Arbitration Court Reckoner - September 2020
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By way of the present column, an attempt is made to brie y review the salutary judgments
pronounced by the Courts in the month of September 2020 under the Arbitration & Conciliation Act,
1996 (hereinafter referred to as the 'Act'). That while as many judgments as possible are sought to
be reviewed, owing to the limited column space, some judgments would invariably be left out. That
also while an attempt is made to include and review some judgments of various other High Courts,
the emphasis is essentially on the judgments of the High Court of Delhi and Supreme Court of
India. That judgments have been compiled for review with reference to the Section of the Act that
they are primarily dealing with and a detailed analysis has been forgone in favour of succinctness.
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Section 7
(i) Non-signing of agreement containing arbitration clause by one party not a ground to hold that
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In M/s. Chaitanya Construction Company v Delhi Jal Board[1] High Court of Delhi took note of the
fact that S. 7(4) of the Act itself provides that the arbitration agreement need not be in any concrete
or particular form and held that the mere fact that the Respondent therein, who had invited tenders
for the work in question, had not signed the agreement containing the arbitration clause was not a
ground to hold that there was no arbitration clause. The Court took note of the fact that the
petitioner signed the agreement containing the arbitration clause, as provided by the respondent,
and that the respondent had issued the work orders based on this contract, and thus it cannot be
said that the parties were not ad idem on the applicability of the arbitration clause, even though the
Section 8
(ii) Averment in Written Statement that it is being led "Without Prejudice to the Arbitration
Power of the Court to stay Arbitration must be impliedly read into the 1996 Act
In Lindsay International P. Ltd. & Ors. v Laxmi Niwas Mittal & Ors.[2] High Court of Calcutta took
note of the fact that the Defendant before it had led a comprehensive Written Statement of
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Defence taking objections and addressing on merits each of the claims in the plaint individually and
speci cally and it was not until the expiry of three full years that the said Defendant has moved for
Request For Arbitration. It, thus held, that it could therefore safely be said that the Defendant has
waived the Arbitration agreement and has submitted to the jurisdiction of the Court for all intents
and purposes and the Arbitration agreement has been rendered inoperative by waiver. Further, held
that an averment in the Written Statement of defense that it is being led "Without Prejudice to the
Arbitration agreement" does not constitute an application under S. 8 of the Act and a clear, speci c
and overt Act in the form of an independent, stand alone application is required to be made which
the Defendant had not done. It held that while the Defendant has referred to the Arbitration
agreement in his written statement but has not prayed or pleaded that it seeks reference of the
disputes to arbitration. The Court further held that the power of the Court to stay arbitration must
be impliedly read into the 1996 Act and to allow an arbitration to proceed even after the Defendant
has waived the arbitration agreement, or that the same is null and void or inoperative would be a
travesty of justice and thus accordingly restrained the Defendant from proceeding with the Request
for Arbitration.
