Arbitration Monthly Round Up: February 2024
Rajesh Kumar
5 March 2024 9:30 AM IST
Supreme Court Court May Refuse To Appoint Arbitral Tribunal If S.11(6) Petition Is Barred By Limitation Or Claim Is Ex-Facie Time Barred : Supreme Court Case Title: M/s Arif Azim Co. Ltd. Versus M/s Aptech Ltd., ARBITRATION PETITION NO. 29 OF 2023 In a recent ruling, the Supreme Court held that the Limitation Act, 1963 is applicable to proceedings for appointment of...
Supreme Court
Case Title: M/s Arif Azim Co. Ltd. Versus M/s Aptech Ltd., ARBITRATION PETITION NO. 29 OF 2023
In a recent ruling, the Supreme Court held that the Limitation Act, 1963 is applicable to proceedings for appointment of arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 ("A&C Act"), and a Court may refuse to make a reference if the claims, on the date of commencement of arbitration proceedings, are ex-facie barred.
"...there is no doubt as to the applicability of the Limitation Act, 1963 to arbitration proceedings in general and that of Article 137 of the Limitation Act, 1963 to a petition under Section 11(6) of the Act, 1996 in particular", said the Bench of CJI DY Chandrachud and Justices JB Pardiwala, Manoj Misra.
Case Details: M/S Arif Azim Co Ltd v. M/S Aptech Ltd. Arbitration Petition No. 29 of 2023
In a recent verdict, the Supreme Court delved into the crucial question of whether the Limitation Act, 1963 is applicable to applications for the appointment of arbitrators under Section 11(6) of the Arbitration and Conciliation Act, 1996. The court highlighted the absence of a statutory prescription regarding the time limit for such applications and expressed concerns about the unduly long three-year period allowed for filing under Article 137 of the Limitation Act. While recognizing the legislative vacuum, the court urged Parliament to consider amending the Act to prescribe a specific limitation period for filing applications under Section 11(6). The decision emphasized the need for expeditious resolution of commercial disputes and addressed the potential impact of the absence of a time-bound framework.
In its concluding part, the Court observed :
“ 94. … this Court while dealing with similar issues in many other matters has observed that the applicability of Section 137 to applications under Section 11(6) of the Act, 1996 is a result of legislative vacuum as there is no statutory prescription regarding the time limit. We would again like to reiterate that the period of three years is an unduly long period for filing an application under Section 11 of the Act, 1996 and goes against the very spirit of the Act, 1996 which provides for expeditious resolution of commercial disputes within a time-bound manner. Various amendments to the Act, 1996 have been made over the years so as to ensure that arbitration proceedings are conducted and concluded expeditiously. We are of the considered opinion that the Parliament should consider bringing an amendment to the Act, 1996 prescribing a specific period of limitation within which a party may move the court for making an application for appointment of arbitrators under Section 11 of the Act, 1996…” Opined Justice Pardiwala.
The Supreme Court has referred to the larger bench the question of whether the courts have the power to modify the arbitral award under Sections 34 or 37 of the Arbitration and Conciliation Act, 1996.
“Whether or not the Courts in exercise of power under sections 34 or 37 of the Arbitration and Conciliation Act, 1996 are empowered to modify an arbitral award is a question which frequently arises in proceedings not only before this Court but also before the High Courts and the District Courts.”, the Supreme Court frames the question.
Delhi High Court
Case Title: Shri Balaji Enterprises & Ors vs Reserve Bank Of India & Anr. Citation: 2024 LiveLaw (Del) 134
The Delhi High Court bench comprising Justice Subramonium Prasad held that the aggrieved party should avail the alternate remedy available under the Arbitration and Conciliation Act, 1996 before approaching the court under Article 226 unless there are extraordinary or exceptional circumstances. Further, the bench held that the remedy available to a party under Article 226 is not absolute and is at the discretion of the High Court.
6. It is well settled that High Courts do not entertain writs in cases where an equally efficacious alternate remedy is available to the aggrieved party and the aggrieved person has approached the High Court without availing of the said remedy.
Case Title: M/s Opuskart Enterprises & Ors vs Kaushal Kishore Tyagi
The Delhi High Court bench comprising Justice Pratibha M. Singh held that the disagreements related to the partners' business activities, whether conducted through the firm or the company, fall within the scope of arbitrable matters. The bench rejected the argument that the firm or the company cannot be brought forth in the arbitration proceedings since neither the firm nor the company are signatories to the arbitration agreement. It referred to the Supreme Court decision in Cox and Kings Ltd. v. SAP India Pvt. Ltd. and held that common business ventures of the partners, whether conducted through the firm or the Company, fell within the purview of the arbitration clause.
Case Title: M/s Exotic Buildcon Pvt. Ltd. vs M/s Medors Biotech Pvt. Ltd.
The Delhi High Court bench comprising of Justice Vibhu Bakhru and Justice Tara Vitasta Ganju dismissed a Section 34 application filed by Exotic Buildcon Pvt. Ltd. against M/s Medors Biotech Pvt. Ltd. The bench held that an arbitral award cannot be set aside merely because the respondent company's name was struck off from the Register of Companies post-commencement of arbitral proceedings. It upheld the principle that the cancellation of a company's incorporation doesn't affect the realization of amounts due to the company or the discharge of its obligations.
Case Title: The Braithwaite Burn and Jessop Construction Co Ltd vs Northern Railway
The Delhi High Court bench comprising Justice Sachin Datta allowed an application made under Section 14 of the Arbitration and Conciliation Act, regarding the termination of an arbitrator's mandate under his former employment with the respondent, Northern Railway. The bench held that a broad-based panel should have been provided to the complainant and 4 was very less a number, coupled with the fact that each arbitrator in the panel was a former employee of Northern Railway. The bench concluded that this was against the principles enshrined in Clause 64 of the General Conditions of Contract (GCC) and the decisions given by the Supreme Court. The bench also acknowledged the unjustified exclusion of four claims raised by the Petitioner and held it invalid as per the GCC.
Case Title: Information TV Private Limited vs Jitendra Dahyabhai Patel
The Delhi High Court bench, comprising Justice Prathiba M. Singh, held that a petition under Section 11 of the Arbitration and Conciliation Act, 1996 can only be filed after a notice of arbitration has been issued and there has been a failure to make the appointment of an arbitrator within 30 days. The bench held that the limitation period arises upon the failure to make the appointment of the arbitrator within 30 days from the issuance of the notice invoking arbitration.
Case Title: National Research Development Corporation & Anr vs Chromous Biotech Pvt Ltd.
The Delhi High Court bench comprising Justice Pratibha M Singh held that the time limit for limitation under Section 34(3) of the Arbitration and Conciliation Act, 1996 is absolute in nature and it is impermissible to condone the delay in challenging an arbitral award under Section 34 unless the party demonstrates diligence and bona fide reasons beyond its control for the delay.
The High Court referred to the decision of the Supreme Court in Union of India v. Popular Construction [(2001) 8 SCC 470], and noted the absolute nature of the time limit prescribed under Section 34 of the Act. The High Court noted that the use of the phrase 'but not thereafter' in the proviso to sub-section (3) of Section 34 serves as an express exclusion within the meaning of Section 29(2) of the Limitation Act, rendering any extension beyond the specified period impermissible. This interpretation is further supported by the historical context and the scheme of the Arbitration Act, which emphasizes minimizing the supervisory role of courts in the arbitral process.
Case Title: Air India Limited vs All India Aircraft Engineers Association & Anr.
