Arbitration Court Reckoner :August-October 2021 (Part 1)

By way of the present column, an attempt is made to briefly review the salutary judgments pronounced by the Courts in the months of August & October 2021 under the Arbitration & Conciliation Act, 1996 (hereinafter referred to as the 'Act'). While as many judgments as possible are sought to be reviewed, owing to the limited column space, some judgments would invariably be left out. Further, while an attempt is made to include and review some judgments of various other High Courts, the emphasis is essentially on the judgments of the High Court of Delhi and Supreme Court of India. The judgments have been compiled for review with reference to the Section of the Act that they are primarily dealing with and a detailed analysis has been forgone in favour of succinctness.

Section 2(2)

(i) Choosing a foreign governing law would not amount to an agreement to exclude the applicability of S. 9 of the Act

S. 9 is applicable post award in foreign seated arbitrations.

In Medima LLC v Balasore Alloys Limited^[1], the Petitioner who had obtained an Award in its favour, in an ICC arbitration proceedings seated in London, filed an application for interim reliefs before the High Court at Calcutta. The said application was opposed by raising an issue of maintainability in view of a 'Governing Law' clause contained in the contract, by which the contract was to be governed by and construed in accordance with laws of United Kingdom. It was contended by Respondent that such clause fell within the exception carved out in the proviso to S. 2(2) of the Act, i.e., as parties had chosen a foreign governing law, applicability of S. 9 had been excluded by agreement. The Court after discussing the legislative history and intent behind the proviso to S 2(2) of the Act, held that merely choosing a foreign governing law would not amount to an agreement to exclude the applicability of S. 9 of the Act and that the agreement must indicate in clear and express terms that the parties to intend exclude the operation of S. 9. It further held that S. 9 is applicable post award in foreign seated arbitrations.

(ii) Intent of introducing proviso to S. 2(2) is to ensure remedy of S. 9 continues to be available in foreign seated arbitrations

In Hindustan Cleanenergy Ltd. v Maif Investments India 2 PTE Ltd & Ors.^[2] High Court of Delhi held that the fact that the arbitration is to take place at Singapore and, therefore, any award which may be passed therein may be enforceable before the Singapore Courts, cannot, therefore, be cited as a ground to divest the petitioner of its right to seek interim protection under S. 9 of the Act. Taking note of the fact that the Respondent Nos. 1 and 2 are located in Singapore and have no Indian presence and are likely to dissipate their assets, the Court granted a restraint on sale and creation of third party rights in respect of the agreement securities.

Section 9

(iii) Post Award Section 9 does not contemplate enforcement of the award

In Tulika Devidayal v Pradipkumar Laxmanbhai Patel and Ors.^[3], High Court of Bombay held that the dominant purpose of S. 9 is to provide an interim measure of protection before and during arbitral proceedings such that the subject matter of the arbitration is protected. Further held that, however, such relief can be granted only before the award is enforced and S. 9 operates upto the stage of enforcement. Thus, Section 9 does not contemplate active enforcement after the passing of an award. It thus, refused to entertain the reliefs of appointment of court receiver and restraint on assets.

(iv) Whether the Court has the power to entertain an application under S. 9(1) of the Act, once an Arbitral Tribunal has been constituted?

In Arcelor Mittal Nippon Steel India Ltd. v Essar Bulk Terminal Ltd.^[4], Supreme Court was dealing with a case where the application u/s 9 had been reserved for orders by the commercial court before appointment of arbitrator but no order had been pronounced. It had been argued by the Petitioner that the Commercial Court could not pronounce orders in view of the bar contained in S. 9(3) of the Act. The Court held that on a combined reading of S. 9 with S. 17 of the Act, once an Arbitral Tribunal is constituted, the Court would not entertain and/or in other words take up for consideration and apply its mind to an application for interim measure, unless the remedy under S. 17 is inefficacious, even though the application may have been filed before the constitution of the Arbitral Tribunal. It, however, clarified that the bar of S. 9(3) would not operate, once an application has been entertained and taken up for consideration, as in the instant case, where hearing has been concluded and judgment has been reserved. When an application has already been taken up for consideration and is in the process of consideration or has already been considered, the question of examining whether remedy u/s 17 is efficacious or not would not arise. The requirement to conduct the exercise arises only when the application is being entertained and/or taken up for consideration. The Court observed that there could be numerous reasons which render the remedy u/s 17 inefficacious, for example, the different Arbitrators constituting an Arbitral Tribunal could be located at faraway places and not in a position to assemble immediately and in such a case an application for urgent interim relief may have to be entertained by the Court u/s 9(1).