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Section 9
(iii) Copyright disputes pertain to rights in rem and thus not arbitrable
In Sanjay Lalwani v Jyostar Enterprises & Ors.[3] High Court of Madras held the S. 9 petition led by
the petitioner therein not maintainable as dispute were arising from Copyright Assignment, and
(iv) In absence of manifest intention to arbitrate, Court would be reluctant to pass interim
measures
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In H. Thiagaraj & Ors. v Maryammal & Ors.[4], High Court of Madras set aside the injunction granted
by the District Judge in a S. 9 petition inter alia on the ground that though the dispute was raised by
the applicant in the year 2009 and the Court had directed the parties to go for arbitration as early as
02.03.2011, no steps whatsoever was taken out by the applicant or some other party to refer the
matter to arbitration. Only in the year 2014, the application u/s 9 of the Act has been led. It held
that the above conduct of parties makes it clear that manifest intention to arbitrate the dispute is
absent on the part of the applicants, who were the parties to the earlier proceedings. Therefore, it
held, that in view of absence of manifest intention shown by the petitioners, who seek interim
measure u/s 9 of the Act, the Court normally would be reluctant to pass interim measures and set
(v)Interim measure/Relief in the nature of restraining person from carrying on trade or business
cannot be granted
In Shraddha Entertainment v Kondaduvam Entertainment & Ors.[5] High Court of Madras was
seized of a matter where the petitioner/appellant therein had led both appeals against the order of
the arbitrator refusing to grant certain injunctions as also led petitions u/s 9 seeking similar reliefs
before Court. The Court rstly held that when the arbitrator has already rejected such a relief, which
was challenged before the Court in the appeal, again seeking similar prayer by way of interlocutory
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applications cannot be maintainable. The Court further took note of the fact that Petitioner had
sought 2 injunctions - One is injunction restraining the Respondent from opening or operating any
bank account either in their individual or joint names and/or in the names of any entity in which any
or all of them are in control and the other is to direct Respondents to disclose the names and
details of all banks where they hold any account whatsoever operated by them either individually or
jointly. The Court held that rst relief sought by the appellant is in the nature of restraining the
person from carrying on trade and business and such relief cannot be granted in the name of
interim measure. Qua the second relief, Court held that the arbitrator had rightly negativated the
same as to give any such relief the provision under Order 38 Rule 5 of CPC had to be satis ed
In Cupino Ltd. v Shree Ahuja Properties & Realtors P. Ltd. & Ors.[6], High Court of Bombay rejected
the contention of the Respondent therein that the order passed u/s 9 is not a nal order/decree and
there is no occasion to execute the order under Order XXI, CPC. The Court held Section 36 of the
Code makes available all remedies for execution of decrees to be employed for execution of Orders
as well. Further, held, the once an order under Section 9 has become nal order of payment of that
amount into court, even though arbitration is pending, Order XXI can certainly be resorted to for
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(vii) Mere claim, which is yet to be adjudicated, does not constitute special equities to entitle
In CRSC Research And Design Institute Group Co. Ltd v. Dedicated Freight Corridor Corporation Of
India Limited & Ors.[7] High Court of Delhi reiterated the criteria, which are required to be satis ed,
before interim protection can be granted u/s 9 namely (a) the existence of an arbitration clause,
and manifest intent, of the S. 9 petitioner, to invoke the said clause, and initiate arbitral proceedings,
(b) the existence of a prima facie case, balance of convenience and irreparable loss, justifying such
grant of interim relief to the applicant, and (c) the existence of emergent necessity. The Court
rejected the argument of special equities premised on the ground, that the claim of the Petitioner
therein against Respondent, is far in excess of the amounts of the bank guarantees and invocation
must be stayed. The Court held that a mere claim, of the petitioner, against the respondent – the
justify injuncting the invocation of unconditional bank guarantees, even if such a claim is in excess
of the amount covered by the bank guarantees. Further held that in case of an irrevocable and
unconditional bank guarantee the condition, in the agreement between the parties, under which the
bank guarantees could be enforced, cannot be cited as a ground to stay the invocation and
encashment thereof.
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Section 11
(viii) How to harmonise or reconcile two different arbitration clauses in two related agreements
In Balasore Alloys Ltd. v Medima LLC[8] , Supreme Court of India held in order to harmonise or
reconcile two different arbitration clauses in two related agreements between the same parties and
to arrive at a conclusion as to which of the clauses would be relevant in the given facts; it would be
necessary to refer to the manner in which the arbitration Clause was invoked and the nature of the
dispute that was sought by the parties to be resolved through arbitration. On such consideration, in
the facts of the case, the Court held that the nature of dispute raised by the parties indicate that
those aspects are to be determined in terms of the provisions contained in the Main Agreement
and thus disputes would have to be decided as per arbitration clause in the Main agreement and
the same would be the relevant arbitration clause and not the arbitration clauses contained in
(ix) S. 5 of Limitation Act does not apply to application u/s. 11 of the Act
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In The Board of Trustees of the Port of Chennai v. X-press Container Line (UK) Ltd. & Ors.[9], High
Court of Madras held that Section 5 of Limitation Act cannot be applied to condone the delay in a
suit and extend the period of limitation and this logic will apply to an application led u/s 11 of the
Act also.
