Arbitration Monthly Round-Up: December 2023
Ausaf Ayyub
2 Jan 2024 5:00 AM GMT
Supreme Court Arbitration Clauses In Unstamped Agreements Enforceable : Supreme Court 7-Judge Bench Overrules 'NN Global' Decision Case Title: In Re Interplay Between Arbitration Agreements Under The Arbitration And Conciliation Act 1996 And The Indian Stamp Act 1899 Curative Pet(C) No. 44/2023 In R.P.(C) No. 704/2021 In C.A. No. 1599/2020 Citation: 2023 LiveLaw...
Supreme Court
Case Title: In Re Interplay Between Arbitration Agreements Under The Arbitration And Conciliation Act 1996 And The Indian Stamp Act 1899 Curative Pet(C) No. 44/2023 In R.P.(C) No. 704/2021 In C.A. No. 1599/2020
Citation: 2023 LiveLaw (SC) 1049
A seven-judge bench of the Supreme Court on Wednesday (December 13) ruled that arbitration clauses in unstamped or inadequately stamped agreements are enforceable. Insufficiency of stamping does not make the agreement void or unenforceable but makes it inadmissible in evidence. However, it is a curable defect as per the Indian Stamp Act, the Court pointed out.
The Court overruled the judgment rendered by a 5-judge bench in April this year in M/s. N.N. Global Mercantile Pvt. Ltd. v. M/s. Indo Unique Flame Ltd. And Ors which had by a 3:2 majority held that unstamped arbitration agreements are not enforceable.
The bench comprising Chief Justice of India DY Chandrachud, Justice Sanjay Kishan Kaul, Justice Sanjiv Khanna, Justice B R Gavai, Justice Surya Kant, Justice JB Pardiwala, and Justice Manoj Misra passed the judgement in the case In Re Interplay Between Arbitration Agreements Under The Arbitration And Conciliation Act 1996 And The Indian Stamp Act 1899.
Arbitration Agreement Can Bind Non-Signatories: Supreme Court Upholds 'Group Of Companies' Doctrine
Case: Cox and Kings Ltd v. SAP India Pvt Ltd | ARBIT. PETITION No. 38/2020
Citation: 2023 LiveLaw (SC) 1042
A Constitution Bench of the Supreme Court on Wednesday (December 6) held that an arbitration agreement can bind non-signatories as per the "group of companies" doctrine.
"The 'group of companies' doctrine must be retained in the Indian arbitration jurisprudence considering its utility in determining the intention of the parties in the context of complex transactions involving multiple parties and multiple agreements," the Court observed.
Case: Cox and Kings Ltd v. SAP India Pvt Ltd | ARBIT. PETITION No. 38/2020
Citation: 2023 LiveLaw (SC) 1042
While approving the 'group of companies' doctrine in the arbitration law jurisprudence, the Supreme Court clarified that the principle of "alter ego" or "piercing the corporate veil" cannot be the basis for applying this doctrine.
The Constitution Bench comprising Chief Justice of India DY Chandrachud, Justice Hrishikesh Roy, PS Narasimha, JB Pardiwala and Manoj Misra was answering a reference which doubted the "group of companies" doctrine which allows non-signatory companies to be bound by arbitration agreement.
Cancellation Of Deed Is Action In Personam, Not In Rem; It Is Arbitrable : Supreme Court
Case Title: SUSHMA SHIVKUMAR DAGA vs. MADHURKUMAR RAMKRISHNAJI BAJAJ., Diary No.- 1164 - 2022
Citation: 2023 LiveLaw (SC) 984
Recently, the Supreme Court (December 15) allowed arbitration between the parties in a property dispute based on the broad language of the arbitration clause in the Tripartite Agreements. The Court rejected the argument that since the suit was for cancellation of a deed, the dispute was not arbitrable, as the action was in rem. The Court held that cancellation of a deed was an action in personam and hence arbitrable.
The Court observed that the Tripartite Agreements formed the basis of all subsequent agreements entered between the parties, including the ones that gave rise to the present dispute.
