Arbitration Supreme Court Digest 2021 : Major Judgments

1. High Court's Power Under Article 226/227 To Interfere With Arbitration Process Needs To Be Exercised In Exceptional Rarity

The Supreme Court in Bhaven Construction v. Executive Engineer Sardar Sarovar Narmada Nigam Ltd. has observed that the power of the High Courts under Article 226/227 of the Constitution of India to interfere with an arbitration process needs to be exercised in exceptional rarity, wherein one party is left remediless under the statute or a clear 'bad faith' shown by one of the parties.

"If the Courts are allowed to interfere with the arbitral process beyond the ambit of the enactment, then the efficiency of the process will be diminished," the bench comprising Justices NV Ramana, Surya Kant and Hrishikesh Roy observed while setting aside a judgment of Gujarat High Court allowing a writ petition challenging the jurisdiction of the sole arbitrator.

2. Whether Non-Payment Of Stamp Duty On Commercial Contract Will Invalidate Arbitration Agreement? Supreme Court Refers Issue To Constitution Bench

A three judge bench of the Supreme Court in N.N. Global Mercantile Pvt. Ltd Vs. Indo Unique Flame Ltd. has observed that non-payment of stamp duty on the commercial contract will not invalidate the arbitration agreement.

Disagreeing with two earlier judgments in this regard, the bench comprising Justices DY Chandrachud, Indu Malhotra and Indira Banerjee referred the following question to the Constitution Bench,

"Whether the statutory bar contained in Section 35 of the Indian Stamp Act, 1899 applicable to instruments chargeable to Stamp Duty under Section 3 read with the Schedule to the Act, would also render the arbitration agreement contained in such an instrument, which is not chargeable to payment of stamp duty, as being non-existent, unenforceable, or invalid, pending payment of stamp duty on the substantive contract / instrument ? "

3. Is Appointment Of Arbitrator By Ineligible Person Valid? Supreme Court Refers Issue To Larger Bench

In Union of India v. M/S Tantia Constructions Ltd, a bench comprising Justices RF Nariman, Navin Sinha and KM Joseph doubted the correctness of the decision in Central Organisation for Railway Electrification v. M/s ECI-SPIC-SMO-MCML (JV) A Joint Venture Company and referred to larger bench the issue whether the appointment of an arbitrator by a person, who is disqualified to be an arbitrator as per Section 12(5) of the Arbitration Act, is valid.

In the Central Organization of Railway Electrification, a division bench had held that such appointments by an authority who is disqualified from being an arbitrator can be valid depending on the facts. On the other hand, an earlier decision delivered by a 2-judge bench headed by Justice Nariman in the case Bharat Broadband Network Ltd v. United Telecoms Ltd (April 2019) had held that the appointment of arbitrator by a person who himself is ineligible to be an arbitrator as per Section 12(5) of the Arbitration and Conciliation Act 1996 is void ab initio.

4. Section 12(5) Of Arbitration & Conciliation Act Which Deals With Ineligibility Of Appointment As Arbitrator Is A Mandatory & Non-Derogable Provision

In Haryana Space Application Centre v. Pan India Consultants Pvt. Ltd, the bench of Justices L. Nageswara Rao, Indu Malhotra and Ajay Rastogi observed that the Section 12(5) of the Arbitration and Conciliation Act read with the Seventh Schedule, which deals with ineligibility of a person to be appointed as an Arbitrator, is a mandatory and non-derogable provision of the Act.

5. Refusal To Condone Delay For Appeal Under Section 34 Of Arbitration Act Appealable Under Section 37

In Chintels India Ltd v. Bhayana Builders Pvt Ltd, bench of Justices RF Nariman, Navin Sinha and KM Joseph held that an order refusing to condone the delay in filing an appeal under Section 34 of the Arbitration and Conciliation Act 1996 is appealable under Section 37 of the Act. It observed that the expression "setting aside or refusing to set aside an arbitral award" does not stand by itself. The expression has to be read with the expression that follows-"under section 34".

