Arbitration Cases Monthly Digest: August 2024
Mohd Talha Hasan
19 Sept 2024 12:09 PM IST
Supreme Court
Case Details: M/S D. KHOSLA AND COMPANY VERSUS THE UNION OF INDIA, SPECIAL LEAVE PETITION (CIVIL) NO.812 OF 2014
Citation : 2024 LiveLaw (SC) 558
The Supreme Court on Wednesday held that an Arbitral Tribunal is not empowered to grant interest upon interest while passing an arbitral award as the Arbitration Act, 1940 does not specifically provide for the grant of interest on interest.
In the light of the above legal provisions and the case law on the subject, it is evident that ordinarily courts are not supposed to grant interest on interest except where it has been specifically provided under the statute or where there is specific stipulation to that effect under the terms and conditions of the contract.
here is no dispute as to the power of the courts to award interest on interest or compound interest in a given case subject to the power conferred under the statutes or under the terms and conditions of the contract but where no such power is conferred ordinarily, the courts do not award interest on interest.”, the bench comprising Justices PS Narasimha and Pankaj Mithal said
Case Details: DLF LTD. (FORMERLY KNOWN AS DLF UNIVERSAL LTD) AND ANR. VERSUS KONCAR GENERATORS AND MOTORS LTD.
Citation : 2024 LiveLaw (SC) 565
In a significant judgment relating to International Commercial Arbitration, the Supreme Court has decided the two important questions on the enforcement of an arbitral award expressed in foreign currency to Indian Currency.
The two questions that appeared for the Court's consideration were:
Firstly, what is the correct and appropriate date to determine the foreign exchange rate for converting the award amount expressed in foreign currency to Indian rupees? Secondly, what would be the date of such conversion, when the award debtor deposits some amount before the court during the pendency of proceedings challenging the award?
Duty Of Every Arbitral Tribunal & Court To Examine What The Contract Provides : Supreme Court
Case Title– Pam Developments Private Limited v. State of West Bengal & Anr.
Citation : 2024 LiveLaw (SC) 613
The Supreme Court recently emphasised that the courts and arbitral tribunals have the duty to examine the contract clauses in proceedings concerning arbitration.
While upholding Calcutta High Court's decision to set aside the arbitrator's decision to award the amount for loss due to idle machinery and labour despite it being prohibited under the contract, the Court said :
“In fact, High Court did what the Arbitrator should have done. Examine what the contract provides. This is not even a matter of interpretation. It is the duty of every Arbitral Tribunal and Court alike and without exception, for contract is the foundation of the legal relationship…The Arbitrator did not even refer to the contractual provisions and the District Court dismissed the objections under Section 34 with a standard phrase as extracted hereinabove.”
High Courts
Bombay High Court
Which Court Can Extend Arbitration Deadlines? Bombay High Court Provides Clarification
Case Title: Sheela Chowgule vs Vijay V. Chowgule and ors
Case Number: WRIT PETITION NO. 88 OF 2024
The Bombay High Court bench of Justice M. S. Karnik and Justice Valmiki Menezes has held that when the High Court constitutes an arbitral tribunal, the High Court holds the jurisdiction to extend the time for completing the arbitration process.
Further, the bench clarified that if the tribunal was constituted through an agreement between the parties, the application for extending time can be addressed by the principal civil court with original jurisdiction, which includes both the district court and the High Court.
Calcutta High Court
No Independent Dispute Redressal Institution Recognised By Government In Kolkata, Parties Should Approach Court Under Section 11 For Appointment Of Arbitrator: Calcutta High Court
Case Title: Bhubaneshwari Seafood Private Limited And Anr. Vs Ugro Capital Limited
Case Number: IA NO. GA-COM/1/2024 In APOT/296/2024
The Calcutta High Court bench of Justice Sabyasachi Bhattacharyya has held that SAMA, an Online Dispute Resolution (ODR) platform, is not an independent Dispute Redressal Institution duly recognized by the Government of India in Kolkata. Therefore, the bench held that party should approach the court for the appointment of an arbitrator in view of disagreement.
Commercial Division Of High Court Can Hear Applications And Appeals Under The Arbitration And Conciliation Act, 1996 Filed On Original Side: Calcutta High Court
Case Title: M/S. Siemens Healthcare Private Limited Vs Sun Hospital And Ors.