(v) When there is no defence to amount payable, deposit can be directed even if no case under O 38 made out

In Affluence Media v Pinaka Studios Private Limited and Ors.^[5] High Court of Bombay held that it is now settled law that where the Court is of the view that there is practically no defence to an amount payable and where it is in the interest of justice to secure the amount which forms the subject matter of the proposed arbitration, even if no case is strictly made out within the letter of Order 38 Rule 1 or 2, though there are serious allegations concerning such case, it is certainly within the power of the Court to order a suitable interim measure of protection under S. 9 of the Act. It thus directed the Respondent to deposit the amount as it found that prima facie, there is really no dispute with reference to the payability of the amount.

(vi) S. 9 petition not maintainable qua arbitration under Delhi Cooperative Societies Act

In Deepak Sharma & Anr. v Sriniwaspuri Mitra Mandal CGHS Ltd & Anr^[6], High Court of Delhi upheld the order of the District Court holding the S. 9 Petition filed by the Appellant as non-maintainable in view of ouster of jurisdiction of civil courts under S. 132(1)(c) of Delhi Co-operative Societies Act, 2003. It held that S. 5 of the Arbitration and Conciliation Act, 1996 can have no overriding effect over S. 132 of the Delhi Cooperative Societies Act, 2003. It held that for any delay in disposal of application by the appellants for reinstatement of their memberships, the appellants have to seek their remedies under Delhi Cooperative Societies Act, 2003 and not by filing a petition under Section 9 of the Arbitration and Conciliation Act, 1996.

(vii) Bank guarantee conditional only to extent that demand/invocation be in specific terms, not that breach would have to be adjudicated first as pre-condition of invocation

In M/s Abir Infrastructure Private Limited v Teestavalley Power Transmission Limited & Ors^[7] High Court of Delhi was dealing with a case where stay on invocation of bank guarantees was sought on the ground that the Court in an earlier round of bank guarantees had found the bank guarantees to be conditional and it was contended that there could be no invocation till breach is adjudicated and held to be on part of the Petitioner. The Court held that the bank guarantees are conditional only to the extent that they are capable of being enforced/encashed upon a demand being made in express terms thereof stating about the petitioner's failure to fulfil the obligations contained in the contract and its refusal to repay and did not mean that conditions regarding failure of the Contractor to fulfil its obligations under the contract would be met only on a competent court determining the same.

(viii)What kind of contracts are determinable?

In M/s Golden Tobacco Limited v M/s Golden Tobie Private Limited^[8], High Court of Delhi was seized with a petition where interim relief in the form of restraint on the Respondent from selling and manufacturing goods under a Trademark License Agreement was sought inter alia on the ground that the agreement had been terminated by the Petitioner who was the trademark owner. The Court rejected the contention of the Petitioner that the Respondent could not seek specific performance of the agreement as the agreement was determinable in nature as it provided for termination in case of breach. The Court rejected the contention that all commercial contracts are in their nature determinable and held that if this contention is accepted, one would have to accept that no commercial contract can be specifically enforced. The Court held that whether an agreement is in its nature determinable, is required to be understood in the context of the nature of that agreement and held that an agreement, which pertains to transfer of rights in property, can certainly not be considered as a determinable contract if the same does not provide for termination by a party without cause. On the facts of the case, the Court held that the Trademarks License Agreement granted Respondent the right to use the exclusive brands of Petitioner in perpetuity and thus a contract of this nature cannot be considered as determinable in absence of any agreement entitling the party to terminate the same without cause or default on the part of the other party. The Court held that the Petitioner, prima facie, has not been able to prove any default on the part of Respondent entitling Petitioner to terminate the Trademark License Agreement and thus found it not entitled to interim relief as prayed for.

