Annual Digest of Arbitration Cases 2023- Supreme Court And High Courts (Part-1)
Ausaf Ayyub
7 Jan 2024 5:09 AM GMT
Supreme Court Arbitration Clauses In Unstamped Agreements Enforceable : Supreme Court 7-Judge Bench Overrules 'NN Global' Decision Case Title: In Re Interplay Between Arbitration Agreements Under The Arbitration And Conciliation Act 1996 And The Indian Stamp Act 1899 Curative Pet(C) No. 44/2023 In R.P.(C) No. 704/2021 In C.A. No. 1599/2020 Citation: 2023 LiveLaw...
Supreme Court
Case Title: In Re Interplay Between Arbitration Agreements Under The Arbitration And Conciliation Act 1996 And The Indian Stamp Act 1899 Curative Pet(C) No. 44/2023 In R.P.(C) No. 704/2021 In C.A. No. 1599/2020
Citation: 2023 LiveLaw (SC) 1049
A seven-judge bench of the Supreme Court on Wednesday (December 13) ruled that arbitration clauses in unstamped or inadequately stamped agreements are enforceable. Insufficiency of stamping does not make the agreement void or unenforceable but makes it inadmissible in evidence. However, it is a curable defect as per the Indian Stamp Act, the Court pointed out.
The Court overruled the judgment rendered by a 5-judge bench in April this year in M/s. N.N. Global Mercantile Pvt. Ltd. v. M/s. Indo Unique Flame Ltd. And Ors which had by a 3:2 majority held that unstamped arbitration agreements are not enforceable.
The bench comprising Chief Justice of India DY Chandrachud, Justice Sanjay Kishan Kaul, Justice Sanjiv Khanna, Justice B R Gavai, Justice Surya Kant, Justice JB Pardiwala, and Justice Manoj Misra passed the judgement in the case In Re Interplay Between Arbitration Agreements Under The Arbitration And Conciliation Act 1996 And The Indian Stamp Act 1899.
Arbitration Agreement Can Bind Non-Signatories: Supreme Court Upholds 'Group Of Companies' Doctrine
Case: Cox and Kings Ltd v. SAP India Pvt Ltd | ARBIT. PETITION No. 38/2020
Citation: 2023 LiveLaw (SC) 1042
A Constitution Bench of the Supreme Court on Wednesday (December 6) held that an arbitration agreement can bind non-signatories as per the "group of companies" doctrine.
"The 'group of companies' doctrine must be retained in the Indian arbitration jurisprudence considering its utility in determining the intention of the parties in the context of complex transactions involving multiple parties and multiple agreements," the Court observed.
Case: Cox and Kings Ltd v. SAP India Pvt Ltd | ARBIT. PETITION No. 38/2020
Citation: 2023 LiveLaw (SC) 1042
While approving the 'group of companies' doctrine in the arbitration law jurisprudence, the Supreme Court clarified that the principle of "alter ego" or "piercing the corporate veil" cannot be the basis for applying this doctrine.
The Constitution Bench comprising Chief Justice of India DY Chandrachud, Justice Hrishikesh Roy, PS Narasimha, JB Pardiwala and Manoj Misra was answering a reference which doubted the "group of companies" doctrine which allows non-signatory companies to be bound by arbitration agreement.
Case Title: M/s. N.N. Global Mercantile Pvt Ltd vs M/s. Indo Unique Flame Ltd & Ors
A Constitution Bench of the Supreme Court, on Tuesday, answered the reference, which pertains to the issue - whether the arbitration clause in a contract, which is required to be registered and stamped, but is not registered and stamped, is valid and enforceable.
A 5-Judge Bench, comprising Justice K.M. Joseph, Justice Ajay Rastogi, Justice Aniruddha Bose, Justice Hrishikesh Roy and Justice C.T. Ravikumar decided the issue by 3:2 majority.
Justice Joseph in concurrence with Justice Bose and Justice Ravikumar decided that "an instrument which is exigible to stamp duty may contain an arbitration clause and which is not stamped cannot be said to be a contract enforceable in law within the meaning of S. 2(h) of the Contract Act and is not enforceable under S 2(g) of the Contract Act”.
Case Title: NTPC Ltd vs M/s SPML Infra Ltd
The Supreme Court has ruled that the court while exercising jurisdiction under Section 11(6) of the Arbitration and Conciliation Act, 1996 (A&C Act) is not expected to act mechanically, and that the limited scrutiny of the court at the pre-reference stage, through the “eye of the needle”, is necessary and compelling.
The bench comprising Chief Justice DY Chandrachud and Justice PS Narasimha remarked that the same is intertwined with the duty of the referral court to protect the parties from being forced to arbitrate when the matter is demonstrably non-arbitrable, adding that same is a legitimate interference by courts to refuse reference in order to prevent wastage of public and private resources.
Case Title: Bhimashankar Sahakari Sakkare Karkhane Niyamita vs Walchandnagar Industries Ltd. (WIL)
The Supreme Court has held that an application under Section 34 of Arbitration and Conciliation Act, 1996 must be filed within “prescribed period” of limitation i.e., 90 days, for seeking benefit of exclusion of period during which the Court remained closed from computation of limitation period.
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.
Case Title: Batliboi Environmental Engineers Limited vs Hindustan Petroleum Corporation Ltd and Anr.
The Supreme Court bench comprising Justice Sanjiv Khanna and Justice M.M. Sundresh, has held that while setting aside an arbitral award for being violative of Section 28(3) of the Arbitration and Conciliation Act, 1996, it must be considered that the Arbitrator is empowered to interpret the contract terms reasonably.
Cancellation Of Deed Is Action In Personam, Not In Rem; It Is Arbitrable : Supreme Court
Case Title: SUSHMA SHIVKUMAR DAGA vs. MADHURKUMAR RAMKRISHNAJI BAJAJ., Diary No.- 1164 - 2022
Citation: 2023 LiveLaw (SC) 984
Recently, the Supreme Court (December 15) allowed arbitration between the parties in a property dispute based on the broad language of the arbitration clause in the Tripartite Agreements. The Court rejected the argument that since the suit was for cancellation of a deed, the dispute was not arbitrable, as the action was in rem. The Court held that cancellation of a deed was an action in personam and hence arbitrable.
The Court observed that the Tripartite Agreements formed the basis of all subsequent agreements entered between the parties, including the ones that gave rise to the present dispute.
In the instant case, cancellation of the Conveyance Deed and registered Development Agreements was sought. Pertinently, there was no arbitration clause in the Conveyance Deed and Development Agreements. However, considering that these agreements find their source in the two Tripartite Agreements, which, in turn, contained a broad arbitration clause, the view taken by the below court for referring the matter to arbitration was affirmed.
Case Title: Magic Eye Developers Pvt. Ltd. vs M/s. Green Edge Infrastructure Pvt. Ltd. & Ors.
The Supreme Court has held that under Section 11(6) of the Arbitration and Conciliation Act, 1996, when the issue of 'existence and validity of an arbitration agreement' is raised at pre-referral stage, then the Court is duty bound to conclusively decide the issue. If the issue regarding 'existence and validity of an arbitration agreement' is left to the Arbitral Tribunal, then it will be contrary to Section 11(6A) of the Arbitration Act. This is to protect the parties from being forced to arbitrate in absence of a valid arbitration agreement.
The Bench comprising of Justice M.R. Shah and Justice C.T. Ravikumar has observed that the 'pre-referral' jurisdiction of Court under Section 11(6) of Arbitration and Conciliation Act, 1996 consists of two inquiries, (i) existence and validity of arbitration agreement; and (ii) non-arbitrability of dispute.
Case Title: Reliance Infrastructure Ltd. vs State of Goa
The Supreme Court has observed that an award could be said to be suffering from “patent illegality” only if it is an illegality apparent on the face of the award and the award is not to be searched out by way of re-appreciation of evidence.
The narrow scope of “patent illegality” cannot be breached by mere use of different expressions which nevertheless refer only to “error” and not to “patent illegality”, the bench of Justices Dinesh Maheshwari and Sanjay Kumar observed while allowing appeals filed by Reliance Infrastructure Ltd.
Case Title: M/s. Shree Vishnu Constructions vs The Engineer in Chief Military Engineering Service & Ors.
The Supreme Court has ruled that where the notice invoking arbitration is issued prior to the coming into force of the Arbitration and Conciliation (Amendment) Act, 2015, i.e., prior to 23.10.2015, and the application under Section 11 of the Arbitration and Conciliation Act, 1996 (A&C Act), seeking appointment of an arbitrator, is made post the enforcement of the Amendment Act, the 2015 Amendment Act shall not be applicable.
"It is observed and held that in a case where the notice invoking arbitration is issued prior to the Amendment Act, 2015 and the application under Section 11 for appointment of an arbitrator is made post Amendment Act, 2015, the provisions of pre-Amendment Act, 2015 shall be applicable and not the Amendment Act, 2015", the Court held.
Case Title: M/s B and T AG vs Ministry of Defence
The Supreme Court has held that the cause of action to appoint an arbitrator would commence from the “Breaking Point” at which any reasonable party would abandon efforts for at arriving at a settlement and contemplate referral of the dispute for arbitration. “Breaking Point” should be treated as the date at which the cause of action arose for the purpose of limitation.
The Bench comprising of the Chief Justice Dr. Dhananjaya Y. Chandrachud and Justice J. B. Pardiwala, while adjudicating an appeal filed in M/s B and T AG v Ministry of Defence, has observed that the entire history of the negotiation between the parties must be specifically pleaded and placed on record, in order to facilitate the Court to find out what was the “Breaking Point” for the purpose of limitation computation.
Case Title: M/s B and T AG vs Ministry of Defence
The Supreme Court while adjudicating an application filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of arbitrator, has held that the limitation period of three years for filing such application would commence from the date when the cause of action arose. Subsequent negotiations between the parties, which take place after the cause of action has arisen, will not postpone the cause of action for the purpose of limitation computation.
The Bench comprising of the Chief Justice Dr. Dhananjaya Y. Chandrachud and Justice J. B. Pardiwala, while adjudicating an appeal filed in M/s B and T AG v Ministry of Defence, has held that, “Negotiations may continue even for a period of ten years or twenty years after the cause of action had arisen. Mere negotiations will not postpone the “cause of action” for the purpose of limitation. The Legislature has prescribed a limit of three years for the enforcement of a claim and this statutory time period cannot be defeated on the ground that the parties were negotiating.”
