Arbitration Cases Weekly Round-Up: 8th May to 14th May, 2022

High Court Cannot Terminate The Mandate Of Arbitrator In Application Under Section 11(6) Of Arbitration Act : Supreme Court

Case Title: Swadesh Kumar Agarwal versus Dinesh Kumar Agarwal

Case Citation: 2022 LiveLaw (SC) 454

The Supreme Court has observed that a dispute/controversy on the mandate of the arbitrator being terminated on the ground mentioned in section 14(1)(a) of the Arbitration and Conciliation Act cannot be decided on an application filed under section 11(6) of the Act. The Supreme Court ruled that such a dispute has to be raised before the "court", as defined under section 2(e) of the Act.

High Courts

Andhra Pradesh High Court

Arbitration Clause In Unstamped Charter Party Agreement Can Invoke Jurisdiction Under Section 9 Of A&C Act: Andhra Pradesh High Court

Case Title: VR Commodities Private Limited versus Norvic Shipping Asia Pte. Ltd.

The Andhra Pradesh High Court has ruled that an arbitration clause contained in a substantive agreement is an independent and autonomous clause, and even if the substantive agreement is not duly stamped as per the Indian Stamp Act, 1899, the arbitration clause is admissible in evidence before the Court who can take into consideration the arbitration clause to decide an application for grant of interim measures under Section 9 of the Arbitration and Conciliation Act, 1996 (A&C Act).

The Bench, consisting of Chief Justice Prashant Kumar Mishra and Justice M. Satyanarayana Murthy, held that since the arbitration agreement is not chargeable with stamp duty under the Indian Stamp Act, by applying the doctrine of separability the arbitration agreement is admissible in evidence before the Court since it is a separate contract.

Bombay High Court

The Court Shall Refer The Parties To Arbitration When There Is A Duality Of Expert Opinion As To The Genuineness Of The Agreement: Bombay High Court

Case Title: M/s Atul & Arkade Realty versus I.A. & I.C. Pvt. Ltd

The Bombay High Court has held that when an allegation as to the fraud and forgery committed in the execution of the agreement is made and there is a duality of expert opinion on the genuineness of the agreement, the court shall refer the matter to the arbitrator.

The Single Bench of Justice N.J. Jamadar has held that when the underlying document in which the arbitration agreement is contained is alleged to be affected by fraud and forgery and there is uncertainty as to the veracity of the signatures on the agreement, the Court shall appoint the arbitrator to decide on the dispute.

Claim For Recovery Of Security Deposit Or Damages Under License Agreement Is Arbitrable & Not Barred By Section 41 Of The Small Cause Courts Act: Bombay High Court

Case Title: Bafna Motors Private Limited versus Amanulla Khan

The Bombay High Court has reiterated that where the parties to a Leave and License Agreement are governed by an Arbitration Agreement, determination of the dispute relating to recovery of the security deposit under the said License Agreement through arbitration is legally permissible.

The Single Bench of Justice N.J. Jamadar held that the expression "charges" as provided under Section 41 of the Presidency Small Cause Courts Act, 1882, which confers exclusive jurisdiction to the Small Causes Court with respect to a dispute between a licensor and a licensee relating to recovery of an immovable property situated in Greater Bombay or recovery of licence fee, charges or rent, cannot subsume in its fold a claim for damages.

Calcutta High Court

Order Passed By Court Under Section 36 Of A&C Act Is An Interim Order, Can Be Modified On Grounds Of Financial Hardship: Calcutta High Court

Case Title: Damodar Valley Corporation versus Reliance Infrastructure Ltd Case

Citation: 2022 LiveLaw (Cal) 164

The Calcutta High Court has ruled that financial hardship and financial indebtedness are sufficient grounds for modifying an order passed under Section 36 of the Arbitration and Conciliation Act, 1996 (A&C Act) to direct the award debtor to deposit the awarded amount by way of cash security.

The Single Bench of Justice Ravi Krishan Kapur held that the security directed to be deposited by a Court under Section 36 of the A&C Act should be real and realisable, and it ought not to be illusory

Delhi High Court

Right To First Refusal Cannot Be Exercised After Making A Counter-Offer To The Seller: Delhi High Court

Case Title: Gujarat Gas Ltd. versus Vedanta Ltd and Ors.

