Permissibility of Arbitration Proceedings by Empanelled Arbitrators under the MSMED Act, 2006
by Hiresh Choudhary* and Surbhi Sharma**
arbitral award
Credible evidence is must to substantiate claim of loss of profitability; SC sets aside arbitral award in conflict with ‘public policy of India’
“The credibility of the evidence is the evidence of the credibility of claim for loss of profit”.
Arbitrator’s failure to decide on Interest Claim amounts to a “Decision”, Calcutta High Court allows challenge under Section 34 of Arbitration and Conciliation Act
Calcutta High Court held Arbitrator’s refusal to decide question of interest under the MSMED Act constitutes a “decision” and therefore, can be challenged under Section 34 of the Arbitration and Conciliation Act, 1996.
Calcutta High Court deems Arbitral Award void after termination of Arbitrator’s mandate under Section 29-A(4) of Arbitration and Conciliation Act, 1996
While cautioning the parties to the Arbitration proceedings, Calcutta High Court stated that parties should be vigilant in applying for extensions within the prescribed periods and dismissed the petitions seeking an extension of the arbitrator’s mandate.
Bombay High Court stays implementation of arbitral award on prima facie patent illegality
Bombay High Court viewed that by considering delays prior to the new contract, there was a ‘patent perversity apparent on the face of the award’.
[S.34 Arbitration Act] Delhi High Court upholds arbitral award for lack of benefit of the ground of “patent illegality”
A party cannot simply raise an objection on the ground of patent illegality if the Award is against them. Patent illegality requires a distinct transgression of law, the clear lack of which makes the petition a pointless effort of objection towards an Award passed by a competent Arbitral Tribunal.
S 34 (4) cannot save or aid an arbitral award suffering from illegalities stipulated under S. 34(2) Arbitration Act: Delhi High Court
Section 34 of the Arbitration Act is a clear and unequivocal embodiment of the Legislature‘s intent to balance the competing facets of arbitration, I.e., on one hand, while courts are enjoined to follow the minimalist intervention route, it would clearly be a travesty of justice if they were to fail to intervene where circumstances warrant, and demand corrective measures being adopted.
Dissenting Opinion in Arbitration cannot be treated as an award if majority award is set aside: Supreme Court
“Dissenting opinion of arbitrators might provide useful clues during procedural issues, which forms a critical part when the hearings are challenged”.
‘Court cannot modify arbitral award under Section 34 of Arbitration Act’: Supreme Court reiterates
The Supreme Court explained that the older Act enabled the Court to modify an award, a power which was consciously omitted by Parliament while enacting the 1996 Act, hinting towards exclusion of power to modify an award.
Compliance of Section 19 of MSMED Act is a pre-requisite for seeking Stay on Arbitral Award: Calcutta High Court
The Calcutta High Court held that failure to comply with procedural requirements under Section 19 of the MSMED Act renders application for stay of Arbitral Award as not maintainable.
Consent for extending arbitral period under Section 29A(3) of 2015 Amendment Act doesn’t need to be express or in writing: Himachal Pradesh HC
“The consensus of the parties in proceeding with the arbitration case beyond twelve months without raising any objection to the continuation of proceeding does amount to consent. On the basis of such consent, the arbitral award if passed after six months would be a valid award.”
[S. 34 Arbitration Act] Delhi High Court refuses to interfere in Indian Railway’s plea regarding arbitral award being perverse
Indian Railway’s has failed to substantiate its grounds for setting aside the impugned Arbitral Award that the impugned award suffers from patent illegality and the findings therein are perverse and would shock the conscience of this Court.
Object of Arbitration Act’s Section 12(2) disclosure is to prohibit any continued Arbitrator-Party associations during proceedings: Calcutta High Court
Section 12(2) of the Arbitration and Conciliation Act, 1996 obligates the Arbitrator to remain neutral and to disclose to the parties any acts or omissions that are likely to fall foul of the mandate.
[SpiceJet v. Kal Airways] Delhi High Court upholds Arbitral Award of Rs. 270 crores; rejects SpiceJet’s plea
“The Tribunal provided reasons for the findings delivered, and there was no perversity apparent on the face of the record or which goes to the root of the matter. Therefore, the impugned Award could not be said to be patently illegal.”
Defaulting Buyers exempted from paying 3 times the Bank Interest Rate under Section 16 of the MSMED Act when supplier is ‘medium enterprise’: Calcutta High Court
“The irrationality of the quantum of the costs imposed will be considered at the time of determining whether the Award should be set aside under Section 34 of the 1996 Act.”
[S. 34 Arbitration Act] Delhi High Court sets aside arbitral award for being perverse and ex-facie arbitrary
The present case is an example where substantial liability has sought to be fastened on one of the contracting parties based on specious paper calculations. It cannot be overemphasized that arbitral tribunals must exercise due care and caution while dealing with such claims.
2023 SCC Vol. 6 Part 2
Power of Indian Courts to modify an Arbitral Award: This article submits that the courts ought to have power to modify the
Arbitrator’s view is ultimate, not to be interfered with by Courts, unless arbitration agreement evidently absent: Calcutta High Court
Calcutta High Court held that Court should not substitute its own view, replacing that of the arbitrator, unless it is manifestly evident that there existed no agreement.
District Court must examine whether pre-deposit of 75% of award under Section 19 of the MSME Act is actually deposited: Himachal Pradesh High Court
Himachal Pradesh High Court set aside the impugned order and directed the District Court to decide the matter afresh.
Delhi High Court sets aside arbitral award passed by Arbitrator having de jure inability to pass the award
The ineligibility of an Arbitrator goes to the root of his jurisdiction and the Arbitral Award cannot be considered as valid.