Case Title: Indian Oil Corporation vs Sathyanarayana Service Station
The Supreme Court has observed that, in arbitration cases, a Court cannot, after setting aside the award, proceed to grant further relief by modifying the award.
High Courts:
Andhra Pradesh High Court:
Case Title: Obulapuram Mining Company vs R.K. Mining Pvt Ltd
The High Court of Andhra Pradesh has held that an execution petition for an arbitration award can only lie before the designated Commercial Courts and no other Court viz., Civil/District Court can entertain such an application.
Allahabad High Court
Case Title: National Highway Authority Of India v. Parimal Bajpai And 3 Others [Appeal Under Section 37 Of Arbitration And Conciliation Act 1996 No. - 901 of 2023]
The Allahabad High Court has held that under Section 34(4) of the Arbitration and Conciliation Act, 1996, the High Court can set aside an arbitral award and remit the case back to the Arbitral Tribunal for a fresh decision.
The bench comprising Justice Ajay Bhanot placed reliance on the judgment of the Apex Court in National Highways Authority of India Vs. P. Nagaraju and Ors to hold thus:
“In light of the provisions of Section 34 of Arbitration and Conciliation Act, 1996 and the appellate powers of this Court, interest of justice which are consistent with the provisions of law will be served by remitting the matter to the Arbitral Tribunal.”
Case Title: Amit Agarwal v. Atul Gupta, Matters under Article 227 No. 11263 of 2023
The Allahabad High Court has upheld the termination of the Arbitrator's mandate, citing an unjustified eight-year delay in proceedings.
The bench of Justice Rohit Ranjan Agarwal observed that the arbitrator sat over the arbitral proceedings for 8 long years without any progress and passed the award in haste after the application seeking its removal was made. Ergo, the Court held that the arbitrator acted in breach of Section 14 and its mandate stands terminated under the said provision.
Case Title: Bata India Limited & Anr. vs U.P. State Micro and Small Enterprise Facilitation Council & Anr.
The Allahabad High Court has ruled that the discretion given to Facilitation Council under Section 18(3) of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) in respect of selection of forum for arbitration between the parties, is absolute and has overriding effect over any other law. In exercise of the said discretion, the provisions of the Arbitration and Conciliation Act, 1996 (A&C Act), including the prohibition contained in Section 80, will have no application, the court has ruled. Therefore, the court held that in the event the conciliation proceedings carried out by the Council under Section 18(2) of the MSMED Act fail, the Council can itself proceed to arbitrate the dispute between the parties.
Allahabad High Court Holds That Improper Notice Invalidates Ex-Parte Arbitral Award
Case Title: Bharat Pumps and Compressors Limited v. Chopra Fabricators & Manufacturers Pvt Ltd, Appeal U/S 37 of the A&C Act No. 146 of 2022
The Allahabad High Court has held that improper notice of arbitration invalidates an arbitration award passed ex-parte.
The bench of Justice Rohit Ranjan Agarwal held that Section 14(2) of the Arbitration Act, 1940 requires that notice be given to the parties after the arbitrators or umpire have signed the award. Without proper notice, the court held that the proceedings leading to the judgment making the award rule of the court would be flawed.
Case Title: Marsons Electrical Industries v. Chairman, Madhya Pradesh Electricity Board (Madhya Pradesh State Electricity Board) And Another [Appeal Under Section 37 Of Arbitration And Conciliation Act 1996 No. - 701 of 2023]
The Allahabad High Court on Tuesday held that the provision of Micro, Small and Medium Enterprises Development Act, 2006 have an overriding effect on the Arbitration and Conciliation Act 1996 and any agreement entered into between parties.
Relying on the decision of the Supreme Court in M/s Silpi Industries vs. Kerala State Road Transport Corporation, the bench comprising of Justice Mahesh Chandra Tripathi and Justice Prashant Kumar held that MSMED Act being a special and beneficial legislation will override the 1996 Act.
Bombay High Court
Case Title: 22Light v. OESPL Pvt Ltd, Commercial Arbitration Application No. 215 of 2021
The High Court of Bombay has held that despite the limited scope of judicial scrutiny under Section 11 of the A&C Act, the Court would refuse to appoint the arbitrator when on a prima facie scrutiny of the material on record, it can come to a conclusion that claims sought to be arbitrated are frivolous and meritless.
The bench of Justice Manish Pitale refused to appoint an arbitrator when the claims sought to be arbitrated by the petitioner were pre-mature as per the terms of the agreement.
Case Title: Kavis Fashions Private Limited vs Dimple Enterprises and others
The Bombay High Court has ruled that the opposite party is entitled to oppose the application for amendment of Statement of Claims on all available grounds. The bench of Justice Manish Pitale rejected the contention that under Section 23(3) of the Arbitration and Conciliation Act, 1996 (A&C Act), a party opposing the amendment application can oppose the same only on the ground of delay in making the amendment.
The court remarked that Section 23(3) uses the words 'having regard to the delay in making it' in contradistinction to the words 'having regard only to'. Thus, the opposite party is entitled to oppose the application for amendment on all available grounds, including the ground of delay, the bench said.
Case Title: M/s Sunflag Iron & Steel Co. Ltd vs M/s. J. Poonamchand & Sons
The Bombay High Court has ruled that mere filing of an application under Section 7(1) of the Insolvency and Bankruptcy Code, 2016 (IBC) is not enough to invoke the bar of Section 238 of the Code. Thus, the same would not bar the court from entertaining an application under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (A&C Act) for appointment of Arbitrator, the court said.
The bench of Justice Avinash G. Gharote held that there is no inconsistency between the provisions of the A&C Act and the IBC, since the provisions of Section 238 of the IBC would come into play only after an order has been passed by the Adjudicating Authority under Section 7(5) of the Code.
Case Title: Arbaza Alimentos Ltda vs MAC Impex and others
The Bombay High Court has reiterated that a general reference to a standard form of contract would be enough for incorporation of an arbitration clause. The court was dealing with a petition seeking execution of a foreign arbitral award passed in the arbitral proceedings conducted under the 'Grain and Feed Trade Association (GAFTA) Simple Disputes Arbitration Rules No.126.'
The bench of Justice Manish Pitale further dismissed the contention of the award-debtor that the arbitrator could not have pronounced upon its own jurisdiction since the 'GAFTA Simple Disputes Arbitration Rules No.126' do not provide a power to the arbitrator to decide his own jurisdiction. The bench said that a specific clause under the said Rules would not be necessary for deciding the challenge made to the jurisdiction of the arbitrator, as the said issue goes to the very root of the matter. It added that a decision on the said issue is necessary before proceeding to consider the claims / counter-claims raised by the parties, on merits.
Case Title: Sunil Kumar Jindal vs Union of India
The Bombay High Court has held that illegality of the appointment procedure does not render the entire arbitration agreement invalid.
The bench of Justice Avinash G. Gharote held that merely because the procedure for the appointment of the arbitrator under the arbitration agreement is rendered invalid on account of the insertion of Section 12(5) and the Supreme Court judgment in Perkins Eastman, the same would not make the entire arbitration agreement unworkable.
The Court held that the choice of getting the dispute resolved through arbitration is one thing and the choice of a specific arbitrator is another thing and both are severable and different from each other. It held that the Courts while dealing with an arbitration clause that has partially become invalid can sever the illegal part and retain the remaining portion when the intention to arbitration is evident.
Case Title: M/s Omanand Industries & Anr. vs The Secretary to the Government of India, Ministry of Road Transport and Highways
The Bombay High Court has ruled that though the scope for challenging the compensation awarded by the Arbitrator to the landowners under Section 3-G (5) of the National Highways Act, 1956 (NHA) is limited to the parameters provided under Section 34 of the Arbitration and Conciliation Act, 1996 (A & C Act), the same cannot be a ground to invoke the High Court's writ jurisdiction under Article 226 of the Constitution of India.
The bench of Justice Avinash G. Gharote dismissed the contention of the landowners that since the Court under Section 34 of A&C Act has no power to modify the award or substitute a new award for further enhancement of the compensation than what was awarded by the Arbitrator, the petitioners were rendered remediless.
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.
Case Title: HSBC PI Holdings (Mauritius) Limited vs Avitel Post Studioz Limited and Ors.
The Bombay High Court, while dealing with a petition seeking enforcement of a foreign arbitral award, has observed that the “pro-enforcement bias” in the New York Convention has been specifically adopted in Section 48 of the Arbitration and Conciliation Act, 1996 (A&C Act).
The bench of Justice Manish Pitale was considering the guidelines issued by the International Bar Association (IBA) on 'Conflicts of Interest in International Arbitration' (IBA Guidelines), while considering the objection raised by the award debtor alleging bias attributable to the Chairman of the Arbitral Tribunal.
The bench observed that the IBA Guidelines have been adopted in the Vth and VIIth Schedules to the A&C Act. While perusing the 'red', 'orange', and 'green' list appended to the IBA guidelines, which set out specific situations warranting (or in the case of the green list, not warranting) disclosure, the court remarked that if the situation is not covered under any of the lists, the court would have to apply the test of a reasonable third person, and not the subjective test, as claimed by the award debtor.
Case Title: Palmview Investments Overseas Limited vs Ravi Arya
The High Court of Bombay has held that any defect in the board resolution authorizing a person to initiate arbitration is only a procedural and a curable defect, thus, it cannot be a ground for the rejection of the claims and termination of the arbitral proceedings.
The bench of Justices K.R. Shriram and Rajesh S. Patil held that requirement of a board resolution authorizing a person to take legal action on behalf of a company is a procedural requirement and any defect in such a resolution would only be a procedural irregularity and thus it cannot be allowed to defeat a substantive right of a party.
Case Title: Gurumahima Heights Co-operative Housing Society Ltd vs M/s Admirecon Infrastructure Pvt Ltd
The Bombay High Court has ruled that mere signing of the arbitral award at a place cannot be the determinative factor for ascertaining the place of arbitration. It added that if there is no agreement between the parties regarding the place of arbitration and the arbitrator has not determined the place of arbitration, the overall circumstances of the case would have to be taken into consideration to reach a conclusion regarding the same.
Case Title: Nikhil H. Malkan v. Standard Chartered Investment and Loans (India) Limited, Arbitration Petition (Lodging) No. 28255 of 2023
The High Court of Bombay has held that Section 29A permits the court to extend the mandate of the arbitral tribunal even when the application is made after the expiry of time limit provided therein.
The bench of Justice Manish Pitale clarified that Section 29A(4) allows the Court to extend the arbitrator's mandate either before or after the specified period's expiry, provided sufficient grounds are demonstrated. The purpose is to ensure the completion of arbitral proceedings, and a rigid time limit is not intended by the legislature.
