Arbitration Cases Weekly Round- Up: 11 June To 17 June 2023

High Courts:

Allahabad High Court:

Facilitation Council Which Was The Conciliator Under MSMED Act, Can Arbitrate The Dispute; Bar Contained In S. 80 Of Arbitration Act Not Applicable: Allahabad High Court

Case Title: Bata India Limited & Anr. vs U.P. State Micro and Small Enterprise Facilitation Council & Anr.

The Allahabad High Court has ruled that the discretion given to Facilitation Council under Section 18(3) of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) in respect of selection of forum for arbitration between the parties, is absolute and has overriding effect over any other law. In exercise of the said discretion, the provisions of the Arbitration and Conciliation Act, 1996 (A&C Act), including the prohibition contained in Section 80, will have no application, the court has ruled. Therefore, the court held that in the event the conciliation proceedings carried out by the Council under Section 18(2) of the MSMED Act fail, the Council can itself proceed to arbitrate the dispute between the parties. 

Bombay High Court:

Arbitration: Application For Amendment Of Statement Of Claims Can Be Opposed On All Available Grounds, Including Ground Of Delay: Bombay High Court

Case Title: Kavis Fashions Private Limited vs Dimple Enterprises and others

The Bombay High Court has ruled that the opposite party is entitled to oppose the application for amendment of Statement of Claims on all available grounds. The bench of Justice Manish Pitale rejected the contention that under Section 23(3) of the Arbitration and Conciliation Act, 1996 (A&C Act), a party opposing the amendment application can oppose the same only on the ground of delay in making the amendment.

The court remarked that Section 23(3) uses the words ‘having regard to the delay in making it’ in contradistinction to the words ‘having regard only to’. Thus, the opposite party is entitled to oppose the application for amendment on all available grounds, including the ground of delay, the bench said.

Mere Filing Of S. 7 Application Under IBC Does Not Bar Application For Appointment Of Arbitrator: Bombay High Court

Case Title: M/s Sunflag Iron & Steel Co. Ltd vs M/s. J. Poonamchand & Sons

The Bombay High Court has ruled that mere filing of an application under Section 7(1) of the Insolvency and Bankruptcy Code, 2016 (IBC) is not enough to invoke the bar of Section 238 of the Code. Thus, the same would not bar the court from entertaining an application under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (A&C Act) for appointment of Arbitrator, the court said.

The bench of Justice Avinash G. Gharote held that there is no inconsistency between the provisions of the A&C Act and the IBC, since the provisions of Section 238 of the IBC would come into play only after an order has been passed by the Adjudicating Authority under Section 7(5) of the Code. 

Calcutta High Court:

Application Under Section 11 Of The Arbitration And Conciliation Act Not To Be Dismissed On Technical Grounds: Calcutta HC

Case Title: Chandan Chatterjee and others vs Gita Sundararaman and others

The Calcutta High Court has recently held that application under Section 11 of the Arbitration and Conciliation Act, 1996 ought not to be dismissed on technical and/or procedural grounds. The court further observed that the requirement under the rules of procedure to file original arbitration agreement or certified copy thereof may be waived by the Court where the arbitration agreement is admitted. The court thus allowed the application under Section 11 and an Arbitrator was appointed.

Mere Use Of The Word ‘Arbitration’ Or ‘Arbitrator’ In A Heading Or Clause Would Not Aggregate To An Arbitration Agreement: Calcutta HC

Case Title: Blue Star Limited vs Rahul Saraf 

While holding non-existence of an arbitration agreement between the parties, the Calcutta High Court recently held that an arbitration agreement may be couched in various modes and forms, however, mere mentioning of the term ‘arbitration’ or ‘arbitrator’ in a heading or existence of these terms in a scattered manner in clauses of agreements between parties do not aggregate to being an arbitration agreement.

Delhi High Court:

Orders Of Arbitral Tribunal Not Signed By All Arbitrators And Absence Of An Arbitrator During Certain Proceedings, Cannot Be A Ground To Set Aside Award: Delhi High Court

Case Title: MMTC Limited vs Aust Grain Exports Pty. Ltd 

The Delhi High Court has reiterated that procedural irregularity cannot be a ground to set aside the Arbitral Award unless such irregularity goes to the root of the matter and shocks the conscience of the Court, thus making the Award illegal.

The bench of Justice Chandra Dhari Singh made the observation while dismissing a petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act), challenging the majority Arbitral Award passed against the petitioner, MMTC Ltd.

National Consumer Disputes Redressal Commission (NCDRC):

NCDRC Reiterates, Arbitration Clause Doesn't Bar Consumer Fora's Jurisdiction To Hear Complaints

Case: Army Welfare Housing Organisation vs Chief Administrator, Huda & Anr.

The New Delhi bench of the National Consumer Disputes Redressal Commission (NCDRC) bench comprising presiding members, C. Vishwanath and Subhash Chandra, recently held that the presence of an arbitration clause in an agreement does not prevent Consumer Fora from exercising their jurisdiction to entertain a Complaint. To emphasize the stance further, reference was made to Section 3 of the Consumer Protection Act, 1986 which clearly states that the Act's provisions are in addition to and not in derogation of any other prevailing law. The NCDRC also affirmed its jurisdiction in cases involving some questions of law and facts.

Other:

Union Government Constitutes Expert Committee For Reforms In Arbitration And Conciliation Act

The Ministry of Law & Justice has constituted a sixteen-member expert committee headed by Dr. T.K. Vishwanathan, Former Secretary of the Department of Legal Affairs, for examining the working of arbitration law in India and recommending reforms in the Arbitration and Conciliation Act, 1996. 

The committee is expected to submit its recommendations within 30 days. The step is being taken to limit the requirement for parties to seek judicial intervention by approaching court.