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Arbitration Cases Weekly Round-Up: 11 September To 17 September 2022

Parina Katyal
18 Sep 2022 3:00 PM GMT
Arbitration Cases Weekly Round-Up: 11 September To 17 September 2022
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Supreme Court: Disputes Related To Tax Concessions Are Not Arbitrable: Supreme Court Case Title: M/s Shree Enterprise Coal Sales Pvt Ltd. versus Union Of India The Supreme Court has held that disputes related to tax concessions are not arbitrable. The division bench of Justice Dhananjaya Y Chandrachud and Justice Hima Kohli has observed that the High Court was in error in...

Supreme Court:

Disputes Related To Tax Concessions Are Not Arbitrable: Supreme Court

Case Title: M/s Shree Enterprise Coal Sales Pvt Ltd. versus Union Of India

The Supreme Court has held that disputes related to tax concessions are not arbitrable.

The division bench of Justice Dhananjaya Y Chandrachud and Justice Hima Kohli has observed that the High Court was in error in holding that the terms of e-auction provided that any dispute was arbitrable. The Apex Court ruled that undoubtedly, a contractual dispute would be amenable to being resolved by arbitration, however, in the present case, the relief related to tax concessions was not of an arbitrable nature.

Court Exercising Power U/Sec 9 Arbitration Act Not Strictly Bound By CPC ; Should Not Withhold Interim Relief On Mere Technicality: Supreme Court

Case Title: Essar House Private Limited versus Arcellor Mittal Nippon Steel India Limited

The Supreme Court observed that a court exercising power under Section 9 of the Arbitration and Conciliation Act is not strictly bound by provisions of CPC and should not withhold relief on mere technicality. The Court ruled that proof of actual attempts to deal with, remove or dispose of the property with a view to defeat or delay the realisation of an impending Arbitral Award is not imperative for grant of relief under Section 9, and that a strong possibility of diminution of assets would suffice.

High Courts:

Allahabad High Court:

Participation In Arbitral Proceedings Without Protest, In Absence Of Agreement On Seat; Venue Is Also The Seat Of Arbitration: Allahabad High Court

Case Title: M/s. Zapdor-Ubc-Abnjv Delhi versus U.O.I.

The Allahabad High Court has ruled that where the parties have failed to specifically mention the seat of arbitration and have participated in the arbitral proceedings at a place without any protest, the parties shall be said to have determined, by their conduct, the said venue of arbitral proceedings as also the seat of arbitration. Hence, the courts at the said place would have exclusive jurisdiction to supervise the arbitral proceedings.

The Single Bench of Justice Sangeeta Chandra held that an order rejecting an application seeking return of the application filed under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act) involves no adjudication under Section 34 and hence, the same is not appealable under Section 37 of the A&C Act; therefore, a petition under Article 227 of the Constitution of India is maintainable against the said order.

Calcutta High Court:

Writ Maintainable Against An Award Passed By Statutory Arbitrator Violating The Principles Of Natural Justice: Calcutta High Court

Case Title: Sri Ganesh Chandra and Ors. versus The State of West Bengal and Ors.

The Calcutta High Court has held that an award passed by the statutory arbitrator under the National Highways Act, 1956 where neither the notice of arbitration was served nor the copy of the award was given to the appellants is violative of principles of natural justice.

The Bench of Justices Arijit Banerjee and Kausik Chanda held the availability of an alternative efficacious remedy under Section 34 of the A&C Act cannot be a bar to the maintainability of the writ petition against an award passed violating the principles of natural justice.

Delhi High Court:

Would Subsequent Agreement Cover Past Transactions? Arbitrator To Decide: Delhi High Court

Case Title: OYO Hotels and Homes Pvt. Ltd. versus Agarwal Packers and Movers Ltd.

The High Court of Delhi has held that while exercising jurisdiction under Section 11 of the A&C Act, the High Court cannot examine an issue as to whether the arbitration clause in a subsequent agreement would govern past transactions of similar nature as it requires detailed consideration of clauses and surrounding circumstances.

The Bench of Justice V. Kameswar Rao held that the limited scope of judicial scrutiny under Section 11 of the Act does not permit the High Court to examine issues that would require an interpretation of the contract, therefore, all such issues are to be referred to arbitrator.

Rejection Of Belated Application For Amendment Of Claim - Not An Interim Award: Delhi High Court

Case Title: Punita Bhardwaj versus Rashmi Juneja

The Delhi High Court has ruled that the order of the Arbitral Tribunal rejecting the application for amendment of statement of claims on the ground that it was filed at a belated stage, does not constitute an interim award and thus, it is not challengeable under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act).

While observing the distinction between the rejection of application for amendment of claims and counter claims on the ground of limitation vis-à-vis on the ground that the amendment was sought belatedly, the single bench of Justice Prateek Jalan held that Section 23 (3) of the A&C Act vests discretion in the arbitral tribunal to disallow a party to amend or supplement its pleadings on the ground that the application is filed belatedly.

Interlocutory Order Passed By The Arbitrator, Rejecting Application For Amendment Of Claims; Not Challengeable Under Article 227: Delhi High Court

Case Title: VRS Natarajan versus OYO Hotels and Homes Pvt. Ltd.

