Link Legal Arbitration Newsletter - June 2022 mask head
M/s Orissa Concrete and Allied Industries Ltd. vs. Union of India, 2022 SCC OnLine Del 955
In this case, the High Court of Delhi decided the issue as to whether a fresh claim arising out of the same dispute can be entertained in a separate arbitration.
The petitioner had sought appointment of a sole arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 (“Act”) to arbitrate the disputes between the parties regarding the manufactured sleepers, delivery of which was not taken by the respondent despite various communications.
The Court held that the claim of the petitioner in the earlier arbitral award concerned the illegal termination of the contract, liquidated damages and recovery of the payment towards the dispatched sleepers. In the earlier arbitration proceedings, the petitioner had not claimed payment and damages towards the sleepers lying with the Petitioner at its premises. By referring to the contract between the Parties, the Court further held that there was no stipulation in the contract that once some disputes are referred to arbitration, further disputes arising out of the same contract cannot be decided by an arbitrator. Taking this view, the Hon’ble Court allowed the petition for appointment of an Arbitrator under Section 11(6) of the Act to adjudicate the fresh disputes arising between the parties.
Haryana Urban Development Authority, Karnal vs. M/s. Mehta Construction Company and Another, 2022 SCC OnLine SC 396
In this matter, the appellant filed an application challenging an arbitral award under Section 34 of the Act along with an application for condonation of delay before the Additional District Judge, Karnal (“ADJ Karnal”). The ADJ Karnal, passed an order wherein it was held that the objections raised by the appellant were barred by limitation and no plausible explanation was given to explain the delay. The appellant preferred an appeal before High Court of Punjab and Haryana against the order passed by ADJ Karnal under Section 37 of the Act, which was dismissed, however, an appeal was filed against the same in the Supreme Court. An issue arose before the Hon’ble Supreme Court as to whether the objections to the award under Section 34 of the Act can be refused to be entertained on account of delay in filing.
The Supreme Court observed that the court had the power to condone the eight days’ delay, which was less than thirty days, in terms of the proviso to sub-section (3) to Section 34 of the Act. The Supreme Court held that the objections under Section 34 of the Act did require consideration and in-depth examination and should not have been dismissed merely on the ground of delay. Therefore, the application for condonation of delay in filing of the objections should have been allowed.
National Highways Authority of India vs. Continental Engineering Corporation, 2022 SCC OnLine Del 1051
In this case, the High Court of Delhi in a Section 34 petition decided whether the arbitral tribunal can decide a claim by a contractor that (in terms of the Contract) requires the issuance of notice to the employer before lodging of the Claim.
The Petitioner had argued that since no notice had been issued under Clause 53.1 of the General Conditions of Contract (“GCC”), the Respondent was disentitled to raise any claim for “excess rate” and the award of the arbitrator for such claims could not be sustained. The High Court held that the said contention was unpersuasive as notice under Section 53.1 of GCC was not mandatory and non-issuance of such a notice did not preclude the Respondent from raising the claim at a subsequent stage. While dealing with the issue, the High Court also relied on the case of National Highways Authority of India v. OSE-GIL JV to hold that, failure to issue notice, does not envisage a situation where the contractor would lose his right to agitate his claim for additional payment. The award in relation to the said claim was accordingly upheld.
Evergreen Land Mark Pvt. Ltd. vs. John Tinson & Company Pvt. Ltd. and Another, 2022 SCC OnLine SC 468
The Supreme Court, in this case, decided on whether an order can be passed in relation to a subject matter under Section 17 of the Arbitration and Conciliation Act, 1996 by way of interim measure when the subject matter which in this case was lease is seriously disputed.
The dispute was with respect to the lease rental amount for the period between March 2020 to December 2021, for which the Arbitral Tribunal had directed the appellant to deposit the amount under Section 17 of the Arbitration Act. The appellant preferred an appeal under Section 37(2)(b) of Arbitration and Conciliation Act, 1996 before the Hon’ble High Court of Delhi against the interim order passed by the Arbitral Tribunal which had been dismissed by the High Court. The appellant filed an appeal before the Supreme Court.
The Supreme Court noted that the liability to pay the lease rent for the period between March 2020 to December 2021 was seriously disputed. Since for a substantial period, there was a total closure due to lockdown and for the remaining period the appellant was allowed with 50% capacity, therefore, the force majeure principle was applicable. The issue related to the applicability of the force majeure principle and liability to pay the lease rent was yet to be considered by the Arbitral Tribunal. Until the time of final adjudication of this issue, no such order for deposit by way of an interim measure on applications under Section 17 of the Arbitration Act could have been passed by the Tribunal. The Supreme Court held that the arbitral tribunal cannot pass an interim order where the issue was seriously disputed.
Millennium School vs. Pawan Dawar, O.M.P. (COMM) 590/2020
The High Court of Delhi in a recent case held that Section 65-B of the Indian Evidence Act, 1872 does not apply to arbitral proceedings.
The Parties had entered into an agreement where the Respondent was obligated to render transportation services using the buses owned by the Petitioner to the students and the employees of the Petitioner. The period of the agreement was 8 years and had a lock-in period of 5 years.
The agreement was terminated by the Petitioner on the ground of deficiency in service and the Respondent applied for arbitrator’s appointment. The Arbitrator awarded the claims of the Respondent in part on the ground that the agreement did not provide for termination during the lock-in period except for grounds under clause 1 of the Agreement. Further the evidence of the Petitioner was rejected by the Arbitrator on the ground that it did not follow the requirements of Section 65-B of the Evidence Act. The award of the Arbitrator was challenged by the Petitioner.
