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Monthly Digest Of Arbitration Cases : May 2022

Ausaf Ayyub
2 Jun 2022 5:30 AM GMT
Monthly Digest Of Arbitration Cases : May 2022
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Supreme Court

"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 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.

Arbitration Act - Dispose Sec 11(5) & 11(6) Applications Pending For Over 1 Year Within 6 Months : Supreme Court To High Courts

Case Title: M/s Shree Vishnu Constructions versus The Engineer in Chief Military Engineering Service And Ors.

Citation: 2022 LiveLaw (SC) 523

The Supreme Court of India has made strong observations emphasising the need for High Courts to decide applications for appointments of Arbitrators at the earliest.

A Bench comprising Justice MR Shah and Justice BV Nagarathna has observed that if the arbitrators are not appointed at the earliest and the applications under Sections 11(5) and 11(6) of the Arbitration Act for appointment of arbitrators are kept pending for a number of years, it will defeat the object and purpose of the enactment of the Act and it may lose the significance of an effective Alternative Dispute Resolution Mechanism.

High Courts

Allahabad High Court

Section47 CPC Application Is Not Maintainable In Execution Proceedings Under Arbitration Act, 1940: Allahabad High Court

Case Title: Bharat Pumps and Compressors v. Chopra Fabricators, Civil Revision No. 53 of 2022

Case Citation: 2022 LiveLaw (AB) 269

The Allahabad High Court held that an application under Section 47 of the CPC is not maintainable in the execution proceedings under Section 17 of the Arbitration Act, 1940.

The Single Bench of Justice Piyush Agarwal held that an arbitration award is not a decree as defined under section 2(2) of CPC and therefore, the objection under section 47 of CPC, which can be filed only in execution of decree (as defined under section 2(2) CPC), is not maintainable in the proceedings seeking execution of the award.

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:

Novation Of Partnership Deed, Arbitration Clause Contained In The Deed Can Be Invoked:Bombay High Court

Case Title: Praful A. Mehta versus Nainesh M. Gandhi

The Bombay High Court has ruled that the allegation of forgery is required to be dealt with at the stage of trial before the Arbitrator.

The Single Bench of Justice A. K. Menon dismissed the contention that an arbitration clause cannot be invoked as a result of novation of the agreement containing the arbitration clause. The Court added that even though there had been a novation of the partnership deed containing an arbitration clause, an Arbitrator could be appointed for adjudication of disputes against the partner with respect to the partnership firm.

The Court Shall Refer The Parties To Arbitration WhenThere 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

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.

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

The Finding Of The MSME Council On Its Jurisdiction Is Not An Interim Award: Calcutta High Court

Case Title: Board of Trustees for the Syama Prasad Mookerjee Port, Kolkata versus Marinecraft Engineers Private Limited

Case Citation: 2022 LiveLaw (Cal) 194

The High Court of Calcutta has held that the decision of the MSME Council on its jurisdiction is an order under Section 16 of the A&C Act and it cannot be termed as an interim award that can be directly challenged under Section 34 of the A&C Act pending adjudication on the other issues.

The Single Bench of Justice Ravi Krishan Kapur has held that the order of the MSME Council that pertains to its jurisdiction has to pass the drill of Section 16(5) and Section 16(6) of the A&C Act and the aggrieved party must wait till the passing of the final award.

No Direction Can Be Passed To Sell Property To Third Party In Section 9 Petition Of The A&C Act: Calcutta High Court

Case Title: Aditya Birla Finance Ltd versus Mcleod Russel India Ltd. and Ors.

Case Citation: 2022 LiveLaw (Cal) 189

The High Court of Calcutta has held that no direction can be passed to sell property to third party in Section 9 petition of the A&C Act.

The Single Bench of Justice Moushumi Bhattacharya has held that a direction to sell the subject property to an outsider who was not a party to the arbitral proceedings would result in the property going out of the girdle of the arbitration and the purpose of a Section 9 application itself would be defeated.

The Objection Regarding The Non-Applicability Of The MSMED Act To 'Works Contract' Is To Be Decided In Arbitration By The MSME Council:Calcutta High Court

Case Title: NBCC (India) Ltd. versus The State of West Bengal and Ors.

