INTERNAL CIRCULATION ONLY ARBITRATION CASES

IMPORTANT LATEST JUDGMENTS

ARBITRATION

1. 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
the jurisdiction. (Para 45) Indian Oil Corporation Ltd. v. Shree Ganesh
Petroleum Rajgurunagar | 1 Feb 2022

2. 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 | 1 Feb 2022
3. 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 | 1 Feb 2022

4. 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.
| 4 Feb 2022 |
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5. 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; | 18 Feb 2022 |

6. High Court Cannot Enter Into Merits Of The Claim In An Appeal

Under Section 37 Arbitration Act: Supreme Court

Haryana Tourism Limited vs M/s Kandhari Beverages Limited

The Supreme Court observed that a High Court cannot enter into the merits of
the claim in an appeal under Section 37 of the Arbitration and Conciliation Act,
1996. In this case, the arbitrator directed a party to pay a sum of Rs. 9.5
lakhs.The other party filed objection petition before Additional District Judge,
Chandigarh under Section 34 of the Arbitration Act against the award passed
by the arbitrator. The said petition was dismissed. Thereafter, a further appeal
before the High Court under Section 37 of the Arbitration Act was filed. The
said appeal was allowed by the High Court which considered the merits of the
claim and has quashed and set aside the award passed by the arbitrator as
well as the order passed by Additional District Judge, Chandigarh.

7. Arbitrator Can Grant Post-Award Interest On The Interest Amount

Awarded: Supreme Court

UHL Power Company Ltd. v. State of Himachal Pradesh

The Supreme Court observed that post-award interest can be granted by an

Arbitrator on the interest amount awarded. In this case, in terms of the award
dated 05th June, 2005, the Sole Arbitrator had awarded a sum of
₹26,08,89,107.35 in favour of UHL Power Company Limited towards expenses
claimed along with pre-claim interest capitalized annually, on the expenses so
incurred. Further, compound interest was awarded in favour of UHL @ 9% per
annum till the date of claim and in the event the awarded amount is not
realized within a period of six months from the date of making the award,
future interest was awarded @ 18% per annum on the principal claim with
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interest. The court, however, agreed with the view expressed by the Appellate
Court that the Single Judge (while considering Section 34 petition to set aside
Arbitration Award) committed a gross error in re-appreciating the findings
returned by the Arbitral Tribunal and taking an entirely different view in
respect of the interpretation of the relevant clauses of the Implementation
Agreement governing the parties.

8. Arbitral Tribunal Constituted Before 2015 Amendment Cannot

Operate If It Violates Neutrality Mandate Under Section 12(5) :
Supreme Court

Ellora Paper Mills Limited v. State of Madhya Pradesh

The Supreme Court held that 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. The Court held that an arbitration clause that
prescribes appointment of arbitrators contrary to the amended provision of
Section 12(5) of the Arbitration and Conciliation Act cannot be given
effect. "...when the arbitration clause is found to be foul with the amended
provision, the appointment of the arbitrator would be beyond the pale of the
arbitration agreement, empowering the Court to appoint such an arbitrator as
may be permissible.That would be the effect of the non-obstante clause
contained in sub-section (5) of Section 12 and the other party cannot insist
upon the appointment of the arbitrator in terms of the arbitration agreement",

9. Arbitration - Party Without Notice Of Section 11(6) Petition filed By

Other Party Free To Appoint Arbitrator: Supreme Court

M/s. Durga Welding Works v. Chief Engineer, Railway Electrification,

Allahabad And Anr.

The Supreme Court has held that a party to the arbitration agreement can
appoint an arbitrator even after an Arbitration Petition under Section 11(6) of
the Arbitration and Conciliation Act, 1996 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. A bench comprising Justice Ajay Rastogi and
Justice Abhay S. Oka dismissed an appeal filed to assail the order the Orissa
High Court, which had dismissed an Arbitration Petition filed under Section
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11(6) of the Arbitration and Conciliation Act, 1996 ("Act") for the appointment
of an arbitrator, since the appellant himself had selected an arbitrator; filed its
statement of claim and the Arbitral Tribunal had passed ex-parte arbitral
award almost three years before the Respondents were put to notice of the
Arbitration Petition filed before the High Court.

10. Section 5 Limitation Act Cannot Be Invoked To Condone Delay

Beyond Period Prescribed U/Sec 34(3) Arbitration Act: Supreme
Court

Mahindra and Mahindra Financial Services Ltd. v. Maheshbhai Tinabhai

Rathod

The Supreme Court, in a judgment delivered last month (16th December 2021),
held that Section 5 of Limitation Act cannot be applied to condone the delay
beyond the period prescribed under Section 34(3) of Arbitration and
Conciliation Act, 1996. In this case, petition under Section 34 was filed before
the High Court with a delay of 185 days beyond the time period allowed under
Section 34 (3) of the Act. The singe judge refused to condone the delay. In
appeal, the Division Bench condoned it and directed to place it before Single
bench for admission. This order was assailed before the Supreme Court. "The
scope available for condonation of delay being self contained in the proviso to
Section 34(3) and Section 5 of Limitation Act not being applicable has been
taken note by this Court in its earlier decisions, which we may note.."

11. Not Always Obligatory To Remit Matter To Arbitration

Tribunal Merely Because A Party Filed Application U/s 34(4)
Arbitration Act: Supreme Court

Case Tile: I-Pay Clearing Services Private Limited v. ICICI Bank Limited-
The Supreme Court observed that merely because an application is filed under
Section 34(4) of the Arbitration and Conciliation Act by a party, it is not always
obligatory on the part of the Court to remit the matter to Arbitral
Tribunal. "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.", the bench comprising
Justices R. Subhash Reddy and Hrishikesh Roy observed. The court said that
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
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reasoning, in support of the findings which are already recorded in the award.
As per Section 34(4) of the Act, upon a request by a party, the Court may
adjourn the proceedings for a period determined by it in the order to give the
Arbitral Tribunal an opportunity to resume the arbitral proceedings or to take
such other action as in the opinion of Arbitral Tribunal, will eliminate the
grounds for setting aside the arbitral award.

12. High Court's Power Under Article 226/227 To Interfere With

Arbitration Process Needs To Be Exercised In Exceptional Rarity

The Supreme Court in Bhaven Construction v. Executive Engineer Sardar

Sarovar Narmada Nigam Ltd. has observed that the power of the High Courts
under Article 226/227 of the Constitution of India to interfere with an
arbitration process needs to be exercised in exceptional rarity, wherein one
party is left remediless under the statute or a clear 'bad faith' shown by one of
the parties."If the Courts are allowed to interfere with the arbitral process
beyond the ambit of the enactment, then the efficiency of the process will be
diminished," the bench comprising Justices NV Ramana, Surya
Kant and Hrishikesh Roy observed while setting aside a judgment of Gujarat
High Court allowing a writ petition challenging the jurisdiction of the sole
arbitrator.

13. Is Appointment Of Arbitrator By Ineligible Person Valid?

Supreme Court Refers Issue To Larger Bench

In Union of India v. M/S Tantia Constructions Ltd, a bench

comprising Justices RF Nariman, Navin Sinha and KM Joseph doubted the
correctness of the decision in Central Organisation for Railway
Electrification v. M/s ECI-SPIC-SMO-MCML (JV) A Joint Venture
Company and referred to larger bench the issue whether the appointment of
an arbitrator by a person, who is disqualified to be an arbitrator as per Section
12(5) of the Arbitration Act, is valid.

In the Central Organization of Railway Electrification, a division bench had

held that such appointments by an authority who is disqualified from being an
arbitrator can be valid depending on the facts. On the other hand, an earlier
decision delivered by a 2-judge bench headed by Justice Nariman in the case
Bharat Broadband Network Ltd v. United Telecoms Ltd (April 2019) had held
that the appointment of arbitrator by a person who himself is ineligible to be an
INTERNAL CIRCULATION ONLY ARBITRATION CASES
arbitrator as per Section 12(5) of the Arbitration and Conciliation Act 1996 is
void ab initio.