(ix) Decree Holder cannot seek reliefs which have the effect of interfering with the business decisions of the Judgment debtor

In Morgan Securities and Credit Pvt. Ltd. v Ganesh Benzoplast Limited^[9] High Court of Delhi held that the Decree Holder has the right to take recourse against the assets of the Judgement Debtor for recovery of its dues, but not to interfere in its business decisions and consequently rejected the reliefs sought seeking restraint of certain resolutions of the Respondent Company which had been alleged to have passed with the intent to pass on business to subsidiary company to defeat the enforcement of the award. The Court held that the interim reliefs sought in the petition are beyond the jurisdiction of the Court under S. 9 of the Act, pending execution proceedings.

(x) Relief in the nature of mandatory injunction cannot be granted u/s 9 if

it is in the nature of final relief

In Punjab National Bank v The National Highways Authority Of India & Anr^[10] High Court of Delhi refused to grant relief seeking directions to Respondent to terminate the concession agreement and deposit of termination payment. The Court held that a direction directing Respondent to terminate the agreement is by its very nature irrevocable and final and, cannot be construed as an interim measure. It further rejected the other relief prayed by the Petitioner for deposit of awarded amount in the Escrow account. The Court held Petitioner would require to institute separate proceedings for recovery of amounts from the Concessionaire and clearly the same cannot be directed by an order under S. 9 of the Act.

Section 11

(xi)Important that the procedure for appointment of arbitrator does not give one party the advantage

In M/s CMM Infraprojects Ltd. v IRCON International Ltd.^[11], High Court of Delhi was dealing with a clause where the Respondent got to propose a panel from which was the petitioner to select two names and Respondent was to appoint one of the two as Petitioner's nominee arbitrator and thereafter the Respondent got to appoint its own nominee arbitrator as well. The Court held that such a clause does not provide for any effective counter balancing as the process starts with selection of a panel by the Respondent and this restricts the element of choice that the contractor may exercise in choosing its nominee and further allows the Respondent to ultimately choose the contractor's nominee from the two names suggested by the contractor as also appoint its own nominee. The Court held that this undeniably indicates that the scales are tipped in favour of the Respondent when it comes to the appointment process as in effect, 2/3rd strength of the Arbitral Tribunal is nominated by the Respondent. The Court held that the clause in its current state may not be workable and judgment in case of Central Organisation for Railway Electrification v. M/s ECI-SPIC-SMO-MCML (JV) a Joint Venture Company^[12] not applicable.

(xii)Plea of limitation must be ex facie made out to refuse appointment of arbitrator u/s 11

In M/s Foodworld v Indian Railway Catering And Tourism Corporation Ltd^[13] High Court of Delhi that the test for rejecting of a S. 11 application on the ground of limitation is whether the disputes are barred by limitation must be apparent on the anvil of the 'ex-facie' or the 'prima facie' test. The object is clearly to weed out frivolous litigation in respect of the claims that are ex-facie meritless and dishonest or otherwise not maintainable. The object is not to preclude the parties from agitating their bona fide disputes before the forum of their choice. On the facts of the case before it, the Court found that question of limitation as raised in the present case, is a contentious one and it would not be apposite for this Court to enter into an adjudicatory exercise to decide the same in these proceedings.

(xiii) the power of Court to appoint an arbitrator, under S. 11(6), cannot be hedged in by any panel of arbitrators suggested by one party or the other

In H S Oberoi Buildtech Pvt. Ltd. v Mahamaya Infrastructure Pvt. Ltd^[14] High Court of Delhi rejected the contention of the Respondent that in view of the default on the part of the petitioner in selecting an arbitrator out of the panel of three arbitrators provided by the respondent, compliance with the protocol contemplated in clause of the agreement would require the court to appoint an Arbitrator from the said panel. The Court held that the power of the Court to appoint an arbitrator, under S. 11(6), cannot be hedged in by any panel of arbitrators suggested by one party or the other. Once S. 11(6) of the Act applies, it is for the Court to appoint an Arbitrator, as per its best judgment.

