Supreme Court Annual Digest 2024 [Arbitration And Conciliation Act]

Section 33 - Although the Arbitral Tribunal becomes functus officio after passing an award, it would still retain the limited jurisdiction to clarify or correct errors in an award. North Delhi Municipal Corporation v. S.A. Builders Ltd., 2024 LiveLaw (SC) 1010

Section 11 (6) - Arbitration clause - Interpretation - Pro-arbitration approach - Mutual Consent - Validity and interpretation of arbitration clause - The Supreme Court examined the arbitration clause in the Deed of Partnership dated 16.07.2016, which provided for disputes to be referred to arbitration. The clause stated arbitration as "optional" and required mutual consent for appointing an arbitrator. The Court held that the clause cannot be interpreted as making arbitration contingent solely upon mutual agreement at the time of the dispute. Instead, the clause reflects the intention of the parties to resolve disputes through arbitration. Tarun Dhameja v. Sunil Dhameja, 2024 LiveLaw (SC) 996

Section 11 (6) - Non-Arbitrable Disputes - Payment of Wages and Industrial Disputes - Termination of Employment - Non-Disclosure Obligations - Abuse of Process - The appellant challenged the appointment of an arbitrator by the High Court on grounds that the dispute concerning his termination and non-payment of wages was governed by the Payment of Wages Act, 1936, and the Industrial Disputes Act, 1947. The respondent had terminated the appellant's employment, citing absenteeism during the COVID-19 pandemic, and later initiated arbitration proceedings despite ongoing statutory remedies sought by the appellant. Whether the dispute involving non-payment of wages and termination of employment is arbitrable. Whether the High Court's appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act was appropriate given the pending statutory remedies. Held, the Supreme Court set aside the High Court's order appointing an arbitrator, holding that the disputes concerning non-payment of wages and termination were non-arbitrable as they fell within the exclusive jurisdiction of statutory authorities under the Payment of Wages Act and Industrial Disputes Act. The claim of a violation of the non-disclosure obligations was not substantiated by the respondent during initial disciplinary actions, making it an afterthought. The Supreme Court allowed the appeal, dismissing the petition under Section 11(6) of the Arbitration and Conciliation Act. The appellant was awarded costs of Rs. 5 lakhs, payable within three months. Dushyant Janbandhu v. Hyundai AutoEver India Pvt. Ltd., 2024 LiveLaw (SC) 981

Section 34 - Condonation of delay - Liberal interpretation - The appellant's land was acquired under the National Highways Act, 1956. The appellant filed an appeal before the High Court of Punjab & Haryana, which was later dismissed as barred by limitation under the Arbitration and Conciliation Act, 1996. The appellant sought condonation of the period from 20.10.2011 to 20.01.2012 under Section 14 of the Limitation Act, 1963. Whether the period from 20.10.2011 to 20.01.2012 should be excluded under Section 14 of the Limitation Act while calculating the limitation period for filing objections under Section 34 of the Arbitration and Conciliation Act, 1996. Held, Section 14 of the Limitation Act, which provides for the exclusion of the time spent in bona fide legal proceedings, applies to proceedings under Section 34 of the Arbitration and Conciliation Act, 1996. The Court emphasized a liberal interpretation of limitation provisions to secure the limited remedies available under Sections 34 and 37 of the Arbitration Act. The Court allowed the exclusion of the period from 20.10.2011 to 23.02.2012, thereby restoring the Section 34 petition for reconsideration. The appeals were allowed, and the judgment of the High Court and the order of the District Judge were set aside. The Section 34 petition was restored to its original number for fresh adjudication. Kirpal Singh v. Government of India, 2024 LiveLaw (SC) 970

Section 29A (4) and (5) – Extension of Arbitral Tribunal's Mandate – Sufficient Cause - Whether an application for extension of the mandate of an Arbitral Tribunal can be filed after the expiry of the statutory period under Section 29A(4). Whether the facts and circumstances of the case justify the extension of the mandate. Held, under Section 29A(4) of the Act the mandate of the Arbitral Tribunal can be extended either prior to or after the expiry of the statutory period. The provision explicitly empowers the court to grant an extension even after the Tribunal's mandate has expired. On examining the facts, including the exclusion of the limitation period due to the COVID-19 pandemic as per the Court's earlier orders (In re: Cognizance for Extension of Limitation, (2022) 3 SCC 117), the Court found sufficient cause for granting an extension. The extension of time under Section 29A(5) is discretionary and contingent upon showing sufficient cause, which must align with the objective of efficient and effective dispute resolution. The statutory timeline for arbitration is not intended to frustrate proceedings but to ensure their expeditious conclusion. The concept of "sufficient cause" under Section 29A must be interpreted with flexibility, keeping in mind the peculiar circumstances of the case and the overarching goal of dispute resolution. This judgment clarifies the scope of Section 29A(4) and reinforces the principle that procedural timelines in arbitration must not impede the resolution of disputes, particularly in exceptional circumstances like a global pandemic. The Supreme Court allowed the appeal, set aside the High Court's dismissal of the application, and extended the mandate of the Arbitral Tribunal. Ajay Protech Pvt. Ltd. v. General Manager, 2024 LiveLaw (SC) 915

