Supreme Court Quarterly Digest 2022- ARBITRATION (Jan - Mar)

Arbitration and Conciliation Act, 1996 - Jurisdiction - When two or more Courts have jurisdiction to adjudicate disputes arising out of an arbitration agreement, the parties might, by agreement, decide to refer all disputes to any one Court to the exclusion of all other Courts, which might otherwise have had jurisdiction to decide the disputes. The parties cannot, however, by consent, confer jurisdiction on a Court which inherently lacked jurisdiction. (Para 47) Ravi Ranjan Developers Pvt. Ltd. v. Aditya Kumar Chatterjee, 2022 LiveLaw (SC) 329

Arbitration and Conciliation Act, 1996 - Only if the agreement of the parties was construed to provide for seat/place of arbitration in India, would Part-I of the 1996 Act be applicable. If the seat/place were outside India, Part-I would not apply, even though the venue of a few sittings may have been in India, or the cause of action may have arisen in India. (Para 36) Ravi Ranjan Developers Pvt. Ltd. v. Aditya Kumar Chatterjee, 2022 LiveLaw (SC) 329

Arbitration and Conciliation Act, 1996 - Seat and Venue - Sittings at various places are relatable to venue. It cannot be equated with the seat of arbitration or place of arbitration, which has a different connotation. (Para 44, 45) Ravi Ranjan Developers Pvt. Ltd. v. Aditya Kumar Chatterjee, 2022 LiveLaw (SC) 329

Arbitration and Conciliation Act, 1996 - Special leave petition against an order of the Calcutta High Court, allowing an Arbitration Petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of an Arbitrator - Allowed - Calcutta High Court inherently lacks jurisdiction to entertain the application. Ravi Ranjan Developers Pvt. Ltd. v. Aditya Kumar Chatterjee, 2022 LiveLaw (SC) 329

Arbitration and Conciliation Act, 1996; Section 11 - While dealing with petition under Section 11, the Court by default would refer the matter when contentions relating to non arbitrability are plainly arguable. In such case, the issue of non arbitrability is left open to be decided by the Arbitral Tribunal. (Para 11) Mohammed Masroor Shaikh v. Bharat Bhushan Gupta, 2022 LiveLaw (SC) 120

Arbitration and Conciliation Act, 1996; Section 11(6) - A party to the arbitration agreement can appoint an arbitrator even after an Arbitration Petition has been filed by the other party before the High Court for appointment of an arbitrator if the party has not been given due notice of the same. (Para 16) Durga Welding Works v. Chief Engineer, 2022 LiveLaw (SC) 9

Arbitration and Conciliation Act, 1996; Section 11(6) and 2(1)(e) - An application under Section 11(6) of the A&C Act for appointment of an Arbitrator/Arbitral Tribunal cannot be moved in any High Court in India, irrespective of its territorial jurisdiction. Section 11(6) of the A&C Act has to be harmoniously read with Section 2(1)(e) of the A&C Act and construed to mean, a High Court which exercises superintendence/supervisory jurisdiction over a Court within the meaning of Section 2(1)(e) of the A&C Act. It could never have been the intention of Section 11(6) of the A&C Act that arbitration proceedings should be initiated in any High Court in India, irrespective of whether the Respondent resided or carried on business within the jurisdiction of that High Court, and irrespective of whether any part of the cause of action arose within the jurisdiction of that Court, to put an opponent at a disadvantage and steal a march over the opponent. Ravi Ranjan Developers Pvt. Ltd. v. Aditya Kumar Chatterjee, 2022 LiveLaw (SC) 329

Arbitration and Conciliation Act, 1996; Section 12(5) read with Seventh Schedule - An arbitral tribunal constituted as per an arbitration clause before the 2015 amendment to the Arbitration and Conciliation Act 1996 will lose its mandate if it violates the neutrality clause under Section 12(5) read with the Seventh Schedule, which were incorporated through the 2015 amendment. (Para 8, 9) Ellora Paper Mills Ltd. v. State of Madhya Pradesh, 2022 LiveLaw (SC) 8

Arbitration and Conciliation Act, 1996; Section 31 - Post-award interest can be granted by an Arbitrator on the interest amount awarded. (Para 4-6) UHL Power Company Ltd. v. State of Himachal Pradesh, 2022 LiveLaw (SC) 18