14. Section 12(5) Of Arbitration & Conciliation Act Which Deals

With Ineligibility Of Appointment As Arbitrator Is A Mandatory & Non-
Derogable Provision

In Haryana Space Application Centre v. Pan India Consultants Pvt. Ltd, the
bench of Justices L. Nageswara Rao, Indu Malhotra and Ajay
Rastogi observed that the Section 12(5) of the Arbitration and Conciliation Act
read with the Seventh Schedule, which deals with ineligibility of a person to be
appointed as an Arbitrator, is a mandatory and non-derogable provision of the
Act.

15. Refusal To Condone Delay For Appeal Under Section 34 Of

Arbitration Act Appealable Under Section 37

In Chintels India Ltd v. Bhayana Builders Pvt Ltd, bench of Justices RF

Nariman, Navin Sinha and KM Joseph held that an order refusing to condone
the delay in filing an appeal under Section 34 of the Arbitration and
Conciliation Act 1996 is appealable under Section 37 of the Act. It observed
that the expression "setting aside or refusing to set aside an arbitral award"
does not stand by itself. The expression has to be read with the expression that
follows-"under section 34".

16. Presence Of Arbitration Clause In Contract Between State

Instrumentality & Private Party Does Not Oust Writ Jurisdiction
Under Article 226

In UNITECH Limited v. Telangana State Industrial Infrastructure Corporation,

bench of Justices DY Chandrachud and MR Shah observed that presence of
an arbitration clause within a contract between a state instrumentality and a
private party is not an absolute bar to availing remedies under Article 226 of
the Constitution. It held that the State and its instrumentalities are not exempt
from the duty to act fairly merely because in their business dealings they have
entered into the realm of contract.

17. Proceedings Under Section 34 Of Arbitration Act Also Covered

By Moratorium Under Section 14 IBC
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The Supreme Court in P Mohanraj and others v M/s Shah Brothers Ispat
Ltd. observed that an application under Section 34 of the Arbitration and
Conciliation Act to set aside an award is covered by moratorium under Section
14 of the Insolvency and Bankruptcy Code."Section 34 proceeding is a
proceeding against the corporate debtor in a court of law pertaining to a
challenge to an arbitral award and would be covered just as an appellate
proceeding in a decree from a suit would be covered," the bench of Justices RF
Nariman, Navin Sinha and KM Joseph observed.

18. Limitation Period For Filing 'Section 34' Petition Commences

From Date Of Receipt Of Signed Copy Of Arbitral Award By Parties

In Dakshin Haryana Bijli Vitran Nigam Ltd. v. M/S Navigant Technologies Pvt.
Ltd, the Supreme Court bench Justices Indu Malhotra and Ajay
Rastogi observed that the period of limitation for filing the Petition under
Section 34 of the Arbitration and Conciliation Act would commence from the
date on which the signed copy of the award was made available to the parties.

19. Sole Proprietorship Will Fall Under International Commercial

Arbitration If Proprietor Is Foreign Resident

In Amway India v. Ravindranath Rao & Anr, bench of Justices RF

Nariman and BR Gavai held that a sole proprietorship will fall under
international commercial arbitration if the proprietor is a habitual resident of a
foreign country, notwithstanding the fact that the proprietary concern is
carrying out business in India. The Bench set aside an order of the Delhi High
Court appointing an arbitrator in the case Amway India v. Ravindranath Rao,
holding that the High Court had no jurisdiction as the dispute was an
international commercial arbitration within the meaning of Section 2(1)(f) of the
Arbitration and Conciliation Act.

20. Supreme Court Suggests Amendments To Sections 11(7), 37

To Bring Section 8 & 11 At Par On Appealability

In Pravin Electricals Pvt. Ltd. v. Galaxy Infra and Engineering Pvt. Ltd., bench
of Justices RF Nariman, BR Gavai and Hrishikesh Roy observed that the
amendments to Section 11(7) and 37 of the Arbitration and Conciliation Act,
1996 might be necessary so that the orders passed under Section 8 and 11 are
brought on par as far as appealability is concerned.
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21. Limitation Period For Filing 'Section 11' Application Seeking
Appointment Of Arbitrator Governed By Article 137 Limitation Act

In Bharat Sanchar Nigam Ltd. v. Nortel Networks India Pvt. Ltd., Supreme
Court observed that the period of limitation for filing an application under
Section 11 of the Arbitration and Conciliation Act would be governed by Article
137 of the First Schedule of the Limitation Act, and will begin to run from the
date when there is failure to appoint the arbitrator, the Supreme Court held.

In rare and exceptional cases, where the claims are ex facie time barred, and it
is manifest that there is no subsisting dispute, the Court may refuse to make
the reference, the bench comprising Justices Indu Malhotra and Ajay
Rastogi held.

The court also suggested amendment of Section 11 of the Act to provide a

period of limitation for filing an application under this provision, which is in
consonance with the object of expeditious disposal of arbitration proceedings.

22. Supreme Court Overrules 'NV International' Verdict Which

Held Delay Beyond 120 Days For Arbitration Appeal Under Section
37 Can't Be Condoned

In Government of Maharashtra v. Borse Brothers Engineers and Contractors

Pvt Ltd, a two-judge bench comprising Justices RF Nariman and S Ravindra
Bhat overruled its 2019 verdict in the case M/s NV International v. State of
Assam which had strictly held that a delay of more than 120 days in filing of
appeals under Section 37 of the Arbitration and Conciliation Act 1996 cannot
be condoned.

The Top Court has now held that delay beyond 90, 60 or 30 days for filing
appeals under Section 37, depending on the forum, can be condoned. But the
Court added a rider that such condonation of delay should be an exception and
not the norm, having regard to the objective of the Arbitration Act for
expeditious settlement of claims.

23. Arbitration Reference Not Maintainable If Filed After

Admission Of Insolvency Resolution Petition U/s 7 IBC

In Indus Biotech Private Limited v. Kotak India Venture (Offshore) Fund, the
Supreme Court bench headed by then CJI SA Bobde observed that in any
proceeding which is pending before the Adjudicating Authority under Section 7
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of Insolvency and Bankruptcy Code, if such petition is admitted upon the
Adjudicating Authority recording the satisfaction with regard to the default and
the debt being due from the corporate debtor, any application seeking reference
to arbitration under Section 8 of the Arbitration and Conciliation Act made
thereafter will not be maintainable.

24. High Court Under Article 226 Should Not Entertain A Dispute
Which Is Arbitrable Unless There Is An Issue Of Public Interest

In Rapid MetroRail Gurgaon Limited v. Haryana Mass Rapid Transport

Corporation, a bench comprising Justices DY Chandrachud, MR
Shah and Sanjiv Khanna observed that ordinarily a High Court in its
jurisdiction under Article 226 of the Constitution has to decline to entertain a
dispute which is arbitrable, unless there is a fundamental issue of public
interest. In this case the High Court had entertained the writ petition even
though there was an arbitration clause between the parties. In appeal, the
Apex Court noted that the High Court was concerned over a fundamental issue
of public interest, which was the hardship that would be caused to commuters
who use the rapid metro as a vehicle for mass transport in Gurgaon.

25. Question Of Novation Of Contract Cannot Be Considered In A

Petition Under Section 11 Arbitration Act

In Sanjiv Prakash v. Seema Kukreja, bench comprising Justices RF Nariman,

BR Gavai and Hrishikesh Roy observed that the question of novation of
contract containing an arbitration clause cannot be considered by the Court in
a petition filed under Section 11 of the Arbitration and Conciliation Act. The
court said that a Section 11 court would refer the matter when contentions
relating to non-arbitrability are plainly arguable, or when facts are contested.
The court cannot, at this stage, enter into a mini trial or elaborate review of the
facts and law which would usurp the jurisdiction of the arbitral tribunal.

