Arbitration Weekly Round Up: 22nd April to 28th April 2024
ausaf ayyub
3 May 2024 1:00 PM IST
Allahabad High Court Court Under Section 19 Of MSMED Act, 2006 Empowered To Allow Predeposit In Installments: Allahabad High Court Case Title: M/S Docket Care Systems vs M/S Hariwill Electronics India Pvt. Ltd. 2024 LiveLaw (AB) 266 The Allahabad High Court division bench of Chief Justice Arun Bhansali and Justice Jaspreet Singh held that expression “in the manner directed...
Allahabad High Court
Case Title: M/S Docket Care Systems vs M/S Hariwill Electronics India Pvt. Ltd. 2024 LiveLaw (AB) 266
The Allahabad High Court division bench of Chief Justice Arun Bhansali and Justice Jaspreet Singh held that expression “in the manner directed by such court” in Section 19 of the Micro, Small And Medium Enterprises Development Act, 2006 gives the discretion to the court to allow the predeposit to be made, if felt necessary, in installments also.
Bombay High Court
Case Title: Glencore India Pvt Ltd v. Amma Lines Limited, Arbitration Petition No. 42 of 2024
The High Court of Bombay has held that an arbitrator's mandate would not terminate when the proceedings are not completed within timelines agreed by the parties, if the delays in the conduct of the proceedings are attributable to the party seeking termination of the mandate.
The bench of Justice Bharati Dangre held that generally, in an arbitration not governed by Section 29A, the arbitrator's mandate expires upon its failure to conclude the proceedings within the time period agreed by the parties, however, it would not hold true when the tribunal acted expeditiously and the delays in proceedings were on account of fault of the parties themselves.
Calcutta High Court
Case Title: Dhansar Engineering Company Pvt Ltd v. Eastern Coalfields Ltd, RVWO No. 38 of 2023
The High Court of Calcutta has held that a policy circular issued by a parent company contemplating arbitration would not be an arbitration agreement if it requires fresh consent of the contractor to refer the dispute to arbitration.
The bench of Justice Ravi Krishan Kapur held that when for existing contracts, the circular required consent of the contractor for reference to arbitration, it cannot be construed to be an arbitration agreement as it would require a fresh arbitration agreement to be executed between the parties prior to reference of dispute to arbitration.
Delhi High Court
Case Title: Paisalo Digital Limited v. Sat Priya Mehmia Memorial Educational Trust
Citation: 2024 LiveLaw (Del) 475
The High Court of Delhi has held that assurance given by a party to repay the debts in letter issued to the other party would amount to an acknowledgement of the debt within the meaning of Section 18 of the Limitation Act.
The bench of Justic Prathiba M. Singh held that such an acknowledgement would give rise to a fresh cause of action and the period of limitation would run afresh from the date of such acknowledgement as provided under Section 18 of the Limitation Act.
Case Title: Religare Finvest Limited v. Widescreen Holdings Pvt Ltd
Citation: 2024 LiveLaw (Del) 482
The High Court of Delhi has held that a Court exercising powers under Sections 14 & 15 of the A&C Act can extend the mandate of the arbitrator if no ground for its substitution is made out in the application.
The bench of Justice Neena Bansal Krishna held that once the Court is satisfied that there is no ground for substitution of the arbitrator, the Court can extend the mandate even without an application under Section 29A(4) of the Act.
Case Title: Samrata Constructions Company v. Union of India
Citation: 2024 LiveLaw (Del) 481
The High Court of Delhi has held that when the arbitral tribunal fails to deal with submissions of a party on a contentious issue, the resultant award would not fulfil the requirements of a reasoned award as required under Section 31 of the A&C Act. It held that the tribunal cannot simply accept unquantified claims without assigning reasons and without dealing with the objections to those claims.
The bench of Justices Vibhu Bakhru and Tara Vitasta Ganju held that once it is found that the agreement has been validly terminated in accordance with the terms of the Contract, it follows that the earnest money is not liable to be refunded.
Case Title: Religare Finvest Limited v. Widescreen Holdings Pvt Ltd
Citation: 2024 LiveLaw (Del) 479
The bench of Justice Neena Bansal Krishna of Delhi High Court has held that mandate of the arbitrator cannot be terminated when the delay in proceedings was on account of pendency of appeal against the decision of the arbitral tribunal.
The Court held that time consumed in the appeal and the consequent SLP and clarificatory applications cannot be attributed to the arbitral tribunal as a delay in the conduct of arbitral proceedings.
