Arbitration And Conciliation Act: 20 Recent SC Judgments

The Government of Haryana, PWD Haryana (B and R) Branch V. M/s. G.F. Toll Road Pvt. Ltd. & Ors.

The Supreme Court held that the Arbitration and Conciliation Act, 1996, does not disqualify a former employee from acting as an arbitrator, provided that there are no justifiable doubts as to his independence and impartiality. The bench of Justice Abhay Manohar Sapre and Justice Indu Malhotra observed that, even after 2015 amendment, the position remains the same, as Entry 1 to 5th Schedule of the Act does not include "past/former employees."

Mere Delay In Passing The Award By Itself Cannot Be The Ground To Appoint Another Arbitrator

Rajasthan Small Industries Corporation Limited V. M/S Ganesh Containers Movers Syndicate

In this case, it was observed that mere neglect of an arbitrator to act or delay in passing the award by itself cannot be the ground to appoint another arbitrator in deviation from the terms agreed to by the parties.The bench comprising of Justice R. Banumathi and Justice Indira Banerjee held thus while considering appeal against Rajasthan High Court order appointing a retired District Judge as the sole arbitrator to resolve the dispute between the parties, by allowing application under Section 11 and Section 15 of the Arbitration and Conciliation Act, 1996, filed by contractor.

Arbitral Tribunal Cannot Award Interest If Agreement Expressly Bars Its Payment

Jaiprakash Associates Ltd. V. Tehri Hydro Developmentcorporation India Ltd.

It was reiterated that arbitrator cannot award interest on award if the agreement expressly prohibits grant of interest. The bench of Justices A K Sikri, Abdul Nazeer and M R Shah dismissed an appeal to uphold a judgment of Delhi High Court, which had set aside an arbitration award to the extent it granted interest overlooking the prohibition in the agreement.

Independent Assessment Of Merits Of Award Cannot Be Made In An Arbitration Appeal

MMTC Ltd. V. M/S Vedanta Ltd.

The Supreme Court observed that, a court while considering an appeal under Section 37 of the Arbitration and Conciliation Act, cannot undertake an independent assessment of the merits of the award.The bench comprising Justice Mohan M. Shantanagoudar and Justice Vineet Saran observed that, in such appeals, the court must only ascertain that the exercise of power by the Court under Section 34 has not exceeded the scope of the provision.

Maintainability Of Execution Case To Be Considered Along With Issue Of Enforceability Of Foreign Award

LMJ International Ltd. V. Sleepwell Industries Co. Ltd.

The Apex Court observed that piecemeal consideration of the issue of maintainability of the execution case concerning the foreign awards, in the first place; and then the issue of enforceability thereof, is not envisaged under the scheme of Section 48 of the Arbitration and Conciliation Act, 1996. The bench comprising Justice AM Khanwilkar and Justice Ajay Rastogi observed that the Court is expected to consider both these aspects viz. maintainability and enforceability, simultaneously at the threshold.

Pre-Deposit Clauses To Invoke Arbitration Makes Arbitral Process Ineffective And Expensive

M/S ICOMM Tele LTD. V.Punjab State Water Supply & Sewerage Board & Anr.

In this case, the Court observed that pre-deposit clauses to invoke arbitration would render the arbitral process ineffective and expensive.The bench comprising Justice Rohinton Fali Nariman and Justice Vineet Saran struck down such a clause in a notice inviting tender by Punjab State Water Supply & Sewerage Board.

Court Can Appoint Independent Arbitrator Only After Resorting To The Procedure In Arbitration Agreement

Union Of India V. Parmar Construction Company

The Supreme Court observed that the High Court, while dealing with an application under Section 11(6) of the Arbitration and Conciliation Act, seeking appointment of an 'independent Arbitrator', should first resort to the mechanism in appointment of an arbitrator as per the terms of contract as agreed by the parties.

