Arbitration Monthly Round-Up: September 2023
Ausaf Ayyub
8 Oct 2023 5:45 AM GMT
Supreme Court: 'Every Arbitrator May Not Be Legally Trained, Some Decisions Are Based On Equity' : Supreme Court Explains Scope Of Judicial Interference In Arbitral Awards Case Title: Batliboi Environmental Engineers Limited vs Hindustan Petroleum Corporation Ltd and Anr. The Supreme Court bench comprising Justice Sanjiv Khanna and Justice M.M. Sundresh, has held that while...
Supreme Court:
Case Title: Batliboi Environmental Engineers Limited vs Hindustan Petroleum Corporation Ltd and Anr.
The Supreme Court bench comprising Justice Sanjiv Khanna and Justice M.M. Sundresh, has held that while setting aside an arbitral award for being violative of Section 28(3) of the Arbitration and Conciliation Act, 1996, it must be considered that the Arbitrator is empowered to interpret the contract terms reasonably.
High Courts:
Andhra Pradesh High Court:
Case Title: Obulapuram Mining Company vs R.K. Mining Pvt Ltd
The High Court of Andhra Pradesh has held that an execution petition for an arbitration award can only lie before the designated Commercial Courts and no other Court viz., Civil/District Court can entertain such an application.
Bombay High Court
Case Title: 22Light v. OESPL Pvt Ltd, Commercial Arbitration Application No. 215 of 2021
The High Court of Bombay has held that despite the limited scope of judicial scrutiny under Section 11 of the A&C Act, the Court would refuse to appoint the arbitrator when on a prima facie scrutiny of the material on record, it can come to a conclusion that claims sought to be arbitrated are frivolous and meritless.
The bench of Justice Manish Pitale refused to appoint an arbitrator when the claims sought to be arbitrated by the petitioner were pre-mature as per the terms of the agreement.
Calcutta High Court:
Case: Sarat Chatterjee and Co. (VSP) Private Limited v Sri Munisubrata Agri International Limited (Formerly known as LMJ International Ltd.) and Anr.
The Calcutta High Court has recently held that the security furnished by an award-debtor for stay of an arbitral award must be “clean, unblemished and with good exchange value.”
Sarat Chatterjee & Co. (“applicants”) had argued that that an earlier division-bench judgement of 2015, had already secured 10,000 metric tonnes of Coke equating to more than the total security value of the award of Rs 18.21 crores in favour of the Munisubrata (“respondents”), and that the Court could now affect the sale of the aforesaid coke, in lieu of the security payable.
In refuting the arguments of the applicants, while expressing its insecurity about the security proposed by them, a single-bench of Justice Moushumi Bhattacharya held:
“The Court is empowered to impose conditions on the award-debtor who seeks stay of an Award and must look to the provisions of the CPC for taking recourse to the principles for grant of stay of a decree or order. The Court must simply ensure that the security offered by the award-debtor has good currency value and is not an empty reassurance given by the award-debtor on a speculated value of unsold goods. The limited protection by the Division Bench for sale of the 10,000 MTs of Met Coke in 2015 cannot be resurrected after years to urge that the award-holder stands secured to the extent of the projected sale value of the goods amounting to Rs. 45 crores. Besides the uncertainties listed above, the 10,000 MTs of Met Coke has admittedly not been sold till date and even the sale was mired in litigation.”
Case Title: Rohan Builders (India) Pvt Ltd vs Berger Paints India Ltd
The Calcutta High Court has recently held that the mandate of an arbitral tribunal is held to be terminated under Section 29A of the Arbitration & Conciliation Act, 1996, (“1996 Act”), unless the same is extended during its subsistence, in the absence of which, an arbitrator would become de jure inadmissible.
Case Title: Sarat Chatterjee and Co. (VSP) Pvt Ltd vs Sri Munisubrata Agri International Ltd and Anr.
The Calcutta High Court has recently held that the security furnished by an award-debtor for stay of an arbitral award must be “clean, unblemished and with good exchange value.”
