDC versus H.R. Builders

Citation: 2022 LiveLaw (Del) 614

The High Court of Delhi has held that the objection regarding the excepted matter would be an after-thought if the same was not raised before the arbitral tribunal.

The Division Bench of Justice Mukta Gupta and Justice Neena Bansal Krishna relied on the judgment of the Supreme Court in J.G. Engineers versus UOI (2011) to hold that only the question of determination of the quantum of compensation for delay is an excepted matter and the issue if the compensation is payable is an arbitrable matter.

Challenge Without Impugned Award, Vakalatnama, And The Attested Statement Of Truth, Non-Est In Law: Delhi High Court

Case Title: Ircon International versus Reacon Engineers (India) Pvt. Ltd.

Citation: 2022 LiveLaw (Del) 607

The High Court of Delhi has held that a challenge petition filed without impugned award, vakalatnama, and verification is non-est in law.

The Single Bench of Justice Vibhu Bakhru was dealing with a case where the petitioner had initially filed a challenge petition under Section 34 of the A&C Act without the impugned award, vakalatnama, and the statement of truth.

Prima Facie Case Alone Does Not Entitle A Party To Relief Under Section 17 Of The A&C Act: Delhi High Court

Case Title: Splendor Buildwell Pvt. Ltd. & Anr. versus Rajesh Kumar Pasricha

Citation: Citation: 2022 LiveLaw (Del) 659

The Delhi High Court has ruled that a prima facie case alone does not entitle a party to relief under Section 17 of the Arbitration and Conciliation Act, 1996 (A&C Act) for interim measures.

The Single Bench of Justice Sanjeev Narula observed that there were highly disputed questions of fact involved in the dispute relating to the interpretation of the agreement between the parties. Holding that the possible extent of the claim likely to be awarded to the claimant vide the arbitral award cannot be a foregone conclusion, the Court set aside the order passed by the Arbitral Tribunal directing the counter-claimant to secure a certain amount in an application filed under Section 17 of the A&C Act by the claimant for interim measures

Even If The Principal Agreement Is Non-Existent, The Arbitration Clause Would Still Apply: Delhi High Court

Case Title: National Research Development Corporation and Anr. versus Mak Controls and Systems Private Limited

Citation: 2022 LiveLaw (Del) 647

The Delhi High Court has ruled that even if the principal agreement is non-existent, the arbitration clause contained therein would still apply.

The Single Bench of Justice V. Kameswar Rao observed that since the issue of limitation and arbitrability was not conclusive against the party, the issue was amenable to the jurisdiction of the Arbitral Tribunal.

Arbitration Clause Contained In A Tax Invoice Is Binding: Delhi High Court

Case Title: Swastik Pipe Ltd. versus Dimple Verma

Citation: 2022 LiveLaw (Del) 648

The Delhi High Court has ruled that an arbitration clause contained in a tax invoice is binding between the parties.

Noting that the opposite party had earlier received similar tax invoices, against which it had made payments, the Single Bench of Justice V. Kameswar Rao ruled that the party could not disown the clear stipulation contained in the tax invoice with regard to any dispute being referred to arbitration.

Subrogation Deed Does Not Terminate The Right Of The Assured To Initiate Arbitration Against The Wrongdoer: Delhi High Court

Case Title: Fresenius Medical Care Dialysis Service India Pvt. Ltd. versus Kerry Indev Logistics Pvt. Ltd.

Citation: 2022 LiveLaw (Del) 637

The Delhi High Court has held that arbitration can be invoked by the insured even after entering into a subrogation-cum-assignment agreement with an insurance company.

The Single Bench of Justice Sanjeev Sachdeva held that subrogation does not put an end to the right of the assured to initiate legal proceedings against the wrongdoer, it merely allows the insurer to step into the shoes of the insured to recover the damages.

Section 8 Application Should Be Filed Within Time Available For Filing Written Statement: Delhi High Court

Case Title: M/S. SPML Infra Ltd. versus M/S. Trisquare Switchgears Pvt. Ltd.