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.
Case Title: Madgavkar Salvage v. Bergen Offshore Logistics Pvt Ltd, Comm. Arbitration Petitioner No. 13 of 2015.
The High Court of Bombay has held that under Section 37 of the A&C Act, the challenge must be related to the impugned order passed under Section 34 of the Act and not merely to the arbitral award. It held that it is incumbent upon a party to point out errors in the order under Section 34 to make out a case in appeal under Section 37.
The bench of Chief Justice Devendra Kumar Upadhyaya and Justice Arif. S. Doctor held that the Court while exercising powers under Section 37 of the A&C Act cannot take an independent assessment of the arbitral award, therefore, the challenge must be premised on the errors in the impugned order under Section 34. It held that it is not permissible for a party to challenge an arbitral award de hors any challenge to the impugned order.
Calcutta High Court
Case Title: Godrej & Boyce Mfg. Co. Ltd vs Shapoorji Pallonji and Company Pvt Ltd
The Calcutta High Court has ruled that a single composite invocation of arbitration under Section 21 of the Arbitration and Conciliation Act, 1996 (A&C Act), pertaining to a consolidated claim arising out of three different Purchase Orders, containing separate arbitration clauses, cannot be labelled as invalid or unlawful.
The court made the observation while noting that all the Purchase Orders, though issued at different times, were a sub-set of the respondent's performance of a single Main Contract. Further, the relevant clauses of the Purchase Order established a link between the liabilities arising out of the Purchase Orders and the Main Contract, and contained identically worded arbitration clauses.
Case Title: Marine Craft Engineers Pvt Ltd vs. Garden Reach Shipbuilders and Engineers Ltd
The Calcutta High Court has ruled that the date of execution of a contract between a buyer and a supplier under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) is irrelevant for the application of the provisions of the said Act. The Facilitation Council would have exclusive jurisdiction to decide on the reference, and to take up the dispute/ refer the same for arbitration under Section 18(4) of the MSMED Act, if the supplier's claim relates to the goods or services supplied after the date of its registration under the MSMED Act, the Court held.
Arbitration- Limitation Starts From Failure Of Settlement Talks: Calcutta High Court
Case Title: Zillon Infraprojects Pvt Ltd vs BHEL
The High Court of Calcutta has held that the period of limitation will only begin to run when the talks of amicable settlement between the parties fail.
The bench of Justice Shekhar B. Saraf held that the period of limitation for referring a dispute to arbitration would be calculated from the date of the breaking point i.e., the date of failure of settlement talks, when the parties were trying to amicably settle the dispute.
Case Title: SREI Equipment Finance vs Sadhan Mandal
The High Court of Calcutta has held that an arbitration award passed by an arbitrator who was unilaterally appointed by one of the parties cannot be executed under Section 36 of the A&C Act.
The bench of Justice Shekhar B. Saraf held that a unilaterally appointed award does not carry the privilege of existence in the eyes of the law and is regarded as a nullity, therefore, there is nothing to execute in an enforcement petition.
Case Title: Blue Star Limited vs Rahul Saraf
The High Court of Calcutta has held that a clause in an agreement that merely provides for a possibility of arbitration is not a binding arbitration agreement.
The bench of Justice Shekhar B. Saraf held that a clause which provides for resolution of dispute either by way of litigation or arbitration cannot be held to be a binding arbitration agreement as the clause makes arbitration a possibility which may unravel itself, if and only if the parties choose to opt for it, post occurrence of disputes.
The Court also reiterated that nomenclature of a clause is irrelevant and mere use of words like 'arbitration' would not make any clause a valid arbitration agreement.
Case Title: Homevista Décor & Furnishing Pvt Ltd. vs Connect Residuary Pvt Ltd.
The High Court of Calcutta has held that the venue would not become the seat of the arbitration when the agreement confers exclusive jurisdiction on the Court in a different place.
The bench of Justice Shekhar B. Saraf held that presence of a clause which confers exclusive jurisdiction upon a Court in a place other than the venue of arbitration is a 'Contrary Indicia' that prevents the venue of arbitration from becoming the seat.
Case Title: Chandan Chatterjee and others vs Gita Sundararaman and others
The Calcutta High Court has recently held that application under Section 11 of the Arbitration and Conciliation Act, 1996 ought not to be dismissed on technical and/or procedural grounds. The court further observed that the requirement under the rules of procedure to file original arbitration agreement or certified copy thereof may be waived by the Court where the arbitration agreement is admitted. The court thus allowed the application under Section 11 and an Arbitrator was appointed.
Case Title: Blue Star Limited vs Rahul Saraf
While holding non-existence of an arbitration agreement between the parties, the Calcutta High Court recently held that an arbitration agreement may be couched in various modes and forms, however, mere mentioning of the term 'arbitration' or 'arbitrator' in a heading or existence of these terms in a scattered manner in clauses of agreements between parties do not aggregate to being an arbitration agreement.
Case Title: Nemai Chandra Roy Karmakar alias Nemai Roy vs Sarada Construction
The Calcutta High Court has ruled that it is the duty of the defendant to file the application under Section 8 of the Arbitration and Conciliation Act, 1996 seeking arbitral reference, before filing the first statement in a suit. However, the court remarked that filing of a Section 8 application along with the written statement cannot lead to any presumption that the defendant has waived its right of referring the dispute for arbitration.
The bench of Justice Bibhas Ranjan De further held that a document which is not duly stamped, or being compulsorily registerable is not registered, cannot be acted upon by the Court.
Case Title: M.D. Creations & Others vs Ashok Kumar Gupta
The Calcutta High Court has reiterated that the remedy under Article 227 of the Constitution of India against the order of the Arbitral Tribunal rejecting the challenge to its jurisdiction under Section 16 of the Arbitration and Conciliation Act, 1996 (A&C Act), can be invoked only on ground of the Arbitrator's patent lack in inherent jurisdiction, or exceptional circumstances, or 'bad faith' on part of the other party.
Case Title: Orissa Metaliks Pvt. Ltd. vs SBW Electro Mechanics Import Export Corporation
The High Court of Calcutta has held that venue would be the seat of arbitration when the agreement between the parties contains no significant contrary indicia.
The bench of Justice Krishna Rao also held that merely because the arbitration agreement does not clearly provide for the law governing the arbitration, it would not make the agreement ambiguous, vague or uncertain so to allow refusal of reference to arbitration under Section 45 of the Act.
The Court held that judicial interference under Section 45 is not permitted, on grounds of agreement being null and void, inoperative or incapable of being performed arising out of objection regarding ambiguity as to the applicable law, as long as the intention of the parties to refer the dispute to arbitration is clear.
Case Title: Essar Oil and Gas Exploration and Production Ltd vs Gargi Travels Pvt Ltd
The Calcutta High Court has held that a prior reference to the Facilitation Council under Section 18(1) of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act), which is still at the stage of conciliation, does not debar the Court from passing an order under Section 11 of the Arbitration and Conciliation Act, 1996 (A&C Act) for appointment of arbitrator on the basis of an independent arbitration clause between the parties.
The court ruled that the bar contemplated under Section 24 of the MSMED Act only comes into operation if and when there is anything inconsistent between Sections 15 to 23 of the MSMED Act and any other law for the time being in force. The bench of Justice Sabyasachi Bhattacharyya remarked that there is no inconsistency per se between Section 11 of the A&C Act and the reference to conciliation under Section 18(1) and (2) of the MSMED Act, to attract the rigour of Section 24.
Case Title: West Bengal Housing Board vs Abhisek Construction
The High Court of Calcutta has held that Section 12(5) of the A&C Act, which provides for ineligibility of a person to act as an arbitrator whose appointment falls under any categories mentioned under the Seventh Schedule to the Act, would not apply to an arbitration that commenced before the 2015 Amendment.
The bench of Justice Shekhar B. Saraf held that the 2015 Amendment that added Section 12(5) to the A&C Act would not retrospectively apply to arbitration proceedings that commenced before the Amendment became operative.
Case Title: Bharat Vanijya Eastern Private Limited vs State of West Bengal
The Calcutta High Court has ruled that once the court has disposed of a civil suit and referred the parties to arbitration in an application filed by it under Section 89 of the Code of Civil Procedure, 1908 (CPC), and has appointed an arbitrator with the written consent of both the parties, the suit cannot be revived.
Case Title: East India Minerals Limited vs The Orissa Mineral Development Company Limited
The Calcutta High Court has held that once the arbitral proceedings have been commenced pursuant to reference under Section 21 of the Arbitration and Conciliation Act, 1996, any delay in the conclusion/resumption of such proceedings would not wipe out the arbitral reference.
The bench of Justice Shekhar B. Saraf held that arbitral proceedings cannot be rendered inoperative for the reason that there was some delay in the conclusion of the proceedings or that the proceedings were stalled and its resumption took a long time.
Case Title: State of West Bengal vs Rajpath Contractors and Engineers Limited
The High Court of Calcutta has invoked its powers under Article 133(1)(a) r/w Article 134A of the Constitution to allow the aggrieved party to directly appeal against its judgment to the Supreme Court on the ground that the case involves a substantial question of law of general importance.
The bench of Justice Shekhar B. Saraf was dealing with a peculiar situation wherein the application filed under Section 34 of the A&C Act was rendered barred in law for the reason that the entire 30 days grace period provided under proviso to Section 34(3) coincided with the Court holidays.
Case Title: Ugro Capital Limited vs Raj Drug Agency
The Calcutta High Court has held that mere allegations of fraud inter-se the respondents would not make a dispute non-arbitrable. The bench of Justice Shekhar B. Saraf held that merely because the respondents inter-se dispute the validity of the agreement containing arbitration clause and also their signature on it, it does not make the dispute non-arbitrable. It further held that mere possibility or existence of criminal proceedings arising out of the same facts would not put the dispute beyond the scope of arbitration.
Case: Sarat Chatterjee and Co. (VSP) Private Limited v Sri Munisubrata Agri International Limited (Formerly known as LMJ International Ltd.) and Anr.
The Calcutta High Court has recently held that the security furnished by an award-debtor for stay of an arbitral award must be “clean, unblemished and with good exchange value.”
Sarat Chatterjee & Co. (“applicants”) had argued that that an earlier division-bench judgement of 2015, had already secured 10,000 metric tonnes of Coke equating to more than the total security value of the award of Rs 18.21 crores in favour of the Munisubrata (“respondents”), and that the Court could now affect the sale of the aforesaid coke, in lieu of the security payable.
