Supreme Court: Starting Point Of Limitation U/ Section 34(3) Arbitration Act In Cases Of Suo Motu Correction Of Award: Supreme Court Explains Case Title: USS Alliance versus State of Uttar Pradesh The Supreme Court has observed that the starting point for the limitation under Section 34(3) Arbitration and Conciliation Act, in case of suo moto correction of the award, would be...
Supreme Court:
Case Title: USS Alliance versus State of Uttar Pradesh
The Supreme Court has observed that the starting point for the limitation under Section 34(3) Arbitration and Conciliation Act, in case of suo moto correction of the award, would be the date on which the correction was made and the corrected award is received by the party.
Once the arbitral award has been amended or corrected, it is the corrected award which has to be challenged and not the original award, the bench of Justices Sanjiv Khanna and M M Sundresh observed.
Case Title: TATA Sons Pvt Ltd versus Siva Industries and Holdings Ltd
The Supreme Court has held that the time limit of twelve months as prescribed in Section 29A of Arbitration and Conciliation Act is not applicable for international commercial arbitration.
"In terms of the amended provisions of Section 29A, arbitral tribunals in international commercial arbitrations are only expected to make an endeavor to complete the proceedings within twelve months from the date of competition of pleadings and are not bound to abide by the time limit prescribed for domestic arbitrations.", the bench of CJI D Y Chandrachud and Justice P S Narasimha observed.
High Courts
Bombay High Court:
Dispute Between Service Providers Can’t Be Referred to Arbitration: Bombay High Court
Case Title: World Phone Internet Services Pvt. Ltd. versus One OTT Intertainment Ltd. In Centre
The Bombay High Court has ruled that the Telecom Regulatory Authority of India Act, 1997 (TRAI Act) is a self-contained Code, intended to deal with all disputes arising out of the Telecommunication Services provided in the country and therefore, the dispute between service providers which is likely to affect the consumers/subscribers, cannot be referred to arbitration.
Case Title: Edufocus International Education LLP versus Yashovardhan Birla & Ors.
The Bombay High Court has reiterated that dispute between parties arising under the Leave and License Agreement, emanating from a relationship of a licensor and licensee, cannot be referred to arbitration in view of the statutory bar contained in Section 41 of the Presidency Small Cause Courts Act, 1882 (PSCC Act), as per which the Small Causes Court alone would have the jurisdiction to adjudicate the dispute.
The bench of Justice N. J. Jamadar, however, observed that an Agreement to Lease merely contemplates to create a lease in the future and thus, the bar under Section 41 will not apply to the dispute arising under it. Thus, specific performance of the Agreement to Lease can be sought even before an Arbitrator, the Court held.
Clause Contained In The Tax Invoice Amounts To An Arbitration Clause: Bombay High Court
Case Title: Bennett Coleman & Co. Ltd versus MAD (India) Pvt Ltd
The Bombay High Court has held that the clause contained in the invoices, which clearly stipulates a reference to arbitration, deserves to be construed as an arbitration clause.
The single bench of Justice Bharati Dangre has observed that any document in writing exchanged between the parties that provides a record of the agreement and in respect of which there is no denial by the other side, would squarely fall within the ambit of Section 7 of the Arbitration and Conciliation Act, 1996, and would amount to an arbitration clause.
Case Title: Deepti Prakash Ghate versus NKGSB Co. Op. Bank Ltd
The Bombay High Court has set aside an award passed pursuant to an arbitral reference made under Section 84(1) of the Multi-State Cooperative Societies Act, 2002 (MSCS Act), since the award debtor was not a member of the Co-operative Society.
The bench of Justice Manish Pitale ruled that a dispute, which is not covered under Section 84 (1) of the MSCS Act, would not be capable of being referred to arbitration. Thus, the Court concluded that the arbitral award was rendered without jurisdiction against the petitioner/ award debtor.
Case Title: TLG India Pvt Ltd versus Rebel Foods Pvt Ltd
The Bombay High Court has ruled that while the limitation period for filing an application under Section 11 of the Arbitration and Conciliation Act, 1996 (A&C Act), seeking appointment of arbitrator, is to be examined by the Court, the limitation aspect of the substantive claims is to be looked into only by the arbitral tribunal and not by the Court. The bench of Justice Bharati Dangre added that the only exception to this is, if the claim being referred to arbitration is hopelessly barred by limitation, which is apparent from the admitted facts and documents.
