Arbitration Cases Weekly Round-Up: 25 September To 1 October, 2022

Reliance On Evidence Filed After Conclusion Of Hearing; Award Is Patently Illegal:Bombay High Court

Case Title: Secretary to the Government of India, Ministry of Shipping, Road Transport and Highways & Anr. versus The Additional Commissioner, Nagpur & Ors.

The Bombay High Court has ruled that where the only documentary material relied upon by the claimant in the arbitral proceedings, is introduced on record surreptitiously and after the conclusion of hearing, the arbitral award is vitiated on account of patent illegality.

The Single Bench of Justice Rohit B. Deo held that the power of the court under Section 34 (4) of the Arbitration and Conciliation Act, 1996 (A&C Act) to remand the matter back to the arbitrator is discretionary, which must be exercised judiciously and only in appropriate cases. The Court added that where the integrity of the arbitral proceedings was compromised, and crucial evidence was introduced on record after conclusion of hearing, it was not an appropriate case to exercise discretion under Section 34 (4).

Reference Made Under MSMED Act; District Court Has Power To Extend Mandate Or Substitute Arbitrator Under Section 29A Of A&C Act: Bombay High Court

Case Title: M/s. Magnum Opus IT Consulting Private Limited versus M/s. Artcad Systems

The Bombay High Court has ruled that the provisions of Section 29A of the Arbitration & Conciliation Act, 1996 (A&C Act), which enables the Court to extend the mandate of the Arbitrator or substitute the Arbitrator, would be applicable to the reference made under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act).

The Single Bench of Justice Anuja Prabhudessa held that there is no provision under the MSMED Act to extend the mandate of the arbitrator or substitute the arbitrator, hence, if the provisions of Section 29A of the A&C Act are made inapplicable to the reference made under the MSMED Act, it would render the arbitral scheme under the MSMED Act otiose.

Chhattisgarh High Court:

Non-Delivery Of Signed Copy Cannot Save Limitation; Chhattisgarh High Court Affirms Section34 Dismissal

Case Title: Union of India versus Bhola Prasad Agrawal & Anr.

The Chhattisgarh High Court has ruled that though the delivery of signed copy of the arbitral award to each of the parties to the arbitral proceedings is sine qua non, however, if the award debtor had already become aware of the award, enabling him to file an application to set aside the award, mere non-delivery of the signed copy cannot be said to cause any prejudice to him.

The Single Bench of Justice Arvind Singh Chandel was dealing with an appeal filed by the applicant under Section 37 of the Arbitration and Conciliation Act, 1996 (A&C Act), against the order of the District Court dismissing the applicant's application to set aside the arbitral award on the ground of limitation.

Delhi High Court:

Court Cannot Modify Arbitral Award By Awarding Interest Under Section 34 Of A&CAct: Delhi High Court

Case Title: Canara Bank versus The State Trading Corporation of India Ltd. & Anr.

The Delhi High Court has ruled that though the claimant is entitled to pre-arbitration interest on the amount of counter-guarantee released in its favour, the Court, in view of the limited scope of judicial review under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act), cannot award interest to the claimant since it would amount to modification of the award.

The Division Bench of Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad observed that though the Supreme Court, in certain cases, has awarded interest to the relevant parties by modifying the arbitral awards, however, the same was undertaken by the Apex Court in exercise of its discretionary powers under Article 142 of the Constitution of India.

Madhya Pradesh High Court:

S.34Arbitration Act Application Can't Be Rejected By Merely Citing Insufficient Grounds, Court Must Assign Reasons: MP High Court

Case Title: The State Of Madhya Pradesh versus M/s. SMEC International Pvt. Ltd.

The Madhya Pradesh High Court recently reprimanded a Commercial Court for rejecting a petition filed under section 34 of Arbitration and Conciliation Act, 1996 without assigning proper reasons for such dismissal.

The matter was being heard by Justice Sujoy Paul & Justice Prakash Chandra Gupta: "Whether grounds so taken in the application filed under Section 34 do fulfill those conditions or not should have been considered by assigning justifiable reasons by the Court below. Para-16 of impugned order, in our opinion is too cryptic, too bald, too shallow and too sketchy. It is not expected from a judicial forum to reject the application without assigning any 'reason' and directly reach to a 'conclusion'."

Orissa High Court:

LoA Not Issued, But Bid Documents Establish Contractual Relationship - Arbitration Clause Can Be Invoked : Orissa High Court

Case Title: M/s. Jhar Mining Infra Private Limited versus CMD, managing Coalfields Ltd. & Ors.

The Orissa High Court has ruled that where a tenderer/bidder is declared as a 'Preferred Bidder', the arbitration clause incorporated in the tender document can be invoked by the bidder, even if no tender is awarded to it and no formal contract is concluded between the parties.

The Court held that the arbitration clause contained in the tender document, which provided for referring the disputes which arose prior to the execution of the contract to arbitration, is an arbitration agreement in terms of Section 7 of the Arbitration and Conciliation Act, 1996 (A&C Act).