Unveiling the Gavel’s Verdicts: July 2023 Commercial Judgments Update-Part 1

By Gunjan Chhabra

(Visit here to read more Case Briefs by Gunjan Chhabra)

Does the High Court always have jurisdiction to Extend Time Limit of Arbitration Proceedings?

 This issue arose in the case of Aatash Norcontrol Ltd. Vs. Gujarat Maritime Board (2023) ibclaw.in 399 HC (Gujarat High Court, Decided on 13.06.2023).

In this case the Petitioner had filed a Petition under Sections 29A(4) & 29A(5) of the Arbitration & Conciliation Act, 1996(“Act”) for extension of time limit of the arbitration proceedings which were pending between parties. The extension sought was for a period of 9 months.

The Court observed as follows:

1. Section 2(1)(e) read with section 29A of the Act makes it evident that the power to extend the time limit of arbitration lies with the Principal Civil Court having jurisdiction to entertain application for appointment of Arbitrator as Court of original jurisdiction. (Relied on State of West Bengal & Others Vs. Associated Contractors (2017) ibclaw.in 257 SC)
2. In this case the parties never approached the High Court under Section 11 of appointment of arbitrator as the arbitrator was appointed by consent. (Distinguished DDA Vs. Tara Chand Sumit Construction Co 2020 SCC Online Del 2501).
3. In other cases where the High Court/Supreme Court acted as Court under Section 29A application for appointment of arbitrator had been earlier made, owing to which they had become the Court of Principal Civil jurisdiction as per Section 2(1)(e) and had power to extend the time limit. But this was not true for the present case.
4. In view of the above, the High Court would not exercise its jurisdiction to extend time limit. 

In light of the same, the Petition was dismissed keeping it open for the Petitioner to approach the Principal Civil Court of original jurisdiction for extending the time limit of arbitration.

Can an Award be set aside on the Ground of Violation of a Statute?

In ARG Outlier Media Pvt. Ltd. Vs. HT Media Ltd. (2023) ibclaw.in 495 HC (Delhi High Court, decided on 04.07.2023), an arbitration Award was challenged under Section 34 of the Arbitration & Conciliation Act, 1996 (“A&C Act”).

The case revolved around a commercial agreement between both parties. The three main grounds on which the award was assailed were:

1. Insufficient stamping of the Arbitration Agreement.
2. Incorrect interpretation of the terms of the Agreement.
3. Absence of proof of damages awarded.

On these issues the Court observed as follows:

1. Even if one party had signed at Mumbai, once the Agreement stated it was executed at New Delhi, and it was admittedly duly stamped in accordance with stamp duty applicable in Delhi, the Agreement could not be said to be under stamped under the Maharashtra Stamp duty act.
2. Even assuming that the Arbitrator’s interpretation of law violated the Maharashtra Stamp Act, the jurisdiction of the Court was limited under Section 34. Even the contravention of a statute, if it was not liked to public policy or public interest, could not lead to setting aside of an award on ground of patent illegality. (Reliance placed on Ssangyong Engineering and Construction Company Limited v. National Highways Authority of India (NHAI),(2019) ibclaw.in 156 SC).
3. Regarding incorrect interpretation of the terms of Agreement, the Court reiterated the principle of limited jurisdiction of Court to interfere in a plausible interpretation given by the arbitrator. (Reliance placed on Delhi Airport Metro Express Pvt. Ltd. Vs. Delhi Metro Rail Corporation Ltd. (2022) ibclaw.in 68 SC.
4. Regarding Proof of damages, the Court held that the claim of the Respondent was not based on any breach of the Agreement but was based on a clause of the Agreement itself. The question of proof of damage was irrelevant.

In view of the above, the Petition was dismissed and award upheld.

Can an Award Passed on the basis of an Insufficiently Stamped Agreement, be set aside on this ground alone?

