Judgment of Day-Arbitration

Can an application under Section 34 of the Arbitration & Conciliation Act, 1996 for setting aside an arbitral award be filed without filing the copy of the award, to save the period of limitation u/s 34(3)? – KGF Cottons Pvt. Ltd. Vs. Haldiram Snacks Pvt. Ltd. – Delhi High Court

The Hon’ble Delhi High Court held that a petition under Section 34 of the Arbitration & Conciliation Act is for setting aside the Award. It cannot be said that a challenge to an Award filed without the Award itself would be a valid filing. Without the Award, the challenge would become meaningless because unless the Award is perused by the Court, it cannot adjudicate upon the appropriateness and correctness of the Award. An application under Section 34 of the Act filed without an Award and admittedly without a vakalatmana can only be a stack of papers filed only to save the limitation.

Can an application under Section 34 of the Arbitration & Conciliation Act, 1996 for setting aside an arbitral award be filed without filing the copy of the award, to save the period of limitation u/s 34(3)? – KGF Cottons Pvt. Ltd. Vs. Haldiram Snacks Pvt. Ltd. – Delhi High Court Read Post »

When it comes to scope of an appeal under Section 37 of the Arbitration and Conciliation Act, 1996, jurisdiction of the Appellate Court in examining an order passed under Section 34, either setting aside or refusing to set aside an arbitral award, is all the more circumscribed – Somdatt Builders –NCC – NEC(JV) Vs. National Highways Authority of India and Ors. – Supreme Court

The Hon’ble Supreme Court held that:

(i) Division Bench of the High Court was not at all justified in setting aside the arbitral award exercising extremely limited jurisdiction under Section 37 of the 1996 Act by merely using expressions like ‘opposed to the public policy of India’, ‘patent illegality’ and ‘shocking the conscience of the court’.
(ii) It is necessary to remind the courts that a great deal of restraint is required to be shown while examining the validity of an arbitral award when such an award has been upheld, wholly or substantially, under Section 34 of the 1996 Act.
(iii) Frequent interference with arbitral awards would defeat the very purpose of the 1996 Act.
(iv) The court cannot undertake an independent assessment of the merits of the award and must only ascertain that the exercise of power by the court under Section 34 has not exceeded the scope of the provision.

When it comes to scope of an appeal under Section 37 of the Arbitration and Conciliation Act, 1996, jurisdiction of the Appellate Court in examining an order passed under Section 34, either setting aside or refusing to set aside an arbitral award, is all the more circumscribed – Somdatt Builders –NCC – NEC(JV) Vs. National Highways Authority of India and Ors. – Supreme Court Read Post »

Can the benefit of the condonable period, which expired during the Court’s vacation, be granted when the petition is filed immediately after the reopening of the Court, in exercise of the power under Section 4 of the Limitation Act, 1963? – My Preferred Transformation & Hospitality Pvt. Ltd. and Anr. Vs. Faridabad Implements Pvt. Ltd. – Supreme Court

The Hon’ble Supreme Court has held that in light of the current position of law, the Section 34 application preferred by the appellant is barred by limitation based on the following conclusions:
(i) There is no wholesale exclusion of Sections 4 to 24 of the Limitation Act when calculating the limitation period under Section 34(3) of the ACA.
(ii) Section 4 of the Limitation Act applies to Section 34(3) of the ACA only to the extent when the 3-month period expires on a court holiday. It does not aid the applicant when the 30-day condonable period expires on a court holiday.
(iii) In view of the applicability of Section 4 of the Limitation Act to Section 34 proceedings, Section 10 of the GCA does not apply and will not benefit the applicant when the 30- day condonable period expires on a court holiday.

Can the benefit of the condonable period, which expired during the Court’s vacation, be granted when the petition is filed immediately after the reopening of the Court, in exercise of the power under Section 4 of the Limitation Act, 1963? – My Preferred Transformation & Hospitality Pvt. Ltd. and Anr. Vs. Faridabad Implements Pvt. Ltd. – Supreme Court Read Post »

30 days time limit under Section 33 of Arbitration Act, 1996 for correction/ interpretation of arbitral award can be waived, if agreed upon by the parties and in that case, an arbitrator does not become functus officio | In the absence of agreement on interest, as per Sec. 31(7)(a), the sum awarded would mean the principal amount plus the interest awarded from the date of cause of action upto the date of the award, thereafter, as per Sec. 31(7)(b), the sum (principal plus interest) would carry interest @ 18% from the date of the award to the date of payment – North Delhi Municipal Corporation Vs. S.A. Builders Ltd. – Supreme Court

In this case, Hon’ble Supreme Court interpreted Section 31(7)(a) and Section 31(7)(b) and Section 33 of the Arbitration Act.