6. Presence Of Arbitration Clause In Contract Between State Instrumentality & Private Party Does Not Oust Writ Jurisdiction Under Article 226

In UNITECH Limited v. Telangana State Industrial Infrastructure Corporation, bench of Justices DY Chandrachud and MR Shah observed that presence of an arbitration clause within a contract between a state instrumentality and a private party is not an absolute bar to availing remedies under Article 226 of the Constitution. It held that the State and its instrumentalities are not exempt from the duty to act fairly merely because in their business dealings they have entered into the realm of contract.

7. NHAI v. Progressive Construction: Supreme Court Appoints Justice (Rtd.) GS Singhvi As Sole Arbitrator

In NHAI v. Progressive Construction Ltd, division bench of Justices Indu Malhotra and Ajay Rastogi while allowing an appeal filed by National Highways Authority of India (NHAI), directed the parties to the arbitral proceedings to approach the Indian Council of Arbitration within 2 weeks for the adjudication of the disputes in accordance with ICA Rules of Domestic Commercial Arbitration & Conciliation, 2016.

8. Proceedings Under Section 34 Of Arbitration Act Also Covered By Moratorium Under Section 14 IBC 

The Supreme Court in P Mohanraj and others v M/s Shah Brothers Ispat Ltd. observed that an application under Section 34 of the Arbitration and Conciliation Act to set aside an award is covered by moratorium under Section 14 of the Insolvency and Bankruptcy Code.

"Section 34 proceeding is a proceeding against the corporate debtor in a court of law pertaining to a challenge to an arbitral award and would be covered just as an appellate proceeding in a decree from a suit would be covered," the bench of Justices RF Nariman, Navin Sinha and KM Joseph observed.

9. Limitation Period For Filing 'Section 34' Petition Commences From Date Of Receipt Of Signed Copy Of Arbitral Award By Parties

In Dakshin Haryana Bijli Vitran Nigam Ltd. v. M/S Navigant Technologies Pvt. Ltd, the Supreme Court bench Justices Indu Malhotra and Ajay Rastogi observed that the period of limitation for filing the Petition under Section 34 of the Arbitration and Conciliation Act would commence from the date on which the signed copy of the award was made available to the parties.

10. Sole Proprietorship Will Fall Under International Commercial Arbitration If Proprietor Is Foreign Resident 

In Amway India v. Ravindranath Rao & Anr, bench of Justices RF Nariman and BR Gavai held that a sole proprietorship will fall under international commercial arbitration if the proprietor is a habitual resident of a foreign country, notwithstanding the fact that the proprietary concern is carrying out business in India. The Bench set aside an order of the Delhi High Court appointing an arbitrator in the case Amway India v. Ravindranath Rao, holding that the High Court had no jurisdiction as the dispute was an international commercial arbitration within the meaning of Section 2(1)(f) of the Arbitration and Conciliation Act.

11. Supreme Court Suggests Amendments To Sections 11(7), 37 To Bring Section 8 & 11 At Par On Appealability

In Pravin Electricals Pvt. Ltd. v. Galaxy Infra and Engineering Pvt. Ltd., bench of Justices RF Nariman, BR Gavai and Hrishikesh Roy observed that the amendments to Section 11(7) and 37 of the Arbitration and Conciliation Act, 1996 might be necessary so that the orders passed under Section 8 and 11 are brought on par as far as appealability is concerned.

12. Limitation Period For Filing 'Section 11' Application Seeking Appointment Of Arbitrator Governed By Article 137 Limitation Act

In Bharat Sanchar Nigam Ltd. v. Nortel Networks India Pvt. Ltd., Supreme Court observed that the period of limitation for filing an application under Section 11 of the Arbitration and Conciliation Act would be governed by Article 137 of the First Schedule of the Limitation Act, and will begin to run from the date when there is failure to appoint the arbitrator, the Supreme Court held.

In rare and exceptional cases, where the claims are ex facie time barred, and it is manifest that there is no subsisting dispute, the Court may refuse to make the reference, the bench comprising Justices Indu Malhotra and Ajay Rastogi held.

