Arbitration Weekly Round-Up: 16th October – 22nd October
LIVELAW NEWS NETWORK
24 Oct 2023 4:30 PM IST
Supreme Court Arbitrator Won't Become Ineligible By Unilaterally Revising Fee; Mandate Can't Be Terminated On Grounds Not Mentioned In Schedule : Supreme Court Case Title: M/S CHENNAI METRO RAIL LIMITED vs. M/S TRANSTONNELSTROY AFCONS JV, C.A. No. 4591/2023 Citation : 2023 LiveLaw (SC) 909 In a notable judgment, the Supreme Court has held that unilateral revision of fee by...
Supreme Court
Case Title: M/S CHENNAI METRO RAIL LIMITED vs. M/S TRANSTONNELSTROY AFCONS JV, C.A. No. 4591/2023
Citation : 2023 LiveLaw (SC) 909
In a notable judgment, the Supreme Court has held that unilateral revision of fee by an arbitral tribunal, though not permissible, will not terminate its mandate on the ground of ineligibility as per Section 12 of the Arbitration and Conciliation Act 1996.
Although the Supreme Court has held in Oil and Natural Gas Corporation Ltd. vs Afcons Gunanusa JV 2022 LiveLaw (SC) 723 that the arbitrators should revise the fee only in consultation with the parties and should not do it unilaterally, a bench comprising Justices S Ravindra Bhat and Aravind Kumar held in the present case that a breach of the rule laid down in ONGC will not render the arbitrator ineligible.
The bench categorically held that only the grounds specified in the Fifth and Seventh Schedule of the Arbitration and Conciliation Act can be considered to determine the ineligibility of an arbitrator. The ineligibility of the arbitrator must be something "going to the root of the jurisdiction, divesting the authority of the tribunal, thus terminating the mandate of the arbitrator", the judgment authored by Justice Bhat said.
Allahabad High Court
Case Title: Madhyanchal Vidyut Vitran Nigam Ltd v. Shashi Cable, Matters under Article 227 No. 3384 of 2023
The High Court of Allahabad has held that a petition for the execution of the arbitral award can be enforced anywhere in the country, where the assets of the award debtor are located.
The bench of Justice Pankaj Bhatia held that Section 42 of the A&C Act which bars any petition in any Court other than the Court where the first petition in relation to arbitration agreement was filed does not apply to petitions for the enforcement of the arbitration award. It relied on the judgment of the Supreme Court in Sundaram Finance and Cheran Properties to arrive at the above conclusion.
Case Title: Bharat Petroleum Corporation Ltd v. Anoop Kumar Modi, Matters under Article 227 No. 2704 of 2023
Neutral Citation: 2023:AHC-LKO: 68875
The Allahabad High Court has held that it is the choice of the award holder to file an execution petition at the place of its choice and it need not necessarily approach the Court where the award was passed.
The bench of Justice Pankaj Bhatia also held that merely because Section 16 of the Commercial Courts Act which provides for amendment to CPC does not include Order 21 within the amended provisions, it would not mean that the Commercial Court would not have the inherent jurisdiction to execute an arbitral award. It held that words ‘applications’ under Section 10(3) of the Commercial Courts Act would include the application for execution of the arbitral award in terms of Section 36 of the A&C Act.
Calcutta High Court
Case: Damodar Valley Corporation v Reliance Infrastructure Limited
Citation: 2023 LiveLaw (Cal) 306
In a landmark 255-page judgement, the Calcutta High Court has upheld an arbitral award in favor of Reliance Infrastructure (“RIL”), arising out of a deal struck with the Damodar Valley Corporation (“DVC”) for construction of thermal power plants in Raghunathpur.
In upholding the award passed by a panel of three arbitrators, a single-bench of Justice Shekhar B Saraf noted that India is in dire need of Arbitration reform due to increased judicial interference at every stage. It held:
“Arbitration has been envisaged as a mechanism of dispute resolution which is free from the clutches of redundancy, inefficiency, and delay that plague our litigation system. It seems that arbitration process in India itself is finding it hard to bear the weight of the increasing judicial interference at every stage of the process. This not only impacts the viability of arbitration as a dispute resolution mechanism, but further demotes India’s standing as a business friendly destination in a globalised world. There is dire need of arbitration reform in India. This reform must not only reflect in the legislation itself, but also in the mind-set of all the stakeholders.”