One of the issue in a batch of appeals was whether it was permissible for the High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996 (prior to the Amendment Act, 2015) to appoint third party or an independent Arbitrator when the parties have mutually agreed for the procedure vis-à-vis the authority to appoint the designated arbitrator.

Court Can't Appoint Arbitrator When The Contract Containing Arbitration Clause Is Insufficiently Stamped

Garware Wall Ropes Ltd vs. Coastal Marine Constructions & Engineering Ltd.

The Supreme Court held that it would be necessary for the Court before considering and passing final orders on an application under Section 11(6) of the Act to await the adjudication by the stamp authorities, in a case where the document objected to, is not adequately stamped.

The bench comprising Justice Rohinton Fali Nariman and Justice Vineet Saran observed that the law laid down in SMS Tea Estates (P) Ltd. v. Chandmari Tea Co. (P) Ltd. still applies, even after introduction of Section 11(6A), by way of the Arbitration and Conciliation (Amendment) Act, 2015.

Person Ineligible To Be Arbitrator Under Sec.12(5) Of Arbitration Act Cannot Appoint Another Arbitrator

Bharat Broadband Network Limited V. United Telecoms Limited

The Supreme Court held that the appointment of arbitrator by a person who himself is ineligible to be an arbitrator as per Section 12(5) of the Arbitration and Conciliation Act 1996 is void ab initio.The bench of Justices R F Nariman and Vineet Saran followed the 2017 decision in TRF Ltd. v Energy Engineering Projects Ltd (2017) 8 SCC 377 (TRF Ltd)., which had held that an ineligible person cannot appoint arbitrator.

Sec.34 Arbitration Act- Unilateral Addition To Contract By Arbitral Tribunal Violates Most Basic Notions Of Justice

Ssangyong Engineering & Construction Co. Ltd. V. National Highways Authorityof India (NHAI)

Holding that "a unilateral addition or alteration of a contract can never be foisted upon an unwilling party", the Supreme Court set aside an arbitral award on the grounds of it being in conflict with "most basic notions of justice" and thereby conflicting with "public policy of India" as per Section 34(2)(b)(ii)(iii) of the Arbitration and Conciliation Act 1996.

In addition to that, the Court held that the award was also liable to be set aside under Section 34(2)(a)(iii) on the finding that the party was rendered "unable to present his case".

Termination Of Arbitration Proceedings U/s 32 Of Arbitration And Conciliation Act Cannot Be Recalled

Sai Babu vs. Clariya Steels Pvt. Ltd.

The Supreme Court observed that the termination of Arbitration proceedings by the Arbitrator under Section 32(2) (c) of the Arbitration and Conciliation Act cannot be recalled.

In this case, the sole arbitrator terminated proceedings under Section 32(2) (c) i.e. on the ground that the continuation of the proceedings become unnecessary or impossible. Later, he allowed an application by one of the parties seeking recall of the order terminating the proceedings. The Karnataka High Court dismissed the challenged against this 'recall' by the Arbitrator.

A Court Deciding 'Section 34' Petition Has No Jurisdiction To Remand The Matter To Arbitrator For Fresh Decision

Radha Chemicals V. Union Of India

The Supreme Court reiterated that the court while deciding a petition under Section 34 of the Arbitration and Conciliation Act has no jurisdiction to remand the matter to the arbitrator for a fresh decision.The bench comprising Justice Rohinton Fali Nariman and Justice Navin Sinha set aside a Calcutta High Court order that remanded the matter to the arbitrator in order to decide the point of limitation afresh. The division bench of the high court had affirmed the single bench order of remand.

'Association' Referred To In Section 2(1)(f)(iii) Of The Arbitration And Conciliation Act Would Include A Consortium Of Companies, One Of Which Is A Foreign Company

M/S Larsen And Toubro Limited Scomi Engineering Bhd V. Mumbai Metropolitan Region Development Authority

The Supreme Court held that an 'association' referred to in Section 2(1)(f)(iii) of the Arbitration and Conciliation Act, 1996, would include a consortium consisting of two or more bodies corporate, at least one of whom is a body corporate incorporated in a country other than India.