The Hon’ble Court held that:

(i) The clarification sought for and issued by Arbitrator would be covered by the expression unless another period of time has been agreed upon by the parties appearing in Section 33(1).
(ii) In the circumstances, contention of the appellant that the Arbitrator had become functus officio and therefore lacked jurisdiction to issue the clarification cannot be accepted and is thus rejected.
(iii) It is not the case of the appellant that the interest portion is covered by the contract agreement between the parties. In the absence thereof, Section 31(7)(a) as well as Section 31(7)(b) of the 1996 Act would have their full effect. The sum awarded would mean the principal amount plus the interest awarded from the date of cause of action upto the date of the award. Thereafter, as per Section 31(7)(b) of the 1996 Act, the sum (principal plus interest) would carry interest @ 18% from the date of the award to the date of payment. This would be consistent with the law laid down by this Court in Hyder Consulting (UK) Ltd. vs. Governor, State of Orissa (2017) ibclaw.in 248 SC.

30 days time limit under Section 33 of Arbitration Act, 1996 for correction/ interpretation of arbitral award can be waived, if agreed upon by the parties and in that case, an arbitrator does not become functus officio | In the absence of agreement on interest, as per Sec. 31(7)(a), the sum awarded would mean the principal amount plus the interest awarded from the date of cause of action upto the date of the award, thereafter, as per Sec. 31(7)(b), the sum (principal plus interest) would carry interest @ 18% from the date of the award to the date of payment – North Delhi Municipal Corporation Vs. S.A. Builders Ltd. – Supreme Court Read Post »

An application for extension under Section 29A(4) of Arbitration and Conciliation Act, 1996 can be filed either before or after the termination of the Tribunal’s mandate upon expiry of the statutory and extendable period | ‘Sufficient cause’ should be interpreted in the context of facilitating effective dispute resolution – Ajay Protech Pvt. Ltd. Vs. General Manager and Anr. – Supreme Court

The Hon’ble Supreme Court held that:

(i) Even if Section 29A(4) of the Arbitration Act provides for the termination of the Tribunal’s mandate on the expiry of the period, it recognises party autonomy to move an application before the Court for further extension. Thus, the termination of mandate under the provision is only conditional on the non-filing of an extension application, and cannot be taken to mean that the mandate cannot be extended once it expires.

(ii) The meaning of ‘sufficient cause’ for extending the time to make an award must take colour from the underlying purpose of the arbitration process. Therefore, ‘sufficient cause’ should be interpreted in the context of facilitating effective dispute resolution.

An application for extension under Section 29A(4) of Arbitration and Conciliation Act, 1996 can be filed either before or after the termination of the Tribunal’s mandate upon expiry of the statutory and extendable period | ‘Sufficient cause’ should be interpreted in the context of facilitating effective dispute resolution – Ajay Protech Pvt. Ltd. Vs. General Manager and Anr. – Supreme Court Read Post »

What are the requisites to be considered by the Court while deciding an application filed under section 45 of the Arbitration and Conciliation Act, 1996? – Balaji Steel Trade Vs. Fludor Benin S.A. and Ors. – Delhi High Court

Hon’ble Delhi High Court held that:

(i) Section 45 of the Arbitration Act, which is contained in Part II of the Arbitration Act, casts a statutory mandate on Courts to refer parties to an arbitration agreement to arbitration. The only limited exception carved in Section 45 is if the Court is of the prima facie opinion that the arbitration agreement is (a) null and void; or (b) in-operative; or (c) incapable of being performed. Unless such grounds are made out, the Court has no discretion but to refer the parties to arbitration.
(ii) Section 2(f) of the A&C act, which falls in part I, specifies that “this part shall apply to all arbitrations and to all proceedings relating thereto”. It can be determined that Section 5 is integral to Part II of the A&C Act.

What are the requisites to be considered by the Court while deciding an application filed under section 45 of the Arbitration and Conciliation Act, 1996? – Balaji Steel Trade Vs. Fludor Benin S.A. and Ors. – Delhi High Court Read Post »

Whether the appointment process under an arbitration agreement, which allows a party who has an interest in the dispute to unilaterally appoint a sole arbitrator or curate a panel of arbitrators and mandate that the other party select their arbitrator from the panel, is valid in law? – Central Organisation for Railway Electrification Vs. ECI SPIC SMO MCML (JV) A Joint Venture Company – Supreme Court

