Arbitration Cases Weekly Round-Up: 1st May to 7th May 2022

"Group Of Companies" Doctrine Needs Relook, Says Supreme Court; Refers Issues To Larger Bench

Case Title: Cox and Kings Limited versus SAP India Private Limited and Anr.

Citation: 2022 LiveLaw (SC) 455

The Supreme Court has referred various aspects regarding the application of the doctrine of 'Group of Companies', which is often utilised to bind non-signatories to an Arbitration Agreement, to a larger Bench.

"There is a clear need for having a relook at the doctrinal ingredients concerning the group of companies doctrine", observed a Bench comprising Chief Justice of India, N.V. Ramana, Justices Surya Kant and A.S. Bopanna.

The Power Of The Arbitral Tribunal To Award Interest Is Discretionary And Subject To An Agreement Between The Parties: Supreme Court

Case Title: Delhi Airport Metro Express Pvt. Ltd. versus Delhi Metro Rail Corporation

Citation: 2022 LiveLaw (SC) 452

The Supreme Court has held that the power of the arbitral tribunal to award interest is subject to an agreement between the parties to the contrary. The Court held that the tribunal cannot award interest if the parties have agreed otherwise.

The Division Bench of Justice L. Nageshwar Rao and Justice B.R. Gavai held that when the parties have an agreement between themselves that governs the issue of interest, the arbitrator would lose its discretion and will be guided by the agreement between the parties.

Application Under Section 11(6) Not Maintainable For Appointment Of Arbitrator In Absence Of A Written Agreement Between Parties:Supreme Court

Case Title: Swadesh Kumar Agarwal versus Dinesh Kumar Agarwal & Ors.

Citation: 2022 LiveLaw (SC) 454

The Supreme Court has ruled that there is a difference between the arbitrator appointed under Section 11(5) and under Section 11(6) of the Arbitration and Conciliation Act, 1996 (A&C Act) and failing any written agreement between the parties on the procedure for appointing an arbitrator (s) under Section 11(2), application for appointment of arbitrator (s) shall be maintainable under Section 11(5) and not under Section 11(6).

The Bench of Justices M.R. Shah and B.V. Nagarathna held that once the dispute is referred to arbitration and the sole arbitrator is appointed by the parties by mutual consent, the arbitration agreement cannot be invoked for the second time.

High Courts

Calcutta High Court

Post-Award Interest Is Not Advisory But A Mandate Of The A&C Act: Calcutta High Court

Case Title: Future Market Networks Limited versus Laxmi Pat Surana & Anr.

Case Citation: 2022 LiveLaw (Cal) 156

The Calcutta High Court has ruled that award of future or post-award interest is not advisory but a mandate of the Arbitration and Conciliation Act, 1996 (A&C Act) and it should be given its due weightage.

The Single Bench of Justice Moushumi Bhattacharya reiterated that post award interest is a safeguard against delayed payment of the amount awarded to the award holder.

Delhi High Court

Inordinate And Unexplained Delay In Rendering Arbitral Award Is Against Public Policy Of India: Delhi High Court

Case Title: Director General Central Reserve Police Force versus Fibroplast Marine Pvt. Ltd.

The Delhi High Court has ruled that inordinate and unexplained delay in rendering the arbitral award is in conflict with the public policy of India and is amenable to challenge under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act).

The Single Bench of Justice Vibhu Bakhru held that award of damages arbitrarily and without any basis also falls foul of the public policy of India.

S.11 Arbitration & Conciliation Act | Not Necessary To Go Into Merits Of Claim/ Counter-Claim For Appointment Of Arbitrator: Delhi High Court

Case Title: OYO Hotels and Homes Pvt. Ltd. versus Parveen Juneja & Ors.

Citation: 2022 LiveLaw (Del) 389

The Delhi High Court has observed that in a petition under Section 11 of the Arbitration & Conciliation Act, 1996 for appointment of arbitrator, High Court is not to go into the merits of the claim or the counter-claim, if any, of the parties.

Justice Sanjeev Sachdeva observed that the High Court has to examine as to whether there is an arbitration agreement between the parties and there are any disputes unless ex-facie it is apparent from the record that the disputes are a mere deadwood.

Jharkhand High Court

Second Application For Appointment Of Arbitrator Is Maintainable, Even Though No Liberty Has Been Granted By Court While Setting Aside The Award: Jharkhand High Court

Case Title: M/s Modern Construction Company versus State of Jharkhand

The Jharkhand High Court has ruled that after an arbitral award has been set aside and quashed by the Court under Section 37 of the Arbitration and Conciliation Act, 1996 (A&C Act), an application under Section 11(6)(c) of the A&C Act for appointment of an arbitrator afresh is maintainable, even though no liberty has been granted by the Court while passing the order under Section 37.

The Single Bench of Justice Sujit Narayan Prasad held that if the second application filed by a party for appointment of an arbitrator afresh is held to be not maintainable then the dispute which is the subject matter of the contract between the parties, would remain undecided.

Madhya Pradesh High Court

Void Ab Initio Appointment Of Arbitrator, The Court Has Jurisdiction Under Section 11 Of A&C Act To Appoint A New Arbitrator: Madhya Pradesh High Court

Case Title: M/s Om Sai RK Constructions Pvt. Ltd. versus M/s Forsight Infractech Pvt. Ltd.

The High Court of Madhya Pradesh has ruled that once the appointment of arbitrator is void ab initio and the arbitrator is ineligible by virtue of Section 12 (5) of the Arbitration and Conciliation Act, 1996 (A&C Act), then the procedure prescribed under Sections 12, 13 and 14 of the A&C Act for challenging the appointment of an arbitrator are not applicable.

The Single Bench of Justice Anand Pathak held that if the arbitrator is appointment unilaterally by the opposite party, the ineligible appointment deserves to be set aside and the arbitrator can be removed at the stage of passing of the award.

Madras High Court

Arbitral Award Not Providing Statutory Compensation On Land Acquired Under NHA Is Perverse: Madras High Court

Case Title: The Project Director (LA), NHAI versus T. Palanisamy and Ors.

Citation: 2022 LiveLaw (Mad) 196

The Madras High Court has held that an arbitral award that does not provide for payment of mandatory statutory compensation with respect to the land acquired under the National Highways Act, 1956 is perverse.

The Single Bench of Justice P.T. Asha held that an Arbitrator exercising jurisdiction under the National Highways Act has to be more vigilant in ensuring that the arbitral award is fair and that the land owner is compensated adequately as per his legal entitlement.

Telangana High Court

Section47 Of CPC Is Not Attracted In Proceedings For Execution Of An Arbitral Award:Telangana High Court

Case Title: M/s. M.S.R. Enterprises versus M/s. Pooja Enterprises

Citation: 2022 LiveLaw (Tel) 40

The Telangana High Court has ruled that in proceedings for execution of an arbitral award the whole gamut of CPC is not attracted, and a Court while dealing with an application under Section 36 of the Arbitration and Conciliation Act, 1996 (A&C Act) for enforcement of an award is not bound by the provisions of Section 47 of the Code of Civil Procedure, 1908 (CPC) and is not required to decide on the validity of the award before seeking its enforcement.

The Bench, consisting of Justice P. Naveen Rao and Dr. Justice G. Radha Rani, held that application of Section 47 of CPC would leave Section 34 of the A&C Act redundant and it will be inconsistent with the scheme of the A&C Act.