The Court further remarked that, “Seeking adjudication of claims after a long gap of time definitely causes more injustice than justice, particularly when certain rights are vested in the parties and it would become greatly impossible to dislodge these rights”.
Case Title: Thomas Cook (India) Limited versus Red Apple Chandrarat Travel
The Bombay High Court has ruled that the ground of limitation, being a mixed question of law and fact, can never be a ground which would involve any “basic notions of morality or justice” for setting aside an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act).
The Court reckoned that the arbitral tribunal had concluded that the claims raised by the claimant were not barred by limitation, by recording a finding of fact that there was a running account between the parties. The bench of Justice G. S. Kulkarni ruled that the said finding of fact cannot be re-examined by appreciating evidence under Section 34 of the A&C Act.
Case Title: Zenobia Poonawala versus Rustom Ginwalla & Ors.
The Bombay High Court has ruled that if an award debtor has failed to take recourse to the provisions of Section 26 of the Arbitration and Conciliation Act, 1996 (A&C Act), it cannot seek to set aside the award on the ground that the expert, whose report was relied upon by the arbitrator, was not examined by the opposite party.
Case Title: Bajaj Electricals Limited versus Chanda S. Khetawat & Anr.
The Bombay High Court has ruled that once reference under Section 18(1) of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) is made and the Facilitation Council is in the process of commencing arbitration under Section 18(3), the application under Section 11 of the Arbitration and Conciliation Act, 1996 (A&C Act) seeking appointment of arbitrator cannot be allowed merely because the parties had entered into an arbitration agreement.
Calcutta High Court:
Case Title: Uphealth Holdings Inc versus Glocal Healthcare Systems Pvt. Ltd. & Ors.
The Calcutta High Court has allowed the application filed under Section 9 of the Arbitration and Conciliation Act, 1996 (A&C Act), seeking interim measures granted by the Emergency Arbitrator under the ICC Arbitration Rules.
The bench of Justice Ravi Krishan Kapur noted that the A&C Act does not provide for enforcement of orders passed by an Emergency Arbitrator in cases of a foreign seated arbitration. However, it observed that both the parties had participated in the proceeding before the Emergency Arbitrator and had agreed to be bound by its order, which was well-reasoned and elaborate. Thus, the Court concluded that the order of the Emergency Arbitrator can be taken into account at the stage of considering a Section 9 application.
Delhi High Court:
Case Title: Govind Singh versus Satya Group Pvt Ltd
The High Court of Delhi has held that mere participation in the arbitration proceedings cannot be considered to be waiver of Section 12(5) that provides for ineligibility of arbitrator.
The bench of Justices Vibhu Bakhru and Amit Mahajan held that applicability of Section 12(5) can only be waived off by an express agreement and not by the conduct of parties. The Court held that the objection to challenge an arbitration award on the ground of ineligibility of arbitrator due to his unilateral appointment can be raised regardless of no such objection being taken before the arbitrator.
Case Title: Raj Kumar Gupta versus M/s Narang Constructions & Financiers Pvt Ltd
The Delhi High Court has ruled that non-attestation of the affidavit accompanying the application filed under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act) is a mere procedural irregularity. Thus, it cannot be treated as fatal to the institution of the suit, the bench of Justice Neena Bansal Krishna concluded. The Court held that the application cannot be considered as non-est for the purpose of computing limitation under Section 34 (3).
Case Titled: M/s Fermina Developers Private Limited versus Indiabulls
The Delhi High Court has ruled that the dispute between the parties, relating to whether the petitioner/debtor had made a default in repaying the loan, empowering the respondent/creditor to proceed under Section 13 of the SARFAESI Act, involved the determination of debt. Thus, the dispute fell within the scope of adjudication contemplated under Section 13 of the SARFAESI Act and it cannot be referred to arbitration, the bench of Justice Yashwant Varma held.
Case Title: Sanghvi Movers Ltd. versus Vivid Solaire Energy Pvt Ltd
The Delhi High Court has ruled that the parties would be governed by the arbitration clause contained in the Contract, even though the arbitration clause is not specifically incorporated in the purchase orders.
The bench of Justice Mini Pushkarna held that the purchase order was not independent of the Contract and that the parties clearly intended the Contract to be the main agreement. Thus, the Court concluded that the parties would be governed by the arbitration clause contained in the Contract.
