Weekly Digest Of Arbitration Cases: April 10 To April 17, 2022

1. Writ Petitions On The Ground Of 'Exceptional Circumstances' Against Order Passed By The Arbitral Tribunal Not Maintainable: Bombay High Court

Case Title: Tagus Engineering Private Limited & Ors. versus Reserve Bank of India & Anr. and IDFC First Bank Limited versus Bell Invest India Limited & Anr.

Citation: 2022 LiveLaw (Bom) 127

The Bombay High Court has ruled that remedy against orders passed under Section 16 of the Arbitration and Conciliation Act, 1996 lies elsewhere and the petitioners, aggrieved by the orders passed under Section 16, cannot file Writ Petitions under Article 226 or Article 227 of the Constitution of India on the ground of 'exceptional circumstances'.

The Bench, consisting of Justices G.S. Patel and Madhav J. Jamdar, held that it is impermissible for the Court to exercise jurisdiction under Article 226 of the Constitution even on questions with respect to the jurisdictional competence of an Arbitral Tribunal, except in cases where the arbitral tribunal is a statutory tribunal created by a statute.

2. Court Does Not Have Adjudicatory Powers Under Section 27 Of The A&C Act: Bombay High Court

Case Title: Dilip s/o. Bhavanji Shah versus Errol Moraes

Citation: 2022 LiveLaw (Bom) 130

The Bombay High Court has ruled that the Court does not have the jurisdiction under Section 27 of the Arbitration and Conciliation Act, 1996 (A&C Act) to consider the legality of the reasons set out by the arbitral tribunal in its order permitting the examination of a witness.

The Single Bench of Justice G.S. Kulkarni ruled that once the arbitral tribunal had formed a prima facie opinion that a particular witness is required to be examined by a party in the arbitral proceedings, the reasons laid down by the tribunal in its order cannot be revisited and scrutinized by the Court, since proceedings under Section 27 of the A&C Act are not in the nature of an appeal and the Court does not have any adjudicatory powers under Section 27.

3. Tax Invoices Containing Reference To Arbitration, Does Not Constitute An Arbitration Agreement: Bombay High Court

Case Title: Concrete Additives and Chemicals Pvt Ltd versus S N Engineering Services Pvt Ltd.

Citation: 2022 LiveLaw (Bom) 133

The Bombay High Court has ruled that acceptance of tax invoices by the opposite party, containing a reference to arbitration, does not lead to the presumption that an arbitration agreement exists between the parties.

The Single Bench of Justice G.S. Kulkarni held that unilateral invoices cannot bring about an arbitration agreement between the parties.

4. Court Can Appoint An Arbitrator During The Pendency Of An Appeal Against An Award, Set Aside On Reasons Other Than Merit : Bombay High Court

Case Title: Wadhwa Group Holdings Pvt. Ltd. versus Homi Pheroze Ghandy and Anr.

Citation: 2022 LiveLaw (Bom) 134

The High Court of Bombay has held that when an award is set aside for other reasons and not on merit, the parties are well within their rights to initiate fresh arbitration in respect of the same claims and pendency of an appeal against such an order is not a ground to refuse the appointment.

The Single Bench of Justice A.K. Menon has further held that an objection as to the claims being barred by Res Judicata, since an appeal is pending before the Court, is outside the limited scope of judicial examination permissible under Section 11 of the A&C Act. The Court held that invocation of arbitration cannot be subjected to the fate of the appeal.

1. Scope Of Section 9 Of The A&C Act Cannot Be Extended To Enforcement Of The Arbitral Award: Calcutta High Court

Case Title: M/s. Satyen Construction versus State of West Bengal & Ors.

Citation: 2022 LiveLaw (Cal) 124

The Calcutta High Court has ruled that the scope of Section 9 of the Arbitration and Conciliation Act, 1996 (A&C Act) cannot be extended to enforcement of the arbitral award or granting the fruits of the award to the award holder as an interim measure.

The Single Bench of Justice Ravi Krishan Kapur held that the right to withdraw the amount deposited by the award debtor, pursuant to an application filed for stay of operation of the award under Section 36(2), does not constitute as an interim protection under Section 9 of the A&C Act since it transgresses into the domain of enforcement of the award.

2. Arbitration Agreement Not Discharged By Death Of A Party And Is Enforceable Against The Legal Representatives: Calcutta High Court

Case Title: Dr. Papiya Mukherjee versus Aruna Banerjea and Anr.

Citation: 2022 LiveLaw (Cal) 125

The Calcutta High Court has ruled that an arbitration agreement will not be discharged by the death of a party and it will be enforceable by or against the legal representatives of the deceased party.

Delhi High Court

1. Claims Raised Before The Arbitral Tribunal Cannot Be Rejected Even If Not Mentioned In The Notice Issued Under Section 21 Of The A&C Act: Delhi High Court

Case Title: Ministry of Youth Affairs & Sports versus Agility Logistic Pvt Ltd

Citation: 2022 LiveLaw (Del) 307

The Delhi High Court has ruled that it is not necessary that a notice issued under Section 21 of the Arbitration and Conciliation Act, 1996 should quantify the amounts that are claimed by the claimant before the Arbitral Tribunal.

