Arbitration Cases Monthly Round-Up: March 2023
Ausaf Ayyub
3 April 2023 11:25 AM GMT
High Courts Allahabad High Court: When Arbitration Clause Covers All The Disputes, Jurisdiction Can’t Be Limited To A Particular Dispute: Allahabad High CourtCase Title: Agra Development Authority Agra vs. M/s Baba Construction Pvt Ltd The High Court of Allahabad has held that when the arbitration clause covers all the disputes arising out of the contract within its ambit then...
High Courts
Allahabad High Court:
Case Title: Agra Development Authority Agra vs. M/s Baba Construction Pvt Ltd
The High Court of Allahabad has held that when the arbitration clause covers all the disputes arising out of the contract within its ambit then the scope of the arbitrator cannot be limited to decide only a particular dispute.
The bench of Justices Prashant Kumar and Manoj Kumar Gupta held that all the disputes that have arisen before the appointment of the arbitrator can be referred to him for adjudication as the claim for damages which has been made prior to invocation of arbitration, becomes a dispute within the meaning of the provisions of 1996 Act and the arbitrator’s jurisdiction cannot be confined to a particular dispute.
Bombay High Court:
Case Title: Nagreeka Indcon Products Pvt Ltd vs. Cargocare Logistics (India) Pvt Ltd
The Bombay High Court has ruled that the use of the word ‘can’ in the relevant clause has the effect of qualifying Arbitration as a mode of settlement, and the mere fact that a particular clause is captioned as “Arbitration”, does not conclusively imply the mandatory nature of arbitration when the option is left to the parties to settle their disputes through arbitration.
Arbitration Clause Can Be Invoked By Assignee Of Rights Under Contract: Bombay High Court
Case Title: M/s. Siemens Factoring Pvt Ltd vs. Future Enterprises Pvt Ltd
The Bombay High Court has ruled that an arbitration agreement is assignable, just as any other contract, and where the obligations and rights under an Agreement, containing an arbitration clause, are assigned in favour of an assignee, the remedy of arbitration would also stand assigned in its favour.
The bench of Justice Bharati Dangre held that there was no need of separate execution of an arbitration agreement between the parties in view of the fact that all the rights in favour of the original party to the arbitration agreement (assignor) had been assigned in favour of the assignee/ claimant, and the said assignment was specifically acknowledged by the opposite party.
Case Title: Sara Chemicals and Consultants vs. Deepak Nitrite Ltd
The Bombay High Court has ruled that no appeal is maintainable under Section 37 of the Arbitration and Conciliation Act, 1996 (A&C Act) against the order of the Arbitral Tribunal directing the party to disclose the contents of sealed envelope submitted by it at the time of tendering of evidence, since the same did not relate to the subject matter of arbitration nor was it a subject matter of the claim/counter claim raised by the parties and thus, it fell outside the purview of Section 17.
Case Title: Mantras Green Resources Ltd. & Ors. vs. Canara Bank
The Bombay High Court has reiterated that the Recovery of Debts and Bankruptcy Act, 1993 (RDB Act) bars the jurisdiction of the Civil Court only in respect of the applications filed by banks/ financial institutions for recovery of debt, however, it does not bar the jurisdiction of the Civil Court to try a suit filed by the borrower.
The bench of Justice Bharati Dangre remarked that even though a remedy is available to the borrower to file a counterclaim in the application filed by the bank/financial institution before the Debt Recovery Tribunal (DRT), the same does not bar the borrower to file a civil suit raising an independent claim against the bank/financial institution.
Case Title: Hanuman Motors Pvt Ltd & Anr. vs. M/s Tata Motors Finance Ltd
The Bombay High Court has ruled that when one of the parties to the dispute has an overwhelming and unilateral power to appoint a Sole Arbitrator, the same completely vitiates such an appointment as the same is hit by Section 12(5) read with the Seventh Schedule of the Arbitration and Conciliation Act, 1996 (A&C Act).
While dealing with a petition filed under Section 34 of the A&C Act, the Court held that it was not necessary for the petitioner to raise an objection regarding the unilateral appointment before the arbitrator, to be able to raise the same in a Section 34 petition to challenge the arbitral award.
