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

Not Necessary For Party To Raise Objection Regarding Unilateral Appointment Before The Arbitrator, Can Be Raised In S. 34 Petition: Bombay High Court

Case Title: Hanuman Motors Pvt Ltd & Anr. vs. M/s Tata Motors Finance Ltd

The Bombay High Court has ruled that when one of the parties to the dispute has an overwhelming and unilateral power to appoint a Sole Arbitrator, the same completely vitiates such an appointment as the same is hit by Section 12(5) read with the Seventh Schedule of the Arbitration and Conciliation Act, 1996 (A&C Act).

While dealing with a petition filed under Section 34 of the A&C Act, the Court held that it was not necessary for the petitioner to raise an objection regarding the unilateral appointment before the arbitrator, to be able to raise the same in a Section 34 petition to challenge the arbitral award.

Facilitation Council Under MSMED Act Has No Jurisdiction To Conduct Arbitration Dispute Arising Under A Works Contract: Bombay High Court

Case Title: National Textile Corporation Ltd vs. Elixir Engineering Pvt Ltd & Anr.

The Bombay High Court has set aside an arbitral award passed by the Facilitation Council by invoking statutory arbitration under Section 18(3) of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act), holding that the Council could not have exercised jurisdiction to conduct arbitration in a dispute arising under a works contract.

The bench of Justice Manish Pitale remarked that a works contract is not amenable to the provisions of the MSMED Act, and therefore the MSMED Act could not have been invoked by the claimant/ award holder.

Delhi High Court:

Airport Metro Arbitral Award: DMRC Seeks Review Of High Court Ruling, Says Attachment Of Statutory Expenses Will Cause Chaos On Delhi Roads

Case Title: Delhi Airport Metro Express Pvt Ltd vs. Delhi Metro Rail Corporation Ltd

Seeking a review of Delhi High Court's recent decision on the execution petition filed by Reliance Infra-promoted Delhi Airport Metro Express Private Limited (DAMEPL), the Delhi Metro Rail Corporation (DMRC) has told the court that the attachment of its statutory expenses will result in immediate stoppage of the entire metro network in National Capital Region and cause inconvenience to more than 50 Lakh commuters.

Justice Yashwant Varma has listed the matter for hearing on March 29. "Let both the Union as well as Ld. Counsel representing the GNCTD obtain appropriate instructions in respect of directions as framed in the order of 17 March, 2023, in the meanwhile," said the court.

Party Can’t Restrict Limitation Period For Invoking Arbitration Contrary To Limitation Act : Delhi High Court

Case Title: Municipal Corporation of Delhi vs. Natraj Construction Company

The Delhi High Court has ruled that, in view of Section 28 of the Indian Contract Act, 1872, a party cannot be permitted to restrict the period of limitation for invoking arbitration, in contravention to the limitation period provided by law. The Court observed that a lesser period of limitation provided under the Contract between the parties would be hit by Section 28.

Noting that the limitation period for invoking arbitration under the A&C Act is three years, as prescribed under Article 137 of the Limitation Act, 1963, the bench of Justice Manoj Kumar Ohri remarked that the appellant cannot be permitted to rely on the relevant clause of the Contract and restrict the period of limitation for invoking arbitration to 120 days.

High Court Exercises Judicial Function Under S. 11 (6) of Arbitration Act; Principle Of Res Judicata Applicable To S. 11 Petition: Delhi High Court

Case Title: Antique Art Export Pvt Ltd vs. United India Insurance Company Ltd

The Delhi High Court has ruled that the High Court exercises a judicial function under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (A&C Act), and thus while dealing with a petition filed under Section 11 for appointment of Arbitrator, the High Court can determine the issue of maintainability of a petition on any ground, including on territorial jurisdiction or res judicata.

Arbitral Tribunal Erred In Fixing Fees Separately For Claims And Counter-Claims, Contrary To The Agreement Between Parties: Delhi High Court

Case Title: NHAI vs. M/s AE Tollway Ltd.

The Delhi High Court has ruled that the Apex Court’s decision in Oil and Natural Gas (ONGC) vs Afcons Gunanusa JV (2022), where it had interpreted the Fourth Schedule of the Arbitration and Conciliation Act, 1996 (A&C Act), clearly requires party autonomy to be given paramount importance.

The bench of Justice Prateek Jalan remarked that though in ONGC (2022), it was held that the term “sum in dispute” in the Fourth Schedule shall be considered separately for the claim and counter-claim, the Arbitral Tribunal was in error in fixing the arbitral fees separately for the claims and counter-claims, contrary to the express Agreement between the parties.

Himachal Pradesh High Court:

Arbitrator Under The National Highways Act Has To Give An Award Within 1 Year; Failure Can Result In Termination Of The Mandate: HP High Court

Case Title: Ganga Ram vs. Special Land Acquisition Officer

The High Court of Himachal Pradesh has held that the arbitration proceedings under the National Highways Act, 1956 are governed by the Arbitration and Conciliation Act, 1996, thus, the arbitrator so appointed by the Central Government under Section 3G(a) of the National Highways Act is bound to follow the provisions of the A&C Act.

The bench of Justice Sushil Kukreja held that in terms of Section 29(A) of the A&C Act, the arbitrator is mandated to deliver an award within 1 year from the date of entering reference and non-compliance with this provision will result in the termination of the mandate of the arbitrator. The Court held that the same provision also applies to a statutory arbitration governed by the A&C Act, thus, the mandate of the arbitrator under National Highways Act will stand terminated if the award is not delivered within the stipulated time-period.