Case Title: Spectrum Infra Ventures v. WBSMEFC, WPA No. 11265 of 2023
The High Court of Calcutta has held that an arbitration award passed under MSMED Act cannot be challenged in a writ petition merely on the ground that the petitioner’s request for adjournment was refused by the arbitrator.
The bench of Sabyasachi Bhattacharyya held that a party aggrieved by an award passed under MSMED Act has to challenge it under Section 34 of the A&C Act r/w Section 19 of the MSMED Act and the remedy of writ petition to challenge such award would not be available unless it is shown that the award has resulted in the failure of justice.
The Court held that if a party was given a hearing by the arbitral tribunal and despite the opportunity the party chose not to put up a defence and sought adjournment which was refused by the arbitral tribunal then the consequent award cannot be challenged under Article 226 of the Constitution on the ground of suffering from vice of violation of natural justice.
It held that the party aggrieved by such an award can challenge it under Section 34(2)(a)(iii) on the ground that it was not given sufficient opportunity to prove its case, however, the limited scrutiny permissible under writ jurisdiction in view of availability of an alternative remedy does not permit the writ court to examine it unless it results in palpable violation of the law or patent arbitrariness.
Case Title: Power Mech Projects Limited v. BHEL, AP 444 of 2023
The High Court of Calcutta has held that if one letter with the necessary stamp is part of the correspondence forming the contract, the entire contract is deemed duly stamped.
The bench of Justice Moushumi Bhattacharya held that where a contract or agreement of any kind is effected by correspondence consisting of two or more letters and if any one of the letters is properly stamped the contract or agreement shall be deemed to be duly stamped in view of proviso (c) to Section 35 of the Indian Stamps Act.
The Court held that proviso (c) to Section 35 relieves a party from the statutory obligation of stamping each and every letter or document forming part of the correspondence where one of the letters is properly stamped.
Case Title: Power Mech Projects Limited v. BHEL, AP 444 of 2023
The High Court of Calcutta has held that absence of arbitration clause in the main agreement is immaterial when it specifically incorporates another agreement containing arbitration clause.
The bench of Justice Moushumi Bhattacharya held that Section 7(5) of the A&C Act allows incorporation of the arbitration agreement by reference and a case wherein the main agreement specifically incorporates the earlier agreements containing arbitration clause, the situation would squarely be covered by the said Section.
Gujarat High Court
Case Title: InstaKart Services v. Megastone Logiparks Pvt Ltd, Petition under Arbitration Act no. 159 of 2022
LL Citation: 2023 LiveLaw (Guj) 168
The High Court of Gujarat has held that when wo agreements are co-terminus and their performance is interdependent, the arbitration clause in one agreement can be invoked for the other as well.
The bench of Chief Justice Sunita Agarwal held that when two agreements are integrally related to each other and the performance of one is dependent on the other, then the absence of an arbitration clause in one of such agreement would not be material as the arbitration clause contained in the other would govern both the agreements.
Case Title: InstaKart Services v. Megastone Logiparks Pvt Ltd, Petition under Arbitration Act no. 159 of 2022
LL Citation: 2023 LiveLaw (Guj) 168
The High Court of Gujarat has held that the place of arbitration is the venue and not the seat of arbitration when there is a contradictory exclusive jurisdiction clause.
The bench of Chief Justice Sunita Agarwal held that the place where the arbitration is stated to be conducted would be the venue of arbitration when the agreement contains an exclusive jurisdiction clause that confers exclusive jurisdiction on a court in a different place. It held that the presence of such an exclusive jurisdiction clause would be a contrary indicator which prevents the venue of being the seat of arbitration.
Karnataka High Court
Case Title: Karnataka State Highways Improvement Project AND M/s. KMC - VDB (JV), W.P. No. 29440 of 2019
The Karnataka High Court has held that an arbitral award which does not deal with either movable property or immovable property, but awards damages payable to the award holder, does not attract stamp duty under the Karnataka Stamp Act, 1957.
Justice R Nataraj thus dismissed a petition challenging an order of the trial court rejecting its application seeking to impound the award of the arbitrator for non-payment of stamp duty by the respondent.
