Op EdsOP. ED.

This article attempts to analyse and examine the applicability of the law of limitation to proceedings under the Arbitration and Conciliation Act, 1996, vis-à-vis two aspects in particular. The first of these aspects being the limitation as applicable to the initiation of arbitration, be it by reference to arbitration by the court or by filing an application of appointment of an arbitrator in court, and the second being the limitation as applicable to the substantive claims in arbitration.

The law of limitation and the statutory regime for applicability of limitation to arbitration

The law of limitation is essentially a statute in the civil law system, which prescribes a maximum period, after the happening of an event, in which legal action can be commenced. The happening of this event, is often called the cause of action, which means the bundle of facts which constitute to establish the infringement of right. In India, the law of limitation is governed by the Limitation Act, 1963 (hereinafter referred to as “the Limitation Act”), and Section 3 of the Limitation Act of bars the remedy of filing of suits, appeals and applications, after prescribed period of time.1 Thus, an action cannot be initiated by a party if the prescribed time has passed after accrual of cause of action on the basis of which the action has been initiated.

The law of limitation is based on the following maxim[1], vigilantibus non dormientibus jura subveniunt which means “laws serve the vigilant, not those who sleep.” Additionally, Halsbury’s Laws of England[2], states the objectives of the law of limitation as follows:

“The Courts have expressed at least three different reasons supporting the existence of statutes of limitation i.e.―

(a) that long dormant claims have more of cruelty than justice in them;

(b) that a defendant might have lost the evidence to dispute the State claim; and

(c) that persons with good causes of actions should pursue them with.”

Similarly, the Delhi High Court in Satender Kumar v. MCD[3] (Satender Kumar), while highlighting the objectives of law of limitation stated that due to long passage of time vital evidence which would be the defence of the opposite party is bound to get lost or misplaced. Therefore, seeking adjudication of claims preferred after long lapse of time would cause more injustice than justice.

Arbitration is not an exception to this principle, and the law of limitation also applies to it. Section 43(1) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Arbitration Act”)[4] states that “the Limitation Act, 1963 (36 of 1963), shall apply to arbitrations as it applies to proceedings in court”.

Applicability of the Limitation Act for initiation of arbitration

The question now arises as to when does the cause of action to initiate arbitration arise, and when does it stop. In this part, we go on to see the application of the law of limitation vis-à-vis initiation of arbitration. Broadly speaking arbitration can be initiated by means of three methods:

(i) By sending a notice of invocation to the other party within the meaning of Section 21 of the Arbitration Act. This is also the point of commencement of an arbitration proceeding.

(ii) By filing an application under Section 11 of the Arbitration Act. This section provides that a party can approach the Court for appointment of arbitrator, if both parties fail to appoint an arbitrator, either under an agreed procedure as per the agreement between the parties, or upon notice of invocation of arbitration.

(iii) By filing an application under Section 8 of the Arbitration Act. Section 8 empowers a party to apply, to a Court before which an action may have been brought in a case where an arbitration agreement exists, to refer the parties to arbitration. Therefore, in a case where an arbitration agreement exists between the parties, and one party has still brought a civil action before the court or judicial authority, the opposing party can approach the court by filing an application under Section 8 praying for the matter to be referred to arbitration.

The question now to be analysed is what the time period for initiation of arbitration is, and when does the limitation for this begin. One of the early judgments which sets the law in this regard is the judgment of Inder Singh Rekhi v. DDA[5] (“Inder Singh Rekhi”), the Court observed that:

“… in order to be entitled to an order of reference under Section 20 (Section 11 of the Arbitration Act, which was previously Section 20 of the Arbitration and Conciliation Act, 1940) it is necessary that there should be an arbitration agreement and secondly, difference must arise to which this agreement applies. The existence of a dispute is, therefore, essential for appointment of an arbitrator under Section 8 or a reference under Section 20 of the Act.”

The Court’s reading was in respect of Section 20 of the Arbitration and Conciliation Act, 1940 (hereinafter referred to as “the old Act”) which is essentially Section 11 of the Arbitration Act, and the element of dispute is contained in Section 21 of the Arbitration Act. Therefore, even under the Arbitration Act, in order to get a dispute referred under Section 11 of the Arbitration Act, the necessary ingredients are the existence of a dispute, and the second ingredient being the existence of an arbitration agreement.

The Court also went on to define that “A dispute arises where there is a claim and a denial and repudiation of the claim.”