(xiv)Can the invocation qua different work orders between same parties be composite?

In Manisha Kulkarni Proprietor Of M/s Mani Engineers Pune v NCC Limited^[15], High Court of Delhi rejected the submission of the Respondent that as the Petitioner had not made separate invocations under the different work orders, its common petition for appointment of arbitrator qua disputes arising out of different work orders must be rejected. The Court felt that the Respondent's objections regarding a composite invocation notice and filing of a common petition, were hyper-technical and devoid of merit. It ordered that the reference for each agreement will be independent, although the same can be adjudicated by a common arbitral tribunal.

(xv)Limited jurisdiction u/s 11 does not denude the Court of its judicial function to look beyond the bare existence of an arbitration clause to cut the deadwood

In DLF Home Developers Limited v Rajapura Homes Private Limited & Anr.^[16] Supreme Court held that neither it nor a High Court, while dealing with a petition u/s 11 as the case may be, are expected to act mechanically merely to deliver a purported dispute raised by an applicant at the doors of the chosen Arbitrator. It held that on the contrary, the Court(s) are obliged to apply their mind to the core preliminary issues, albeit, within the framework of S. 11(6-A) of the Act and reiterated that such a review is not intended to usurp the jurisdiction of the Arbitral Tribunal but is aimed at streamlining the process of arbitration. Further held, that even when an arbitration agreement exists, it would not prevent the Court to decline a prayer for reference if the dispute in question does not correlate to the said agreement. In the facts of the case, it found that the disputes were covered by the arbitration clauses in the 2 agreements relied by the Petitioner. It partly accepted the prayer of the petitioner to refer the disputes under the agreements to a single and composite arbitral tribunal but thought it appointed one common arbitrator to avoid conflicting awards but left to the wisdom of the sole arbitrator to decide whether the disputes should be consolidated and adjudicated under one composite award or otherwise.

(xvi) Rules of arbitration institution chosen by parties do not entail automatic seat selection as per said rules if venue separately provided

In S.P. Singla Constructions Private Limited v Construction And Design Services, Uttar Pradesh Jal Nigam^[17] High Court of Delhi was dealing with a case where the clause of agreement provided for Rules of Arbitration of the International Centre for Alternative Dispute Resolution, New Delhi (ICADR) while providing Lucknow as the venue of arbitration. It was the case of the Petitioner that "venue" of arbitration does not include the "seat" of the arbitration and since the arbitration has to be conducted in terms of Rules of Arbitration of the International Centre for Alternative Dispute Resolution, New Delhi, therefore, seat of the Arbitrator has to be New Delhi whereas the Respondent contended that in terms of clause 26.3.1, the venue of arbitration has to be Lucknow only. The Court accepted the Respondent's contention and held that rules of ICADR shall come into play with regard to procedure to be followed, only after the arbitration commences.

(xvii)Use of word 'arbitration' not enough to discern intention to arbitrate

In M/s Universal Design Build v Dealskart Online Services Private Limited & Ors.^[18]High Court of Delhi held that a mere lack of the words 'arbitrator' or 'arbitration' cannot render a purported arbitration clause to be invalid, however, at the same time, a mere mention of the said words would not ipso facto lead to the conclusion that a given clause is a valid arbitration agreement. It held that in case of an ambiguous clause, the court has to infer the understanding between the parties which would indicate an agreement to arbitrate from the agreement between the parties, as well as other circumstances or material shown to it. On such a consideration, the Court found that in the case at hand though the word arbitration was used in the clause but intention to arbitrate could not be gathered and thus dismissed the petition for appointment of arbitrator.

