Arbitration Cases Weekly Round-Up: April 16 To April 22, 2023

Supreme Court Deprecates Practice Of Filing Applications In Disposed Of SLPs To Side-Step Arbitration Process

Case Title: Narsi Creation Pvt Ltd and Anr. vs State of Uttar Pradesh and Ors.

The Supreme Court has reiterated that the courts normally ought not interfere with arbitral proceedings, especially till the time an award is not passed. The top court has deprecated the practice of filing applications in disposed of Special Leave Petitions (SLPs) in order to side-step the arbitration process, adding that the said applications must not be entertained by the court.

High Courts:

Bombay High Court:

Whether A Signed Copy Or Certified Copy Of The Award, Purpose Of S. 31(5) of A&C Act Is To Inform The Party: Bombay High Court

Case Title: Rahul S/o Omprakash Gandhi vs The Akola Janta Commercial Co-Operative Bank Limited

The Bombay High Court has ruled that the purpose of Section 31(5) of the Arbitration and Conciliation Act, 1996 (A&C Act), which provides for delivery of the signed copy of the arbitral award, is of imparting knowledge to the party regarding the contents of the award, and to make the party aware that the limitation to raise a challenge has started to run. The court held that the said knowledge/information is equally available to the party, when it receives the certified copy of the award signed by the Arbitrator. Thus, the Court remarked that the purpose of Section 31(5) is achieved whether a signed copy is delivered or a certified copy of the signed award is obtained by the party.

Taking note that the award debtor had obtained the certified copy of the signed award from the Arbitrator, the bench of justice Avinash G. Gharote rejected its plea that since the signed copy of the award was not delivered to it, the time for making the Section 34 application to set aside the award had not expired and thus, the execution proceedings were infirm.

Delhi High Court:

Delhi High Court Invokes “Direct Benefits” And “Intertwined” Estoppel Theory To Refer Non-Signatory To Arbitration

Case Title: Gaurav Dhanuka & Anr. vs Surya Maintenance Agency Pvt Ltd & Ors.

The Delhi High Court has invoked the “direct benefits” estoppel theory and the “intertwined estoppel theory” to refer a non-signatory to arbitration.

While referring the builder/developer (non-signatory) of a building to arbitration in a dispute between the owner of the flat and the maintenance agency under the ‘maintenance agreement’, the court observed that its impleadment was mandated not on account of the “group of companies” doctrine but on the ground that the maintenance agency’s authority was directly derived from the developer under the ‘service agreement’ executed between them.

The High Court reckoned that the developer was deriving direct benefit from the service agreement with the maintenance agency. Further, the said service agreement was inextricably linked to the maintenance agreements containing the arbitration clause.

Therefore, both the “direct benefits” estoppel theory and the “intertwined estoppel theory” were applicable in the case to refer the non-signatory developer to arbitration, the court ruled.

Himachal Pradesh High Court:

Appeal Against Dismissal Of S. 8 Application Filed Before Commencement Of 2015 Arbitration Amendment Act, Not Maintainable: Himachal Pradesh High Court

Case Title: Graviss Foods Private Limited vs M/s Ice Cream Garden & Anr.

The Himachal Pradesh High Court has reiterated that the amendment incorporated in Section 37 (1) (a) of the Arbitration and Conciliation Act, 1996 (A&C Act) by the Arbitration and Conciliation (Amendment) Act, 2015, which provides for an appeal against an order of the court refusing to refer the parties to arbitration under Section 8, is prospective in nature. Thus, the same will apply to court proceedings which have commenced on or after the Amendment Act came into force, i.e., 23.10.2015.

The bench of Acting Chief Justice Sabina and Justice Satyen Vaidya added that since appeal is a continuation of original proceedings, the date of commencement of court proceedings would be the date of filing of the Section 8 application and not the date the order dismissing the said application was passed by the court.