26. High Court Under Article 226 And 227 Should Be Extremely
Circumspect In Interfering With Orders Passed Under Arbitration
Act

In Navayuga Engineering Company v. Bangalore Metro Rail Corporation

Limited, bench comprising Justices RF Nariman and BR Gavai reiterated that
a High Court while exercising jurisdiction under Article 226 and 227 should be
extremely circumspect in interfering with orders passed under the Arbitration
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and Conciliation Act. The bench held that such interference can be made only
in cases of exceptional rarity or cases which are stated to be patently lacking in
inherent jurisdiction.

27. Indian Parties Can Choose A Foreign Seat For Arbitration

In PASL Wind Solutions Private Limited v. GE Power Conversion India Pvt.

Ltd, three-judge bench comprising Justices Rohinton Fali Nariman, BR
Gavai and Hrishikesh Roy held that parties to a contract who are Indian
nationals or Companies incorporated in India can choose a forum for
arbitration outside India.

"Nothing stands in the way of party autonomy in designating a seat of

arbitration outside India even when both parties happen to be Indian
nationals," it observed.

"Freedom of contract needs to be balanced with clear and undeniable harm to

the public, even if the facts of a particular case do not fall within the
crystallised principles enumerated in well-established 'heads' of public policy.
The question that then arises is whether there is anything in the public policy
of India, as so understood, which interdicts the party autonomy of two Indian
persons referring their disputes to arbitration at a neutral forum outside
India," the Court said.

28. Existence Of Arbitration Clause Does Not Debar Court From

Entertaining A Writ Petition In Contractual Matter

In Uttar Pradesh Power Transmission Corporation Ltd. v. CG Power And

Industrial Solutions Limited, the Supreme Court bench of Justices Uday
Umesh Lalit and Indira Banerjee observed that the existence of an arbitration
clause does not debar the court from entertaining a writ petition. It reiterated
that relief under Article 226 of the Constitution of India may be granted in a
case arising out of contract.

"It is well settled that availability of an alternative remedy does not prohibit the
High Court from entertaining a writ petition in an appropriate case. The High
Court may entertain a writ petition, notwithstanding the availability of an
alternative remedy, particularly (1) where the writ petition seeks enforcement of
a fundamental right; (ii) where there is failure of principles of natural justice or
(iii) where the impugned orders or proceedings are wholly without jurisdiction
or (iv) the vires of an Act is under challenge," the Court held.
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29. Limitation Act Provisions Will Apply To Arbitration
Proceedings Initiated Under Section 18(3) MSMED Act

In M/s. Silpi Industries v. Kerala State Road Transport Corporation, bench

comprising Justices Ashok Bhushan and R. Subhash Reddy held that the
provisions of the Limitation Act will apply to arbitration proceedings initiated
under Section 18(3) of Micro, Small and Medium Enterprises Development Act,
2006 (MSMED Act). It also observed that counterclaim is maintainable before
the statutory authorities under MSMED Act.

30. Section 34 Arbitration Act Gives No Power To Modify Arbitral

Award; Appellate Court Can Only Set Aside Or Remand

In Project Director, National Highways vs. M. Hakeem the Supreme Court held
that a court, under Section 34 of the Arbitration and Conciliation Act, cannot
modify an award.

"If one were to include the power to modify an award in Section 34, one would
be crossing the Lakshman Rekha," Justices RF Nariman and BR
Gavai observed.

31. Arbitration Award Which Ignores Vital Evidence Or Rewrites

The Contract Is Liable To Be Set Aside

In PSA Sical Terminals Pvt. Ltd. v. Board Of Trustees Of V.O. Chidambranar

Port Trust Tuticorin, the Supreme Court observed that an arbitration award
which ignores vital evidence in arriving at its decision or rewrites a contract is
liable to be set aside under Section 34 of the Arbitration and Conciliation Act
on the ground of patent illegality.

The Bench comprising Justices RF Nariman and BR Gavai observed that a

finding based on no evidence at all or an award which ignores vital evidence in
arriving at its decision would be perverse. Rewriting a contract for the parties
would be breach of fundamental principles of justice, the court remarked.

32. Emergency Arbitration Award Enforceable In Indian Law:

Supreme Court Rules In Favour Of Amazon In Case Against Future
Retail

In Amazon.com NV Investment Holdings LLC v. Future Retail Limited, the

Supreme Court had ruled in favour of e-commerce giant Amazon in its dispute
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with Future Retail Limited(FRL) over the latter's merger deal with Reliance
group. The top court held that that Emergency Award passed by Singapore
arbitrator stalling FRL-Reliance deal is enforceable in Indian law. "It is wholly
incorrect to say that Section 17(1) of the Act would exclude an Emergency
Arbitrator's orders", the Court said in the judgment.

A Bench comprising Justices RF Nariman and BR Gavai opined, "We declare

that full party autonomy is given by the Arbitration Act to have a dispute
decided in accordance with institutional rules which can include Emergency
Arbitrators delivering interim orders, described as "awards". Such orders are an
important step in aid of decongesting the civil courts and affording expeditious
interim relief to the parties. Such orders are referable to and are made under
Section 17(1) of the Arbitration Act."

33. 'Perversity' Or 'Patent Illegality' Not Grounds To Refuse

Enforcement Of Foreign Arbitration Award

In Gemini Bay Transcription Pvt. Ltd. v. Integrated Sales Service Ltd, the
Supreme Court has observed that perversity of an award is not a ground to
refuse enforcement of a foreign award under Section 48 of the Arbitration and
Conciliation Act, after the 2015 amendment.

The Court held that the ground of "patent illegality" is only available to set
aside domestic arbitration awards made under Part 1 of the Arbitration and
Conciliation Act and will not apply to international commercial awards.

"The ground of "patent illegality appearing on the face of the award" is an

independent ground of challenge which applies only to awards made under
Part I which do not involve international commercial arbitrations," the bench
comprising Justices RF Nariman and BR Gavai observed.

34. Bar U/s 9(3) Arbitration Act Not Applicable If Application Was
Taken Up By Court Before Constitution Of Arbitration Tribunal

In Arcelor Mittal Nippon Steel India Ltd v. Essar Bulk Terminal Ltd, the
Supreme Court has observed that the bar under Section 9(3) of the Arbitration
and Conciliation Act operates only when the application under Section 9(1) had
not been entertained till the constitution of the Arbitral Tribunal.

"Once an Arbitral Tribunal is constituted the Court cannot take up an

application under Section 9 for consideration, unless the remedy under Section
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17 is inefficacious. However, once an application is entertained in the sense it
is taken up for consideration, and the Court has applied its mind to the Court
can certainly proceed to adjudicate the application", the bench
comprising Justices Indira Banerjee and JK Maheshwari observed.

35. Chairman Of Company In Arbitration Ineligible To Be

Arbitrator; Disqualification Conditions Have To Be Read As A Whole

The Supreme Court in Jaipur Zila Dugdh Utpadak Sahkari Sangh Limited vs.
M/s Ajay Sales & Suppliers observed that non-independence and non-
impartiality of an arbitrator would make him ineligible to conduct arbitration.

The bench of Justices MR Shah and Aniruddha Bose observed that the
ineligibility of an arbitrator can be removed only by an 'express agreement'.

The issue to be considered was whether the Chairman who is an elected

member of the petitioner Sahkari Sangh can be said to be 'ineligible' under Sub-
section (5) of Section 12 read with Seventh Schedule to the Act or not? The
Sangh's contention was that, in the Seventh Schedule to the Act 'Chairman' is
not mentioned and only Manager, Director or part of the Management can be
said to be ineligible.

