Arbitration Cases Weekly Round-Up: June 19 – June 25, 2022

Arbitral Proceedings Cannot Be Imposed On A Debenture Trustee Under A Scheme Of Compromise, In The Absence Of An Arbitration Agreement: Bombay High Court

Case Title: HMG Industries Ltd. versus Canara Bank

Citation: 2022 LiveLaw (Bom) 224

The Bombay High Court has held that even though a Scheme of Compromise entered into under Section 391 of the Companies Act, 1956 overrides all the agreements between the affected parties, arbitral proceedings cannot be imposed by a Company on a Debenture Trustee by virtue of the said Scheme only, in the absence of an arbitration agreement between them.

The Single Bench of Justice A.K. Menon ruled that the Debenture Trustee was an independent obligation of the Company and thus, the arbitration clause contained in the Scheme was not binding on the Debenture Trustee

Mere Pendency Of A Civil Suit Is Not An Absolute Bar To A Petition Under Section 11Of The A&C Act: Bombay High Court

Case Title: Priya Rishi Bhuta & Anr. versus Vardhaman Engineers and Builders & Ors.

Citation: 2022 LiveLaw (Bom) 221

The High Court of Bombay has held that mere pendency of a Civil Suit is not an absolute bar to a petition under Section 11 of the A&C Act as long as the petitioner can withdraw its suit before the defendant files its statement on the issue.

The Single Bench of Justice G.S. Kulkarni held that it is also permissible for the Civil Court to consider an application of the plaintiff to permit withdrawal of the suit when there is an arbitration agreement, and refer the parties for arbitration.

Gujarat High Court:

A Party Is Not Entitled To Invoke The Arbitration Clause After Signing The Discharge Voucher Without Any Protest Or Demur: Gujarat High Court

Case Title: Balkrishna Spintex Private Limited versus The New India Assurance Company Limited

The Gujarat High Court has ruled that a party is not entitled to invoke the arbitration clause after it had signed the discharge voucher without any protest or demur, since no arbitrable dispute could be said to subsist.

The Single Bench of Chief Justice Aravind Kumar held that an application for referring the dispute to arbitration could not be entertained merely on the ground that the party had, within 15 days from the receipt of an amount, contended that the said amount was received by it under duress.

Court Can't Decide Disputed Questions Of Facts U/S 11(6) Arbitration Act, Question Of Arbitrability Can Be Examined By Arbitral Tribunal: Gujarat High Court

Case Title: Lords Inn Hotels and Developers Ltd. versus Raysons Residency Pvt. Ltd.

The High Court cannot decide disputed questions of facts in a petition filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 for the appointment of arbitrator, the Gujarat High Court has held.

The Bench comprising Chief Justice Aravind Kumar observed, "All these issues including arbitrability can be examined by the Arbitral Tribunal itself."

Himachal Pradesh High Court:

The Writ Not Maintainable Against An Order Of The Arbitrator Dismissing An Application For Interrogatories: Himachal Pradesh High Court

Case Title: M/s V. Kare Biotech and Ors. versus Hemant Aggarwal and Anr.

The Himachal Pradesh High Court has held that a writ petition would be non-maintainable against an order of the arbitrator dismissing the application for interrogatories.

The Single Bench of Justice Satyen Vaidya held that the arbitration act is a complete code in itself which prohibits judicial interference except where so provided under the Act.

Madhya Pradesh High Court:

Invocation Of Section 9 Of The A&C Act; Need To Wait Termination Of Conciliation Proceedings Under MSME Act: Madhya Pradesh High Court

Case Title: M/S Ujas Associates versus M/S KJS Cement (India) Ltd.

The Madhya Pradesh High Court has ruled that the provisions of the Arbitration and Conciliation Act, 1996 (A&C Act), including Section 9, would come into operation only after the termination of the conciliation proceedings under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act), in the absence of an arbitration agreement between the parties.

The Bench, consisting of Justices Sheel Nagu and Maninder S. Bhatti, held that the powers under Section 9 of the A&C Act cannot be invoked by the competent Court prior to the termination of the conciliation proceedings under the MSMED Act

Meghalaya High Court:

Justifiable Doubts Regarding The Independence Of Empanelled Arbitrators Would Always Exist: Meghalaya High Court

Case Title: Jaguar Overseas Limited versus Union of India & Anr.

Citation: 2022 LiveLaw (Meg) 20

The High Court of Meghalaya has held that if a contractor/ tenderer does not accept the names of the possible arbitrators that are listed on the panel prepared by the tenderee, the panel cannot be enforced since there would always be justifiable doubts regarding the independence or impartiality of the empanelled arbitrators.

The Single Bench of Chief Justice Sanjib Banerjee held that even if a person is named as an arbitrator in the arbitration agreement entered into before the occurrence of the dispute, and whose appointment would otherwise fall foul of the Seventh Schedule, a party is not barred from objecting to the agreed arbitrator taking up reference.

Orissa High Court:

Arbitral Award Cannot Be Set Aside On The Ground That It Is Based On Insufficient Material: Orissa High Court

Case Title: GMR Kamalanga Energy Ltd. versus SEPCO Electric Power Construction Corporation

Citation: 2022 LiveLaw (Ori) 106

The Orissa High Court has reiterated that an arbitral award cannot be set aside on the ground of breach of fundamental principles of justice, if the findings of the Arbitral Tribunal do not shock the conscience of the Court.

The Single Bench of Justice K.R. Mohapatra held that even if the material available before the Arbitral Tribunal is not sufficient to come to the conclusion arrived at by the Tribunal, the award cannot be set aside on this ground alone.

Telangana High Court:

Place Of Residence Of The Arbitrator Would Not Be The Seat Of Arbitration: Telangana High Court

Case Title: M/s S. Square Infra versus Garneni Chalapathi Rao

The High Court of Telangana has held that the place of residence of the arbitrator would not determine the seat of arbitration.

The Single Bench of Justice P. Sree Sudha held that merely because an arbitrator residing in Hyderabad has been appointed, it would not mean that only the Courts at Hyderabad would have the jurisdiction to decide all the matters arising out of arbitration agreement.

Parties Cannot Be Said To Be Negotiating When The Respondent Did Not Reply ; Period Of Limitation Cannot Be Extended On That Basis: Telangana High Court

Case Title: Terra Infra Development Ltd. versus NCC Ltd.

Citation: 2022 LiveLaw (Tel) 53

The Telangana High Court has held that the parties cannot be said to be negotiating when the respondent did not reply to the letters of the applicant and the period of limitation for invoking arbitration would not be extended in such a scenario.

The Single Bench of Justice K. Lakshman held that the period of limitation would begin to run when the liability to pay is disputed by a party and mere writing of letters and correspondences will not extend the limitation period.

Having Regard To The Object Of The A&C Act, The Delay Of 435 Days In Filing An Appeal Is Too Long To Exercise Discretion: Telangana High Court

Case Title: Naveen P Malvay versus Samskruthi Shelters

Citation: 2022 LiveLaw (Tel) 52

The Telangana High Court has held that having regard to the object of the A&C Act, the delay of 435 days in filing an appeal is too long to exercise discretion.

The Division Bench of Justice P. Naveen Rao dismissed an appeal that was filed after a long delay of 435 days on the ground that no sufficient reason was assigned for delay in filing the appeal. The Court held that when the delay is long, a heavy burden is placed on the applicant to give cogent reasons to satisfy the court for condonation of delay.