The court also suggested amendment of Section 11 of the Act to provide a period of limitation for filing an application under this provision, which is in consonance with the object of expeditious disposal of arbitration proceedings.

13. Supreme Court Overrules 'NV International' Verdict Which Held Delay Beyond 120 Days For Arbitration Appeal Under Section 37 Can't Be Condoned

In Government of Maharashtra v. Borse Brothers Engineers and Contractors Pvt Ltd, a two-judge bench comprising Justices RF Nariman and S Ravindra Bhat overruled its 2019 verdict in the case M/s NV International v. State of Assam which had strictly held that a delay of more than 120 days in filing of appeals under Section 37 of the Arbitration and Conciliation Act 1996 cannot be condoned.

The Top Court has now held that delay beyond 90, 60 or 30 days for filing appeals under Section 37, depending on the forum, can be condoned. But the Court added a rider that such condonation of delay should be an exception and not the norm, having regard to the objective of the Arbitration Act for expeditious settlement of claims.

14. Arbitration Reference Not Maintainable If Filed After Admission Of Insolvency Resolution Petition U/s 7 IBC

In Indus Biotech Private Limited v. Kotak India Venture (Offshore) Fund, the Supreme Court bench headed by then CJI SA Bobde observed that in any proceeding which is pending before the Adjudicating Authority under Section 7 of Insolvency and Bankruptcy Code, if such petition is admitted upon the Adjudicating Authority recording the satisfaction with regard to the default and the debt being due from the corporate debtor, any application seeking reference to arbitration under Section 8 of the Arbitration and Conciliation Act made thereafter will not be maintainable.

15. High Court Under Article 226 Should Not Entertain A Dispute Which Is Arbitrable Unless There Is An Issue Of Public Interest

In Rapid MetroRail Gurgaon Limited v. Haryana Mass Rapid Transport Corporation, a bench comprising Justices DY Chandrachud, MR Shah and Sanjiv Khanna observed that ordinarily a High Court in its jurisdiction under Article 226 of the Constitution has to decline to entertain a dispute which is arbitrable, unless there is a fundamental issue of public interest. In this case the High Court had entertained the writ petition even though there was an arbitration clause between the parties. In appeal, the Apex Court noted that the High Court was concerned over a fundamental issue of public interest, which was the hardship that would be caused to commuters who use the rapid metro as a vehicle for mass transport in Gurgaon.

16. Question Of Novation Of Contract Cannot Be Considered In A Petition Under Section 11 Arbitration Act

In Sanjiv Prakash v. Seema Kukreja, bench comprising Justices RF Nariman, BR Gavai and Hrishikesh Roy observed that the question of novation of contract containing an arbitration clause cannot be considered by the Court in a petition filed under Section 11 of the Arbitration and Conciliation Act. The court said that a Section 11 court would refer the matter when contentions relating to non-arbitrability are plainly arguable, or when facts are contested. The court cannot, at this stage, enter into a mini trial or elaborate review of the facts and law which would usurp the jurisdiction of the arbitral tribunal.

17. High Court Under Article 226 And 227 Should Be Extremely Circumspect In Interfering With Orders Passed Under Arbitration Act

In Navayuga Engineering Company v. Bangalore Metro Rail Corporation Limited, bench comprising Justices RF Nariman and BR Gavai reiterated that a High Court while exercising jurisdiction under Article 226 and 227 should be extremely circumspect in interfering with orders passed under the Arbitration and Conciliation Act. The bench held that such interference can be made only in cases of exceptional rarity or cases which are stated to be patently lacking in inherent jurisdiction.

18. Indian Parties Can Choose A Foreign Seat For Arbitration 

In PASL Wind Solutions Private Limited v. GE Power Conversion India Pvt. Ltd, three-judge bench comprising Justices Rohinton Fali Nariman, BR Gavai and Hrishikesh Roy held that parties to a contract who are Indian nationals or Companies incorporated in India can choose a forum for arbitration outside India.