Further, even R.S. Bachawat’s Law of Arbitration[6] defines the word dispute in following terms:

“…there can only be a dispute when a claim is asserted by one party and denied by the other on whatever grounds. Mere failure or inaction to pay does not lead to the inference of the existence of dispute. Dispute entails a positive element and assertion in denying, not merely inaction to accede to a claim or a request. Whether in a particular case a dispute has arisen or not has to be found out from the facts and circumstances of the case.”

The Court then went on to hold that the starting point for the cause of action for determining the limitation for a Section 20 petition or a Section 8 application would be the point from when the dispute arose, by observing that:

“4. In order to be entitled to ask for a reference under Section 20 of the Act there must not only be an entitlement to money but there must be a difference or dispute must arise. … when the assertion of the claim was made on 28-2-1983, and there was non-payment, the cause of action arose from that date.”

 The observation of the Supreme Court was in view of the applicability of Article 137 of the Limitation Act to a petition under Section 11 (Section 20) or a petition under Section 8. Article 137 is the article which applies to any petition which is filed in court, which reads “Three years from when the right to apply accrues”. Therefore clearly, the “right to apply” for a petition under Section 8 or Section 11 would accrue only once the dispute has accrued, and therefore the starting point for limitation of an application under Section 8 or Section 11 would be the accrual of the dispute.

Even before the judgment of Inder Singh Rekhi8, the Supreme Court of India had clarified that Article 137 (erstwhile Article 181) of the Limitation Act, 1963, would be applicable to petitions moved before the Court, even if they are moved under the Arbitration Act. This was the observation in Wazir Chand Mahajan v. Union of India9, which laid down that Article 181 of the old Limitation Act, 1908 would be applicable to applications filed under Section 20 of the old Act.

There could also be other instances where a dispute could arise. A dispute could also arise when one party gives a notice of invocation/appointment of arbitrator to the other party, and the other party either fails to do so, or fails to agree on an appointment10. The limitation would then start from that date, for the purpose of filing a petition under Section 11 or Section 8.

In view of the above discourse, it is evident, that the starting point of limitation for initiation of arbitration, is from the date when the dispute arose, and the stopping point is the giving of the notice of invocation, or the filing of the Section 11 or Section 8 petition.

Applicability of the Limitation Act to substantive claims in arbitration

The next question which arises is how to judge when the limitation for the substantive claim starts, and when does it stop. While in the previous section we discussed what is the right time period to initiate arbitration, we contrast this section by analysing the prescriptive time period for a substantive claim within the arbitration. Therefore, this section deals with the cause of action for a claim, and not the cause of action for an arbitration.

One such question arose for consideration in Panchu Gopal Bose v. Board of Trustees for Port of Calcutta11 (“Panchu Gopal”). In this case, the petitioner had made its claim for the first time in the year 1979. Thereafter no payment was forthcoming towards this claim. However, the petitioner thereafter failed to take any follow-up action, up until November 1989, that means well over 10 years. In November 1989 the petitioner sent a notice of invocation for appointment of arbitrator to the respondent, where after the respondent immediately refuted it.  In this case, the Court held that the cause of arbitration arises when the claimant becomes entitled to raise the question, that is, when the claimant acquires the right to require arbitration. The Court therefore observed that “the limitation would run from date when the cause of arbitration would have accrued, but for the agreement”. Therefore, the Court found that in this case the cause of arbitration had accrued back in 1979, when it became entitled to payment, and not in 1989 when the dispute arose. Therefore, the claim of payment was held to be hopelessly barred by limitation.

Similarly, even in J.C. Budhraja v. Orissa Mining Corpn. Ltd.12 (“J.C. Budhraja”), where it was the petitioner’s contention that the limitation for the claims would begin to run from the date on which the difference arose between the parties, the Court refuted the contention and observed to the contrary. In this case the Court took notice that the notice for invocation of arbitration was served on 4-06-1980, and it had to be seen whether on that date, the claims were barred. The Court then went on to observe that that claim arose on 14-4-1977 when the final bill was prepared, and not on 4-6-1980, when the notice invoking arbitration was sent.

The Delhi High Court, in Satender Kumar13 observed that limitation for filing a petition for appointment of an arbitrator would be different from the limitation for a claim and the accrual/arising of cause of action for a claim would vary as per the facts and circumstances of each case, and the nature of jural relationship between the parties. In this particular case, the Court held that Article 18 of the Limitation Act would be applicable, and the cause of action arose in that particular case upon completion of work. Similarly, in MCD v. Gurbachan Singh and Sons14 (“Gurbachan Singh”) it was observed that a claim pertaining to work completed in 1994 for which the claim was filed only in the year 2000, was barred by limitation, as the cause of action arose in the year 1994.