Delhi High Court:
Case Title: CASA2 STAYS PVT LTD v. BBH COMMUNICATIONS INDIA PVT LTD
The High Court of Delhi has held that the principles of natural justice are not violated when the opportunity to make oral submissions on an issue was granted but not availed by the party. It held that no party has the absolute right to insist on his convenience in every respect.
The bench of Justices Suresh Kumar Kait and Neena Bansal Krishna held that an Arbitrator has a right to manage the proceedings and to give directions to the parties to be present on a particular date, time and place and this would be sufficient compliance of the principles of natural justice.
The Court remarked that when the dispute between the parties was based on documents, merely because the oral arguments were not addressed by a party, does not lead to inevitable denial of principles of natural justice, unless it is shown that a pertinent aspect was left unconsidered.
Case Title: Amit Guglani v. L&T Housing Finance
The Delhi High Court has held that Section 21 notice is a mandatory pre-requisite for invoking jurisdiction of the under Section 21 of the A&C Act,
The bench of Justice Jyoti Singh held that a petition under Section 11 of the Act can only be filed when the parties fail to appoint the arbitrator in terms of the procedure agreed upon by the parties and Section 21 is an important element of this procedure as it provides for the request to be made to the other party for reference of the dispute to Arbitration, therefore, without a request there cannot be a failure which a sine qua non for Section 11(6) to come into play.
The Court further clarified that even when the agreement provides for unilateral appointment of the arbitrator, it doesn't exempt a party from adhering to the notice requirement stated in Section 21.
Case Title: Amit Guglani v. L&T Housing Finance
The Delhi High Court has held that when there are two interconnected agreements with conflicting arbitration clauses, the arbitration clause contained in the main/umbrella agreement should be given primacy over the other clause.
The bench of Justice Jyoti Singh held that when disputes under two connected agreements had different Arbitration Clauses, the disputes should be resolved under the main or umbrella agreement and the seat of arbitration should be determined as per the clause contained in the main agreement.
The Court also reiterated that notice under Section 21 is a mandatory pre-requisite for invoking the jurisdiction of the Court under Section 11 of the Act.
Case Title: Liberty Footwear Company v. Liberty Shoes Limited
The Delhi High Court has decided that if a petition under Section 9 is submitted to any court other than the one where the initial application was made, Section 42 of the A&C Act will prevent it. This section grants exclusive jurisdiction to the first court for arbitration-related cases. First court is basically the court where an arbitration petition is filed at the first instance. Section 42 says that if I have filed an application before the Delhi High Court, any other application that I file before any other court say Calcutta, would be barred by limitation.
A bench of Justice Jyoti Singh noted that allegations involving fraud, collusion, or malafides in the filing of the first petition can only be addressed by the court where the initial petition was filed. The second court isn't authorized to investigate such matters.
The court also determined that if the first court concludes that the first proceedings were tainted by fraud or collusion or lacks jurisdiction over the case, Section 42 wouldn't apply. In such cases, parties can approach the appropriate court without being restricted by Section 42.
Case Title: DD Global Capital vs SE Investment Ltd
The High Court of Delhi has held that when earlier loan agreement liabilities are transferred through an agreement, the subsequent loan agreements' arbitration clauses become binding on the parties.
Case Title: JRA Infratech vs Engineering Projects (India) Ltd
The High Court of Delhi has reiterated that a question as to whether the arbitration agreement is vitiated by fraud should be left to the wisdom of the arbitrator who will be free to decide the same on the basis of the evidence and the Court exercising power under Section 11 of the A&C Act should not get into such a finding.
Case Title: Vivek Khanna vs OYO Apartments Investment
The High Court of Delhi has held that the sum agreed by the parties as liquidated damages would not dispense with the requirement of proof by the party claiming liquidated damages that it actually suffered a loss. The bench of Justice Manoj Kumar Ohri held that a sum ascertained as liquidated damages in the contract is not in the nature of penalty, but is a pre-estimate of loss estimated by parties to be likely suffered in the event of breach of contract.
