Legal Reference Library

Holding that an arbitral tribunal does not have the power to lift the corporate veil, the Delhi High Court, in Sudhir Gopi vs IGNOU, has also observed that mere failure of a corporate entity to meet its contractual obligations is no ground for piercing the  corporate veil. In the instant case, a sum of $664,070, along with pre award and future interest at the rate of 12% per annum, was awarded by the arbitral tribunal in favour of IGNOU against Sudhir Gopi and UEIT jointly and severally. This award was assailed before the high court contending that UEIT is a limited liability company and although Sudhir Gopi is the principal shareholder as well as the chairman and managing director of UEIT, he is not personally liable for the contractual liability of UEIT. With regard to the question of jurisdiction, Justice Vibhu Bhakru agreed with the contention that the arbitral tribunal, being a creature of limited jurisdiction, has no power to extend the scope of the arbitral proceedings...

The Supreme Court, in Union of India vs M/S Simplex Infrastructures, has reiterated that intra-court Letters Patent Appeal under clause 15 of the Letters Patent of High Court at Calcutta is not maintainable against an order passed by the single judge on an application for condonation of delay filed along with the petition for setting aside an arbitration award. A division bench of Calcutta High Court, holding that intra-court appeal is maintainable against single judge order condoning the delay, had reversed the order by invoking its jurisdiction under Letters Patent Appeal. Referring to the decision in Fuerst Day Lawson Limited vs Jindal Exports Limited, the bench comprising Justice Dipak Misra and Justice AM Khanwilkar held that the remedy of Letters Patent Appeal against that decision is unavailable and the question as to whether the single judge had rightly exercised the discretion or otherwise could be assailed before the apex court by way of special leave petition. “Even if...

The Supreme Court, in Kinnari Mullick vs. Ghanshyam Das Damani, has held that Section 34 (4) of the Arbitration and Conciliation Act 1996, does not empower the court to relegate the parties before the Arbitral Tribunal after having set aside the arbitral award in question. A three judge bench of the apex court headed by Justice Dipak Misra held that the limited discretion available to the court under Section 34(4) can be exercised only upon a written application made in that behalf by a party to the arbitration proceedings and the court cannot exercise this limited power of deferring the proceedings before it suo motu. In the instant case, a division bench of the Calcutta High Court, while setting aside the award in question, also directed, without there being any application of either parties, to send back the award to the Arbitral Tribunal for assigning reasons in support of the award. The apex court bench observed that the respondent did not make such a request before the sing...

The Supreme Court, in Indus Mobile Distribution Private Limited vs Datawind Innovations Private Limited, has held that when there is an exclusive jurisdiction clause in an arbitration agreement stating that the courts at a particular place alone would have jurisdiction in respect of disputes arising under the agreement, it would oust all other courts’ jurisdiction in the matter, even in a case where no part of cause of action arises at that place. In the instant case, the arbitration agreement had fixed the seat of arbitration in Mumbai, and there was a clause stating that the courts at Mumbai alone would have jurisdiction in respect of disputes arising under the agreement. A Section 9 petition was filed before the Delhi High Court contending that no part of the cause of action arose in Mumbai, only the courts of three territories could have jurisdiction in the matter, namely, Delhi and Chennai (from and to where goods were supplied), and Amritsar (which is the registered office of...

In Cruz City 1 Mauritius Holdings v. Unitech Limited, Justice Vibhu Bakhru held that foreign arbitral award can be enforced in India pertaining to put options, exit at assured return, and guarantee arrangements and the provisions of FEMA and related regulations cannot be claimed as defense by Indian parties. In this matter, an investor Cruz City (Mauritius Company) sought to enforce a foreign arbitral award against Unitech (an Indian company) and its wholly owned subsidiary Burley Holdings Ltd.. (a Mauritius company).

High Court of Himachal Pradesh Rajiv Bhatia v. Indusind Bank Ltd. and Ors. MANU/HP/0106/2017 23.03.2017 Arbitration “Venue of Arbitration proceedings” need not essentially be a place where “seat of arbitration” is located” In facts of present case, pursuant to award passed by Arbitrator in favour of Respondent/decree holder, an execution petition was filed before Court below. Petitioner primarily raised two objections; one with regard to territorial jurisdiction of Arbitrator and other with regard to amounts paid by him from time to time having not been accounted and reflected in statement of accounts by Respondent. Objections filed by Petitioner, have been dismissed and warrants of attachment of his property have been issued. Moot question in present case is whether by referring the matter for arbitration at Chennai, has Respondent violated territorial jurisdiction and conferred the same to an authority, which practically had no jurisdictional authority to adjudicate such ...

The Supreme Court, in Union of India vs. Besco Ltd, has held that even if an arbitrator is specified in the agreement for arbitration, the chief justice or the designated judge is free to appoint an independent arbitrator, having due regard to the qualification, if circumstances so warrant. A bench comprising Justice Kurian Joseph and Justice R Banumathi upheld a high court judgment which had nominated an independent arbitrator, on the ground that petitioner (before the high court) had lost the mandate to appoint an arbitrator since it failed to appoint the arbitrator within the permitted time. Referring to some decisions in this aspect, the court observed: “Though an arbitrator is specified in the agreement for arbitration, if circumstances so warrant, the Chief Justice or the designated Judge is free to appoint an independent arbitrator, having due regard to the qualification, if any, and other aspects as required under Section 11(8) of the Act.” The court also, in the facts of...