Section 11 - Scope of inquiry - Prima facie determination of the existence of arbitrable disputes. Whether the High Court was justified in dismissing the application for appointment of an arbitrator. Held, at the stage of deciding an application under Section 11 the court's jurisdiction is limited to determining the prima facie existence of an arbitration agreement and not to undertake a detailed examination of the merits or frivolity of the claims. The High Court exceeded its jurisdiction by delving into the merits of the dispute, including the auditor's findings, and dismissing the arbitration application on the ground of alleged dishonesty of the appellant. The existence of an arbitration agreement (Clause 18.12 of the MSA) was not disputed, and the question of arbitrability or genuineness of the disputes should be left to the arbitral tribunal. Referring to the judgment in SBI General Insurance Co. Ltd. v. Krish Spinning, 2024 LiveLaw (SC) 489, the Court reiterated that the referral court's role is limited to prima facie scrutiny of the arbitration agreement. The arbitral tribunal is competent to address issues of frivolity or dishonesty in claims, based on a comprehensive assessment of evidence. To balance the limited judicial interference under Section 11 with the prevention of abuse of arbitration proceedings, the arbitral tribunal may award costs against parties found to have initiated frivolous claims. The appeal was allowed, and the order of the High Court was set aside. All legal contentions and objections were kept open for consideration before the arbitrator. Goqii Technologies v. Sokrati Technologies, 2024 LiveLaw (SC) 891 : AIR 2024 SC 5711

Section 11(6) – Maintainability and Limitation - A fresh application under Section 11 (6) is not maintainable if no liberty was granted at the time of withdrawal of the first application. A fresh application under Section 11(6) of the Act is subject to limitation, and if time-barred, such an application cannot be entertained. Section 14(2) of the Limitation Act, 1963, does not benefit a respondent in such cases for exclusion of the period during which the first application was pending. Condonation of delay under Section 5 of the Limitation Act, 1963, is also not available to the respondent in the absence of sufficient cause. Hpcl Bio-Fuels Ltd. v. Shahaji Bhanudas Bhad, 2024 LiveLaw (SC) 879

Section 12 - Appointment of Arbitrators - Principles of Equal Treatment - The principle of equal treatment of parties applies at all stages of arbitration proceedings, including the appointment of arbitrators. The Arbitration Act permits Public Sector Undertakings (PSUs) to maintain empanelled arbitrators, but arbitration clauses cannot compel the other party to select arbitrators exclusively from such panels. Clauses allowing unilateral appointment of a sole arbitrator raise justifiable doubts about the arbitrator's independence and impartiality and hinder equal participation in the appointment process. In three-member tribunals, requiring one party to select its arbitrator from a PSU-curated panel violates the principle of equal treatment, as it creates an imbalance in the appointment process. Unilateral appointment clauses in public-private contracts contravene Article 14 of the Constitution of India. The express waiver under Section 12(5) of the Arbitration Act permits parties to waive claims of bias against unilaterally appointed arbitrators after disputes arise, enabling them to consider the necessity of waiving the nemo judex rule. The judgment applies prospectively to arbitrator appointments made after its pronouncement, including appointments in three-member tribunals. Central Organisation for Railway Electrification v. Eci Spic Smo Mcml (Jv), 2024 LiveLaw (SC) 874

Section 11 - Applicability of Part I – Determination of the Seat of Arbitration – Jurisdiction of Indian Courts - Principles - Exclusion of Part I for Pre-2012 Agreements - Exclusive Jurisdiction of the Seat - Determination of the Seat - Role of Party Autonomy - Forum Non Conveniens - Residual Application of Closest Connection Test - Part I of the Act applies only to arbitrations where the seat is in India or the arbitration agreement is governed by Indian law. Agreements executed post-06.09.2012 with a foreign seat are outside the jurisdiction of Indian courts. For agreements executed prior to 06.09.2012, Part I is excluded if the parties explicitly designate a foreign seat or implicitly adopt foreign law as the governing law. Once the seat of arbitration is determined, it operates as an exclusive jurisdiction clause, rejecting concurrent jurisdiction. The "Closest Connection Test" is no longer applicable. Instead, if an arbitration agreement expressly designates a location as the seat (even if termed as "venue") or aligns with the curial law stipulated, such designation prevails unless contrary indicia exist. Courts must honor the parties' express and implied choices in the arbitration agreement and not impute inadvertence in their stipulations. Where multiple potential seats are designated, the Doctrine of Forum Non Conveniens may be applied to determine the most appropriate seat. Residual Application of Closest Connection Test is limited to cases where the arbitration agreement lacks express or implied designation of a seat or curial law. The petition under Section 11 of the Act was dismissed as the seat of arbitration was outside India, and the agreement was not governed by Indian law. Arif Azim Co. Ltd. v. Micromax Informatics Fze, 2024 LiveLaw (SC) 871