Unsigned Arbitration Agreement Not Invalid In All Cases

Caravel Shipping Services Pvt. Ltd. Vs. Premier Sea Foods Exim Pvt. Ltd.

The Supreme Court held that the only prerequisite for an arbitration agreement is that it should be in writing and it cannot be said that in all cases, an arbitration agreement needs to be signed. The bench comprising Justice Rohinton Fali Nariman and Justice Navin Sinha observed that the plaintiff has itself relied upon the Bill of Lading as part of its cause of action in his suit against defendants.

Application for Enforcement of Foreign Award Shall Not Be Dismissed Merely For Non-Production of Requisite Documents 'At The Time Of Application'

P.E.C. Limited vs. Austbulk Shipping SDN BHD

The Supreme Court held that, at the initial stage of filing of an application for enforcement of a foreign award, non-compliance of the production of the documents mentioned in Section 47 of the Arbitration and Conciliation Act shall not entail in dismissal of the application for enforcement of an award.

Any Challenge To Arbitrator Appointed Should Be Raised Before The Arbitrator Himself In First Instance

Sp Singla Constructions Pvt. Ltd. V.State Of Himachal Pradesh And Another

The Supreme Court reiterated that any challenge to the arbitrator appointed should be raised before the arbitrator himself under Section 13 of the Arbitration and Conciliation Act 1996, in the first instance and thereafter under Section 34 of the Act.

The bench comprising Justice R. Banumathi and Justice Indira Banerjee was considering high court order that held that the appointment of arbitrator could not be challenged by way of an application under Section 11(6) of the Act.

'Administrative Difficulties' Not A Valid Reason To Condone Delay In Filing Application To Set Aside Arbitral Award

M/S Simplex Infrastructure Ltd V. Union Of India

The Supreme Court held that administrative difficulties would not be a valid reason to condone a delay above and beyond the statutory prescribed period under Section 34 of the Arbitration and Conciliation Act, 1996 to file an application to set aside arbitration award.

No Appointment Of Arbitrator If There Is Violation Of Conditionality Clause In Arbitration Agreement

United India Insurance Co. Ltd. vs. Hyundai Engineering and Construction Co. Ltd.

While setting aside a Madras High Court judgment appointing an arbitrator ignoring the conditionality clause in an arbitration agreement, the Supreme Court observed that, even after the 2015 amendment insertion of sub-section 6A in Section 11 of the Arbitration and Conciliation Act, the arbitration clause has to be interpreted strictly considering the conditionality clause.

Prior Notice To Other Party Before Filing Application To Set Aside Arbitral Award Not Mandatory

The State Of Bihar & Ors. V. Bihar Rajya Bhumi Vikas Bank Samiti

Disapproving view adopted by many High courts in the matter of interpretation of Section 34(5) the Arbitration and Conciliation Act, the Supreme Court held that the requirement (under Section 34(5)) of prior notice to the other party before filing an application to set aside an arbitral award is a directory.

Limitation Period For Application For Setting Aside Arbitration Award Begins From The Date Of Signed Copy Of The Award Delivered To The Party Making It

Anilkumar Jinabhai Patel (D) v Pravinchandra Jinabhai Patel

The Supreme Court reiterated that the limitation period prescribed under Section 34(3) of the Arbitration and Conciliation Act would commence only from the date of the signed copy of the award delivered to the party making the application for setting it aside.

The bench of Justice RK Agrawal and Justice R Banumathi made this observation while referring to State of Maharashtra and Ors v Ark Builders Pvt Ltd, wherein it was held that the expression "...party making that application had received the arbitral award..." cannot be read in isolation and it must be understood that Section 31(5) of the Act requires a signed copy of the award to be delivered to each party.