"Nothing stands in the way of party autonomy in designating a seat of arbitration outside India even when both parties happen to be Indian nationals," it observed.

"Freedom of contract needs to be balanced with clear and undeniable harm to the public, even if the facts of a particular case do not fall within the crystallised principles enumerated in well-established 'heads' of public policy. The question that then arises is whether there is anything in the public policy of India, as so understood, which interdicts the party autonomy of two Indian persons referring their disputes to arbitration at a neutral forum outside India," the Court said.

19. Existence Of Arbitration Clause Does Not Debar Court From Entertaining A Writ Petition In Contractual Matter

In Uttar Pradesh Power Transmission Corporation Ltd. v. CG Power And Industrial Solutions Limited, the Supreme Court bench of Justices Uday Umesh Lalit and Indira Banerjee observed that the existence of an arbitration clause does not debar the court from entertaining a writ petition. It reiterated that relief under Article 226 of the Constitution of India may be granted in a case arising out of contract.

"It is well settled that availability of an alternative remedy does not prohibit the High Court from entertaining a writ petition in an appropriate case. The High Court may entertain a writ petition, notwithstanding the availability of an alternative remedy, particularly (1) where the writ petition seeks enforcement of a fundamental right; (ii) where there is failure of principles of natural justice or (iii) where the impugned orders or proceedings are wholly without jurisdiction or (iv) the vires of an Act is under challenge," the Court held.

20. Limitation Act Provisions Will Apply To Arbitration Proceedings Initiated Under Section 18(3) MSMED Act

In M/s. Silpi Industries v. Kerala State Road Transport Corporation, bench comprising Justices Ashok Bhushan and R. Subhash Reddy held that the provisions of the Limitation Act will apply to arbitration proceedings initiated under Section 18(3) of Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act). It also observed that counterclaim is maintainable before the statutory authorities under MSMED Act.

21. Section 34 Arbitration Act Gives No Power To Modify Arbitral Award; Appellate Court Can Only Set Aside Or Remand

In Project Director, National Highways vs. M. Hakeem the Supreme Court held that a court, under Section 34 of the Arbitration and Conciliation Act, cannot modify an award.

"If one were to include the power to modify an award in Section 34, one would be crossing the Lakshman Rekha," Justices RF Nariman and BR Gavai observed.

22. Arbitration Award Which Ignores Vital Evidence Or Rewrites The Contract Is Liable To Be Set Aside

In PSA Sical Terminals Pvt. Ltd. v. Board Of Trustees Of V.O. Chidambranar Port Trust Tuticorin, the Supreme Court observed that an arbitration award which ignores vital evidence in arriving at its decision or rewrites a contract is liable to be set aside under Section 34 of the Arbitration and Conciliation Act on the ground of patent illegality.

The Bench comprising Justices RF Nariman and BR Gavai observed that a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse. Re­writing a contract for the parties would be breach of fundamental principles of justice, the court remarked.

23. Emergency Arbitration Award Enforceable In Indian Law: Supreme Court Rules In Favour Of Amazon In Case Against Future Retail

In Amazon.com NV Investment Holdings LLC v. Future Retail Limited, the Supreme Court had ruled in favour of e-commerce giant Amazon in its dispute with Future Retail Limited(FRL) over the latter's merger deal with Reliance group. The top court held that that Emergency Award passed by Singapore arbitrator stalling FRL-Reliance deal is enforceable in Indian law. "It is wholly incorrect to say that Section 17(1) of the Act would exclude an Emergency Arbitrator's orders", the Court said in the judgment.

A Bench comprising Justices RF Nariman and BR Gavai opined, "We declare that full party autonomy is given by the Arbitration Act to have a dispute decided in accordance with institutional rules which can include Emergency Arbitrators delivering interim orders, described as "awards". Such orders are an important step in aid of decongesting the civil courts and affording expeditious interim relief to the parties. Such orders are referable to and are made under Section 17(1) of the Arbitration Act."

