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Monthly Digest Of Arbitration Cases: June 2022
ausaf ayyub
2 July 2022 10:45 AM IST
Allahabad High Court Section 47 CPC Application Is Not Maintainable In Execution Proceedings Under Arbitration Act, 1940: Allahabad High Court Case Title: Bharat Pumps and Compressors versus Chopra Fabricators Citation: 2022 LiveLaw (AB) 269 The Allahabad High Court has held that an application under Section 47 of the CPC is not maintainable in the execution...
Allahabad High Court
Case Title: Bharat Pumps and Compressors versus Chopra Fabricators
Citation: 2022 LiveLaw (AB) 269
The Allahabad High Court has held that an application under Section 47 of the CPC is not maintainable in the execution proceedings under Section 17 of the Arbitration Act, 1940.
The Single Bench of Justice Piyush Agarwal held that an arbitration award is not a decree as defined under Section 2(2) of CPC and therefore, the objection under section 47 of CPC, which can be filed only in execution of a decree (as defined under section 2(2) CPC), is not maintainable in the proceedings seeking execution of the award.
Bombay High Court:
Case Title: D.K. Infrastructure Pvt. Ltd. versus Kishore Agarwal and Anr.
The Bombay High Court has held that once the Court is satisfied regarding the existence of an arbitration agreement between the parties, the Court can decline to make a reference to arbitration only if it is satisfied that the dispute is non-existent or that it has become a deadwood.
The Single Bench of Justice N.J. Jamadar reiterated that the scope of enquiry under Section 11(6) of the Arbitration and Conciliation Act, 1996 is extremely limited and that the arbitrability of the dispute is required to be determined by the Arbitral Tribunal.
Case Title: Choice Developers versus Pantnagar Pearl CHS Ltd. & Ors.
The Bombay High Court has reiterated that the Court is free to pass an order under Section 9 of the Arbitration and Conciliation Act, 1996 (A&C Act) to grant interim measures of protection against a third party who is impleaded in the petition filed under Section 9.
The Single Bench of Justice G.S. Kulkarni held that the minority members of a Society cannot act against the will of the majority members of the Society and obstruct the redevelopment work in the Society.
Case Title: HMG Industries Ltd. versus Canara Bank
Citation: 2022 LiveLaw (Bom) 224
The Bombay High Court has held that even though a Scheme of Compromise entered into under Section 391 of the Companies Act, 1956 overrides all the agreements between the affected parties, arbitral proceedings cannot be imposed by a Company on a Debenture Trustee by virtue of the said Scheme only, in the absence of an arbitration agreement between them.
The Single Bench of Justice A.K. Menon ruled that the Debenture Trustee was an independent obligation of the Company and thus, the arbitration clause contained in the Scheme was not binding on the Debenture Trustee
Case Title: Priya Rishi Bhuta & Anr. versus Vardhaman Engineers and Builders & Ors.
Citation: 2022 LiveLaw (Bom) 221
The High Court of Bombay has held that mere pendency of a Civil Suit is not an absolute bar to a petition under Section 11 of the A&C Act as long as the petitioner can withdraw its suit before the defendant files its statement on the issue.
The Single Bench of Justice G.S. Kulkarni held that it is also permissible for the Civil Court to consider an application of the plaintiff to permit withdrawal of the suit when there is an arbitration agreement, and refer the parties for arbitration.
The Bombay High Court recently has observed that set-off of unliquidated damages that are not ascertained or admitted against an undisputed claim is not tenable.
Single judge G.S. KULKARNI reiterated that a Section 9 Court would not be unduly bound by procedural law contained in the Code of Civil Procedure, 1908, the underlying principle being to make arbitration an effective form of dispute resolution; and that a performance bank guarantee ("PBG") cannot be invoked contrary to the provision for its invocation in the PBG itself.
Chhattisgarh High Court
The High Court of Chhattisgarh has held that an arbitral award that is vitiated by fraud and criminal conspiracy would be void and non-est and can be set aside in a Writ Petition and the availability of an alternative remedy under Section 34 of the A&C Act is not a bar to the maintainability of the petition.
The Division Bench of Chief Justice Anup Kumar Goswami and Justice Rajendra Chandra Samant further held that on a plain reading of Section 34 of the A&C Act, it is revealed that fraud and conspiracy are not the ground to challenge an arbitral award.
The Court held that a writ petition would be maintainable if the challenge to the award is made on the touch-stone of offences of fraud and conspiracy.