This issue was discussed as an Obiter Dicta in the case of In ARG Outlier Media Pvt. Ltd. Vs. HT Media Ltd. (2023) ibclaw.in 495 HC (Delhi High Court, decided on 04.07.2023), an arbitration Award was challenged under Section 34 of the Arbitration & Conciliation Act, 1996 (“A&C Act”).

The said conclusions were reached by Court on the basis of sections 36 and 61 of the Indian stamp Act and are reproduced below:

1. In terms of law, an improperly stamped agreement could not have been admitted in evidence ( Relied on N.N. Global Mercantile v Indo Unique Flame Ltd (2023) ibclaw.in 56 SC). However, once admitted in evidence by the Arbitrator, the award passed on the basis of such an agreement cannot be faulted on this ground.
2. The Court under Section 34 is not an Appellate Court & may not even have powers under Section 61 of the Indian Stamp Act.
3. Even if it is said that Section 61 is applicable, the Court could maximum impound the document & refer it to the collector of stamps for adjudication on stamp duty & penalty.
4. However, the same would not in any manner, affect the enforcement or validity of the Arbitral Award.

This conclusion drawn by the Court, although not directly applicable to the case, goes one step ahead discussing a scenario as to what happens if an insufficiently stamped agreement is admitted in evidence by an Arbitrator, albeit incorrectly, and an award is passed on that basis.

This Obiter is a reiteration of various judgments such as Javer Chand & Others v. Pukhraj Surana, (1962) 2 SCR 333, Shyamal Kumar Roy v. Sushil Kumar Agarwal, (2006) 11 SCC 331; Sirikonda Madhava Rao v. N. Hemalatha, SLP (C) No. 14882 & 14883/2022 (order dated 14.11.2022), SNG Developers Limited v. Vardhman Buildtech Private Limited, 2021:DHC:4100.

Can you use ChatGPT to prepare “original” content?

Recently, there have been a slew of law suits against OpenAI, the company who developed the popular language AI Model, #ChatGPT. Most of these cases revolve around copyright issues. Some of them are:

1. 𝐂𝐥𝐚𝐫𝐤𝐬𝐨𝐧 𝐋𝐚𝐰𝐬𝐮𝐢𝐭

• Filed on June 28, 2023 in Northern California Court by anonymous individuals.
• This Alleges that OpenAI violated privacy laws by using 300 billion words from the internet, including personal information, without consent. It accuses OpenAI of stealing “private information, including personally identifiable information, from hundreds of millions of internet users, including children of all ages, without their informed consent or knowledge.”
• Class action seeking $3 billion in damages.

2. 𝐒𝐚𝐯𝐞𝐫𝐢 𝐚𝐧𝐝 𝐁𝐮𝐭𝐭𝐞𝐫𝐢𝐜𝐤 𝐋𝐚𝐰 𝐬𝐮𝐢𝐭

• Complaint filed in November 2022 on behalf of open-source programmers as a class action lawsuit, which accuses OpenAI and its funder partner Microsoft of having ripped off coders in an effort to train GitHub Copilot- which is AI driven virtual assistant. 
• Again a Class action alleging copyright infringement and accusing OpenAI of profiting unfairly from open-source creators.

3. 𝐓𝐫𝐞𝐦𝐛𝐥𝐚𝐲 𝐚𝐧𝐝 𝐀𝐰𝐚𝐝 𝐋𝐚𝐰𝐬𝐮𝐢𝐭

• Lawsuit filed in July 2023 by two authors alleging that OpenAI has committed copyright infringement and violated Digital Millennium Copyright Act by using their books to train ChatGPT. 
• The novels allegedly used were Tremblay’s novel “The Cabin at the End of the World” and two of Awad’s novels: “13 Ways of Looking at a Fat Girl” and “Bunny”.
• Seeks unspecified damages.

All of these are still pending where openAI has specifically denied all allegations and claims. The fate of these is still to be seen.

One thing is for certain that these lawsuits will surely have a big impact on the Future of AI.

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