(xviii)Purpose of keeping a conciliation clause in any Agreement is to shorten the path for settlement of disputes between the parties

In M/s Sanjay Iron And Steel Limited v Steel Authority Of India^[19], High Court of Delhi was dealing with a case where the petitioner had sought to invoke arbitration though the agreement provided that the parties will try to resolve disputes through conciliation and only thereafter invoke, arbitration. The Court held that it was not a case where it was apparent that conciliation would serve no purpose as though a few communications have been exchanged between the parties raising grievance and replies thereto, however, both sides did not at all sit together to resolve the disputes. Thus, the Court directed that the parties are to first explore possibility of resolution of disputes through Conciliation in terms Clause of the Agreement and thereafter invoke arbitration and dismissed the petition for appointment of arbitrator.

(xix) Acceptance under S. 7 of the Indian Contract Act, 1872 must be absolute and unqualified to make terms of agreement binding including the arbitration clause

In Airox Technologies (P) L v Shanti Mukand Hospital^[20] High Court of Delhi was dealing with a case where appointment of arbitrator was sought on the basis of an arbitration clause contained in the final offer letter though the purchase orders executed pursuant thereto did not have an arbitration clause. The Court held that the Offer Letter does not constitute as a valid/ binding Arbitration Agreement between the parties as the offer letter was not accepted unconditionally and there was a counter offer. The Court held that the acceptance under S. 7 of the Indian Contract Act, 1872 must be absolute, unqualified, and unconditional to form a binding contract and, in light of a counter-offer which was undisputedly accepted by the Petitioner, it cannot be held that the Offer Letter was accepted to form a valid agreement.

(xx) Invocation of arbitration by one party qua its claims, does not mandatorily require for the other party to also simultaneously raise its claims, if any

In Airone Charters Pvt. Ltd. v Jetsetgo Aviation Services Pvt. Ltd. High Court of Delhi was dealing with a case where the Petitioner had sought to invoke arbitration qua claims which had been refused to be taken on record as counter claims by an already constituted Arbitral Tribunal between the same parties. The Tribunal had refused to take them on record due to failure to file them within time granted though otherwise the claims were within limitation. The Court held that there could be no inflexible rule requiring all disputes/claims to be raised at the time of invocation where the arbitration clause in the agreement between the parties does not expressly require reference of all existing disputes to arbitration. However, if such an express stipulation is contained in the arbitration clause, the party invoking arbitration cannot seek piecemeal reference of disputes which were in existence on the date when arbitration was initially invoked, and refer them to arbitration at different stages. The Court, however, clarified that the above principle, however, would have no applicability in a situation in which the two sets of claims being sought to be referred to arbitration are by different parties to the contract. So holding, the Court held that the petitioner was entitled to seek reference of its claims to arbitration but rejected the insistence that they be referred to the existing arbitral tribunal. It held that party autonomy entitles parties to choose their arbitrator and a party in a S. 11 party can only seek appointment of arbitrator and parties cannot insist that the arbitration must be conducted by a pre-existing Arbitral Tribunal, unless the opposite party consents to that arrangement.

(xxi) What constitutes the 'seat' of arbitral proceedings – the intention of the parties is germane and that can be discerned from terms of the contract

In ISGEC Heavy Engineering Ltd v Indian Oil Corporation Limited^[21], High Court of Delhi was dealing with a case where the clause in the agreement provided that venue of arbitration will be New Delhi but with the caveat that Arbitrators may with the consent of the parties agree upon any other venue. The Court accepted the contention of the Respondent that the said caveat made it evident that parties have not agreed that the seat of arbitration would be at New Delhi, instead, it is only a convenient place for conducting arbitration proceedings, which can be changed by agreement as per S. 20(3) of the Act. The Court held that the word 'seat' and 'venue' have different connotations and are not synonymous, in so far as the arbitration proceedings are concerned, although, they have often been used interchangeably. The Court held that the caveat provided in the clause prima facie, suggests that the 'venue' specified is not really envisaged as the 'seat' of the proceedings, which should be specified in certain terms. The Court also took note of the fact that unlike the open ended venue clause, the contract had a categorical jurisdiction clause which conferred jurisdiction on courts at Guwahati and thus it held that Delhi is only the venue and the juridical 'seat' shall vest with the civil court(s) at Guwahati.

