Arbitration Cases Weekly Round-Up: 2 October To 8 October, 2022

Arbitral Tribunal Must Give Reasons For Fixing Interest Rate; Award Holder Not Entitled To Interest For Delay Caused By It : Supreme Court

Case Title: Executive Engineer (R and B) versus Gokul Chandra Kanungo

The Supreme Court recently held that a case where the award holder was responsible for delaying the proceedings which led to a huge lapse of time would be a fit case of exercising power under Article 142 to reduce the rate of interest on the sum of award.

The Court further held that the Arbitration and Conciliation Act casts a duty upon the arbitral tribunal to give reasons as to how it deems the rate of interest to be reasonable. The bench of Justices B.R. Gavai and B.V. Nagarathna held that no interest would be payable for the period on which there were lapses on the part of the award holder.

Arbitration- Court Can Undertake Preliminary Inquiry Under Section 11 To Ascertain If Dispute Is Arbitrable : Supreme Court

Case Title: Emaar India Ltd. versus Tarun Aggarwal Projects LLP

The Supreme Court has held that the High Courts while appointing the arbitrator can launch a preliminary inquiry to decide the issue of 'Excepted Matters' when an objection to that effect is taken by the respondent.

The bench of Justices M.R. Shah and Krishna Murari held that if any dispute falls within the 'excepted' category provided in the contract between the parties, then it falls outside the scope of arbitration, therefore, no arbitration can happen with respect to those matters.

High Courts:

Andhra Pradesh High Court:

Review Of Judgment/Order Passed Under Section 11 Of The A&C Act Is Not Permissible: Andhra Pradesh High Court

Case Title: Nagireddy Srinivasa Rao versus Chinnari Suryanarayana & Ors.

The Andhra Pradesh High Court has held that review of an order/judgment passed under Section 11 of the Arbitration and Conciliation Act, 1996 (A&C Act) is not permissible.

The Bench of Justice R. Raghunandan Rao held that power of review is the creature of a statute and in absence of any such provision in a statute, an order/judgment cannot be reviewed on its merit unless it is for some procedural irregularity.

Calcutta High Court:

Dispute of Unregistered Partnership Firm Can Be Referred To Arbitration, Bar U/S 69Partnership Act Not Applicable: Calcutta High Court

Case Title: Md. Wasim & Anr. versus M/s. Bengal Refrigeration and Company & Ors.

The Calcutta High Court, while hearing an application filed under Section 11 of the Arbitration and Conciliation Act, 1996 ('Arbitration Act') for appointment of an arbitrator to resolve the dispute between the parties, held that the bar for instituting a suit or any other proceeding under Section 69 of the Indian Partnership Act, 1932 shall not be applicable to arbitral proceedings under Section 11 of the Arbitration Act.

Arbitrator Cannot Delegate The Task Of Quantifying The Amount Of Award To A Chartered Accountant: Calcutta High Court

Case Title: Usha Martin Limited versus Eastern Gases Limited

The Calcutta High Court has held that the arbitrator can indeed take assistance from a third party, including a Chartered Accountant, however, it cannot completely delegate the important function of quantifying the amount of award to any third party.

The Bench of Justice Shekhar B. Saraf held that an arbitral award wherein the arbitrator failed to determine the amount of award and delegated that function to a third party cannot be sustained in the eyes of law. The Court remarked that an arbitrator cannot shun away from its duty and delegate an important function to a third party.

Delhi High Court:

Members Of Joint Venture Cannot Invoke Arbitration Clause In Their Individual Capacity: Delhi High Court

Case Title: Consulting Engineers Group Limited versus National Highways Authority of India (NHAI)

The Delhi High Court has ruled that where an agreement is entered into by the parties by forming a consortium / Joint Venture, one of the members of the consortium cannot separately invoke the arbitration agreement in their individual capacity.

The Single Bench of Justice Mini Pushkarna reiterated that when there is an agreement with a consortium, it is never the intention of the parties that one of the members of the consortium can separately invoke the arbitration clause.

Limitation Period For Invoking Arbitration Cannot Be Extended By Consent: Delhi High Court

Case Title: Extramarks Education India Private Limited versus Shri Ram School & Anr.

The Delhi High Court has ruled that a statement made by the opposite party in the reply to the notice invoking the arbitration clause, giving consent for appointment of an arbitrator, would not extend the limitation period for invoking arbitration, if the claims raised by the claimant are ex-facie time-barred.

The Single Bench of Justice Anup Jairam Bhambhani held that the limitation period for invoking a legal remedy cannot be extended even by consent. The Court ruled that a party may concede a claim at any time, however, it cannot concede the availability of a legal remedy beyond the prescribed period of limitation.

Madras High Court:

Arbitral Award Directing Specific Performance Of Contract, Cannot Be Set Aside On Ground Of Inequitable Nature Of Contract: Madras High Court

Case Title: M/s. Macro Marvel Projects Ltd. versus J. Vengatesh & Ors.

The Madras High Court has ruled that an arbitral award directing specific performance of a contract, cannot be set aside on the ground that the nature of agreement between the parties was not capable of specific enforcement. The Court added that the said issue related to the construction of an agreement, which cannot be made a ground for interference of the arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act).

The Division Bench of Justices Paresh Upadhyay and D. Bharatha Chakravarthy held that an arbitral award cannot be interfered on the ground that it directed specific performance of a contract which was inequitable in nature and which gave an unfair advantage to a party.