Case Number: IA NO. GA/1/2024 and connected matter
The Calcutta High Court bench of Justice Sabyasachi Bhattacharyya has held that even if an application or appeal under the Arbitration and Conciliation Act, 1996 relating to a commercial dispute is filed on the Original Side of the High Court, the same can be heard and disposed by the Commercial Division of the High Court.
Grounds For Challenging Arbitral Awards Narrower Under 1940 Act Compared To 1996 Act: Calcutta High Court
Case Title: State of West Bengal Vs Sambhu Nath Ghosh and another
Case Number: A.P. No. 654 of 2011
The Calcutta High Court bench of Justice Sabyasachi Bhattacharyya has held that the grounds for challenging an arbitral award under the Arbitration Act of 1940 are more limited compared to those under the Arbitration and Conciliation Act of 1996.
The High Court considered the grounds enumerated under Section 34 of the 1996 Act which allow for a challenge if a party was incapacitated, if the arbitration agreement was invalid, if the applicant was not given proper notice of the Arbitrator's appointment, if the award dealt with matters beyond the arbitration agreement, or if the composition of the Arbitral Tribunal or the procedure was not in accordance with the agreement.
Government Entities Must Also Be Viewed Equally In Delay Condonation Applications Under Section 37 Of Arbitration Act: Calcutta High Court
Case Title: Hindustan Aeronautics Ltd. Vs Civcon Construction Pvt. Ltd.
Case Number: APOT/75/2024 IA NO: GA-COM/1/2024, GA-COM/2/2024
The Calcutta High Court bench of Justice Sabyasachi Bhattacharyya has held that a government entity should also be seen from an egalitarian perspective while considering application for condonation of delay in filing appeal under Section 37 of the Arbitration and Conciliation Act, 1996.
The bench held that while government agencies are not granted undue favor as litigants, there should also be no undue bias against them.
Section 34 Challenge Unwarranted If Arbitrator's Judgment Is Well-Reasoned And Based On Evidence: Calcutta High Court
Case Title: Damodar Valley Corporation Vs BLA Projects Pvt. Ltd.
Case Number: AP-COM No. 231 of 2024
The Calcutta High Court bench of Justice Sabyasachi Bhattacharyya has held that if an Arbitrator's judgment is well-reasoned and backed by substantial evidence, there are no grounds to challenge it under Section 34 of the Arbitration and Conciliation Act, 1996.
Case Title: Sajarul Rahaman And Anr vs Srei Equipment Finance Limited And Anr and Connected Matters
Case Number: AP-COM/304/2024 and connected matters
The Calcutta High Court bench of Justice Sabyasachi Bhattacharyya has held that the principal application under Section 34 of the Arbitration and Conciliation Act, 1996, challenging an arbitral award, falls under Entry No. 2(c) of Schedule II of the Court Fees Act. This entry is the residuary provision that prescribes a court fee of Rs. 120 for original applications before the High Court, where no other specific provision in Schedule II applies.
Delhi High Court
Case Title: M/S Plus91 Security Solutions Vs Nec Corporation India Private Limited (Erstwhile Nec Technologies Private Limited)
Citation: 2024 LiveLaw (Del) 869
The Delhi High Court division bench of Justice Vibhu Bakhru and Justice Tara Vitasta Ganju has held that an Arbitral Tribunal's decision to award damages for loss of profit is vitiated by patent illegality if it contradicts the express terms of the agreement between the parties.
The bench held that:
“It is essential to maintain the bargain entered into between the parties. The parties agreed that they would not be liable for (i) any indirect, special, or consequential loss or damage; (ii) any loss or damages due to loss of goodwill; and, (iii) loss of revenue or profit arising from or in connection with the MOU. f the MOU is accepted as a binding agreement, this is clearly a part of the bargain struck by the parties. Disregarding the said stipulation would in effect amount to rewriting the bargain between the parties.”
Case Title:Maruti Traders vs Itron India Pvt Ltd
Case Number: O.M.P. (COMM) 89/2024
The Delhi High Court bench of Justice C Hari Shankar has held that commerce is devoid of equity. The bench held that commercial transactions are driven by a harsh reality, and the principle of universal brotherhood does not extend to commercial dealings. In these transactions, there is no obligation on the arbitrator for fairness, kindness, or equity, and no court can mandate such qualities.