In refuting the arguments of the applicants, while expressing its insecurity about the security proposed by them, a single-bench of Justice Moushumi Bhattacharya held:
“The Court is empowered to impose conditions on the award-debtor who seeks stay of an Award and must look to the provisions of the CPC for taking recourse to the principles for grant of stay of a decree or order. The Court must simply ensure that the security offered by the award-debtor has good currency value and is not an empty reassurance given by the award-debtor on a speculated value of unsold goods. The limited protection by the Division Bench for sale of the 10,000 MTs of Met Coke in 2015 cannot be resurrected after years to urge that the award-holder stands secured to the extent of the projected sale value of the goods amounting to Rs. 45 crores. Besides the uncertainties listed above, the 10,000 MTs of Met Coke has admittedly not been sold till date and even the sale was mired in litigation.”
Case Title: Rohan Builders (India) Pvt Ltd vs Berger Paints India Ltd
The Calcutta High Court has recently held that the mandate of an arbitral tribunal is held to be terminated under Section 29A of the Arbitration & Conciliation Act, 1996, (“1996 Act”), unless the same is extended during its subsistence, in the absence of which, an arbitrator would become de jure inadmissible.
Case Title: Sarat Chatterjee and Co. (VSP) Pvt Ltd vs Sri Munisubrata Agri International Ltd and Anr.
The Calcutta High Court has recently held that the security furnished by an award-debtor for stay of an arbitral award must be “clean, unblemished and with good exchange value.”
Case: Reliance Infrastructure Ltd. v DVC
Case No: AP 428 OF 2023
The Calcutta High Court has recently admitted appeals against an order which partially upheld an arbitral award in favour of Reliance Infrastructure Limited ("RIL") against Damodar Valley Corporation ("DVC").
A division bench of Justice IP Mukherji and Justice Biswaroop Chowdhury admitted appeals preferred by both DVC and RIL, against the judgement of a single judge which had partially upheld the validity of the impugned award, and had directed the DVC to furnish the same to RIL, in the matter of construction of thermal power plants in Raghunathpur.
Case: Manish Todi vs Pawan Agarwal
Citation: 2023 LiveLaw (Cal) 341
The Calcutta High Court has recently held that Section 43(4) of the Arbitration & Conciliation Act, 1996, (1996 Act) must defer to the provisions of the Limitation Act and that the period of limitation cannot be extended to create a new window after the expiry of the limitation.
In dismissing a plea for appointment of an arbitrator under Section 11 of the Act as time-barred, a single bench of Justice Moushumi Bhattacharya held:
Section 43(4), simply put, excludes the time from commencement of arbitration to the date of setting aside of the arbitral award...the petitioner's recourse to section 43(4) of the 1996 Act, even if applied to the facts, does not come to the petitioner's rescue since the petitioner would lag behind the limitation period by 4 years 3 months. The question of limitation must also be decided on the underlying principles of the Limitation Act and discounting the existence of an arbitration clause.
Delhi High Court
Case Title: U.P. Jal Vidyut Nigam Ltd v. C.G. Power & Industrial Solution Ltd
Citation: 2023 LiveLaw (Del) 1297
The Delhi High Court has ruled that the application of Section 14 of the Limitation Act is not available to a petitioner who, through lack of diligence, allowed its Section 34 petition under the Arbitration and Conciliation Act to be dismissed twice for non-prosecution.
The bench of Justices Rajiv Shadkher and Tara Vitasta Ganju held that the fact that a petition was dismissed in default on two occasions, shows complete lack of due diligence in its prosecution.
The Court held that benefit of Section 14 of the Limitation Act, which exempt a period covered by litigious activity and protects a litigant against the bar of limitation when a proceeding is dismissed on account of a technical defect instead of being decided on merits, would not be extended to a party that fails to diligently pursue a matter.
Case Title: IRCON International vs. Pioneer Fabricators
The High Court of Delhi has held that the location of the Facilitation Council administering arbitration under Section 18 of the MSMED Act, 2006 would remain the 'Venue' of arbitration when the parties have conferred exclusive jurisdiction on a Court situated in a different place.
The bench of Justices V. Kameshwar Rao and Anoop Jairam Bhambhani held that by virtue of the provisions of the MSMED Act, only the procedure of constitution of the Arbitral Tribunal is obliterated and the same does not eclipse the agreement between the parties of foisting exclusive jurisdiction on a particular Court.
The Court disagreed with the view taken by a single bench in Ahluwalia Contracts v. Ozone Research, 2023 LiveLaw (Del) 114 wherein the Court had held that the location of the Facilitation Council would be the seat of arbitration despite the agreement between the parties conferring exclusive jurisdiction on a court in a different place.
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.
Case Title: Goyal Mg Gases Pvt Ltd vs. Panama Infrastructure Developers Pvt Ltd & Ors
The Delhi High Court has reiterated that a party who is a non-signatory to the arbitration agreement, can be impleaded as a necessary party in the arbitration proceedings.
The bench of Justices Najmi Waziri and Sudhir Kumar Jain further ruled that the Arbitral Tribunal's order rejecting the application for impleadment of parties in the arbitral proceedings, does not constitute an 'interim award' under the Arbitration and Conciliation Act, 1996 (A&C Act), since it does not decide any substantive question of law or deal with the merits of the case.
Case Title: M/s Promax Power Ltd vs M/s Tahal Consulting Engineers India Pvt Ltd
The Delhi High Court has ruled that though the power to pass an attachment order before an award is rendered by the Arbitral Tribunal may not have been specifically set out in Sections 9 and 17 of the Arbitration and Conciliation Act, 1996 (A&C Act), however, such an order could be made if the circumstances so warrant.
However, the bench of Justice Yashwant Varma remarked that the said power cannot be invoked merely because the claimant is found to have a just or valid claim upon a prima facie evaluation. It would also be obligatory upon the claimant to establish that the defendant before the Tribunal is indulging in activities aimed at dissipation of assets or is seeking to remove the assets with an intent to defeat the arbitral award that may be ultimately passed. The said twin test must be satisfied before such an attachment order is justifiably made, the Court said.
Case Title: Tehri Hydro Development Corporation India Limited vs M/s C. E. C. Limited
The Delhi High Court has reiterated that the agreement between the parties has primacy over the powers of the Arbitral Tribunal to grant pre-award interest under Section 31(7)(a) of the Arbitration and Conciliation Act, 1996 (A&C Act). The bench of Justice Chandra Dhari Singh held that since the Agreement between the parties specifically provided that no interest shall be granted on the accrued amount under the contract, the same took away the power of the Arbitrator to deviate and grant his own rate of interest.
Noting that the Arbitral Tribunal is a creature of a contract, the court remarked that since the Agreement between the parties was the “birth-giver”, it should be held at a higher stature when it concerns an issue that has been pre-decided and mutually agreed between the parties.
Case Title: Daiichi Sankyo Company Limited vs Malvinder Mohan Singh and Ors.
The Delhi High Court has allowed Daiichi Sankyo to withdraw over Rs. 20.5 crores lying with the Registrar General of the High Court, which was transmitted pursuant to the Supreme Court's 2022 order in the contempt proceedings initiated against the directors of Indiabulls Housing Finance Limited (IHFL) and Indiabulls Ventures Limited (IVL) for flouting the Supreme Court's restraint orders in relation to the shareholding of Fortis Healthcare Holdings Private Limited (FHHPL) in Fortis Healthcare Limited (FHL).
The contempt proceedings had arisen out of the application filed by Daiichi in the execution petition pertaining to a 2016 foreign arbitral award passed in its favour in the arbitral proceedings initiated against the respondents, including the former promoters of FHL- Malvinder and Shivinder Mohan Singh. The award debtors were jointly and severally held liable to pay to Daiichi a sum aggregating to more than Rs. 4000 crores.
Case Title: Sanjay Mehra vs Sharad Mehra & Ors.
The Delhi High Court has ruled that once there is an arbitration agreement governing the parties, the matter must be referred for arbitration unless there is a “chalk and cheese” case of non-arbitrability.
The bench of Justice Jyoti Singh rejected the contention that since the Sale Deed executed subsequent to the Memorandum of Family Settlement (MOFS) exclusively conferred jurisdiction to courts, the parties cannot be referred to arbitration. The court ruled that since the Sale Deed was executed in furtherance of the MOFS, the two agreements were linked and inseparable. Thus, arbitration was the intended and consciously chosen forum for dispute resolution between the parties, with respect to the alleged breach of the terms of the MOFS.
Case Title: Department of Transport, GNCTD vs Star Bus Services Pvt Ltd
The Delhi High Court has ruled that an arbitral award passed after an inordinate, substantial and unexplained delay would be “contrary to justice and would defeat justice”. Consequently, the same would also be in conflict with the public policy of India.
The bench of Justice Chandra Dhari Singh said that a substantial delay in making the award cannot be a regular phenomenon and that the Arbitrator must use reasonable despatch in conducting the proceedings and making an award. He further observed that the question whether the delay in pronouncement of the arbitral award places it in conflict with the public policy of India, must be construed in the facts of each case.
Case Title: S.S. Con-Build Pvt Ltd vs Delhi Development Authority
The Delhi High Court has ruled that the disputes relating to determination of a lease or the arrears of rent payable in respect of public premises, are questions statutorily mandated to be determined exclusively by the Estate Officer under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 (PP Act). Thus, the same are non-arbitrable.
The bench of Justice Yashwant Varma observed that the PP Act was enacted for the purpose of setting up a speedy machinery for eviction of persons found to be in unauthorized occupation of public premises. Further, Section 15 of the PP Act ousts the jurisdiction of courts in respect of eviction of persons from public premises and in relation to other connected aspects.
The court remarked that though the Estate Officer under the PP Act is not entitled to go into questions of competing ownership, all other issues of determination which relate to the occupation of public premises and questions incidental to it, would clearly fall within the exclusive jurisdiction of the Estate Officer. Thus, the same are non-arbitrable.
Case Title: Radnik Exports vs Supertech Realtors Pvt Ltd
The Delhi High Court has held that an issue of full and final settlement of dispute between the parties will be a question of fact which has to be decided by the arbitrator.
The bench of Justice Navin Chawla held that the Court while exercising powers under Section 11 of the Arbitration and Conciliation Act, 1996 cannot determine a disputed question of fact as its jurisdiction is confined to a prima facie conclusion of the existence of the arbitration agreement.
Case Title: Union of India vs Reliance Industries Limited & Ors.