The Single Bench of Justice Vibhu Bakhru held that a notice under Section 21 is required to set out the disputes between the parties, and upheld the view of the Arbitral Tribunal that the claims raised by the claimant before the Arbitral Tribunal cannot be rejected only on the ground that they were not mentioned in the notice issued under Section 21.

2. Time Spent In Mediation Would Be Excluded For The Purpose Of Calculating The Period Of Limitation For Invoking Arbitration: Delhi HC

Case Title: Alstom Systems India Pvt. Ltd. versus Zillion Infraprojeccts Pvt. Ltd.

Citation: 2022 LiveLaw (Del) 311

The High Court of Delhi has observed that when the agreement between the parties provides for mandatory mediation, the time spent in the mediation process shall be excluded from the period of limitation.

The Single Bench of Justice C. Hari Shankar held that the notice invoking arbitration as well as the substantive claims of a party would not become time-barred if the parties were undergoing the mediation process contemplated in the arbitration clause and the time consumed in an unfruitful mediation process shall be excluded for the purpose of calculating the limitation period.

3. The Dispute Between The Parties Which Arises Subsequently Can Be Proceeded In A Separate Arbitration: High Court of Delhi

Case Title: Orissa Concrete and Allied Industries Ltd. versus Union of India

Citation: 2022 LiveLaw (Del) 312

The High Court of Delhi has observed that a subsequent dispute arising from the same transaction can be referred to a separate arbitration and the arbitration agreement cannot be said to be a one-time measure that cannot be invoked after an award is made in the earlier reference.

The Single Bench of Justice Mukta Gupta observed that the word "all disputes" in an arbitration agreement means all the existing disputes at the time of invocation of arbitration and the disputes that arise subsequently can be decided in a separate arbitration. There is no legal impediment that proscribes the invocation of the arbitration agreement if there is a pending arbitration or an award is made in an earlier arbitration.

4. Sufficiency Of Stamp Duty On Agreement And Nature Of Contract Cannot Be Adjudicated By Court Under Section 11 Of A&C Act: Delhi High Court

Case Title: Parsvnath Developers Ltd versus Future Retail Limited

Citation: 2022 LiveLaw (Del) 323

The Delhi High Court has ruled that the Court cannot adjudicate on the issue whether the claims made by the petitioner are barred by limitation while dealing with a petition filed under Section 11 of the Arbitration and Conciliation Act, 1996 for referring the parties to arbitration.

Case Title: Cement Corporation of India versus Promac Engineering Industries Limited

Citation: 2022 LiveLaw (Del) 329

The Delhi High Court has ruled that a petition under Section 9 of the Arbitration and Conciliation Act, 1996 (A&C Act) for interim measures of protection, is not maintainable before the Court against the procedural orders passed by the Arbitral Tribunal.

The Bench, consisting of Justices Mukta Gupta and Neena Bansal Krishna, held that the procedural orders passed by the Arbitral Tribunal fixing the arbitration fees does not fall within the ambit of Section 9 of the A&C Act, and rejected the contention that the petition was maintainable under the residuary clause of Section 9(1)(ii)(e) of the A&C Act.

Case Title: National Highways Authority of India versus Continental Engineering Corporation (CEC)

Citation: 2022 LiveLaw (Del) 331

The High Court of Delhi has observed that the failure of the contractor to issue notice under the contract does not deprive him of his right to claim additional payment before the arbitral tribunal.

The Single Bench of Justice Bakhru also observed that such a stipulation in the contract is not a mandatory provision but only directory in nature and must be examined with reference to the other clauses and the contemporary records.

Gujarat High Court

1. There Cannot Be A Deemed Waiver Of Section 12(5) Of The A&C Act By Issuing A Letter To The Opposite Party: Gujarat High Court

Case Title: M/S M N Trapasia versus Divisional Railway Manager (WA)

Citation: 2022 LiveLaw (Guj) 119

The Gujarat High Court has ruled that unless the embargo placed under Section 12(5) of the Arbitration and Conciliation Act, 1996 is waived by the parties, the provisions of Section 12(5) would continue to be attracted.

The Single Bench of Chief Justice Aravind Kumar held that there cannot be a deemed waiver of Section 12(5) by merely issuing a letter or communication calling upon the opposite party to waive the embargo.

Kerala High Court

1. Dissenting Views Of Minority Members Does Not Constitute An Arbitral Award: Kerala High Court

Case Title: Lloyed Insulations (India) Ltd versus Foremexx Space Frames

Citation: 2022 LiveLaw (Ker) 178

The Kerala High Court has ruled that the Arbitral Tribunal can pass only one arbitral award and not multiple awards.

