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Arbitration Weekly Roundup: July 08 - July 14, 2024
Rajesh Kumar
16 July 2024 12:33 PM IST
Supreme Court Avoid Bulky Pleadings & Lengthy Submissions In Arbitration Appeals : Supreme Court To Advocates Case Title: Bombay Slum Redevelopment Corporation Private Limited Versus Samir Narain Bhojwani Citation : 2024 LiveLaw (SC) 445 Expressing displeasure over the filing of bulky and lengthy submissions in the arbitral proceedings, the Supreme Court on Monday (July...
Supreme Court
Avoid Bulky Pleadings & Lengthy Submissions In Arbitration Appeals : Supreme Court To Advocates
Case Title: Bombay Slum Redevelopment Corporation Private Limited Versus Samir Narain Bhojwani
Citation : 2024 LiveLaw (SC) 445
Expressing displeasure over the filing of bulky and lengthy submissions in the arbitral proceedings, the Supreme Court on Monday (July 8) called upon the Bar to urge only the legally permissible grounds in the arbitration proceedings carried under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996.
“When members of the bar take up so many grounds in petitions under Section 34, which are not covered by Section 34, there is a tendency to urge all those grounds which are not available in law and waste the Court's time. The time of our Courts is precious, considering the huge pendency. This is happening in a large number of cases. All this makes the arbitral procedure inefficient and unfair. It is high time that the members of the Bar show restraint by incorporating only legally permissible grounds in petitions under Section 34 and the appeals under Section 37.", the bench comprising Justices Abhay S. Oka and Pankaj Mithal said.
The Court believed that the growing tendency amongst the members of the bar to rely upon a large number of precedents, whether relevant or irrelevant, results in a very long hearing before the Courts in Sections 34 and 37 proceedings.
Case no. – Civil Appeal No. 7426 of 2023
Case Title – State of West Bengal & Ors. v. Rajpath Contractors and Engineers Ltd.
Citation : 2024 LiveLaw (SC) 454
The Supreme Court reiterated that if an arbitral award is challenged beyond the three-month limitation, the benefit of section 4 of the Limitation Act will not be available. The Court held that the 30-day extension period mentioned in the proviso to Section 34(3) of the Arbitration and Conciliation Act 1996 cannot be included in the "prescribed period" in Section 4 of the Limitation Act 1963.
Section 4 of the Limitation Act provides relief in case the court is closed on the day of expiry of the "prescribed period" for instituting a suit, appeal or application.
A bench of Justice Abhay Oka and Justice Pankaj Mithal dismissed the State of West Bengal's appeal challenging Calcutta High Court's decision that dismissed its petition under Section 34 of the Arbitration and Conciliation Act, 1996.
Allahabad High Court
Case Title: Savitri Devi v. Union of India and others 2024 LiveLaw (AB) 430 [APPEAL UNDER SECTION 37 OF ARBITRATION AND CONCILIATION ACT 1996 No. – 210 of 2023]
Case Citation: 2024 LiveLaw (AB) 430
Elucidating on the applicability of the judgment of the Supreme Court in Union of India v. Tarsem Singh and Ors 2019, the Allahabad High Court has held that “retroactive application of judicial decisions to arbitral awards would create legal and procedural chaos.”
For context, in Tarsem Singh (supra), the Apex Court held that the provisions regarding solatium and interest provided in the Land Acquisition Act would apply to acquisitions made under the National Highways Act. The court also held that this ruling of the Supreme Court shall apply to all pending cases.
The High Court was essentially dealing with an arbitration that had concluded in 2008. The Court held that reopening an arbitration because of a subsequent judicial decision would lead to instability and unpredictability in arbitral proceedings.
Bombay High Court
Case title: Ivory Properties & Hotels Private Limited vs. Vasantben Ramniklal Bhuta & Ors. (OS-COMAP-90-2020 and COMAP-91-2020)
Citation: 2024 LiveLaw (Bom) 342
The Bombay High Court set-aside an Arbitral Award under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act) as the Arbitrator relied on a non-executed agreement for arriving at the decision. The Court stated that it can annul an arbitral award under Section 34 if the arbitrator adopted a non-judicial approach.
The Division Bench of B.P. Colabawalla and Somasekhar Sundaresa were considering a commercial appeal filed by the appellant against Bottom of Forma Single Judge Bench's decision to set aside the Arbitral Award under Section 34 of A&C Act.
Calcutta High Court
Case Title: Kotak Mahindra Bank Limited Vs Shalibhadra Cottrade Pvt. Ltd. And Ors.
