Arbitration Cases Weekly Round-Up: 16 October To 22 October, 2022

Rewriting Commercial Contractual Terms Is Fatal To An Arbitral Award: Delhi High Court

Case Title: Calcom Cement India Ltd. versus Binod Kumar Bawri & Ors.

The Delhi High Court has ruled that where the parties agree to enter into a mutual consultation in the future, for making amendments to an original agreement, the same would only constitute an "agreement to agree", which is not enforceable in law.

The Single Bench of Justice C. Hari Shankar held that the finding of the arbitral tribunal that though the amendment contemplated by the "Amendment to the Share Holders Agreement" was not in fact carried out by the parties, however, the original Share Holders Agreement stood altered, extinguishing the liability of the party, was erroneous in law.

Arbitration Clause In The Initial Agreement Binding Even If Subsequent Settlement Doesn't Have It: Delhi High Court

Case Title: Omega Finvest LLP versus Direct News Private Limited

The Delhi High Court has ruled that an arbitration clause contained in a rent agreement would continue to be binding upon the parties, despite the fact that after the expiry of the agreement the parties had entered into a 'Terms of Settlement' and an 'Addendum to Settlement', which did not contain an arbitration clause.

The Single Bench of Justice V. Kameswar Rao observed that the relationship between the parties came into existence on the execution of the rent agreement. Further, it noted that the 'Terms of Settlement' and the 'Addendum to Settlement' executed between the parties did not contain a stipulation that the arbitration clause between them stood rescinded. The Court held that the arbitration clause was binding on the parties and thus, the dispute between the parties arising on the breach of the terms of settlement must be referred to arbitration.

Initiation Of Proceedings Under The SARFAESI Act Does Not Bar The Arbitration Of Disputes:Delhi High Court

Case Title: Diamond Entertainment Technologies Pvt. Ltd. & Ors. versus Religare Finvest Limited

The Delhi High Court has ruled that the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) provides a remedy in addition to the adjudication under the Arbitration and Conciliation Act, 1996 (A&C Act) and hence, initiation of proceedings under the SARFAESI Act does not bar the arbitration of disputes.

The Single Bench of Justice Neena Bansal Krishna held that whether an arbitral award would operate as a res judicata, barring the second arbitration under the same agreement, must be decided by the Arbitrator since it involves mixed questions of fact and law.

Arbitral Tribunal Cannot Recall The Order Terminating The Arbitral Proceedings: Delhi High Court

Case Title: Vag Educational Services versus Aakash Educational Services Ltd.

The High Court of Delhi has held that once the arbitral tribunal terminates the arbitration proceedings on account of the claimant withdrawing its claims, it cannot recall the order of termination.

The bench of Justice C. Hari Shankar held that once the arbitral proceedings are terminated, the arbitral tribunal becomes Functus Officio and it cannot entertain an application recalling its earlier order by which it terminated the arbitral proceedings.

Notice Stating Right To Initiate Arbitration Not A Notice Under Section 21 of A&CAct: Delhi High Court

Case Title: Shriram Transport Finance Co. Ltd. versus Narender Singh

The Delhi High Court has ruled that a notice issued by a party, merely stating its right to initiate arbitral proceedings, which it would subsequently initiate if the payment was not made by the opposite party, is a unilateral communication which does not qualify as a notice under Section 21 of the Arbitration and Conciliation Act, 1996 (A&C Act).

The Division Bench of Justices Rajiv Shakdher and Tara Vitasta Ganju reiterated that the A&C Act does not contemplate unilateral appointment of an arbitrator by one of the parties and that there must be a consensus between the parties for appointment of the arbitrator. The Court added that commencement of arbitral proceedings is incumbent on the receipt of such request or notice, as provided under Section 21 of the A&C Act.

Place Of Arbitration Would Not Become The 'Seat' When The Exclusive Jurisdiction Is Conferred On A Court At A Different Place: Delhi High Court

Case Title: Kush Raj Bhatia versus DLF Power and Services Limited

The High Court of Delhi held that place of arbitration would not become the seat of arbitration when the parties have conferred exclusive jurisdiction on a Court other than the seat Court.

The bench of Justice Neena Bansal Krishna held that conferring exclusive jurisdiction, over a Court different from the Court at the place of arbitration, would be a contrary indicia and the place of arbitration would merely be the venue, and only the Court at which exclusive jurisdiction is conferred shall have the jurisdiction to decide all applications arising out of the arbitration between the parties.

Madras High Court:

Limitation Qua Counter-Claim Stops On The Date Of Notice Of Arbitration: Madras High Court

Case Title: Chennai Water Desalination Ltd. versus Chennai Metropolitan Water Supply and Sewerage Board

The High Court of Madras has held that the limitation period qua Counter-Claims would be arrested on the date on which the respondent issues the notice of arbitration and the date of filing of counter-claims would be irrelevant.

The bench of Justice M. Sundar further held that limitation is a facet of 'public policy' and an error in limitation clearly leaves an award hit by Section 34(2)(b)(ii) read with Clause (ii) of Explanation 1 thereat.

Orissa High Court:

Close Relative Of Arbitrator Must Be 'Controlling The Company' To Make Him Ineligible: Orissa High Court

Case Title: Abhay Trading Pvt Ltd., Mumbai versus National Aluminum Company Ltd., NALCO, Bhubaneswar

The Orissa High Court has clarified that to make an arbitrator ineligible under Clause 9 of the Seventh Schedule read with Section 12(5) of the Arbitration and Conciliation Act, 1996, the arbitrator must have a close family relationship with a party and in case of companies, he must have a close relation with the person(s) in the management who should be "controlling the company".