Case Title: National Textile Corporation Ltd vs. Elixir Engineering Pvt Ltd & Anr.
The Bombay High Court has set aside an arbitral award passed by the Facilitation Council by invoking statutory arbitration under Section 18(3) of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act), holding that the Council could not have exercised jurisdiction to conduct arbitration in a dispute arising under a works contract.
The bench of Justice Manish Pitale remarked that a works contract is not amenable to the provisions of the MSMED Act, and therefore the MSMED Act could not have been invoked by the claimant/ award holder.
Case Title: John Peter Fernandes vs. Saraswati Ramchandra Ghanate (since deceased) & Ors.
The Bombay High Court has reiterated that the doctrine of severability can apply to arbitral awards, so long as the objectionable part can be segregated. The Court added that if the award is partially set aside by applying the doctrine of severability, the same would not amount to modification or correction of the errors of the arbitrator.
The bench of Justice Manish Pitale further held that the Arbitral Tribunal cannot decided an issue in violation of the terms of the agreement between the parties, by applying the principles of equity.
Calcutta High Court:
Case Title: Sarada Construction vs. Bhupendra Pramanik
The High Court of Calcutta has held that the A&C Act is a complete code in itself and it does not contain any provision for the review of an order passed under Section 11 of the Act. The Bench of Justice Shekhar B. Saraf held that power of review is a creature of statute and unlike the Supreme Court which has inherent power of review under Article 137 of the Constitution of India, no such power is conferred on the High Courts by the Constitution, therefore, it cannot review its order passed under Section 11 of the Act.
Case Title: Cholamandalam Investment & Finance Company Ltd vs. Amrapali Enterprises
The High Court of Calcutta has deprecated the practice of banking and financial institutions unilaterally appointing the arbitrator. It refused to enforce an award passed by an arbitrator that was unilaterally appointed by the petitioner.
The bench of Justice Shekhar B. Saraf has held that an arbitration award passed by a unilaterally appointed arbitration is non-est and its enforcement would be refused under Section 36 of the A&C Act even if the award was not set aside under Section 34.
Delhi High Court:
Case Title: Shapoorji Pallonji and Company Private Limited vs. Union of India
The Delhi High Court has reiterated that when a person has itself become ineligible by operation of law to act as an arbitrator, it cannot nominate another person to act as arbitrator.
The bench of Justice Yashwant Varma was dealing with an arbitration clause which exclusively empowered the Chief Project Manager to appoint the arbitrator from a panel which was itself maintained by it. The Court concluded that the constitution of the Arbitral Tribunal, as contemplated by the arbitration clause, was clearly tainted by fundamental illegality.
Case Title: New Delhi Municipal Council vs. Decor India Pvt Ltd
The Delhi High Court has reiterated that though it is permissible to introduce an amendment in a petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act), however, new grounds of challenge containing new material/ facts cannot be introduced when the said grounds were neither raised in the original petition under Section 34 nor before the Arbitral Tribunal.
Case Title: Tejpal Singh vs. Surinder Kumar Dewan
The Delhi High Court has ruled that since the party had failed to challenge the termination of the Collaboration Agreement in the first round of arbitral proceedings, the demolition of the structure built by it under the said Collaboration Agreement would not give it a fresh cause of action.
The bench of Justice Navin Chawla remarked that the cause of action for challenging the termination of the Collaboration Agreement and/or for claiming any relief under the said Collaboration Agreement, was available to the petitioner at the stage of the earlier arbitral proceedings.
Case Title: FIITJEE Ltd vs. Ashish Khare & Anr.
The Delhi High Court has reiterated that mere reference to a wrong provision or term of the agreement cannot invalidate the notice invoking arbitration, if otherwise such power or provision exists in the document executed between the parties.
The bench of Justice Navin Chawla remarked that since there was no dispute regarding the existence of an arbitration clause in the document executed between the parties, which was admittedly binding on them, merely because the claimant had referred to the wrong Agreement, the same will not invalidate the arbitration notice issued under Section 21 of the A&C Act.