Case Number: Execution Case No. 193 2019
The Calcutta High Court bench of Justice Sabyasachi Bhattacharyya has held that even a unilateral appointment of the arbitrator, without any further allegation of bias under Section 12(5) of the Arbitration and Conciliation Act, 1996, renders the Arbitrator ineligible.
The bench held that in addition to the grounds specifically mentioned in Section 12(5) read with the Seventh Schedule unilateral appointment of Arbitrator by one of the parties itself has also been brought under the purview of disqualification by ineligibility.
Further, the High Court held that unilateral appointment arbitrator ineligibility under Section 12(5) of the Arbitration and Conciliation Act, 1996 does not void an arbitral proceeding and its consequential award ab initio.
Section 12(5) states that any person whose relationship with the parties or the subject matter of the dispute falls within the categories specified in the Seventh Schedule shall be ineligible to be appointed as an arbitrator.
Case Title: M/s Zillion Infraprojects Pvt Ltd Vs Bridge and Roof Co India Ltd
Case Number: AP-COM No. 77 of 2024 and AP No. 407 of 2022
The Calcutta High Court bench of Justice Sabyasachi Bhattacharyya has struck part of the arbitration clause as being violative of Article 14 of the Constitution. The clause prevented the subcontractor from participating in arbitration proceedings despite having to bear the expenses for its claims.
Further, it allowed the Indian Oil Corporation (IOCL) to unilaterally decide whether a dispute could be referred to arbitration, thus depriving the subcontractor of an independent right to raise disputes.
Delhi High Court
Case Title: BPT Infra Project Pvt. Ltd. Vs Indraprastha Ice And Cold Storage Pvt. Ltd.
Citation: 2024 LiveLaw (Del) 783
The Delhi High Court bench of Justice C. Hari Shankar has held that while exercising power under Section 27(1) of the Arbitration and Conciliation Act, 1996 to grant a request to summon a witness, the arbitrator is not required to offer detailed reasons when granting such a request.
Section 27(1) of the Arbitration and Conciliation Act, 1996 allows the arbitral tribunal or a party with the tribunal's approval to apply to the court for assistance in taking evidence.
Case Title: Nafees Ahmed Vs Delhi Tourism And Transportation Development Corporation Ltd
Citation: 2024 LiveLaw (Del) 782
The Delhi High Court bench of Justice C. Hari Shankar has held that coercion, or its absence in a dispute is a complex question, purely of fact, which has necessarily to be examined by the arbitral tribunal. The bench held that with the introduction of sub-Section 6(A) in Section 11, the jurisdiction of the referral court is now circumscribed.
Consequently, the High Court appointed Mr. P.V. Dinesh, Senior Advocate as arbitrator to resolve the disputes between parties.
Section 11(6A) reads as follows:
"The Supreme Court or, as the case may be, the High Court while considering any application under sub-section (4) or sub-section (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement."
Case Title: M/S Dhawan Box Sheet Containers Pvt Ltd Vs M/S Sel Manufacturing Co Ltd
Citation: 2024 LiveLaw (Del) 781
The Delhi High Court bench of Justice Prateek Jalan has held that when parties engage in actions based on invoices containing arbitration clauses, demonstrating mutual acceptance, an arbitration agreement may be inferred directly from those invoices. The High Court referred to the decision of the Supreme Court in Swastik Pipe Ltd. v. Shri Ram Autotech Pvt. Ltd. ("Swastik Pipe -1") where it was held that if the invoices with arbitration clauses were acted upon, demonstrating mutual acceptance, an arbitration agreement could be inferred. However, the Supreme Court noted that it has limited jurisdiction under Section 11 of the Arbitration Act which makes it necessary to do prima facie determination of the arbitration agreement's existence.
Case Title: Murari Lal Agarwal Vs Kmc Construction Limited & Ors.
Citation: 2024 LiveLaw (Del) 780
Case Number: ARB.P. 1416/2022
The Delhi High Court bench of Justice Prateek Jalan has held that in a 'two-contract case', a specific reference to the arbitration clause in an earlier contract is necessary for its incorporation into the main contract between the parties.
A 'two-contract case' refers to a situation where there are two separate contracts involved and the parties seek to incorporate terms, including an arbitration clause, from one contract into another.
Case Title: GJ (JV) Comprising of M/S Godara Construction Company M/S Jandu Construction India Pvt. Ltd. Vs Union Of India
Citation: 2024 LiveLaw (Del) 778
Case Number: ARB.P. 862/2024
The Delhi High Court bench of Justice Prateek Jalan has held that panel comprising of serving or retired officers of Railways not only restricted the party's choice but also compelled it to choose its nominee from amongst four names suggested by the Railways.