Section 11 (6) – Scope and Limitation - The referral court's role under Section 11(6) is limited to determining whether the application for appointment of an arbitrator is within the statutory limitation period of three years. Intricate evidentiary inquiries into whether the claims are time-barred or on the merits of the disputes fall exclusively within the domain of the arbitral tribunal. The court emphasized that parties' inability to appeal Section 11 orders necessitates avoiding decisions that may leave claimants remediless. It clarified that the arbitral tribunal retains authority to adjudicate issues of limitation as preliminary matters and to impose costs if the claims are found frivolous or time-barred. In the present case, the petitions under Section 11(6) were filed within limitation, considering the invocation notice dated 23.01.2017 and the respondents' failure to comply within 30 days. Consequently, an arbitral tribunal was constituted to adjudicate disputes under the Shareholders Agreement. The court directed that all substantive issues, including whether the claims are barred by limitation, be resolved by the arbitrator. It was also observed that costs for unnecessary arbitration proceedings may be imposed on the party found to have abused the process. Petitions allowed; sole arbitrator appointed for adjudication of disputes. Aslam Ismail Khan Deshmukh v. Asap Fluids Pvt. Ltd., 2024 LiveLaw (SC) 868

Section 18 and 36 - Government or statutory bodies cannot claim any special privilege or differential treatment in arbitration proceedings or enforcement-related matters. International Seaport Dredging Pvt. Ltd. v. Kamarajar Port Ltd, 2024 LiveLaw (SC) 852

Section 11 - Arbitration Clause in Public Premises Disputes – Applicability of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 vis-à-vis the Arbitration and Conciliation Act, 1996 – Jurisdiction of the High Court - Held, the Supreme Court dismissed the appeal by Central Warehousing Corporation, upholding the High Court's decision to refer the dispute to arbitration. The Court rejected the appellant's contention that the Public Premises Act, 1971, overrides the Arbitration Act, holding that the dispute arose from the terms of the agreement, including the right of renewal and the revision of storage charges, thus falling squarely within the arbitration clause of the contract. Central Warehousing Corporation v. Sidhartha Tiles and Sanitary, 2024 LiveLaw (SC) 822 : AIR 2024 SC 5645

Section 11 - Whether the Public Premises Act, 1971, overrides the Arbitration and Conciliation Act, 1996. Whether the High Court erred in appointing an arbitrator - The Court noted that the dispute concerned contractual obligations under an arbitration clause in the lease agreement dated 26.09.2012, valid until 11.09.2015, with issues arising prior to the lease's expiration. The Public Premises Act, 1971, pertains to eviction of unauthorised occupants and does not preclude arbitration for contractual disputes during the lease period. Relying on SBI General Insurance Co. Ltd. v. Krish Spinning, 2024 LiveLaw (SC) 489, the Court reaffirmed that the referral court's inquiry under Section 11(6-A) is limited to a prima facie examination of the existence of an arbitration agreement. Appeal dismissed with costs of ₹50,000. Arbitration proceedings to resume, and award to be delivered expeditiously. Central Warehousing Corporation v. Sidhartha Tiles and Sanitary, 2024 LiveLaw (SC) 822 : AIR 2024 SC 5645

Section 31(7)(b) - Post-award interest - Legal Principles: (i) Section 31(7)(a) allows party autonomy regarding pre-award interest. (ii) Section 31(7)(b) mandates post-award interest unless expressly varied by the award, not by contract. (iii) Contractual clauses restricting interest do not apply to post-award interest under statutory provisions. R.P. Garg v. Chief General Manager, Telecom Department, 2024 LiveLaw (SC) 794

Section 31(7)(b) - Post-award interest - Validity of a contractual clause prohibiting interest in light of statutory provisions - The appellant entered into a contract with the Telecom Department for trenching and laying underground cables. Disputes over non-payment of bills led to arbitration. The Arbitrator awarded the claim but denied post-award interest citing a contractual clause. The District Court granted 18% post-award interest, but the High Court reversed this decision based on the contract clause. Held, the Supreme Court set aside the High Court's judgment, holding that under Section 31(7)(b) of the Arbitration and Conciliation Act, 1996, post-award interest is a statutory right that cannot be overridden by a contract. The clause in the contract prohibiting interest was inapplicable to the post-award period. The Court restored the District Court's decision granting 18% interest from the award date until realization. Appeal allowed. R.P. Garg v. Chief General Manager, Telecom Department, 2024 LiveLaw (SC) 794

