Supreme Court Annual Digest 2025: Arbitration And Conciliation Act

Arbitration A non-signatory to an arbitration agreement cannot be permitted to remain present in arbitration proceedings, as it would breach confidentiality and exceed the Court's jurisdiction after appointing an arbitrator - Section 35 of the 1996 Act states that an award binds only parties to the arbitration and those claiming under them - 'Party' is defined by section 2(h) as a party to an arbitration agreement - Permitting a non-signatory to be present in proceedings where the award would not bind them has no legal basis and is 'unknown to law' - Such a direction breaches the confidentiality principle enshrined in Section 42A of the 1996 Act, which requires the arbitrator, arbitral institution and parties to maintain confidentiality. Kamal Gupta v. L.R. Builders Pvt. Ltd; 2025 LiveLaw (SC) 799 : 2025 INSC 975 An agreement between a Port authority and a private entity cannot override the provisions of the law, specifically the Major Port Trusts Act, 1963 - When a tariff revision dispute arises, and parties fail to agree, a competent authority must resolve the issue - An arbitrator's award is contrary to basic legal principles if it reads clauses of an agreement in isolation - Entire agreement must be read as a whole. [Para 26] Paradip Port Authority v. Paradeep Phosphates Ltd., 2025 LiveLaw (SC) 802 : 2025 INSC 971 : AIR 2025 SC 3835 Agreed interest rate can't be later challenged as exorbitant - Arbitrator cannot override contractual rate. BPL Ltd. v. Morgan Securities and Credits, 2025 LiveLaw (SC) 1169 : 2025 INSC 1380 Arbitral Award – Execution - Allegation of Fraud/Collusion (Fraud on Corporation) – Held, the maxim "fraud unravels everything" is acknowledged, an execution petition cannot be kept in abeyance based on mere allegations of fraud or collusion by the judgment-debtor's own officials, especially after the arbitral award has attained finality up to the Supreme Court. Entertaining such objections under Section 47, without a finding of fraud or even a prima facie case established, would be an abuse of process akin to a retrial, which is contrary to the object of Section 47. Courts must exercise great caution and circumspection before entertaining such allegations - Appeal dismissed. [Relied on Lazarus Estates Ltd. v. Beasley (1956) 1 All ER 341; Electrosteel Steel Limited v. ISPAT Carrier Private Limited 2025 LiveLaw SC 491; Para 34-35, 95-99] MMTC Ltd. v. Anglo American Metallurgical Coal Pvt. Ltd., 2025 LiveLaw (SC) 1060 : 2025 INSC 1279 Arbitral Award - Unexplained Delay – Validity – Held, an inordinate and unexplained delay in the pronouncement of an arbitral award (in the pre-Section 29A era) is not, per se, a ground for setting aside an award under Section 34. However, where the negative effect of such delay is explicit and adversely reflects on the findings in the award, it can be construed to be in conflict with the public policy of India or vitiated by patent illegality - Section 14(2) not mandatory pre-condition: An aggrieved party is not required to invoke the remedy under Section 14(2) of the Act (termination of the arbitrator's mandate) as a condition precedent to laying a challenge to a delayed and tainted award under Section 34, as both provisions operate independently. [Para 19, 20, 48, 63] Lancor Holdings v. Prem Kumar Menon, 2025 LiveLaw (SC) 1056 : 2025 INSC 1277 Arbitration Agreement – Unilateral Appointment Clause – Validity and Severability - Held that a clause in a public-private contract (Clause 25) which mandates unilateral appointment of an arbitrator by an ineligible authority (Managing Director) and further stipulates that "no arbitration shall be held" if such appointment fails, is void ab initio as it violates the principle of nemo judex in causa sua and is contrary to Article 14 of the Constitution - the invalidity of the appointment procedure does not destroy the core agreement to arbitrate - Applying the doctrine of severability, the offending portions, including the negative covenant, must be severed, and the substantive arbitration agreement survives, thereby enabling the court to appoint an independent arbitrator under Section 11(6). [Relied on the Constitution Bench judgment in Central Organisation for Railway Electrification v. ECI SPIC SMO MCML (JV) 2025 4 SCC 641; Para 12] Hindustan Construction Company Ltd. v. Bihar Rajya Pul Nirman Nigam Ltd., 2025 LiveLaw (SC) 1153 : 2025 INSC 1365 Arbitration and Conciliation Bill, 2024 – Absence of Statutory Recognition for Impleadment of Non-Signatories – Supreme Court Criticism - The Supreme Court expressed dissatisfaction with the Arbitration and Conciliation Bill, 2024, for failing to explicitly recognize the power of arbitral tribunals to implead or join non-signatory parties, despite judicial precedents emphasizing its necessity. The Court urged the Department of Legal Affairs, Ministry of Law...

Supreme Court Annual Digest 2025: Arbitration And Conciliation Act

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