Arbitration and Conciliation Act, 1996; Section 34 - An error in interpretation of a contract in a case where there is valid and lawful submission of arbitral disputes to an Arbitral Tribunal is an error within jurisdiction. (Para 45) Indian Oil Corporation Ltd. v. Shree Ganesh Petroleum Rajgurunagar, 2022 LiveLaw (SC) 121

Arbitration and Conciliation Act, 1996; Section 34 - Limitation Act, 1961; Section 5 - Section 5 of Limitation Act is not applicable to condone the delay beyond the period prescribed under Section 34(3) of Act 1996. Mahindra and Mahindra Financial Services Ltd. v. Maheshbhai Tinabhai Rathod, 2022 LiveLaw (SC) 5

Arbitration and Conciliation Act, 1996; Section 34 - Patent Illegality - An Arbitral Tribunal being a creature of contract, is bound to act in terms of the contract under which it is constituted. An award can be said to be patently illegal where the Arbitral Tribunal has failed to act in terms of the contract or has ignored the specific terms of a contract. (Para 44) Indian Oil Corporation Ltd. v. Shree Ganesh Petroleum Rajgurunagar, 2022 LiveLaw (SC) 121

Arbitration and Conciliation Act, 1996; Section 34 - The Court does not sit in appeal over the award made by an Arbitral Tribunal. The Court does not ordinarily interfere with interpretation made by the Arbitral Tribunal of a contractual provision, unless such interpretation is patently unreasonable or perverse. Where a contractual provision is ambiguous or is capable of being interpreted in more ways than one, the Court cannot interfere with the arbitral award, only because the Court is of the opinion that another possible interpretation would have been a better one. (Para 46) Indian Oil Corporation Ltd. v. Shree Ganesh Petroleum Rajgurunagar, 2022 LiveLaw (SC) 121

Arbitration and Conciliation Act, 1996; Section 34 - The principle that a 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 would be applicable where the Appellate Court decides the application under Section 34 of the Act on merits - Even in a case where the award is set aside under Section 34 of the Act on whatever the grounds which may be available under Section 34 of the Act, in that case the parties can still agree for the fresh arbitration may be by the same arbitrator - When both the parties agreed to set aside the award and to remit the matter to the learned Sole Arbitrator for fresh reasoned Award, it is not open to contend that the matter may not be and/or ought not to have been remanded to the same sole arbitrator. (Para 8) Mutha Construction v. Strategic Brand Solutions (I) Pvt. Ltd., 2022 LiveLaw (SC) 163

Arbitration and Conciliation Act, 1996; Section 34(4) - A harmonious reading of Section 31, 34(1), 34(2A) and 34(4) of the Arbitration and Conciliation Act, 1996, make it clear that in appropriate cases, on the request made by a party, Court can give an opportunity to the arbitrator to resume the arbitral proceedings for giving reasons or to fill up the gaps in the reasoning in support of a finding, which is already rendered in the award. But at the same time, when it prima facie appears that there is a patent illegality in the award itself, by not recording a finding on a contentious issue, in such cases, Court may not accede to the request of a party for giving an opportunity to the Arbitral Tribunal to resume the arbitral proceedings. (Para 21) I-Pay Clearing Services Pvt. Ltd. v. ICICI Bank Ltd. 2022 LiveLaw (SC) 2

Arbitration and Conciliation Act, 1996; Section 34(4) - If there are no findings on the contentious issues in the award or if any findings are recorded ignoring the material evidence on record, the same are acceptable grounds for setting aside the award itself. Under guise of either additional reasons or filling up the gaps in the reasoning, the power conferred on the Court cannot be relegated to the Arbitrator. In absence of any finding on contentious issue, no amount of reasons can cure the defect in the award. (Para 21) I-Pay Clearing Services Pvt. Ltd. v. ICICI Bank Ltd. 2022 LiveLaw (SC) 2