The bench noted that while there might be a limited expectation of fairness in transactions involving the Government, the contract's terms remain paramount. In commercial disputes, relief cannot be granted based on principles of equity and fairness; it must be sought within the framework of the Contract Act or relevant statutes.
Case Title: Hindustan Alloys Pvt. Ltd. Vs Maa Sheetla Ventures Limited
Case Number: W.P.(C) 10561/2024, CM APPL. 43391-43392/2024
The Delhi High Court bench of Justice Sanjeev Narula has held that the scope of judicial interference under Article 226 is limited when challenging an Arbitral Tribunal's order concerning the conduct of arbitration proceedings.
The bench held that a writ petition cannot be entertained against every interlocutory order related to case management. Such orders fall within the Arbitral Tribunal's discretion and authority which includes decisions on matters like summoning witnesses and producing documents.
Non-Response Can't Be Presumed As Consent For Appointment Of Arbitrator: Delhi High Court
Case Title: M/S S. K. BUILDERS v. M/S CLS CONSTRUCTION PVT LTD
Citation: 2024 LiveLaw (Del) 898
The Delhi High Court bench of J. C.Hari Shankar has held that consent requires consensus ad idem and there must be positive consent present from the petitioner side with respect to the appointment of an arbitrator. If such consent is absent, the appointment becomes unilateral and ex facie illegal.
Case Title: Index Hospitality Limited Vs Contitel Hotels And Resorts Pvt Ltd & Ors.
Citation: 2024 LiveLaw (Del) 909
The Delhi High Court bench of Justice Dharmesh Sharmab has held that breaches of undertakings given before a Court, or an Arbitral Tribunal should not be pursued under the Contempt of Courts Act. Instead, the High Court held that proper course of action is to seek enforcement of the arbitral award.
Court Has Power To Grant Anti-Enforcement Injunction Against Proceedings In Foreign Court Which Threaten Arbitral Process Initiated In India: Delhi High Court
Case Title: Honasa Consumer Limited Vs Rsm General Trading Llc
Citation: 2024 LiveLaw (Del) 922
The Delhi High Court bench of Justice C. Hari Shankar has held that when proceedings in a foreign court, or a decree issued by a foreign court, threaten the arbitral process that may be initiated in India, the court has the authority under Section 9 of the Arbitration Act to restrain the party from continuing with the foreign proceedings or enforcing the potentially prejudicial decree.
Section 29A Time Limit Does Not Apply To Arbitral Proceedings Commenced Before 2015 Amendment: Delhi High Court
Case Title: M/S Chinar Steel Industries Vs Ircon International Limited
Citation: 2024 LiveLaw (Del) 924
The Delhi High Court bench of Justice Prateek Jalan has held that time limit under Section 29A of the Arbitration and Conciliation Act is not applicable to arbitral proceedings “commenced” as per Section 21 prior to 2015 amendment.
The bench held the “commencement” of proceedings is the relevant yardstick for determining applicability of the Section 29A after 2015 amendment and is different from the concept of “entering upon the reference” referred to in Section 29A before the 2015 amendment.
Court's Role Under Section 11(5) Or 11(6) Of Arbitration Act Limited To Verifying Arbitration Agreement And Timely Filing: Delhi High Court
Case Title: Raj Kumari Taneja Vs Rajinder Kumar & Anr.
Citation: 2024 LiveLaw (Del) 929
The Delhi High Court bench of Justice C. Hari Shankar has held when a Court exercises jurisdiction under Section 11(5) or Section 11(6) of the Arbitration and Conciliation Act, 1996, it has to only ensure the existence of an arbitration agreement between the parties and to confirm that the petition under these sections has been filed within three years of the service of a Section 21 notice.
Excise Duty Disputes Non-Arbitrable Only When Involving Sovereign Functions Including Determination Of Tax Rate Or Liability: Delhi High Court
Case Title: Bharat Broadband Network Ltd. Vs Paramount Communications Ltd
Citation: 2024 LiveLaw (Del) 930
The Delhi High Court bench of Justice Prateek Jalan has held that a dispute regarding excise duty is only non-arbitrable when it involves a sovereign function, such as determining tax liability or the rate at which duty must be paid to revenue authorities. The bench clarified that this issue is separate from the dispute which concerns whether the claimant is obligated to pay the respondent for the goods supplied including excise duty at the rate specified in the invoices.