Section 34 and 37 - Unless the arbitral award suffers from the illegality mentioned under Section 34 of the Act, no award can be interfered with or set aside by the Appellate Courts under Section 37 of the Act. The award cannot be set aside merely for the reason that the view of the Appellate Court is a better view than the one taken by the arbitral tribunal. The award as such cannot be touched unless it is contrary to the substantive provision of law; any provision of the Act or the terms of the agreement. Punjab State Civil Supplies Corporation Ltd. v. Sanman Rice Mills, 2024 LiveLaw (SC) 754 : AIR 2024 SC 4856

Section 34 - Mere violation of law won't make arbitral award invalid - fundamental policy of law must be violated. OPG Power Generation v. Enexio Power Cooling Solutions, 2024 LiveLaw (SC) 738

An arbitration agreement is not necessarily non-binding on a non-signatory party. Such a party, though not a signatory, may have intended to be bound through its conduct or relationship with the signatory parties. A referral court must determine the issue from a prima facie perspective; although, ultimately, it is the arbitral tribunal which shall decide the same based on evidence. Ajay Madhusudan Patel v. Jyotrindra S. Patel, 2024 LiveLaw (SC) 727 : AIR 2024 SC 4648

Section 29A (4) r/w. (5) - Application for extending the time for passing of an arbitral award can be filed even after the expiry of the twelve-month or the extended six-month period. Rohan Builders v. Berger Paints, 2024 LiveLaw (SC) 693 : AIR 2024 SC 4369

Courts at referral stage must not enter into contested questions involving complex facts. Cox & Kings Ltd. v. Sap India Pvt. Ltd., 2024 LiveLaw (SC) 676 : AIR 2024 SC 4520

Courts and arbitral tribunals have the duty to examine the contract clauses in proceedings concerning arbitration. Pam Developments v. State of West Bengal, 2024 LiveLaw (SC) 613 : (2024) 10 SCC 715

Section 31(7) and 34 - Award of interest - Arbitrator awarded pre-reference interest at 12% per annum from the date of breach to the date of the Award), and post-award interest at 9.25% per annum. The District Judge upheld this decision under Section 34 of the Arbitration and Conciliation Act. However, the High Court modified the Award, disallowing pre-reference interest based on its interpretation that the contract prohibited it, and allowed interest only for the pendente lite and post-award periods. Upon appeal, the Supreme Court reinstated the Arbitrator's award of pre-reference interest, holding that the Arbitrator had the discretion to award interest under Section 31(7) of the Arbitration and Conciliation Act, 1996, and that the contract between the parties did not explicitly prohibit such an award. Interference with an arbitrator's decision on interest is unwarranted unless there is a clear violation of the contract or statutory provisions. (Para 9) Pam Developments v. State of West Bengal, 2024 LiveLaw (SC) 613 : (2024) 10 SCC 715

Section 34 and 37 - Loss due to idle labor, machinery, etc. - Arbitrator awarded Rs. 5,80,500 to the appellant, relying on the Hudson's formula for on-site establishment expenses. The District Court, under Section 34 of the Arbitration and Conciliation Act, upheld the award, stating that the Arbitrator's findings were not irrational or in conflict with public policy. However, the High Court, exercising its jurisdiction under Section 37, examined the contractual provisions and found that the claim was impermissible under the "Special Terms and Conditions" of the contract, which explicitly prohibited claims for idle labor or machinery. The High Court overruled the Arbitrator's decision, stating that the contract terms should have been properly considered, and its conclusions were upheld by the higher court. The Supreme Court agreed with the High Court's decision, affirming that the contract terms must guide the award and that no amount can be granted for idle labor or machinery in violation of the contract. (Para 7) Pam Developments v. State of West Bengal, 2024 LiveLaw (SC) 613 : (2024) 10 SCC 715

Section 37 - Interest on delayed payments of running account (RA) bills - Arbitrator awarded Rs. 54,84,024 with an interest rate of 12% p.a. to the appellant, holding that the delay in payments led to "blocked capital," entitling the claimant to compensation. The District Court upheld the Award. However, the High Court, under Section 37 of the Arbitration and Conciliation Act, set aside the Award, questioning the Arbitrator's analysis of the payment timelines and contract terms. The High Court held that the Arbitrator failed to address key issues such as the timing of bill preparation and entitlement to interest. Upon appeal, the Supreme Court restored the Arbitrator's Award, finding no fault in the Arbitrator's reasoning and ruling that the High Court's interference was unwarranted. The Court reiterated that the scope of interference under Section 37 is limited and found that the Award was neither perverse nor in conflict with public policy. (Para 8) Pam Developments v. State of West Bengal, 2024 LiveLaw (SC) 613 : (2024) 10 SCC 715

