Arbitration Cases Weekly Round-Up: February 19 To February 25, 2023
Parina Katyal
26 Feb 2023 11:00 AM IST
Bombay High Court: Multiple Arbitrations By Arbitrator Involving The Same Co-operative Bank Under S. 84 Of MSCS Act; Not A Disqualification: Bombay High Court Case Title: Kalpesh Shantikumar Mehta & Ors. versus NKGSB Co-op. Bank Ltd & Anr. The Bombay High Court has ruled that reference of more than two arbitrations to the same arbitrator under Section 84 of the...
Bombay High Court:
Case Title: Kalpesh Shantikumar Mehta & Ors. versus NKGSB Co-op. Bank Ltd & Anr.
The Bombay High Court has ruled that reference of more than two arbitrations to the same arbitrator under Section 84 of the Multi-State Cooperative Societies Act, 2002 (MSCS Act), involving the same Co-operative Bank, would not fall foul of clause 22 of Schedule V of the Arbitration and Conciliation Act, 1996 (A&C Act).
Noting that in the statutory arbitration contemplated under the MSCS Act, the arbitrator is appointed by the Central Registrar/Commissioner of Cooperative Societies under Section 84 (4) of the MSCS Act, the bench of Justice Bharati Dangre held that the embargo created under clause 22 comes into picture only when the Arbitrator is appointed by one of the parties or an affiliate of one of the parties.
Delhi High Court:
Case Title: Bharat Heavy Electricals Ltd versus M/s Zillion Infraprojects Pvt Ltd
The Delhi High Court has ruled that the Arbitral Tribunal has the power under Section 31(6) of the Arbitration and Conciliation Act, 1996 (A&C Act) to pass an interim Award on the basis of the admissions made by a party before the Interim Resolution Professional (IRP) in the CIRP proceedings initiated under the Insolvency and Bankruptcy Code, 2016 (IBC) against the opposite party.
Dismissing the argument of the appellant that the admissions made before the IRP cannot be treated as an admission in the arbitral proceedings, the bench of Justices Suresh Kumar Kait and Neena Bansal Krishna remarked that Order XII Rule 6 of the Code of Civil Procedure, 1908 (CPC) is couched in the widest terms and the same permits considering the admissions made in the pleadings before the Court or “otherwise”.
Case Title: M/s. Indiabulls Housing Finance Ltd & Anr. versus Shipra Estate Ltd
The Delhi High Court has ruled that the Arbitrator has no jurisdiction to set aside the sale notice issued by the secured creditor under Section 13(4) of the SARFAESI Act, 2002, seeking to enforce its “security interest”.
The bench of Justice Anup Jairam Bhambhani remarked that the matter of a notice issued under Section 13(4) of the SARFAESI Act is not arbitrable at all, and thus, the Arbitrator does not have the option to exercise any discretion under Section 17 of the Arbitration and Conciliation Act, 1996 (A&C Act) in relation to the said matter.
Since a specific right is vested in a “secured creditor” to enforce a “security interest”, by issuance of a sale notice under Section 13(4) of the SARFAESI Act, that specific right cannot be ousted by an order made by an arbitral tribunal, the Court held.
Case Title: D Narasimha Rao & Ors versus Revanta Multi State CGHS Ltd & Anr.
The Delhi High Court has held that the Central Registrar is not divested of its authority and jurisdiction to appoint an Arbitral Tribunal in terms of Section 84 (4) of the Multi-State Cooperative Societies Act, 2002 (MSCS Act), when a dispute pertaining to a multi-state cooperative society is sought to be referred to arbitration under Section 84 of the Act.
The bench of Justice Yashwant Varma remarked that as per the direction issued by the Central Government under the Notification dated 24th February, 2003, the Registrar of Co-operative Societies of States is contemporaneously empowered to refer matters to arbitration, however, the same does not denude the jurisdiction of the Central Registrar.
Thus, the Court concluded that initiation of proceedings for constitution of an Arbitral Tribunal by the petitioner, by issuing a notice to the Central Registrar, did not suffer from a manifest illegality.
Case Title: Sunil Kumar Chandra versus M/s Spire Techpark Pvt Ltd
The Delhi High Court has reiterated that where there is any inconsistency between the two clauses of a same instrument/document, the former clause shall prevail over the latter one.
The bench of Justice Chandra Dhari Singh concluded that the former clause (arbitration clause), under which the parties agreed to resolve “any” dispute arising under the agreement through arbitration, shall have a prevailing effect over the latter clause, which was not clear as no clear and unambiguous meaning was given regarding what kind of disputes shall be referred to the courts in the specified jurisdiction.
Case Title: Asad Mueed & Anr versus Hammad Ahmed & Ors.
The Delhi High Court has ruled that the power of the Arbitral Tribunal to grant interim measures under Section 17 of the Arbitration and Conciliation Act, 1996 (A&C Act), is not inferior to the power of a court under Section 9.
The bench of Justice Yashwant Varma remarked that though Section 9(3) of the A&C Act is not an ouster clause, it still requires the court to consider whether its intervention is warranted after the Arbitral Tribunal has been constituted and is in seisin of the dispute.
Kerala High Court:
Case Title: Southern Railway versus M.R. Ramakrishnan
The Kerala High Court recently held that the Court situated within the territorial jurisdiction of the seat or place of arbitration alone will have the jurisdiction to entertain an application filed under Section 34 of the Arbitration and Conciliation Act, 1996.
A single bench of Justice K Babu observed that the term “subject-matter of arbitration” in the definition of “court” in Section 2(1)(e) of the Act, refers to the Court having supervisory control over the arbitration proceedings. This would mean the Court where the seat or place of arbitration is will have jurisdiction to entertain a challenge to the arbitral award under Section 34 of the Act.
Madras High Court:
Case Title: M/s. Transtonnelstroy – Afcons (JV) versus M/s.Chennai Metro Rail Ltd
While granting relief to the Chennai Metro Rail Limited (CMRL), the Madras High Court has noted that while an arbitral tribunal, which consists of experts in the field, is at liberty to apply its own knowledge and understanding to arrive at a conclusion, it should always allow the parties involved to present their case.
Case Title: Hina Suneet Sharma & Anr. versus M/s Nissan Renault Financial Services India Pvt Ltd
The Madras High Court has ruled that even if a party has failed to challenge the unilateral appointment of the Arbitrator under Section 13 of the Arbitration and Conciliation Act, 1996 (A&C Act) before the Arbitral Tribunal, it would not take away its right to challenge the award under Section 34 of the A&C Act on the ground that the Arbitrator was unilaterally appointed.
The bench of Justice Krishnan Ramasamy reiterated that if any award is passed in violation of the provisions of the A&C Act, the same would be against the public policy of India.