The Delhi High Court bench comprising Acting Chief Justice Manmohan and Justice Tushar Rao Gedela modified its earlier order which restrained the execution of an arbitral award involving Air India as a party. Air India claimed that instead of granting an unconditional stay as requested, the High Court initially restrained the execution of the award by employing a contingency on Air India to pay the whole decretal amount. The High Court modified this order and allowed Air India to deposit 50% of decretal amount as an FDR and the remaining 50% as a Bank Guarantee.
The arbitral tribunal directed Air India to pay Rs 57.92 crore along with interest and the cost of arbitration proceedings to the All India Aircraft Engineers' Association, which represents 480 members serving as engineers for either Air India or Indian Airlines. Additionally, the arbitral tribunal instructed Air India to calculate and pay wage arrears with interest to the Indian Aircraft Technicians Association.
Case Title: Allied-Dynamic Joint Venture vs Ircon International Ltd, Delhi
The Delhi High Court bench comprising Justice Pratibha M. Singh held that objections regarding bias against an arbitrator, as outlined in Section 12(5) of the Arbitration and Conciliation Act, 1996, cannot be raised after the arbitrator has rendered a decision under Section 31. The single bench emphasized that once an award has been made, raising allegations of bias amounts to a waiver under Section 4 of the Arbitration Act.
The High Court noted that the Agreement itself, under clause 72.2.3, provided a safeguard against bias by stipulating that if an employee is appointed as an arbitrator, he/she must not be connected with the work in question. Despite the Petitioner's claim of raising the issue of bias through letters, the High Court held that there was no formal adjudication or request for a change of arbitrator on grounds of bias by the Petitioner. Given these circumstances, it held that it would impermissible for the Petitioner to wait for the award to be rendered and then approach the High Court with allegations of bias against the arbitrator.
Case Title: Nitin Kwatra vs Stadhawk Services Pvt. Ltd. & Ors.
The Delhi High Court single bench of Justice Sachin Datta held that even if the agreement specifies exclusive jurisdiction on a different court, courts having jurisdiction over the seat of arbitration retain supervisory authority over the arbitral process. Therefore, it held that the presence of a generic exclusive jurisdiction clause does not diminish Delhi courts' jurisdiction as the seat of arbitration.
The High Court held that the jurisdiction of the courts overseeing the arbitration process is tied to the designated seat of arbitration. Even if a contract includes a clause conferring exclusive jurisdiction on a different court, when the arbitration clause specifies a venue, it held that this effectively designates the venue as the seat of arbitration. Therefore, the High Court held that courts having jurisdiction over the seat of arbitration retain supervisory authority over the arbitral process. It noted that the clause in the Letter of Agreement (LOA) purporting to confer exclusive jurisdiction was generic and did not specifically refer to arbitration proceedings. Consequently, it allowed the application under Section 11(6) of the Arbitration Act and appointed Praveen Pahuja as the sole arbitrator to adjudicate the disputes between the Petitioner and Respondent No. 1.
Case Title: Sanjay Kumar Verma vs Planning And Infrastructural Development Consultants Pvt. Ltd.
The Delhi High Court bench comprising Justice Sanjeev Narula held that the intention of the parties to grant exclusive jurisdiction can be derived from the language of the arbitration clause even in the absence of the usage of the term “seat” in the arbitration clause. The bench held that if there is an agreement explicitly or impliedly stating a seat of arbitration, the exclusive jurisdiction is upon the court of the seat to appoint an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996.
Upon analyzing the language of the arbitration clause, the High Court concluded that it signified a mutual agreement designating Patna as the place of arbitration. Despite the absence of the explicit term 'seat' in the clause, the parties' intent to establish Patna as the arbitration venue was clear. This interpretation aligned with the principle of party autonomy enshrined in Section 20 of the Arbitration Act, which mandates honouring the parties' consensus on such matters. Therefore, the High Court determined that Patna was indeed the designated seat of arbitration, depriving it of jurisdiction to adjudicate the petition.
Case Title: JKG Infratech Private Limited vs Larsen and Toubro Limited
The Delhi High Court bench comprising Justice Prateek Jalan held that registration under the MSME Act is a prerequisite for availing its benefits, and such benefits cannot be claimed retrospectively for contracts entered into before registration. The bench held that the Micro and Small Enterprises Facilitation Council doesn't have the power to entertain the dispute under Section 18 of the MSME Act for the claims which arose before registration. Therefore, the Council was not empowered to refer the parties to arbitration.
Case Title: State Trading Corporation Of India Ltd vs Micro And Small Enterprises Facilitation Council Delhi And Anr.
The Delhi High Court division bench of the Acting Chief Justice Manmohan and Justice Manmeet Pritam Singh Arora held that a party cannot file a writ petition under Article 226/227 challenging the arbitration award under Micro, Small, and Medium Enterprises Development Act, 2006 without taking recourse to a statutory remedy for challenging an award under Section 34 of the Arbitration and Conciliation Act, 1996. The bench noted that recourse is subjected to the requirement of pre-deposit of the award under Section 19 of the 2006 act.
The High Court disapproved of the stand taken by some High Courts that any order passed by the arbitral tribunal can be corrected by the High Court under Article 226 or 227. It advocated for minimizing judicial intervention during the arbitration process, stating that parties should generally wait until the award is pronounced, except in cases where a right of appeal is available under Section 37 under Arbitration Act. Consequently, it dismissed the appeal.
Case Title: Vedanta Limited vs Shreeji Shipping.
The Delhi High Court single bench of Justice Jasmeet Singh held that if an arbitration agreement stipulates multiple seats of arbitration, thereby, offering a choice to the parties is not void under Section 29 of the Indian Contract Act, 1872 declares agreements uncertain in meaning or incapable of being made certain as void.
The High Court referred to the decision of the Supreme Court in Indus Mobile Distribution (P) Ltd. v. Datawind Innovations (P) Ltd., [(2017) 7 SCC 678], and held that designating the seat of arbitration is akin to an exclusive jurisdiction clause. It clarified that once the seat is determined, it vests exclusive jurisdiction with the courts of that seat for regulating arbitral proceedings arising from the agreement between the parties. Hence, considering that the arbitration clause specified three potential seats, the High Court upheld its jurisdiction to entertain and decide the Section 11 petition.
Case Title: Surya Alloy Industries Ltd Vs Union Of India And Anr.
The Delhi High Court single bench of Justice Sachin Datta held that once a party has agreed to constituting an arbitral tribunal, it is precluded from subsequently opposing the appointment of an arbitrator based on the alleged non-fulfillment of pre-arbitral steps.
The High Court noted that the Respondents agreed to constitute the arbitral tribunal in a letter. It noted that Respondents' request for waiver of clause 12(5) of the Arbitration Act and after the Petitioner's refusal do so, the Respondents were obligated, as per the arbitration agreement, to send a panel of arbitrators to the Petitioner within 60 days from the demand for arbitration. The High Court held that this crucial step was not been taken by the Respondents.
Case Title: M/S S.K Agencies vs M/S DFM Foods
The Delhi High Court single bench of Justice Sachin Datta dismissed the notion that the arbitration clause would cease to exist with the termination of the contract. The bench emphasized that the arbitration clause, as part of the contract, should be treated as an independent agreement.
he High Court noted that the arbitral tribunal holds the primary authority to determine questions of non-arbitrability. It held that unless a dispute is manifestly or ex facie non-arbitrable, the general rule is to refer the dispute to arbitration, echoing the maxim "When in doubt, do refer".
The High Court highlighted that the dispute centered around the interpretation of clause 3 in the agreement, The Petitioner asserted that, based on contractual provisions and the conduct of the parties, there was no automatic termination of the agreements. Conversely, the Respondent contended that the agreement dated 22.12.2018 automatically expired on 24.07.2019 by virtue of clause 3, rendering the petitioner's subsequent claims outside the scope of the arbitration agreement. The High Court held that this should be adjudicated by a duly constituted arbitral tribunal, emphasizing that it was beyond the court's purview to interpret contractual provisions or delve into aspects influencing the merits of the parties' respective cases.