The Bench, consisting of Justice P.B. Suresh Kumar and C.S. Sudha, ruled that the dissenting views of the minority member(s) of an Arbitral Tribunal does not constitute an Arbitral Award, and the dissenting views cannot be made the basis of a proceeding under Section 34 of the Arbitration and Conciliation Act, 1996 for setting aside the arbitral award or proceedings under Section 36 for its enforcement.

Madhya Pradesh High Court

1. 'Requisition Of Record From Arbitral Tribunal Not Akin To Remanding Matter': Madhya Pradesh High Court

Case Title: Anil Kumar Tripathi versus Doorsanchar Nigam Ltd. (BSNL)

Citation: 2022 LiveLaw (MP) 106

The High Court of Madhya Pradesh, Gwalior Bench has held that a court can direct requisition of record from an arbitral tribunal and that the same would not be akin to remanding the matter to the tribunal, but to ascertain the exact nature of the dispute through record of the case.

Justice Anand Pathak dealt with a writ petition moved by the Petitioner who was aggrieved by the order of the commercial court, whereby it directed the requisition of the original record of the arbitrator before considering the application u/s 34 of the Arbitration and Conciliation Act, 1996.

Madras High Court

1. Provisions Of The MSMED Act Overrides The Arbitration Agreement Between The Parties: Madras High Court

Case Title: Madurai Kamraj University versus The Chairman, Micro & Small Enterprises Facilitation Council and Anr.

Citation: 2022 LiveLaw (Mad) 160

The High Court of Madras has observed that S. 18 of the MSMED Act will override the arbitration clause between the parties. The Court observed that since S. 24 of the MSMED Act is a non-obstante clause, it gives overriding effect to the provisions of S. 15 -23 of the Act.

The Bench of Justice Pushpa Sathyanarayan and Justice P. Velmurgan observed that once a reference is filed before the MSME Council under S. 18 of the Act, the provisions of the arbitration clause must yield to the provisions contained under S. 18 of the Act.

2. Writ Petition Is Not Maintainable To Enforce The Arbitral Award: Madras High Court

Citation: 2022 LiveLaw (Mad) 161

The High Court of Madras observed that a writ petition cannot be filed to enforce an arbitral award when an alternative remedy is available under S. 36 of the A&C Act.

The Single Bench of Justice G.K. Ilanthiraiyan observed that the A&C Act is a complete code in itself and envisages minimum judicial intervention.

Orissa High Court

1. On Procedural Aspects The Arbitration Act Must Yield To The Provisions Of The Commercial Courts Act: Orissa High Court

Case Title: M.G. Mohanty and Anr. versus State of Odisha and others

Citation: 2022 LiveLaw (Ori) 44

The High Court of Orissa has observed that the Court for the purpose of deciding all the applications arising out of the arbitration agreement between the parties would be the Commercial Court as defined under the Commercial Courts Act which need not necessarily be the Principal Civil Court as provided under the Arbitration Act.

The Court observed that the jurisdiction of the Commercial Court can be conferred on a judicial officer subordinate to the rank of a District Judge, i.e., the Principal Civil Judge notwithstanding anything contained in S. 2(1)(e) of the Arbitration Act.

2. Writ Petition Is Maintainable Against The Award Of The MSME Council Which Failed To Give A Hearing On Limitation: Orissa High Court

Case Title: M/s Bajaj Electricals Ltd. versus Micro Small and Enterprises Facilitation and Anr.

Citation: 2022 LiveLaw (Ori) 45

The High Court of Orissa has observed that a writ petition is maintainable against an award rendered by the MSME Council under S. 18 of the MSMED Act wherein the petitioner was not given a hearing on a material issue regarding the limitation of the substantive claims.

The Single Bench of Justice Arindam Sinha has observed that in cases where an award is passed without hearing a party, the availability of an alternative remedy to challenge the award under S. 19 of the MSMED Act r/w S. 34 of the Arbitration Act shall not be a ground to dismiss the writ petition as compelling the petitioner to challenge the award would require him to comply with the requirement of deposit of 75% of the amount awarded.

Telangana High Court

1. Arbitral Award A Nullity If Passed Beyond Prescribed Period: Telangana High Court

Case Title: Roop Singh Bhatty and others versus M/s. Shriram City Union Finance Limited

Citation: 2022 LiveLaw (Tel) 24

The Telangana High Court has held that the provisions of Section 29A of the Arbitration and Conciliation Act, 1996 (A&C Act) are cast in mandatory terms and the mandate of the arbitrator terminates under Section 29A(4) after the expiry of the prescribed period, making the arbitrator functus-officio and the award passed by him a nullity.

The Bench, consisting of Justice P. Naveen Rao and Dr. Justice G. Radha Rani, ruled that substitution of Section 29A(1) of the A&C Act by the Amendment Act of 2019, amending the time limit for making an award, does not operate retrospectively, and merely because the word substitution is used the amended provision does not relate back to the date of the original provision.