Citation: 2022 LiveLaw (Cal) 214

The Calcutta High Court held that objections regarding the non-applicability of the MSMED Act to works contract can be decided in arbitration by MSME Council.

The Division Bench of Chief Justice Prakash Shrivastava and Justice Rajarshi Bharadwaj upheld the order of the Single Bench whereby the petitioner was referred to arbitration before the MSME Council with a direction that his objection regarding the non-applicability of the MSMED Act as the contract was a works contract would be decided by the Arbitral Tribunal.

S.11Arbitration Act | Interested Party Cannot Appoint An Arbitrator To Decide Disputes Between Parties: Calcutta High Court

Case Title: New Eureka Travels Club versus South Bengal State Transport Corporation

Citation: 2022 LiveLaw (Cal) 200

The Calcutta High Court, while adjudicating upon an application under Section 11 of the Arbitration and Conciliation Act, 1996 (Act), has held that it is a settled law that neither an interested party can be appointed as an arbitrator nor can the said interested party appoint an arbitrator to decide the disputes between the parties.

The Single Bench of Justice Shekhar B. Saraf observed that where a sole arbitrator is required to be appointed as per the parties, it is the Court that is to decide the sole arbitrator.

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.

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.

Rejected Claims By Resolution Professional In Insolvency Proceedings, To Be Decided By The Arbitrator: Delhi High Court

Case Title: Bharat Petroresources Limited versus JSW Ispat Special Products Limited

Citation: 2022 LiveLaw (Del) 469

The High Court of Delhi held that the claims rejected by Resolution Professional in the insolvency proceedings on the ground that they arose after the Insolvency Commencement Date (ICD), are to be decided by the arbitrator.

The Single Bench of Justice Vibhu Bakhru held that extinguishment of claims that arose after the Insolvency Commencement Date (ICD) is a contentious issue that is to be decided by the arbitrator when the parties have an arbitration agreement.

Deferment Charges On Liquidated Damages, No Liability To Pay When Liquidated Damages Itself Not Payable : Delhi High Court

Case Title: Haryana Vidyut Prasaran Nigam Ltd. (HVPNL) versus Cobra Instalaciones Y Services S.A. and Shyam Indus Power Solution Pvt. Ltd. JV

Citation: 2022 LiveLaw (Del) 454

The High Court of Delhi has held that there would be no question of recovery of deferment charges on the liquidated damages when the liquidated damages are themselves not payable.

The Single Bench of Justice Vibhu Bakhru has held that deferment charges cannot be treated as separate charges payable irrespective of whether the liquidated damages are payable or not. The Court held that these would only be payable when the liquidated damages are held to be payable

Challenge By NHAI On Fee Fixation By Arbitral Tribunal, Delhi High Court Holds That Tribunal Can Fix Its Fees

Case Title: National Highway Authority of India versus MEP Chennai Bypass Toll Road Pvt. Ltd. & Anr.

Citation: 2022 LiveLaw (Del) 453

The Delhi High Court has ruled that the Arbitral Tribunal is permitted to fix its fee, if its appointment is made by way of an ad hoc agreement between the parties.

The Single Bench of Justice Sanjeev Narula held that where the Arbitral Tribunal has accepted its appointment outside the mandate of the International Centre for Alternative Dispute Resolution (ICADR), it is entitled to determine its fee and is not bound by ICADR Rules. The Court upheld the order of the Arbitral Tribunal fixing the arbitral fee separately for the claims and the counter-claims.

Mere Pendency Of An Insolvency Petition Is Not A Bar To The Appointment Of The Arbitrator: Delhi High Court

Case Title: Millennium Education Foundation versus Educomp Infrastructure and School Management Limited

Citation: 2022 LiveLaw (Del) 449

The High Court of Delhi has held that the mere pendency of an insolvency petition under Section 9 of the IBC is not a bar to the appointment of an arbitrator.

The Single Bench of Justice Sanjeev Sachdeva has held that merely because an insolvency petition is pending, it cannot be an embargo on the power of the Court to decide arbitration applications. The Court added that it is only when the insolvency petition is admitted and the moratorium is declared that the proceedings under the Arbitration Act would be non-maintainable.