The Delhi High Court bench comprising Justice Anup Jairam Bhambhani has upheld the 2018 arbitral award passed in favour of Reliance Industries Limited (RIL) in an international commercial arbitration arising from a dispute between the conglomerate and the Ministry of Petroleum & Natural Gas, Government of India, under a 'Production Sharing Contract' (PSC) executed in 2000, involving the exploration and extraction of natural gas in the Krishna-Godavari Basin.
The High Court upheld the majority arbitral award passed by a three-member Arbitral Tribunal, which had ruled that Reliance was permitted to extract the migrated gas under the PSC and that the “Public Trust Doctrine” was not contravened.
Case Title: Union of India vs Reliance Industries Limited & Ors.
The Delhi High Court bench comprising Justice Anup Jairam Bhambhani has upheld the 2018 arbitral award passed in favour of Reliance Industries Limited (RIL) in an international commercial arbitration arising from a dispute between the conglomerate and the Ministry of Petroleum & Natural Gas, Government of India, under a 'Production Sharing Contract' (PSC) executed in 2000, involving the exploration and extraction of natural gas in the Krishna-Godavari Basin.
The High Court upheld the majority arbitral award passed by a three-member Arbitral Tribunal, which had ruled that Reliance was permitted to extract the migrated gas under the PSC and that the “Public Trust Doctrine” was not contravened.
Case Title: Fedders Electric & Engineering vs Srishthi Constructions
The Delhi High Court has held that the Court while exercising powers under Section 9(3) of the A&C Act cannot examine the allegations of fraud or forgery when the arbitral tribunal is already in place and seized of the matter. The bench of Justice Chandra Dhari Singh held that once the arbitral tribunal has been constituted, the Court shall not entertain any application under Section 9 except in cases of exceptional circumstances in which the remedy before the tribunal would not be efficacious.
Case Title: M/s Vindhya Vasini Construction Co vs M/s Bharat Heavy Electricals Ltd
The Delhi High Court has ruled where the Arbitration Agreement unambiguously provides that in case the stipulated person cannot act as an Arbitrator, the dispute is not to be referred to Arbitration at all, the same reflected the conditional acceptance of Arbitration by the party.
The bench of Justice Navin Chawla further remarked that it cannot be said that the said condition stipulated in the subsequent part of the Arbitration Agreement is severable, in view of the express provision contained in the Agreement regarding its non-enforceability.
Case Title: Roadway Solutions India Infra Limited vs National Highway Authority of India
The Delhi High Court has ruled that in view of Sections 20A and 41(ha) of the Specific Relief Act, 1963, the courts should grant no injunction relating to infrastructure projects where delay may be caused by such an injunction.
The bench of Justice Chandra Dhari Singh remarked that the role of courts is to interfere to the minimum extent so that public work projects are not impeded or stalled.
Reasons For Bias Do Not Fall Under VII Schedule Of A&C Act , Petition Is Abuse Of Process Of Court : Delhi High Court
Case Title: Maj Pankaj Rai vs NIIT Ltd
The Delhi High Court has held that an arbitrator can be removed under Section 14(1)(a) of the Arbitration and Conciliation, 1996 (A&C Act) which provides for de jure ineligibility of arbitrator only if his appointment falls within the grounds mentioned under the VII Schedule.
The bench of Justice Chandra Dhari Singh held that the mandate of the arbitrator on grounds of bias and prejudice cannot be terminated if the test of Schedule VII is not satisfied as the grounds mentioned therein are the only situations that render an arbitrator de jure ineligible to act as arbitrator.
Case Title: Najmus Sehar vs M/s Bombay Marcantile Coop Bank & Ors.
Citation: 2023 LiveLaw (Del) 452
The Delhi High Court has ruled that the limitation period for reference of money dispute between the cooperative society and its defaulting member to arbitration, would be determined as per the provisions of Section 85(1)(a) of the Multi State Co-operative Societies Act, 2002 (MSCS Act), and not as per the Limitation Act, 1963.
The bench of Justices Rajiv Shakdher and Girish Kathpalia observed that Section 85(1)(a) of the MSCS Act clearly provides that in such disputes, the limitation period for referral to arbitration would be computed from the date on which the member dies or ceases to be a member of the society. Further, the same is notwithstanding anything contained in the Limitation Act.
The court remarked that though Section 85(1)(a) of the MSCS Act carves an extraordinary niche out of the general law of limitation, however, the same is in absolute consonance with the basic purpose of creation of the said statute.
Case Title: Shivalaya Construction Co. Pvt Ltd. v. National Insurance Company Ltd
Citation: 2023 LiveLaw (Del) 453
The High Court of Delhi has held that ordinarily the dispute under insurance policy claims would not be referred to arbitration when the reference is limited to quantum of compensation and the insurer disputes liability.
The bench of Justice Prateek Jalan distinguished between a situation wherein the insurer denied the entire liability and where the entire liability is not disputed but only claims under one of the heads is disputed as being outside the scope of reference.
Case Title: M/s Mahesh Construction vs Municipal Corporation of Delhi & Anr.
Citation: 2023 LiveLaw (Del) 459
The Delhi High Court has ruled that a clause in a contract that prohibits payment of interest on delayed payments, does not prohibit the arbitrator from granting interest under Section 31(7) of the Arbitration and Conciliation Act, 1996 (A&C Act). The bench of Justice Manoj Kumar Ohri held that the said stipulation only puts a restriction on the contracting party to claim interest on delayed payments. Since interest is compensatory in nature, the arbitrator's powers are not curtailed by such narrow clauses in the contract.
Case Title: Kal Airways Pvt. Ltd vs M/s SpiceJet Ltd. & Anr.
The Delhi High Court has directed SpiceJet to pay the entire arbitral award of Rs. 380 crore to the airline's former promotor, Kalanithi Maran, and his firm, Kal Airways Pvt. Ltd, in an execution petition filed by Maran seeking enforcement of a 2018 arbitral award passed in his favour.
The court has also directed the airline to file an Affidavit of its assets within the specified time frame.
The bench of Justice Yogesh Khanna passed the order after noting that the airline had failed to comply with the Supreme Court's order dated 13.02.2023. The Apex Court in the said order had directed SpiceJet to pay an amount of Rs.75 crore to Maran within a period of three months, towards its interest liability, pending the disposal of the petition under Section 34 of the Arbitration and Conciliation Act, 1996. In the event of default in compliance with the said order, the top court had held that the entire arbitral award would be executable forthwith.
Case Title: Tomorrow Sales Agency (P) Ltd. vs SBS Holdings, Inc.
The Delhi High Court has ruled that a third-party funder, i.e., a non-signatory to arbitration agreement, who is not a party to the arbitral proceedings or the award, cannot be held liable for the awarded amount merely because it has funded a party in arbitral proceedings.
The court dismissed the contention that third-party funders must be held liable for funding impecunious persons who are unsuccessful in pursuing their claims in the arbitral proceedings. It held that permitting enforcement of an arbitral award against a non-party which has not accepted any such risk, is neither desirable nor permissible.
The court remarked that third-party funders play a vital role in ensuring access to justice. In absence of third-party funding, a person having a valid claim would be unable to pursue the same for recovery of amounts that may be legitimately due, the bench comprising Justices Vibhu Bakhru and Amit Mahajan observed.
The Expression “Any” Member of Arbitral Tribunal Cannot Be Read As “All Members”: Delhi High Court
Case Title: Shapoorji Pallonji and Company Private Limited vs Union of India
The Delhi High Court has ruled that the expression “any member” contained in a clause that lays down a mandatory qualification to be appointed as arbitrator, cannot be read as “all members” of the Arbitral Tribunal. The court said that the phrase “any member” must be interpreted in the context in which it is used.
The bench of Justice Yashwant Varma was dealing with an Arbitration Clause that required that “any member” of the Arbitration Tribunal shall be a “Graduate Engineer with experience in handling public works engineering contracts” at a level “not lower than Chief Engineer (Joint Secretary level of Government of India)”. The said Clause provided that the same was “a mandatory qualification to be appointed as arbitrator”.
Case Title: DAG Private Limited vs Ravi Shankar Institute for Music and Performing Arts
The High Court of Delhi has upheld an arbitral award wherein the arbitrator held that the 'Balance Rent' during the lock-in period is a genuine pre-estimate of loss which requires no further proof of loss.
The bench of Justice V. Kameshwar Rao held that when the contract provides for payment of entire balance rent for the lock-in period if the deed is terminated before the expiry of the lock-in period, it would be a genuine pre-estimate of the losses that the lessor would bear for the early termination of the contract/deed. It held that lock-in period acts an assurance for the lessee that his possession would not be disturbed and it also guarantees the lessor a certain sum of money for a definite period and any breach involves consequences for both the parties.
Case Title: M/s Mahesh Construction vs Municipal Corporation of Delhi & Anr.
The Delhi High Court has ruled that a clause in a contract that prohibits payment of interest on delayed payments, does not prohibit the arbitrator from granting interest under Section 31(7) of the Arbitration and Conciliation Act, 1996 (A&C Act). The bench of Justice Manoj Kumar Ohri held that the said stipulation only puts a restriction on the contracting party to claim interest on delayed payments. Since interest is compensatory in nature, the arbitrator's powers are not curtailed by such narrow clauses in the contract.
The bench concluded that the arbitrator is empowered under Section 31(7) of the A&C Act to grant interest for all the three periods namely, pre-reference, pendente-lite and post award periods, unless the contract prohibits the arbitrator from granting interest under Section 31(7).
Case Title: Shivalaya Construction Co. Pvt Ltd. vs National Insurance Company Ltd
The High Court of Delhi has held that ordinarily the dispute under insurance policy claims would not be referred to arbitration when the reference is limited to quantum of compensation and the insurer disputes liability.
The bench of Justice Prateek Jalan distinguished between a situation wherein the insurer denied the entire liability and where the entire liability is not disputed but only claims under one of the heads is disputed as being outside the scope of reference.
The Court held that there cannot be any arbitration in the first scenario, however, the second issue would not put the dispute beyond the ambit of the arbitration clause and it would be proper for the respondent to raise such objections before the arbitrator.
Case Title: Najmus Sehar vs M/s Bombay Marcantile Coop Bank & Ors.
The Delhi High Court has ruled that the limitation period for reference of money dispute between the cooperative society and its defaulting member to arbitration, would be determined as per the provisions of Section 85(1)(a) of the Multi State Co-operative Societies Act, 2002 (MSCS Act), and not as per the Limitation Act, 1963.