Case Title: Municipal Corporation of Delhi vs. Narinder Kumar
The Delhi High Court has ruled that, as a necessary corollary of the provisions of Section 34 and Section 37 of the Arbitration and Conciliation Act, 1996 (A&C Act), what cannot be considered by the adjudicating Court under a Section 34 petition can certainly not be adjudicated upon by the appellate Court under Section 37.
The Court added that it has almost “Nil” scope of interference while dealing with a challenge against an order disposing of a Section 34 petition, unless there is something perverse, contrary to law and/or which actually shocks the conscience of the Court.
Case Title: Arvind Techno Globe JV vs. Delhi Metro Rail Corporation Ltd
The Delhi High Court has referred the disputes between the Delhi Metro Rail Corporation Ltd (DMRC) and M/s Arvind Techno Globe (JV) in relation to a construction contract to arbitration, appointing Justice N.V. Ramana, former Chief Justice of India, as the Sole Arbitrator to adjudicate the disputes between the parties.
The bench of Justice Chandra Dhari Singh was dealing with a petition filed under Section 11 of the Arbitration and Conciliation Act, 1996 (A&C Act) by the petitioner, Arvind Techno Globe, seeking appointment of an independent sole arbitrator. The petitioner argued that the DMRC, by asking the petitioner to choose an arbitrator from a panel of 5 names outlined by it, failed to appoint an independent arbitral tribunal in accordance with Section 12(5) of the A&C Act.
Noting that the dispute before it was limited to the extent of appointment of an independent arbitrator, the Court appointed Justice N.V. Ramana as the Sole Arbitrator and referred the parties to arbitration.
Case Title: Aditya Birla Finance Limited vs. Siti Networks Limited & Ors.
The Delhi High Court has ruled that the statements made by a party in a ‘Letter of Comfort’, assuring the creditor that it shall ensure that the debtor repays the loan on the relevant due dates, are promissory in character and thus enforceable, even if they do not meet the requirement of Section 126 of the Indian Contract Act, 1872 which deals with the Contract of Guarantee.
The bench of Justice V. Kameswar Rao thus referred the claim raised by the petitioner/ claimant, Aditya Birla Finance Ltd, seeking compliance with the ‘Letters of Comfort’ issued by Zee Entertainment Enterprises Ltd and Essel Corporate LLP, in relation to a loan availed by their group company, Siti Networks Ltd, to arbitration.
The Court invoked the doctrine of ‘Group of Companies’ to refer the parties to arbitration, noting that Siti Networks, Zee Entertainment and Essel Corporate are part of the Essel Group of companies and are related parties.
Case Title: Hindustan Construction Co. Ltd. vs. National Hydro Electric Power Corporation Ltd
The Delhi High Court has ruled that the existence of any dispute between the parties to the contract is not a ground for issuing an injunction to restrain the enforcement of an unconditional bank guarantee. The Court was dealing with a petition under Section 9 of the Arbitration and Conciliation Act, 1996 (A&C Act) seeking to restrain the opposite party from invoking/ encashing the Performance Bank Guarantee.
The bench of Justice Chandra Dhari Singh held that since the petitioner had arbitral awards with respect to the Construction Project in its favour, where the counter-claims of the opposite party-who sought to invoke the bank guarantee-had been dismissed, there were special equities in petitioner’s favour, which is an exception to the rule that a bank must always honour the terms of an unconditional and irrevocable bank guarantee.
Arbitrator Must Serve Sufficient Notice Before Proceeding Ex-Parte Against Party: Delhi High Court
Case Title: M/s Mittal Pigments Pvt Ltd vs. M/s GAIL Gas Ltd
The Delhi High Court has set aside an ex-parte Arbitral Award on the ground that the Arbitrator failed to issue proper communication to the party before proceeding ex-parte against it and that it failed to make adequate efforts to examine whether the absence of the party was with or without showing sufficient cause.
The bench of Justice Chandra Dhari Singh held that under the Arbitration and Conciliation Act, 1996 (A&C Act), it has always been preferred and encouraged that an Arbitrator provides a pre-emptory notice to any party against whom it is seeking to proceed ex-parte, even though the same has not been stipulated under the A&C Act in clear terms.