A Party Cannot Dispute The Jurisdiction On Account Of Non-Existence Of The Arbitration Agreement After Submitting To The Jurisdiction Of The Arbitrator: Delhi High Court

Case Title: Amrish Gupta versus Gurchait Singh Chima

The High Court of Delhi held that a party cannot dispute the jurisdiction on account of non-existence of the arbitration agreement after submitting to the jurisdiction of the arbitrator.

The Single Bench of Justice Vibhu Bakhru held that generally, the arbitration clause contained in the main agreement would also fall when the validity of the main agreement is challenged and the dispute would be non-arbitrable.

Plaintiff Is Not Entitled To Return Of Court Fees When The Parties Are Referred To Arbitration Under Section 8 Of The A&C Act: Delhi High Court

Case Title: A-One Realtors Pvt. Ltd. versus Energy Efficiency Services Ltd.

Citation: 2022 LiveLaw (Del) 502

The High Court of Delhi has held that the plaintiff is not entitled to return of Court Fess when the parties are referred to arbitration under Section 8 of the A&C Act.

The Single Bench of Justice Amit Bansal held that the benefit of Section 16 of the Court Fees Act would only be available to the plaintiff when the parties are referred to arbitration for settlement in terms of Section 89 of the CPC and not under Section 8 of the A&C Act.

Waiver Under Section 12(5) Of A&C Act Has To Be By An Express Agreement In Writing: Delhi High Court

Case Title: AK Builders versus Delhi State Industrial Infrastructure Development Corporation Ltd

Citation: 2022 LiveLaw (Del) 490

The Delhi High Court has ruled that any right under Section 12(5) of the Arbitration and Conciliation Act, 1996 (A&C Act), that deals with the ineligibility of certain persons to be appointed as an arbitrator, can be waived of only by an express Agreement in writing entered into after the disputes had arisen between the parties.

The Single Bench of Justice Vibhu Bakhru dismissed the contention that since the petitioner had participated in the arbitral proceedings it was precluded from raising any objections towards the appointment of the Arbitrator. The Court reiterated that a person who is ineligible to act as an arbitrator would also be ineligible to appoint an arbitrator.

The Provisions For The Quantum Of Damages Under Land Acquisition Act, 2013 Would Apply To Arbitrations Under The Resettlement Of Displaced Persons (Land Acquisition) Act, 1948: Delhi High Court

Case Title: Rajinder Kumar Agarwal versus Union of India

The High Court of Delhi has held that the provisions for the quantum of damages under Land Acquisition Act, 2013 (LARR Act) would apply to arbitrations under the Resettlement of Displaced Persons (Land Acquisition) Act, 1948.

The Single Bench of Justice Navin Chawla has held that the provisions of the LARR Act being beneficial in nature would also apply to all the pending arbitrations under the Resettlement of Displaced Persons (Land Acquisition) Act.

Arbitral Award Passed In Disregard To Judicial Decisions Conflicts With The Public Policy : Delhi High Court

Case Title: Sanjay Roy versus Sandeep Soni & Ors.

The Delhi High Court has held that an arbitral award that is not in consonance with the judicial decisions and principles laid down by the courts of India would be in violation of the fundamental policy of Indian law and thus in conflict with the public policy of India under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act).

The Bench, consisting of Justices Mukta Gupta and Neena Bansal Krishna, upheld the order of the Single Judge setting aside the arbitral award under Section 34 on the ground that the Arbitrator had failed to apply the basic fundamental law as contained in the Limitation Act, 1963 and the Transfer of Property Act, 1882.

Arbitrator Cannot Rewrite Terms Of The Agreement Merely Because It Flouts Business Common Sense: Delhi High Court

Case Title: Union of India, Ministry of Railways, Railway Board & Anr. versus M/s Jindal Rail Infrastructure Limited

The High Court of Delhi held that the arbitrator cannot re-write the terms of the agreement between the parties merely because they flout business common sense.

The Single Bench of Justice Vibhu Bakhru has held that an award wherein the arbitrator re-works a bargain between the parties merely because it is commercially difficult for one party to perform the same would be against the fundamental policy of Indian Law and would be vitiated by patent illegality.