Section 11 (6) and 37 - Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983 - Applicability - Where an arbitration clause exists in a contract, but the Madhya Pradesh Arbitration Tribunal initially directed recourse to the 1996 Act, and the High Court appointed an arbitrator under Section 11(6) without jurisdictional objection, and an award was made - Held, even if the 1983 Act was applicable as per M.P. Rural Road Development Authority v. L.G. Chaudhary Engineers & Contractors, (2018) 10 SCC 826 the award should not be set aside solely on the ground of failure to invoke the 1983 Act, especially when the appellant had initially taken recourse to it - Further, where jurisdictional objections were not raised at the appropriate stage, the award should not be annulled - In the interest of justice, under Article 142 of the Constitution of India, the High Court's order setting aside the award was reversed, and the appeal under Section 37 of the 1996 Act was restored for reconsideration on merits, excluding the issue of the 1983 Act's applicability. Modern Builders v. State of Madhya Pradesh, (2024) 10 SCC 637

How to determine conversion of arbitral award in foreign currency to indian currency - Explained. DLF Ltd. v. Koncar Generators and Motors Ltd, 2024 LiveLaw (SC) 565 : AIR 2024 SC 4165 : (2025) 1 SCC 343 : (2025) 1 SCC 343

Arbitral Tribunal is not empowered to grant interest upon interest while passing an arbitral award as the Arbitration Act, 1940 does not specifically provide for the grant of interest on interest. D. Khosla and Company v. Union of India, 2024 LiveLaw (SC) 558 : AIR 2024 SC 3937 : (2024) 9 SCC 476

Judge hearing Section 34 application must apply mind to grounds of challenge. Kalanithi Maran v. Ajay Singh, 2024 LiveLaw (SC) 520

Initiation of arbitration and criminal proceedings under Section 138 N.I. Act are separate and independent proceedings that arise from two separate causes of action. Therefore, the institution of the proceedings under Section 138 N.I. Act does not imply a 'continuing cause of action' for the purpose of initiating arbitration. (Para 9) Elfit Arabia v. Concept Hotel BARONS Ltd, 2024 LiveLaw (SC) 494

Dispute regarding full and final settlement of contract is arbitrable. (Para 59) SBI General Insurance Co. Ltd. v. Krish Spinning, 2024 LiveLaw (SC) 489

Section 11(6) - While deciding a Section 11(6) petition for an appointment of an arbitrator, the referral courts must not conduct an intricate evidentiary enquiry into the question of whether the claims raised by the applicant are time-barred and should leave that question for determination by the arbitrator. The referral court should limit its enquiry to examining whether the Section 11(6) application has been filed within the period of limitation of three years or not. (Para 131) SBI General Insurance Co. Ltd. v. Krish Spinning, 2024 LiveLaw (SC) 489

Section 34(3) and Limitation Act of 1963; Section 2(j) & 4 – Bar of limitation – Three months from the date of receiving the arbitral award – Held, the prescribed period of limitation started from 1st July, 2022 and ended on 30th September. The three months provided by way of limitation expired a day before the commencement of the pooja vacation, which commenced on 1st October 2022. Therefore, the appellants were not entitled to take benefit of Section 4 of the Limitation Act which states that if the 'prescribed period' of limitation expires on the day court is closed, the limitation period can be extended to the day the court re-opens. Further, as per Section 34(3), the period of limitation was extended by a maximum period of 30 days which expired on 30th October, 2022 on which date the court was closed. The benefit of section 4 of Limitation Act is only applicable on the 'prescribed period' and not applicable on the extended 30 days. Section 2(j) of the Limitation Act makes it amply clear that the 'prescribed period' for making an application for setting aside an arbitral award is three months. Hence, even when the period of extended limitation expired on 30th October when the court was closed, the benefit of Section 4 for the extension of limitation to the day the court re-opens is not applicable. Held, as the petition was filed on 31st October 2022, the High Court was right in holding that the petition filed was beyond the period specified under Section 34(3). Hence, there is no merit in the appeal, and it is, accordingly, dismissed. (Para 10 & 11) State of West Bengal v. Rajpath Contractors and Engineers Ltd., 2024 LiveLaw (SC) 454 : AIR 2024 SC 3252 : (2024) 7 SCC 257

Section 19(1) – Applicability of Civil procedure Code, 1908 in arbitral proceedings – The legislature's intention is reflected in Section 19(1) of the Arbitration Act, which provides that an Arbitral Tribunal is not bound by the provision of the CPC. Hence, the provisions of the CPC have not been made applicable to the proceedings under Sections 34 and 37(1)(c). (Para 18) Bombay Slum Redevelopment Corporation v. Samir Narain Bhojwani, 2024 LiveLaw (SC) 445 : AIR 2024 SC 3427 : (2024) 7 SCC 218

Section 34 and 37 – Jurisdiction of the Appellate Court dealing with an appeal under Section 37 – Jurisdiction during appeal under Section 37 against the judgment in a petition under Section 34 is more constrained than the jurisdiction of the Court dealing with a petition under Section 34. It is the duty of the Appellate Court to consider whether Section 34 Court has remained confined to the grounds of challenge that are available in a petition under Section 34. The ultimate function of the Appellate Court under Section 37 is to decide whether the jurisdiction under Section 34 has been exercised rightly or wrongly. While doing so, the Appellate Court can exercise the same power and jurisdiction that Section 34 Court possesses with the same constraints. (Para 16) Bombay Slum Redevelopment Corporation v. Samir Narain Bhojwani, 2024 LiveLaw (SC) 445 : AIR 2024 SC 3427 : (2024) 7 SCC 218