Citation: 2022 LiveLaw (Del) 634

The Delhi High Court has ruled that if a party fails to file an application under Section 8(1) of the Arbitration and Conciliation Act, 1996 (A&C Act) for referring the parties to arbitration within the time available for filing the first statement on the substance of the dispute, which would include a written statement in the context of a suit, the party would forfeit its right to apply under Section 8(1) of the A&C Act.

The Division Bench of Justices Vibhu Bakhru and Amit Mahajan held that the amendment to Section 8 of the A&C Act by the 2015 Arbitration and Conciliation (Amendment) Act cannot be considered in isolation, in view of the fact that the Parliament has also enacted the Commercial Courts Act, 2015, which came into force on the same date as the Arbitration and Conciliation (Amendment) Act, 2015.

The Arbitrator Cannot Award A Lumpsum Amount As Against Specified Claims Without Adjudicating The Claims: Delhi High Court

Case Title: Kanti Bijlee Utpadan Nigam Ltd. v. Paltech Cooling Towers & Equipments Ltd.

Citation: 2022 LiveLaw (Del) 692

The High Court of Delhi has held that an award wherein a lumpsum amount is awarded against the specified claims without adjudication of the claims is unsustainable.

The Bench of Justice Vibhu Bakhru held that an arbitral tribunal cannot award a lumpsum amount against specified claims of a party merely to meet the ends of justice.

Non-Applicability Of Section 9 Of The A&C Act Can't Be Presumed If Parties Opted For Foreign-Seated Institutional Arbitration: Delhi High Court

Case Title: Shanghai Electric Group Co. Ltd. v. Reliance Infrastructure Ltd.

Citation: 2022 LiveLaw (Del) 683

The High Court of Delhi has held that merely because the parties have chosen a foreign-seated institutional arbitration under the UNCITRAL Law, they cannot be presumed to have entered into an agreement to exclude the applicability of Section 9 of the A&C Act as provided under the proviso to Section 2(2) of the A&C Act.

The Bench of Justice Sanjiv Narula held that the words "an agreement to the contrary" appearing under Section 2(2) cannot be presumed or interpreted on the mere assertion of a party but the same must be clearly borne out of the agreement between the parties.

Application Under Section 9 Of The A&C Act For Pre-Award Relief Can Be Filed In A Court Where The Assets Of The Respondent Are Located: Delhi High Court

Case Title: Shanghai Electric Group Co. Ltd. v. Reliance Infrastructure Ltd.

Citation: 2022 LiveLaw (Del) 682

The High Court of Delhi has held that an application under Section 9 of the A&C Act for pre-award relief can also be filed before the Court where the assets of the respondent are located.

The Bench of Justice Sanjeev Narula held that the Court for the purpose of Section 9 application in a foreign seated arbitration would be as provided under Section 47 of the A&C Act.

CPC Contemplates Execution Of A Foreign Decree And Not An Order: Delhi High Court

Case Title: Shanghai Electric Group Co. Ltd. v. Reliance Infrastructure Ltd.

Citation: 2022 LiveLaw (Del) 681

The High Court of Delhi has held that remedy before the foreign arbitral tribunal would not be inefficacious when the bulk of the assets of a party are located in India as the interim order in a foreign-seated arbitration is not enforceable under the A&C Act.

The Bench of Justice Sanjeev Narula also held that an interim award passed in arbitration with seat in India is enforceable under Section 17(2) of the Act, however, there is no provision in the Act for the enforcement of an interim order passed in a foreign seated arbitration, therefore, any meaningful interim relief related to assets located in India can only be granted by Indian Courts.

The Rejection Of An Application Under Section 34 Of The A&C Act Cannot Be Construed To Mean That The Court Has Concurred With The View Of The Arbitral Tribunal: Delhi High Court

Case Title: Glitter Overseas and Ors. v. MMTC Ltd.

