Arbitration Cases Weekly Round-Up: 18 September To 24 September, 2022

Mere Reference To Proposal Containing An Arbitration Clause, Unilaterally Signed By One Party, Would Not Amount To An Arbitration Agreement: Bombay High Court

Case Title: M/s. TCI Infrastructure Limited & Anr. versus M/s. Kirby Building Systems (Uttaranchal) Private Limited & Anr.

The Bombay High Court has ruled that in an agreement executed by both the parties which contains independent terms and conditions, a mere reference to a proposal containing an arbitration clause which was unilaterally signed by one party, would not amount to an arbitration agreement coming into existence between the parties.

The Single Bench of Justice Manish Pitale held that for an arbitration agreement to come into existence, there must be a document incorporating an arbitration clause or agreement which is executed by both the parties, showing a consensus ad-idem between them.

Kerala High Court:

Materials Before Court Insufficient To Decide Fraud In Relation To Existence Of Arbitration Agreement, Arbitrator To Decide Issue: Kerala HC

Case Title: M/s. SVS Marketing Sanitary Pvt. Ltd. versus M/s. Bathtouch Metals Pvt. Ltd.

Citation: 2022 LiveLaw (Ker) 493

The Kerala High Court on Thursday reiterated that where a plea of fraud is raised in a dispute, the civil aspect of fraud is arbitrable, unless the very arbitration agreement is found to have been vitiated by fraud.

As to the forum to decide upon the arbitrability of the agreement, Justice Satish Ninan reiterated that the Courts would be bound to refer the parties for adjudication unless it was evident that there was no valid arbitration agreement, nor an arbitrable dispute.

Orissa High Court:

Writ Not Maintainable Against Admission Of Petition Under Section 34 Of A&C Act Without Pre-Deposit: Orissa High Court

Case Title: M/s. Chemflo Industries Pvt. Ltd. versus M/s. KMC Construction Ltd. and Anr.

The Orissa High Court has ruled that the Court cannot entertain a writ petition against an order passed by the lower court admitting the application under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act) to set aside the arbitral award, despite the fact that the award debtor had failed to deposit 75% of the awarded amount, as mandated by Section 19 of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act).

The Single Bench of Justice Arindam Sinha held that rejection of the demurrer application, filed by the petitioner for violation of the provisions of Section 19 of the MSMED Act, can be taken as a ground of appeal under Section 37 of the A&C Act against the order passed in a Section 34 application. Hence, the Court ruled that it cannot be considered by the Court as a rarest of the rare case so as to exercise judicial review.

Rajasthan High Court:

Challenge Against Appointment Of Arbitrator Can Be Entertained Only After Passing Of The Award: Rajasthan High Court Reiterates

Case Title: Surya Wires Private Limited versus Rajasthan Skills and Livelihoods Development Corporation

The Rajasthan High Court has reiterated that any challenge against an arbitrator on the grounds contained in the Fifth Schedule of the Arbitration and Conciliation Act, 1996 (A&C Act), which give rise to justifiable doubts regarding his independence or impartiality, can be gone into by the Court only after the Arbitral Tribunal has given an award.

The Single Bench of Justice Pankaj Bhandari ruled that where the arbitration clause provided for referring the disputes to the Empowered Committee of Ministry of Rural Development, the Empowered Committee cannot be said to be an interested party, ineligible to be constituted as an Arbitral Tribunal under Section 12(5) of the A&C Act, since it was not a party to the agreement between the Rajasthan Skills and Livelihoods Development Corporation and the applicant.