Section 34 and 37 – Object of arbitral proceedings – The court directed the members of the Bar to show restraint by incorporating only legally permissible grounds in petitions under Section 34 and the appeals under Section 37. Held, arbitration must become a tool for expeditious, effective, and cost-effective dispute resolution. When members of the bar take up so many grounds in petitions under Section 34, which are not covered by Section 34, there is a tendency to urge all those grounds which are not available in law and waste the Court's time. The proceedings under Sections 34 and 37 are being treated as if the same are appeals under Section 96 of the CPC, making the arbitral procedure inefficient and unfair. Further held, everyone associated with the arbitral proceedings must remember that brevity will make the arbitral proceedings and the proceedings under Sections 34 and 37 more effective. (Para 23) Bombay Slum Redevelopment Corporation v. Samir Narain Bhojwani, 2024 LiveLaw (SC) 445 : AIR 2024 SC 3427 : (2024) 7 SCC 218

Section 34 and 37 – Power of the Appellate Court dealing with the appeal under Section 37(1)(c) of the Arbitration Act to pass an order of remand to Section 34 Court. Order of remand passed directing the learned Single Judge to hear the petition under Section 34 afresh is challenged – The remedy of an appeal will not be effective unless there is a power of remand vesting in the appellate authority. In the Arbitration Act, there is no statutory embargo on the power of the Appellate Court under Section 37(1)(c) to pass an order of remand. However, looking at the scheme of the Arbitration Act, the Appellate Court can exercise the power of remand only when exceptional circumstances make an order of remand unavoidable. Held, while deciding the petition under Section 34 of the Arbitration Act, the learned Single Judge has made a very elaborate consideration of the submissions made across the Bar. Hence, the finding of the Appellate Bench that the impugned judgment of the learned Single Judge does not address several issues raised by the parties cannot be sustained at all. Further held, the remand was completely unwarranted, as the learned Single Judge has elaborately dealt with the merits of the challenge in the Section 34 petition. (Para 7, 17, 18 & 20) Bombay Slum Redevelopment Corporation v. Samir Narain Bhojwani, 2024 LiveLaw (SC) 445 : AIR 2024 SC 3427 : (2024) 7 SCC 218

Section 29A - A High Court which does not have original civil jurisdiction does not have the power to extend the time limit for passing of the arbitral award. Chief Engineer (NH) PWD (Roads) v. BSC & C and C JV, 2024 LiveLaw (SC) 425

Section 25 – Termination of arbitral proceedings – The learned Arbitrator is bound to terminate the proceedings on grounds of failure of the claimant to file his statement of claim in accordance with Section 23, in view of Section 25(a). If the respondent to the proceedings fails to file a statement of defence in accordance with Section 23, in the light of Section 25(b), the learned Arbitrator is bound to proceed further with the arbitral proceedings. Even if the claimant, after filing a statement of claim, fails to appear at an oral hearing or fails to produce documentary evidence, the learned Arbitrator is expected to continue the proceedings as provided in Section 25(c). Held, The fact that clause (c) of Section 25 enables the Arbitral Tribunal to proceed in the absence of the claimant shows the legislature's intention that the claimant's failure to appear after filing the claim cannot be a ground to say that the proceedings have become unnecessary or impossible. (Para 10, 12 & 15) Dani Wooltex Corporation v. Sheil Properties Pvt. Ltd., 2024 LiveLaw (SC) 405 : AIR 2024 SC 2958 : (2024) 7 SCC 1

Section 32 – Grounds for termination of arbitral proceedings – Section 32 provides for the termination of the arbitral proceedings in the following contingencies: a. On making final arbitral award; b. On the Claimant withdrawing his claim as under Section 32(2)(a); c. Parties agreeing on termination of arbitral proceedings as under Section 32(2)(b); or d. When the Arbitral Tribunal finds that the continuation of proceedings has become unnecessary or impossible for any other reason, as under Section 32(2)(c). Held, Section 32(2)(c) can be invoked for reasons other than those mentioned in Section 32(2)(a) & 32(2)(b). Under Section 32(2)(c), mere existence of a reason for terminating the proceedings is not sufficient and reason must be such that the continuation of the proceedings has become unnecessary or impossible. Further held, if, after filing a claim, the claimant fails to appear at an oral hearing or fails to produce documentary evidence, it cannot be said that the continuation of proceedings has become unnecessary and the learned Arbitrator can proceed with the arbitral proceedings. (Para 14 & 15) Dani Wooltex Corporation v. Sheil Properties Pvt. Ltd., 2024 LiveLaw (SC) 405 : AIR 2024 SC 2958