Case Title: NHAI vs. Patel-KNR (JV)
The High Court of Delhi has held that a petition filed under Section 34 of the A&C Act is not a valid filing if it is filed without or in anticipation of the final approval. The bench of Justice Navin Chawla was dealing with a petition by National Highways Authority of India (NHAI) challenging an arbitration award passed against it, however, admittedly the petition was filed by its counsel in anticipation of its final approval. Moreover, the petition was not accompanied by a copy of the award and the date of the impugned award was also wrongly mentioned at certain places.
The Court thus held that a petition which is filed in anticipation of the final approval and without the copy of the award and vakalatnama, and with several other defects regarding the statement of truth, is a non-est filing.
Case Title: ITD Cementation India Limited vs. SSJV-ZVS Joint Venture
The High Court of Delhi has held that all the members of a ‘joint venture (JV)’ are jointly and severally liable to the third parties with which the JV enters into an agreement.
The bench of Justice Yashwant Varma held that a JV is a quasi-partnership wherein two or more entities may come together and jointly undertake a particular transaction or contract for mutual profit. It held the parties to a JV agreement may provide for different rights or obligations amongst themselves, however, this arrangement inter se parties would not have any effect on the right of a third party to proceed jointly or severally against any individual member of the JV.
The Court also held that when the JV is made a party before an arbitral tribunal, all its members are bound by the result of the arbitral award and there is no requirement to separately array individual members.
Case Title: Newton Engineering and Chemicals Ltd vs. UEM India Pvt Ltd
The Delhi High Court has ruled that the issue whether the disputes between the parties have arisen under the Memorandum of Understanding (MoU) containing an arbitration clause, or the subsequent work orders issued to the party, which are devoid of any arbitration clause, or whether they are related to both, can be looked into by the Arbitrator who can rule on his own jurisdiction in terms of Section 16 of the Arbitration and Conciliation Act, 1996 (A&C Act).
Case Title: Devas Employees Mauritius Pvt. Ltd vs. Antrix Corporation Limited & Ors.
The Delhi High Court on Friday dismissed an appeal against single judge’s order setting aside a 2015 arbitral award by which Antrix Corporation Limited, commercial and marketing arm of ISRO, was required to pay US$ 562.2 million to Devas Multimedia Private Limited over wrongful repudiation of a contract.
A division bench of Chief Justice Satish and Justice Subramonium Prasad in its judgment on the appeal moved by Devas Employees Mauritius Private Limited said it is "well established" that Devas was incorporated with fraudulent intentions so that it could enter into the agreement with Antrix.
Case Title: Delhi Airport Metro Express Private Limited vs Delhi Metro Rail Corporation Ltd
The Delhi High Court on Friday directed the Union of India and Delhi government to forthwith attend to Delhi Metro Rail Corporation (DMRC)'s request for extension of sovereign guarantee or subordinate debt to enable it make payment of dues to Reliance Infra-owned Delhi Airport Metro Express Private Limited (DAMEPL) under the 2017 arbitral award.
Case Title: Delhi Airport Metro Express Private Limited vs Delhi Metro Rail Corporation Ltd
The Delhi High Court on Friday observed that the Union of India and Delhi Government are in complete control of affairs of Delhi Metro Rail Corporation (DMRC) and must be commanded to take appropriate steps to enable the corporation to meet the obligation of making payment of dues to Reliance Infra-owned Delhi Airport Metro Express Private Limited (DAMEPL) under a 2017 arbitral award. Lifting the corporate veil, Justice Yashwant Varma observed that the governments cannot shirk from their liability to abide by binding judgments, decrees and awards.
Case Title: Yash Deep Builders vs. Sushil Kumar Singh
The High Court of Delhi has held that the scope of Section 9 of the A&C Act does not envisage relief in the nature that would restore a contract which already stands terminated. The bench of Justice Chandra Dhari Singh held that the Court while exercising powers under Section 9 of the A&C Act cannot direct specific performance of a determinable contract. It held that a contract, which in its nature is determinable, cannot be specifically enforced under Section 14(d) of the Specific Reliefs Act, therefore, the Court cannot do something that is statutorily prohibited.