(xxii) If the parties have entered into an agreement with a particular mechanism for appointment of arbitrator with open eyes, it is not open to ignore it and invoke exercise of powers in Section 11(6) of the Act.

In CG Tollway Limited v National Highway Authority Of India & Anr.^[22] High Court of Delhi dismissed the petition u/s 11 wherein the Petitioner had sought to avoid the procedure provided under the agreement for appointment of arbitrator on the ground that the appointing authority/institution provided in the agreement is for all intents and purposes controlled by the Respondent. The Court held that the petitioner was bound by the procedure for appointment agreed to by the parties and cannot byspass the same to approach Court u/s 11. It further held that objections as to the credibility of the appointing authority/institution are misfounded as the panel maintained by the said institution includes Bureaucrats, Chief Engineers, Secretaries to Government of India hailing from different educational background and also Former Judges whose integrity cannot be doubted.

Section 12(5)

(xxiii) Consent granted for extension of time of arbitral proceedings does not amount to express waiver under proviso to S 12(5)

In Larsen And Toubro Limited v HLL Lifecare Limited^[23] High Court of Delhi held that consent granted for extension of time of arbitral proceedings does not amount to express waiver as required for attracting the applicability of proviso to S. 12 (5). It also rejected the contention of the Respondent that arbitral proceedings being at an advanced stage, the petition for termination of mandate is met by laches. The Court held statutory right conferred by Section 12(5) of the 1996 Act cannot be divested and allowed the petition for termination.

(xxiv) no requirement for a party to raise any objections regarding bias of the arbitrator for seeking enforcement of the provisions of S. 12(5) of the A&C Act

In Delhi Buildtech Pvt. Ltd. v M/s. Satya Developers Pvt. Ltd.^[24], High Court of Delhi allowed the petition for termination of mandate of the arbitrator on the ground that Arbitrator is ineligible to act as an arbitrator as he was unilaterally appointed by the Managing Director of the respondent. It reiterated that in view of the unambiguous language of the proviso to S. 12(5), a waiver under S. 12(5) of the Act cannot be inferred by the conduct of the parties. The Court held that if the ineligibility u/s 12(5) is attracted by operation of law, the same would be attracted notwithstanding that no specific allegations of lack of independence or bias has been made against the arbitrator and no such allegations are required to be made.

Section 17

(xxv) Arbitrator cannot pass directions directing payments to be made to third parties, who are strangers to the arbitration proceedings

In M/s. Delhi Buildtech Pvt. Ltd. v M/s. Satya Developers Pvt. Ltd.^[25], High Court of Delhi held that an arbitrator u/s 17 could not pass directions inter alia directing the Appellant(Respondent before the arbitrator) to settle accounts of its sub-contractors and labourers by making payment to them. The Court held that while the Work Orders executed between the parties may have terms dealing with sub-contractors but they do not confer any right upon the Respondent (Claimant before the arbitrator) to enforce payment obligations of the sub-contractors/ labourers/ suppliers of the Appellant and such terms can only protect the Respondent or indemnify them in the event any obligation would fall upon them. The Court noted that arbitrator is not seized with any dispute between the Appellant and its sub-contractors and thus, directions issued are beyond the scope of reference and would cause grave injustice to the Appellant because it would have to make payments without adjudication of liability as the Appellant may have genuine disputes with its sub-contractors/ labourers etc. and its right to agitate the same cannot be foreclosed.

(xxvi) Emergency Arbitrator's orders, if provided for under institutional rules, would be covered by the Act and be an order under Section 17(1) of the Act.

no appeal lies under Section 37 of the Arbitration Act against an order of enforcement of an Emergency Arbitrator's order made under Section 17(2) of the Act.