In the instant case, cancellation of the Conveyance Deed and registered Development Agreements was sought. Pertinently, there was no arbitration clause in the Conveyance Deed and Development Agreements. However, considering that these agreements find their source in the two Tripartite Agreements, which, in turn, contained a broad arbitration clause, the view taken by the below court for referring the matter to arbitration was affirmed.
Allahabad High Court
Case Title: National Highway Authority Of India v. Parimal Bajpai And 3 Others [Appeal Under Section 37 Of Arbitration And Conciliation Act 1996 No. - 901 of 2023]
The Allahabad High Court has held that under Section 34(4) of the Arbitration and Conciliation Act, 1996, the High Court can set aside an arbitral award and remit the case back to the Arbitral Tribunal for a fresh decision.
The bench comprising Justice Ajay Bhanot placed reliance on the judgment of the Apex Court in National Highways Authority of India Vs. P. Nagaraju and Ors to hold thus:
“In light of the provisions of Section 34 of Arbitration and Conciliation Act, 1996 and the appellate powers of this Court, interest of justice which are consistent with the provisions of law will be served by remitting the matter to the Arbitral Tribunal.”
Case Title: Amit Agarwal v. Atul Gupta, Matters under Article 227 No. 11263 of 2023
The Allahabad High Court has upheld the termination of the Arbitrator's mandate, citing an unjustified eight-year delay in proceedings.
The bench of Justice Rohit Ranjan Agarwal observed that the arbitrator sat over the arbitral proceedings for 8 long years without any progress and passed the award in haste after the application seeking its removal was made. Ergo, the Court held that the arbitrator acted in breach of Section 14 and its mandate stands terminated under the said provision.
Allahabad High Court Holds That Improper Notice Invalidates Ex-Parte Arbitral Award
Case Title: Bharat Pumps and Compressors Limited v. Chopra Fabricators & Manufacturers Pvt Ltd, Appeal U/S 37 of the A&C Act No. 146 of 2022
The Allahabad High Court has held that improper notice of arbitration invalidates an arbitration award passed ex-parte.
The bench of Justice Rohit Ranjan Agarwal held that Section 14(2) of the Arbitration Act, 1940 requires that notice be given to the parties after the arbitrators or umpire have signed the award. Without proper notice, the court held that the proceedings leading to the judgment making the award rule of the court would be flawed.
Case Title: Marsons Electrical Industries v. Chairman, Madhya Pradesh Electricity Board (Madhya Pradesh State Electricity Board) And Another [Appeal Under Section 37 Of Arbitration And Conciliation Act 1996 No. - 701 of 2023]
The Allahabad High Court on Tuesday held that the provision of Micro, Small and Medium Enterprises Development Act, 2006 have an overriding effect on the Arbitration and Conciliation Act 1996 and any agreement entered into between parties.
Relying on the decision of the Supreme Court in M/s Silpi Industries vs. Kerala State Road Transport Corporation, the bench comprising of Justice Mahesh Chandra Tripathi and Justice Prashant Kumar held that MSMED Act being a special and beneficial legislation will override the 1996 Act.
Bombay High Court
Case Title: Nikhil H. Malkan v. Standard Chartered Investment and Loans (India) Limited, Arbitration Petition (Lodging) No. 28255 of 2023
The High Court of Bombay has held that Section 29A permits the court to extend the mandate of the arbitral tribunal even when the application is made after the expiry of time limit provided therein.
The bench of Justice Manish Pitale clarified that Section 29A(4) allows the Court to extend the arbitrator's mandate either before or after the specified period's expiry, provided sufficient grounds are demonstrated. The purpose is to ensure the completion of arbitral proceedings, and a rigid time limit is not intended by the legislature.
Case Title: Tata Motors Finance Solutions Ltd v. Naushad Khan, Commercial Arbitration Petition (L) No. 8654 of 2022
The High Court of Bombay has held that a debt owed to a financial institution covered only under the SARFAESI Act is arbitrable, however, a debt owed to a financial institution to which the provisions of RDDB Act also applies is non-arbitrable.