Case Title: M/s BCC-Monalisha (JV) vs Container Corporation of India
The High Court of Delhi has held that claims of a party cannot be referred to arbitration when the requirement to mandatorily notify such claims with the General Manger (GM) was not followed.
Case Title: M/s BCC-Monalisha (JV) vs Container Corporation of India
The High Court of Delhi has held that in cases where the contract stipulates arbitration solely in instances where the cumulative value of claims is below 20% of the contract value, the court would abstain from directing the parties towards arbitration if the claims surpass this specified cumulative value threshold.
Jammu and Kashmir and Ladakh High Court:
Case Title: Brij Mohan Sawney vs Sanjeev Kumar Gupta
The Jammu and Kashmir and Ladakh High Court has clarified that filing of the application under Section 5 of the Jammu and Kashmir Arbitration and Conciliation Act, 1997 cannot be construed as a submission of statement of the substance of the dispute within the meaning of Section 8(1) of the Act to create a legal bar in referring the matter to an arbitrator.
Kerala High Court:
Case Title: M/S Anantham Online Pvt. Ltd. vs Senior Divisional Commercial Manager, Southern Railway, Thiruvananthapuram
The Kerala High Court recently laid down that even if a formal agreement has not been entered into between the parties, where they have bound themselves to certain specified terms and conditions, it cannot be contended that there is no concluded contract between the parties. The court thus accepted the arbitration request and appointed an Arbitrator for resolving the dispute between M/S Anantham Online Pvt. Ltd., and the Senior Divisional Commercial Manager, Southern Railway, regarding the execution of a work contract between the parties for operating the Vehicle Parking Facility at Thiruvananthapuram Central (Main Entry) Railway.
Madras High Court:
Case Title: EDAC Engineering vs Industrial Fans (India) Pvt Ltd
The High Court of Madras has held that once a party has unconditionally accepted the fees fixed by the arbitral tribunal during the arbitral proceeding, it cannot later challenge the fees of the arbitral tribunal by filing a petition under Section 39(2) of the A&C Act.
Case Title: EDAC Engineering vs Industrial Fans (India) Pvt Ltd
The High Court of Madras has held that the moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 does not affect the payment of fees to the arbitrator for the award passed before the moratorium was declared.
Case Title: EDAC Engineering vs Industrial Fans (India) Pvt Ltd
The High Court of Madras has held that the fees to arbitrator has to be treated on parity with the fees of the liquidator and must be given a preferential status in terms of priority of dues.
Rajasthan High Court:
Case Title: Aseem Watts vs Union of India
The Rajasthan High Court has held that the place of arbitration does not become the seat of arbitration when the exclusive jurisdiction is conferred on Courts of another place. The bench of Justice Pushpendra Singh Bhati held that where a place is designated merely as a ‘venue’ and courts of another place have been granted the exclusive jurisdiction, the latter is a clear ‘contrary indicia’ that prevents the place from becoming the seat of arbitration.
Sikkim High Court:
Case Title: Kiran Devi Chouraria vs Jhumar Mal Singhi & Ors.
The High Court of Sikkim has held that a third party/objector can file a petition under O.XXI R.97 R/W Section 47 of CPC before the Executing Court if it can be shown that the arbitral award in respect of the immovable property is a nullity or obtained by fraud.
Other Developments:
The India International Arbitration Centre (IIAC) Releases Conduct Of Arbitration Regulations, 2023
The India International Arbitration Centre (IIAC) has officially unveiled the India International Arbitration Centre (Conduct of Arbitration) Regulations, 2023 (hereinafter referred to as the "Regulations"), shedding light on the intricate procedures governing arbitral processes. These Regulations, which became effective on September 1, meticulously outline the procedure for initiating arbitration under the purview of IIAC, the selection of arbitrators, and the mechanisms for resolving disputes.