Therefore, what becomes apparent from this discourse is, that as far as the starting of limitation period for a substantive claim is concerned, the instance where the cause of action arises, depends on the facts and circumstances of each case, and is not merely the point where the dispute arises.

As far as the stopping of the period of limitation of a claim or a counterclaim is concerned, the Supreme Court’s judgment in State of Goa v. Praveen Enterprises15 makes the law very clear. In respect of claims in arbitration, the Court clarifies by a combined reading of Section 21 of the Arbitration Act, and Section 3 of the Limitation Act, 1963, the following aspects:

  1. A claim for which a notice invoking arbitration is given, the date of stopping of limitation, is the date when a notice invoking arbitration is given.
  2. In case of the claims, where there is no notice of invocation given, and they are added directly in the statement of claim, then the date of filing of the statement would be the relevant date when the limitation stops to run.
  3. In the case of a claim, for which neither a notice of invocation is given, nor they were contained in the original statement of claims, the relevant date for stopping of the limitation period would be, the date on which the amendment in the original statement of claims, incorporating this new claim is filed.
  4. In the case of a claim in the nature of a set-off, the same above rules being Rules 1, 2 and 3 would apply. That means the date of stopping of limitation would be the date when either the main claim is invoked, or filed in the statement of claims, or incorporated by way of an amendment, respectively.
  5. In the case of a counterclaim, ordinarily, the date when the counterclaim is filed would be the date relevant for determining the date of stopping of limitation period.
  6. However, in the case of a counterclaim, where before filing the counterclaim, the counter claimant has, by way of a separate notice of invocation, invoked the counterclaim, then that would be the date relevant for the stopping of the limitation period.

Court’s view on the difference between the period of limitation for a claim and for filing of a petition

The Courts in India have time and again reiterated that there is a marked difference between the limitation period for filing a petition under Section 11 or Section 8, and the limitation period for a claim to be raised in arbitration.

The Supreme Court has in J.C. Budhraja16 cautioned that “the period of limitation for filing a petition under Section 8(2) seeking appointment of an arbitrator cannot be confused with the period of limitation for making a claim”. In this case the Court had highlighted the error made by the arbitrator while confusing both issues.

In Union of India v. L.K. Ahuja and Co.17, an application was made to the Court for the appointment of arbitrator in year 1976 after the denial of the request by respondent in the same year. However, the claim which anticipated to be referred to the arbitration was pertaining to the work completed in the year 1972. The Supreme Court observed that:

“8. In view of the well-settled principles we are of the view that it will be entirely a wrong to mix up the two aspects, namely, whether there was any valid claim for reference under Section 20 of the Act and, secondly, whether the claim to be adjudicated by the arbitrator, was barred by lapse of time. The second is a matter which the arbitrator would decide unless, however, if on admitted facts a claim is found at the time of making an order under Section 20 of the Arbitration Act, to be barred by limitation.”

Apart from the key difference of the limitation period itself, the difference also exists in the stage when the limitation aspect of both issues can be looked into by a Court or an arbitrator. While the limitation period for filing a petition for appointment of an arbitrator or reference of disputes to arbitration is to be seen by the Court, the limitation aspect of the substantive claims is looked into by the Arbitral Tribunal and not the Court. The only exception to this rule is if the claims to be referred to arbitration are hopelessly barred by limitation, which is apparent from admitted facts and documents.

The Delhi High Court explained this distinction in Satender Kumar18, by observing:

 “The limitation for filing a petition, seeking reference of disputes to arbitration, is different than the period of limitation for the subject claims as such. Meaning thereby, that the petition may be within limitation because, it may be filed within three years of arising of disputes, however the main claims are time barred or not is an issue on merits to be decided in arbitration proceedings The second aspect, and which is in fact is the more important aspect, is that, if on admitted facts, the claims are clearly barred by limitation at the time of passing of the order under Section 20 of the Arbitration Act, 1940, then there need not be reference of the disputes to arbitration because there is no entitlement to money, and therefore a dispute or difference with respect to the same, once the same are clearly time barred.