Section 14
(x)Once Managing Director of the Respondent is ineligible to appoint arbitrator, Company can also
not appoint
In M/s. Omcon Infrastructure P. Ltd. v Indiabulls Investment Advisors Ltd.[10], High Court of Delhi
allowed the petition for termination of mandate of the arbitrator appointed unilaterally by the
Respondent in view of the ratio of the judgment in Perkins Eastman Architects DPC & Anr. v HSCC
India Ltd.[11] While doing so, it rejected the narrow construction sought to be given by the arbitrator
to the judgment of Perkins (supra) on the purported ground that judgement in Perkins (supra) was
not applicable as the authority to nominate the arbitrator was vested in a Company (that being the
word used in the arbitration clause) and not an individual. The Court held that once the Managing
Director of the Respondent is ineligible to appoint arbitrator in view of Perkins (supra), the same
would also bar the Company itself from unilaterally appointing the arbitrator.
(xi) Voluntary recusal of Arbitrator in one arbitral proceeding not a ground for terminating
In Himachal Pradesh Power Corporation Ltd. v Hindustan Construction Co. Ltd.[12], High Court of
Delhi held that that the voluntary recusal of the Presiding Arbitrator in another arbitration
proceeding is not a ground for terminating the mandate of a Presiding Arbitrator in a separate
arbitration proceedings, though between the same parties. It further held that Presiding Arbitrator's
brother (mentions Petitioner's brother in para 16 of judgment but the context reveals that the
reference is to the Presiding Arbitrator's brother) who appeared as a Senior Advocate on behalf of
the respondent before the Himachal Pradesh High Court in a separate unconnected matter is not
"close family member" as de ned in Category 10 of the Seventh Schedule and therefore, the
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Presiding O cer is not ineligible to act as an Presiding O cer under Section 12 (5) of the
Section 17
(xii) Principles governing grant of injunctions, appointments of receiver etc are a part of
In Flywheel Logistics Solutions P. Ltd. v Hinduja Leyland Finance Ltd. & Ors.[13], High Court of
Madras was dealing with challenge to orders passed by the arbitrator u/s 17 of the Act to seize the
vehicles which had been purchased by way of loan agreement which was subject of arbitration. The
Court held that though S. 19 of the Act states that the Arbitral Tribunal is not bound by the Code of
Civil Procedure, 1908, this is primarily targeted at unshackling the Arbitral Tribunal from the
procedural wrangles of the Code. Further held that, on the other hand, principles governing the
grant of injunctions, appointments of receiver etc are a part of the substantive law of the country
and by virtue of S. 28(1)(a) of the Act the Tribunal shall be bound to decide in accordance with the
substantive law for the time being in force in India. While the nance company or Bank may have a
contractual right to repossess the asset upon commission of default by the borrower, it cannot be
gainsaid that in many cases mechanical seizure of vehicles, en masse, may lead to substantial
injustice. It held that in a number of cases the borrowers generate income by putting these vehicles
to use and therefore, it may be worthwhile for the Tribunal to balance equities, in appropriate cases,
by allowing the vehicles to operate while at the same time direct that some portion of the income
got from plying these vehicles be deposited to the credit of the nance company. Further held, that
the Tribunals are under no obligation to pass orders seizing vehicles mechanically and in a vast
majority of these cases, a common sense approach would not only ensure that the nance
company is able to realise some portion of the outstanding dues periodically while at the same
Section 34
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In C.S. Sivanandan v Karvy Stock Broking Ltd. & Ors.[14]¸High Court of Madras held that arbitration
in the case at hand was governed by 'National Stock Exchange bye-laws' and Bye – law 19 provided
for a multi-tier arbitration. The Court took note of the fact that the petition had been led u/s 34 of
Act assailing the award made by the Arbitral Tribunal, which is the second tier of the three-
tiered/multi tiered arbitration mechanism provided for under Chapter XI of NSE Byelaws. It held
that, therefore, the third tier of arbitration mechanism has not been exhausted. In this scenario, the
Court was of the considered view that it would be appropriate to relegate the parties to Appellate
Arbitral Tribunal under Chapter XI (19) of NSE by-laws leaving open all questions, rights and
contentions of the parties and preserving the right of petitioner to seek exclusion of time spent in
In NHAI v Sahakar Global Ltd.[15]¸ High Court of Delhi while dismissing the petition led assailing
the arbitral award held that not only was the scope of judicial interference in an arbitral award
limited if the view taken by the Arbitrator is a possible view but also further held that the arbitrator