The Supreme Court, in IMAX Corporation vs. M/S E-CITY Entertainment, has held that Part-I of the Arbitration and Conciliation Act 1996, has no application in a case where parties chose and agreed to the arbitration being conducted outside India and the arbitration was in fact held outside India. A bench comprising Justice SA Bobde and Justice Ashok Bhushan was considering an appeal against the Bombay High Court order wherein it had held that petition to set aside an arbitral award in an arbitral proceedings held in London is maintainable before a court in India. The Court observed that, in the instant case, the parties expressly agreed that the arbitration will be conducted according to the ICC Rules of Arbitration and left the place of arbitration to be chosen by the ICC. “The relationship between the seat of arbitration and the law governing arbitration is an integral one. The seat of arbitration is defined as the juridical eat of arbitration designated by the parties, or by th...

The Delhi High Court, in ALUPRO BUILDING SYSTEMS PVT LTD vs OZONE OVERSEAS PVT LTD,  has clarified and settled that Section 21 of the Arbitration & Conciliation Act 1996, is mandatory to be complied with before reference of disputes to arbitration. The court laid down the object and purpose of issuing the notice under Section 21 holding that the Section is not limited only for the purpose of determining limitation and a party cannot straightaway file a claim before the arbitrator without issuing the notice under Section 21. The court held that in the absence of an agreement to the contrary, notice under Section 21 of the Act by the claimant invoking the arbitration clause, preceding the reference of disputes to arbitration, is mandatory. In other words, without such notice, the arbitration proceedings that are commenced would be unsustainable in law. The court also held that mere acceptance of supplies by a party on the basis of invoices containing an arbitration clause w...

The Supreme Court has held that an interim order made before, during or even after an award by an arbitrator will continue in force till the award is enforced. Interpreting Section 9 of the Arbitration and Conciliation Act, the court stated so in the appeal of UltraTech Cement Ltd against the judgment of the Rajasthan High Court which had ruled in favour of the state Vidyut Utpadan Nigam Ltd. In this case, the two parties signed an agreement by which UltraTech was allowed to take away fly ash free for five years and thereafter at the rate fixed by the Nigam. After a few years, the Nigam invited tenders for sale of fly ash. The cement company moved the civil court seeking a restraint. The judge allowed it. But the Rajasthan High Court set it aside.  The cement company moved the Supreme Court, pointing out that arbitration was pending and therefore the rate should not be changed. The court passed an interim order restricting the sale of fly ash. After the award, the question aros...

In a landmark judgment accepting the concept of ‘two tier arbitration’ or ‘second instance arbitration’, a three judge bench of the Supreme Court comprising of Justices Madan B. Lokur, R.K Agrawal and D.Y Chandrachud answering a reference made in 2006 due to divergence of opinions between Justice S.B.Sinha and Tarun Chatterjee, held that arbitration clauses which provide for a two- step arbitration process are valid under Indian arbitral jurisprudence. In a nutshell, brief facts of the dispute are that M/s. Centrotrade Minerals and Metal Inc., and the Hindustan Copper Limited, entered into a contract for sale of 15,500 DMT of Copper Concentrate to be delivered at Kandla Port in the State of Gujarat in two separate consignments.After the consignments were delivered, the payments therefor had been made. However, a dispute arose between the parties as regard the dry weight of concentrate copper. Clause 14 of the contract contained an arbitration agreement which read: “All disputes or diff...

In Utpal Dasgupta Vs. Mrinal Kanti Sinha, the Hon'ble Calcutta High Court held that ;- From the above decisions, the following principles emerge: (a) An Award, which is (i) Contrary to substantive provisions of law; or (ii) The provisions of the Arbitration and Conciliation Act, 1996; or (iii) Against the terms of the respective contract; or (iv) Patently illegal, or (v) Prejudicial to the rights of the parties, is open to interference by the Court under S.34(2) of the Act. (b) Award could be set aside if it is contrary to: (i) Fundamental policy of Indian Law; or (ii) The interest of India; or (iii) Justice or morality; (iv) The Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the Court; (v) It is open to the Court to consider whether the Award is against the specific terms of contract and if so, interfere with it on the ground that it is patently illegal and opposed to the public policy of India.” There...

In ANANTHESH BHAKTA REPRESENTED BY MOTHER USHA A.BHAKTA & ORS. VERSUS NAYANA S. BHAKTA & ORS., the Hon'ble Supreme Court had following three issues arises for consideration: (1) Whether nonfiling of either original or certified copy of retirement deed and partnership deed along with application I.A.No. IV dated 09.05.2014 entailed dismissal of the application as per section 8(2) of 1996 Act. (2) Whether the fact that all the parties to the suit being not parties to the retirement deed/partnership deed, the Court was not entitled to make the reference relying on arbitration agreement. (3) Whether dispute pertaining to unregistered partnership deed cannot be referred to an arbitration despite there being arbitration agreement in the deed of retirement/partnership deed. For Issue no. 1, the Hon'ble court held that Section 8(2) has to be interpreted to mean that the court shall not consider any application filed by the party under Section 8(1) unless i...