The Delhi High Court has reiterated that all interlocutory orders passed by the Arbitral Tribunal are not amenable to challenge under Articles 226 and 227 of the Constitution of India.

The Single Bench of Justice C. Hari Shankar held that there is no statutory or other legal bar under the Arbitration and Conciliation Act, 1996 (A&C Act), including under the proviso to Section 34 (2A) of the A&C Act, against raising the interlocutory order passed by the Arbitrator rejecting the application for amendment of Statement of Claims, as a ground for challenging the final award. Thus, the Court ruled that the said interlocutory order was not challengeable under Article 227.

Karnataka High Court:

Arbitration Clause, Effect Of Novation; Can't Be Decided Under Section 11 Of A&C Act:Karnataka High Court

Case Title: Jaganmayi Builders and Developers Private Limited & Ors. versus Sumanth Reddy & Ors.

The Karnataka High Court has ruled that the issue whether an agreement containing an arbitration clause stood novated with the execution of a second agreement and thus, the arbitration agreement between the parties was not subsisting, cannot be decided at the stage of reference to arbitration under Section 11 of the Arbitration and Conciliation Act, 1996 (A&C Act), since it involves a detailed enquiry which must be decided by the Arbitrator himself under Section 16 of the A&C Act.

The Single Bench of Justice B. M. Shyam Prasad reiterated that where novation of the contract containing an arbitration clause is alleged, it is unsafe to conclude about the existence of an arbitration agreement at the stage of reference on a prima facie review of facts.

Madras High Court:

Clause Giving Only Supervisory Powers To Third Party With Respect To Disputes;Not An Arbitration Agreement: Madras High Court

Case Title: Innovators Facade Systems Ltd. versus Larsen & Toubro Limited

The Madras High Court has ruled that where the parties have agreed to give only supervisory powers to a third party with respect to the disputes arising between them, and a clause which does not disclose the intention of the parties to give any adjudicatory powers to the third party, does not qualify as an 'arbitration agreement', as defined under Section 2(1)(b) read with Section 7 of the Arbitration and Conciliation Act, 1996 (A&C Act).

The Single Bench of Justice M. Sundar held that the adjudicatory process is an essential feature of arbitration, in contra-distinction to mediation, and hence, when there is nothing to demonstrate that the contracting parties intended to put an adjudicatory mechanism in place, an arbitration agreement cannot be said to exist.

Parties Can Deviate From Terms Of Jurisdiction Under The Arbitration Clause Only Once:Madras High Court

Case Title: Andal Dorairaj & Ors. versus M/s. Rithwik Infor Park Pvt. Ltd. & Ors.

The Madras High Court has ruled that the parties have got the liberty to deviate from the terms with respect to the jurisdiction, as contained in the Arbitration Clause; however, the number of such deviations is limited to only one.

The Single Bench of Justice R.N. Manjula held that waiver of the jurisdiction clause contained in the arbitration agreement can be presumed from the conduct of the parties. The Court added that if the parties have waived the earlier agreement on jurisdiction and have substituted a new jurisdiction by conduct, then, in view of Section 42 of the Arbitration and Conciliation Act, 1996 (A&C Act), the parties cannot make any further diversions with respect to the jurisdiction.

Orissa High Court:

Arbitrator Can Award Interest On Interest Under The A&C Act: Orrisa High Court

Case Title: Mahanadi Coalfields Ltd. versus B.S. Agarwal, Engineers and Contractors

The Orissa High Court has held that the arbitrator can award separate interest on claims which are in nature of interest for delayed payment.

The Bench of Justice Arindam Sinha held that bar under Section 3 of the Interest Act, 1978 does not apply to interest under the A&C Act. It held that under Section 31(7)(a) of the A&C Act there is no bar on the grant of interest on interest.

Telangana High Court:

Substitution Of Arbitrator Based On Allegation Of Collusion Can't Be Done Under Section 11of A&C Act: Telangana High Court

Case Title: M/s Sawera Township India Private Limited versus Faisal Bin Tirif

The Telangana High Court has ruled that in an application filed under Section 11 of the Arbitration and Conciliation Act, 1996 (A&C Act), the Court cannot, on the ground of collusion, refuse to appoint the arbitrator as specified in the arbitration clause and appoint a substitute arbitrator.

The Single Bench of Justice K. Lakshman held that the allegations regarding any collusion between the specified arbitrator and the opposite party cannot be decided in an application filed under Section 11 of the A&C Act. The Court added that a party cannot seek appointment of a substitute arbitrator on mere allegations of collusion.

Uttarakhand High Court:

Arbitration Clause In An Unregistered But Compulsorily Registrable Document Can Be Enforced: Uttarakhand High Court Reiterates

Case Title: Yukti Construction Pvt. Ltd versus Mrs. Asha and Ors.

The Uttarakhand High Court recently observed that an arbitration agreement does not require registration under the Registration Act.

Relying on the Supreme Court's findings in SMS Tea Estates Private Limited v. Chandmari Tea Company Private Limited, (2011) 14 SCC 66, a bench comprising of Chief Justice Vipin Sanghi reiterated that having regard to the proviso to Section 49 of Registration Act read with Section 16(1)(a) of the Act, an arbitration agreement in an unregistered but compulsorily registrable document can be acted upon and enforced for the purpose of dispute resolution by arbitration.

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