Citation: 2022 LiveLaw (Del) 664

The High Court of Delhi has held that merely because the challenge to an arbitral award is dismissed by the Court exercising powers under Section 34 of the A&C Act would not mean that the court has concurred with the view of the arbitral tribunal.

Order Of Facilitation Council, After Termination Of Conciliation Under MSMED Act, Not Executable: Delhi High Court

Case Title: M/s. Unicon Engineers versus M/s. Jindal Steel and Power Ltd.

Citation: 2022 LiveLaw (Del) 722

The Delhi High Court has ruled that an order passed by the Facilitation Council under Section 18 of the Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act) after the termination of conciliation proceedings, without taking the dispute up for arbitration or referring it to an institution or centre for arbitration, is a nullity and does not constitute an arbitral award. Therefore, the Court ruled that it cannot be enforced under Section 36 of the Arbitration and Conciliation Act, 1996 (A&C Act).

The Single Bench of Justice Prateek Jalan reiterated that the proceedings for conciliation and arbitration cannot be clubbed.

Agreement Containing Arbitration Clause Not Signed By A Party; Parties Can Still Be Referred To Arbitration: Delhi High Court

Case Title: Buildmyinfra Private Limited versus Gyan Prakash Mishra

Dated: 22.07.2022 (Delhi High Court)

The Delhi High Court has ruled that even if the Agreement containing an Arbitration Clause has not been signed by a party to the dispute, the parties can still be referred to Arbitration.

The Single Bench of Justice Prateek Jalan held that it is not necessary for the written document to be signed by all the parties, as long as the existence of an arbitration agreement can be culled out from the exchange of letters or other means of communication between the parties.

The Arbitrator Cannot Alter The Express Terms Of The Agreement Between The Parties By Applying The Business Efficacy Test: Delhi High Court

Case Title: Food Corporation of India versus Adani Agri Logistics Ltd.

Citation: 2022 LiveLaw (Del) 718

The High Court of Delhi has held that the arbitrator cannot alter the express terms of the agreement by applying the business efficacy test when there is no ambiguity as to the intention of the parties.

The Bench of Justice Vibhu Bakhru held that the Penta Test as propounded by the Supreme Court in Nabha Power Ltd versus Punjab State Power Corp. Ltd. is only for the purpose of determining the intention when the terms of the agreement are not express or are silent on an aspect, and thus, it would have no application when there is no ambiguity as to the contract between the parties.

If The Imposition Of LD Was Contingent On Extension Of Time, Recovery Of LD Is Not Time Barred: Delhi High Court

Case Title: Shyama Power India Ltd. v. Haryana Vidyut Prasaran Nigam Ltd. O.M.P. (COMM) 137 of 2021

Date: 07.07.2022

The High Court of Delhi has held that the arbitrator cannot reject the claim of a party for refund of Liquidated Damages (LD) as barred by time if it was inextricably linked to the issue of Extension of Time (EOT) on which the decision of the competent authority was pending.

The Bench of Justice Vibhu Bakhru held that the period of limitation for the purpose of refund of LD would only begin from the date of the decision on the issue of EOT if the imposition of LD was contingent upon the EOT.

Just Because Interlocutory Order Of Arbitral Tribunal Is Not Challengeable Under Section 34 Of A&C Act, Remedy Is Not Writ Under Article 226 And 227: Delhi High Court

Case Title: Easy Trip Planners Ltd. versus One97 Communications Ltd.

Citation: 2022 LiveLaw (Del) 717

The Delhi High Court has ruled that merely because an interlocutory order passed by the Arbitral Tribunal is not amenable to challenge under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act), the remedy under Article 226 and Article 227 of the Constitution of India would not be available against the said order.

The Single Bench of Justice C. Hari Shankar held that a party can approach the Court against an interim order passed in the arbitral proceedings only if the order is appealable under Section 37 of the A&C Act.

When The Main Relief Is Rejected By The Arbitral Tribunal, Which Included Interim Relief, The Interim Relief Granted In Isolation Is Incorrect: Delhi High Court

Case Title: Orchid Infrastructure Developers (P) Ltd. versus Five Star Constructions Pvt. Ltd.