Case Title: Chadha Motor Transport Company Pvt Ltd vs. Barinderjit Singh Sahni
The Delhi High Court has ruled that, merely because the defendant participated in a civil suit filed by the plaintiff, he cannot be said to have waived his right to invoke arbitration with respect to all future litigation between the parties under the Agreement.
The bench of Justice Neena Bansal Krishna held that participation of a party in a civil suit instituted by a partner, would not debar the party from initiating independent proceedings by way of arbitration, seeking independent remedies under the Partnership Deed.
Case Title: Prime Interglobe Pvt Ltd vs. Super Milk Products Pvt Ltd
The Delhi High Court has ruled that the Arbitral Tribunal’s order rejecting a party’s request to file counter claims on the ground of delay, does not foreclose its right to invoke arbitration seeking independent reference of its claims.
The bench of Justice Prateek Jalan remarked that, when arbitration proceedings are invoked at the instance of one party, it is generally open to the other party to file its counter-claims in the same proceedings. However, this does not per se signify that the Court has also referred the claims of the prospective counter-claimant to arbitration, so as to bar its right to assert its claims at a future date.
Case Title: Bawana Infra Development Pvt Ltd vs. Delhi State Industrial & Infrastructure Development Corporation Limited (DSIIDC)
The Delhi High Court has ruled that Section 31 (7) (a) of the Arbitration and Conciliation Act, 1996 (A&C Act), which deals with the Arbitrator’s discretion while awarding interest in respect of the pre-reference period, applies only where there is no agreement between the parties with respect to the rate of interest to be awarded.
The bench of Justice Chandra Dhari Singh remarked that the Arbitral Tribunal may not resort to Section 31(7)(b), while awarding post-award interest, when express provisions regarding the rate of interest are present in the agreement between the parties.
Case Title: M/s. Modi Construction Company vs. M/s Ircon International Ltd
The Delhi High Court, while dealing with a petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act), has rejected the contentions raised by the petitioner that the Award of the Majority Tribunal declaring the Clause providing for compound interest as null, was perverse since there were no pleadings made by the opposite party in its Statement of Defence seeking the said declaration.
While holding that it is within the domain of the Arbitrator to interpret the terms of the contract, the bench of Justice Neena Bansal Krishna upheld the Majority Award and the findings made by the Majority Tribunal that since the relevant Clause providing for compound interest did not specify the rate of interest, the entire clause was void under Section 29 of the Indian Contract Act, 1872.
Case Title: Amazing Research Laboratories vs. Krishna Pharma
The High Court of Delhi has held that an arbitration award that is passed in violation of the provisions of the Indian Contracts Act, 1872 would be liable to be set aside as suffering from patent illegality.
The bench of Neena Bansal Krishna partially set aside an arbitration award that was passed in contravention of Sections 59-61 of the Indian Contracts Act, 1872. The Court explained the law of apportionment of funds vis-à-vis a running and non-mutual account.
Case Title: M/s Kuldeep Kumar Contractor vs. Hindustan Prefab Limited
The Delhi High Court has ruled that, while dealing with a petition filed under Section 11 of the Arbitration and Conciliation Act, 1996 (A&C Act), if the arbitration clause between the parties in the Special Conditions of Contract (SCC), which does not contain the mandate of a pre-arbitral procedure, is claimed to be overridden by another arbitration clause existing in the General Conditions of Contract (GCC), which mandates following a pre-arbitral mechanism, the same must be adjudicated by the Arbitral Tribunal as per the Kompetenz-Kompetenz principle.
The bench of Justice Chandra Dhari Singh also remarked that a ‘No-Claim Declaration’ given by a party would not extinguish its remedy to invoke arbitration under the arbitration clauses contained in the agreements or render the arbitration agreement void, in view of the Doctrine of Severability.
Case Title: Delhi Airport Metro Express Pvt Ltd vs. Delhi Metro Rail Corporation Ltd
Seeking a review of Delhi High Court's recent decision on the execution petition filed by Reliance Infra-promoted Delhi Airport Metro Express Private Limited (DAMEPL), the Delhi Metro Rail Corporation (DMRC) has told the court that the attachment of its statutory expenses will result in immediate stoppage of the entire metro network in National Capital Region and cause inconvenience to more than 50 Lakh commuters.