Case Title: M/S Axalta Coating Systems India Pvt. Ltd. Vs M/S Madhuban Motors Pvt. Ltd.
The Delhi High Court single bench of Justice Anup Jairam Bhambhani held that mere expression of "place of arbitration" does not automatically indicate the seat and the determination of the seat should be inferred from other clauses in the agreement and the conduct of the parties. The bench held that the seat was in Delhi as the contract clause specified that the venue for arbitral proceedings would be in New Delhi, and it vested exclusive jurisdiction in the courts of law in Delhi for all disputes arising from the Supply Agreement.
The High Court referred to the decision of the Supreme Court in Ravi Ranjan Developers Pvt. Ltd. vs Aditya Kumar Chatterjee and noted that mere mention of a place in an arbitration clause does not inherently result in that place becoming the seat of arbitration. Secondly, parties, while having the discretion to refer disputes to a specific court to the exclusion of others, must do so in accordance with sections 11(6) and 20(1) of the Arbitration Act.
Case Title: Swashbuckler Hospitality Pvt. Ltd. vs Avdesh Mittal & Anr.
The Delhi High Court single bench of Justice Dinesh Kumar Sharma rejected an argument that a letter of intent was a non-binding agreement and noted that the arbitration agreement contained in the letter of intent should be treated as an independent and binding agreement. Further, it held that the referral court at Section 11 stage should not examine or impound an unstamped instrument and should leave it for determination by the arbitral tribunal.
Upon reviewing the Letter of Intent, which included the arbitration clause in clause 24, the High Court noted that the document was unstamped. It noted that the primary focus of the court, while considering applications under Section 11(6-A) of the Arbitration Act, was confined to examining the existence of an arbitration agreement. It held that the non-existence of an arbitration agreement is the only valid reason for a court's refusal to refer a matter to arbitration. The amended Section 8(1) of the arbitration agreement limited the judicial authority's intervention to the question of whether the parties have a valid arbitration agreement.
Case Title: Gorkha Security Services vs Govt. Of Nct Of Delhi.
The Delhi High Court single bench of Justice Mohan Kumar Ohri held that an arbitral award lacking adequate reasoning suffers from the inherent flaw of patent illegality. It emphasized that a reasoned order should be proper, intelligible, and adequate, and failure to adhere to these standards can lead to challenges under Section 34 of the Arbitration and Conciliation Act, 1996.
The High Court noted that the agreement does not prohibit either party from claiming interest, as it remains silent on the aspect of interest. Notably, it held the award lacked specificity in explaining the rationale behind the denial of pre-award interest, despite the explicit request made for such interest during the proceedings. It recognized that the Arbitrator possesses discretion to award interest, a discretion that must be reasonably exercised.
Case Title: Morgan Securities & Credits Pvt Ltd. vs Samtel Display Systems Ltd.
The Delhi High Court single bench comprising Justice Sachin Datta held that an award suffering from internal contradictions is considered perverse and patently illegal under Section 34 of the Arbitration and Conciliation Act, 1996.
The High Court, while exercising jurisdiction under Section 34 of the Arbitration Act, acknowledged the limited scope of interference with arbitral awards. It emphasized that an arbitrator is the final arbiter on factual issues, and the interpretation of contract terms lies within the arbitrator's domain. It held that interference is only allowed if the award is palpably perverse, where no reasonable person could arrive at the arbitrator's conclusion.
Case Title: Steel Authority Of India Ltd vs Uniper Global Commodities.
The Delhi High Court single bench of Justice Sachin Datta held that the court under Section 27 of the Arbitration and Conciliation Act, 1996 cannot determine the admissibility, relevancy, materiality, and weight of any evidence, as doing so would amount to impermissible interference with the Tribunal's proceedings.
The High Court held that the orders of an Arbitral Tribunal are not ordinarily disturbed in Section 27 petition, emphasizing that the court, in exercising powers under Section 27, is not hearing an appeal over the Tribunal's decision. It Court highlighted that while the Arbitral Tribunal is not bound by the rules of procedure like the Code of Civil Procedure and the Evidence Act, it is still obligated to form an opinion and exercise discretion in permitting the examination of a witness.
Case Title: Devender Kumar Kashyap vs Chander Muni.
The Delhi High Court single bench of Justice Rekha Palli held that when a party provides its incorrect address in proceedings cannot be permitted to urge that the invocation notice of arbitration under Section 21 of the Arbitration and Conciliation Act, 1996 was not served at the correct address.
The High Court favored the Petitioner's contention that the Respondent, having provided his address in the previous petition filed in December 2021, is not in a position to argue that the invocation notice was improperly served. Moreover, it held that the purpose of the invocation notice is to inform the opposing party about the dispute and provide an opportunity for mutual agreement on the appointment of an arbitrator. Given that the Respondent was well aware of the Petitioner's intent for arbitration, the High Court held rejected Respondent's argument.
Case Title: Umaxe Projects Private Limited vs Air Force Naval Housing Board
The Delhi High Court single bench of Justice Manoj Kumar Ohri held that filing of the Section 29(A) application by a party did not amount to a waiver of its right to challenge the arbitrator's ineligibility under Section 12(5) of the Arbitration and Conciliation Act, 1996. The bench held that filing an application under Section 29A of the Arbitration Act for an extension of the mandate did not amount to an express waiver in writing under Section 12(5).
The High Court noted that the arbitrator was unilaterally appointed by the Respondent, in accordance with Clause 18.2 of the General Conditions of Contract (GCC) forming part of the Agreement and Clause 22 of the Agreement. These clauses did not afford the Petitioner any say in the appointment process.
The High Court held that the chairman-cum-managing director of a party ineligible himself was also not eligible to appoint another arbitrator. Further, it held that participation in arbitral proceedings without objecting to the arbitrator's appointment did not constitute a waiver of the right under Section 12(5) of the Arbitration Act.
Case Title: Aakash Educational Services Ltd Vs M/S Lotus Education & Ors.
The Delhi High Court single bench of Justice Dinesh Kumar Sharma held that mere invalidation or unenforceability of the arbitrator appointment process does not render the entire arbitration clause void. The bench held that even if an arbitration award is set aside due to unilateral appointment and non-compliance with Section 12 of the Arbitration Act, fundamental agreement between the parties to submit their disputes to arbitration remains intact. Therefore, the parties can file a fresh application under Section 11 of the Arbitration Act for arbitrator appointment.
The primary objection raised by the Respondent was that if an arbitration award is set aside due to unilateral appointment and non-compliance with Section 12 of the Arbitration Act, the Petitioner cannot file a fresh application under section 11 of the Arbitration Act for arbitrator appointment.
The High Court rejected the Respondent's contention that exhaustion of remedies under the arbitration clause prevents seeking re-appointment of the arbitrator. It held that as long as disputes covered by the arbitration agreement remain unresolved, parties are free to invoke arbitration again after an award is set aside. It held that setting aside an award doesn't preclude parties from re-agitating their claims before another arbitral tribunal.
Case Title: Indian Highways Management Company Ltd. vs Prakash Asphaltings and Toll Highways (India) Pvt. Ltd.
The Delhi High Court single bench of Justice Prateek Jalan held that the MSME Facilitation Council does not have the jurisdiction to arbitrate matters pertaining to individual service providers who do not fall under the definition of 'supplier' under the MSME Act. The same would be violative of Section 34 of the Arbitration and Conciliation Act, 1996.