Delhi High Court
The Delhi High Court has reiterated that power under Section 9 of the Arbitration and Conciliation Act, 1996 (A&C Act) cannot be exercised for directing specific performance of the contract itself.
The Division
Bench of Justices Jyoti Singh and Anoop Kumar Mendiratta held that a direction to the opposite party to extend the contract for a further period would amount to granting specific relief of the contract, which is beyond the scope of the powers of the Court under Section 9 of the A&C Act. The Court ruled that power under Section 9 can only be exercised for preservation of the subject matter of the dispute till the decision of the Arbitral Tribunal.
Case Title: Juki India Private Limited versus M/s Capital Apparels Technology Private Limited
Citation: 2022 LiveLaw (Del) 536
The Delhi High Court has ruled that where an MoU has been signed by the parties for settlement of dues arising under an agreement, arbitration can be sought for violation of the terms of the MoU, even if the MoU does not contain an Arbitration Clause.
The Single Bench of Justice Anup Jairam Bhambhani held that since the MoU was a part of the dispute covered by the Arbitration Clause contained in the agreement, the dispute between the parties could be referred to arbitration.
Case Title: National Seeds Corporation Ltd. versus National Agro Seeds Corporation
Citation: 2022 LiveLaw (Del) 532
The High Court of Delhi has held that acknowledgment of an amount as due and payable under the ledger/statement of accounts, constitutes a fresh cause of action and extends the period of limitation.
The Division Bench of Justice Rajiv Shakdher and Justice Jasmeet Singh held that the period of limitation for an amount that is shown as outstanding in the book of accounts would get extended from the date of such acknowledgement in terms of Section 18 of the Limitation Act.
Case Title: Himanshu Shekar versus Prabhat Shekhar
Citation: 2022 LiveLaw (Del) 526
The High Court of Delhi has held that the embargo under Section 12(5) of the A&C Act would not apply to a distant relative of the parties.
The Single Bench of Justice Vibhu Bakhru held that in terms of Explanation 1 and Entry 9 to the Seventh Schedule r/w Section 12(5), only spouse, sibling, child, parent or life partner of a party would be ineligible to be appointed as an arbitrator.
Case Title: Panipat Jalandhar National Highway 1 Tollway Pvt. Ltd. versus NHAI
Citation: 2022 LiveLaw (Del) 521
The High Court of Delhi has held that multiple arbitrations with regard to existing claims on same contract are to be avoided.
The Single Bench of Justice Suresh Kumar Kait held that permitting the parties to have multiple arbitrations for the adjudication of the existing disputes related to the same contract would entail multiple observations.
Case Title: UEM India Pvt. Ltd. versus ONGC Ltd.
The Delhi High Court has ruled that an order passed by the Arbitral Tribunal, after the matter is remanded back to it by the Court under Section 34(4) of the Arbitration and Conciliation Act, 1996, is not a fresh arbitral award that can be challenged by filing a separate petition under Section 34(1).
The Single Bench of Justice Vibhu Bakhru held that a party cannot be precluded from raising additional grounds, which had arisen as a result of the subsequent order passed by Arbitral Tribunal after the matter was remitted to it by the Court, to challenge the arbitral award.
Case Title: M/s Sat Kartar Tour N Travels versus ONGC Ltd.
Citation: 2022 LiveLaw (Del) 550
The Delhi High Court has ruled that an order passed by the Arbitrator holding that the arbitral proceedings shall be conducted at any other place, would not change the seat of Arbitration as provided in the Arbitration Clause.
The Single Bench of Justice V. Kameswar Rao held that the Arbitrator cannot decide anything contrary to what has been decided by the parties.
Gujarat High Court:
Case Title: Lite Bite Foods Pvt. Ltd. versus Airports Authority of India
The Gujarat High Court has held that a party cannot circumvent the dispute resolution process after agreeing on the same.
The Single Bench of Justice Ashutosh J. Shastri held that a party is bound to follow the mechanism provided under the arbitration clause that requires it to first raise the dispute before the Dispute Resolution Committee (DRC) and pre-deposit the amount in dispute, if no challenge is made by the party to the validity of the terms of the clause.
Case Title: Pahal Engineers versus The Gujarat Water Supply and Sewerage Board
The High Court of Gujarat has held that a writ petition would not be maintainable against an order of the arbitral tribunal whereby it has rejected the claim of a party on the ground that its pleadings were without verification and affidavit to that effect.
The Single Bench of Justice Vaibhavi D. Nanavati held that once the arbitrator rejects the claims of a party that essentially means a final closure of its claims and the order of the arbitrator can be challenged under Section 34 of the Arbitration and Conciliation Act, 1996.