The bench of Justices Rajiv Shakdher and Girish Kathpalia observed that Section 85(1)(a) of the MSCS Act clearly provides that in such disputes, the limitation period for referral to arbitration would be computed from the date on which the member dies or ceases to be a member of the society. Further, the same is notwithstanding anything contained in the Limitation Act.
Case Title: Man Industries (India) Limited vs Indian Oil Corporation Limited
The Delhi High Court has ruled that the plea that the Arbitrator is de jure ineligible to act as an Arbitrator is a plea of lack of jurisdiction. This plea can be allowed to be raised as an additional ground in a petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act), by way of an amendment and even without the same, the court has held.
The bench of Justice Navin Chawla made the observation while allowing the amendment application seeking to add an additional ground to challenge the arbitral award, even though the said application was filed much beyond the limitation period prescribed in Section 34(3) of the A&C Act. In its amendment application, the petitioner sought to raise the additional ground that the Arbitrator was de jure ineligible to act as such in view of Section 12(5) of the A&C Act.
Case Title: Indian Railway Catering & Tourism Corp. Ltd. vs M/s Goel & Goel
The High Court of Delhi has held that IRCTC is a State under Article 12 of the Constitution of India and is bound by its affidavit before any court of law and it cannot file contrary affidavit before the arbitral tribunal to defeat a claim of the other party in arbitration.
Arbitration Clause In A Contract Perishes With Its Novation: Delhi High Court
Case Title: B.L. Kashyap and Sons Ltd vs MIST Avenue Pvt Ltd
The High Court of Delhi has held that an arbitration clause contained in an agreement would perish with its novation if the novated agreement does not contain any arbitration clause.
Case Title: Unique Décor (India) Pvt Ltd. vs Synchronized Supply Systems Ltd.
The High Court of Delhi has held that if the parties have, by written communications, extended the period of agreement, the arbitration clause that was a part of the agreement continues to be operative.
The bench of Justices Vibhu Bakhru and Amit Mahajan has distinguished between the situations wherein an arbitration clause expires with the novation of the main agreement and when the arbitration clause continues to be operative when the original agreement is not superseded by any other agreement but extended by the parties through written communications.
A Consent Foreign Award Is Enforceable Under The New York Convention: Delhi High Court
Case Title: Nuovopignone International SRL vs Cargo Motors Private Limited & Anr.
The High Court of Delhi has held that a consent foreign award is enforceable under the New York Convention/Part II of the A&C Act, 1996.
The bench of Justice Yashwant Varma rejected the argument that consent arbitration award do not fall within the rubric of New York Convention. The Court rejected the argument that an award to be recognized under the Convention must be one based on adjudication as arbitration presupposes adjudication by the tribunal and any award incorporating the settlement agreement entered into by the parties during the pendency of the proceedings would not amount to an award.
Case Title: NHAI vs Suresh Chandra
The Delhi High Court has held that 'partial reduction in traffic' due to a remote event of flood is not a force majeure event.
The bench of Justice Manoj Kumar Ohri held that force majeure event contemplates a complete blockade of the road due to the floods and not mere reduction of the traffic on a particular road.
Case Title: MMTC Limited vs Aust Grain Exports Pty. Ltd
The Delhi High Court has reiterated that procedural irregularity cannot be a ground to set aside the Arbitral Award unless such irregularity goes to the root of the matter and shocks the conscience of the Court, thus making the Award illegal.
The bench of Justice Chandra Dhari Singh made the observation while dismissing a petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act), challenging the majority Arbitral Award passed against the petitioner, MMTC Ltd.
Case Title: CASA2 STAYS PVT LTD v. BBH COMMUNICATIONS INDIA PVT LTD
The High Court of Delhi has held that the principles of natural justice are not violated when the opportunity to make oral submissions on an issue was granted but not availed by the party. It held that no party has the absolute right to insist on his convenience in every respect.
The bench of Justices Suresh Kumar Kait and Neena Bansal Krishna held that an Arbitrator has a right to manage the proceedings and to give directions to the parties to be present on a particular date, time and place and this would be sufficient compliance of the principles of natural justice.
The Court remarked that when the dispute between the parties was based on documents, merely because the oral arguments were not addressed by a party, does not lead to inevitable denial of principles of natural justice, unless it is shown that a pertinent aspect was left unconsidered.
Case Title: Amit Guglani v. L&T Housing Finance
The Delhi High Court has held that Section 21 notice is a mandatory pre-requisite for invoking jurisdiction of the under Section 21 of the A&C Act,
The bench of Justice Jyoti Singh held that a petition under Section 11 of the Act can only be filed when the parties fail to appoint the arbitrator in terms of the procedure agreed upon by the parties and Section 21 is an important element of this procedure as it provides for the request to be made to the other party for reference of the dispute to Arbitration, therefore, without a request there cannot be a failure which a sine qua non for Section 11(6) to come into play.
The Court further clarified that even when the agreement provides for unilateral appointment of the arbitrator, it doesn't exempt a party from adhering to the notice requirement stated in Section 21.
Case Title: Amit Guglani v. L&T Housing Finance
The Delhi High Court has held that when there are two interconnected agreements with conflicting arbitration clauses, the arbitration clause contained in the main/umbrella agreement should be given primacy over the other clause.
The bench of Justice Jyoti Singh held that when disputes under two connected agreements had different Arbitration Clauses, the disputes should be resolved under the main or umbrella agreement and the seat of arbitration should be determined as per the clause contained in the main agreement.
The Court also reiterated that notice under Section 21 is a mandatory pre-requisite for invoking the jurisdiction of the Court under Section 11 of the Act.
Case Title: Liberty Footwear Company v. Liberty Shoes Limited
The Delhi High Court has decided that if a petition under Section 9 is submitted to any court other than the one where the initial application was made, Section 42 of the A&C Act will prevent it. This section grants exclusive jurisdiction to the first court for arbitration-related cases. First court is basically the court where an arbitration petition is filed at the first instance. Section 42 says that if I have filed an application before the Delhi High Court, any other application that I file before any other court say Calcutta, would be barred by limitation.
A bench of Justice Jyoti Singh noted that allegations involving fraud, collusion, or malafides in the filing of the first petition can only be addressed by the court where the initial petition was filed. The second court isn't authorized to investigate such matters.
The court also determined that if the first court concludes that the first proceedings were tainted by fraud or collusion or lacks jurisdiction over the case, Section 42 wouldn't apply. In such cases, parties can approach the appropriate court without being restricted by Section 42.
Case Title: DD Global Capital vs SE Investment Ltd
The High Court of Delhi has held that when earlier loan agreement liabilities are transferred through an agreement, the subsequent loan agreements' arbitration clauses become binding on the parties.
Case Title: JRA Infratech vs Engineering Projects (India) Ltd
The High Court of Delhi has reiterated that a question as to whether the arbitration agreement is vitiated by fraud should be left to the wisdom of the arbitrator who will be free to decide the same on the basis of the evidence and the Court exercising power under Section 11 of the A&C Act should not get into such a finding.
Case Title: Vivek Khanna vs OYO Apartments Investment
The High Court of Delhi has held that the sum agreed by the parties as liquidated damages would not dispense with the requirement of proof by the party claiming liquidated damages that it actually suffered a loss. The bench of Justice Manoj Kumar Ohri held that a sum ascertained as liquidated damages in the contract is not in the nature of penalty, but is a pre-estimate of loss estimated by parties to be likely suffered in the event of breach of contract.
Case Title: M/s BCC-Monalisha (JV) vs Container Corporation of India
The High Court of Delhi has held that claims of a party cannot be referred to arbitration when the requirement to mandatorily notify such claims with the General Manger (GM) was not followed.
Case Title: M/s BCC-Monalisha (JV) vs Container Corporation of India
The High Court of Delhi has held that in cases where the contract stipulates arbitration solely in instances where the cumulative value of claims is below 20% of the contract value, the court would abstain from directing the parties towards arbitration if the claims surpass this specified cumulative value threshold.
Case Title: Usha Bansal v. Genesis Finance Co. Ltd
Citation: 2023 LiveLaw (Del) 1299
The High Court of Delhi has held that a bare plea of fraud, coercion or duress cannot justify challenge to the Settlement Agreement under Section 34 of the A&C Act.
The bench of Justice Sachin Datta has held that a bare plea of fraud, coercion or duress cannot justify challenge to the Settlement Agreement under Section 34 of the A&C Act.
The Court held that once a party has voluntarily participated in the mediation proceedings without any protest or demur resulting in the settlement agreement, it cannot, subsequently, be allowed to challenge the settlement agreed on grounds of fraud/coercion.
Case Title: Viceroy Engineering v. Smiths Detection Veecon Systems Pvt Ltd, OMP(COMM) 302 of 2019
Citation: 2023 LiveLaw (Del) 1262
The High Court of Delhi has held that technical deficiencies, including pagination and affidavit attestation, do not invalidate petitions under Section 34 of the A&C Act.
The bench of Justice Manoj Kumar Ohri held that every objection in the filing would not render a petition non-est and it is only the defects that goes to the root of the matter that would make the filing non-est.
Case Title: Umaxe Projects Pvt Ltd v. AIR Force Naval Housing Board, OMP(COMM) 469/2023
Citation: 2023 LiveLaw (Del) 1261
The High Court of Delhi has held that mere participation of a party in the arbitration proceeding cannot be deemed to be a waiver under Section 12(5) of the A&C Act.
The bench of Justice Manoj Kumar Ohri held that filing an application under Section 29(A) does not amount to an express waiver in writing of the right to challenge the arbitrator's ineligibility under Section 12(5). The decision clarified that mere participation in arbitral proceedings, without an overt act indicating awareness and conscious waiver of the right to object, does not suffice.
Case Title: J.S.R. Constructions v. NHAI, ARB.P. 753 of 2023
Citation: 2023 LiveLaw (Del) 1250
The High Court of Delhi has held that a party cannot unilaterally appoint the presiding arbitrator upon the failure of the nominee arbitrators to reach a consensus.
The bench of Justice Sachin Datta held that a procedure, allowing the Director General of a party to appoint the presiding arbitrator upon the failure of the nominee arbitrators to mutually appoint the presiding arbitrator, is invalid. It held that a person ineligible to act as an arbitrator should not have any role in appointing one. The procedure lacked effective counterbalancing, favouring one party in the constitution of the arbitral tribunal.
Case Title: Anil Kumar Gupta v. MCD, FAO(OS) (COMM) 315 of 2019.
The High Court of Delhi has held that the Court exercising powers under Section 34 of the A&C Act cannot reduce the rate of the interest awarded by the arbitral tribunal as the same amounts to modification of the arbitral award.