24. 'Perversity' Or 'Patent Illegality' Not Grounds To Refuse Enforcement Of Foreign Arbitration Award

In Gemini Bay Transcription Pvt. Ltd. v. Integrated Sales Service Ltd, the Supreme Court has observed that perversity of an award is not a ground to refuse enforcement of a foreign award under Section 48 of the Arbitration and Conciliation Act, after the 2015 amendment.

The Court held that the ground of "patent illegality" is only available to set aside domestic arbitration awards made under Part 1 of the Arbitration and Conciliation Act and will not apply to international commercial awards.

"The ground of "patent illegality appearing on the face of the award" is an independent ground of challenge which applies only to awards made under Part I which do not involve international commercial arbitrations," the bench comprising Justices RF Nariman and BR Gavai observed.

25. Contravention Of A Statute Not Linked To Public Policy Or Public Interest Cannot Be A Ground To Set Aside An Arbitral Award 

The Supreme Court in Delhi Airport Metro Express Pvt. Ltd. vs. Delhi Metro Rail Corporation Ltd observed that contravention of a statute which is not linked to public policy or public interest cannot be a ground to set aside an arbitration award.

"There is a disturbing tendency of courts setting aside arbitral awards, after dissecting and reassessing factual aspects of the cases to come to a conclusion that the award needs intervention and thereafter, dubbing the award to be vitiated by either perversity or patent illegality, apart from the other grounds available for annulment of the award," the bench of Justices L. Nageswara Rao and S. Ravindra Bhat observed.

26. Bar U/s 9(3) Arbitration Act Not Applicable If Application Was Taken Up By Court Before Constitution Of Arbitration Tribunal

In Arcelor Mittal Nippon Steel India Ltd v. Essar Bulk Terminal Ltd, the Supreme Court has observed that the bar under Section 9(3) of the Arbitration and Conciliation Act operates only when the application under Section 9(1) had not been entertained till the constitution of the Arbitral Tribunal.

"Once an Arbitral Tribunal is constituted the Court cannot take up an application under Section 9 for consideration, unless the remedy under Section 17 is inefficacious. However, once an application is entertained in the sense it is taken up for consideration, and the Court has applied its mind to the Court can certainly proceed to adjudicate the application", the bench comprising Justices Indira Banerjee and JK Maheshwari observed.

27. Chairman Of Company In Arbitration Ineligible To Be Arbitrator; Disqualification Conditions Have To Be Read As A Whole

The Supreme Court in Jaipur Zila Dugdh Utpadak Sahkari Sangh Limited vs. M/s Ajay Sales & Suppliers observed that non­-independence and non-impartiality of an arbitrator would make him ineligible to conduct arbitration.

The bench of Justices MR Shah and Aniruddha Bose observed that the ineligibility of an arbitrator can be removed only by an 'express agreement'.

The issue to be considered was whether the Chairman who is an elected member of the petitioner Sahkari Sangh can be said to be 'ineligible' under Sub­-section (5) of Section 12 read with Seventh Schedule to the Act or not? The Sangh's contention was that, in the Seventh Schedule to the Act 'Chairman' is not mentioned and only Manager, Director or part of the Management can be said to be ineligible.

Rejecting the said contention, the bench observed that the Chairman of the Sangh can certainly be held to be 'ineligible' to continue as an arbitrator. Referring to Voestalpine Schienen GMBH vs. Delhi Metro Rail Corporation Limited, (2017) 4 SCC 665, the court said, "Sub­-section (5) of Section 12 read with Seventh Schedule has been inserted bearing in mind the 'impartiality and independence' of the arbitrators. It has been inserted with the purpose of 'neutrality of arbitrators'. Independence and impartiality of the arbitrators are the hallmarks of any arbitration proceedings as observed in the case of Voestalpine Schienen (Supra). Rule against bias is one of the fundamental principles of natural justice which apply to all judicial proceedings and quasi-judicial proceedings and it is for this reason that despite the contractually agreed upon, the persons mentioned in Sub­section (5) of Section 12 read with Seventh Schedule to the Act would render himself ineligible to conduct."

