Arbitration Cases Weekly Round-Up: 6th January To 12th January 2025

Update: 2025-01-15 11:10 GMT
Arbitration Cases Weekly Round-Up: 6th January To 12th January 2025
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Supreme Court Supreme Court Sets Aside Awards Of Over Rs 46 Lakhs Passed Against UP Govt In Sham Arbitration Proceedings Case Details : STATE OF UTTAR PRADESH AND ANOTHER VERSUS R.K. PANDEY AND ANOTHER | CIVIL APPEAL NO. 10212 OF 2014 Citation : 2025 LiveLaw (SC) 45 The Supreme Court on Thursday (January 9) set aside two ex-parte arbitration awards on grounds of fraud played...

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Supreme Court

Supreme Court Sets Aside Awards Of Over Rs 46 Lakhs Passed Against UP Govt In Sham Arbitration Proceedings

Case Details : STATE OF UTTAR PRADESH AND ANOTHER VERSUS R.K. PANDEY AND ANOTHER | CIVIL APPEAL NO. 10212 OF 2014

Citation : 2025 LiveLaw (SC) 45

The Supreme Court on Thursday (January 9) set aside two ex-parte arbitration awards on grounds of fraud played by the litigant who appointed sole arbitrators and conducted 'sham' arbitration proceedings in a service dispute against U.P. Government and Government Hospital where he was employed.

The bench of CJI Sanjiv Khanna and Justice Sanjay Kumar was hearing an appeal by the State of Uttar Pradesh challenging the veracity of the ex parte awards and the arbitration agreement relied by the respondent on the basis of which such arbitration proceedings were conducted.

The Court observed : "It was not the case of Respondent No. 1, R.K. Pandey that the Municipal and Development Board, Kanpur, or the Governor of Uttar Pradesh has invoked the arbitration clause. The unilateral appointment of the arbitrator by Respondent No. 1, R.K. Pandey is, therefore, contrary to the arbitration clause as propounded by him."

The Court placed reliance on the recent decision in Central Organisation of Railway Electrification v. ECI PIC SMO MCPL (JV), a Joint Venture Company which held that a clause that allows one party to unilaterally appoint a sole arbitrator gives rise to justifiable doubts as to the independence and impartiality of the arbitrator. Further, such a unilateral clause is exclusive and hinders equal participation of the parties in the appointment process of arbitrators.

Supreme Court Flags Stringent Limitation Provisions Curtailing Arbitration Appeal Remedies, Urges Parliament To Address Issue

Case no. – My Preferred Transformation & Hospitality Pvt. Ltd. & Anr. v. M/S Faridabad Implements Pvt. Ltd.

Citation : 2025 LiveLaw (SC) 49

The Supreme Court raised concerns about the interpretation of limitation statutes in arbitration cases and observed that the rigid application of the law could curtail the limited remedy available under Section 34 of the Arbitration and Conciliation Act, 1996 to challenge arbitral awards.

“In our view, the above construction of limitation statutes is quite stringent and unduly curtails a remedy available to arbitrating parties to challenge the validity of an arbitral award. This must be addressed by the Parliament”, the Court observed.

A bench of Justice PS Narasimha and Justice Pankaj Mithal dismissed an appeal filed by a company against a Delhi High Court judgment rejecting its challenge to an arbitral award as barred by limitation under Section 34.

While the Court concluded that the appellant's delay in filing the petition was not condonable under the prevailing legal framework, Justice Narasimha, in his opinion, with which Justice Mithal agreed, highlighted concerns with the strict interpretation of limitation provisions.

High Courts

Andhra Pradesh High Court

While Deciding Petition U/S 9 Of Arbitration Act, Court Cannot Ignore Basic Principles Of CPC: Andhra Pradesh HC

Case Title: Tuf Metallurgical Private Limited Vs. Bst Hk Limited and Others

Case Number: ICOMAA. No.2 of 2024

The Andhra Pradesh High Court bench of Justices Ninala Jayasurya and Nayapathy Vijay observed that in deciding a petition under Section 9 of the Arbitration Act, the Court cannot ignore the basic principles of the CPC. At the same time, the power of the Court to grant relief is not curtailed by the rigours of every procedural provision in the CPC. In exercise of its powers to grant interim relief under Section 9 of the Arbitration Act, the Court is not strictly bound by the provisions of the CPC.

The court observed that the Order 38 Rule 5 CPC contemplates a notice to the defendant to furnish security within a specified time, either to furnish security in such sum as may be specified in the order, to produce and place at the disposal of the Court, when required, the said property or value of the same, or such portion thereof as may be sufficient to satisfy the decree, or to appear and show cause why he should not furnish security.

It also noted that the Order 38 Rule 5 CPC does not debar the Court to pass ex parte order of attachment if the Court is of the opinion that there is a requirement of doing so as the defendant might dispose of the property in the interregnum. On attachment, the defendant can appear before the Court and show cause as to why attachment should be removed.