The High Court held that even with the Respondent's expansive interpretation of Section 2(n)(iii) of the MSME Act, the Respondent does not fulfil the definition of a 'supplier.' It held that the Agreement in question didn't entail the sale of any goods from the Respondent to the Petitioner. The services provided by the Respondent to the Petitioner were carried out by the Respondent itself, not by a micro or small enterprise. The Agreement assigned the Respondent the responsibility of procuring and installing equipment at the Petitioner's toll plazas and maintaining it for five years, along with other contracted services.
Case Title: The Executive Engineer & Ors Vs M/S Bholasingh Jaiprakash Construction Ltd & Anr.
The Delhi High Court single bench of Justice Subramonium Prasad held that Article 226 of the Constitution of India is an extraordinary remedy and cannot be invoked where a party has failed to invoke other remedies available to it under law. It held that if a party fails to challenge the arbitration award under Section 34 of the Arbitration and Conciliation Act, 1996, cannot approach the High Court by filing a Writ Petition under Article 226 of the Constitution of India.
The High Court noted that the Arbitral Tribunal proceedings were initiated on 16.08.2022, with repeated reminders sent to the Petitioner urging its participation. However, the Petitioner consistently refused to engage in the proceedings. Despite being aware of the ongoing arbitration, the Petitioner did not challenge the award within the prescribed time under the Arbitration Act, opting instead to approach the court through a Writ Petition under Article 226 of the Constitution of India.
The High Court emphasized that Article 226 is an extraordinary remedy and cannot be invoked when other remedies available under the law have not been pursued. It acknowledged the objectives of the MSMED Act, which was designed to alleviate the regulatory burden on such enterprises. It noted that once a matter is referred to arbitration and an award is passed, it can be challenged under Section 34 of the Arbitration Act or Section 19 of the MSMED Act.
29. Section 29A Not Applicable To Arbitration Proceedings Commenced Before 2015: Delhi High Court
Case Title: Zillion Infraprojecs Pvt. Ltd Through Anant Saxena Vs Fab-Tach Works & Constructons Pvt. Ltd.
The Delhi High Court single bench Justice Manoj Kumar Ohri held that Section 29A of the Arbitration and Conciliation Act, 1996 which prescribes a time limit for issuance of arbitral award is not applicable to arbitration proceedings commenced before 2015 Amendment Act. It held that arbitral proceedings commence on the date when the Respondent receives the request for reference to arbitration. Section 29A mandates for the tribunal to make the award within a period of twelve months from the date of completion of pleadings.
The High Court noted that the Section 26 of the Amendment Act explicitly stated that the amendments would not apply to ongoing arbitral proceedings that had commenced in accordance with Section 21 of the Arbitration Act before the commencement of the Amendment Act, unless the parties agreed otherwise. In essence, the applicability of the Amendment Act was made prospective unless there was mutual agreement for retrospective application. The pivotal question before the High Court was whether Section 29A and its prescribed time limits would be applicable to arbitral proceedings initiated before the enactment of the Amendment Act.
Case Title: Govt. Of NCT of Delhi vs M/s R.S Sharma Contractors Pvt. Ltd
The Delhi High Court single bench of Justice Dinesh Kumar Sharma held that arbitral proceedings before the arbitrator are not required to be technical in nature and the arbitrator is within its power to decide the same on the basis of material on record. The bench held that the arbitrator is the sole judge of the quality and quantity of evidence, and the court's role is not to reassess the material or correct the arbitrator's errors under Section 34 of the Arbitration and Conciliation Act, 1996.
The High Court held that the legislative mandate is to ensure an expeditious and binding dispute resolution process with minimal court intervention. The proceedings under Section 34 are summary, reflecting the legislative intent for minimal interference and prompt dispute resolution. It clarified that the scope of inquiry under Section 34 is confined to assessing whether the grounds specified in Section 34(2), 13(5), or 16(6) justify setting aside the award. It reiterated that the arbitrator is the sole judge of the quality and quantity of evidence, and the court's role is not to reassess the material or correct the arbitrator's errors.
Case Title: M/s NHPC Ltd v. M/s Jaiprakash Associates Ltd, OMP(ENF.)(COMM) 184 of 2023
The High Court of Delhi has held that the counterclaims allowed by the arbitral tribunal can be enforced under Section 36 of the A&C Act when the portion of the award granting larger sums to the judgment-debtor (claimant in the arbitration) is set aside.
The bench of Justice Jasmeet Singh reiterated that partial setting aside of an award is permissible under the Act, therefore, when the award qua the claims allowed is set aside, the award regarding the counterclaims remains valid and enforceable.
The Court held that the counterclaims allowed by the arbitral tribunal can be enforced under Section 36 of the A&C Act when the portion of the award granting larger sums to the judgment-debtor (claimant in the arbitration) is set aside.
The Court reiterated that partial setting aside of an award is permissible under the Act, therefore, when the award qua the claims allowed is set aside, the award regarding the counterclaims remains valid and enforceable.
Bombay High Court
Cause Title: Kalpataru Projects International Ltd. v. Municipal Corporation of Greater Mumbai and Anr.
The Bombay High Court has rejected a construction company's claim that the dispute resolution clause in the General Conditions of Contract with Mumbai Municipal Corporation constituted a valid arbitration agreement due to a lack of mutual intention to arbitrate.s
The court pointed out that the title "Finality of Decision and Non-Arbitrability" of the clause clearly indicates the parties did not intend for it to serve as an arbitration agreement. The bench of Justice Firdosh P. Pooniwalla further opined that mere declaration of the adjudication committee's decision as "final and binding" did not inherently indicate an intention to arbitrate.
The court added that the clause does not even make any reference to arbitration or appointment of an arbitrator, therefore, this dispute resolution clause did not constitute a valid arbitration agreement.
Case Title: Hyundai Construction Equipment India Pvt. Ltd vs Saumya Mining Limited and Another
The Bombay High Court bench comprising Justice Neela Gokhale held that in cases where an application has been made in a court concerning an arbitration agreement, that court alone possesses jurisdiction over an application for appointment of arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996. Further, the bench held that even in agreements where no specific seat is mentioned, multiple courts may potentially have jurisdiction, depending on where a part of the cause of action arises.
Case Title: Ketan Champaklal Divecha vs DGS Township Pvt. Ltd. & another
The Bombay High Court bench comprising Justice Manish Pitale held that individual and minority members of a society cannot invoke arbitration clauses in development agreements against the developer. The bench held that when a society and its members enter into a development agreement with the developer, the society speaks for its members and the members would lose their independent rights qua the society.
Case Title: M/s Bafna Udyog vs Micro & Small Enterprises, Facilitation Council and anr.
The Bombay High Court bench comprising Justice Neela Gokhle held that the parties should have a separate arbitration agreement between them for reference to arbitration under Micro, Small & Medium Enterprises Development Act, 2006 by Micro & Small Enterprises, Facilitation Council. The bench rejected the argument that Section 18(3) of the MSMED Act 2006 provides for a deemed arbitration agreement, thereby, eliminating the necessity for a separate arbitration agreement between the parties.
36. Arbitrators Can't Unilaterally Modify Fee, Needs Parties' Consent: Bombay High Court
Case Title: Shanklesha Construction and Others vs Ashok Mohanraj Chhajed
The Bombay High Court bench comprising Justice Manish Pitale held that any amendments, revisions, or modifications in fees of an arbitrator must only occur with the consent of the parties, as outlined in the tripartite agreement and per Schedule IV of the Arbitration and Conciliation Act, 1996. The High Court also held that the arbitrator is not bound by the strict rules of the CPC and the Evidence Act and can employ a reasonable approach while judging the proceedings, in light of the principles of natural justice. Any grievances related to the conduct of the proceedings can be raised by the aggrieved party under the grounds mentioned in Section 34 of the Arbitration and Conciliation Act, 1996.