Allegations Of Fraud And Time-Barred Claims Must Be Addressed By Arbitral Tribunal, Not Court: Delhi High Court
Case Title: Dr. Rahul Bhayana Vs Dr. Rohit Bhayana & Anr.
Citation: 2024 LiveLaw (Del) 939
The Delhi High Court bench of Justice C. Hari Shankar has held that issues such as allegations of fraud and claims that the applicant's claims are time-barred must be addressed by the arbitral tribunal rather than the court.
Discovery And Inspection Orders By Arbitral Tribunal Are Not Interim Awards If They Do Not Resolve Disputed Issues: Delhi High Court
Case Title: Aptec Advanced Protective Technologies Ag Vs Union Of India & Anr
Citation: 2024 LiveLaw (Del) 944
The Delhi High Court bench of Justice Anup Jairam Bhambhani has held that an order by arbitral tribunal addressing applications related to the discovery and inspection of documents does not constitute an interim award if it does not resolve a matter at issue between the parties.
Court Acquires Jurisdiction Under Section 11(6) Of Arbitration Act Immediately On Default Of Pre-Arbitral Or Arbitral Procedure: Delhi High Court
Case Title: M/S Bksons Infrastructure Pvt. Lt Vs Managing Director, National Highways And Infrastructure Development Corporation
Citation: 2024 LiveLaw (Del) 942
The Delhi High Court bench of Justice C. Hari Shankar has held that court acquires jurisdiction under Section 11(6) of the Arbitration and Conciliation Act, 1996 immediately on the default, of either party, in adhering to the pre-arbitral or arbitral procedure envisaged in the contract.
Arbitral Tribunal Is Master of Evidence, Delhi High Court Upholds Award Against Railways
Case Title: Union Of India Vs M/S Parishudh Machines Pvt. Ltd.
Citation: 2024 LiveLaw (Del) 943
The Delhi High Court division bench of Justice Rajiv Shakdher and Justice Tara Vitasta Ganju has held that when an arbitrator delivers an Arbitral Award, the assessment of the quality and quantity of evidence presented to her must be respected, and any reasonable conclusion drawn by the arbitrator based on the facts should be upheld. The bench held that that the Arbitral Tribunal is the master of evidence and a findings of fact arrived at by an arbitrator is on an appreciation of the evidence on record are not to be scrutinised as if the Court was sitting in appeal (referred to State of Jharkhand v. HSS Integrated Sdn)
Case Title: Kunal Food Products Pvt. Ltd. Vs Delhi Development Authority
Citation: 2024 LiveLaw (Del) 946
The Delhi High Court bench of Justice Prateek Jalan has held that it is reasonable for an arbitrator to deny pre-reference and pendente lite interest when the applicant is partially responsible for delays in completing the project.
The bench held that interpreting a contract and determining claims based on that interpretation fall within the arbitral tribunal's authority.
Arbitration Clause Invalid If Contractor Cannot Select Arbitrator From Railway's Panel: Delhi High Court
Case Title: M/S Kamladityya Construction Pvt Ltd VS Rail Land Development Authority
Citation: 2024 LiveLaw (Del) 948
The Delhi High Court bench of Justice C. Hari Shankar has held that an arbitration clause is invalid if it does not allow the contractor to select an arbitrator from a panel provided by the Railway. The High Court noted that there was a significant distinction between the clause and the arbitration clause previously considered by the Supreme Court in Central Organization for Railway Electrification v. ECI-SPIC-SMO-MCML (JV).
Gujarat High Court
Case Title: Prabhudas Jesangbhai Patel Versus Vinodbhai Mohanbhai Togadiya
LL Citation: 2024 LiveLaw (Guj) 110
The Gujarat High Court bench of Justice J. C. Doshi has held that whether a party has waived their right to seek arbitration and submitted to the jurisdiction of the Court depends on the party's conduct during the suit.
However, the bench held that the legal principle remains that an application under Section 8(1) of the Arbitration and Conciliation Act, 1996, must be filed before the first statement on the substance of the dispute is submitted.
Himachal Pradesh High Court
Sec 151 CPC Application Not Maintainable When Sect 29A(4) Of Arbitration Act Applies, Incorrect Quote Of Section Not Grounds For Dismissal: HP High Court
Case Title: Kamlu vs Collector Land Acquisition
Citation: 2024 LiveLaw (HP) 52
The Himachal High Court bench of Justice Rakesh Kainthla has held that an application under Section 151 of the CPC is not maintainable when a specific provision exists under Section 29A(4) of the Arbitration and Conciliation Act, 1996 for extending the time of arbitration proceedings. However, the bench also held that the application cannot be dismissed solely because it cited Section 151 CPC instead of Section 29A(4) of the Arbitration Act.
