Arbitration Cases Weekly Round-Up: 8 January to 14 January 2022

Starting Point Of Limitation U/ Section 34(3) Arbitration Act In Cases Of Suo Motu Correction Of Award: Supreme Court Explains

Case Title: USS Alliance versus State of Uttar Pradesh

The Supreme Court has observed that the starting point for the limitation under Section 34(3) Arbitration and Conciliation Act, in case of suo moto correction of the award, would be the date on which the correction was made and the corrected award is received by the party.

Once the arbitral award has been amended or corrected, it is the corrected award which has to be challenged and not the original award, the bench of Justices Sanjiv Khanna and M M Sundresh observed.

Bombay High Court:

Award Against Guarantor Who Is Not Member Of Multi State Co-Op Society, Without Jurisdiction: Bombay High Court

Case Title: Deepti Prakash Ghate versus NKGSB Co. Op. Bank Ltd

The Bombay High Court has set aside an award passed pursuant to an arbitral reference made under Section 84(1) of the Multi-State Cooperative Societies Act, 2002 (MSCS Act), since the award debtor was not a member of the Co-operative Society.

The bench of Justice Manish Pitale ruled that a dispute, which is not covered under Section 84 (1) of the MSCS Act, would not be capable of being referred to arbitration. Thus, the Court concluded that the arbitral award was rendered without jurisdiction against the petitioner/ award debtor.

Delhi High Court:

Dispute Whether Partner Can Use Firm’s Trade Mark For His Own Sole Proprietorship, Can Be Referred To Arbitration: Delhi High Court

Case Title: M/s Liberty Footwear Company versus M/s Liberty International

The Delhi High Court has reiterated that disputes relating to subordinate rights in personam arising from rights in rem are arbitrable. Thus, the bench of Justice Navin Chawla concluded that the dispute whether a partner can use the partnership firm’s trade mark for his own sole proprietorship concern, can be referred to arbitration.

The Court further ruled that merely because a Statute specifies which Civil Court is to adjudicate a dispute, is not enough to infer the implicit non-arbitrability of such dispute.

Section 34 Application Does Not Cease To Be An Application Only Because Procedural Requirements Were Not Complied: Delhi High Court

Case Title: Oil and Natural Gas Corporation versus Joint Venture Of M/s Sai Rama Engineering Enterprises (SREE) & M/s Megha Engineering & Infrastructure Limited (MEIL)

The Delhi High Court has ruled that an application to set aside an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act) does not cease to be an application merely because the applicant has not complied with certain procedural requirements. The bench of Justices Vibhu Bakhru and Purushaindra Kumar Kaurav held that filing an affidavit in support of an application and the statement of truth by way of an affidavit, are procedural requirements. In absence of these requirements, the application cannot be treated as non est, the Court said.

The Court added that though filing of a court fee is necessary, however, the defect in not filing the court fee along with the application can be cured and it would not render the application invalid.

Court Has No Jurisdiction To Review Order Passed Under Section 11 of A&C Act: Delhi High Court

Case Title: M/s Diamond Entertainment Technologies Private Limited & Ors. versus Religare Finvest Limited

The Delhi High Court has reiterated that orders passed in an application filed under Section 11 of the Arbitration and Conciliation Act, 1996 (A&C) cannot be reviewed since there is no provision of review contained in the A&C Act.

The bench of Justice Neena Bansal Krishna, while dismissing a review petition filed against the arbitral reference made under Section 11, held that in view of the decision of Apex Court in M.D. Frozen Foods Exports Pvt Ltd versus Hero Fincorp Ltd. (2017), disputes covered under the SARFAESI Act in respect of which proceedings under the SARFAESI Act are initiated, can be referred to arbitration.

The Court remarked that though M.D. Frozen Foods (2017) is specifically mentioned in Vidya Drolia (2020) but it has not been overruled and thus, there is no ground to review the High Court’s order under Section 11.

Gujarat High Court:

Arbitration Under MSMED Act For Supplies Made Prior To Registration, Void-ab-initio: Gujarat High Court

Case Title: Anupam Industries Ltd. versus State Level Industry Facilitation Council

The Gujarat High Court has ruled that arbitral proceedings initiated under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) relating to the services provided by the claimant before its registration under the MSMED Act, are void-ab-initio.

The bench of Dr. Justice A. P. Thaker held that for initiation of proceedings like conciliation and arbitration under the MSMED Act, it is necessary that such firm/supplier is registered under the MSMED Act during the relevant time. It added that since the lack of jurisdiction of the Arbitral Tribunal went to the root of the entire proceeding, even if the opposite party had knowledge regarding the arbitral proceedings conducted under the MSMED Act and it did not participate in the proceedings, that would not give the Tribunal any jurisdiction under the MSMED Act.