Case Title: Kanhai Foods Ltd versus A and HP Bakes
The Gujarat High Court has ruled that issues involving enforcement of the conditions of a Franchise Agreement cannot be the subject matter of an application for interim measures under Section 9 of the Arbitration and Conciliation Act, 1996.
The Bench, consisting of Justices N.V. Anjaria and Samir J. Dave, held that conditions of a contract can be enforced only when the rights of the parties are finally adjudged and crystallised by the Arbitrator.
Case Title: Balkrishna Spintex Private Limited versus The New India Assurance Company Limited
The Gujarat High Court has ruled that a party is not entitled to invoke the arbitration clause after it had signed the discharge voucher without any protest or demur, since no arbitrable dispute could be said to subsist.
The Single Bench of Chief Justice Aravind Kumar held that an application for referring the dispute to arbitration could not be entertained merely on the ground that the party had, within 15 days from the receipt of an amount, contended that the said amount was received by it under duress.
Case Title: Lords Inn Hotels and Developers Ltd. versus Raysons Residency Pvt. Ltd.
The High Court cannot decide disputed questions of facts in a petition filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 for the appointment of arbitrator, the Gujarat High Court has held.
The Bench comprising Chief Justice Aravind Kumar observed, "All these issues including arbitrability can be examined by the Arbitral Tribunal itself."
Himachal Pradesh High Court:
Case Title: M/s V. Kare Biotech and Ors. versus Hemant Aggarwal and Anr.
The Himachal Pradesh High Court has held that a writ petition would be non-maintainable against an order of the arbitrator dismissing the application for interrogatories.
The Single Bench of Justice Satyen Vaidya held that the arbitration act is a complete code in itself which prohibits judicial interference except where so provided under the Act.
Case Title: Backend Bangalore Pvt. Ltd. v. Chief-Engineer-Cum-Project Director, HPRIDC, Arbitration Case No. 61 of 2022
Citation: 2022 LiveLaw (HP) 14
The High Court of Himachal Pradesh has held that pre-arbitration reference to the adjudicator in terms of arbitration clause is only directory and cannot be held to be a bar to the appointment of an arbitrator by the Court.
The Single Bench of Chief Justice Mohammed Rafiq held that the respondent could not object to the maintainability of the petition, merely on the ground that the pre-condition of reference to adjudicator was not met if it also did not make efforts to settle the dispute but proceeded to terminate the agreement.
Jharkhand High Court
Case Title: Jharia Petrol Supply versus Indian Oil Corporation Limited
The Jharkhand High Court has ruled that if the application for appointment of Arbitrator under Section 11(6)(c) of the Arbitration and Conciliation Act, 1996 (A&C Act) is itself not maintainable on the ground of inordinate delay in filing it, the issue of limitation cannot be referred to the Arbitrator for adjudication.
The Single Bench of Justice Sujit Narayan Prasad held that, in view of the decision of the Supreme Court in the case of Bharat Sanchar Nigam Limited and Another versus Nortel Networks India Private Limited (2021), the issue of limitation is required to be answered at the threshold itself, i.e., at the stage where the application filed under Section 11(6)(c) of the A&C Act is considered by the Court.
Karnataka High Court
Case Title: ITI Limited versus Alphion Corporation & Anr.
Citation: 2022 LiveLaw (Kar) 183
The Karnataka High Court has ruled that even with respect to a High Court that does not exercise an Ordinary Original Civil Jurisdiction, a Commercial Division is required to be established for the purpose of considering applications and appeals arising out of an International Commercial Arbitration. The Court added that the said Commercial Division must comprise of a Single Judge.
The Bench, consisting of Chief Justice Ritu Raj Awasthi and Justice Suraj Govindaraj, held that though Section 4 of the Commercial Courts Act, 2015 provides for the establishment of a Commercial Division in the High Court that exercises an Ordinary Original Civil Jurisdiction, it does not bar the establishment of a Commercial Division in a High Court that does not exercise the said jurisdiction.
Case Title: Gokaldas Images Private Limited versus Aries Agro-Vet Associates (Pvt) Limited & Anr.
The Karnataka High Court has reiterated that the landlord-tenant disputes governed by the Transfer of Property Act, 1882 are arbitrable in nature.
The Single Bench of Justice E.S. Indiresh observed that the Supreme Court in the case of Vidya Drolia versus Durga Trading Corporation (2020) had overruled its decision in Himangi Enterprises versus Amaljit Singh Ahulvalia (2017). The Court thus held that the landlord-tenant disputes between the parties under the lease deed, which was governed by the Transfer of Property Act, could be referred to arbitration.
