Arbitration Weekly Round-Up: 27th November to 3rd December
Ausaf Ayyub
5 Dec 2023 12:30 PM GMT
Bombay High Court N.N. Global Judgment Does Not Affect The Power Of Court To Grant Interim Measures Under Section 9 Of The A&C Act Despite Inadequacy/Insufficiency Of Stamp Duty: Bombay High Court Case Title: L&T Finance Limited v. Diamond Projects Limited, Commercial Arbitration Petition No. 1430 of 2019 The High Court of Bombay has held that the judgment of...
Bombay High Court
Case Title: L&T Finance Limited v. Diamond Projects Limited, Commercial Arbitration Petition No. 1430 of 2019
The High Court of Bombay has held that the judgment of the Constitution Bench in N.N. Global does not affect the power of Court to grant interim measures under Section 9 of the A&C Act despite the non-payment or insufficiency of payment of stamp duty on the arbitration agreement or the main agreement containing the arbitration clause.
The bench of Justice Bharati Dangre held that unlike Section 11 or 8 of the A&C Act, the Court exercising powers under Section 9 of the Act is not required to make a determination on the existence and validity of the arbitration agreement rather the Court would have to grant interim relief on the parameters of three-fold test of (a) prima facie case (b) balance of convenience and (c) irreparable injury.
The Court held that an inadequately/insufficiently stamped instrument/document/agreement shall not preclude the party from seeking interim measures as contemplated under Section 9 of the A&C Act.
Case Title: Madgavkar Salvage v. Bergen Offshore Logistics Pvt Ltd, Comm. Arbitration Petitioner No. 13 of 2015.
The High Court of Bombay has held that under Section 37 of the A&C Act, the challenge must be related to the impugned order passed under Section 34 of the Act and not merely to the arbitral award. It held that it is incumbent upon a party to point out errors in the order under Section 34 to make out a case in appeal under Section 37.
The bench of Chief Justice Devendra Kumar Upadhyaya and Justice Arif. S. Doctor held that the Court while exercising powers under Section 37 of the A&C Act cannot take an independent assessment of the arbitral award, therefore, the challenge must be premised on the errors in the impugned order under Section 34. It held that it is not permissible for a party to challenge an arbitral award de hors any challenge to the impugned order.
Calcutta High Court
Case: Concrete Developers LLP v Gaurav Churiwal and Ors.
Citation: 2023 LiveLaw (Cal) 335
The Calcutta High Court has recently held that a Court exercising powers under Section 37 of the Arbitration & Conciliation Act, 1996 (“1996 Act”) must be circumspect in its interference with interim orders of an arbitrator.
In refusing to interfere with the order passed under Section 17 of the 1996 Act, for preserving the share of a deceased LLP partner, amounting to approx. Rs 6 crores in a separate interest bearing account in name of the LLP, a single-bench of Justice Moushumi Bhattacharya held:
“There can be no jurisdictional objection to the impugned order as the Act of 1996 grants the arbitral tribunal plenary powers to pass such orders for preserving the dispute in the arbitration. The order also does not suffer from any factual or legal infirmity and is certainly not arbitrary or perverse. Taking into account the legal position, the case law on the subject and the particular facts in the present matter, the Court is accordingly of the view that the impugned order does not call for any interference.”
Delhi High Court
Case Title: Asset Reconstruction Company India Ltd v. ATS Infrastructure Limited, ARB. A. (COMM) 7 of 2022
Citation: 2023 LiveLaw (Del) 1185
The High Court of Delhi has held that the arbitral tribunal has no jurisdiction to create security on a property over which a charge is created in favour of a third party.
The bench of Justice Yogesh Khanna modified an interim order of the arbitral tribunal passed under Section 17 of the A&C Act to the extent to which the order created security on the property on which a charge was already created in favour of a third party which was not present before the arbitral tribunal.
Case Title: H.P. Cotton Textile Mills Ltd v. The Oriental Insurance Company Limited, OMP (ENF.) (COMM.) 123/2019
Citation: 2023 LiveLaw (Del) 1188
While dismissing a second execution petition filed in respect of “unsatisfied” claims in an Arbitral Award, the Delhi High Court has held that a court cannot go behind the Award in execution proceedings and enable decree holder to fill gaps in producing evidence.
