Arbitration Cases Weekly Round-Up: 14 August To 20 August, 2022

Arbitral Tribunal Not Barred Under Section 79 Of The RERA Act From Passing An Order Of Injunction: Bombay High Court

Case Title: Ashok Palav Coop. Housing Society Ltd. versus Pankaj Bhagubhai Desai & Anr

The Bombay High Court has ruled that the Arbitral Tribunal is not a Civil Court within the meaning and purview of the Code of Civil Procedure, 1908 and thus, the arbitral proceedings cannot be said to be barred under Section 79 of the Real Estate (Regulation and Development) Act, 2016 (RERA Act).

The Single Bench of Justice G.S. Kulkarni held that the bar of Section 79 of the RERA Act would not apply to an Arbitral Tribunal and thus, the Arbitral Tribunal is not barred from passing an order of injunction under Section 17 of the Arbitration and Conciliation Act, 1996 (A&C Act).

Contract Discharged By Settlement – Dispute Under Contract Is A Deadwood; Cannot Be Referred To Arbitration: Bombay High Court

Case Title: Vishwajit Sud & Co. versus L & T Stec JV, Mumbai

The Bombay High Court has ruled that once a settlement is arrived at by the parties, the contract between the parties stands discharged by mutual agreement and hence, the dispute arising under the said contract is a deadwood which cannot be referred to arbitration.

The Single Bench of Justice G.S. Kulkarni held that a party cannot be allowed to resurrect the dead issues and foist an unwarranted arbitration after the contract between them stood discharged by a complete accord and satisfaction in terms of the settlement agreement arrived between them.

Calcutta High Court:

Conduct Of The Parties Can't Substitute Arbitration Agreement: Calcutta High Court

Case Title: Eastern Coalfields Ltd. versus RREPL-KIPL (JV)

The Calcutta High Court has held that the Court while exercising powers under Section 11 of the A&C Act is bound to examine the existence of the arbitration agreement, in absence of the agreement, it cannot refer the parties to arbitration merely because the respondent did not raise objections.

The Bench of Justice Bebangshu Basak held that the conduct of the parties is not a substitute for an arbitration agreement.

Award Of Demurrage Charges Under Major Ports Act Is Not Valid When Contract Does Not Provide For Such Charges: Calcutta High Court

Case Title: Steel Authority of India versus Vizag Seaport Pvt. Ltd.

Citation: 2022 LiveLaw (Cal) 293

The High Court of Calcutta has held that the arbitral tribunal cannot award demurrage charges on the basis of Major Ports Act, 1963 when the contract between the parties has no provision for such damages.

The Bench of Justice Krishna Rao held that an arbitral award wherein the tribunal has awarded demurrage charges in absence of any provision in the agreement for levy of such charge would be vitiated by patent illegality.

Gauhati High Court:

Dismissal On Locus Standi Without Opportunity To Bring On Record Documents; Violation Of Section 18 Of The A&C Act: Gauhati High Court

Case Title: S.R. Engineering Construction versus The Commander Works Engineer

Citation: 2022 LiveLaw (Gau) 56

The Gauhati High Court has held that dismissal of the claim on the ground of locus standi without the opportunity to bring necessary documents on merit and hearing the claims on merit is violation of Section 18 of the A&C Act that provides for equal treatment for parties.

The Bench of Justice Devashis Baruah was hearing an appeal against the order of the lower court passed under Section 34 of the A&C Act whereby the Court rejected the challenge petition of the appellant.

Jharkhand High Court:

Exclusive Jurisdiction Is Good For Civil Suits, Can't Supersede The Seat Of Arbitration:Jharkhand High Court

Case Title: M/s R.K. Mineral Development Pvt. Ltd. versus Hindalco Industries Ltd.

Citation: 2022 LiveLaw (Jha) 80

The Jharkhand High Court has held that merely because exclusive jurisdiction has been conferred on a different court, the same cannot amount to contrary indicia and the venue of arbitration would still be the seat of arbitration.

The Bench of Justice Sujit Narayan Prasad held that exclusive jurisdiction clause cannot supersede the designation of venue/seat of arbitration.

Kerala High Court:

Substitution Of Arbitrator On Ground Of Bias Will Not Come Within The Scope Of Substitution Under Section 29A (6) Of A&C Act: Kerala High Court

Case Title: Flemingo Duty Free Shop Private Ltd. versus Airports Authority of India

The Kerala High Court has ruled that allegation of bias cannot be raised as a ground to seek substitution of Arbitrator under Section 29A of the Arbitration and Conciliation Act, 1996 (A&C Act).

The Single Bench of Justice Sathish Ninan held that there is a stark difference between the substitution of an Arbitrator under Section 15(2) and the substitution of the Arbitrator under Section 29A (6) and hence, the request for substitution of an Arbitrator on the ground of bias will not come within the scope of substitution under Section 29A (6) of the A&C Act.

Madhya Pradesh High Court:

Award Passed By An Arbitrator Who Doesn't Have Qualification As Per Agreement Is Non-Est: Madhya Pradesh High Court

Case Title: Chokhi Dhani versus JS Construction

The Madhya Pradesh High Court has held that if the agreement between the parties provides for certain qualifications of an arbitrator, then the appointment must be made in accordance with those qualifications only.

The Bench of Justice Subodh Abhyankar further held that an application filed under Order 7 Rule 11 of CPC challenging the jurisdiction of the arbitrator is to be treated as the application under Section 16 of the A&C Act as the nomenclature of an application is inconsequential but what is averred and the prayer/relief sought therein is relevant.

Orissa High Court:

Mere Reply To The Notice Of Arbitration Would Not Save The Limitation Period For Filing Counter-Claims: Orissa High Court

Case Title: Birla Institute of Management versus Fiberfill Interiors & Constructions

The Orissa High Court has held that a mere reply to the notice of arbitration would not save the period of limitation for filing the counter-claim(s).

The Court held that the date on which the counterclaim is filed before the arbitrator would be the relevant date for determining the date of stopping of the period of limitation unless the respondent had issued a separate notice of arbitration raising the counter-claims, then the limitation would be computed as on the date of that notice.

Patna High Court:

When Liability Is Admitted, Arbitration Clause Is Not A Bar To Entertain Writ Petition: Patna High Court

Case Title: Fulena Construction Pvt. Ltd. versus The State of Bihar

Citation: 2022 LiveLaw (Pat) 21

The High Court of Patna has held that arbitration clause is not a bar to the maintainability of a writ petition when the liability to pay is not disputed by the respondent.

The Division Bench of Justice Chakradhari Sharan Singh and Justice Madhresh Prasad held that once the liability to pay is admitted by the respondent, there remains no dispute that can be referred to arbitration, therefore, the arbitration clause would no longer be a bar to the writ petition.