The bench of Justice Manish Pitale while distinguishing both the acts held that the proceedings under RDDB Act contains exhaustive provisions for the determination as well as the recovery of the determined debt, however, SARFAESI Act contains provisions only for the enforcement of the debt and no provision for the determination/crystallization of the debt.
The Court held that since the RDDB Act contains an exhaustive provision, the debts covered under the ambit of the Act are non-arbitrable.
Case Title: Shailesh Ranka and Ors v. Windsor Machines Limited, Commercial Arbitration Application (L) No. 38198 of 2022
The High Court of Bombay has held that a dispute related to the business of the firm cannot be referred to arbitration by a partner in absence of other partners.
The bench of Justice Manish Pitale held that the implied authority granted to a partner does not extend to referring the dispute to arbitration in view of the bar under Section 19(2)(a) of the Partnership Act, 1932.
The Court also held that an arbitration notice issued by one of the partners without the consent of the remaining partners is invalid which renders the petition for the appointment of the arbitrator also invalid.
Case Title: Madgavkar Salvage v. Bergen Offshore Logistics Pvt Ltd, Comm. Arbitration Petitioner No. 13 of 2015.
The High Court of Bombay has held that under Section 37 of the A&C Act, the challenge must be related to the impugned order passed under Section 34 of the Act and not merely to the arbitral award. It held that it is incumbent upon a party to point out errors in the order under Section 34 to make out a case in appeal under Section 37.
The bench of Chief Justice Devendra Kumar Upadhyaya and Justice Arif. S. Doctor held that the Court while exercising powers under Section 37 of the A&C Act cannot take an independent assessment of the arbitral award, therefore, the challenge must be premised on the errors in the impugned order under Section 34. It held that it is not permissible for a party to challenge an arbitral award de hors any challenge to the impugned order.
Calcutta High Court
Case: Reliance Infrastructure Ltd. v DVC
Case No: AP 428 OF 2023
The Calcutta High Court has recently admitted appeals against an order which partially upheld an arbitral award in favour of Reliance Infrastructure Limited ("RIL") against Damodar Valley Corporation ("DVC").
A division bench of Justice IP Mukherji and Justice Biswaroop Chowdhury admitted appeals preferred by both DVC and RIL, against the judgement of a single judge which had partially upheld the validity of the impugned award, and had directed the DVC to furnish the same to RIL, in the matter of construction of thermal power plants in Raghunathpur.
Case: Manish Todi vs Pawan Agarwal
Citation: 2023 LiveLaw (Cal) 341
The Calcutta High Court has recently held that Section 43(4) of the Arbitration & Conciliation Act, 1996, (1996 Act) must defer to the provisions of the Limitation Act and that the period of limitation cannot be extended to create a new window after the expiry of the limitation.
In dismissing a plea for appointment of an arbitrator under Section 11 of the Act as time-barred, a single bench of Justice Moushumi Bhattacharya held:
Section 43(4), simply put, excludes the time from commencement of arbitration to the date of setting aside of the arbitral award...the petitioner's recourse to section 43(4) of the 1996 Act, even if applied to the facts, does not come to the petitioner's rescue since the petitioner would lag behind the limitation period by 4 years 3 months. The question of limitation must also be decided on the underlying principles of the Limitation Act and discounting the existence of an arbitration clause.
Delhi High Court
Case Title: U.P. Jal Vidyut Nigam Ltd v. C.G. Power & Industrial Solution Ltd
Citation: 2023 LiveLaw (Del) 1297
The Delhi High Court has ruled that the application of Section 14 of the Limitation Act is not available to a petitioner who, through lack of diligence, allowed its Section 34 petition under the Arbitration and Conciliation Act to be dismissed twice for non-prosecution.
The bench of Justices Rajiv Shadkher and Tara Vitasta Ganju held that the fact that a petition was dismissed in default on two occasions, shows complete lack of due diligence in its prosecution.
