Arbitration Weekly Round-Up: 25th December to 31st December
Ausaf Ayyub
2 Jan 2024 4:15 AM GMT
Bombay High Court Debt Owed To Financial Institutions Under SARFAESI Is Arbitrable, Not Debt Under RDDB Act: Bombay High Court Case Title: Tata Motors Finance Solutions Ltd v. Naushad Khan, Commercial Arbitration Petition (L) No. 8654 of 2022 The High Court of Bombay has held that a debt owed to a financial institution covered only under the SARFAESI Act is arbitrable, however,...
Bombay High Court
Case Title: Tata Motors Finance Solutions Ltd v. Naushad Khan, Commercial Arbitration Petition (L) No. 8654 of 2022
The High Court of Bombay has held that a debt owed to a financial institution covered only under the SARFAESI Act is arbitrable, however, a debt owed to a financial institution to which the provisions of RDDB Act also applies is non-arbitrable.
The bench of Justice Manish Pitale while distinguishing both the acts held that the proceedings under RDDB Act contains exhaustive provisions for the determination as well as the recovery of the determined debt, however, SARFAESI Act contains provisions only for the enforcement of the debt and no provision for the determination/crystallization of the debt.
The Court held that since the RDDB Act contains an exhaustive provision, the debts covered under the ambit of the Act are non-arbitrable.
Case Title: Shailesh Ranka and Ors v. Windsor Machines Limited, Commercial Arbitration Application (L) No. 38198 of 2022
The High Court of Bombay has held that a dispute related to the business of the firm cannot be referred to arbitration by a partner in absence of other partners.
The bench of Justice Manish Pitale held that the implied authority granted to a partner does not extend to referring the dispute to arbitration in view of the bar under Section 19(2)(a) of the Partnership Act, 1932.
The Court also held that an arbitration notice issued by one of the partners without the consent of the remaining partners is invalid which renders the petition for the appointment of the arbitrator also invalid.
Delhi High Court
Case Details: QUANTUM UNIVERSITY v. INTERNATIONAL QUANTUM UNIVERSITY FOR INTEGRATIVE MEDICINE INC O.M.P (COMM) 260/2021
Citation: 2023 LiveLaw (Del) 1343
The Delhi High Court on December 13 held that the ambit of Section 34 of the Arbitration & Conciliation Act 1996 strictly restrained the Court from interfering in issues of interpretation of contractual conventions and those matters where the arbitrator is required to be “subjectively satisfied” on questions of facts.
The single-judge bench of Justice C. Hari Shankar in a petition against an arbitral award also discussed the application of the observations made by the Hon'ble Supreme Court in the landmark case of Satyam Infoway Ltd. v. Siffynet Solutions Ltd. in cases relating to domain name infringement
CASE TITLE: SMAAASH LEISURE LTD V. AMBIENCE COMMERCIAL DEVELOPERS PVT LTD, OMP(COMM) 180/2022
Citation: 2023 LiveLaw (Del) 1347
The High Court of Delhi has held that a panel of arbitrators consisting of merely 3 persons is not broad-based, therefore, a party cannot be compelled to appoint the arbitrator from such a narrow panel.
The bench of Justice Jyoti Singh also reiterated that mere participation in the arbitral proceedings cannot be constituted as a waiver to application of Section 12(5) of the A&C Act, therefore, a party cannot be precluded from challenging the jurisdiction of the tribunal merely on ground of participation in the arbitral proceedings, if the objection goes to the root of the matter and renders the arbitrator ineligible.
CASE TITLE: SMAAASH LEISURE LTD V. AMBIENCE COMMERCIAL DEVELOPERS PVT LTD, OMP(COMM) 180/2022
Citation: 2023 LiveLaw (Del) 1347
The High Court of Delhi has held that a statement made by a party's counsel before the Arbitrator withdrawing objection to unilateral appointment would not suffice 'express agreement' required under Section 12(5) of the A&C Act
The bench of Justice Jyoti Singh reiterated that ineligibility of the arbitrator goes to the root of the matter and any award passed by an ineligible arbitrator is non-est as the proceedings before such an arbitrator are void ab initio.
Case Title: Indus Towers Limited v. Sistema Shyam Teleserivices Limited, O.M.P.(COMM) 209/2019
Citation: 2023 LiveLaw (Del) 1354
While dismissing a Section 34 petition under the Arbitration Act, the Delhi High Court recently observed that the 2G judgment, whereby the Supreme Court quashed the First-Come-First-Serve (“FCFS”) policy, constituted a “change in law” for grant of spectrum/licenses.
“By passing the 2G judgment, the Hon'ble Supreme Court scrapped the FCFS Policy which was the earlier usual procedure under the law for grant of spectrum/licenses and later on the Hon'ble Supreme Court passed directions that the spectrum/licences would only be granted after conducting fresh auctions, hence, it is apparent that the decision in the aforesaid judgment would amount to change in law”.
Case Title: Ministry of Health & Family Welfare and Anr v. M/s Hosmac Projects, FAO(OS)(COMM) 236 of 2019
Citation: 2023 LiveLaw (Del) 1356
The High Court of Delhi has held that a copy of the signed arbitral award served only on the lawyer or the agent of the party does not constitute a valid delivery in absence of the delivery on the party itself.
The bench of Justices Rajiv Shakdher and Tara Vitasta Ganju held that the term 'party' under Section 31(5) of the Act refers to the actual entity who executed the arbitration agreement, excluding agents or lawyers representing the party.
Case Title: NEC CORPORATION INDIA PRIVATE LIMITED v. M/S PLUS91 SECURITY SOLUTIONS, OMP(COMM) 244 of 2023
Citation: 2023 LiveLaw (Del) 1357
The Delhi High Court has ruled that an arbitral tribunal lacks the authority to grant damages for a breach of a Memorandum of Understanding (MoU), particularly when the MoU serves as a preliminary agreement to enter into a definitive contract. This is especially significant when the MoU entails no financial implications and includes a clause explicitly preventing any monetary liability for a breach.
Justice Manoj Kumar Ohri's bench emphasized that damages cannot be awarded for a breach of an agreement when the association was merely exploratory, aimed at entering into contracts on a case-by-case basis in the future.
Telangana High Court
Case Title: Sri Venkatswara Service Station v. IOCL, WP No. 12345 of 2011
The Telangana High Court has directed the Indian Oil Corporation to restore the dealership in favour of Venkateshwar Service Station holding that the arbitrator cannot pass an restoration of dealership order owing to section 14(1)(c) of the Specific Performance Act and when the arbitrator held that termination was illegal, the Corporation was bound to consider the application for restoration.
Justice Surepalli Nanda has passed the order in a set of Writ Petitions filed by the petitioner challenging the actions of Indian Oil Corporation in terminating the dealership awarded in favour of the petition; and the subsequent rejection of restoration of dealership request, despite the arbitration award being in favour of the petitioner.
The Bench held " This Court is of the firm opinion that the Respondent Corporation failed to understand that the Arbitrator had his own limitations in directing for restoration of dealership with the Petitioner as per mandate in Sec.14(1) of the Specific Relief Act, 1963 and left it open to the Petitioner to persue the remedy available to the Petitioner very clearly observing and holding the termination of the dealership of the Petitioner as invalid since the Petitioner had not violated the relevant clauses of the dealership agreement."