Madhya Pradesh High Court
Arbitral Award Can Be Enforced Anywhere In Country Where Decree Is Executable: Madhya Pradesh High Court
Case Title: M/s Mahindra & Mahindra Financial Services Limited Versus Mr. Neelambar Singh Patel And Others
Case Number: CIVIL REVISION No. 240 of 2012
The Madhya Pradesh High Court bench of Justice Dwarka Dhish Bansal has held that an award could be enforced through its execution in any location within the country where the decree could be executed. The bench held that it is unnecessary to obtain a transfer of the decree from the Court that had jurisdiction over the arbitral proceedings.
State Not Part To Agreement Can't File Section 16 Application: Madhya Pradesh High Court
Case Title: The State Of Madhya Pradesh And Others Versus T.R.G. Industries Private Limited A Company Registered Under The Companies Act 1956 And Others
Case Number: WRIT PETITION No. 12871 of 2024
The Madhya Pradesh High Court bench of Chief Justice Sanjeev Sachdeva and Justice Rajendra Kumar Vani has held that an arbitration agreement entered into between the Ministry of Road Transport and Highways, Government of India, and a private company does not involve or implicate the State Government in any legal capacity. The bench held that such an agreement is exclusively between the central government ministry and the concerned company, thereby excluding any role or involvement of the State Government. As a result, the bench held that the State Government cannot be considered a party to the arbitration agreement or the related arbitral proceedings.
Punjab and Haryana High Court
Case Title: Shanker Printing Mills vs United India Insurance Company Ltd. and others
Case Number: ARB-47-2023 (O&M)
The Punjab and Haryana High Court bench of Justice Jagmohan Bansal has held that an arbitration clause in a partnership firm's agreement remains valid if a private limited company has taken over all the firm's assets and liabilities.
The High Court held that this arrangement can be inferred from both the dissolution deed of the partnership firm and in the company's Memorandum of Association and Articles of Association.
Case Title: M/S I Care Consultancy Vs L & T Finance Ltd And Ors
Case Number: ARB-57-2023
The Punjab and Haryana High Court bench of Justice Jagmohan Bansal has held that the High Court itself does not qualify as a Civil Court under Section 2(1)(e) of the Arbitration and Conciliation Act, 1996.
Consequently, the High Court held that it has jurisdiction under Section 11(6) of the Arbitration Act, which grants it authority where the principal Civil Court of original jurisdiction would have the power to address the issues that are subject to arbitration, if those issues were to be considered in a suit.
Rajasthan High Court
Arbitral Tribunal First To Adjudge Non-Arbitrability Of Dispute And Ground Of Res-Judicata, Courts Can Have Second Look After Award: Rajasthan HC
Title: Dilip Kumar v Dharampal Choudhary & Anr.
Citation: 2024 LiveLaw (Raj) 195
The bench of Justice Nupur Bhati at the Rajasthan High Court accepted an application filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 seeking appointment of an arbitrator and observed that the issue of non-arbitrability of a dispute under an arbitration agreement falls under the domain of the arbitral tribunal in the first instance and the courts have the power to only “second look” after passing of the arbitral award.The Court also opined that the question regarding the claim being barred by res judicata does not arise for consideration in proceedings under Section 11 of the Act, and hence, it also needs to be dealt with by the arbitral tribunal only.
Pre-Arb Step(s) Cannot Be Treated As Mandatory If Could Not Be Fructified: Rajasthan High Court
Title: M/S Larsen and Tourbo v Rajasthan Urban Sector Development Project & Anr.
Citation: 2024 LiveLaw (Raj) 215
The bench of Justice Sudesh Bansal at the Rajasthan High Court opined that where pre-arbitration steps mentioned in the agreement could not be fructified, it could not be held that those were mandatory in nature and in the event of failure of these no arbitration could be initiated. The Court held that it was a well settled principle of law that an arbitration agreement being a commercial one needed to be interpreted in a manner so as to give effect to the intention of the parties of referring a dispute to arbitration, rather than invalidating the same on technicalities.