The Court held that benefit of Section 14 of the Limitation Act, which exempt a period covered by litigious activity and protects a litigant against the bar of limitation when a proceeding is dismissed on account of a technical defect instead of being decided on merits, would not be extended to a party that fails to diligently pursue a matter.
Case Title: Usha Bansal v. Genesis Finance Co. Ltd
Citation: 2023 LiveLaw (Del) 1299
The High Court of Delhi has held that a bare plea of fraud, coercion or duress cannot justify challenge to the Settlement Agreement under Section 34 of the A&C Act.
The bench of Justice Sachin Datta has held that a bare plea of fraud, coercion or duress cannot justify challenge to the Settlement Agreement under Section 34 of the A&C Act.
The Court held that once a party has voluntarily participated in the mediation proceedings without any protest or demur resulting in the settlement agreement, it cannot, subsequently, be allowed to challenge the settlement agreed on grounds of fraud/coercion.
Case Title: Viceroy Engineering v. Smiths Detection Veecon Systems Pvt Ltd, OMP(COMM) 302 of 2019
Citation: 2023 LiveLaw (Del) 1262
The High Court of Delhi has held that technical deficiencies, including pagination and affidavit attestation, do not invalidate petitions under Section 34 of the A&C Act.
The bench of Justice Manoj Kumar Ohri held that every objection in the filing would not render a petition non-est and it is only the defects that goes to the root of the matter that would make the filing non-est.
Case Title: Umaxe Projects Pvt Ltd v. AIR Force Naval Housing Board, OMP(COMM) 469/2023
Citation: 2023 LiveLaw (Del) 1261
The High Court of Delhi has held that mere participation of a party in the arbitration proceeding cannot be deemed to be a waiver under Section 12(5) of the A&C Act.
The bench of Justice Manoj Kumar Ohri held that filing an application under Section 29(A) does not amount to an express waiver in writing of the right to challenge the arbitrator's ineligibility under Section 12(5). The decision clarified that mere participation in arbitral proceedings, without an overt act indicating awareness and conscious waiver of the right to object, does not suffice.
Case Title: J.S.R. Constructions v. NHAI, ARB.P. 753 of 2023
Citation: 2023 LiveLaw (Del) 1250
The High Court of Delhi has held that a party cannot unilaterally appoint the presiding arbitrator upon the failure of the nominee arbitrators to reach a consensus.
The bench of Justice Sachin Datta held that a procedure, allowing the Director General of a party to appoint the presiding arbitrator upon the failure of the nominee arbitrators to mutually appoint the presiding arbitrator, is invalid. It held that a person ineligible to act as an arbitrator should not have any role in appointing one. The procedure lacked effective counterbalancing, favouring one party in the constitution of the arbitral tribunal.
Case Title: Anil Kumar Gupta v. MCD, FAO(OS) (COMM) 315 of 2019.
The High Court of Delhi has held that the Court exercising powers under Section 34 of the A&C Act cannot reduce the rate of the interest awarded by the arbitral tribunal as the same amounts to modification of the arbitral award.
The bench of Justices Yashwant Varma and Ravinder Dudeja held that the modulation of the terms of the award by reducing the rate of interest awarded by the arbitral tribunal is impermissible within the limited power conferred on the Court under Section 34 of the A&C Act.
Case Title: S.K. Engineering & Construction Company India, ARB. P. 737 of 2023
Citation: 2023 LiveLaw (Del) 1215
The High Court of Delhi has held that the Court exercising powers under Section 11 of the A&C Act can sever an illegal/offending portion of the arbitration clause.
The bench of Justice Sachin Datta held that an arbitration clause does not become illegal by mere illegality of the appointment procedure provided therein, therefore, the Court u/s 11 can sever the illegal portion of the award and refer the dispute to arbitration.
Entire Arbitration Not Invalid By Illegality Of Appointment Procedure: Delhi High Court Reiterates
Case Title: S.K. Engineering & Construction Company India, ARB. P. 737 of 2023
Citation: 2023 LiveLaw (Del) 1217
The High Court of Delhi has held that an arbitration clause does not become illegal by mere illegality of the appointment procedure provided therein.