Rejecting the said contention, the bench observed that the Chairman of the
Sangh can certainly be held to be 'ineligible' to continue as an arbitrator.
Referring to Voestalpine Schienen GMBH vs. Delhi Metro Rail Corporation
Limited, (2017) 4 SCC 665, the court said, "Sub-section (5) of Section 12 read
with Seventh Schedule has been inserted bearing in mind the 'impartiality and
independence' of the arbitrators. It has been inserted with the purpose of
'neutrality of arbitrators'. Independence and impartiality of the arbitrators are
the hallmarks of any arbitration proceedings as observed in the case
of Voestalpine Schienen (Supra). Rule against bias is one of the fundamental
principles of natural justice which apply to all judicial proceedings and quasi-
judicial proceedings and it is for this reason that despite the contractually
agreed upon, the persons mentioned in Subsection (5) of Section 12 read with
Seventh Schedule to the Act would render himself ineligible to conduct."

36. Arbitration Reference Can Be Declined If Dispute In Question

Does Not Correlate To Arbitration Agreement

In DLF Home Developers Limited vs. Rajapura Homes Private Limited, the
Supreme Court observed that prayer for reference to Arbitration under Section
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11 of the Arbitration and Conciliation Act can be declined if the dispute in
question does not correlate to the arbitration agreement.

The bench of Chief Justice of India NV Ramana and Justice Surya

Kant observed that it is not expected to act mechanically merely to deliver a
purported dispute raised by an applicant at the doors of the chosen Arbitrator.

37. Retirement Will Not Terminate Mandate Of Dept Officer

Appointed As Sole Arbitrator : Supreme Court Restores 1998 Award

In M/s Laxmi Continental Construction Co v. State of UP, while deciding an

appeal arising out of the Arbitration Act 1940, the Supreme Court has held
that a department officer, who was appointed as the arbitrator, can continue to
preside over the arbitration proceedings even after his retirement.

A bench comprising Justices MR Shah and AS Bopanna was considering the

question "whether once an officer of the department is appointed as an
Arbitrator considering the arbitration clause, whether his mandate to continue
the arbitration proceedings shall come to an end on his retirement?".

38. Arbitrator Cannot Grant Pendente Lite Interest If Contract

Contains A Specific Clause Expressly Barring Payment Of Interest

In Garg Builders v. Bharat Heavy Electricals Limited, the Supreme Court

observed that an arbitrator cannot grant pendente lite interest if the contract
contains a specific clause which expressly bars payment of interest. Such a
contractual clause will not be a violation of Section 28 of the Indian Contract
Act, 1872, the bench of Justices S. Abdul Nazeer and Krishna
Murari observed.

The court said that the Arbitration and Conciliation Act, 1996, categorically
restricts the power of an arbitrator to award preference and pendente lite
interest when the parties themselves have agreed to the contrary.

39. Pre-Deposit Of 75% Of Awarded Amount U/s 19 MSMED Act

Mandatory While Preferring Application To Set Aside Arbitration
Award

In Gujarat State Disaster Management Authority v. Aska Equipments Limited,

the Supreme Court observed that the requirement under Section 19 of the
Micro, Small and Medium Enterprises Development Act of deposit of 75% of the
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awarded amount as a pre deposit while preferring the application/appeal for
setting aside the award, is mandatory.

The bench comprising of Justices MR Shah and AS Bopanna observed, 'On a

plain/fair reading of Section 19 of the MSME Act, 2006, reproduced
hereinabove, at the time/before entertaining the application for setting aside
the award made under Section 34 of the Arbitration & Conciliation Act, the
applicant/appellant has to deposit 75% of the amount in terms of the award as
a pre-deposit. The requirement of a deposit of 75% of the amount in terms of
the award as a pre-deposit is mandatory. However, at the same time,
considering the hardship which may be projected before the appellate court
and if the appellate court is satisfied that there shall be undue hardship
caused to the appellant/applicant to deposit 75% of the awarded amount as a
pre deposit at a time, the court may allow the pre-deposit to be made in
installments."

40. Arbitrator Has Substantial Discretion In Awarding Interest

U/Sec 31 (7) (a) Arbitration Act

In Punjab State Civil Supplies Corporation Limited (Punsup) v. Ganpati Rice

Mills, the Supreme Court observed that an Arbitrator has substantial
discretion in awarding interest under Section 31(7)(c) of the Arbitration and
Conciliation Act, 1996. In this case, the Arbitrator had granted interest at the
rate of 18% per annum from 01.01.2003 till the date of realization. Disposing
the petition under Section 34 of the Arbitration and Conciliation Act, 1996
(Arbitration Act), the rate of interest was reduced by the District Court to 12%
per annum. In an Arbitration appeal, the High Court further reduced the rate
of interest to 9% per annum.

In appeal, the bench of Justices Sanjiv Khanna and Bela M.

Trivedi noted "Per contra, Section 31 (7) of the Arbitration Act, 1996 grants
substantial discretion to the arbitrator in awarding interest. No reason and
grounds have been given to reduce the rate of interest."

41. Party Not Barred From Raising New Grounds To Set Aside
Award In An Sec 37 Appeal

In State of Chhattisgarh v. Sal Udyog Private Limited, the Supreme Court has
observed that a party is not barred from raising an additional ground for
setting aside an arbitration award in arbitration appeal under Section 37 of the
INTERNAL CIRCULATION ONLY ARBITRATION CASES
Arbitration Conciliation Act,1996, merely because the said ground was not
raised in the petition under Section 34 to set aside the Arbitration award.

A Bench comprising CJI NV Ramana, Justices Surya Kant and Hima

Kohli observed, "We are afraid, the plea of waiver taken against the appellant-
State on the ground that it did not raise such an objection in the grounds spelt
out in the Section 34 petition and is, therefore, estopped from taking the same
in the appeal preferred under Section 37 or before this Court, would also not
be available to the respondent-Company having regard to the language used in
Section 34(2A) of the 1996 Act that empowers the Court to set aside an award
if it finds that the same is vitiated by patent illegality appearing on the face of
the same."

42. 2015 Amendment Won't Apply To Section 34 Applications

Filed Prior To It

The Supreme Court in Ratnam Sudesh Iyer v Jackie Kakubhai Shroff has held
that the 2015 amendment to Section 34 of the Arbitration and Conciliation Act
1996 will apply only to Section 34 applications that have been made after the
date of the amendment.

"Section 34 as amended will apply only to Section 34 applications that have

been made to the Court on or after 23.10.2015, irrespective of the fact that the
arbitration proceedings may have commenced prior to that," bench of Justices
SK Kaul and MM Sundresh observed.

43. Arbitrator Cannot Modify Award On An Application Under

Section 33 Arbitration Act

In Gyan Prakash Arya vs Titan Industries Limited, Supreme Court observed

that an Arbitrator cannot modify an Arbitration award on an application filed
under Section 33 of the Arbitration and Conciliation Act.

Only in a case of arithmetical and/or clerical error, the award can be modified
and such errors only can be corrected, the bench comprising Justices MR
Shah and BV Nagarathna said.

44. If Conciliation Not Successful, Arbitration Proceedings Must

Be Resorted To
INTERNAL CIRCULATION ONLY ARBITRATION CASES
In Jharkhand Urja Vikas Nigam Limited v. The State of Rajasthan & Ors., the
Supreme Court bench of Justice Indira Banerjee and Justice Subhash
Reddy, while dealing with a matter pertaining to delayed payment of dues by
Jharkhand electricity board to a Conductors supplier held that Section18 of
The Micro Small and Medium Enterprise Development Act 2006 [MSMED Act]
and noted that "Under S. 18(3), when conciliation fails and stands terminated,
the dispute between the parties can be resolved by arbitration. The council is
empowered either to take up arbitration on its own or to refer the arbitration
proceedings to any institution as specified in the said section."