The High Court of Delhi has held that the appointment of the arbitrator cannot be called unilateral when the tribunal was constituted pursuant to the consent by the respondent to the appointment from a panel of 5 names.
The Bench of Justice Prathiba M.Singh held that appointment of arbitrator from a panel of 5 names consisting of retired govt. officials would be valid in terms of the judgment of the Supreme Court in Central Organisation for Railways which continues to hold the field despite pending before a larger bench in absence of a stay on the judgment.
Case Title: Pankaj Singh V. Bashir Ahmed Haroon
Citation: 2024 LiveLaw (Del) 477
The Delhi High Court single bench of Justice Dinesh Kumar Sharma has held that while the court's jurisdiction is limited at the time of making a reference, it is not expected to mechanically refer the dispute to arbitration.
The Court also held that once a party has chosen to file a civil suit to get the disputes resolved, it cannot be permitted to invoke arbitration when the suit fails. The Court also held that arbitration clause in an earlier agreement cannot be invoked if the subsequent agreement does not refer to the previous agreement.
Case Title: Paisalo Digital Limited v. Sat Priya Mehmia Memorial Educational Trust
Citation: 2024 LiveLaw (Del) 476
The High Court of Delhi has imposed costs of Rs. 5 lakhs on a party that failed to disclose an unfavourable order under SARFAESI Act while seeking interim relief under Section 9 of the A&C Act.
The bench of Justice Prathiba M. Singh held that pendency of proceedings under SARFASI Act is not a bar on initiation of proceedings under A&C Act, however, a party must disclose a fact essential for fair adjudication on the dispute.
Case Title: Hardy Exploration & Production (India) Inc v. Government of India
Citation: 2024 LiveLaw (Del) 497
The Delhi High Court on Tuesday imposed Rs. 50,000 cost on Central government for seeking repeated adjournments in a petition for enforcement of an arbitral award, allegedly having a monetary value of over Rs.1100 crores.
The bench of Justice Prateek Jalan noted that the Union had sought another adjournment despite the objections of party seeking enforcement and the assurance given by the Union on last hearing that no further adjournments shall be sought.
Gujarat High Court
Case Title: M/s Ghakun Steels Pvt Ltd v. State of Gujarat, R/Special Civil Application No. 4876 of 2024
LL Citation: 2024 LiveLaw (Guj) 51
The bench of Justice Vaibhavi D. Nanavati of Gujarat High Court has held that an award passed by MSEF Council under Section 18 of the MSMED Act cannot be directly challenged in a writ petition and the aggrieved party has to challenge it under Section 34 of the A&C Act.
The Court relied upon the judgment of the Supreme Court in India Glycols Ltd., Vs. Micro and Small Enterprises Facilitation Council 2023 LiveLaw (SC) 992 wherein the Apex Court held that a writ against an award by MSEF Council is not maintainable and the award can be challenge only through Section 34 of the A&C Act r/w Section 19 of the MSMED Act providing for 75% mandatory pre-deposit of the awarded amount.
Himachal Pradesh High Court
Case Title: Pawan Sahni & others vs Satish Sharma & others
The Himachal Pradesh High Court single bench of Chief Justice M.S. Ramachandra Rao held that there is a tendency of the parties to impugn the motives of Arbitrators without affording them the opportunity under Section 13(2) of the Arbitration and Conciliation Act, 1996. It held that such baseless allegations and accusations could needlessly tarnish the reputation of Arbitrators especially of retired High Court Judges and undermine the arbitration process.
Karnataka High Court
The Issue Of Limitation Is Also Part And Parcel Of The Arbitrable Point: Karnataka High Court
Case Title: Shivaraj Kamshetty v. The Managing Director Karnataka State Agricultural Marketing Board, Civil Misc Petition No. 20003 of 2022
Citation: 2024 LiveLaw (Kar) 201
The bench of Justice C.M. Joshi of Karnataka High Court (Kalaburagi Bench) has held that the issue of limitation of claims is a part and parcel of the arbitrable point which can be decided by the arbitrator.
The Court relied upon the judgment of the Apex Court in BSNL v. Nortel Neworks, LL 2021 SC 153 wherein the Apex Court held that issue of limitation is a mixed question of law and fact which should be decided by the arbitral tribunal. Further, the Court had held that the Court exercising power under Section 11 of the A&C Act can refuse arbitration only when the claims are ex-facie barred by limitation.