has, after detailed analysis of the documents and pleadings, rightly come to the conclusion that
implementation of GST by the Government of India constitutes change of law having material
adverse affect on the obligations of parties and is thus a force majeure event as per the clause
In P. Kothai & Ors. v. Shriram Transport Finance Company Ltd. & Ors.[16] High Court of Madras held
that that the trigger notice invoking arbitration was clearly barred by limitation and therefore, the
impugned award therein is vitiated for entertaining arbitral proceedings which are barred by
limitation and not examining limitation though S. 3 of Limitation Act read with S. 43 of the Act
makes it statutorily imperative to do so even if it is not set up as a defence. The Court reiterated
that in case of loan, that the date of commission of default would be the cause of action for
purposes of limitation.
Section 36
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(xvi) Subsequent application led not hit by res judicate if execution petition had been disposed
In Kal Airways P. Ltd. v M/s. Spicejet Ltd. & Anr[17] High Court of Delhi held that when an
enforcement petition had been disposed off with the liberty to the Decree Holder to approach the
Court in the event of any subsequent development with respect to the 'status of the judgment
debtor', then ling of an application on the ground of material change in the nancial health of the
Judgment debtor would not be hit by res judicata or constructive res judicate and the change in
status need not be only limited to insolvency or bankruptcy proceedings but would include other
events that would show material changes in the nancial health of the Judgment Debtor including
auditor's reports. The Court further held that contentions with regards to award being erroneously
premised or the prospects of Judgment Debtor succeeding in their challenge under S. 34 of the Act
would have no bearing in an execution petition once the award is not stayed and the award would
Section 37
(xvii) Qualitative difference between the two challenges provided u/s 37(1) & 37(2) & even
In Dinesh Gupta & Ors. v Anand Gupta & Ors.[18] High Court of Delhi held that principle that parties
have by express choice excluded court's jurisdiction by opting for arbitration would apply, with
equal force, to challenges to interlocutory orders of arbitral tribunals, u/s 37, as they would, to
challenges to the nal award, u/s 34. The Court held that there is, necessarily, a qualitative
difference between the two challenges provided u/s 37(1) & 37(2), though both would lie to the
High Court. The challenge u/s 37(1), which is directed against a nal award of the arbitrator/arbitral
tribunal, is akin to a second appeal. The challenge u/s 37(2), on the other hand, is directed against
the decision of the arbitral tribunal and therefore must necessarily to conform to the discipline
enforced by S. 5. The Court held it would, therefore, be improper for a Court to treat an appeal, u/s
37 (2) of the 1996 Act, as akin to an appeal under the CPC. An appeal against an order by an
arbitrator, or by an arbitral tribunal, is an appeal sui generis, and interference, by the Court, in such
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appeals, has to be necessarily cautious and circumspect. The Court further held that this position
would stand especially underscored where the order, under challenge, is discretionary in nature and
in such case, merits interference, under Section 37(2)(b), therefore, only where such exercise is
palpably arbitrary or unconscionable. If anything, therefore, the jurisdiction of the Court, under
Section 37(2)(b), is even more limited than the jurisdiction that it exercises under Section 37(2)(a)
or, for that matter, under Section 34. Further held, that while exercising jurisdiction under Section
17(1)(ii)(b), the arbitrator is not strictly bound by the con nes of Order XXXVIII Rule 5 of the CPC,
(xviii) Doctrine of Proportionality as part of special equities can only be applied if there is
crystallized liability
In Hindustan Construction Co. Ltd. v National Hydro Electric Power Corporation Ltd.[19] Division
Bench of High Court of Delhi upheld the refusal of the Single Judge to grant injunction against
encashment of bank guarantees and held that mere extension of the completion time can by no
stretch be reckoned as satisfaction, to prevent invocation of performance BGs either because the
contractor had failed to faithfully perform its obligations or it failed to commence work, or had
suspended the work or had failed to take effective steps for making good the defects etc. It further
held that while proportionality could be included in the exception of special equities, it can be
applied only where the crystallized liability is signi cantly lower than the value of the Bank
Guarantee furnished and the contract is a concluded one and held that the same did not apply in
the present case, where neither condition prevails and the contract is neither a concluded one nor
has it been terminated and thus the liabilities are not crystallized.