The High Court held that termination of the agreement was justified by the Petitioner since a material breach had occurred on the part of the Respondent and further held that the Evidence Act does not apply to arbitration proceedings and therefore, rejection on the aforesaid ground was a fault on the part of the Arbitrator. The Court also held that an objection regarding failure to comply with Section 65-B of the Evidence Act should be raised at the earliest opportunity.
Sacheerome Advanced Technologies (SAT) vs. NEC Technologies Pvt. Ltd. (NECI), O.M.P. (T) (Comm) 34/2022
The High Court of Delhi, in this case, held that for challenging the appointment of an arbitral tribunal, a petition under Section 14(1) of the Arbitration and Conciliation Act (“Act”) cannot be filed on the grounds set out under Section 12(3) of the Act i.e., on the ground of justifiable doubts as to the independence or impartiality of the Arbitrator. The appointment can be challenged as per the procedure given under Section 13 of the Act.
In this case, the Claimant had brought a claim under Section 11 of the Act after the invocation of arbitration. Subsequent to the death of the sole arbitrator who was appointed by the court, the court appointed a new arbitrator. The Petitioner filed a petition under Section 14(2) of the Act and sought termination of the mandate of the Arbitrator on the ground that there was a failure on the part of the Arbitrator in making complete disclosure as given in Section 12(1) of the Act at the time of his appointment.
The Court ruled that an arbitrator’s appointment can only be challenged by a party in accordance with the procedure provided in Section 13 of the Act. The Court further observed that a petition under Section 14(1) of the Act cannot be filed challenging the appointment of the arbitral tribunal on the grounds set out in Section 12(3) of the Act.
Hunch Circle Pvt. Ltd. vs. Future Technology Pvt. Ltd., (2017) 7 SCC 678
A petition under Section 11(6) was brought before the High Court of Delhi and a decision regarding jurisdiction had to be made keeping in consideration clauses relating to ‘Governing Law’ and ‘Arbitration’ which formed part of the main agreement.
The Court noted that Governing Law clause conferred exclusive jurisdiction over matters arising out of the agreement, for granting of interim relief or enforcement of an award on the court in whose jurisdiction the main premises of the subject matter of the agreement was situated, which in the present case was located at Gurgaon. Whereas, the Arbitration clause provided that the seat of arbitration was at Delhi and venue of arbitration was India. The Court held that as the contract conferred exclusive jurisdiction on courts at Gurgaon for filing of a petition under Section 9 and Section 34 of the Arbitration and Conciliation Act. Therefore, under Section 11, the High Court of Punjab and Haryana had jurisdiction and not High Court of Delhi, despite fixation of the seat of arbitration at Delhi.
Swadesh Kumar Agarwal vs. Dinesh Kumar Agarwal & Ors., Civil Appeal Nos. 2935-2938 of 2022
In this case, the Supreme Court while deciding a family dispute differentiated between Section 11(5) and (6) of the Act.
It was observed by the Court that Section 11(5) of the Act is attracted in cases where no procedure for the appointment of arbitrator is provided, whereas Section 11(6) is attracted where the procedure for appointment of arbitrator is already provided for in the agreement. Thus, it was held that a Section 11(6) application will be maintainable only where there is an agreement regarding the appointment between the Parties. Where there is no prior agreement between the parties regarding the appointment of the arbitrator then the parties are free to agree on a procedure by mutual consent and in case of any failure, while doing so, Section 11(5) would be attracted.
FIRM NEWS
  • Our Managing Partner, Mr. Atul Sharma has been once again recognised as a ‘Litigation Star” in the prestigious Benchmark Litigation Asia-Pacific 2022 rankings. Read More
  • The Firm has been ranked in Banking and Project Finance practice areas in the prestigious IFLR1000’s first group of 2022 rankings. Read More
  • Link Legal has been recognised as Winner in the practice areas of Aviation and Infrastructure & Project Finance at India Business Law Journal’s Indian Law Firm Awards 2022. Read More
  • The Firm has been ranked in the prestigious Benchmark Litigation Asia-Pacific 2022 Rankings for 7 practice areas. Read More
  • Read the article ‘Every transfer or sale is not ‘actual sale’: clarifies Supreme Court’ authored by our Partner, Ravi Charan Pentapati  published on Mondaq Read More
  • Our Associate Partner, Neha Singh shared her expert views in an insightful interview titled “India to have Cape Town Convention in full force soon” published by STAT Times. Read More
  • Our Associate Partner, Ambuj Sonal shared his views in an insightful interview with RGNUL Financial and Mercantile Law Review published in its April edition on the topic “Cross Border M&A in India Post COVID-19”. Read More
  • Read the article ‘Twin Conditions to be Satisfied: SC on Claims of Wages/Salaries’ authored by our Partner, Ravi Charan Pentapati, and Associate, Niharika Agarwal, published on Mondaq. Read More
  • Check out the glimpses of Day 1 of the London International Disputes Week 2022, wherein our Managing Partner, Mr. Atul Sharma was the Panel Speaker in the session. Read More
  • Our Partner, Jinni Sinha was the Keynote Speaker at the recently held seminar on Types of Agreement used in Start-up Industry, organized by The Institute of Company Secretaries of India. Read More
  • Our Senior Associate, Akshay Arora was the Speaker at the recently held Seminar on “Personal Finance & Portfolio Management” organised by the Institute of Innovation in Technology and Management (IITM), New Delhi. Read More
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