28. Arbitration Reference Can Be Declined If Dispute In Question Does Not Correlate To Arbitration Agreement

In DLF Home Developers Limited vs. Rajapura Homes Private Limited, the Supreme Court observed that prayer for reference to Arbitration under Section 11 of the Arbitration and Conciliation Act can be declined if the dispute in question does not correlate to the arbitration agreement.

The bench of Chief Justice of India NV Ramana and Justice Surya Kant observed that it is not expected to act mechanically merely to deliver a purported dispute raised by an applicant at the doors of the chosen Arbitrator.

29. Retirement Will Not Terminate Mandate Of Dept Officer Appointed As Sole Arbitrator : Supreme Court Restores 1998 Award

In M/s Laxmi Continental Construction Co v. State of UP, while deciding an appeal arising out of the Arbitration Act 1940, the Supreme Court has held that a department officer, who was appointed as the arbitrator, can continue to preside over the arbitration proceedings even after his retirement.

A bench comprising Justices MR Shah and AS Bopanna was considering the question "whether once an officer of the department is appointed as an Arbitrator considering the arbitration clause, whether his mandate to continue the arbitration proceedings shall come to an end on his retirement?".

30. Arbitrator Cannot Grant Pendente Lite Interest If Contract Contains A Specific Clause Expressly Barring Payment Of Interest

In Garg Builders v. Bharat Heavy Electricals Limited, the Supreme Court observed that an arbitrator cannot grant pendente lite interest if the contract contains a specific clause which expressly bars payment of interest. Such a contractual clause will not be a violation of Section 28 of the Indian Contract Act, 1872, the bench of Justices S. Abdul Nazeer and Krishna Murari observed.

The court said that the Arbitration and Conciliation Act, 1996, categorically restricts the power of an arbitrator to award preference and pendente lite interest when the parties themselves have agreed to the contrary.

31. Pre-Deposit Of 75% Of Awarded Amount U/s 19 MSMED Act Mandatory While Preferring Application To Set Aside Arbitration Award

In Gujarat State Disaster Management Authority v. Aska Equipments Limited, the Supreme Court observed that the requirement under Section 19 of the Micro, Small and Medium Enterprises Development Act of deposit of 75% of the awarded amount as a pre deposit while preferring the application/appeal for setting aside the award, is mandatory.

The bench comprising of Justices MR Shah and AS Bopanna observed, 'On a plain/fair reading of Section 19 of the MSME Act, 2006, reproduced hereinabove, at the time/before entertaining the application for setting aside the award made under Section 34 of the Arbitration & Conciliation Act, the applicant/appellant has to deposit 75% of the amount in terms of the award as a pre-deposit. The requirement of a deposit of 75% of the amount in terms of the award as a pre-deposit is mandatory. However, at the same time, considering the hardship which may be projected before the appellate court and if the appellate court is satisfied that there shall be undue hardship caused to the appellant/applicant to deposit 75% of the awarded amount as a pre deposit at a time, the court may allow the pre-deposit to be made in installments."

32. Arbitrator Has Substantial Discretion In Awarding Interest U/Sec 31 (7) (a) Arbitration Act

In Punjab State Civil Supplies Corporation Limited (Punsup) v. Ganpati Rice Mills, the Supreme Court observed that an Arbitrator has substantial discretion in awarding interest under Section 31(7)(c) of the Arbitration and Conciliation Act, 1996. In this case, the Arbitrator had granted interest at the rate of 18% per annum from 01.01.2003 till the date of realization. Disposing the petition under Section 34 of the Arbitration and Conciliation Act, 1996 (Arbitration Act), the rate of interest was reduced by the District Court to 12% per annum. In an Arbitration appeal, the High Court further reduced the rate of interest to 9% per annum.