The High Court referred to the decision of the Supreme Court in Oil and Natural Gas Corporation Limited (ONGC) Vs. Afcons Gunanusa JV where the Supreme Court issued guidelines on determination of arbitrator's fees, emphasizing the need for a tripartite agreement, setting out the fee components. The Supreme Court further elucidated in its judgment that the 'sum in dispute' encompasses the entire amount to be adjudicated upon, allowing the arbitrator or arbitral tribunal to compute and charge fees for both the claim and the counter-claim. The High Court held that any amendments, revisions, or modifications in fees must only occur with the consent of the parties, as outlined in the tripartite agreement.
Case Title: K.I.P.L. Vistacore Infra Projects J.V vs Municipal Corporation of the city of Ichalkarnji
The Bombay High Court bench comprising Justice Bharati Dangre held that the power to extend the mandate of an arbitral tribunal or arbitrator under Section 29-A of the Arbitration and Conciliation Act, 1996 lies exclusively with the court that appointed the arbitrator(s). The bench held that the term 'Court' in Section 29A must be interpreted in a manner consistent with the Court's power to appoint arbitrators under Section 11.
The High Court referred to its decision in Cabra Instalaciones Y. Services vs. Maharashtra State Electricity Distribution Company Limited, where the arbitral tribunal was constituted by an order from the Supreme Court under Section 11(5) of the Act. The judgment specifically held that the High Court, exercising power under Section 29A, does not possess the authority to appoint a substitute arbitral tribunal or any member thereof. Further, it emphasized that in the context of international commercial arbitration, such powers exclusively belong to the Supreme Court. Furthermore, the judgment pointed out that the jurisdiction conferred upon the “Court” by Section 29A precludes other courts from exercising similar powers.
Case Title: Nilesh Shejwal vs Agrowon Agrotech Industries Pvt. Ltd.
The Bombay High Court single bench comprising Justice Bharati Dangre held that due to an evolution in contemporary arbitration where there was a belief that fraud disputes were unsuitable for arbitration, today, arbitral tribunals routinely navigate through extensive material in various dispute types. Thus, it held that the previous notion of fraud being non-arbitrable due to complexity is archaic and no longer applicable in modern arbitration practices.
The High Court emphasized the distinction between rights in rem, which are adjudicated by courts or statutory tribunals as they pertain to rights exercisable against the world at large, and actions in personem, which determine the rights and interests of parties to the subject matter of disputes and are arbitrable. Contrary to past views that fraud disputes involving voluminous evidence were unfit for arbitration, the High Court noted that there is an evolution of contemporary arbitration practice, wherein arbitral tribunals routinely navigate through extensive material in various dispute types. Thus, it held that the previous notion of fraud being non-arbitrable due to complexity is archaic and no longer applicable in modern arbitration practices.
Calcutta High Court
Case Title: Suresh Dhanuka vs Shahnaz Husain
The Calcutta High Court bench comprising Justice Krishna Rao held that while interpreting the arbitration agreements, the courts should have a presumption in favour of arbitration of the dispute and the court could only interfere if the party shows prima facie non-existence of valid arbitration agreement. It held that Sections 8 and 11 of the Arbitration and Conciliation Act, 1986 give the arbitrator or the tribunal the primary authority to determine the questions of non-arbitrability of the disputes. Further, it held that Section 16 confers significant powers upon the tribunal to determine any objections concerning the existence or validity of the arbitration agreement.
Case Title: R S Fuel Pvt Ltd vs Ankit Metal And Power Ltd
The Calcutta High Court bench comprising Justice Moushumi Bhattacharya held that neither the Arbitration and Conciliation Act, 1996 nor the Insolvency and Bankruptcy Code, 2016 allows a party's request to halt the publication of an arbitral award to the extent of its reliance on another party's counter-clam. The bench noted that the notion of splitting an arbitral award for this purpose is unnatural and unsupported by law.
The High Court noted that Section 14(1)(a) of the IBC applies to the institution or continuation of suits and proceedings against the corporate debtor, including arbitration proceedings. However, the High Court noted that the Respondent, who was also the claimant in the arbitration, cannot rely on Section 14(1)(a) to impede the publication of the arbitral award.
The Calcutta High Court single bench of Justice Prasenjit Biswas held that consumer forum cannot assume jurisdiction when a special statue prescribes for arbitration and designates a forum for adjudication of disputes. It held that a special law takes precedence over a general law.
The High Court, referred to Section 84 of the Multi-State Co-operative Societies Act, 2002, and held that the dispute between the Petitioner co-operative society and Complainant should have been referred to arbitration as per the specific provision of the Act. The High Court observed that both the District Forum and State Commission failed to take into account the statutory provisions, specifically overlooking the jurisdictional limitations imposed by the Multi-State Co-operative Societies Act.
Case Title: RKD Niraj JV vs The Union Of India.
The Calcutta High Court single bench of Justice Moushumi Bhattacharya held that the clause in General Conditions of Contract stipulating appointment of a panel of three gazetted railway officers for arbitration violated Section 12(5) of the Arbitration and Conciliation Act, 1996, read with the Fifth and Seventh Schedules of the Act.
The High Court noted that the Clause 64(3)(a)(ii) of the GCC mandated an agreement to arbitration under three gazetted railway officers, subject to a specified rank. The High Court noted that Section 12(5) of the Arbitration Act, in conjunction with the Fifth and Seventh Schedules, guards against the appointment of arbitrators with potential conflicts of interest. It highlighted Entry-1 of the Seventh Schedule, which specifically bars arbitrators with relationships or conflicts with the parties, counsel, or if the arbitrator has a business relationship with a party.
Case Title: Cholamandalam Investment and Finance Company Limited. Vs. Uma Earth Movers and Anr.
The Calcutta High Court single bench of Justice Moushumi Bhattacharya held that both Principal Civil Court and Commercial Division of the High Court has the jurisdiction to entertain Section 9 petition if the claim amount is between Rs. 10 lakhs to Rs. 1 crore. It rejected the contention that the City Civil Court doesn't have jurisdiction to receive or try the first application under Section 9.
The High Court held that Section 2(1)(e) of the Arbitration Act, meticulously defined the term "Court," designating the forum where a party is obligated to bring a subject matter related to arbitration for adjudication.
It referred to a Notification published on 20.3.2020 in the Kolkata Gazette Extraordinary by the Judicial Department, Government of West Bengal. This notification, executed under the authority granted by section 3(1-A) of The Commercial Courts Act, 2015, altered the landscape by delineating the pecuniary jurisdiction of both the City Civil Court and the Calcutta High Court. The notification specifies the pecuniary jurisdictions of these courts in relation to the value of commercial disputes, establishing concurrent jurisdiction for commercial disputes ranging from Rs. 10 lakhs to Rs. 1 crore. Notably, considering the Petitioner's claim of approximately Rs. 67.53 lakhs, the High Court held that both the City Civil Court and the Commercial Division of the Calcutta High Court would have concurrent jurisdiction.
Case Title: Rolta Infrastructure and Technology Services Private Limited vs Department of Information Technology And Electronics, Government of West Bengal
The Calcutta High Court single bench of Justice Moushumi Bhattacharya held that there exists no conflict between the Arbitration and Conciliation Act, 1996, and the provisions of The West Bengal Public Land (Eviction of Unauthorised Occupants) Act, 1962. It held that both statutes operate within distinct domains and do not overlap in their scope or application.
