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 RarityThe 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 BenchA 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 BenchIn 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 ProvisionIn 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 37In 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 226In 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 ArbitratorIn NHAI v. Progressive Construction Ltd, division bench of Justices Indu Malhotra and Ajay Rastogi while allowing an appeal filed by National Highways...

Arbitration Supreme Court Digest 2021 : Major Judgments

Shruti Kakkar

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