Justice Yashwant Varma has listed the matter for hearing on March 29. "Let both the Union as well as Ld. Counsel representing the GNCTD obtain appropriate instructions in respect of directions as framed in the order of 17 March, 2023, in the meanwhile," said the court.
Case Title: Municipal Corporation of Delhi vs. Natraj Construction Company
The Delhi High Court has ruled that, in view of Section 28 of the Indian Contract Act, 1872, a party cannot be permitted to restrict the period of limitation for invoking arbitration, in contravention to the limitation period provided by law. The Court observed that a lesser period of limitation provided under the Contract between the parties would be hit by Section 28.
Noting that the limitation period for invoking arbitration under the A&C Act is three years, as prescribed under Article 137 of the Limitation Act, 1963, the bench of Justice Manoj Kumar Ohri remarked that the appellant cannot be permitted to rely on the relevant clause of the Contract and restrict the period of limitation for invoking arbitration to 120 days.
Case Title: Antique Art Export Pvt Ltd vs. United India Insurance Company Ltd
The Delhi High Court has ruled that the High Court exercises a judicial function under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (A&C Act), and thus while dealing with a petition filed under Section 11 for appointment of Arbitrator, the High Court can determine the issue of maintainability of a petition on any ground, including on territorial jurisdiction or res judicata.
Case Title: NHAI vs. M/s AE Tollway Ltd.
The Delhi High Court has ruled that the Apex Court’s decision in Oil and Natural Gas (ONGC) vs Afcons Gunanusa JV (2022), where it had interpreted the Fourth Schedule of the Arbitration and Conciliation Act, 1996 (A&C Act), clearly requires party autonomy to be given paramount importance.
The bench of Justice Prateek Jalan remarked that though in ONGC (2022), it was held that the term “sum in dispute” in the Fourth Schedule shall be considered separately for the claim and counter-claim, the Arbitral Tribunal was in error in fixing the arbitral fees separately for the claims and counter-claims, contrary to the express Agreement between the parties.
Case Title: GTM Builders and Promoters Pvt Ltd vs. Sneh Development Pvt Ltd
The Delhi High Court has reiterated that mere existence of an arbitration agreement or arbitration clause would not be sufficient to refer the parties to arbitration and that even in the presence of an arbitration agreement, the court may decline to refer the parties to arbitration if the dispute does not correlate to the said agreement.
While dealing with a petition filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (A&C Act), the Court observed that in the guise of seeking reference to an arbitrator, the petitioner was seeking recovery of the costs that it had been directed to pay as compensation to the homebuyers by the National Consumer Disputes Redressal Commission (NCDRC).
While dismissing the petition, the Court remarked that while adjudicating a Section 11 petition, a court shall endeavour to evaluate whether the party has made out a prima facie arbitrable case or not.
Case Title: NTPC Ltd vs. Larsen and Toubro Limited & Anr.
The Delhi High Court has ruled that where a party has filed an application seeking to update/revise its counter claims before the Arbitral Tribunal, intending to primarily alter/change the amount of the counter-claims, the said application was, in effect, an application for amendment of the counter-claims, even though it was termed as an ‘updation application’.
Referring to the provisions of Section 23(3) of the Arbitration and Conciliation Act, 1996, the bench of Justice V. Kameswar Rao held that the Tribunal was within its right to reject the application for updation / revision, which in effect was for amendment of the counter-claims, on the ground that the same was filed belatedly.
Case Title: Inox Air Products Pvt Ltd vs. Air Liquide North India Pvt Ltd
The High Court of Delhi has held that recourse to Section 34(4) of the A&C Act cannot be taken to permit the arbitral tribunal to consider the material evidence which it earlier failed to consider.
The bench of Justice Prateek Jalan held that Section 34(4) of the A&C Act empowers the Court deciding an application under Section 34(1) of the Act to adjourn the challenge proceedings and remit the matter back to the arbitral tribunal to allow it to eliminate the ground of the challenge. However, this power can only be exercised to allow the tribunal to provide for gaps in the reasoning or cure any other curable defect. The same does not extend to allow the tribunal to give a new finding or a fresh decision, the Court ruled.