Section 32(2)(c) - Termination of arbitration proceedings on grounds that the continuation of proceedings has become unnecessary or impossible – Abandonment by the claimant of his claim makes the arbitral proceedings unnecessary. Mere absence in proceedings or failure to participate does not, per se, amount to abandonment. Only if the established conduct of a claimant is such that it leads only to one conclusion that the claimant has given up, his/her claim can an inference of abandonment be drawn. Held, there is no material on record to conclude that claimant had abandoned its claim. The finding of the learned Arbitrator that there was abandonment of the claim is not based on any documentary or oral evidence on record. Hence, the finding is entirely illegal. (Para 16 & 20) Dani Wooltex Corporation v. Sheil Properties Pvt. Ltd., 2024 LiveLaw (SC) 405 : AIR 2024 SC 2958

Section 32(2)(c) - Termination of arbitration proceedings on grounds that the continuation of proceedings has become unnecessary or impossible – Abandonment by the claimant of his claim makes the arbitral proceedings unnecessary. Only because a claimant, after filing his statement of claim, does not move the Arbitral Tribunal to fix a date for the hearing, the failure of the claimant, per se, will not amount to the abandonment of the claim. Held, the failure of the claimant to request the Arbitral Tribunal to fix a date for hearing, per se, is no ground to conclude that the proceedings have become unnecessary. (Para 21) Dani Wooltex Corporation v. Sheil Properties Pvt. Ltd., 2024 LiveLaw (SC) 405 : AIR 2024 SC 2958

Withdrawal of arbitrator – An Arbitrator always has the option to withdraw for any reason. Therefore, he can withdraw because of the parties' non­cooperation in the proceedings. But in such a case, his mandate will be terminated, not the arbitral proceedings. (Para 13) Dani Wooltex Corporation v. Sheil Properties Pvt. Ltd., 2024 LiveLaw (SC) 405 : AIR 2024 SC 2958

Section 34 & 37 – Interference in arbitral award has limited scope under Section 34 and 37 – As far as the construction of the terms of a contract is concerned, it is for the Arbitral Tribunal to adjudicate upon. If, after considering the material on record, the Arbitral Tribunal takes a particular view on the interpretation of the contract, the Court under Section 34 does not sit in appeal over the findings of the arbitrator. The majority opinion of technical persons need not be subjected to a relook, especially when the learned Single Judge had also agreed with the view taken by the Arbitral Tribunal. The findings of the majority in the Arbitral award is upheld. No merit in appeal. (Para 13 & 15) National Highway Authority of India v. Hindustan Construction Company Ltd; 2024 LiveLaw (SC) 361 : AIR 2024 SC 2383 : (2024) 6 SCC 809

Section 34 & 37- Scope of interference of courts with arbitral awards – A judgment setting aside or refusing to set aside an arbitral award under Section 34 is appealable under Section 37. The jurisdiction under Section 37 is akin to the jurisdiction of the Court under Section 34 and restricted to the same grounds of challenge as Section 34. As per section 37(3) of Arbitration Act, a recourse to Section 37 is the only appellate remedy available against a decision under Section 34 and no second appeal shall lie from an order passed under Section 37. Held, nothing in the section 37(3) takes away the constitutional right under Article 136 to grant Special Leave to Appeal against a decision rendered in appeal under Section 37. This is the discretionary and exceptional jurisdiction of this Court to grant Special Leave to Appeal and it is a third stage at which this court tests the exercise of jurisdiction by the courts acting under Section 34 and Section 37 of the Arbitration Act. (Para 41, 42) Delhi Metro Rail Corporation Ltd. v. Delhi Airport Metro Express Pvt. Ltd., 2024 LiveLaw (SC) 291 : AIR 2024 SC 2070 : (2024) 6 SCC 357

Section 34 (2-A) – Grounds for setting aside an arbitral award – A domestic award may be set aside if the Court finds that it vitiated by 'patent illegality' appearing on the face of the award. It is patent illegality, if the decision of the arbitrator is found to be perverse, or so irrational that no reasonable person would have arrived at it; or the construction of the contract is such that no fair or reasonable person would take; or, that the view of the arbitrator is not even a possible view. A 'finding' based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside under the head of 'patent illegality'. An award without reasons would suffer from patent illegality. The arbitrator commits a patent illegality by deciding a matter not within his jurisdiction or violating a fundamental principle of natural justice. (Para 40) Delhi Metro Rail Corporation Ltd. v. Delhi Airport Metro Express Pvt. Ltd., 2024 LiveLaw (SC) 291 : AIR 2024 SC 2070 : (2024) 6 SCC 357