The bench of Justice Sachin Datta held that the procedure for appointment of an arbitrator is clearly distinct and separable from the agreement to refer disputes to arbitration, even if these are contained in the same arbitration clause.
Case Title: Iqbal Singh v. Naresh Kumar, OMP(MISC.) 15 of 2023
Citation: 2023 LiveLaw (Del) 1223
The High Court of Delhi has extended the time period for the completion of arbitral proceedings, despite observing that there was inordinate delay in the completion of arbitral proceedings, on the ground that the proceedings, though protracted, has reached advance stage.
The bench of Sachin Datta while dealing with an application under Section 29A(4) of the A&C Act, extended the mandate of the arbitral tribunal despite acknowledging the substantial delay and petitioner's laxity by absorbing that the proceedings were at advanced stage and if the mandate is not extended, the entire time consumed would be rendered futile.
Case Title: SAIL v Uniper Global Commodities, OMP(E)(COMM.) 22 of 2023
Citation: 2023 LiveLaw (Del) 1224
The High Court of Delhi has held that the Court exercising powers under Section 27 of the A&C Act cannot form an opinion on the relevancy or the admissibility of the evidence for which the assistance of the Court is sought.
The bench of Justice Sachin Datta held that the role of Court under Section 27 of the A&C Act is not adjudicatory, therefore, the Court would not examine the aspects of relevancy or admissibility of the evidence, rather, it is the duty of the tribunal to examine such aspects before permitting a party to approach the court for its assistance.
Case Title: SAIL v Uniper Global Commodities, OMP(E)(COMM.) 22 of 2023
Citation: 2023 LiveLaw (Del) 1224
In a recent ruling, the Delhi High Court emphasized that when an arbitral tribunal is presented with a party's application under Section 27 of the Arbitration and Conciliation Act (A&C Act), seeking permission to seek the court's assistance in obtaining evidence, it is imperative for the tribunal to form a prima facie view on the relevance and admissibility of the evidence.
Justice Sachin Datta, presiding over the case, highlighted that the tribunal, in the exercise of its jurisdiction under Section 27 of the Act, should avoid a mechanical approach. Instead, it is obligated to carefully scrutinize, even on a prima facie basis, the relevance of the intended witness before granting approval for such an application from any party.
The Court held that, while the Arbitral Tribunal isn't bound by the rules of the Code of Civil Procedure or the Evidence Act, it still has a duty to exercise discretion and form an opinion when permitting witnesses to be examined.
Case Title: N.K. Sharma v. The General Manager Northern Railways, ARB.P. 893 of 2022
Citation: 2023 LiveLaw (Del) 1207
The High Court of Delhi has held that once a party has agreed to constitute an arbitral tribunal, it cannot turn around and resist appointment of arbitrator on the ground of non-fulfilment of pre-arbitral steps.
The bench of Justice Sachin Datta also held that issue of 'excepted matters' requires in-depth examination of the factual matrix, therefore, the same can only be done by the arbitral tribunal and goes beyond the scope of examination permissible under Section 11 of the A&C Act.
A Written-Off Debt Is An Asset, Award Holder Can Enforce At The Location Of Asset: Delhi High Court
Case Title: Taqa India Power Ventures v. NCC Infrastructure Holdings, OMP(EFA)(COMM) 1 of 2018
Citation: 2023 LiveLaw (Del) 1208
The Delhi High Court ruled that a written-off debt constitutes a recoverable asset, affirming the award holder's right to enforce the award at the location of the debt/asset.
The bench of Justice Prateek Jalan held that a debt written off by the award debtor remains a recoverable asset. This pivotal decision solidifies the award holder's entitlement to initiate enforcement proceedings at the location where the debt is owed or the asset is situated, establishing a robust legal precedent in favor of the award holder's enforcement rights.