Addressing potential conflicts with other statutes, the Court rejected arguments suggesting conflict between the Arbitration Act, and the West Bengal Public Land (Eviction of Unauthorised Occupants) Act, 1962. It asserted that both statutes operate independently, and the former does not override the latter. Moreover, the High Court disagreed with contentions regarding the exclusivity of the judicial authority under the 1962 Act, noting that there is no statutory prohibition on invoking arbitration clauses even when proceedings are initiated under the 1962 Act.
Case Title: Tarit Mitra and Anr. vs Sharad Goenka
The High Court of Calcutta bench comprising Justice Sugato Majumdar adjudicated on a matter involving a civil suit for possession of premises from the tenants and an application made under Section 8 of the Arbitration and Conciliation Act, 1996 by the tenants seeking to refer the dispute to arbitration based on the tenancy agreement which had expired a few years ago and was not novated or renewed. The High Court emphasized that while the tenancy may be established by conduct, arbitration cannot be inferred from the parties' conduct alone. Therefore, it was concluded that there existed no arbitration agreement within the meaning of Section 7 of the Act.
The High Court further noted that there was no explicit agreement showing that disputes related to tenancies should be resolved through arbitration. Additionally, the other two incidental agreements were not renewed, and there was no written indication that disputes between the parties should be referred to arbitration, as required by Section 7 of the Arbitration and Conciliation Act, 1996. It emphasized that while a tenancy may be established by conduct, arbitration cannot be inferred from the parties' conduct alone. The original agreement had a clause stating that disputes under the tenancy agreement should be referred to arbitration, but as the tenancy was renewed and novated, the parties were not in agreement regarding the applicability of the arbitration clause.
Gauhati High Court
Case Title: M.S. Oil India Limited vs M.S. Badri Rai And Company
The Gauhati High Court single bench of Justice Sanjay Kumar Medhi held that the commencement under Section 21 of the Arbitration and Conciliation Act, 1996 does not arise unless an Arbitration Tribunal is constituted. It held that the arbitration does not automatically commence when the other party gives receipt of the claim.
The High Court held that there is a presumption that there is consent from the nominee arbitrators of both parties for the appointment of the Presiding Arbitrator. It emphasized that the Presiding Arbitrator cannot assume jurisdiction to adjudicate the dispute and issue a declaration under Section 12 of the Arbitration Act without such consent.
Case Title: M/s Atw (India) Pvt. Ltd. vs Union Of India And Anr
The Gauhati High Court single Judge Justice Michael Zothankhuma has rejected the notion that it is a mere post office under Section 11(6) of the Arbitration and Conciliation Act, 1996, obligated to appoint an arbitrator without considering obvious legal infirmities.
The single-judge held that the court under Section 11(6) of the Arbitration Act decides the arbitrability of the dispute by prima facie analysis.
The High Court noted that Clause 63 & 64(1)(i) of the GCC clearly mandated the resolution of disputes through arbitration. However, it noted the introduction of a limitation in Clause 10.1, stating that when the claim or dispute value exceeds 20% of the contract work value, the provisions of Clause 63 & 64 of the GCC would not be attracted. The Petitioner a claim amounting to Rs. 1,86,23,336.78, which constituted approximately 36.6% of the total contract value as per the contract agreement.
Gujarat High Court
Case Title: Poll Cont Associates vs Narmada Clean Tech Ltd.
The High Court of Gujarat single bench of Chief Justice Sunita Agarwal allowed a Section 11 application of the Arbitration and Conciliation Act seeking the appointment of an Arbitrator. It refuted the contention of the Respondent that the dispute had become non-arbitrable because the Petitioner had issued a 'No Claim Certificate' earlier, making the dispute 'stale' in nature.
The bench reiterated that it could only carry on a prima-facie assessment as a general rule of law and the decision on arbitrability lies primarily within the Arbitrator's ambit.
At the outset, the High Court refuted the Respondent's contention that the disputes are no more arbitrable because they've become 'stale'. In this regard, the High Court referred to the 'Eye of the Needle' principle propounded by the Supreme Court in NTPC Limited vs SPML Infra Limited, which means that the jurisdiction of the courts under Section 11(6) of the Arbitration Act is very narrow and warrants just two inquiries. The primary inquiry has to be whether an arbitration agreement existed between the parties (this includes the question of privity of contract) and the secondary inquiry has to be whether the dispute is arbitrable. The High Court further clarified that arbitrability of the dispute, as a general rule, also lay under the Arbitrator's ambit. However, the referral court may reject claims which are ex-facie and manifestly non-arbitrable.
Case Title: Board Of Trustees Of Deendayal Port Through Executive Engineer (H) Vs M/S. Shantilal B. Patel & Anr.
The Gujarat High Court division bench of Chief Justice Sunita Agarwal and Justice Aniruddha P. Mayee held that Court cannot sit in appeal over the arbitral award and re-examine the merits. It held that it is not permissible for a court to reappreciate the evidence on record.
Further, it held that the arbitral award cannot be interfered with where on interpretation of any contract or document, two views are possible, and the Arbitrator has accepted one view.
The High Court held that it cannot sit in appeal over an arbitral award and re-examine the merits of the case. It emphasized that it is impermissible to re-appreciate the evidence on record in a Section 34 application. It highlighted the limited scope of interference under Sections 34 and 37 of the Arbitration Act. Further, it held that interference is not warranted when two possible views on the interpretation of a contract or document exist, and the arbitrator has accepted one view.
Andhra Pradesh High Court
Case Title: The Project Director, National Highways Authority of India vs M/s. Vijayanagaram Hatcheries Pvt. Ltd.
The Andhra Pradesh High Court division bench comprising Chief Justice Dhiraj Singh Thakur and Justice R. Raghunandan Rao held that that it lacks the authority in writ petition to enforce an award issued by an arbitrator when it is already challenged under Section 34 of the Arbitration and Conciliation Act, 1996.
The High Court referred to the decision of the Supreme Court in the case of National Highways Authority of India Vs. Sheetal Jaidev Vade & Others, [2022 LiveLaw (SC) 705] and highlighted the Supreme Court's disapproval of entertaining writ petitions under Article 226 of the Constitution of India for the execution of awards passed by arbitral tribunals or courts. The Supreme Court, in the cases, expressed its disapproval of a judgment and order passed under Article 226, directing the NHAI to deposit the entire compensation amount awarded by the arbitrator and allowing the original landowners to withdraw the said amount.
Allahabad High Court
Case Title: M/S Sahbhav Engineering Ltd. Ahmadabad Thru. Authorised Representative Mr. Pramod Dave vs. U.P. State Micro Small And Medium Enterprises Facilitation Council Kanpur Thru. Chairman And Others 2024 LiveLaw (AB) 67 [WRIT - C No. - 3774 of 2023]
The Allahabad High Court has held that an arbitral award passed in a reference made under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 must be challenged as per provisions of Section 19 of the MSMED Act read with Section 34 of the Arbitration and Conciliation Act, 1996.
Section 19 of the MSMED Act provides that any application for setting aside any decree, award or other order made either by the Council itself or by any institution or centre providing alternate dispute resolution services to which a reference is made by the Council under the MSED Act shall not be entertained by any court unless the appellant (not the supplier) deposits 75% of the decretal amount.
Case Title: M/S Neelkanth Construction vs. Union Of India And 3 Others 2024 LiveLaw (AB) 68
The Allahabad High Court has reiterated that the scope of judicial review in proceedings under Section 11(6) of the Arbitration and Conciliation Act, 1996 is very narrow. The Court held that debatable questions of fact cannot be gone into by the Court while adjudicating an application for appointment of arbitrator.