Citation: 2022 LiveLaw (Del) 712

The Delhi High Court has ruled that when the main relief claimed by the claimant has been rejected by the Arbitral Tribunal, the Arbitral Tribunal cannot award an interim or ancillary amount, which is included under the same claim, in favour of the claimant.

The Single Bench of Justice Sanjeev Narula held that when the main relief is rejected by the Arbitral Tribunal, axiomatically, the interim relief ought to be rejected as well.

Sections15 And 16 Of The MSMED Act Are Mandatory Provisions, Arbitrator Must Assign Reasons For Not Awarding Compound Interest: Delhi High Court

Case Title: Bharat Heavy Electrical Ltd. versus Bhatia Engineering Company

Citation: 2022 LiveLaw (Del) 711

The High Court of Delhi has affirmed the order of the lower Court by which it had set aside an arbitral award for not awarding interest in terms of Sections 15 and 16 which are mandatory provisions of the MSMED Act.

The Bench of Justice Vibhu Bakhru and Justice Amit Mahajan held that once the arbitrator has held that MSMED Act applies to the dispute between the parties, it must assign reasons for not awarding interest in terms of Sections 15 and 16 of the Act.

Gujarat High Court:

Dispute Referred To Arbitration Under MSME Act; Court Can Extend The Mandate Of Arbitrator Under Section 29A Of A&C Act: Gujarat High Court

Case Title: M/s Magirsha Industries versus M/s Gujarat State Fertilizer and Chemicals Limited

The Gujarat High Court has ruled that even in cases where the dispute has been referred to arbitration under the Micro, Small and Medium Enterprises Development Act, 2006 (MSME Act), the Court is empowered under Section 29A of the Arbitration and Conciliation Act, 1996 (A&C Act) to extend the mandate of the Arbitral Tribunal.

A Party Can Withdraw Its Consent For Reference To Arbitration Under Section 89 Of The CPC Any Time Before The Court Acts Upon Such Consent: Gujarat High Court

Case Title: Krishna Calibration Services v. Jasmin Bharat Patel

The Gujarat High Court has held that a party can withdraw its consent for reference to arbitration under Section 89 of CPC any time before the court has acted upon such a reference.

Himachal Pradesh High Court:

Petition Under Section 11 Of The A&C Act Would Be Non-Maintainable After Filing Of An Application Under Section 13 Of The Act:Himachal Pradesh High Court

Case Title: State of H.P. versus BMD Pvt. Ltd.

The Himachal Pradesh High Court has held that a party cannot file a petition under Section 11 of the A&C Act after it has already submitted to the jurisdiction of the arbitrator by way of filing a petition under Section 11 of the A&C Act.

The Single Bench of Justice Sandeep Sharma held once the petitioner has failed to respond/object to the arbitration notice wherein the name of the arbitrator was mentioned within 30 days, there would be deemed consent on its behalf and it cannot object to the appointment of the named arbitrator at a later stage.

Jharkhand High Court:

Similar Matters Pending Before The Facilitation Council Under The MSME Act; Parties Can Be Referred To Arbitration: Jharkhand High Court

Case Title: M/s National Collateral Management Services Limited versus M/s Maa Diwri Rice Mill Pvt. Ltd.

The Jharkhand High Court has ruled that merely because one of the parties has approached the Facilitation Council under the Micro, Small and Medium Enterprises Development Act, 2006 (MSME Act) for adjudication of a similar dispute, the application for appointment of arbitrator cannot be held to be not maintainable.

The Single Bench of Justice Sujit Narayan Prasad held that in view of the arbitration agreement between the parties, even if similar matters were pending before the Facilitation Council under the MSME Act, the same cannot be a ground for holding the application for appointment of arbitrator as not maintainable.