In Bharat Sanchar Nigam Ltd. v Aksh Opti bre Ltd.[20] High Court of Delhi reiterated that when the
arbitral award has been upheld u/s 34 of the Act, the appellate court cannot, in exercise of
jurisdiction u/s 37 of the Act, proceed to independently assess the relative merits and demerits of
the case and while exercising jurisdiction u/s 37 of the Act, the court must be extremely
circumspect in interfering. The Court further noted that the appellant, therein, had, in fact, agreed
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that the Arbitral Tribunal can x the rate for the intercity bandwidth charges, payable by the
respondent. After agreeing to such a position, it was now not open to the appellant to state that the
view taken by the learned Sole Arbitrator was wrong since the rates were xed and agreed.
Section 45
In Government of India v Vedanta Limited and Others, Supreme Court of India held that the period
of limitation for enforcement of a foreign award in India would be governed by Indian law. It held
that Foreign awards are not decree of Indian Courts and upon grant of recognition and enforcement
u/s 48 of the Act, for the limited purpose of enforcement the foreign award is deemed to be a
decree of the Court that granted such enforcement. Accordingly, the Court held that the period of
limitation for enforcement of foreign award would be governed by Article 137 of the Limitation Act.
Further held that the bar contained in Section 5 of the Limitation Act would not extent to a
substantive application under the Act, consequently, delay may be condoned on an application
under Section 5 of the Limitation Act. It also held that the Courts at the seat of the arbitration have
"supervisory" or "primary" jurisdiction while the Courts at the place of enforcement have
"enforcement" or "secondary" jurisdiction. That as seat of the arbitration was in Malaysia, thereby
the curial law was Malaysian law and the curial law would determine the procedure of arbitration
including challenge to an award. Therefore, the Malaysian Courts were right in applying Malaysian
law for testing the Award on a challenge by the Petitioner. However, the Court further held that
merely because the Malaysian Courts have upheld the Award, that would not be an impediment on
the Indian enforcement Court to examine the Award for enforcement in light of S. 48 of the
Arbitration Act. If the Award is found to be against public policy of India, it would not be enforced by
Indian Courts. However, on consideration, Court held that the award is not against public policy of
India.
Article 227
(xxi)As no restriction either in the arbitration agreement or in the order of reference, counter
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In Ved Prakash Mithal & Sons v Principal, Kirori Mal College & Ors[21], High Court of Delhi was
dealing with a petition impugning the order of the Arbitrator rejecting the Petitioner's application for
rejection of counter claims on the ground that there was no speci c reference of counter claim by
the Court while referring the parties to arbitration u/s 8 of the Act and thus arbitral tribunal is
precluded from entertaining the counter claim. The Court held that there is no restriction either in
the arbitration agreement or in the order of reference with regard to disputes that can be referred or
exclusion from reference of certain disputes and thus contention of Petitioner that that the
counterclaims could not have been entertained by the Arbitral Tribunal is not sustainable.
[5] C.M.P. No. 8322 and 8323 of 2020 decided On 04th September 2020
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[6] Interim Application No. 1 of 2020 in Commercial Execution Application (L) No. 528 of 2020
[11] 2019SCCOnlineSC1517
[13] C.M.P. Nos. 271, 273, 275, 277, 289, 617 to 621 and 623 to 640 of 2020 decided On: 17.09.2020
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