Arbitration Cases Weekly Round-Up: 7th August To 13th August, 2022

Arbitration Agreement Not A Bar For Referring Parties To Facilitation Council Under MSMED Act:Andhra Pradesh High Court

Case Title: M/s. Dalapathi Constructions versus The State of Andhra Pradesh & Ors.

The Andhra Pradesh High Court has ruled that a reference to the Facilitation Council under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) for conciliation and subsequent arbitration, is not barred on account of the presence of an arbitration agreement between the parties.

The Single Bench of Justice R. Raghunandan Rao held that even if the arbitration agreement between the parties provides for a different method of constituting an Arbitral Tribunal, the party can be referred to the Facilitation Council under Section 18 of the MSMED Act for recovery of its dues.

Delhi High Court:

Supersession Of The Arbitration Clause Must Not Be Inferred Lightly: Delhi High Court

Case Title: Shristi Infrastructure Development Corporation Ltd. versus Ircon International Limited

Citation: 2022 LiveLaw (Del) 778

The Delhi High Court has ruled that in view of the principle of 'when in doubt, do refer', as enunciated by the Supreme Court, if there is an arbitration agreement between the parties, which is sought to be negated by a party by citing other provisions of a contract, which requires interpretation of the contract, the Court must lean towards referring the matter to arbitration.

The Single Bench of Justice Anup Jairam Bhambhani held that an arbitration agreement embedded in a contract is always considered a separate and severable clause, and that the supersession of the arbitration clause must not be inferred lightly.

Account Statements And IT Returns Relied On By Arbitral Tribunal, Have Evidentiary Value:Delhi High Court

Case Title: M/s Scholastic India Pvt. Ltd. & Anr. versus Kanta Batra

Citation: 2022 LiveLaw (Del) 763

The Delhi High Court has ruled that the arbitral award cannot be set aside on the ground that the material relied upon by the Arbitral Tribunal does not measure up to the standards under the Indian Evidence Act, 1872.

The Bench, consisting of Justices Vibhu Bakhru and Amit Mahajan, held that an award passed by the Arbitral Tribunal, by relying upon the Bank Account statements and the Income Tax Return furnished by the Claimant, cannot be said to be an unreasoned award or an award based on no evidence.

Madras High Court:

Limitation Is An Aspect Of Public Policy For The Purpose Section 34 Of Arbitration Act: Madras High Court

Case Title: M/s. Chennai Water Desalination Ltd. versus Chennai Metropolitan Water Supply and Sewerage Board (CMWSSB)

Citation: 2022 Livelaw (Mad) 346

The Madras High Court has ruled that limitation is a facet of public policy, and hence, an arbitral award which is incorrect qua limitation is hit by Section 34(2)(b)(ii), read with Clause (ii) of Explanation 1 to Section 34(2)(b)(ii) of the Arbitration and Conciliation Act, 1996 (A&C Act).

The Single Bench of Justice M. Sundar held that, in view of the principle laid down by the Supreme Court in Voltas Limited versus Rolta India Limited (2014), if the counter claimant before an Arbitral Tribunal has invoked the arbitration clause, then, the date of such invocation would be the relevant date to decide the limitation period for raising the counter claim.

Orissa High Court:

Section5 Limitation Act Application Not Required If Application Under Section 34 Of A&C Act Is Within Statutory Period: Orissa High Court

Case Title: Faridabad Gurgaon Minerals versus Orissa Mining Corporation Ltd.

The Orissa High Court has ruled that there is no requirement under Section 34(3) of the Arbitration and Conciliation Act, 1996 (A&C Act) to file a separate application for condonation of delay in filing an application to set aside an arbitral award under Section 34 of the A&C Act, since the prescribed and the extended periods are both provided under Section 34 of the A&C Act.

The Single Bench of Justice Arindam Sinha held that the Supreme Court in the case of State of Bihar versus Bihar Rajya Bhumi Vikas Bank Samiti (2018) has declared the law and has interpreted the provisions of Section 34 (5) of the A&C Act, which requires a party to issue a prior notice to the opposite party before filing an application to set aside an arbitral award, as being directory in nature and not mandatory.