The bench noted that such a panel is not in consonance with the judgment of the Supreme Court in Central Organisation for Railway Electrification v. ECI-SPIC-SMO-MCML (JV).
Disputes Related To Lock-In Periods In Employment Contracts Are Arbitrable: Delhi High Court
Case Title: Lily Packers Private Limited Vs Vaishnavi Vijay Umak and connected matters
Citation: 2024 LiveLaw (Del) 777
Case Number: ARB.P. 1210/2023
The Delhi High Court bench of Justice Prathiba M. Singh has held that disputes relating to lock-in periods that apply during the subsistence of employment contracts are arbitrable under the Arbitration and Conciliation Act, 1996.
The High Court held that the three-year lock-in period did not constitute an unreasonable curtailment of the employees' right to employment and did not violate any fundamental rights. It noted that such clauses are typically negotiated voluntarily and entered into with mutual consent.
Arbitration Clause In Lease Agreement Invalidated By Subsequent Verbal Agreement: Delhi High Court
Case Title: Mukesh Khurana Vs Rahul Chaudhary
Citation: 2024 LiveLaw (Del) 773
Case Number: FAO 200/2024 & CAV 286/2024 & CM APPL. 36461- 36462/2024
The Delhi High Court bench of Justice Manoj Jain has held that the arbitration clause in a lease agreement ceases to exist if the lease terminates and a new verbal tenancy agreement is established.
The bench noted that:
“….but since previous agreement was replaced and substituted by an oral agreement, defendant cannot be permitted to fall back upon any of the term contained in the earlier lease agreement, which has now ceased to exist.”
Arbitration Clauses Require Explicit Reference In Subsequent Agreements: Delhi High Court
Case Title: Deepa Chawla Vs Raheja Developers Ltd
Citation: 2024 LiveLaw (Del) 772
Case Number: CS(OS) 416/2023
The Delhi High Court bench of Justice Jasmeet Singh has held that for an arbitration clause to be enforceable in subsequent agreements, it must be explicitly referenced within those agreements.
The bench noted that the subsequent agreement in the dispute contained a specific exclusion of the arbitration clause.
The bench held that:
“Both the parties have agreed to the said clause and therefore cannot at this stage seek a remedy that they have waived of by way of this express condition in the Second Agreement.”
Case Title: Growth Techno Projects Limited Vs Ishwar Industries Limited
Citation: 2024 LiveLaw (Del) 764
Case Number: OMP (ENF.) (COMM.) 224/2023
The Delhi High Court bench of Justice Jasmeet Singh has held the time period starting from the filing of the petition under Section 34 of the Arbitration Act till the amendment to the Arbitration Act in 2015, stands excluded from the counting of the limitation period for the enforcement of the arbitral award.
It held that the period from the filing of the Section 34 application until the amendment in Section 36 came into effect should be excluded from the limitation period.
The 2015 amendment to Section 36 of the Arbitration Act brought a change in the enforceability of arbitral awards. Prior to the amendment, the mere filing of a petition under Section 34 of the Arbitration Act, which challenges the arbitral award, resulted in an automatic stay on the enforcement of the award.
The post-amendment Section 36 specifies that the filing of an application under Section 34 does not automatically render the award unenforceable.
Section 34 allows a party to file an application for setting aside the award on specific grounds.
Section 36 outlines the process through which an arbitral award is enforced as if it were a decree of the court.
Himachal High Court
Case Title: Kamla Devi vs Land Acquisition Officer-cum-Competent Authority and another
Case Number: Arbitration Case No.573 of 2024
The Himachal Pradesh High Court bench of Justice Bipin Chander Negi onus is upon the arbitrator to perform the task entrusted to them within the time schedule prescribed in Section 29A of the Arbitration and Conciliation Act, 1996.
The bench noted that criticized an arbitrator appointed by Central Government under the National Highways Act for his callous attitude. The court noted that the arbitrator took upon the task of deciding the arbitration proceedings knowing fully well that if the proceedings are not completed within the time schedule, then unless the same is extended by a Court of Law, the mandate of the Arbitrator shall stands terminated.
Others
The Department of Law, Justice, and Parliamentary Affairs of the Government of Jammu and Kashmir has issued a circular and underscored the critical importance of adhering strictly to time limits in arbitration proceedings.
The circular observed shortcomings where arbitration cases have not been handled promptly which led to serious repercussions. Often, it noted that references to the Department of Law, Justice, and Parliamentary Affairs are delayed until the last moment, jeopardizing the validity of appeals against arbitral awards due to expired limitation periods.
The circular noted that such delays, compounded by inadequately drafted condonation applications lacking essential details, risk dismissal of meritorious appeals, make arbitral awards immediately enforceable without further court intervention.