The bench of Justices Yashwant Varma and Ravinder Dudeja held that the modulation of the terms of the award by reducing the rate of interest awarded by the arbitral tribunal is impermissible within the limited power conferred on the Court under Section 34 of the A&C Act.
Case Title: S.K. Engineering & Construction Company India, ARB. P. 737 of 2023
Citation: 2023 LiveLaw (Del) 1215
The High Court of Delhi has held that the Court exercising powers under Section 11 of the A&C Act can sever an illegal/offending portion of the arbitration clause.
The bench of Justice Sachin Datta held that an arbitration clause does not become illegal by mere illegality of the appointment procedure provided therein, therefore, the Court u/s 11 can sever the illegal portion of the award and refer the dispute to arbitration.
Entire Arbitration Not Invalid By Illegality Of Appointment Procedure: Delhi High Court Reiterates
Case Title: S.K. Engineering & Construction Company India, ARB. P. 737 of 2023
Citation: 2023 LiveLaw (Del) 1217
The High Court of Delhi has held that an arbitration clause does not become illegal by mere illegality of the appointment procedure provided therein.
The bench of Justice Sachin Datta held that the procedure for appointment of an arbitrator is clearly distinct and separable from the agreement to refer disputes to arbitration, even if these are contained in the same arbitration clause.
Case Title: Iqbal Singh v. Naresh Kumar, OMP(MISC.) 15 of 2023
Citation: 2023 LiveLaw (Del) 1223
The High Court of Delhi has extended the time period for the completion of arbitral proceedings, despite observing that there was inordinate delay in the completion of arbitral proceedings, on the ground that the proceedings, though protracted, has reached advance stage.
The bench of Sachin Datta while dealing with an application under Section 29A(4) of the A&C Act, extended the mandate of the arbitral tribunal despite acknowledging the substantial delay and petitioner's laxity by absorbing that the proceedings were at advanced stage and if the mandate is not extended, the entire time consumed would be rendered futile.
Case Title: SAIL v Uniper Global Commodities, OMP(E)(COMM.) 22 of 2023
Citation: 2023 LiveLaw (Del) 1224
The High Court of Delhi has held that the Court exercising powers under Section 27 of the A&C Act cannot form an opinion on the relevancy or the admissibility of the evidence for which the assistance of the Court is sought.
The bench of Justice Sachin Datta held that the role of Court under Section 27 of the A&C Act is not adjudicatory, therefore, the Court would not examine the aspects of relevancy or admissibility of the evidence, rather, it is the duty of the tribunal to examine such aspects before permitting a party to approach the court for its assistance.
Case Title: SAIL v Uniper Global Commodities, OMP(E)(COMM.) 22 of 2023
Citation: 2023 LiveLaw (Del) 1224
In a recent ruling, the Delhi High Court emphasized that when an arbitral tribunal is presented with a party's application under Section 27 of the Arbitration and Conciliation Act (A&C Act), seeking permission to seek the court's assistance in obtaining evidence, it is imperative for the tribunal to form a prima facie view on the relevance and admissibility of the evidence.
Justice Sachin Datta, presiding over the case, highlighted that the tribunal, in the exercise of its jurisdiction under Section 27 of the Act, should avoid a mechanical approach. Instead, it is obligated to carefully scrutinize, even on a prima facie basis, the relevance of the intended witness before granting approval for such an application from any party.
The Court held that, while the Arbitral Tribunal isn't bound by the rules of the Code of Civil Procedure or the Evidence Act, it still has a duty to exercise discretion and form an opinion when permitting witnesses to be examined.
Case Title: N.K. Sharma v. The General Manager Northern Railways, ARB.P. 893 of 2022
Citation: 2023 LiveLaw (Del) 1207
The High Court of Delhi has held that once a party has agreed to constitute an arbitral tribunal, it cannot turn around and resist appointment of arbitrator on the ground of non-fulfilment of pre-arbitral steps.
The bench of Justice Sachin Datta also held that issue of 'excepted matters' requires in-depth examination of the factual matrix, therefore, the same can only be done by the arbitral tribunal and goes beyond the scope of examination permissible under Section 11 of the A&C Act.
A Written-Off Debt Is An Asset, Award Holder Can Enforce At The Location Of Asset: Delhi High Court
Case Title: Taqa India Power Ventures v. NCC Infrastructure Holdings, OMP(EFA)(COMM) 1 of 2018
Citation: 2023 LiveLaw (Del) 1208
The Delhi High Court ruled that a written-off debt constitutes a recoverable asset, affirming the award holder's right to enforce the award at the location of the debt/asset.
The bench of Justice Prateek Jalan held that a debt written off by the award debtor remains a recoverable asset. This pivotal decision solidifies the award holder's entitlement to initiate enforcement proceedings at the location where the debt is owed or the asset is situated, establishing a robust legal precedent in favor of the award holder's enforcement rights.
The court rejected the award debtor's argument that writing off the debt in the award debtor's accounts equates to the legal obliteration of the debt. It held that the writing off of a debt in accounting does not mean the debt becomes unrecoverable or legally extinguished.
Case Title: Taqa India Power Ventures v. NCC Infrastructure Holdings, OMP(EFA)(COMM) 1 of 2018.
The High Court of Delhi has held that the policy concerns which militate against forum shopping in the context of substantive civil proceedings do not apply to enforcement proceedings, where the award holder is entitled to proceed against the assets of the award debtor in any and every jurisdiction in which such assets are located.
The bench of Justice Prateek Jalan held that the award holder's right to elect any court within which assets of the award debtor are available, regardless of their diminished value, does not amount to forum shopping.
Case Title: Sri Ganesh Engineering Works v. Northern Railways, ARB.P 609/2023
Citation: 2023 LiveLaw (Del) 1210
The High Court of Delhi has held that an arbitration clause that confers on a party the right to nominate 2/3rd of arbitral tribunal violates the principles of 'counter-balancing' as sought to be achieved by the Supreme Court in the landmark judgment in Perkins.
The bench of Justice Jyoti Singh held that a party cannot have the right to nominate the majority of the arbitral tribunal and such an exercises casts doubts on the neutrality and impartiality of the arbitral tribunal.
Panel Of Four Arbitrators, All Ex-Employees Of One Party, Not Broad-Based: Delhi High Court
Case Title: Sri Ganesh Engineering Works v. Northern Railways, ARB.P 609/2023
The High Court of Delhi has held that the composition of the panel, limited to a mere four arbitrators, all of whom are former employees of a single party, does not reflect a sufficiently broad-based representation.
Justice Jyoti Singh's bench emphasized that when appointing an arbitral tribunal from a party-maintained panel, it must be not only numerically robust but also diverse. The panel should encompass individuals from various backgrounds, including lawyers, retired judges, engineers, accountants, etc., ensuring a comprehensive representation.
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.
Gauhati High Court:
Case Title: Union of India vs Jyoti Forge and Fabricators
The Gauhati High Court has held that a Court cannot condone the delay in the filing of the petition under Section 34 of the A&C Act beyond 120 days. The bench of Justice Malasri Nandi held that the Court cannot condone the delay beyond the period of limitation provided under Section 34(3) of the Act i.e., 3 months+ 30 days. It held that Section 5 of the Limitation Act does not apply to petition under Section 34(1) of the A&C Act.
Gujarat High Court:
Case Title: Gujarat Mineral Development Corporation Limited vs Morris Samuel Christian
The Gujarat High Court recently allowed the writ petition filed by Gujarat Mineral Development Corporation Limited praying for quashing and setting aside the mandate, constitution and authority of Morris Samuel Christian (respondent no.1) in relation to an Arbitration Case, with a further request to quash and set aside the 'Final Awarding' passed by the respondent.
Case Title: Yashang Navinbhai Patel vs Dilipbhai Prabhubhai Patel
The Gujarat High Court has ruled that once the partnership at will is dissolved, the arbitration clause contained in the partnership deed cannot be invoked to refer the dispute between the partners to arbitration. The bench of Justice Biren Vaishnav was dealing with an arbitration clause which provided for reference of the dispute between the partners with regard to the “dealing of the firm” to arbitration. The court held that the term “dealing” would mean engaging in business and thus, for the dispute to fall within the ambit of the arbitration clause, the firm must be subsisting.
Himachal Pradesh High Court:
Case Title: M/s Sterkem Pharma Private Limited vs Symbiosis Pharmaceuticals Private Limited and Ors.
The Himachal Pradesh High Court has ruled that it is the bounden duty of the Arbitrator appointed by the Facilitation Council under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) to issue signed copies of the arbitral award to the parties irrespective of the fact whether the parties have contested the proceedings or were proceeded ex-parte.
The court has deprecated the practice of the Facilitation Council supplying a copy of the award certified by the Council itself to the concerned parties. The court said that the same is not in consonance with the procedure mandated under Section 31(5) of the Arbitration and Conciliation Act, 1996 (A&C Act) as well as the MSMED Act. It added that the arbitral award is to be made available to the parties by the Arbitrator himself in accordance with the provisions of Section 31(5) of the A&C Act.
Case Title: M/s Pratap Industries Products vs M/s Hindustan Construction Company Ltd
The Himachal Pradesh High Court has directed the District Court, which stayed the execution of an arbitral award in exercise of its power under Micro, Small and Medium Enterprises Development Act, 2006 (MSME Act), to first determine whether Section 19 of the Act was complied with. The provision requires the party challenging the award to make a pre-deposit to the tune of 75% of the award. Justice Joytsna Rewal Dua said the District Court must see whether the pre-deposit amount is actually deposited.
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.
Jammu and Kashmir and Ladakh High Court:
Case Title: Mahant Subash Shah vs Kabir Singh & Anr.
The Jammu and Kashmir and Ladakh High Court has held that no appeal or revision would lie against an order allowing an application for condonation of delay accompanying an application filed under section 34 of the Arbitration and Conciliation Act for setting aside arbitral award.
A bench of Justice Javed Iqbal Wani said the legislature by using expression an appeal shall lie from the orders provided therein "and from no others" in Section 37 (Appealable orders) has taken away the right to appeal against all orders except specified in Section 37 (1) and (2).
Case Title: Union of India vs S.P. Singla Construction Pvt Ltd.
The High Court of Jammu & Kashmir and Ladakh has held that the requirement to refer the dispute to DAB, as per the GCC of FIDIC Contracts, is mandatory and the failure to comply with the provision results in making the dispute non-arbitrable.