Case Title: Sobha Ltd. versus Nava Vishwa Shashi Vijaya and Ors.
The High Court of Karnataka has held that the petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 would be premature when the parties have not complied with the precondition of conciliation.
The Bench of Chief Justice Ritu Raj Awasthi dismissed the arbitration petition for the appointment of an arbitrator on the ground that the petitioner had directly approached the Court without taking recourse to the precondition of conciliation.
Case Title: M/s Abhiram Infra Projects Private Limited versus The Commissioner, Karnataka Slum Development Board
Citation : 2022 LiveLaw (Kar) 198
The Karnataka High Court has ruled that in the absence of an application filed under Section 33 of the Arbitration and Conciliation Act, 1996 (A&C Act) for correction of typographical errors in the arbitral award, the Court cannot pass an order modifying and correcting the arbitral award on the basis of a Memo filed before it by a party.
The Single Bench of Justice E.S. Indiresh held that after the lapse of 30 days from the passing of the arbitral award, no application for rectification of typographical mistakes under Section 33 of the A&C Act can be entertained.
Case Title: BEML Ltd. versus Prakash Parcel Services Ltd.
The High Court of Karnataka has held that a subsequent Section 8 application would be non-maintainable when the order of the arbitrator accepting objection to its jurisdiction was not challenged.
The Division Bench of Justice Alok Aradhe and Justice J.M. Khazi held that once the order of the arbitrator terminating the arbitral proceedings has attained finality, it would not be open for a party who did not lay any challenge to the order to contend that the dispute once again be referred to arbitration.
Madhya Pradesh High Court:
Case Title: M/S Ujas Associates versus M/S KJS Cement (India) Ltd.
The Madhya Pradesh High Court has ruled that the provisions of the Arbitration and Conciliation Act, 1996 (A&C Act), including Section 9, would come into operation only after the termination of the conciliation proceedings under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act), in the absence of an arbitration agreement between the parties.
The Bench, consisting of Justices Sheel Nagu and Maninder S. Bhatti, held that the powers under Section 9 of the A&C Act cannot be invoked by the competent Court prior to the termination of the conciliation proceedings under the MSMED Act
Madras High Court
Enforcement Of A Foreign Arbitral Award Can Be Filed In More Than One High Court: Madras High Court
Case Title: NCC Infrastructure Holdings Ltd and Anr. versus TAQA India Power Ventures Pvt. Ltd.
Citation: 2022 LiveLaw (Mad) 232
The High Court of Madras has held that more than one High Court can exercise jurisdiction for the recognition and enforcement of a part of the arbitral award if the claims are decided for and against the parties thereto.
The Single Bench of Justice Senthilkumar Ramamoorthy held that the Court for the purpose of the enforcement of a foreign award would be the one within whose jurisdiction either the award debtor carries his business or its assets are located within its jurisdiction.
Meghalaya High Court:
Case Title: Jaguar Overseas Limited versus Union of India & Anr.
Citation: 2022 LiveLaw (Meg) 20
The High Court of Meghalaya has held that if a contractor/ tenderer does not accept the names of the possible arbitrators that are listed on the panel prepared by the tenderee, the panel cannot be enforced since there would always be justifiable doubts regarding the independence or impartiality of the empanelled arbitrators.
The Single Bench of Chief Justice Sanjib Banerjee held that even if a person is named as an arbitrator in the arbitration agreement entered into before the occurrence of the dispute, and whose appointment would otherwise fall foul of the Seventh Schedule, a party is not barred from objecting to the agreed arbitrator taking up reference.
Orissa High Court:
Case Title: GMR Kamalanga Energy Ltd. versus SEPCO Electric Power Construction Corporation
Citation: 2022 LiveLaw (Ori) 106
The Orissa High Court has reiterated that an arbitral award cannot be set aside on the ground of breach of fundamental principles of justice, if the findings of the Arbitral Tribunal do not shock the conscience of the Court.
The Single Bench of Justice K.R. Mohapatra held that even if the material available before the Arbitral Tribunal is not sufficient to come to the conclusion arrived at by the Tribunal, the award cannot be set aside on this ground alone.
Punjab and Haryana High Court:
Case Title: M/s SGM Packaging Industries versus M/s Goyal Plywood LLP
The Punjab and Haryana High Court has ruled that even in the absence of an arbitration agreement between the parties, the matter can be referred to arbitration under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act).
