Arbitration Cases Weekly Round-Up: 30 October To 5 November, 2022

Issue Of Arbitrability Should Be Left To Arbitrator Unless On The Face It Is Found That Dispute Is Non- Arbitrable: Supreme Court

Case Title: VGP Marine Kingdom Pvt Ltd versus Kay Ellen Arnold

The Supreme Court reiterated that while considering application under Section 11(6) of the Arbitration and Conciliation Act, the dispute with respect to the arbitrability should be left to the arbitrator, unless on the face it is found that the dispute is not arbitrable.

High Courts:

Andhra Pradesh High Court:

Once Registered As MSME, The Nature Of Activity Cannot Be A Bar To Any Relief Under The Act: Andhra Pradesh High Court

Case Title: Dalapathi Constructions versus The State of Andhra Pradesh & Ors.

The Andhra Pradesh High Court has held that once an enterprise is registered with the local MSME Council, it is entitled to all the benefits of the Act and the nature of activity between the parties cannot stand as a bar to any relief provided under the act.

The bench of Justice R. Ragunandan Rao held that MSME Council cannot dismiss an application under Section 18 of the Act on the ground that the activity between the parties was merely a 'trading activity', thus, not covered by the provisions of the act.

Bombay High Court:

Arbitration, Invoked Without Authority, The Defect Can't Be Ratified With Fresh Board Resolution: Bombay High Court

Case Title: Sushma Arya and Ors. versus Palmview Overseas Ltd. and Ors.

The Bombay High Court has ruled that the order passed by the arbitral tribunal, granting a choice to the claimant to prove the board resolution passed by it, appointing its authorized representative, or to pass a fresh board resolution, is an interim award which is amenable to challenge under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act).

The Single Bench of Justice C.V. Bhadang held that once the arbitral tribunal had ruled that the specified person had no authority to invoke arbitration and depose on behalf of the claimant, in view of the fact that the alleged board resolution was not proved by it as valid, the tribunal could not have ruled that the said defect was rectifiable. The Court added that ratification can only be of an act which is otherwise valid.

Delhi High Court:

Use Of Word 'Mediation' In Arbitration Clause Is Immaterial, Clause Does Not Lose Its Character: Delhi High Court

Case Title: Consolidated Construction Consortium Limited versus SDMC

The Delhi High Court has held that nomenclature of an arbitration clause is immaterial when all the elements are present. The bench of Justice Prateek Jalan held that an arbitration clause would not lose its character merely because the word 'mediation' has been used as its nomenclature.

It held that, in construction of a contractual clause, the Court should be guided by the substance of the agreement between the parties rather than by the nomenclature employed. The Court expounded on the essential elements of an arbitration clause.

A Party Cannot Be Made To Nominate Its Arbitrator From A Narrow Panel Of 4 Arbitrators Consisting Of Retired Officers Of The Other Party: Delhi High Court

Case Title: Gangotri Enterprises Ltd. versus General Manager Northern Railways

The High Court of Delhi has held that a panel of arbitrator with only four names to choose from does not satisfy the concept of neutrality of arbitrators. It held that a narrow panel comprising of retired employees of a party creates a reasonable apprehension of bias and partiality.

The bench of Justice Mini Pushkarna held that the contractor cannot be made to choose its nominee arbitrator from a panel of only four names and that too when the final choice of appointing its nominee arbitrator is vested on the Employer.

Arbitration Proceedings Against IRCTC; Delhi High Court Rejects Unilateral Appointment Of Arbitrator

Case Title: KMA Caterers versus Indian Railway Catering and Tourism Corporation (IRCTC)

The High Court of Delhi has held that the designation of Zonal Offices as the 'venue' of arbitration would not make it the 'seat' of arbitration when the meaningful dealings related to the contract happened at the Headquarters of a party.

The bench of Justice Mini Pushkarna held that venue would not become the seat when the tender documents, the process of award of tender, licence fees, signature and execution of the agreement and the jurisdiction of Court all happens to be on a place other than the venue.

Gujarat High Court:

Application For Appointment Of Arbitrator Can't Be Rejected Due To Vague Notice Invoking Arbitration: Gujarat High Court

Case Title: Hemlata Jain versus Padmavati Analkumar Mishra

The Gujarat High Court has ruled that the contention that the notice issued under Section 21 of the Arbitration and Conciliation Act, 1996 (A&C Act), invoking the arbitration clause, is vague or bereft of material particulars, cannot be a ground to reject the application under Section 11(6) of the A&C Act, seeking appointment of an arbitrator.

The Single Bench of Chief Justice Aravind Kumar held that the provisions of Section 21 of the A&C Act do not even remotely suggest that the nature of dispute has to be enumerated or explained in the notice invoking the arbitration clause.

Madhya Pradesh High Court:

Section 34 Of The A&C Act Application Pending For 13 Years, MP HC Directs District Courts To Decide All Petitions Within 1 Year

Case Title: Dharamdas Tirthdas Constructions Pvt. Ltd. versus Union of India

The Madhya Pradesh High Court has expressed strong displeasure for keeping a petition under Section 34 of A&C Act pending for 13 years.

The bench of Justice Subodh Abhaynkar remarked that delay in deciding arbitration applications mocks at and frustrates the very object for which the Act was promulgated. The Court directed all the district Court to decide all the petitions under Section 34 of the Act as expeditiously as possible in accordance with Section 34(6) that provides for a maximum of one year period to dispose of the application.

Rajasthan High Court:

Death Of One Of The Arbitrators - But Decided To Pass Award Prior To Death - Not Contrary To Section 10 Of A&C Act: Rajasthan High Court

Case Title: M/s Shree Ram Junawa Industries versus M/s Rounak Steels

The Rajasthan High Court has ruled that if an Arbitral Tribunal had principally decided to pass the award on a day when all the members of the Arbitral Tribunal were present, merely because the detailed award was passed on the day when one of the members of the Arbitral Tribunal was not alive, and was thus signed by only two members, it cannot be said that the award was contrary to Section 10 of the Arbitration and Conciliation Act, 1996 (A&C Act).

The Single Bench of Justice Vijay Bishnoi held that the principles of res judicata also apply between two stages of the same litigation.