In Amazon.Com NV Investment Holdings LLC v Future Retail Limited & Ors.^[26] Supreme Court held when S. 17(1) uses the expression "during the arbitral proceedings", the said expression would be elastic enough, when read with the provisions of Section 21 of the Act, to include emergency arbitration proceedings if provided for under the institutional rules agreed between the parties. The Court further held that as S. 9(3) and S. 17 form part of one scheme, it is clear that an "arbitral tribunal" as defined under S. 2(1)(d) would not apply and the arbitral tribunal spoken of in S. 9(3) would be like the "arbitral tribunal" spoken of in S. 17(1) which would include an Emergency Arbitrator appointed under institutional rules. The Court also held that legal fiction created under S. 17(2) for enforcement of interim orders is created only for the limited purpose of enforcement as a decree of the court and such fiction cannot be extended to encompass appeals from such orders and thus held appeal from an enforcement of an Emergency Arbitrator' order would not be maintainable.

(xxvii) Application of O. 39 principles to direct release of payment at an interim stage is impermissible as the same is in the nature of final relief

In M/s Varaha Infra Ltd. v M/s Jiangxi Construction Engineering (Group) Co. Ltd.^[27] High Court of Delhi was seized with a challenge to the order of the arbitration whereby the arbitrator has allowed release of part of the amount in dispute, at the interim stage, without adjudication, by applying principles that are essentially applicable to grant of interim injunctions viz. prima facie case, balance of convenience and irreparable loss. The Court held that these cardinal principles applicable for grant of interim measure(s) of protection could not be applied for issuing direction(s) that is akin to grant of final relief. It found that the relief granted is "final" in nature and could not have been premised on a prima facie interpretation.

(xxviii) Direction to deposit lease rent pending adjudication upheld

In M/s Cinepolis India Pvt. Ltd. v M/s Sarita Multiplex Pvt. Ltd^[28] High Court of Delhi held that if a lessee continues to remain in occupation of demised premises, then even though it may allege breach of lease which as per it dispenses the obligation to pay rent, it is imperative that the interests of lessor are also protected pending adjudication of alleged breach. It thus upheld the order of the Arbitral Tribunal directing deposit of lease rent.

(xxix)Bank guarantee can be ordered to be returned if the purpose for which it was given stands discharged

In Elena Power And Infrastructure Limited v Shapoorji Pallonji And Company Private Limited & Anr.^[29] High Court of Delhi upheld the order passed by the Arbitral Tribunal u/s 17 directing the return of the Retention Bank Guarantee (RBG) as the work had been admittedly completed and even defect liability period (DLP) over. The Court rejected the contention of the Appellant that in doing so the Tribunal had rendered final findings qua issues and pre-determined the claim raised by the Appellant about incomplete structural works. The Court held that the purpose for which the RBG was issued i.e. the DLP, has been completed and thus the RBG stood discharged.

(xxx) To what extent would the exercise of power, by the Court, under S. 9(1)(ii)(b) or by the Arbitral Tribunal under S. 17(1)(ii)(b) of the Act be governed by provisions of Order XXXVIII Rule 5 of the CPC

Sufficiency of evidence is not an aspect on the basis of which an interlocutory order of the Arbitral Tribunal can be set aside, in exercise of S. 37 jurisdiction.

In Augmont Gold Pvt. Ltd. v One97 Communication Limited^[30] High Court of Delhi reiterated that power of the Arbitral Tribunal under S. 17 and the power of the Court under S. 9 of the Act are co-extensive and co-equal in character and that while the Court or Arbitrator are not bound by the express words of Order XXXVIII Rule 5 of the CPC, while exercising jurisdiction under Section 9(1)(ii)(b) or S. 17()(ii)(b), the guiding principles behind the provision were required to be borne in mind especially prima facie finding of liability . It held that a direction under S. 17, by the Arbitral Tribunal to secure the admitted amount during the arbitral proceedings may not justify interference u/s 37, either on first principles or on merits, unless the finding of admission of liability on the part of the party who is asked to make the deposit is itself found to suffer from perversity or patent illegality.

Arbitration Court Reckoner : April & May 2021