45. Section 2

Whether an ‘Emergency Arbitrator’ is an arbitrator within the meaning of

Section 2(1)(d) of the Arbitration & Conciliation Act?

Amazon.Com NV Investment Holdings LLC v. Future Coupons Private

Limited & Ors

The Court held that the concept of emergency arbitrator is based upon party
autonomy as the law gives complete freedom to the parties to choose an
arbitrator or an arbitral institution. Further, the emergency arbitrator is an
arbitrator for all purposes. The order of the emergency arbitrator is binding
upon the parties but not on the subsequently constituted arbitral tribunal
which has the power to reconsider, modify, terminate or annul the order/award
of the emergency arbitrator. Lastly, it was held that the order passed by the
emergency arbitrator is an order under Section 17(1) and enforceable as an
order of the Court under Section 17(2) of the Act.

46. Section 8

Whether an arbitration agreement would be unenforceable if the

underlying contract was not stamped?

M/S NN Global Mercantile Pvt Ltd v. M/S Indo Unique Flame Ltd &
Others

The Supreme Court held that the arbitration agreement is an independent

agreement between the parties, and is not chargeable to payment of stamp
duty. The non-payment of stamp duty on the commercial contract would not
invalidate the arbitration clause since it has an independent existence of its
own. Further, the Court observed that the finding in SMS Tea
Estates and Garware that the non-payment of stamp duty on the commercial
INTERNAL CIRCULATION ONLY ARBITRATION CASES
contract would invalidate even the arbitration agreement, is not the correct
position in law, and referred the issue to a larger bench.

47. What is the scope of Court’s jurisdiction while examining an

application under Section 8 of the Act?

Hero Electric Vehicles Private Limited & Anr V Lectro E-Mobility Private
Limited & Anr -The Court held that while dealing with cases under Section 8
of the Act, the Court has to make sure that it is exercising the very same
jurisdiction which the arbitral tribunal is empowered to exercise while
determining the aspect of arbitrability of the dispute, or the existence of a valid
arbitration agreement.

48. Whether any application filed under Section 8 of the

Arbitration Act, 1996 will be maintainable if a petition under
Section 7 of the Insolvency & Bankruptcy Code is pending?

Indus Biotech Private Limited v. Kotak India Venture (Offshore) Fund &
Ors-The Supreme Court held that if a petition under Section 7 of IBC is
admitted, any application u/s 8 of the Arbitration Act made thereafter, will not
be maintainable. However, if petition u/s 7 of IBC is yet to be admitted and, if
an application under Section 8 of the Act is filed, the adjudicating authority
must first decide the application u/s 7 of the IBC by recording a satisfaction as
to whether there is default or not, even if the application under Section 8 of Act
is kept along for consideration.

49. Section 9

Whether two Indian parties can choose a foreign seat of arbitration?

PASL Wind Solutions Private Limited V GE Power Conversion India Private

Limited-The Supreme Court held that the parties to an arbitration agreement
have the autonomy to decide not only on the procedural law to be followed but
also the substantive law. Therefore, two Indian parties can choose a foreign
seat of arbitration.

50. Whether the Division Bench can dispose of in entirety the

proceedings under Section 9 of the Act which were pending before
the Single Judge?
INTERNAL CIRCULATION ONLY ARBITRATION CASES
Panipat Jalandhar NH-1 Tollway Pvt Ltd vs National Highways Authority
of India -The Supreme Court held that it was inappropriate for the Division
Bench to dispose of an application under Section 9 which was pending before
the Single Judge. The application u/s 9 of the Act was restored to enable the
applicant place his submissions before the Single Judge.

51. Section 11

Whether the dispute relating to novation of Contract is required to be

examined by the Arbitral Tribunal or by the Court u/s 11?

SPML Infra Ltd v. NTPC Limite-The Court held that once it is established that
the parties had entered into an arbitration agreement, the courts must relegate
the parties to arbitration to adjudicate the dispute.

52. Whether a party can be compelled to arbitrate even though it

is not a signatory to the contract?

Shapoorji Pallonji and Co Pvt Ltd v. Rattan India Power Ltd & Anr-The
Delhi High Court held that a non-signatory being directly involved in the
contract can be compelled to arbitrate.

53. Whether the scope of Section 11 is confined to the

examination of the existence of an arbitration agreement?

Pravin Electricals Pvt Ltd v. Galaxy Infra And Engineering Pvt Ltd -The
Supreme Court observed that Section 11 proceedings are preliminary and
summary and not a mini trial. Relying on Vidya Drolia v. Durga Trading
Corporation, the Court held that when it appears that prima facie review would
be inconclusive and requires detailed examination, the matter should be left for
final determination by the arbitral tribunal. Further, the expression “existence
of an arbitration agreement” in Section 11 of the Act would include aspect of
validity of an arbitration agreement.

54. What is the scope of powers of the Court under Section 11 of

the Arbitration Act, 1996?

Sanjiv Prakash v. Seema Kukreja And Ors -The Supreme Court held that the
court at Section 11 stage cannot enter into a mini trial or elaborate review of
the facts and law which would usurp the jurisdiction of the arbitral tribunal.
INTERNAL CIRCULATION ONLY ARBITRATION CASES
55. Section 12-Whether the decision in the case of Perkins
Eastman Architects DPC & Anr. v. HSCC (India) Limited ought to be
read in a restrictive manner?

City Lifeline Travels Private Limited v. Delhi Jal Board -The Court held that
the efficacy of arbitration as an alternate dispute resolution mechanism rests
on the foundation that the disputes would be adjudicated by independent and
impartial arbitrators. Therefore, the decision in Perkins Eastman Architects
DPC & Anr. v. HSCC (India) must be read in an expansive manner, not in a
restrictive way.

56. Section 16-Whether a jurisdictional objection u/s 16 of the

Act can be decided ‘while passing the award'?

Surender Kumar Singhal & Ors v. Arun Kumar Bhalotia & Ors-The Delhi
High Court observed that an arbitral tribunal ought to decide the objection u/s
16 of the Act as a preliminary issue, as soon as possible. It was held that the
question of jurisdiction would have to be adjudicated first, prior to the passing
of the final award.

57. Whether Rule 20 of the Delhi International Arbitration Centre

(Arbitration Proceedings) Rules, 2018 can be equated with Section
16 of the Arbitration and Conciliation Act, 1996?

Jeph Bev Private Limited & Ors v. Delhi International Arbitration Centre
& Ors -The Delhi High Court held that Rule 20 of the Delhi International
Arbitration Centre cannot be equated to Section 16 of the Act. The said Rule
deals with competence of the DIAC to administer and not of the competence of
the arbitral tribunal to adjudicate.

58. Section 20- Whether there is concurrent jurisdiction of two

courts u/s 2(1)(e) of the Act, namely, the court where the cause of
action accrues and the court of the seat of arbitration?

Aniket SA Investments LLC v. Janapriya Engineers Syndicate Private

Limited and Ors-Relying on BGS SGS Soma v. NHPC, the Court held that
there is no concurrent jurisdiction of two courts under Section 2(1)(e) of the
Act. Further, it was held that paragraph 96 of BALCO and the judgment
in Swastik Gases would have no application in a situation where the parties
have chosen a seat of arbitration. A choice of seat is an expression of party
autonomy and carries with it the effect of conferring exclusive jurisdiction on
the courts of the seat.
INTERNAL CIRCULATION ONLY ARBITRATION CASES
59. Whether the seat of arbitration can be changed by mutual
consent of the parties?

M/S Inox Renewables Ltd v. Jayesh Electricals Ltd -The Court held that
once the seat of arbitration is replaced by mutual agreement of the parties, the
courts at the new seat shall be vested with exclusive jurisdiction.