“The rival contentions regarding arbitrability, in my view, cannot be decided in the instant proceedings. Its adjudication requires appreciation of evidence. The scope of judicial review in deciding issue of arbitrability is very limited,” held Acting Chief Justice Manoj Kumar Gupta.
The Court relied on Vidya Drolia and Others vs. Gujarat Informatics Limited wherein the Supreme Court had held that the scope of adjudication under Section 11(6) is very narrow.
“In the said judgment, it has been observed that while deciding issue of arbitrability, the Court under Section 11(6) has a very limited power, confined to cases where there is not even a vestige of doubt that the claim is non-arbitrable.”
Case Title: M/s Jaypee Infratech Limited V. M/s Ehbh Services Private Limited And Another [Civil Misc. Arbitration Application No.2 Of 2022]
The Allahabad High Court has referred the question whether application under Section 29A of the Arbitration and Conciliation Act, 1996 for time extension can only be heard by the Supreme Court or the High Court where the appointment of such arbitrator has been made by the Supreme Court or the High Court, as the case may be.
Further, the Court has raised a query regarding the powers of the 'Court' as defined under Section 2(1)(e) of the Act to adjudicate on an application under Section 29A of the Act.
Section 29A of the Arbitration and Conciliation Act, 1996 provides that award must be passed within 12 months from the date on which the arbitral tribunal enters reference. Sub-section (4) of Section 29A provides that mandate of the arbitral tribunal shall end within 12 months or at the expiry of the extended period provided the 'Court' extends the said period. Sub-section (6) of Section 29A empowers the 'Court' to substitute arbitrators while extending the said period.
Case Title: Sanjay Agarwal vs Rahul Agarwal And Ors.
The Allahabad High Court single bench of Justice Alok Mathur held that the objections under Section 47 of the CPC are not maintainable in execution proceedings for the enforcement of an arbitration award. It held that an arbitration award, not being issued by a "court," falls outside the definition of a decree as outlined in Section 2(2) of CPC. Moreover, once the award attains finality, any objections must be raised exclusively in proceedings under Section 34 of the Arbitration Act.
The High Court highlighted the nature and scope of revisional jurisdiction, emphasizing its role in correcting errors of jurisdiction committed by subordinate courts. It held that the revisional jurisdiction is confined to addressing questions of jurisdiction and is not intended for re-examining or reassessing evidence on record.
The High Court dismissed the revisionist's argument regarding the maintainability of objections under Section 47 of the CPC at the execution stage. It held that the revisionist should have challenged the award under Section 34 of the Arbitration Act and that objections under Section 47 of CPC were not maintainable at the execution stage.
55. Compliance Of Section 21 Of Arbitration & Conciliation Act, 1996 Is Mandatory: Allahabad High Court
Case Title: M/S Samyam Industries and Others v Shivalik Small Finance Bank Ltd.
The Allahabad High Court has held that the compliance of Section 21 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) is mandatory. Thus, arbitral proceedings would only commence once the notice invoking arbitration issued by the claimant is received by the respondent.
The Bench comprising Justice Manju Rani Chauhan was adjudicating a writ petition filed under Article 226 of the Constitution by borrowers, challenging the arbitration proceedings initiated against them by Shivalik Small Finance Bank Ltd. without serving a Notice Invoking Arbitration. The Bench has quashed the arbitration proceedings for not complying with the requirements of Section 21 of Arbitration Act.
Punjab and Haryana High Court
Case Title: M/s A.G. Construction Co. vs The State of Punjab and Others
The High Court of Punjab and Haryana single-judge bench of Justice Suvir Sehgal adjudicated on a Section 11 petition filed by a Construction Company which was conducting work for the Department of Technical Education and Industrial Training, although the department itself wasn't a party to the petition. The single-judge bench determined that even though the work was intended for the Department, this department neither issued the allotment nor acted as the executing agency. As a result, the petition was allowed.
The High Court held that the objections raised by the respondents were invalid. The allotment letter was executed between the Petitioner and the Respondent. Although the work was intended for the Department of Technical Education and Industrial Training, this department neither issued the allotment nor is it the executing agency. Therefore, it was not considered a necessary party to the petition for the appointment of an arbitrator.
Telangana High Court
57. Arbitrator Taking A Different View Is Not A Ground To Set Aside Award: Telangana High Court
Case Title: M/S Nile Ltd. vs Sri Gurdip Singh and Another
The Telangana High Court bench comprising Justice M.G. Priyadarsini held that the scope of setting aside an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1986 is very limited and can only be set aside if there is an error apparent on the face of the record and there is perversity in the award. Further, it held that the courts should not interfere with the arbitral awards merely because a different view has been taken by the arbitrator based on the evidence and that it should be against public policy or public interest.
Regarding the scope of interfering with the arbitration award, the High Court noted that there is limited scope for interfering with an award under Section 34 of the Arbitration and Conciliation Act, 1986 (“Arbitration Act”). Further, it noted that the expression “public policy” in Section 34 has a wider amplitude and awards passed against the terms of the contract are not in public policy. It referred to the decision of the Supreme Court in NTPC Limited v. Deconar Services Private Limited [2021 SCC OnLine SC 498], where it was held that the courts should not interfere with arbitral awards merely because a different view could be taken based on the evidence. It emphasized that unless there is perversity in the award or an error of law, courts should refrain from intervening. The High Court clarified that showing another reasonable interpretation of the evidence is insufficient grounds for interference.
Case Title: East Hyderabad Expressway Limited vs The Hyderabad Metropolitan Development Authority and another.
The Telangana High Court bench comprising Justice C.V. Bhaskar Reddy held that the question of whether a claim is barred by limitation time is to be decided by the Arbitral Tribunal/Arbitrator under Section 20 of the Arbitration and Conciliation Act, 1996. Further, the bench noted that the scope of Section 11(6) in conjunction with Section 11(9) is confined to the appointment of an arbitrator based on the existence of an arbitration agreement and not to examine the merits of the case.
Case Title: Athelli Mallikarjun and others vs S.S.B Constructions, Registered Partnership Firm, Secunderabad and another.
The Telangana High Court single bench comprising Justice CV Bhaskar Reddy held that the mere exchange of communications or settlement discussions between the parties does not extend the period of limitation for issuing a notice of arbitration. The bench held that mere negotiations do not delay the cause of action for the purpose of limitation.
The High Court held that since the Arbitration Act does not specify the limitation period for filing an application under Section 11, recourse must be taken to the Limitation Act, 1963. The High Court noted that the notice invoking arbitration issued by the Applicants was over five years after the rejection of their claims by the Respondent. It noted that the period of limitation for such notices begins immediately after the rejection of final bills, pursuant to Article 55 of the Schedule of the Limitation Act. It highlighted the necessity for a clear notice invoking arbitration, setting out the particular dispute within three years from the rejection of a final bill.
Case Title: M/s Naolin Infrastructure Private Ltd. vs M/s Kalpana Industries
The Telangana High Court single bench of Justice Alok Aradhe held that the requirement under Section 8(1) of the Arbitration and Conciliation Act, 1996 to inform the court regarding the existence of an arbitration clause is fulfilled when a party files an application for rejection of plaint under Order VII Rule 11 of the Code of Civil Procedure, 1908 in a commercial court.
The High Court noted that the essence of Section 8(1) of the Arbitration Act is to bring to the notice of the court the existence of an arbitration agreement between the parties involved. Referencing the decision of the Supreme Court in the case of Sundaram Finance Ltd. vs Abdul Samad [AIR 2018 SC 965], the High Court held that once an application is made under Section 8 of the Arbitration Act, the approach of the civil court should not centre around jurisdiction but rather on whether its jurisdiction has been ousted. It stressed the importance of adhering to the procedures outlined in special statutes, stating that general law should yield to special law. Further, it held that failure to do so could delay dispute resolution and exacerbate the complexity of grievances.