Case Title: Goyal Mg Gases Pvt Ltd vs. Panama Infrastructure Developers Pvt Ltd & Ors.
The Delhi High Court has reiterated that a party who is a non-signatory to the arbitration agreement, can be impleaded as a necessary party in the arbitration proceedings.
The bench of Justices Najmi Waziri and Sudhir Kumar Jain further ruled that the Arbitral Tribunal’s order rejecting the application for impleadment of parties in the arbitral proceedings, does not constitute an ‘interim award’ under the Arbitration and Conciliation Act, 1996 (A&C Act), since it does not decide any substantive question of law or deal with the merits of the case.
Gujarat High Court:
Case Title: Indian Bank (erstwhile Allahabad Bank) vs. Morris Samuel Christian
The Gujarat High Court has ruled that merely because the borrower is an MSME, it would not be governed by the provisions of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act), including the arbitral mechanism envisaged under the said Act.
The bench of Justice Biren Vaishnav observed that though, as per the mechanism provided under the MSMED Act, the dispute between the supplier and the buyer of goods or services may be adjudicated through arbitration in accordance with the Arbitration and Conciliation Act, 1996 (A&C Act), however, the same does not contemplate adjudication of disputes arising from a loan transaction, which is the subject matter of a special Act such as the SARFAESI Act.
Himachal Pradesh High Court:
Award Passed By Unilaterally Appointed Arbitrator Is Void: Himachal Pradesh High Court
Case Title: Divisional Manager vs. Prem Lal
The Himachal Pradesh High Court has held that arbitral proceedings conducted by a unilaterally appointed arbitrator are void ab initio and the consequent award is non-est. The bench of Justice Jyotsana Rewal Dua held that an arbitration award passed by a unilaterally appointed sole arbitrator is not enforceable under Section 36 of the A&C Act.
Case Title: Ganga Ram vs. Special Land Acquisition Officer
The High Court of Himachal Pradesh has held that the arbitration proceedings under the National Highways Act, 1956 are governed by the Arbitration and Conciliation Act, 1996, thus, the arbitrator so appointed by the Central Government under Section 3G(a) of the National Highways Act is bound to follow the provisions of the A&C Act.
The bench of Justice Sushil Kukreja held that in terms of Section 29(A) of the A&C Act, the arbitrator is mandated to deliver an award within 1 year from the date of entering reference and non-compliance with this provision will result in the termination of the mandate of the arbitrator. The Court held that the same provision also applies to a statutory arbitration governed by the A&C Act, thus, the mandate of the arbitrator under National Highways Act will stand terminated if the award is not delivered within the stipulated time-period.
Telangana High Court:
Case Title: Ranganath Properties Pvt. Ltd. vs. Phoenix Tech Zone Pvt. Ltd.
The High Court of Telangana has held that arbitration under Section 42 of the Special Economic Zones Act, 2005 would override a contractual arbitration clause entered into between the parties.
The bench of Chief Justice Ujjal Bhuyan held that Special Economic Zones Act, 2005 is a special legislation and Sections 42 and 51 of the Act gives it an overriding effect over other Acts. Section 42 of the Act provides for statutory arbitration wherein the arbitrator would be appointed by the Central Government; therefore, it would override the provisions of the Arbitration and Conciliation Act (A&C Act), the Court said. Thus, an application under Section 11 of the A&C Act for appointment of the arbitrator would not be maintainable.
Case Title: M/s. Sri Rama Constructions vs. M/s. Max Infra (I) Ltd
The Telangana High Court has ruled that once a decision is made in an application filed under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act), the Court has no power to remit the matter back to the Arbitrator under Section 34(4).
The bench of Justices P. Naveen Rao and J. Sreenivas Rao observed that since the Arbitrator had failed to frame an issue on the counter-claims made by the party and had failed to consider all the documents filed before him, the award was not sustainable and was set aside under Section 34. After the said decision was made in the Section 34 application, the issue of remitting the matter to the Arbitrator does not arise, the Court said.