Another instance where the Court refused to refer dead claims to arbitration is in Progressive Constructions Ltd. v. National Hydroelectric Power Corpn. Ltd.19, wherein it was been held that claims which are ex facie barred by limitation need not be referred for decision in the arbitration proceedings. Further, even in National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd.20, it has been held that dead claims (long barred) need not be referred to arbitration.

Since these judgments, there has been a slight evolution in law, in terms of the amendment brought in Section 1121, where the Court, while considering an application for appointment, now needs to confine itself to the question whether the arbitration agreement exists or not, and need not go into any other aspects. However, despite this marked change in law, it can still be argued, that in the case of dead claims, which are hopelessly barred by limitation, there is nothing to be referred to arbitration, and thus the Court may still refuse an appointment on this ground.

Conclusion

Applicability of the law of limitation to arbitration proceedings is much more similar to its applicability to a suit initiated under the Code of Civil Procedure, 1908. However, the difference arises with respect to the date on which the dispute arises and the date on which request for arbitration has been made to the respondent. As these dates decide the validity of application made to the court, with respect to the law of limitation.

Ultimately, the Courts are empowered to dismiss the application even if it is within time, in case where substantive claim is time barred on admitted facts. As, it would save the party from the cost of arbitration, especially in case where the arbitrator could erroneously hold the time-barred claim as claim within time, ultimately leading to a failure in being able to enforce such a claim.


Working with Adwitya Legal LLP as Partner, Arbitration and Dispute Resolution, e-mail: gunjan@adwlegal.co.in.

Author is grateful to Mr. Akash Kishore, who is currently interning with Adwitya Legal LLP, for his research inputs.

1 Provided under First Schedule to the Limitation Act, 1963.

[1] Vanka Radhamanohari v. Vanka Venkata Reddy, (1993) 3 SCC 4.

[2] Fifth Edn. (2008).

[3] 2010 SCC OnLine Del 424.

[4] S. 37 of the Arbitration Act, 1940.

[5] (1988) 2 SCC 338.

[6] Wadhwa and Co. (2005).

[8] (1988) 2 SCC 338.

[9] (1967) 1 SCR 303.

[10] State of Orissa  v. Damodar Das, (1996) 2 SCC 216.

[11] (1993) 4 SCC 338.

[12] (2008) 2 SCC 444.

[13] 2010 SCC OnLine Del 424.

[14] 2014 SCC OnLine Del 19.

[15] (2012) 12 SCC 581.

[16] (2008) 2 SCC 444.

[17] (1988) 3 SCC 76.

[18] 2010 SCC OnLine Del 424.

[19] 2009 SCC OnLine Del 2199.

[20] (2009) 1 SCC 267.

[21] By way of the Arbitration and Conciliation (Amendment) Act, 2015, S. 11(6-A) was inserted which reads, “The Supreme Court or, as the case may be, the High Court, while considering any application under sub-s. (4) or sub-s. (5) or sub-s. (6), shall, notwithstanding any judgment, decree or order of any court, confine to the examination of the existence of an arbitration agreement.”

Case BriefsHigh Courts

Kerala High Court: The Division Bench of C.T. Ravikumar and K. Haripal, JJ., partially allowed the instant appeal challenging the correctness of the orders of the District Judge whereby the District Judge had declined to interfere with the arbitral award.

Properties of the appellants were acquired by the National Highway Authority for the purpose of widening the Valayar-Vadakkanchery sector of NH 47 under a common notification and compensation was awarded by the Special Land Acquisition Officer. Special Land Acquisition Officer had granted a total compensation of Rs 2,65,252 to appellant 1 on the basis of comparable sales method while compensation of Rs 3,37,337 was awarded to the appellant 2. Being dissatisfied with quantum of compensation, the appellants invoked the arbitration clause. The arbitrator granted an additional compensation of Rs 1,04,449 as an enhancement, besides 9% interest on the enhanced amount from the date of dispossession to appellant 1 and an enhancement of Rs 1,67,215 and 9% interest on the additional compensation was granted to appellant 2. On being aggrieved by the order of the arbitrator, the appellants moved the District Court under Section 34 of the Arbitration Act. Later on, the instant appeal was filed against the order of District Judge.

The appellants contended that, the claims made were not properly considered by the Special Land Acquisition Officer and the Arbitrator, therefore, in order to prove the prevailing market value of the land and for quantifying the other damage suffered by them, they might be afforded one more opportunity and the matters might be remanded, enabling them to adduce further evidence.  The appellants argued that they had not been granted solatium and interest on solatium, which they were entitled to as per the decision in Paul Mani v. Special Deputy Collector and Competent Authority, 2019 SCC OnLine Ker 2700.