Section 48 – Enforcement of foreign award in India challenged on grounds of arbitral bias – In India, courts must adopt an internationally recognized narrow standard of public policy, when dealing with the aspect of bias. Refusal of enforcement of foreign award should only be in a rare case where, non- adherence to International Standards is clearly demonstrable. Held, cannot infer bias or likelihood of bias of the Presiding Arbitrator, hence there is no violation of the public policy, which would render the foreign award unenforceable in India. The award debtors have failed to substantiate their allegation of bias, conflict of interest or the failure by the Presiding Arbitrator to render disclosure to the parties, as an objection to the enforcement of the award. Courts across the world have applied a higher threshold of bias to prevent enforcement of an Award than the standards set for ordinary judicial review. The award debtors have failed to meet the high threshold for refusal of enforcement of a foreign award under Section 48 of the Indian Arbitration Act. The decision given by the High Court for enforcement/execution of the foreign award stands approved. (Para 22, 25, 36, 42 & 43) Avitel Post Studioz Ltd. v. Hsbc Pi Holdings (Mauritius) Ltd., 2024 LiveLaw (SC) 267 : (2024) 7 SCC 197

Section 48 – Challenge of Arbitral bias raised at the enforcement stage – Held, challenge of arbitral bias is raised at the enforcement stage, must be discouraged by Courts to send out a clear message that Indian Courts would ensure enforcement of a foreign Award unless it is demonstrable that there is a clear violation of morality and justice. No setting aside challenge based on bias was raised before the Singapore Courts by the appellants within the limitation period. Since the objection of bias was not raised in appropriate proceedings it could not be raised at the post-award Stage. Held, the Award Debtors should have applied for setting aside of the Award before the Singapore Courts at the earliest point of time. (Para 27, 29 & 42) Avitel Post Studioz Ltd. v. Hsbc Pi Holdings (Mauritius) Ltd., 2024 LiveLaw (SC) 267 : (2024) 7 SCC 197

Section 78(5) – Arbitration clause – Two-Contract Case – When the parties enter into a contract, making a general reference to another contract, such general reference would not have the effect of incorporating the arbitration clause from the referred document into the contract between the parties. The arbitration clause from another contract can be incorporated into the contract only by a specific reference to arbitration clause. A reference to the document in the contract should be such that shows the intention to incorporate the arbitration clause from another document into the contract between the parties. The present case is a 'two-contract' case. Clause 7.0 of the L.O.I. which also forms part of the agreement specifically provides that the redressal of the dispute between the NBCC and the respondent shall 'only' be through civil courts having jurisdiction of Delhi alone. When there is a reference in the second contract to the terms and conditions of the first contract, the arbitration clause would not ipso facto be applicable to the second contract unless there is a specific mention/reference thereto. The present case is not a case of 'incorporation' but a case of 'reference' and a general reference would not have the effect of incorporating the arbitration clause. The learned single judge of the Delhi High Court has erred in allowing the appointed the Sole Arbitrator to adjudicate the dispute between the parties. (Para 10, 12, 13, 21 & 23) NBCC (India) Ltd. v. Zillion Infraprojects Pvt. Ltd., 2024 LiveLaw (SC) 246 : AIR 2024 SC 1941 : (2024) 7 SCC 174

Section 11(6) - Limitation Act, 1963 is applicable to proceedings for appointment of arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 ("A&C Act"), and a Court may refuse to make a reference if the claims, on the date of commencement of arbitration proceedings, are ex-facie barred. (Para 50) Arif Azim Co. Ltd. v. Aptech Ltd., 2024 LiveLaw (SC) 180 : AIR 2024 SC 1347 : (2024) 5 SCC 313

Section 11 - Parliament should consider bringing an amendment to the Act, 1996 prescribing a specific period of limitation within which a party may move the court for making an application for appointment of arbitrators under Section 11 of the Act, 1996. (Para 94) Arif Azim Co. Ltd. v. Aptech Ltd., 2024 LiveLaw (SC) 180 : AIR 2024 SC 1347 : (2024) 5 SCC 313

Sections 34 or 37 - Whether the courts have the power to modify the arbitral award ? Referred to a larger Bench. Gayatri Balasamy v. Isg Novasoft Technologies Ltd; 2024 LiveLaw (SC) 149

An award could be said to be against the public policy of India in, inter alia, the following circumstances: 1. When an award is, on its face, in patent violation of a statutory provision 2. When the arbitrator/Arbitral Tribunal has failed to adopt a judicial approach in deciding the dispute. 3. When an award is in violation of the principles of natural justice. 4. When an award is unreasonable or perverse. 5. When an award is patently illegal, which would include an award in patent contravention of any substantive law of India or in patent breach of the 1996 Act. 6. When an award is contrary to the interest of India, or against justice or morality, in the sense that it shocks the conscience of the Court. (Para 27) S.V. Samudram v. State of Karnataka, 2024 LiveLaw (SC) 14 : AIR 2024 SC 447 : (2024) 3 SCC 623

Sections 34 and 37 - Modification of Arbitral Award not allowed under Section 34. Court could have at best set aside the award and could not modify the same. (Para 32.8) S.V. Samudram v. State of Karnataka, 2024 LiveLaw (SC) 14 : AIR 2024 SC 447 : (2024) 3 SCC 623