60. What is the period of limitation under Section 23(4) and 29(A)
of the Arbitration and Conciliation Act,1996?

In Re: Cognizance For Extension Of Limitation -The Supreme Court held

that the period from March 15, 2020 to March 14, 2021 shall be excluded in
computing the limitation period prescribed under Section 23(4) and 29(A) of the
Arbitration and Conciliation Act,1996.

61. Section 34-Whether a new arbitrator could be appointed after

the award is set aside u/s 34?

Jagdish Kishinchand Valecha v. Srei Equipment Finance Ltd-The Calcutta

High Court observed that the Arbitration Act, 1996 ensures party autonomy at
all levels and the freedom of the parties to decide on the next course of action
must therefore be preserved. Accordingly, after setting aside the award, the
Court appointed a new arbitrator with the consent of the parties to decide the
disputes afresh.

62. What will be the relevant date for determining the foreign
exchange rate applicable to an arbitral award?

Voith Hydro Ltda & Ors v. Ntpc Limited -The Court held that the date on
which the challenge to the arbitral award is finally rejected would be the date
for determining the foreign exchange applicable to an award made in foreign
currency.

63. Whether a court can interfere in an arbitral award on the

ground that the tribunal erred in evaluating the evidence led by the
parties?

Megha Enterprises And Ors v. Haldiram Snacks Pvt Ltd-The Court held that
it cannot interfere with the arbitral award merely on the ground that it does not
concur with the inference drawn by the arbitral tribunal from the evidence led
by the parties. Also, the court u/s 34 cannot re appreciate evidence.
INTERNAL CIRCULATION ONLY ARBITRATION CASES
64. Section 36-Whether it is mandatory to pay stamp duty at the
time of passing of the award?

Mohini Electricals Ltd v. Delhi Jal Board -The Delhi High Court held that the
arbitrator has no statutory power to direct that the stamp duty be paid within
a specific period. Further, there is no obligation to pay stamp duty at the time
of signing or pronouncement of the award.

65. Whether the delay in filing an appeal u/s 37 of the Act can be
condoned?

Government of Maharashtra (Water Resources Department) v. M/S Borse

Brothers Engineers & Contractors Pvt Ltd

The Supreme Court observed that delay in filing an appeal u/s 37 of the Act of
1996 can be condoned only in exceptional cases where a party has acted bona
fide and not in a negligent manner.

66. Section 7-Whether an arbitration clause that allows the

arbitration proceeding to be abandoned at the will of one party
would be valid in law?
Tata Capital Finance limited v. Shri chand const. and Apartments
pvt. Ptd. 2021

The High Court of Delhi held that an arbitration agreement that confers
unequal power on one party to unilaterally abandon the arbitration
proceedings, would be invalid in law, as such an agreement would lack
‘mutuality’, which is an essential feature of an arbitration agreement. The court
further held that an arbitration agreement which provides for arbitration of the
claims of one party and providing for a remedy of court or any other for a for
the claim of the other party would also be invalid in law as the same would not
only result in splitting of the claims and cause of action but also in the
multiplicity of proceedings and conflicting decisions on the same cause of
action.

67. Section 8-Whether a party can file a writ petition against an

order referring the parties to arbitration under Section 8 of the Act?

Arun Srivastava v. M/S Larsen & Toubro Ltd. The High Court of Delhi held
that a petition under Article 227 would not be maintainable against an order
referring the parties to arbitration under Section 8. The court observed that no
provision for appeal against an order allowing Section 8 application is there in
the act, therefore, the legislative intent is clear in terms that if there is a valid
INTERNAL CIRCULATION ONLY ARBITRATION CASES
arbitration agreement, the court must refer the parties to arbitration and all
the issues related to existence and validity of the arbitration agreement must
be raised before the tribunal.

68. What is the meaning that is to be ascribed to the term

“constitution of the tribunal.”?

Quippo Infrastructure Ltd. v. A2z Infraservices Ltd.

The Calcutta High Court held that the constitution of the tribunal has to be
given a wider interpretation so as to include assumption of jurisdiction by the
arbitral tribunal after the arbitral proceedings have commenced in terms of
Section 21 of the Arbitration Act, 1996.

69. Whether the court can determine the substantial issues while
dealing with an application under Section 9 of the Act?

DLF Ltd. v. Leighton India Contractors Pvt. Ltd. - The High Court of Delhi
held the scope of Section 9 of the Act is to merely preserve the subject matter of
dispute till the arbitral tribunal is constituted and the same cannot be
extended to directing specific performance of the contract itself. The
Substantive questions and issues relating to illegality of action, entitlement,
liability, damages, etc. have to be left for the Tribunal to adjudicate upon.

70. Section 11-Whether the right of a party to appoint an

arbitrator gets forfeited in case it fails to appoint an arbitrator prior
to the filing of the petition u/s 11 of the Act?

Patil Rail Infrastructure Pvt. Ltd v. Ministry Of Railway -Relying on Datar

Switchgears v. Tata Finance Ltd., the Delhi High Court held that a party
forfeits its right to make an appointment once the petition under section 11 is
filed. Further, it held that the party cannot unilaterally make an appointment
in view of the law laid down in Perkins Eastman.

71. Whether the right of a party to invoke arbitration can be

restricted to a lesser period than provided under the limitation act?

Sagar Constructions v. Govt. (NCT) of Delhi The High Court of Delhi held
that a party cannot restrict the right of the other party to invoke arbitration to
a lesser period than provided under the Arbitration Act. It held that the right of
the party to invoke arbitration would be three years from the date when cause
of action arises, the parties cannot circumscribe it to a lesser period through
an agreement. The court relied on the judgment of the Supreme Court
INTERNAL CIRCULATION ONLY ARBITRATION CASES
in National Insurance Co. v. Sujir Ganesh Nayak to hold that an agreement
that restrict the period of limitation would be void under Section 28 of the
Indian Contract Act. The court held that the right of the party to invoke
arbitration would be three years from the date when cause of action arises, the
parties cannot circumscribe it to a lesser period through an agreement.

72. Whether the Court while exercising the jurisdiction under

Section 11 can determine if the arbitration agreement correlate
with the dispute?

DLF Home Developers Limited v. Rajapura Homes Private Limited

The Supreme Court widened the scope of examination of the arbitration

agreement at the pre-arbitral stage to hold that the Courts while appointing an
arbitrator must not act mechanically and relegate the parties to arbitration,
but must examine the arbitration agreement to ensure that the arbitration
agreement must correlate to the dispute at hand and the courts can decline the
reference if there is no correlation. The court observed that it would not be
usurping the jurisdiction of the arbitrator, but would only be streamlining the
process of arbitration.

Avantha Holdings Limited v. CG Power and Industrial Solutions Limited

The High Court of Delhi declined to refer the parties to arbitration after coming
to the conclusion that subject matter of the dispute is outside the scope of
arbitration agreement. The Court relied on the judgments of the Supreme
Court in Vidya Drolia to hold that limited scope of examination of arbitration
agreement at pre-arbitral stage also includes an ex-facie view on the
arbitrability of dispute and the court can decline to refer the parties to
arbitration if it finds that the dispute does not correlate to the arbitration
agreement.

73. Whether a party invoking arbitration can bifurcate its claims,

choosing to refer some claims at one stage and others at a later
stage?

Airone Charters Pvt. Ltd v. JetSetGo Aviation Services Pvt. Ltd.

The High Court of Delhi held that a party invoking arbitration cannot bifurcate
its claims, choosing to refer some claims at one stage and others at a later
stage. A party must specify in the notice invoking arbitration all existing
disputes. However, if the arbitration agreement does not mandate that all the
INTERNAL CIRCULATION ONLY ARBITRATION CASES
claims are to be made in one go, then the parties are not barred from raising
them in different proceedings.