The Arbitrator Cannot Allow Forfeiture Of A Substantial Amount Of Consideration Without Proof Of Actual Loss Solely On The Ground That It Was Earnest Money: Delhi High Court

Case Title: Rajesh Gupta versus Ram Avtar

Citation: 2022 LiveLaw (Del) 482

The High Court of Delhi has held that the arbitrator cannot allow forfeiture of a substantial amount of consideration without the proof of actual loss solely on the ground that it was referred to as Earnest Money under the contract.

The Single Bench of Justice Vibhu Bakhru partly set aside an award on the ground that the arbitrator wrongly allowed the forfeiture of Earnest Money which formed a substantial portion of the total consideration without the respondent proving actual loss suffered by it.

Multiple Arbitrations With Regard To Existing Claims On Same Contract Are To Be Avoided: Delhi High Court

Case Title: Panipat Jalandhar National Highway 1 Tollway Pvt. Ltd. v. NHAI

Citation: 2022 LiveLaw (Del) 521

The High Court of Delhi has held that multiple arbitrations with regard to existing claims on same contract are to be avoided.

The Single Bench of Justice Suresh Kumar Kait held that permitting the parties to have multiple arbitrations for the adjudication of the existing disputes related to the same contract would entail multiple observations.

The Court further held that there is no absolute bar in terms of Entry 22 to the Vth Schedule against the appointment of the same person as the arbitrator in more than two arbitrations within a period of three years.

Gujarat High Court

Party Failing To Raise The Issue Of Jurisdiction AtSection11 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.

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.

Registrar Of The Jharkhand Cooperative Society, Who Also Is The Ex-Officio Director Of The Respondent, Jharkhand High Court Says Appointment As Arbitrator Not Barred As Parties Had Agreed Earlier

Case Title: National Club Cooperative Society Ltd versus The Managing Director, Jharkhand State Adivasi Cooperative Marketing Federation Ltd

Citation: 2022 LiveLaw (Jha) 57

The Jharkhand High Court has ruled that just because registration was granted to a party by a State Cooperative Society, presumption against the independence and impartiality of the Registrar of the said State Cooperative Society to act as an Arbitrator cannot arise.

The Single Bench of Justice Sujit Narayan Prasad held that by merely raising apprehension regarding the independence and impartiality of the person specified to act as an Arbitrator in the arbitration clause, a party cannot file an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (A&C Act) for appointment of an Arbitrator.

Karnataka High Court:

No Stamp Duty Leviable On Award Of Compensation Passed By An Arbitrator Under Section 3G(5) Of The National Highways Act: Karnataka High Court

Case Title: Shalini and Anr. versus National Highways Authority of India and Ors.

The Karnataka High Court has ruled that an award of compensation passed by an Arbitrator under Section 3G(5) of the National Highways Act, 1956 does not attract stamp duty.

The Single Bench of Justice Suraj Govindaraj held that an award of compensation passed by the Land Acquisition Officer under the Land Acquisition Act or under any other similarly situated enactment, including the National Highways Act (NHA), is not amenable to payment of any stamp duty. The Court added that merely because the said award of compensation is passed by an Arbitrator under Section 3G(5) of NHA, the same would not attract stamp duty.

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.

A Party Cannot Directly Seek The Appointment Of The Arbitrator If The Agreement Provides For Pre-Arbitration Reference To A Competent Authority: Madhya Pradesh High Court

Case Title: Dharmadas Tirthdas Construction Pvt. Ltd. versus Government of India and Ors.

The High Court of Madhya Pradesh has held that the court cannot appoint the arbitrator when the petitioner has not complied with the condition precedent of referring the dispute to the Superintending Engineer.

The Single Bench of Justice Vivek Rusia has held the pre-arbitral steps to be mandatory, the non-compliance of which will result in the rejection of the application for the appointment of the arbitrator.

Madras High Court

Enforcement Of A Foreign Arbitral Award Can Be Filed In More Than One High Court: Madras High Court

Case Title: NCC Infrastructure Holdings Ltd and Anr. v. TAQA India Power Ventures Pvt. Ltd. Arb. O.P. (Comm. Div) Nos. 410 and 412 of 2021.