Karnataka High Court:

Section 8 Of A&C Act Can't Be Invoked Based On A Non-Binding Arbitration Agreement: Karnataka High Court

Case Title: Masters Management Consultants (India) Private Ltd. versus Nitesh Estates Limited

The Karnataka High Court has ruled that since the agreement between the parties provided for a 'non-binding' arbitration, there was absolutely no intention of the parties to enter into an arbitration agreement and that the said agreement could not be termed as an arbitration agreement.

The Single Bench of Justice Sachin Shankar Magadum held that since under the relevant clause in the agreement, the parties were at a liberty to initiate litigation before the Civil Court, therefore, the said clause clearly detracted from an arbitration agreement and hence, the recovery suit instituted by the petitioner before the lower Court was very much maintainable, and the lower court could not invoke Section 8 of the Arbitration and Conciliation Act, 1996 (A&C Act).

Stamp Duty On Arbitral Award To Be Paid As Per The Rate Applicable When The Award Was Signed: Karnataka High Court

Case Title: Shriram City Union Finance Ltd. versus Mr. Donald Dayanand Donald

The Karnataka High Court has ruled that the date for the purpose of quantifying the stamp duty payable on an arbitral award under the Karnataka Stamp Act, 1957 is the date on which the award was signed.

The Single Bench of Justice S. Vishwajith Shetty held that since the amendment to Article 11(b) of the Schedule to the Karnataka Stamp Act was already in force on the date of passing of the award, the proper stamp duty required to be paid on the arbitral award was 0.75% of the value of the arbitral award.

Mentioning Referral Of The Matter To Arbitral Institution Is Sufficient; Party Not Required To Name Arbitrator: Karnataka High Court

Case Title: M/s Geosmin Studio Sustainable Solutions LLP versus M/s Ethnus Consultancy Services Pvt. Ltd.

The Karnataka High Court has ruled that a notice issued by a party, stating that the matter would be referred to the Council of Architecture, is sufficient for the purpose of invocation of the Arbitration Clause, since the Council of Architecture is an arbitral institution within the meaning of Section 11 of the Arbitration and Conciliation Act, 1996.

The Single Bench of Justice Suraj Govindaraj held that it is sufficient if there is a mention made to refer the matter to the institution for arbitration and that there is no specific requirement that a party should name an arbitrator.

Arbitration Clause Can Be Invoked Against Disputes Under Another Agreement, If Both Agreements Form One Composite Transaction: Karnataka High Court

Case Title: M/s Bestpay Solutions Private Limited versus M/s Razorpay Software Private Limited

The Karnataka High Court has ruled that a party can invoke the Arbitration Clause contained in an agreement with respect to the disputes arising with a third party under another agreement, if both the agreements refer to each other and form one composite transaction.

The Single Bench of Justice Suraj Govindaraj held that where one of the necessary parties was not issued a legal notice, the said legal notice would be defective and not in consonance with Section 21 of the Arbitration and Conciliation Act, 1996.

Constitution Of Arbitral Tribunal Does Not Restrict Application For Interim Relief If "Entertained" By The Court : Karnataka High Court Reiterates The Law

Case Title: Godolphine India Private Limited versus UM Projects LLP

The Karnataka High Court has ruled that the restriction contained under Section 9(3) of the Arbitration and Conciliation Act, 1996 would not apply once an application under Section 9(1) for interim measures has been "entertained" by the Court before the appointment of the arbitrator.

Once The Right To Refer The Dispute To Arbitration Is Waived By A Party, It Cannot Be Reclaimed: Karnataka High Court

Case Title: Y Harish and Anr. versus Y Satish and Ors

The Karnataka High Court has ruled that if a party has disputed the arbitrability of a dispute raised by the opposite party, in its reply to the notice invoking the arbitration clause, it is deemed to have waived its right to seek the reference of the dispute to arbitration.

The Single Bench of Justice Sachin Shankar Magadum held that the right of the party to refer the dispute to arbitration cannot be kept in the sleeve and be used at will.

Meghalaya High Court:

If The Issue Of Limitation Calls For An Enquiry, The Court Should Yield To The Authority Of The Arbitral Tribunal: Meghalaya High Court

Case Title: M/s Maya Construction versus Union of India & Ors.