74. Whether the Pre-Arbitral steps are mandatory in nature?

Sanjay Iron and Steel Limited v. Steel Authority of India-The High Court of
Delhi held that if the arbitration agreement mandates pre-arbitral conciliation,
then the parties cannot circumvent the conciliation process and directly
approach the court for appointment of an arbitrator. The parties must first
make efforts to amicably resolve dispute through conciliation, and only after
the efforts fail and no scope for conciliation remains, the court can directly
appoint an arbitrator.

75. Whether the entire agreement between the parties to refer the
dispute to arbitration will be void or non-existent in case the
appointment mechanism is considered to be void?

Jyoti Sarup Mittal v. Executive Engineer, South Delhi Municipal

Corporation

The High Court of Delhi held that the arbitration agreement will not become
void or non-est, merely because the process of appointment of arbitrator
enshrined under the agreement has become invalid. The court held that such
appointment procedure is only ancillary to the agreement and could be severed
from the rest of the valid agreement, without affecting the rest of the
agreement.

76. Whether the court can draw an interference against a party

that chooses not to appear before the court in a Section 11 petition
and appoint an arbitrator?

Swastik Pipe Ltd. v. Shri Ram Autotech Pvt. Ltd. The High Court of Delhi
held that when the notice invoking arbitration made a categorical assertion
that the arbitration agreement is valid and when both the notice invoking
arbitration and the notice of the petition were duly served on the other party
and it still choose to not appear before the court, the court can draw an
interference that the other party has accepted the validity of the arbitration
agreement.

77. Whether a party can approach the tribunal under a Special

Statute in relation to an issue that has already raised before the
arbitrator appointed by the High Court?
INTERNAL CIRCULATION ONLY ARBITRATION CASES
M.P. Housing and Infrastructure Development Board v. K.P. Dwivedi

The Supreme Court held that a party who participated in the arbitral
proceedings and voluntarily raised an issue before the arbitrator appointed by
the High Court, cannot re-agitate the same before a tribunal constituted under
a special statute. The arbitral proceedings before the arbitrator appointed by
the Court would not be non-est, after the participation of the parties without
any demur or objection, the doctrine of ‘Issue Estoppel’ would apply and the
party would be precluded from raising the same issue again.

78. Section 12-Whether the panel of Arbitrators maintained by the

Respondent will be hit by Section12 of the Act?

BCC Developers & Promoters Ltd. v. DMRC -Relying on the judgment

in Central Organisation for Railway Electrification, the High Court of Delhi held
that merely because the arbitrators on the panel are the ex-employees of one of
the parties, it would not make them ineligible to be appointed as arbitrators to
decide on the dispute. When the parties agreed on a procedure to appoint the
arbitrators, the appointment shall be made in accordance with the agreed
procedure only.

79. Section 14-Whether the mandate of an officer of the

department who is appointed as an Arbitrator owing to his
designation, shall come to an end on his retirement?

Laxmi Continetal Construction Company v. State of Uttar Pradesh The

Supreme Court held that once a person with specific designation has been
appointed as the arbitrator, he would not incur disqualification on the
retirement of his service, unless the agreement provides otherwise or he incurs
disqualification under the Act.

80. Section 17-Whether the award passed by an Emergency

Arbitrator is an award within the meaning of Section 17 of the Act?

Amazon.com NV Investment Holdings LLC v. Future Retail Limited -The

Supreme Court reiterated that party autonomy is an inherent feature of the
Arbitration Act. The parties are at liberty to choose Institutional Rules to get
their dispute resolved which also includes the power of the Emergency
Arbitrator to grant interim reliefs to the parties. An order passed by the
Emergency Arbitrator would be an order within the meaning of Section 17(1),
enforceable under Section 17(2). Further, it held that there lies no appeal
under Section 37 against an order of enforcement under Section 17(2).
INTERNAL CIRCULATION ONLY ARBITRATION CASES
81. Whether the Arbitral Tribunal could conduct a comprehensive
examination of the terms of the contract while adjudicating an
application for interim measures under Section 17 of the Act?

L&T Finance Limited v. Dm South India Hospitality Private Limited-The

High Court of Delhi held that an arbitral tribunal while adjudicating on a
Section 17 application for interim measures is not supposed to conduct a
detailed examination of the terms of the contract. Doing so would amount to pre-
trial determination of the issues and would be detrimental to the concept of a
dispassionate arbitral process. The tribunal acts on equity and is required to keep
in mind a prima facie case, balance of convenience, and irreparable injury,
while deciding an application for interim measures. It further held that the
appellate court is not required to reassess the evidence and, would not interfere
with the discretion of the tribunal unless, the reasoning of the tribunal is ex-
facie perverse or patently illegal.

82. Whether the court can entertain a Section 17 application prior

to the filing of the Statement of Claim?

Sanjay Arora v. Rajan Chadha -The High Court of Delhi held the arbitral
tribunal is empowered to deal with a Section 17 application even before a
Statement of Claims is filed. The objective of interim measures is to protect the
sanctity of the arbitral process and to preserve the subject matter of the
dispute. Therefore, the arbitral tribunal is empowered to decide on a Section 17
application before the filing of the Statement of Claims when any possibility of
frustration of arbitral process is found to exist.

83. Section 21-Whether the Rules of Arbitral Institution would

determine the ‘Seat’ of the arbitral proceeding?

S.P. Singla Constructions Private Limited v. Construction and Design

Services, Uttar Pradesh Jal Nigam -The High Court of Delhi held that the
rules of arbitration would not determine the seat of the arbitration. The seat
would still be decided in accordance with the agreement between the parties. It
further held that rules are procedural in nature and come into play only after
the commencement of arbitration.

84. Section 24-Whether the arbitrator could pass an award without

taking the evidence of one of the parties on record?

Narinder Singh v. Union of India -The Supreme Court held that unnecessary
hurry and haste by the arbitrator which results in the deprivation of a party’s
INTERNAL CIRCULATION ONLY ARBITRATION CASES
right to produce evidence and cross-examine the witness of the other party,
would result in violation of the principles of natural justice and Section 18, 24
and 25 of the Arbitration Act. Such an award would be set aside under Section
34(2)(a)(iii).

85. Section 31-Whether a prior agreement of the parties would

limit the power of the court to award cost?

Union of India v. Om Vajrakaya Construction Company -The High Court of

Delhi held that unlike the power of the tribunal to award interest, there is no
fetter on its power to award costs within the meaning of Section 31A and any
agreement of the parties prohibiting the awarding of cost would be
inconsequential, unless the parties enter into an agreement after the disputes
have arisen.

86. Whether the arbitrator could award interest, regardless of an

agreement of the parties to contrary?

Union of India v. Manraj Enterprises-The Supreme Court held that the

Arbitral Tribunal cannot award interest if the parties have expressly prohibited
the grant of any such interest. The arbitrator is a creature of the contract
therefore, cannot act contrary to the terms of the contract in terms of Section
28 and 31(7) of the Act.

87. Whether the arbitrator is entitled to charge separate fees on

the counter-claims?

NTPC Limited v. Afcons R.N. Shetty and Co.Pvt. Ltd Jv-The High Court of
Delhi held that the arbitrator is entitled to charge fees separately for claims
and counter-claims. There is no requirement under the law to consolidate both
the amounts in determining the ceiling price. On a conjoint reading of Section
31(8), 31A and 38(1) of the Act, it is amply clear that a separate fee is to be
paid for claim and counter-claims.

88. Section 34-Whether the Court can modify an award under

Section 34 of the Arbitration Act?