Case Title: Sri Gourishetty Srinivas vs M/s Karvy Data Management Services
The Telangana High Court bench comprising Justice K Lakshman held that the court can refer a dispute to arbitration unless a party could establish a prima facie case of the non-existence of a valid arbitration agreement. The bench held that in cases where doubt arises regarding the validity of the arbitration agreement, the matter should be referred and decided by the arbitrator.
The High Court, after referring to the arbitration clause and the existence of a dispute regarding rent payment between the parties, observed that an arbitration clause was indeed present in the agreement. Referring to the decision of the Supreme Court in Vidya Drolia v. Durga Trading Corporation [(2021) 2 SCC 1], where the Supreme Court laid down principles for exercising power under Section 11 of the Arbitration and Conciliation Act, 1996. The High Court emphasised the court's role in referring matters to arbitration unless a party could establish a prima facie case of the non-existence of a valid arbitration agreement.
Case Title: K. Venkateswara Rao vs Union Of India.
The Telangana High Court single bench of Justice M.G. Priyadarsini held that as long as the composition of the arbitral tribunal or the arbitral procedure aligns with the agreement between the parties, Section 34 of the Arbitration and Conciliation Act, 1996, does not allow a challenge to an award solely on the basis that the composition of the arbitral tribunal conflicts with the provisions of Part I of the Act.
In the present case, the High Court observed that there was no material to demonstrate an error apparent on the face of the record or perversity in the award. Additionally, it noted that the Petitioner failed to establish any question of law in the case, as the grounds raised by it were based on questions of fact rather than legal issues.
Further, the High Court held that an arbitral award can be set aside only on specific grounds mentioned in Section 34 of the Arbitration Act. It emphasized that Section 34(2)(a)(v) does not apply if the composition of the arbitral tribunal is in accordance with the agreement of the parties. Moreover, it clarified that objections to the composition should have been raised at the initial stage, and the parties are deemed to have waived their right to object if not raised.
Madhya Pradesh High Court
Case Title: M/s Master Point and Anr. vs Smt. Sandhya Chouhan
The High Court of Madhya Pradesh bench comprising Justice Sushrut Arvind Dharmadhikari and Justice Devnarayan Mishra refused to exercise the writ jurisdiction of the High Court under Article 226/227 of the Indian Constitution for a matter involving dismissal of an application made to an Arbitrator under Section 16(3) of the Arbitration and Conciliation Act, 1996 by the Petitioner. The High Court held that a writ petition under Article 226/227 of the Indian Constitution is not maintainable against every order passed by an arbitral tribunal unless exceptional circumstances or 'bad faith' on the opposite party's part has been shown in the petition. The Petitioner was set at liberty to avail remedy after the pronouncement of the final award.
Jammu & Kashmir and Ladakh High Court
Case Title: Babu Ram vs Tata Project Ltd. Residential Manager and Ors.
The Jammu & Kashmir and Ladakh High Court bench comprising Chief Justice N. Kotiswar Singh affirmed that when parties specify a particular location as the venue for arbitration proceedings, that location effectively becomes the seat of arbitration. Consequently, only courts with jurisdiction over that designated venue possess the authority to hear and decide on matters pertaining to the arbitration agreement. Therefore, the bench dismissed an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 for the appointment of an arbitrator noting that the arbitration clause specified Hyderabad is the seat of arbitration, thereby, excluding its jurisdiction to entertain the application.
The High Court referred to the decision of the Supreme Court in BGS SGS Soma JV v. NHPC, (2020) 4 SCC 234, and reinforced the interpretation of arbitration clauses with designated venues as indicating the "seat" of arbitration. The High Court noted that the term "venue" in arbitration clauses refers to the "seat" of arbitration, signifying not only the location for hearings but the overall conduct of the arbitration proceedings. This interpretation aligns with Section 20 of the Arbitration Act, wherein parties have the autonomy to select the place of arbitration.
Case Title: J.K. Sthapak vs Satish Kumar Saxena and Anr.
The High Court of Madhya Pradesh bench comprising Justice Achal Kumar Paliwal dismissed a revision petition seeking to invoke Section 8 of the Arbitration and Conciliation Act, 1996 based on a dispute related to the transfer of cheques under a partnership deed. The arbitration clause in the deed was about disputes arising between the parties, touching the firm's business or interpretation of any subsequent provisions relating to the firm and its business. The High Court noted there was no record suggesting that the mentioned amount was provided to the Petitioner concerning the partnership's business. As a result, the High Court concluded that Clause 22 of the partnership deed, which pertained to arbitration in business-related disputes, would not be applicable in this case.
The High Court observed that two cheques out of three were issued from the firm's account and one cheque was issued from the Respondent's account. The High Court further noted that even prima facie, there was no evidence to demonstrate that Rs. 22 Lakh was given to the Plaintiff from the firm's account. Consequently, there was no record suggesting that the mentioned amount was provided to the Petitioner concerning the partnership's business. As a result, the High Court concluded that Clause 22 of the partnership deed, which pertained to arbitration in business-related disputes, would not be applicable in this case.
Karnataka High Court
Case Title: H R Satyanarayana vs H C Suresha and Others.
The Karnataka High Court single bench comprising Justice MG Uma held that when a Civil Court refers the parties to arbitration and appoints an arbitrator without invoking Section 11 of the Arbitration and Conciliation Act, 1996, the award merges with the decree accepted by the court, therefore, doesn't warrant to be registered and drawn on a stamp paper.
The High Court reiterated that when a Civil Court passes a decree and the decree-holder seeks execution, the Executing Court cannot exceed its jurisdiction. Even if the award by the arbitrator is considered, it merges with the decree accepted by the Appellate Court, and the Executing Court's role is limited to executing the decree in accordance with procedural law. Therefore, the High Court found that the Executing Court erred in its finding that the decree was an arbitral award, and it exceeded its jurisdiction.
Case Title: M/s. ICDS Ltd vs Sri Bhaskaran Pillai and Others.
The Karnataka High Court single bench of Justice HP Sandesh held that even if an arbitration agreement erroneously refers to the 1940 Act after the enactment of the 1996 Act, it does not render the agreement invalid. It held that arbitral proceedings initiated under it before the enactment of the 1996 Act could continue under the old Act unless the parties agreed otherwise.
The High Court held that despite the repeal of the 1940 Act, arbitral proceedings initiated under it before the enactment of the 1996 Act could continue under the old Act unless the parties agreed otherwise. Conversely, proceedings initiated after the enactment of the 1996 Act would be governed by its provisions. The High Court noted that references to the 1940 Act in arbitration agreements made after the enactment of the 1996 Act would not render the agreements invalid. Even if such agreements erroneously referred to the provisions of the 1940 Act, they would still be governed by the 1996 Act.
International
The Court of Arbitration for Sport (CAS) has dismissed Russia's bid to reverse the International Olympic Committee's (IOC) decision to suspend its official status. The IOC took this action after Russia attempted to absorb Ukrainian sports organizations following the 2022 invasion of Ukraine. Established in 1984, the CAS is a global organization dedicated to resolving sports-related disputes through arbitration. CAS is headquartered in Lausanne, Switzerland, and operates courts in New York City, Sydney, and its primary location in Lausanne.
The CAS panel overseeing the appeal upheld the IOC's October 12 decision, stating that the Olympic organization did not violate the principles of legality, equality, predictability, or proportionality in suspending the ROC.
“The CAS Panel in charge of this matter dismissed the appeal and confirmed the Challenged Decision, finding that the IOC EB did not breach the principles of legality, equality, predictability or proportionality.”