Case Title: M/s Liberty Footwear Company versus M/s Liberty International
The Delhi High Court has reiterated that disputes relating to subordinate rights in personam arising from rights in rem are arbitrable. Thus, the bench of Justice Navin Chawla concluded that the dispute whether a partner can use the partnership firm’s trade mark for his own sole proprietorship concern, can be referred to arbitration.
The Court further ruled that merely because a Statute specifies which Civil Court is to adjudicate a dispute, is not enough to infer the implicit non-arbitrability of such dispute.
Case Title: Oil and Natural Gas Corporation versus Joint Venture Of M/s Sai Rama Engineering Enterprises (SREE) & M/s Megha Engineering & Infrastructure Limited (MEIL)
The Delhi High Court has ruled that an application to set aside an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act) does not cease to be an application merely because the applicant has not complied with certain procedural requirements. The bench of Justices Vibhu Bakhru and Purushaindra Kumar Kaurav held that filing an affidavit in support of an application and the statement of truth by way of an affidavit, are procedural requirements. In absence of these requirements, the application cannot be treated as non est, the Court said.
The Court added that though filing of a court fee is necessary, however, the defect in not filing the court fee along with the application can be cured and it would not render the application invalid.
Court Has No Jurisdiction To Review Order Passed Under Section 11 of A&C Act: Delhi High Court
Case Title: M/s Diamond Entertainment Technologies Private Limited & Ors. versus Religare Finvest Limited
The Delhi High Court has reiterated that orders passed in an application filed under Section 11 of the Arbitration and Conciliation Act, 1996 (A&C) cannot be reviewed since there is no provision of review contained in the A&C Act.
The bench of Justice Neena Bansal Krishna, while dismissing a review petition filed against the arbitral reference made under Section 11, held that in view of the decision of Apex Court in M.D. Frozen Foods Exports Pvt Ltd versus Hero Fincorp Ltd. (2017), disputes covered under the SARFAESI Act in respect of which proceedings under the SARFAESI Act are initiated, can be referred to arbitration.
Case Title: Union of India & Anr. versus Alcon Builders and Engineer Pvt. Ltd
The Delhi High Court has ruled that the mandate contained in Section 31(3) of the Arbitration and Conciliation Act, 1996 (A&C Act), as per which an arbitral award shall state the reasons on which it is based, must pervade every aspect of the award, including the award of costs.
“Awarding costs by a stroke of the pen, without stating reasons therefor, would fly in the face of section 31(3), apart from being opposed to well accepted canons of fairness and justice”, the bench of Justice Anup Jairam Bhambhani remarked. The Court thus set aside the award of costs made against the award debtor, holding that the same was arbitrary since it was unreasoned and did not contain any quantification.
Case Title: Monika Oli versus M/s CL Educate Ltd.
The Delhi High Court has ruled that delivery of arbitral award, to be effective under the Arbitration and Conciliation Act, 1996 (A&C Act), must be made to a person who has direct knowledge of the arbitral proceedings. The bench of Justice Chandra Dhari Singh remarked that the word ‘party’ in Section 34(3) of the A&C Act means party to the arbitral proceedings and does not include an agent of the party as well.
The Court further held that, delivery of the arbitral award to the employee of an entity in which the award debtor is a shareholder but the arbitral dispute does not pertain to that entity, would not constitute as proper delivery in terms of the A&C Act.
Case Title: Bright Simons versus Sproxil Inc & Anr.
The Delhi High Court has ruled that merely because the arbitrator had wrongly applied the .IN Domain Name Dispute Resolution Policy (INDRP Policy), while adjudication a dispute over domain names under the said Policy, the award cannot be set aside in the absence of perversity.
The bench of Justice Chandra Dhari Singh ruled that the terminology used by the arbitrator in the award, that the party had failed to prove its claim “beyond doubt”, cannot be equated with the legal term ‘beyond reasonable doubt’, as is used in the criminal trial. Thus, the Court rejected the argument that the standard of proof imposed by the arbitrator violated the fundamental principles of Indian law.
Case Title: Hindustan Zinc Ltd versus National Research Development Corporation
The High Court of Delhi has held that objections available under Section 47 of CPC cannot be considered by a Court at the time of enforcement of an arbitration award under Section 36 of the Arbitration and Conciliation Act, 1996 (A&C Act).
