Arbitration Cases Weekly Round-Up: 25 December To 31 December, 2022

Correspondence Between Parties Cannot Overrule Clear Intention Under Agreement Providing For Optional Arbitration: Bombay High Court

Case Title: GTL Infrastructure Ltd. versus Vodafone India Ltd. (VIL)

The Bombay High Court has ruled that where a clause stipulated that the parties ‘may’ be referred to arbitration, the said clause does not constitute an arbitration agreement, despite the fact that the clause conferred a binding nature upon the decision of the Arbitrator. The Court added that the said clause merely contemplated a future possibility and a choice to refer the disputes to arbitration.

The bench of Justice Bharati Dangre held that the correspondence exchanged between the parties cannot overrule or surpass the clear intention of the parties as manifest under the terms of the agreement.

Arbitration Can Be Invoked Against Party Deleted From Section 9 Application: Bombay High Court

Case Title: Deccan Paper Mills Co. Ltd. versus M/s. Regency Mahavir Properties & Ors.

The Bombay High Court has ruled that once an application is filed under Section 9 of the Arbitration and Conciliation Act, 1996 (A&C Act), merely because the applicant choses to subsequently delete a party from the proceedings under Section 9, it cannot be held that the arbitral proceedings can never be invoked against such a party.

The bench of Justice Manish Pitale held that a party applying for interim measures under Section 9 may wish to delete certain parties, if it finds that the interim measures sought in the facts and circumstances of the case are limited to only a few of the parties to the proceedings.

Reference Limited To Quantum Of Compensation; Dispute Non-Arbitrable If Insurer Disputes Liability: Bombay High Court

Case Title: M/s. Mallak Specialities Pvt Ltd. versus The New India Assurance Co. Ltd.

The Bombay High Court has ruled that where the arbitration clause only provided for reference of dispute relating to quantum of compensation payable under the insurance policy, the plea taken by the insurance company, disputing its liability under the policy, would make the dispute non-arbitrable.

The bench of Justice Bharati Dangre reiterated that an arbitration clause has to be interpreted strictly.

Calcutta High Court:

Disclosure Of Impartiality By Arbitrator Appointed Under MSMED Act Not Against Spirit Of Section 24, Provisions Of A&C Act Shall Apply: Calcutta HC

Case Title: Security Hitech Graphics Private Limited versus LMI India Private Limited

The Calcutta High Court recently ruled that the overriding effect of Section 24 of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) would not operate as an absolute bar upon an Arbitrator appointed under the special statute to disclose its independence and impartiality in accordance with the Arbitration and Conciliation Act, 1996.

Delhi High Court:

Request For Appointment Of Arbitrator, Is Not A Waiver Of Right To Disqualify Under S. 12 (5) Of The Act: Delhi High Court

Case Title: M/s. Osho G.S. & Company versus M/s. Wapcos Limited

The Delhi High Court has ruled that a unilateral request made by one of the parties for setting the appointment procedure in motion, as provided in the arbitration agreement, would not constitute an agreement falling under the proviso to Section 12(5) of the Arbitration and Conciliation Act, 1996 (A&C Act) to waive off the disqualification contemplated under Section 12(5).

The bench of Justice Yashwant Varma observed that the arbitration agreement conferred the power to appoint a Sole Arbitrator upon the CMD of the respondent Company, who was de jure disqualified from being appointed as an arbitrator by virtue of Section 12(5) and thus, incapable in law of appointing an arbitrator. The Court held that the arbitration notice issued by the claimant, calling upon the respondent Company to appoint an arbitrator in accordance with the arbitration agreement, cannot be construed as an express agreement between the parties to waive off the disqualification contemplated under Section 12(5).

Gauhati High Court:

Additional Work Without Consent Of The Employer; Arbitrator Can't Award Damages: Gauhati High Court

Case Title: Sports Authority of Assam versus Larsen and Turbo

The Gauhati High Court has held that the arbitrator cannot invoke Section 70 of the Indian Contract Act to award damages on quantum meruit for the additional work carried out without the prior consent of the employer when the agreement did not contemplate any additional work.

The bench of Justice Kalyan Rai Surana held that when the agreement, containing the arbitration clause, did not contemplate any additional work and the contractor carries out the additional work without the prior consent of the employer, then any dispute qua the additional work would fall outside the ambit of arbitration clause and any award delivered thereupon would be against the fundamental policy of Indian Law.