Bombay High Court

Substantive Objections On Validity Or Existence Of Arbitration Agreement Can Be Adjudicated By Tribunal U/S 16 Of Act: Bombay HC

Case Title: Shreegopal Barasia Versus M/s. Creative Homes & Ors.

Citation: 2025 LiveLaw (Bom) 17

The Bombay High Court bench of Justice Somasekhar Sundaresan has held that substantive objections concerning the validity and existence of an arbitration agreement can be adjudicated by the Arbitral Tribunal and not by the court under section 11 of the Arbitration Act.

It further added that towards such purpose of ruling on its own jurisdiction, and dealing with objections as to existence and validity, two specific sub-clauses have been inserted in Section 16(1) of the Act. The arbitration clause in a contract is treated as an independent agreement that is distinct from the other terms of the contract. Besides, a decision that the contract containing the arbitration clause is void, would not entail the legal outcome that the arbitration clause is invalid.

Delhi High Court

No Bar To Avail Remedy U/S 9 Of Arbitration Act Even Against Non-Parties To Subject Matter Of Dispute: Delhi High Court

The Delhi High Court bench of Justice Neena Bansal Krishna has held that the Plaintiffs are not barred from availing the remedy under Section 9 of the Arbitration and Conciliation Act, 1996 even against individual(s)/entities who are not party to the Family Settlement out of which the dispute arose.

The application for ad interim injunction was held to be not maintainable due to pending Arbitration proceedings in regard to the Family Settlement and a pending Application under Section 12A of the Commercial Courts Act.

The court noted that the Application under Section 12A of the Commercial Courts Act is yet to be adjudicated. It noted that the cause of action reflected that there was no immediate urgency. The issue of whether the suit was only maintainable under the Companies Act before the NCLT was also raised.

Date Of Receipt Of Corrected Award Would Be Taken As Disposal Date U/S 34(3) Of Arbitration Act, Even When Application U/S 33 Has Been Filed: Delhi HC

Case Title: TEFCIL BREWERIES LIMITED v. ALFA LAVAL (INDIA) LIMITED

Citation: 2025 LiveLaw (Del) 18

The Delhi High Court Bench of Justice Subramonium Prasad has held that taking the date of receipt of the corrected award as the starting point and not as the date of disposal would actually go contrary to the plain reading of Section 34(3) of the Act. This will apply even in cases where an application under Section 33 of the Act has been filed.

The court held that the provisions of Section 34(3) of the Act give two timelines. One, where an application under Section 33 of the Act has not been filed in which case the legislature was conscious enough to state that it would be the date of receipt of the award. Whereas, in the case where an application under Section 33 of the Act has been filed, the legislation was conscious enough to lay down that the date of disposal would be the starting point for calculation of limitation.

Himachal Pradesh High Court

High Court Which Appointed Arbitrator U/S 11(6) Of Arbitration Act Cannot Be Classified As “Court” U/S 42: Himachal Pradesh HC

Case Title: The Chief General Manager H.P. Telecom Circle & ors. Versus Sh. Kashmir Singh (Government Contractor)

Citation: 2025 LiveLaw (HP) 2

The Himachal High Court bench of Ms. Justice Jyotsna Rewal Dua has held that the High Court which exercises original civil jurisdiction cannot be classified as 'Court' for the purpose of Section 42 of the Arbitration and Conciliation Act when it merely appointed arbitrators under Section 11(6) of the Act. Section 42 of the Act will not be attracted where High Court having original civil jurisdiction has only appointed the arbitrator and has not undertaken any other exercise.

The court observed that Section 42 starts with a non-obstante clause i.e. 'notwithstanding anything contained elsewhere in this Part or in any other law for the time being in force'. The words 'this Part' refers to Part-I which encompasses Sections 1 – 43. As per Section 42, where an application with respect to an arbitration agreement under Part-I has been made to a Court then that Court alone will have the jurisdiction over (a) arbitral proceedings & (b) all subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that Court and in no other Court.
Madhya Pradesh High Court

Arbitrator Empowered To Pass Order For Dissolution Of Partnership Firm Once Dispute Is Referred: Madhya Pradesh HC

Case Title: MAHESH PATEL Vs YASHWANT NETRAM AND OTHERS

Citation: 2025 LiveLaw (MP) 8

The Madhya Pradesh High Court bench of Justice Subodh Abhyankar has held that the Arbitrator is empowered to pass an order for dissolution of the partnership firm once the matter is referred.

The court observed that the grievance of the applicant is that the firm is being managed by Ashok Patel, who happens to be the father of non-applicant No.3, it is a grievance against the non-applicants only, which is also apparent from the notice for appointment of Arbitrator, in which the dispute has been raised against the present non-applicants only and not against Ashok Patel, and in such circumstances, the said Ashok Patel was not a necessary party to be impleaded in the lis, and thus, there is no question of bifurcation of dispute, hence, the decisions relied upon by Shri Phadke in the case of Sukanya Holdings Pvt. Ltd. (supra) would not be applicable in the facts and circumstances of the case.

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