Citation: 2022 LiveLaw (Del) 444

The High Court of Delhi has held that a party cannot demand its 'Right to First Refusal' after making a counter-offer to the seller.

The Single Bench of Justice Anup Jairam Bhambhani has held that when the party that has been given the right to first refusal (RoFR) makes a counter-offer, the seller becomes entitled to sell the subject goods to the third parties.

Liquidated Damages Can't Be Imposed When The Engineer-In-Charge Holds That The Cause Of Delay Is Explained: Delhi High Court

Case Title: GAIL (India) Ltd. versus Trivendi Engineering & Industries Ltd.

Citation: 2022 LiveLaw (Del) 443

The High Court of Delhi has held that liquidated damages can't be imposed when the Engineer-in-Charge holds that the cause of delay is explained.

The Single Bench of Justice Vibhu Bakhru held that when the Engineer-in-Charge was entrusted with the task of examining the causes of delay, and it had analysed and accepted the justification provided by the contractor and recommended several extensions without the imposition of liquidated damages, it was not open for the employer to levy liquidated damages when the delay was not attributable to the contractor and so was determined by the Engineer-in-Charge.

Supplementary Agreement Rescinding Arbitration Clause; Whether Agreement Contrary To Law, To Be Decided By Arbitrator: Delhi High Court

Case Title: Kiran Infra Engineers Limited versus Northern Railway

Citation: 2022 LiveLaw (Del) 439

The Delhi High Court has held that whether a supplementary agreement between the parties, rescinding the arbitration clause contained in the principal contract, is contrary to law or not in view of taking away the right of a party to invoke arbitration, is required to be decided by the arbitrator himself.

The Single Bench of Justice Sanjeev Sachdeva ruled that the disputes raised by the party contending that the supplementary agreement was hit by Section 17 and Section 23 of the Indian Contract Act, 1872, since it was signed by the party under duress and undue influence, are disputes which the Arbitral Tribunal is competent to rule upon.

Mere Filing Of Written Statement Qua An Independent Transaction Would Not Amount To Waiver Of Right To Invoke Arbitration: Delhi High Court

Case Title: Extramarks Education India Private Limited versus MES Central School

Citation: 2022 LiveLaw (Del) 438

The High Court of Delhi has held that a party cannot be deemed to have waived its right to invoke arbitration merely because it has filed a written statement in respect of disputes that are not covered under the agreement.

The Single Bench of Justice Sanjeev Sachdeva held that a suit in respect of a dispute that is not governed by the arbitration agreement is not an impediment to the invocation of the arbitration.

Section 65-B Of Indian Evidence Act Does Not Apply To Arbitral Proceedings: Delhi High Court

Case Title: Millennium School versus Pawan Dawar

Citation: 2022 LiveLaw (Del) 436

The High Court of Delhi has held that Section 65-B of the Indian Evidence Act, 1872 does not apply to arbitral proceedings.

The Single Bench of Justice Vibhu Bakhru held that although the principles of the Evidence Act usually apply, sensu stricto, the specific provisions of the Act do not apply.

Order Terminating Arbitral Proceedings Without Issuing Show Cause Notice Is Unsustainable And Perverse: Delhi High Court

Case Title: Union of India versus Delhi State Consumer Co Operative Federation Ltd.

Citation: 2022 LiveLaw (Del) 435

The Delhi High Court has ruled that abrupt issuance of orders by the Arbitral Tribunal terminating the arbitral proceedings under Section 25 (a) of the Arbitration and Conciliation Act, 1996 (A&C Act), without holding any hearing and without issuing any show cause notice, is unsustainable and suffers from perversity of approach.

The Single Bench of Justice Prateek Jalan held that to ensure that an Arbitral Tribunal performs the duty entrusted to it is a core aspect of the supervisory function of the High Court, and thus where the Arbitral Tribunal has failed to decide the review applications filed by the claimant seeking recall of the order terminating the arbitral proceedings, the Court can invoke Article 227 of the Constitution of India.

Arbitrator Terminating The Arbitral Proceedings Under Section25(A) Of The A&C Act, Challenge Maintainable Under Article 227 Of The Constitution Of India: Delhi High Court

Case Title: Union of India versus Indian Agro Marketing Co Operative Ltd.