Arbitration and Conciliation Act, 1996; Section 34(4) - Merely because an application is filed under Section 34(4) of the Act by a party, it is not always obligatory on the part of the Court to remit the matter to Arbitral Tribunal. The discretionary power conferred under Section 34(4) of the Act, is to be exercised where there is inadequate reasoning or to fill up the gaps in the reasoning, in support of the findings which are already recorded in the award. Under guise of additional reasons and filling up the gaps in the reasoning, no award can be remitted to the Arbitrator, where there are no findings on the contentious issues in the award. (Para 21) I-Pay Clearing Services Pvt. Ltd. v. ICICI Bank Ltd. 2022 LiveLaw (SC) 2

Arbitration and Conciliation Act, 1996; Section 34(4) - The discretion vested with the Court for remitting the matter to Arbitral Tribunal to give an opportunity to resume the proceedings or not. The words "where it is appropriate" itself indicate that it is the discretion to be exercised by the Court, to remit the matter when requested by a party. When application is filed under Section 34(4) of the Act, the same is to be considered keeping in mind the grounds raised in the application under Section 34(1) of the Act by the party, who has questioned the award of the Arbitral Tribunal and the grounds raised in the application filed under Section 34(4) of the Act and the reply thereto. (Para 21) I-Pay Clearing Services Pvt. Ltd. v. ICICI Bank Ltd. 2022 LiveLaw (SC) 2

Arbitration and Conciliation Act, 1996; Section 34, 37 - An award can be set aside only if the award is against the public policy of India. The award can be set aside under Sections 34/37 of the Arbitration Act, if the award is found to be contrary to, (a) fundamental policy of Indian Law; or (b) the interest of India; or (c) justice or morality; or (d) if it is patently illegal - High Court cannot enter into the merits of the claim in an appeal under Section 37. (Para 8) Haryana Tourism Ltd. v. Kandhari Beverages Ltd., 2022 LiveLaw (SC) 38

Arbitration and Conciliation Act, 1996; Section 34, 37 - Reference to wrong provision, as long as power exists would not matter. Premier Sea Foods v. Caravel Shipping Services, 2022 LiveLaw (SC) 54

Arbitration and Conciliation Act, 1996; Section 34, 37 - The jurisdiction conferred on Courts under Section 34 of the Arbitration Act is fairly narrow, when it comes to the scope of an appeal under Section 37 of the Arbitration Act, the jurisdiction of an Appellate Court in examining an order, setting aside or refusing to set aside an award, is all the more circumscribed - if there are two plausible interpretations of the terms and conditions of the contract, then no fault can be found, if the learned Arbitrator proceeds to accept one interpretation as against the other. (Para 15-21) UHL Power Company Ltd. v. State of Himachal Pradesh, 2022 LiveLaw (SC) 18

Arbitration and Conciliation Act, 1996; Section 37 - The High Court has no jurisdiction to remand the matter to the same Arbitrator unless it is consented by both the parties that the matter be remanded to the same Arbitrator -The High Court either may relegate the parties for fresh arbitration or to consider the appeal on merits on the basis of the material available on record within the scope and ambit of the jurisdiction under Section 37. (Para 3) Dr. A. Parthasarathy v. E Springs Avenues Pvt. Ltd; 2022 LiveLaw (SC) 199

Arbitration and Conciliation Act, 1996; Section 42 - The Section has obviously been enacted to prevent the parties from being dragged into proceedings in different Courts, when more than one Court has jurisdiction. Where with respect to any arbitration agreement, any application under Part I of the A&C Act has been made in a Court, that Court alone would have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement, and the arbitral proceedings, would have to be made in that Court and in no other Court, unless, of course, the Court in which the first application had been instituted, inherently lacked jurisdiction to entertain that application. The Section which starts with a non obstante clause, is binding irrespective of any other law for the time being in force, and irrespective of any other provision in Part I of the A&C Act. (Para 31) Ravi Ranjan Developers Pvt. Ltd. v. Aditya Kumar Chatterjee, 2022 LiveLaw (SC) 329

Arbitration and Conciliation Act, 1996; Section 42 and 11(6) - Section 42 cannot possibly have any application to an application under Section 11(6), which necessarily has to be made before a High Court, unless the earlier application was also made in a High Court. (Para 32) Ravi Ranjan Developers Pvt. Ltd. v. Aditya Kumar Chatterjee, 2022 LiveLaw (SC) 329