The Meghalaya High Court has ruled that in a case where the issue of whether the claim raised by a party is barred by limitation or not calls for an inquiry, the Chief Justice or his designate should allow the objection to be decided by the arbitral tribunal in accordance with law.

The Single Bench of Chief Justice Sanjib Banerjee held that though in an open and shut case where it is apparent that the claim can no longer be pursued, or where the request for setting up an arbitral tribunal is hopelessly barred by limitation, the Court may dismiss the petition for reference to arbitration; however, when an arguable case is made out and the issue of limitation calls for an enquiry, the Court should yield to the authority of the arbitral tribunal.

Court Exercising Powers Under Section 9 Of The A&C Act Cannot Add Conditions To An Unconditional Bank Guarantee: Meghalaya High Court

Case Title: North Eastern Electric Power Corporation Ltd. (NEEPCO) versus Patel-Unity JV

The Meghalaya High Court has held that a court exercising powers under Section 9 of the A&C Act cannot add conditions to an unconditional bank guarantee.

The Division Bench of Chief Justice Sanjib Banerjee and Justice W. Diengdoh held that mere plea of fraud would not be a ground for the court to stay invocation of an unconditional bank guarantee unless a strong prima facie case is made out on such a ground.

Punjab and Haryana High Court:

Section11 Application Barred By Limitation; Parties Cannot Be Referred To Arbitration:Punjab and Haryana High Court

Case Title: M/s Garg Construction Company versus State of Haryana and Ors.

The Punjab and Haryana High Court has reiterated that if the application for appointment of arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 (A&C Act) is hopelessly time-barred, no arbitrator can be appointed by the High Court.

The Single Bench of Chief Justice Ravi Shanker Jha held that in view of Article 137 of the Limitation Act, 1963, the application filed by the applicant before the High Court was barred by limitation, since it was filed well beyond three years.

Rajasthan High Court:

When Termination Of Arbitral Proceedings For Non-Appearance Of Parties, Remain Unchallenged, Application Filed Again For Appointment Of Arbitrator Not Maintainable: Rajasthan High Court

Case Title: Vimlesh Bansal versus Ashok Kumar

The Rajasthan High Court has held that a second arbitration application would be non-maintainable when the order of the arbitrator terminating arbitral proceedings under Section 32(2)(c) was not challenged under Section 14(2) of the A&C Act.

The Single Bench of Justice Pankaj Bhandari held that the legal maxim 'Vigilantibus Non-Dormientibus Jura Subveniunt' which means that 'the law assists only those who are vigilant and not those who sleep over their rights' would squarely apply to a situation where the petitioner slept over its right to challenge the order of termination but filed a second application for appointment of arbitrator.

Telangana High Court:

Impossible For The Party To Fulfil Its Obligations Under The Contract; Parties Cannot Be Referred To Arbitration: Telangana High Court

Case Title: Veeraboina Yadaiah versus Ramakanth Dande

The Telangana High Court has ruled that since it was impossible for a party to fulfil its obligations under an agreement, in view of the doctrine of frustration, the parties cannot be referred to arbitration, despite the presence of an arbitration clause.

The Single Bench of Chief Justice Ujjal Bhuyan observed that though the lease deed between the parties contained an arbitration clause, however, judicial notice could be taken of the fact that the pandemic had broken out in the relevant period under consideration, and hence, it was impossible for the tenant to have paid the rent during the said period. Thus, the Court ruled that it was not a fit case where the parties should be referred to arbitration

Existence Of Contingent Contract U/S 31 Of Contract Act Is A Dispute To Be Referred To Arbitration: Telangana High Court

Recently, the Telangana High Court observed that existence of a "Contingent Contract" cannot be decided in the limited jurisdiction of Courts under Section 11 of Arbitration Act.

Justice K. Lakshman, placing reliance on Supreme Court decision in Vidya Drolia v. Durga Trading Corporation (2021) observed that the scope of interference by the Courts under Section 11 of Arbitration Act is extremely limited

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