The bench of Justice Vashwant Varma held that though under the Arbitration Act, 1940, the Arbitral Award was required to be made a rule of the Court and a decree, but Section 36 of the Arbitration Act, 1996, confers the Arbitral Award with a status of a decree to be enforced in the same manner as if it were a decree of the Court. However, the deeming fiction is limited for the purpose of enforcement and not to make it a decree for all purposes. Thus, the objections that can be raised against a decree at the enforcement stage would not apply to an arbitration award which is a deemed decree only, the Court said
Arbitration Clause Continues To Operate Even After Dissolution Of Partnership: Delhi High Court
Case Title: M/s Shyamjee Prepaid Services versus M/s Top Steels & Mrs. Renu Devi & Anr.
The Delhi High Court has ruled that an arbitration clause contained in a contract executed with a partnership firm, will continue in effect even after the death of a partner causes the dissolution of the partnership.
The bench of Justice Chandra Dhari Singh held that the Court has the power to conduct a procedural review of its order passed under Section 11 of the Arbitration and Conciliation Act, 1996 (A&C Act). It further remarked that the Courts’ competence to review Section 11 orders is unaffected by substantive concerns like a Tribunal’s jurisdiction or the authenticity of evidence.
Case Title: Chabbras Associates versus HSCC India Limited
The High Court of Delhi has held that an application for the appointment of an arbitrator under Section 11 of the A&C Act would be premature if it is filed without compliance with the pre-arbitration internal dispute resolution mechanism stipulated under the agreement.
The bench of Justice Navin Chawla held that when the agreement provides for a multi-tier dispute resolution process in the form of reference of dispute, firstly, to some internal authorities and on being dissatisfied, to invoke arbitration, then the parties cannot directly approach the court for the appointment of arbitrator without exhausting the remedy given under the contract.
Gujarat High Court:
Case Title: Anupam Industries Ltd. versus State Level Industry Facilitation Council
The Gujarat High Court has ruled that arbitral proceedings initiated under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) relating to the services provided by the claimant before its registration under the MSMED Act, are void-ab-initio.
The bench of Dr. Justice A. P. Thaker held that for initiation of proceedings like conciliation and arbitration under the MSMED Act, it is necessary that such firm/supplier is registered under the MSMED Act during the relevant time. It added that since the lack of jurisdiction of the Arbitral Tribunal went to the root of the entire proceeding, even if the opposite party had knowledge regarding the arbitral proceedings conducted under the MSMED Act and it did not participate in the proceedings, that would not give the Tribunal any jurisdiction under the MSMED Act.
Madras High Court:
Case Title: M/s. Radha Meditech versus M/s Cook India Medical Devices Pvt Ltd
While disposing of a Section 11 application for the appointment of an arbitrator filed under the Arbitration and Conciliation Act, the Madras High Court followed the procedure adopted by the Supreme Court in Bharat Sanchar Nigam Limited and another Vs. Nortel Networks India Private Limited. In the above case, the Supreme Court had held that when there is no vestige of doubt that the claim was ex facie time barred, it must be referred to arbitration. However, when there was even the slightest of doubt, the rule was to refer to arbitration.
Non - Signatory Can Be Referred To Arbitration Under ‘Doctrine Of Alter Ego’: Madras High Court
Case Title: Vatsala Jagannathan & Anr. versus Tristar Accommodations & Ors.
The Madras High Court has ruled that non-signatories to arbitration agreement can be referred to arbitration by invoking the ‘doctrine of alter ego’ only in exceptional cases where there is convincing evidence that the non-signatory is the ‘alter ego’ of the signatory.
The bench of Justice Senthilkumar Ramamoorthy remarked that the doctrine of alter ego is applied in exceptional circumstances by piercing the corporate veil of the signatory Company in order to determine who lurked behind it at the relevant point of time.
Punjab & Haryana High Court:
Case Title: M/s Simplex Infrastructure Ltd. & Anr. versus M/s J.P. Singla Engineers and Contractor
The Punjab and Haryana High Court has ruled that where the liability to pay dues under a Contract is admitted by the parties, the dispute between them relating to non-payment cannot be said to be a dispute that ‘arose out of’ or ‘in connection with’ the Contract and thus, it cannot be referred to arbitration. The bench of Justice Nidhi Gupta ruled that it was a simple case of non- payment of the final amount due under the Contract.