Arbitration Cases Weekly Round-Up: 2nd October To 8th October

Calcutta High Court

Party Eligible For Interim Protection U/S 9(1) Arbitration & Conciliation Act, Regressive To Relegate To CPC Procedure: Calcutta High Court

Case: Prathyusha- AMR JV vs Orissa Steel Expressway Private Limited

Citation: 2023 LiveLaw (Cal) 304

The Calcutta High Court has recently allowed applications for appointment of arbitrator u/s 11 and for interim protection u/s 9(1) of the Arbitration & Conciliation Act, 1996 (“Act”) by Prathyusha- AMR, a Joint Venture.

In allowing the plea for appointment of an arbitrator u/s 11 of the Act, a single-bench of Justice Moushumi Bhattacharya noted that “a turning point” in negotiations between the parties may ‘re-vitalise’ limitation in order to sustain a ‘live claim.’

Court Exercising Powers Under Section 9 Of A&C Act Is Not Bound To Strictly Follow Provisions Of Order XXXVIII Rule 5 Of CPC: Calcutta High Court

Case Title: Prathyusha – AMR JV v. Orissa Expressway Pvt Ltd, AP 863 of 2022

The High Court of Calcutta has held that the Court exercising powers under Section 9 of the A&C Act is not strictly bound by the provisions of interim relief contained under Code of Civil Procedure, 1908.

The bench of Justice Moushumi Bhattarcharya held that unlike O. XXXVIII R. 5 of CPC wherein the party seeking relief has to discharge the onus of showing that the other party seeks to obstruct or delay the execution of any decree by disposing of the entirety or part of the property or intends to remove the same from the local limits of the jurisdiction of the Court, Section 9 of the A&C Act does not require the petitioner to show that the opposite party will dissipate the subject matter of the arbitration.

Delhi High Court

Award On Damages Cannot Be Sustained Just On Penalty Clause In Agreement: Delhi High Court

Case Title: Sudershan Kumar Bhayana (Deceased) v. Vinod Seth (Deceased)

Citation: 2023 LiveLaw (Del) 924

The Delhi High Court has held that an award of damages based on no evidence of loss cannot be sustained on the basis of a penalty clause in the agreement.

The bench of Justices Vibhu Bakhru and Amit Mahajan held that mere presence of a clause providing for liquidated damages does not dispense with the requirement of proof of loss from a party claiming damages.

The Court held that a party claiming damages for breach of contract has to plead and prove that as a consequence of such breach, it has suffered the damages and that mere presence of a penalty or liquidated damages clause would not entitle it to such damages unless the damages suffered are incapable of being proved.

Jharkhand High Court

MSEF Council’s Dismissal Order Under Section 18 Is Not An Award For Section 34 Of The A&C Act: Jharkhand High Court

Case Title: The State Project Director v. National Printers, LPA No. 505 of 2019

LL Citation: 2023 LiveLaw (Jha) 53

The Jharkhand High Court has held that an order passed by the MSEF Council dismissing a reference made under Section 18 of the MSMED Act as not maintainable, without conducting the conciliation or the consequent arbitral proceedings, is not an award which can be challenged under Section 34 of the A&C Act r/w Section 19 of the MSMED Act.

The bench of Justices Shree Chandrashekhar and Anubha Rawat Choudhary held that since the alternative remedy under Section 34 is not available in such a case, the aggrieved party can challenge the order of the MSEF Council directly in a writ petition.

The Court also held that an application under Section 18 of the MSMED Act can also be filed for the recovery of the interest amount only even if the principal amount has been paid, though belatedly. It held that once the liability to pay under the MSMED Act crystallizes, it is not erased by mere payment of the principal amount without the due interest, therefore, an application for the recovery of the interest only is maintainable.

Madras High Court

MSEF Council’s Order Without Following Due Procedure Can’t Be Termed As Award: Madras High Court

Case Title: Feeback Infra Pvt Ltd v. MSEF Council, Chennai – W.P. No. 25062 of 2023

Citation: 2023 LiveLaw (Mad) 302

The High Court of Madras has held that an order passed by the MSEF Council without issuing notice of arbitration, opportunity to parties file their pleadings and recording evidence as per the provisions of A&C Act cannot be termed as award.

The bench of Justice S. Sounthar held that since such an order is not an award, it need not be challenged under Section 34 of the A&C Act r/w Section 19 of the MSMED Act as otherwise, the party aggrieved by such an order would have to deposit 75% of the awarded amount which would imbalance the equities.