The Single Bench of Justice Lisa Gill reiterated that the MSMED Act being a Special Act shall prevail over the Arbitration and Conciliation Act, 1996 (A&C Act).
Rajasthan High Court
Case Title: Eptisa Servicios De Ingenieria SL versus Ajmer Smart City Limited
The Rajasthan High Court has ruled that an arbitral award cannot be remitted back to the Arbitral Tribunal under Section 34 (4) of the Arbitration and Conciliation Act, 1996 (A&C Act) if there are no findings recorded in the arbitral award on the contentious issues.
The Single Bench of Justice Ashok Kumar Gaur reiterated that discretionary powers under Section 34 (4) of the A&C Act cannot be exercised under the guise of additional reasons or for filling up the gaps in the reasoning. The Court held that in the absence of any findings on the contentious issues in the award, no amount of reasons can cure the defect in the award.
Telangana High Court:
Case Title: M/s. India Media Services Private Limited versus M/s. SBPL Infrastructure Limited
The Telangana High Court has reiterated that in view of Section 42 of the Arbitration and Conciliation Act, 1996 (A&C Act), only the Court where an application under Section 9 and/or Section 34 has been filed would have the jurisdiction to entertain an application for enforcement of the arbitral award.
The Bench, consisting of Justices P. Naveen Rao and Sambasivarao Naidu, held that Section 42 of the A&C Act opens with a non-obstante clause and, therefore, even though an arbitral award is treated as a 'decree in fiction' by a Civil Court, Section 42 of the A&C Act would cover within its ambit all provisions dealing with execution of an award.
Case Title: Telangana State Tourism Development Corporation Limited versus M/s. A.A. Avocations Pvt. Ltd.
The Telangana High Court has ruled that if a dispute constitutes a 'commercial dispute' under Section 2 (1) (c) (vii) of the Commercial Courts Act, 2015, and the dispute is the subject matter of a domestic arbitration whose 'Specified Value' is more than Rs. One Crore, then an application under Section 9 of the Arbitration and Conciliation Act, 1996 (A&C Act) would lie only before the Commercial Court and not before the Civil Court.
The Bench, consisting of Justices P. Naveen Rao and Sambasivarao Naidu, held that to treat an immovable property as 'used' for commercial purposes, so as to fall within the ambit of Section 2 (1) (c) (vii) of the Commercial Courts Act, it is not necessary that the present lessee should commence commercial operations in the said property.
Case Title: M/s BPR Infrastructure Limited versus M/s. RITES Ltd. and Anr.
The Telangana High Court has ruled that the issue whether a no claim certificate furnished by a party to its employer was under compulsion or duress, or whether the said no claim certificate is valid, which would discharge the contract and debar the party from raising further claims, is an arbitrable dispute.
The Single Bench of Justice Ujjal Bhuyan held that in view of the decision of the Supreme Court in the case of Bharat Sanchar Nigam Limited versus M/s. Nortel Networks India Pvt. Limited (2021), the Court is only required to examine whether an arbitration agreement exists between the parties.
Place Of Residence Of The Arbitrator Would Not Be The Seat Of Arbitration: Telangana High Court
Case Title: M/s S. Square Infra versus Garneni Chalapathi Rao
The High Court of Telangana has held that the place of residence of the arbitrator would not determine the seat of arbitration.
The Single Bench of Justice P. Sree Sudha held that merely because an arbitrator residing in Hyderabad has been appointed, it would not mean that only the Courts at Hyderabad would have the jurisdiction to decide all the matters arising out of arbitration agreement.
Case Title: Terra Infra Development Ltd. versus NCC Ltd.
Citation: 2022 LiveLaw (Tel) 53
The Telangana High Court has held that the parties cannot be said to be negotiating when the respondent did not reply to the letters of the applicant and the period of limitation for invoking arbitration would not be extended in such a scenario.
The Single Bench of Justice K. Lakshman held that the period of limitation would begin to run when the liability to pay is disputed by a party and mere writing of letters and correspondences will not extend the limitation period.
Case Title: Naveen P Malvay versus Samskruthi Shelters
Citation: 2022 LiveLaw (Tel) 52
The Telangana High Court has held that having regard to the object of the A&C Act, the delay of 435 days in filing an appeal is too long to exercise discretion.
The Division Bench of Justice P. Naveen Rao dismissed an appeal that was filed after a long delay of 435 days on the ground that no sufficient reason was assigned for delay in filing the appeal. The Court held that when the delay is long, a heavy burden is placed on the applicant to give cogent reasons to satisfy the court for condonation of delay.