Considering that the cost statement in question was made subject to certification by the Arbitral Tribunal but no proof of payment was forthcoming from the decree holder, Justice Manoj Kumar Ohri observed,
“…the decree holder cannot, under the garb of this execution petition, seek a claim that was not quantified in the award due to failure of the parties to furnish proof”.
The decree holder had filed the petition u/s 36 of the Arbitration and Conciliation Act (“A&C Act”), contending that arbitration cost and interest awarded were inadvertently not claimed in the first execution petition.
Case Title: N.K. Sharma v. The General Manager Northern Railways, ARB.P. 893 of 2022
Citation: 2023 LiveLaw (Del) 1207
The High Court of Delhi has held that once a party has agreed to constitute an arbitral tribunal, it cannot turn around and resist appointment of arbitrator on the ground of non-fulfilment of pre-arbitral steps.
The bench of Justice Sachin Datta also held that issue of ‘excepted matters’ requires in-depth examination of the factual matrix, therefore, the same can only be done by the arbitral tribunal and goes beyond the scope of examination permissible under Section 11 of the A&C Act.
A Written-Off Debt Is An Asset, Award Holder Can Enforce At The Location Of Asset: Delhi High Court
Case Title: Taqa India Power Ventures v. NCC Infrastructure Holdings, OMP(EFA)(COMM) 1 of 2018
Citation: 2023 LiveLaw (Del) 1208
The Delhi High Court ruled that a written-off debt constitutes a recoverable asset, affirming the award holder's right to enforce the award at the location of the debt/asset.
The bench of Justice Prateek Jalan held that a debt written off by the award debtor remains a recoverable asset. This pivotal decision solidifies the award holder's entitlement to initiate enforcement proceedings at the location where the debt is owed or the asset is situated, establishing a robust legal precedent in favor of the award holder's enforcement rights.
The court rejected the award debtor's argument that writing off the debt in the award debtor’s accounts equates to the legal obliteration of the debt. It held that the writing off of a debt in accounting does not mean the debt becomes unrecoverable or legally extinguished.
Case Title: Taqa India Power Ventures v. NCC Infrastructure Holdings, OMP(EFA)(COMM) 1 of 2018.
The High Court of Delhi has held that the policy concerns which militate against forum shopping in the context of substantive civil proceedings do not apply to enforcement proceedings, where the award holder is entitled to proceed against the assets of the award debtor in any and every jurisdiction in which such assets are located.
The bench of Justice Prateek Jalan held that the award holder's right to elect any court within which assets of the award debtor are available, regardless of their diminished value, does not amount to forum shopping.
Case Title: Sri Ganesh Engineering Works v. Northern Railways, ARB.P 609/2023
The High Court of Delhi has held that an arbitration clause that confers on a party the right to nominate 2/3rd of arbitral tribunal violates the principles of ‘counter-balancing’ as sought to be achieved by the Supreme Court in the landmark judgment in Perkins.
The bench of Justice Jyoti Singh held that a party cannot have the right to nominate the majority of the arbitral tribunal and such an exercises casts doubts on the neutrality and impartiality of the arbitral tribunal.
Panel Of Four Arbitrators, All Ex-Employees Of One Party, Not Broad-Based: Delhi High Court
Case Title: Sri Ganesh Engineering Works v. Northern Railways, ARB.P 609/2023
The High Court of Delhi has held that the composition of the panel, limited to a mere four arbitrators, all of whom are former employees of a single party, does not reflect a sufficiently broad-based representation.
Justice Jyoti Singh's bench emphasized that when appointing an arbitral tribunal from a party-maintained panel, it must be not only numerically robust but also diverse. The panel should encompass individuals from various backgrounds, including lawyers, retired judges, engineers, accountants, etc., ensuring a comprehensive representation.
Case Title: Anil Kumar Gupta v. MCD, FAO(OS) (COMM) 315 of 2019.
The High Court of Delhi has held that the Court exercising powers under Section 34 of the A&C Act cannot reduce the rate of the interest awarded by the arbitral tribunal as the same amounts to modification of the arbitral award.
The bench of Justices Yashwant Varma and Ravinder Dudeja held that the modulation of the terms of the award by reducing the rate of interest awarded by the arbitral tribunal is impermissible within the limited power conferred on the Court under Section 34 of the A&C Act.
The Court also held the judgment of Supreme Court in M. Hakeem would also apply to award and judgments passed before the date of the said judgment.
