Arbitration Cases Weekly Round-Up: 5 February To 11 February, 2023

SPA Which Gives Option To Resell Shares To Vendor, Not A ‘Forward Contract’: Bombay High Court

Case Title: Percept Finserve Pvt Ltd & Anr. versus Edelweiss Financial Services Ltd

The Bombay High Court has ruled that a Share Purchase Agreement (SPA), which gives an option to the purchaser to require the seller/vendor to repurchase the shares on the occurrence of a contingency, does not constitute a ‘forward contract’ and thus, the same is enforceable.

Upholding the order of the Single Judge where it had set aside the arbitral award, the Division Bench held that merely because the contract contains a “put option” in respect of securities, the contract cannot be termed as a trade or contract in derivatives. Thus, the Court held that the option contemplated under the SPA was not prohibited in law.

Calcutta High Court:

Arbitrator’s Power To Grant Interim Measures Is pari passu With Court’s Powers Under S. 9 Of Arbitration Act: Calcutta High Court

Case Title: Jagrati Trade Services Pvt Ltd versus Deepak Bhargava & Ors.

The Calcutta High Court has ruled that, post the Amendment Act of 2015, the powers of the Arbitrator to grant interim measures under Section 17 of the Arbitration and Conciliation Act, 1996 (A&C Act), is pari passu with the powers of the Court under Section 9 of the Act.

The bench of Justice Shekhar B. Saraf remarked that the test applicable for granting interim protection under Section 9 would also apply to test the validity of an order passed by the Arbitrator under Section 17.

Delhi High Court:

Agreement To Explore Conciliation Before Arbitration, Only Directory In Nature: Delhi High Court

Case Title: M/s Oasis Projects Ltd versus Managing Director, National Highway and Infrastructure Development Corporation Ltd (NHIDCL)

The Delhi High Court has ruled that the agreement between the parties to explore conciliation before resorting to arbitration, is not mandatory in nature. The Court took note that as per Section 77 of the Arbitration and Conciliation Act, 1996 (A&C Act), in cases of urgency, arbitral proceedings can be initiated even when conciliation proceedings are pending for preserving the party’s rights.

The bench of Justice Navin Chawla concluded that, in terms of Section 77, the petitioner was justified in initiating arbitration for preserving its rights, without going through conciliation, despite the fact that the arbitration clause provided for prior conciliation.

Delay In Approaching Appointing Authority For Constitution Of Tribunal, Won’t Render Claims Time Barred: Delhi High Court

Case Title: Kidde India Ltd versus National Thermal Power Corporation Ltd

The Delhi High Court has ruled that the limitation period within which a party is required to approach the court for seeking constitution of the arbitral tribunal, cannot be conflated with the limitation period for invoking the arbitration agreement. Thus, any delay by the party in taking further steps for constitution of an arbitral tribunal, will not render the party’s substantive claims as barred by limitation.

Sec 34 Petition Is Not Non-Est, Even If Award Is Not Filed In A Separate Folder: Delhi High Court

Case Title: Ambrosia Corner House Pvt Ltd versus Hangro S Foods

The Delhi High Court has ruled that the error committed by the petitioner/award debtor in not filing the documents, including the copy of the Arbitral Award challenged by it, in a separate e-folder, as prescribed in the Delhi High Court (Original Side) Rules, 2018, would not render the petition filed by it under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act) as non-est.

The bench of Justice Navin Chawla remarked that a more liberal approach must be adopted by the Court while considering whether the filing should be treated as ‘non-est.’

Order Passed Under S. 36 Of Arbitration Act Not Appealable Under S. 13 Of Commercial Courts Act: Delhi High Court

Case Title: HP Cotton Textile Mills Ltd versus Oriental Insurance Company Ltd

The Delhi High Court has ruled that appeal against the order of the High Court, passed under Section 36 of the Arbitration and Conciliation Act, 1996 (A&C Act), is not maintainable under Section 13(1A) of the Commercial Courts Act, 2015, since it is not one of the orders enumerated under Order XLIII of the Code of Civil Procedure, 1908 (CPC), from which an appeal would lie.

Gujarat High Court:

Arbitral Tribunal Not Justified In Dismissing Claim Petition For Not Being Verified As Per CPC: Gujarat High Court

Case Title: Pahal Engineers versus Gujarat Water Supply and Sewerage Board

The Gujarat High Court has ruled that failure to abide by the procedural laws would not be fatal to the arbitral proceedings and thus, the Arbitral Tribunal was not justified in dismissing the claim petition/ statement of claims solely on the ground that it was not verified as contemplated under Order VI Rule 15 of the Code of Civil Procedure, 1908 (CPC).