In appeal, the bench of Justices Sanjiv Khanna and Bela M. Trivedi noted "Per contra, Section 31 (7) of the Arbitration Act, 1996 grants substantial discretion to the arbitrator in awarding interest. No reason and grounds have been given to reduce the rate of interest."

33. Party Not Barred From Raising New Grounds To Set Aside Award In An Sec 37 Appeal

In State of Chhattisgarh v. Sal Udyog Private Limited, the Supreme Court has observed that a party is not barred from raising an additional ground for setting aside an arbitration award in arbitration appeal under Section 37 of the Arbitration Conciliation Act,1996, merely because the said ground was not raised in the petition under Section 34 to set aside the Arbitration award.

A Bench comprising CJI NV Ramana, Justices Surya Kant and Hima Kohli observed, "We are afraid, the plea of waiver taken against the appellant-State on the ground that it did not raise such an objection in the grounds spelt out in the Section 34 petition and is, therefore, estopped from taking the same in the appeal preferred under Section 37 or before this Court, would also not be available to the respondent-Company having regard to the language used in Section 34(2A) of the 1996 Act that empowers the Court to set aside an award if it finds that the same is vitiated by patent illegality appearing on the face of the same."

34. 2015 Amendment Won't Apply To Section 34 Applications Filed Prior To It

The Supreme Court in Ratnam Sudesh Iyer v Jackie Kakubhai Shroff has held that the 2015 amendment to Section 34 of the Arbitration and Conciliation Act 1996 will apply only to Section 34 applications that have been made after the date of the amendment.

"Section 34 as amended will apply only to Section 34 applications that have been made to the Court on or after 23.10.2015, irrespective of the fact that the arbitration proceedings may have commenced prior to that," bench of Justices SK Kaul and MM Sundresh observed.

35. Jurisdiction Of High Court Hearing An Arbitration Appeal Is Distinct From That Of First Appellate Court In A Civil Suit

In Punjab State Civil Supplies Corporation Ltd v. Ramesh Kumar and Company, the Supreme Court observed that the jurisdiction in a first appeal arising out of a decree in a civil suit is distinct from the jurisdiction of the High Court under Section 37 of the Arbitration and Conciliation Act arising from the disposal of a petition challenging an arbitral award.

"While considering a petition under Section 34 of the 1996 Act, it is well-settled that the court does not act as an appellate forum. The grounds on which interference with an arbitral award is contemplated are structured by the provisions of Section 34. The District Judge had correctly come to the conclusion that there was no warrant for interference with the arbitral award under Section 34. The High Court seems to have proceeded as if it was exercising jurisdiction in a regular first appeal from a decree in a civil suit. The jurisdiction in a first appeal arising out of a decree in a civil suit is distinct from the jurisdiction of the High Court under Section 37 of the 1996 Act arising from the disposal of a petition challenging an arbitral award under Section 34 of the 1996 Act," the Bench comprising Justices DY Chandrachud and AS Bopanna observed.

36. Arbitrator Cannot Modify Award On An Application Under Section 33 Arbitration Act

In Gyan Prakash Arya vs Titan Industries Limited, Supreme Court observed that an Arbitrator cannot modify an Arbitration award on an application filed under Section 33 of the Arbitration and Conciliation Act.

Only in a case of arithmetical and/or clerical error, the award can be modified and such errors only can be corrected, the bench comprising Justices MR Shah and BV Nagarathna said.

37. If Conciliation Not Successful, Arbitration Proceedings Must Be Resorted To

In Jharkhand Urja Vikas Nigam Limited v. The State of Rajasthan & Ors., the Supreme Court bench of Justice Indira Banerjee and Justice Subhash Reddy, while dealing with a matter pertaining to delayed payment of dues by Jharkhand electricity board to a Conductors supplier held that Section18 of The Micro Small and Medium Enterprise Development Act 2006 [MSMED Act] and noted that "Under S. 18(3), when conciliation fails and stands terminated, the dispute between the parties can be resolved by arbitration. The council is empowered either to take up arbitration on its own or to refer the arbitration proceedings to any institution as specified in the said section."