Arbitration Cases Weekly Round-Up: 10th July To 16th July, 2022

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.

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:

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.

Delhi High Court:

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.

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.

Punjab and Haryana High Court:

Section 11 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.

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