The court rejected the award debtor's argument that writing off the debt in the award debtor's accounts equates to the legal obliteration of the debt. It held that the writing off of a debt in accounting does not mean the debt becomes unrecoverable or legally extinguished.
Case Title: Taqa India Power Ventures v. NCC Infrastructure Holdings, OMP(EFA)(COMM) 1 of 2018.
The High Court of Delhi has held that the policy concerns which militate against forum shopping in the context of substantive civil proceedings do not apply to enforcement proceedings, where the award holder is entitled to proceed against the assets of the award debtor in any and every jurisdiction in which such assets are located.
The bench of Justice Prateek Jalan held that the award holder's right to elect any court within which assets of the award debtor are available, regardless of their diminished value, does not amount to forum shopping.
Case Title: Sri Ganesh Engineering Works v. Northern Railways, ARB.P 609/2023
Citation: 2023 LiveLaw (Del) 1210
The High Court of Delhi has held that an arbitration clause that confers on a party the right to nominate 2/3rd of arbitral tribunal violates the principles of 'counter-balancing' as sought to be achieved by the Supreme Court in the landmark judgment in Perkins.
The bench of Justice Jyoti Singh held that a party cannot have the right to nominate the majority of the arbitral tribunal and such an exercises casts doubts on the neutrality and impartiality of the arbitral tribunal.
Panel Of Four Arbitrators, All Ex-Employees Of One Party, Not Broad-Based: Delhi High Court
Case Title: Sri Ganesh Engineering Works v. Northern Railways, ARB.P 609/2023
The High Court of Delhi has held that the composition of the panel, limited to a mere four arbitrators, all of whom are former employees of a single party, does not reflect a sufficiently broad-based representation.
Justice Jyoti Singh's bench emphasized that when appointing an arbitral tribunal from a party-maintained panel, it must be not only numerically robust but also diverse. The panel should encompass individuals from various backgrounds, including lawyers, retired judges, engineers, accountants, etc., ensuring a comprehensive representation.
Case Details: QUANTUM UNIVERSITY v. INTERNATIONAL QUANTUM UNIVERSITY FOR INTEGRATIVE MEDICINE INC O.M.P (COMM) 260/2021
Citation: 2023 LiveLaw (Del) 1343
The Delhi High Court on December 13 held that the ambit of Section 34 of the Arbitration & Conciliation Act 1996 strictly restrained the Court from interfering in issues of interpretation of contractual conventions and those matters where the arbitrator is required to be “subjectively satisfied” on questions of facts.
The single-judge bench of Justice C. Hari Shankar in a petition against an arbitral award also discussed the application of the observations made by the Hon'ble Supreme Court in the landmark case of Satyam Infoway Ltd. v. Siffynet Solutions Ltd. in cases relating to domain name infringement
CASE TITLE: SMAAASH LEISURE LTD V. AMBIENCE COMMERCIAL DEVELOPERS PVT LTD, OMP(COMM) 180/2022
Citation: 2023 LiveLaw (Del) 1347
The High Court of Delhi has held that a panel of arbitrators consisting of merely 3 persons is not broad-based, therefore, a party cannot be compelled to appoint the arbitrator from such a narrow panel.
The bench of Justice Jyoti Singh also reiterated that mere participation in the arbitral proceedings cannot be constituted as a waiver to application of Section 12(5) of the A&C Act, therefore, a party cannot be precluded from challenging the jurisdiction of the tribunal merely on ground of participation in the arbitral proceedings, if the objection goes to the root of the matter and renders the arbitrator ineligible.
CASE TITLE: SMAAASH LEISURE LTD V. AMBIENCE COMMERCIAL DEVELOPERS PVT LTD, OMP(COMM) 180/2022
Citation: 2023 LiveLaw (Del) 1347
The High Court of Delhi has held that a statement made by a party's counsel before the Arbitrator withdrawing objection to unilateral appointment would not suffice 'express agreement' required under Section 12(5) of the A&C Act
The bench of Justice Jyoti Singh reiterated that ineligibility of the arbitrator goes to the root of the matter and any award passed by an ineligible arbitrator is non-est as the proceedings before such an arbitrator are void ab initio.