National Highway Authority of India v. M.Hakeem The Supreme Court held

that the court under Section 34 could only affirm or set aside the arbitral
award, there is no power vested in the court to modify an award while
exercising jurisdiction under Section 34. The court relied on the judgment
in McDermott International Inc. v. Burn Standard Co. Ltd, to observe that
power under Section 34 does not extend to modifying Arbitral errors. The
INTERNAL CIRCULATION ONLY ARBITRATION CASES
legislative intent of minimal interference is clear in terms of Section 34(4)
which permits the court to adjourn the proceedings and give the arbitral
tribunal a chance to eliminate the grounds for setting aside the award. Further,
it held that modifying an award under Section 34 would amount to crossing
the ‘Lakshman Rekha’.

89. Whether a Court under Section 34 application substitute its

view with that of the arbitrator when both views are possible?

Delhi Airport Metro Express Pvt. Ltd. v. Delhi Metro Rail Corporation
Ltd. -The Supreme Court held that construction of the contract is within the
jurisdiction of the arbitral tribunal only, the court cannot substitute its view
with that of the tribunal. Further it held that mere erroneous application of the
law or contravention of substantive law by the tribunal would not fall within
the rubric ‘Patent Illegality’ if the same does not go to the root of the matter. It
is only when the view taken by the Tribunal is not even a possible view or the
Tribunal goes beyond the terms of reference or delivers an award on an issue
not submitted to it or ignores vital evidence or when the award is based on no
evidence at all, the court would set aside the award under Section 34(2A). It
further held that contravention of a statute not linked to the public policy or
public interest, would not be a ground for setting aside an award under the
head of ‘Public Policy’.

90. Whether the arbitrator could be made a party in a Section 34

application?

Kothari Industrial Corporation Ltd. v. M/S Southern Petrochemicals

Industries -The High Court of Madras imposed a cost of Rs. 1 Lakh on the
appellants for unnecessarily impleading the arbitrator as a party under Section
34 petition. The court observed that it is absolutely pointless to make the
arbitrator a party to a challenge petition, unless specific personal allegations
are made which would merit an answer from the arbitrator.

91. Whether an agreement between the parties can make the 2015
Amendment to the Arbitration Act, 1996 apply retrospectively?

Ratnam Sudesh Iyer v. Jackie Kakubhai Shroff The Supreme Court held
that a general phrase in a contract cannot override the legislative intent of an
amendment to apply it prospectively. The court relied on the Judgment of the
apex court in BCCI v. Kochi Cricket, Ssangyong v. NHAI and HCC v. UOI to
reiterate that the 2015 Amendment Act would only apply to proceedings
commenced after 23.10.2015. The mere inclusion of the words ‘or any
INTERNAL CIRCULATION ONLY ARBITRATION CASES
amendment thereto’ in the agreement would not make the amendment to
Section 34 of the Act apply to arbitral proceedings commenced before the
amendment.

92. Whether the arbitrator can exercise its power ex debito

justitiae to substitute the terms of the contract?

PSA Sical Terminals Pvt. Ltd v. The Board of Trustees of V.O.

Chidambranar Port Trust Tuticorin-The Supreme Court held that the arbitral
tribunal being a creature of the terms of reference, cannot exercise its powers
ex debito justitiae. The tribunal cannot unilaterally modify the terms of the
agreement and foist it on an unwilling party, a party cannot be made to
perform something for which it never entered into a contract, doing so would
amount to re-writing of the contract. The same would amount to breach of
fundamental principles of justice and would shock the conscience of the court.

93. When will the time be the essence of the contract?

Welspun Specialty Solutions Ltd. v. Oil and Natural Gas Corporation

Ltd. The Supreme Court held that merely having an explicit clause would not
make the time as the essence of the contract. The same is to be determined
from the reading of the complete contract as well as the immediate
circumstances. An Extension of Time clause, dilutes the clause making time
the essence of the contract. Moreover, granting numerous extensions without
imposition of any damages would render such a clause entirely ineffective.

94. Whether the unilateral appointment of the arbitrator can be

challenged for the first time in a Section 34 petition?

Kanodia Infratech Limited v. Dalmia Cement (Bharat) Limited The High

Court of Delhi held that a party who has actively participated in the arbitral
proceedings, cannot challenge the unilateral appointment of the arbitrator, for
the first time under Section 34 petition. Failure of the party to raise the
objection at the earliest possible opportunity under Section 11, 12(5), 14, 15
and 16 of the Act, would deprive him to challenge the appointment under
Section 34 application.

95. Whether the Facilitation Council could pass an award without

conducting the arbitral proceedings?

Jharkhand Urja Vikas Nigam Limited v. The State of Rajasthan

INTERNAL CIRCULATION ONLY ARBITRATION CASES
The Supreme Court held that as per the provisions of the MSMED Act read
with the Arbitration Act, the Facilitation Council, on the failure of the
conciliation proceedings can only refer the parties to arbitration and not pass
an award. The arbitration and facilitation cannot be clubbed together to pass
an award. Such an order would be patently illegal and would not constitute an
award within the meaning of the Arbitration Act.

96. Section 36-Whether the Court would be bound by the

principles of Code of Civil Procedure, 1908 while deciding an
enforcement petition under Section 36 of the Arbitration Act, 1996?

Toyo Engineering Corporation v. Indian Oil Corporation Limited -The

Supreme Court reiterated that while staying the enforcement of an award
under Section 36(3), the court should only be considering the principles laid
down under O. 41 R. 5 of the CPC and not swayed by the fact that large
amount is to be paid by the government corporations.

97. Section 37-Whether the Court could decree a claim in an

appeal against an order under Section 34 of the Act?

Punjab State Civil Supplies Corporation Ltd. v. Ramesh Kumar and

Co. The Supreme Court held that the power of the High Court while exercising
jurisdiction under Section 37 against an order under Section 34 is different
from that of the First Appellate Court in a Civil Suit. The court clarified that in
arbitration appeal, the court is only required to determine the validity of the
order under Section 34, it cannot go to the extent of decreeing a claim.

98. Whether the appellate court could re-assess the evidence in an

appeal against an order under Section 17 of the Arbitration Act,
1996?

Augmont Gold Pvt. Ltd. v. One97 Communication-The High Court of Delhi

held that an order passed under Section 17 is discretionary in nature and
subject to the final award, therefore, the court of appeal would not reassess the
evidence to substitute its view with that of the tribunal. The court would not
interfere with the order even if it finds that it had taken a different view, if it
had considered the matter at the trial stage. The court would be justified only if
the view taken by the tribunal is not even a possible view.

99. Whether a Foreign State can claim ‘Sovereign Immunity’

against the enforcement of an arbitral award?
INTERNAL CIRCULATION ONLY ARBITRATION CASES
KLA Const. Technologies Pvt. Ltd. v. The Embassy of Islamic Republic of
Afghanistan-The High Court of Delhi held that a Foreign State cannot claim
Sovereign immunity while dealing in commercial transactions as the State is
not acting in the Sovereign capacity but as a ‘Commercial Entity’. Moreover, by
having given consent to enter into a commercial transaction containing an
arbitration agreement, the State has waived off its right to claim sovereign
immunity against the enforcement of arbitral award.

100. Section 48

Whether the Arbitral Award would be binding on the non-signatory to the

arbitration agreement?

Gemini Bay Transcription Pvt. Ltd. v. Integrated Sales Service Ltd.

Supreme Court held that a non-signatory who is acting as an alter-ego to the

party signatory to the arbitration agreement, would be bound by the arbitral
award. The court observed that the word ‘persons’ has been used under
Section 46 rather than ‘parties. The objection as to award being not binding
does not fit into the grounds enumerated under Section 48 of the act, which
are to be interpreted narrowly for the reason that part II of the act has a pro-
enforcement bias. The party enforcing the award is not bound to adduce
evidence to prove that the non-signatory is a person who is claiming under a
party or affected by alter ego doctrine, for the reason that requirement of
Section 47 is only procedural in nature. Further, it held that ground of ‘patent
illegality’ is not available to awards falling under part-II of the Act.