Citation: 2022 LiveLaw (Del) 423

The Delhi High Court has ruled that since no alternate remedy is available to the claimant to challenge the order of the arbitrator terminating the arbitral proceedings under Section 25(a) of the Arbitration and Conciliation Act, 1996 (A&C Act), hence, a petition under Article 227 of the Constitution of India against the said order of the arbitrator is ex facie maintainable.

The Single Bench of Justice C. Hari Shankar reiterated that the Arbitral Tribunal has the power to recall the order passed by it under Section 25(a) of the A&C Act terminating the arbitral proceedings.

Gujarat High Court

Party Failing To Raise The Issue Of Jurisdiction At Section11 Notice Stage Or During The Arbitral Proceedings, Ground Not Available Under Section 34: Gujarat High Court

Case Title: Leepee Enterprise versus Mehul Industries

The Gujarat High Court has ruled that the issue of jurisdiction of the Arbitrator ought to be raised at the first available opportunity, i.e., when the notice under Section 11 of the Arbitration and Conciliation Act, 1996 (A&C Act) is served for appointment of Arbitrator.

The Single Bench of Justice A.G. Uraizee rejected the contention that the issue of jurisdiction being a legal issue can be raised at any stage.

Can Third Parties To An Arbitration Agreement Be Impleaded As Parties In Proceedings U/S 9 Arbitration Act?: Gujarat High Court Answers

Case Title: Vijay Arvind Jariwala versus Umang Jatin Gandhi

"In the proceedings of section 11, a person who is not a party to the agreement, has no association in eye of law. On the same footing, a third party cannot be a party in the proceedings under section 9 of the Act for interim measures wherein by very nature of the proceedings, third party cannot be said to have a legal participatory right", the Division Bench of the Gujarat High Court, comprising Justice NV Anjaria and Justice Samir Dave, has observed.

Interim Relief Under Section 9 Of The A&C Act Cannot Be Granted Against A Third-Party Unless Claiming Under A Party To The Arbitration Agreement: Gujarat High Court

Case Title: Vijay Arvind Jariwala versus Umang Jatin Gandhi

Citation: 2022 LiveLaw (Guj) 153

The High Court of Gujarat has held that a third party cannot be impleaded as a party to an application for interim reliefs under Section 9 of the A&C Act unless it is a party who is claiming under a party to the arbitration agreement.

The Division Bench of Justice N.V. Anjaria and Justice Samir J. Dave has held that the remedy under the Arbitration Act is between the parties to the arbitration agreement, therefore, the third party has no concern with the proceedings of Section 9 nor the said provision recognizes the inclusion of the third party, who may be independently claiming the rights against the parties to the arbitration and vice versa.

Meghalaya High Court

Arbitral Tribunal Framing An Issue Which Was Already Decided During Interim Award, Writ Maintainable: Meghalaya High Court

Case Title: The Chief Engineer (PWD) (National Highways) Government of Meghalaya, Shillong versus M/s. BSC – C&C JV

The High Court of Meghalaya has held that a writ petition is maintainable against an order of the arbitral tribunal framing issue in respect of a claim that has finally been decided in the interim award.

The Single Bench of Justice H.S. Thangkhiew has held that an arbitrator would be acting without jurisdiction if it frames an issue qua a claim that has already been decided in the interim award.

Orissa High Court

An Unreasoned Arbitration Award Is Against The Public Policy:  Orissa High Court

Case Title: Jayaram Panda versus Project Director, M/s. National Highway Authority of India and others

The High Court of Orissa has held that an unreasoned arbitral award would be against the public policy.

The Single Bench of Justice Arindam Sinha set aside the award as the arbitrator failed to give any reasons for reaching the conclusion in the award. The Court held that an award bereft of reasons, goes against the mandate of the Act and therefore is against the public policy.

Refusal To Delete Name Of A Party From The Arbitral Proceedings Is Not The Rarest Of Rare Case To Invoke Writ Jurisdiction: Orissa High Court

Case Title: State of Odisha versus M/s. Nayagarh Sugar Complex Ltd.

The High Court of Orissa has held that a writ petition is not maintainable against an order of the arbitral tribunal refusing to delete the name of a party from the arbitration.

The Single Bench of Justice Arindam Sinha has held that to invoke the writ jurisdiction in an arbitration matter, the aggrieved party has to show that it is a 'rare of the rarest cases' and the interference of the Court is required. The Court ruled that the order of the tribunal wherein it has refused to delete the name of a party does not fall with the rubric of rare of the rarest cases.