Case Title: Indus Towers Limited v. Sistema Shyam Teleserivices Limited, O.M.P.(COMM) 209/2019
Citation: 2023 LiveLaw (Del) 1354
While dismissing a Section 34 petition under the Arbitration Act, the Delhi High Court recently observed that the 2G judgment, whereby the Supreme Court quashed the First-Come-First-Serve (“FCFS”) policy, constituted a “change in law” for grant of spectrum/licenses.
“By passing the 2G judgment, the Hon'ble Supreme Court scrapped the FCFS Policy which was the earlier usual procedure under the law for grant of spectrum/licenses and later on the Hon'ble Supreme Court passed directions that the spectrum/licences would only be granted after conducting fresh auctions, hence, it is apparent that the decision in the aforesaid judgment would amount to change in law”.
Case Title: Ministry of Health & Family Welfare and Anr v. M/s Hosmac Projects, FAO(OS)(COMM) 236 of 2019
Citation: 2023 LiveLaw (Del) 1356
The High Court of Delhi has held that a copy of the signed arbitral award served only on the lawyer or the agent of the party does not constitute a valid delivery in absence of the delivery on the party itself.
The bench of Justices Rajiv Shakdher and Tara Vitasta Ganju held that the term 'party' under Section 31(5) of the Act refers to the actual entity who executed the arbitration agreement, excluding agents or lawyers representing the party.
Case Title: NEC CORPORATION INDIA PRIVATE LIMITED v. M/S PLUS91 SECURITY SOLUTIONS, OMP(COMM) 244 of 2023
Citation: 2023 LiveLaw (Del) 1357
The Delhi High Court has ruled that an arbitral tribunal lacks the authority to grant damages for a breach of a Memorandum of Understanding (MoU), particularly when the MoU serves as a preliminary agreement to enter into a definitive contract. This is especially significant when the MoU entails no financial implications and includes a clause explicitly preventing any monetary liability for a breach.
Justice Manoj Kumar Ohri's bench emphasized that damages cannot be awarded for a breach of an agreement when the association was merely exploratory, aimed at entering into contracts on a case-by-case basis in the future.
Telangana High Court
Case Title: Sri Venkatswara Service Station v. IOCL, WP No. 12345 of 2011
The Telangana High Court has directed the Indian Oil Corporation to restore the dealership in favour of Venkateshwar Service Station holding that the arbitrator cannot pass an restoration of dealership order owing to section 14(1)(c) of the Specific Performance Act and when the arbitrator held that termination was illegal, the Corporation was bound to consider the application for restoration.
Justice Surepalli Nanda has passed the order in a set of Writ Petitions filed by the petitioner challenging the actions of Indian Oil Corporation in terminating the dealership awarded in favour of the petition; and the subsequent rejection of restoration of dealership request, despite the arbitration award being in favour of the petitioner.
The Bench held " This Court is of the firm opinion that the Respondent Corporation failed to understand that the Arbitrator had his own limitations in directing for restoration of dealership with the Petitioner as per mandate in Sec.14(1) of the Specific Relief Act, 1963 and left it open to the Petitioner to persue the remedy available to the Petitioner very clearly observing and holding the termination of the dealership of the Petitioner as invalid since the Petitioner had not violated the relevant clauses of the dealership agreement."
Case Title: V.B. Ramsagar v. Srijay Constructions, Commercial Court Appeal No. 08 of 2017
The High Court of Telangana has upheld an arbitral award passed by a sole arbitrator wherein the arbitrator directed the pulling down/demolition of the subject building after observing that it was no longer capable to have human habitation.
The bench of Chief Justice Alok Aradhe and Justice N. Tukaramji held that the tribunal rightly directed the pulling down of the subject property when the building was not constructed as per the agreement and the construction was stopped in the middle and structures raised are not sound and safe and the life of the constructed building would not be more than two decades. Moreover, no fresh construction licence would be issued on such condition.
