Arbitration Cases Weekly Round-Up: February 19 To February 25, 2023

Bombay High Court: Multiple Arbitrations By Arbitrator Involving The Same Co-operative Bank Under S. 84 Of MSCS Act; Not A Disqualification: Bombay High Court Case Title: Kalpesh Shantikumar Mehta & Ors. versus NKGSB Co-op. Bank Ltd & Anr. The Bombay High Court has ruled that reference of more than two arbitrations to the same arbitrator under Section 84 of the Multi-State Cooperative Societies Act, 2002 (MSCS Act), involving the same Co-operative Bank, would not fall foul of clause 22 of Schedule V of the Arbitration and Conciliation Act, 1996 (A&C Act). Noting that in the statutory arbitration contemplated under the MSCS Act, the arbitrator is appointed by the Central Registrar/Commissioner of Cooperative Societies under Section 84 (4) of the MSCS Act, the bench of Justice Bharati Dangre held that the embargo created under clause 22 comes into picture only when the Arbitrator is appointed by one of the parties or an affiliate of one of the parties. Delhi High Court: Arbitral Tribunal Has Power To Pass Interim Award On Basis Of Admissions Made Before IRP In CIRP Proceedings: Delhi High Court Case Title: Bharat Heavy Electricals Ltd versus M/s Zillion Infraprojects Pvt Ltd The Delhi High Court has ruled that the Arbitral Tribunal has the power under Section 31(6) of the Arbitration and Conciliation Act, 1996 (A&C Act) to pass an interim Award on the basis of the admissions made by a party before the Interim Resolution Professional (IRP) in the CIRP proceedings initiated under the Insolvency and Bankruptcy Code, 2016 (IBC) against the opposite party. Dismissing the argument of the appellant that the admissions made before the IRP cannot be treated as an admission in the arbitral proceedings, the bench of Justices Suresh Kumar Kait and Neena Bansal Krishna remarked that Order XII Rule 6 of the Code of Civil Procedure, 1908 (CPC) is couched in the widest terms and the same permits considering the admissions made in the pleadings before the Court or “otherwise”. Arbitrator Has No Jurisdiction To Set Aside Sale Notice Issued By Secured Creditor Under Section 13(4) Of SARFAESI Act: Delhi High Court Case Title: M/s. Indiabulls Housing Finance Ltd & Anr. versus Shipra Estate Ltd The Delhi High Court has ruled that the Arbitrator has no jurisdiction to set aside the sale notice issued by the secured creditor under Section 13(4) of the SARFAESI Act, 2002, seeking to enforce its “security interest”. The bench of Justice Anup Jairam Bhambhani remarked that the matter of a notice issued under Section 13(4) of the SARFAESI Act is not arbitrable at all, and thus, the Arbitrator does not have the option to exercise any discretion under Section 17 of the Arbitration and Conciliation Act, 1996 (A&C Act) in relation to the said matter. Since a specific right is vested in a “secured creditor” to enforce a “security interest”, by issuance of a sale notice under Section 13(4) of the SARFAESI Act, that specific right cannot be ousted by an order made by an arbitral tribunal, the Court held. Central Registrar Not Divested Of Its Authority To Appoint Arbitrator Under S. 84 of MSCS Act: Delhi High Court Case Title: D Narasimha Rao & Ors versus Revanta Multi State CGHS Ltd & Anr. The Delhi High Court has held that the Central Registrar is not divested of its authority and jurisdiction to appoint an Arbitral Tribunal in terms of Section 84 (4) of the Multi-State Cooperative Societies Act, 2002 (MSCS Act), when a dispute pertaining to a multi-state cooperative society is sought to be referred to arbitration under Section 84 of the Act. The bench of Justice Yashwant Varma remarked that as per the direction issued by the Central Government under the Notification dated 24th February, 2003, the Registrar of Co-operative Societies of States is contemporaneously empowered to refer matters to arbitration, however, the same does not denude the jurisdiction of the Central Registrar. Thus, the Court concluded that initiation of proceedings for constitution of an Arbitral Tribunal by the petitioner, by issuing a notice to the Central Registrar, did not suffer from a manifest illegality. Former Clause In The Agreement Will Prevail Over The Latter Clause In Case Of Inconsistency: Delhi High Court Reiterates Case Title: Sunil Kumar Chandra versus M/s Spire Techpark Pvt Ltd The Delhi High Court has reiterated that where there is any inconsistency between the two clauses of a same instrument/document, the former clause shall prevail over the latter one. The bench of Justice Chandra Dhari Singh concluded that the former clause (arbitration clause), under which the parties agreed to resolve “any” dispute arising under the agreement through arbitration, shall have a prevailing effect over the latter clause, which was not clear as no clear and unambiguous meaning was given regarding what kind of disputes shall be referred to...

Arbitration Cases Weekly Round-Up: February 19 To February 25, 2023

Parina Katyal

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