The High Court of Madras has held that more than one High Court can exercise jurisdiction for the recognition and enforcement of a part of arbitral award if the claims are decided for and against the parties thereto.

The Single Bench of Justice Senthilkumar Ramamoorthy held that the Court for the purpose of the enforcement of a foreign award would be the one within whose jurisdiction either the award debtor carries his business or its assets are located within its jurisdiction.

The Court held that as a corollary at least two High Courts can have jurisdiction if the arbitrator has allowed the claims of both the parties and each party would file an application for the enforcement of the award in the High Court where the assets of the other party are located.

Effect Of Dismissal Of Insolvency Petition Of The Award Holder Against The Award Debtor.Madras High Court

The Court further held that merely because the NCLT has declined to admit an insolvency petition preferred by the award holder against the award debtor, it would not preclude the award holder from filing an application for the enforcement of the award.

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.

Arbitral Award Rendered Mechanically, Awarding Lower Value For Land Acquired Under NHA:Madras High Court Remits Matter Back To Arbitrator

Case Title: Union of India versus J. Auuamar and Ors.

Citation: 2022 LiveLaw (Mad) 221

The Madras High Court has ruled that an arbitral award rendered by the District Collector awarding a lower value to the land owners with respect to the land acquired under the National Highways Act, 1956 without following the mandate of Section 3G (7) of the National Highways Act, is rendered mechanically.

The Bench, consisting of Justices R. Subramanian and N. Sathish Kumar, remitted the matter back to the Arbitrator for fixing the value of the land acquired under the National Highways Act afresh in terms of Section 3G (7) of the National Highways Act.

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.

Invocation Of Arbitration Clause In Tender Document Is Possible Only If Purchase Order Is Placed: Orissa High Court

Case Title: Emcure Pharmaceuticals Ltd versus The Managing Director, Odisha State Medical Corporation and Others

The Orissa High Court has ruled that till a purchase order is issued by the tenderee pursuant to the acceptance of an offer to supply, no completed 'contract' arises between the parties and thus the arbitration clause contained in the tender document is not attracted.

The Single Bench of Chief Justice Dr. S. Muralidhar reiterated that the arbitration clause contained in the tender document was not an arbitration agreement in praesenti, but a provision that was to come into existence in the future, if a purchase order was placed.

Rajasthan High Court:

Proceedings Under The A&C Act And SARFAESI Act Can Be Resorted To Simultaneously: Rajasthan High Court Reiterates The Legal Position

Case Title: Om Prakash Kumawa versus Hero Housing Finance Ltd.

The High Court of Rajasthan has held that proceedings under the A&C Act and SARFAESI Act can be resorted to simultaneously.

The Single Bench of Justice Mahendra Kumar Goyal has held that the existence of an arbitration clause and filing of an application under Section 9 of the A&C Act is not a bar to the institution of proceedings under the SARFAESI Act.

Condonation Of Delay | S.5 Limitation Act Not Applicable To Proceedings U/S 34 Arbitration& Conciliation Act: Rajasthan High Court

Case Title: State of Rajasthan & Anr. versus M/s. Godhara Construction Company

Citation: 2022 LiveLaw (Raj) 162

The Rajasthan High Court has observed that the provision of Section 5 of the Indian Limitation Act does not apply to the proceedings contained under Section 34 of the Arbitration and Conciliation Act, 1996.

The Single Bench of Justice Anoop Kumar Dhand observed that the proviso to Section 34(3) of the Act of 1996 empowers the court, if it is satisfied that the applicant was prevented by sufficient cause from making application within the said period of three months, to further extend the period and filing of the application for setting aside the arbitral award by 30 days but not thereafter.

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.

Arbitral Award Must Be In Accordance With The Terms Of The Contract: Reiterates Telangana High Court

Case Title: C. Srimannarayana versus Hindustan Petroleum Corporation Limited, SECBAD and Another

The Telangana High Court has reiterated that an arbitral award must be in accordance with the terms of the contract.

The Bench, consisting of Justice P. Naveen Rao and Dr. Justice G. Radha Rani, quashed an arbitral award on the ground that the clauses of the contract were not properly construed by the Arbitrator and that it was a non-speaking order which was rendered without discussing the contentions raised by the claimant.

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