Conclusion:
a. The principle of equal treatment of parties applies at all stages of arbitration proceedings, including the stage of appointment of arbitrators;
b. The Arbitration Act does not prohibit PSUs from empanelling potential arbitrators. However, an arbitration clause cannot mandate the other party to select its arbitrator from the panel curated by PSUs;
c. A clause that allows one party to unilaterally appoint a sole arbitrator gives rise to justifiable doubts as to the independence and impartiality of the arbitrator. Further, such a unilateral clause is exclusive and hinders equal participation of the other party in the appointment process of arbitrators;
d. In the appointment of a three-member panel, mandating the other party to select its arbitrator from a curated panel of potential arbitrators is against the principle of equal treatment of parties. In this situation, there is no effective counterbalance because parties do not participate equally in the process of appointing arbitrators. The process of appointing arbitrators in CORE (supra) is unequal and prejudiced in favour of the Railways;
e. Unilateral appointment clauses in public-private contracts are violative of Article 14 of the Constitution;
f. The principle of express waiver contained under the proviso to Section 12(5) also applies to situations where the parties seek to waive the allegation of bias against an arbitrator appointed unilaterally by one of the parties. After the disputes have arisen, the parties can determine whether there is a necessity to waive the nemo judex rule; and
g. The law laid down in the present reference will apply prospectively to arbitrator appointments to be made after the date of this judgment. This direction applies to three-member tribunals

Whether the appointment process under an arbitration agreement, which allows a party who has an interest in the dispute to unilaterally appoint a sole arbitrator or curate a panel of arbitrators and mandate that the other party select their arbitrator from the panel, is valid in law? – Central Organisation for Railway Electrification Vs. ECI SPIC SMO MCML (JV) A Joint Venture Company – Supreme Court Read Post »

The Court must only conduct a limited enquiry for the purpose of examining whether Section 11(6) of Arbitration & Conciliation Act, 1996 application filed within the limitation period of three years or not, it would not be proper to enquiry whether the claims are time barred | Arbitral Tribunal may impose arbitration costs on petitioner if claims are time-barred – Aslam Ismail Khan Deshmukh Vs. Asap Fluids Pvt. Ltd. and Anr. – Supreme Court

Hon’ble Supreme Court held that while determining the issue of limitation in the exercise of powers under Section 11(6), the referral court must only conduct a limited enquiry for the purpose of examining whether the Section 11(6) application has been filed within the limitation period of three years or not. At this stage, it would not be proper for the referral court to indulge in an intricate evidentiary enquiry into the question of whether the claims raised by the petitioner are time barred. Such a determination must be left to the decision of the arbitrator.

The Court also held that the arbitral tribunal may direct that the costs of the arbitration shall be borne by the party which the Tribunal ultimately finds to have abused the process of law and caused unnecessary harassment to the other party to the arbitration.

The Court must only conduct a limited enquiry for the purpose of examining whether Section 11(6) of Arbitration & Conciliation Act, 1996 application filed within the limitation period of three years or not, it would not be proper to enquiry whether the claims are time barred | Arbitral Tribunal may impose arbitration costs on petitioner if claims are time-barred – Aslam Ismail Khan Deshmukh Vs. Asap Fluids Pvt. Ltd. and Anr. – Supreme Court Read Post »

Can Arbitrator change the venue of arbitration without the consent of all the parties? – Dhule Municipal Commissioner Vs. Borse Borthers Engineers and Contractors Pvt. Ltd. – Bombay High Court

In this important judgment, Hon’ble Bombay High Court referring various judgment held that even assuming that the venue is stipulated in the agreement, and the neutrality of venue comes in sharp focus on account of dominant position of one of the party at a particular venue i.e. if the arbitrator concludes that conducting the arbitration proceedings at the specified venue is detrimental to the arbitration process, he may shift the venue to an alternate conveniently located place. This exercise should be permitted as the arbitrator discharges quasi-judicial functions.

Can Arbitrator change the venue of arbitration without the consent of all the parties? – Dhule Municipal Commissioner Vs. Borse Borthers Engineers and Contractors Pvt. Ltd. – Bombay High Court Read Post »

The appellate power of Section 37 of the Arbitration and Conciliation Act, 1996 is limited within the domain of Section 34 of the Arbitration Act – Punjab State Civil Supplies Corporation Ltd. and Anr. Vs. Sanman Rice Mills and Ors. – Supreme Court

In this important judgment, Hon’ble Supreme Court explains the Scope of powers under Section 34 of the Arbitration and Conciliation Act, 1996, Scope of powers of the Appellate Court under Section 37 and other provisions.

The appellate power of Section 37 of the Arbitration and Conciliation Act, 1996 is limited within the domain of Section 34 of the Arbitration Act – Punjab State Civil Supplies Corporation Ltd. and Anr. Vs. Sanman Rice Mills and Ors. – Supreme Court Read Post »

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