The bench of Justice Vinod Chatterji Koul held that when the agreement between the parties provides for reference of claims to DAB as pre-arbitration requirement and also provides for the consequences for the non-compliance, the parties must necessarily follow the agreed procedure and failure would result in the claims becoming non-arbitrable.
Case Title: Brij Mohan Sawney vs Sanjeev Kumar Gupta
The Jammu and Kashmir and Ladakh High Court has clarified that filing of the application under Section 5 of the Jammu and Kashmir Arbitration and Conciliation Act, 1997 cannot be construed as a submission of statement of the substance of the dispute within the meaning of Section 8(1) of the Act to create a legal bar in referring the matter to an arbitrator.
Jharkhand High Court:
Case Title: Central Coalfields Ltd vs. M/s Rajdhani Carriers Pvt Ltd
The Jharkhand High Court has reiterated that the arbitrator derives authority from the contract and thus, the award passed by him in manifest disregard to the terms of the contract would be arbitrary in nature. The bench of Justice Anubha Rawat Choudhary remarked that deliberate departure from the contract amounts not only to manifest disregard of its authority or misconduct on the part of the arbitrator, but it may also tantamount to a malafide action.
The Court, while dealing with an appeal filed under Section 37 of the Arbitration and Conciliation Act, 1996 (A&C Act) by the award debtor, rejected the argument raised by it that the Arbitrator was duty-bound to examine the point of limitation irrespective of any plea having been raised by it before the Arbitral Tribunal.
Karnataka High Court:
Case Title: Jameela vs Sullia Afsa & Others
The Karnataka High Court has made it clear that in a partnership deed that provides for appointment of Arbitrator, the power of Arbitrator to resolve the dispute flows from the clauses of the partnership deed.
Case Title: Town Essentials Pvt Ltd. vs Daily Ninja Delivery Services Pvt Ltd
The Karnataka High Court has held that the non-signatory defendants cannot be exposed to arbitration under Section 8 of the A&C Act by allowing the dispute to be referred to arbitration.
The bench of Justice Sreenivas Harish Kumar held that when the cause of action against all the defendants is stated to be the same, it cannot be bifurcated so to allow arbitration proceedings against few of the defendants and continuation of the suit against the others as it would lead to multiplicity of proceedings and delay in adjudication. It would also increase the cost of litigation and harassment to the parties and on occasions there is possibility of conflicting judgments and orders by two different forums.
Case Title: Town Essentials Pvt. Ltd. v. Daily Ninja Delivery Services Pvt. Ltd, WP No. 15830 of 2022
Citation: 2023 LiveLaw (Kar) 189
The Karnataka High Court has held that the non-signatory defendants cannot be exposed to arbitration under Section 8 of the A&C Act by allowing the dispute to be referred to arbitration.
The bench of Justice Sreenivas Harish Kumar held that when the cause of action against all the defendants is stated to be the same, it cannot be bifurcated so to allow arbitration proceedings against few of the defendants and continuation of the suit against the others as it would lead to multiplicity of proceedings and delay in adjudication. It would also increase the cost of litigation and harassment to the parties and on occasions there is possibility of conflicting judgments and orders by two different forums.
Kerala High Court:
Case Title: M/S Anantham Online Pvt. Ltd. vs Senior Divisional Commercial Manager, Southern Railway, Thiruvananthapuram
The Kerala High Court recently laid down that even if a formal agreement has not been entered into between the parties, where they have bound themselves to certain specified terms and conditions, it cannot be contended that there is no concluded contract between the parties. The court thus accepted the arbitration request and appointed an Arbitrator for resolving the dispute between M/S Anantham Online Pvt. Ltd., and the Senior Divisional Commercial Manager, Southern Railway, regarding the execution of a work contract between the parties for operating the Vehicle Parking Facility at Thiruvananthapuram Central (Main Entry) Railway.
Madras High Court:
Case Title: Prime Store vs Sugam Vanijya Holdings
The Madras High Court has recently held that the provisions for disqualification for appointment as arbitrator under the Seventh Schedule of the Arbitration and Conciliation Act would be applicable to any person, including a retired judge. The court noted that the provisions with respect to ineligibility and disqualification are mandatory and non-derogable.
Case Title: P. Cheran vs M/s Gemini Industries & Imaging Limited
The Madras High Court has ruled that a party is entitled to challenge the appointment of the Arbitrator at any stage, if there is any violation of the provisions of the Arbitration and Conciliation Act, 1996 (A&C Act).
The court remarked that even if the award debtor had participated in the arbitral proceedings or, after having knowledge of the appointment of the sole Arbitrator, had failed to challenge the said appointment in terms of Section 13, the same would not deprive him of the right to challenge the said appointment under Section 34 for violation of the provisions of Section 12(5) of the A&C Act.
The bench of Justice Krishnan Ramasamy held that when the very appointment of the Arbitrator unilaterally, is improper and impermissible by virtue of Section 12(5), the arbitration proceedings are liable to be vitiated from the stage of the appointment of the Arbitrator. Further, a decision by an authority having no jurisdiction is non est in law and its invalidity can be set up whenever it is sought to be acted upon.
Case Title: EDAC Engineering vs Industrial Fans (India) Pvt Ltd
The High Court of Madras has held that once a party has unconditionally accepted the fees fixed by the arbitral tribunal during the arbitral proceeding, it cannot later challenge the fees of the arbitral tribunal by filing a petition under Section 39(2) of the A&C Act.
Case Title: EDAC Engineering vs Industrial Fans (India) Pvt Ltd
The High Court of Madras has held that the moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 does not affect the payment of fees to the arbitrator for the award passed before the moratorium was declared.
Case Title: EDAC Engineering vs Industrial Fans (India) Pvt Ltd
The High Court of Madras has held that the fees to arbitrator has to be treated on parity with the fees of the liquidator and must be given a preferential status in terms of priority of dues.
Meghalaya High Court:
Case Title: Public Works Department vs M/s BSC-CC & JV
The Meghalaya High Court while upholding an arbitral award has ordered the Public Works Department (National Highway) to pay a contractor Rs. 10 lakh over and above the award amount, saying that PWD put the contractor through unnecessary litigation.
The observations were made while hearing a challenge under Section 37 of the Arbitration and Conciliation Act, 1996 to an order dated May 17, 2023 passed by the Commercial Court, Shillong on a plea under Section 34 of the Act challenging an arbitral award rendered on July 27, 2021.
Orissa High Court:
Case Title: Santosh Kumr Acharya vs Ratinakar Swain
The Orissa High Court has set aside the order passed by the Arbitral Tribunal under Section 26 of the Arbitration and Conciliation Act, 1996 (A&C Act), where the Tribunal had directed the appointment of an expert evaluator for evaluating the assets of the counter-claimant in the arbitral proceedings involving money claims.
While noting that the claims and counter claims raised by the parties were simply money claims, the bench of Justice Arindam Sinha held that expanding the scope of the arbitral reference by including evaluation of assets, would expose the petitioner to the risk of an award being passed beyond the four corners of the reference.
The court said that in the event there is an expansion of the scope of reference by the Arbitral Tribunal, there is no provision in Section 26 of the A&C Act to add the same as a ground of challenge under Section 34; thus, rendering the party remediless.
Rajasthan High Court:
Case Title: Aseem Watts vs Union of India
The Rajasthan High Court has held that the place of arbitration does not become the seat of arbitration when the exclusive jurisdiction is conferred on Courts of another place. The bench of Justice Pushpendra Singh Bhati held that where a place is designated merely as a 'venue' and courts of another place have been granted the exclusive jurisdiction, the latter is a clear 'contrary indicia' that prevents the place from becoming the seat of arbitration.
Sikkim High Court:
Case Title: Kiran Devi Chouraria vs Jhumar Mal Singhi & Ors.
The High Court of Sikkim has held that a third party/objector can file a petition under O.XXI R.97 R/W Section 47 of CPC before the Executing Court if it can be shown that the arbitral award in respect of the immovable property is a nullity or obtained by fraud.
Patna High Court:
Case Title: M/s REW Contracts Pvt Ltd vs Bihar State Power Transmission Co. Ltd & Anr
The Patna High Court has ruled that an arbitration agreement executed by a Joint Venture cannot be invoked by the constituents of the said Joint Venture, since they cannot be considered as a party to the arbitration agreement.
While dealing with a petition under Section 11 of the Arbitration and Conciliation Act, 1996 (A&C Act) seeking appointment of arbitrator, the bench of Chief Justice K. Vinod Chandran held that only the Joint Venture, being a separate legal entity and a party to the arbitration agreement, could invoke arbitration and not the petitioner, who was only one of the constituents of the said Joint Venture.
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."
Case Title: V.B. Ramsagar v. Srijay Constructions, Commercial Court Appeal No. 08 of 2017
The High Court of Telangana has upheld an arbitral award passed by a sole arbitrator wherein the arbitrator directed the pulling down/demolition of the subject building after observing that it was no longer capable to have human habitation.
The bench of Chief Justice Alok Aradhe and Justice N. Tukaramji held that the tribunal rightly directed the pulling down of the subject property when the building was not constructed as per the agreement and the construction was stopped in the middle and structures raised are not sound and safe and the life of the constructed building would not be more than two decades. Moreover, no fresh construction licence would be issued on such condition.
Case Title: Hyderabad Metropolitan Development Authority vs Ramky Elsamex Hyderabad Ring Road Limited
The Telangana High Court held that once the tribunal has passed an order terminating the arbitral proceedings under Section 32(2)(c) r/w Section 38 of the A&C Act for non-payment of tribunal fees, the tribunal cannot recall the order and continue the arbitral proceedings.
The bench of Justices P. Naveen Rao and Nagesh Bheempaka held that once the arbitral proceedings are terminated under Section 32(2)(c) of the Act, the tribunal becomes functus officio and it cannot continue with the arbitral proceedings merely on the grounds that the parties did not take the issue of termination seriously and continued with the arbitral proceedings.
Uttarakhand High Court:
Case Title: M/s B.S. Polypack vs M/s Uttaranchal Agro Food Ruler Mills & Anr.
The Uttarakhand High Court has directed the Micro, Small and Medium Enterprises Facilitation Council to organize workshops and seminars to educate its officers, who undertake arbitration proceedings, to equip themselves with the law of Arbitration.
The court passed the said direction while hearing an appeal against the decision of the Commercial Court who had set aside the arbitral award passed by the Facilitation Council in the arbitration proceedings conducted under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act). Upholding the decision of the Commercial Court, the court ruled that the arbitral award was passed in breach of Section 23 and Section 18 of the A&C Act, which provides for grant of equal and full opportunity to each party to present the case.