Kerala High Court
The Kerala High Court single bench of Justice G. Girish held that the appointment of a sole arbitrator by the Government of Kerala violated Section 12(5) of the Arbitration and Conciliation Act, 1996, as well as the precedent set by the Supreme Court in the Perkins Eastman case.
The court held that the Government of Kerala being the holder of 99.99% of the equity shares with voting rights of a company had an interest in the dispute. Consequently, it held that this inherent interest made the Government of Kerala disqualified under Section 12(5) read with the Seventh Schedule of the Arbitration Act to appoint the sole arbitrator.
Madhya Pradesh High Court
Case Title: Ilwonhibrand Co. Ltd. vs Mahakali Foods Pvt. Ltd. and Others
The Madhya Pradesh High Court division bench of Justice Sushrut Arvind Dharmadhikari and Justice Devnarayan Mishra dismissed a petition seeking interim relief under Section 9 of the Arbitration and Conciliation Act, stating it should have been filed as a 'Miscellaneous Civil Case' rather than an 'Arbitration Case' based on Chapter 2 of the Arbitration and Conciliation (Conduct of Arbitral Proceedings) Rules, 2008.
Case Title: Ramesh Kumar v. Madhya Pradesh Rural Road Development Authority, Arbitration Revision No. 47 of 2022
The High Court of Madhya Pradesh, at Jabalpur, has held that the Arbitration under Section 7 of the Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983 cannot be invoked without first invoking the pre-arbitral in-house remedy provided under the agreement within the period of 30 days given under the Agreement.
The bench of Justices Sheel Nagu and Vinay Saraf held that the pre-arbitral in-house remedy must be invoked within the 30 days from the termination of the works order as provided under the agreement. It held the 3 year limitation period as provided under Section 7 of the Act of 1983 would not be available for reference before the in-house authority.
Madras High Court
Case Title: Sahayaraj V. M/s Shriram Transport Finance Company Ltd, CRP(MD) No. 576 of 2024
Citation: 2024 LiveLaw (Mad) 166
The High Court of Madras at Madurai has held that an Executing Court cannot go behind an arbitration award and decides issues on merit of the award.
The bench of Justice G. Ilangovan held that an arbitration award can only be challenged under Section 34 of the A&C Act and party failing to challenge the award therein cannot raise contentious issues on merit of the award before the executing court.
Case Title: M/s Colorhome Developers Pvt Ltd v. M/s Color Castle Owners Society, OSA(CAD) No. 113 of 2022
Citation: 2024 LiveLaw (Mad) 169
The High Court of Madras has held that a plea regarding lack of jurisdiction or invalidity of the appointment of the arbitrator must be raised before the arbitrator during the arbitral proceedings. It held that if such a plea is not taken at the first instance or, the Court in appeal cannot entertain such an objection.
The bench of Justices R. Subramanian and R. Sakthivel also held that an objection regarding validity of the invocation of the arbitration dismissed by the Court under Section 11 cannot be raised again in appeal.
Case Title: M/s Geojit Financial Services Ltd v. Mrs. Nalani Rajkumar, Original Side Appeal (CAD) No.51 of 2021
Citation: 2024 LiveLaw (Mad) 170
The High Court of Madras has held that an arbitration award based on an evidence taken on record after the completion of arguments and behind the back of a party would be liable to be set aside under Section 34 of the A&C Act.
The bench of Justices R. Subramanian and R. Sakthivel held that when an evidence is taken behind the back of a party and after the completion of arguments, it deprives that party of its valuable opportunity to dispute such evidence/document.
Patna High Court
Case Title: Murari Prasad v. The National Highway Authority of India, Civil Writ Jurisdiction Case No. 15938 of 2023
The Bench of Justice Rajiv Roy of Patna High Court has held that a writ petition is not maintainable to challenge an order of Arbitrator dismissing reference under NHAI Act for default. It held that the aggrieved party should challenge the award under Section 34 of the Act.
Case Title: Shameen Sultana Khan vs Faizunnisaa Begum
The Telangana High Court single bench of Chief Justice Alok Aradhe held that under Section 16(1) of the Arbitration and Conciliation Act, 1996 the arbitral tribunals have the power to rule on its own jurisdiction including deciding the non-arbitrability of a dispute. Further, the court held that disputes related to insolvency and winding-up of a partnership concerning partners' rights and obligations are arbitrable.