In Bihar Rajya Bhumi Vikas Bank Vs. State of Bihar, the following questions were raised before the Hon'ble Patna High Court :- i) If the principal civil Court is a tribunal, whether a writ of certiorari can be issued and if so, under what circumstances? ii) Whether the provisions of Section 34(5) are mandatory or directory? iii) Whether, while exercising jurisdiction under Section 34 of the Arbitration and Conciliation Act, 1996, the principal civil Court acts as a Civil Court of ordinary jurisdiction or as a mere Court or as a tribunal? And the Hon'ble court held that :- a) Principal civil court, while exercising powers under Section 34 of the Arbitration and Conciliation Act, 1996, is not a Court of civil judicature; rather, it only a tribunal with the trappings of Court. b) Arbitration and Conciliation Act, 1996 – Section 34 (5) – The notice, as prescribed by Section 34 of the 1996 Act, is mandatory before proceeding with the filing of an application under Sectio...

In Oil India Limited vs Essar Oil Limited, the Hon'ble Delhi High Court while quashing the appeal of Oil India to set aside the arbitration award opined that mere delay by the arbitral tribunal to pronounce its award is no ground to set it aside, the Delhi High Court stated, dismissing an appeal of Oil India Ltd (OIL) against an award by a three-member panel in favour of Essar Oil Ltd. The high court said a party can raise the issue only if it suffered prejudice by the delay. In this case, there was a delay of three years, but OIL could not demand quashing of the award as it had failed to assert its right under the Arbitration and Conciliation Act.

High Court of Delhi National Highway Authority of India v. Hindustan Steelworks Construction Limited MANU/DE/2834/2016 19.10.2016 Arbitration Once the parties have approached certain court for relief under Arbitration Act at earlier stages of disputes then it is same court that, parties must return to for all other subsequent proceedings Present application filed by National Highways Authority of India (NHAI) seeking to explain delay of 296 days in filing Petition under Section 34 of Arbitration & Conciliation Act, 1996 (the Act) to challenge Award dated 24th February, 2015 of Arbitral Tribunal (AT) in disputes between NHAI and Respondent, Hindustan Steelworks Construction Ltd + SIPL (HSCL) arising out of a contract dated 18th July, 2005 for construction of a four lane highway. It is stated by NHAI that it received a copy of the Award dated 24th February, 2015 only on 27th February, 2015 by courier and that was the date from which the period of limitation for the purpo...

In FERNAS CONSTRUCTION COMPANY INC VS. GUJARAT STATE PETRONET LTD. , the Hon'ble Gujarat High Court held that any existence of dispute between the parties to the contract cannot be a ground to restrain from evoking the bank guarantee.

IN THE SUPREME COURT OF INDIA Civil Appeal Nos. 8245-8246 of 2016 Decided On: 04.10.2016 Appellants: A. Ayyasamy Vs. Respondent: A. Paramasivam and Ors. Case Note: Arbitration - Agreement - Maintainability of suit - Applicability of precedent - Section 8 of Arbitration and Conciliation Act, 1996 - Parties had entered into deed of partnership containing arbitration Clause - Respondents filed civil suit - Appellant moved application under Section 8 of Act, 1996 raising objection to maintainability of suit in view of arbitration agreement between parties - Trial Court dismissed application, relying upon judgment in N. Radhakrishnan v. Maestro Engineers and Ors. - Appellant preferred petition before High Court - High Court had also chosen to go by dicta laid down in N. Radhakrishnan - Hence, present appeal - Whether view of High Court in following dicta laid down in case of N. Radhakrishnan was correct or not - Whether dispute raised by Respondents in suit was incapable of sett...

In Amrit Jal Ventures Vs. SREI Infrastructure Finance, the Hon'ble Calcutta High Court while allowing the borrowers application for proceeding under Arbitration Act held that In Indian Bank (supra) the Hon’ble Division Bench considered Sections 31, 17, 18 19(6) to (11) of the RDB Act, 1993 and held that it would be evident from Sections 17 and 18 of the RDB Act that civil courts jurisdiction is barred only in regard to the application filed by a bank or a financial institution for recovery of its debts. The jurisdiction of civil courts is not barred in regard to any suit filed by a borrower or any other person against a bank for any other relief. There is no provision in the Act for transfer of suits and proceedings, except section 31, which relates to suit/proceeding by a bank or financial institution for recovery of a debt. Sections 19(6) to (11) (as introduced by Act 1 of 2000), are merely enabling provisions. Significantly, Sections 17 and 18 have not been amended. Jurisd...

In Raffles Design International India Pvt. Ltd. Vs. Educomp Professional Education Ltd., the hon'ble Delhi High Court held that under Section 27 of Arbitration and Conciliation Act, 1996, a person guilty of not following the interim orders of the arbitral proceedings held outside India cannot be proceeded for the contempt under Section 27 of the Act.