The Court observed, the argument of appellants that the claims were not considered by the authorities properly was factually incorrect as it was obvious from the orders passed by the Arbitrator, that even in the absence of the appellants producing supporting documents or proof, the Arbitrator had taken into consideration post-notification developments while granting enhancement in land value as well as the value of structures. As mentioned earlier, the Arbitrator had granted enhancement in compensation under all possible heads, making good the loss sustained by the appellants. The Court said, “It is the settled proposition of law that matters cannot be remanded back to the authority below in order to decide any question of fact which was not properly pleaded and no evidence was let in by the parties in support of the claim.” While reiterating settled proposition of law the Court said, having regard to the scope and ambit of Section 34 of the Arbitration Act that Court’s power is merely supervisory in nature and the Court cannot act as though exercising the appellate jurisdiction. The Court also expressed that, no power had been invested by the Parliament in the Court to remand the matter to the arbitral tribunal. Therefore, the demand for remitting the case back to the arbitrator was denied. On the contention of non-payment of solatium, the court relied on Union of India and Another v. Tarsem Singh, (2019) 9 SCC 304, wherein the Supreme Court had held, the provisions of the Land Acquisition Act 1894, relating to solatium and interest contained in Section 23(1A) and (2) and interest payable in terms of the proviso to Section 28 will apply to acquisitions made under the National Highways Act.

In view of the above, it was held that even in the absence of specific plea or proof, the appellants were entitled to claim solatium and interest on solatium under Section 23(1A) and (2) and interest in terms of the proviso to Section 28 of the Land Acquisition Act and the respondents were directed to quantify the amounts of solatium accordingly. [Eliyamma v. Deputy Collector, 2021 SCC OnLine Ker 80, decided on 07-01-2021]

Case BriefsHigh Courts

Calcutta High Court: Ashis Kumar Chakraborty, J., while allowing the present petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 appointed former judge of the present High Court, Sahidullah Munshi as the sole arbitrator in the present matter.

In the present application under Section 11(6) of the Arbitration and Conciliation Act, 1996, petitioner made a prayer for appointment of a sole Arbitrator to adjudicate the disputes arisen between the parties relating to the agreement dated 16-05-2013 (hereinafter referred as “the said contract”) entered into between the parties herein. By the said contract the respondent inducted the petitioner as the contractor to carry out development work of surrounding areas of Platinum Jubilee Building, terms and conditions of which were specified in the contract. Clause 8 of the said contract contemplated that all disputes arising between the parties shall be referred to the sole arbitrator appointed by the Director, Indian Statistical Institute.

It is the case of the petitioner that since the respondent wrongfully reclaimed its various claims, disputes have arisen which are required to be adjudicated through arbitration. Accordingly, by a dated 9-06-2017, the petitioner invoked the arbitration agreement and requested the respondent to refer the dispute to arbitration by considering provisions contained in Section 12(5), read with fifth and seventh schedule to the Act of 1996. The respondent, however, by their letter dated 12-07-2017, sought to refer certain disputes which had arisen between the parties relating to another contract for construction of the said building. The petitioner by further letter dated 16-07-2018 addressed to the respondent for appointment of an Arbitrator to adjudicate the disputes between the parties relating to the contract with no response from the respondents. Thus, the petitioner has filed the present application praying for relief mentioned above.

Court observed, “In view of the incorporation of the provisions of sub section (5) of Section 12 and the fifth and seventh schedule to the Act of 1996 and the decisions of the Supreme Court in the case of Voestalpine Schienen Gmbh v. Delhi Metro Rail Corporation Limited, (2017)4 SCC 665 and TRF Limited v. Energo Engineering, (2017)8 SCC 377, the Director of the respondent cannot appoint an Arbitrator.” Further, allowing the present petition, Court-appointed former judge, Mr Sahidullah Munshi as the sole arbitrator in the present matter.[Paul Builders Pvt. Ltd. v. Indian Statistical Institute, 2021 SCC OnLine Cal 21, decided on 11-01-2021]


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Case BriefsHigh Courts

Himachal Pradesh High Court: L. Narayana Swamy, CJ., while allowing the present petition under Section 11 of the Arbitration and Conciliation Act, 1996, appointed Arun Kumar Goel, Former Judge of Himachal Pradesh High Court, as a sole arbitrator in the instant matter.

Rajesh K. Sharma, Assistant Solicitor General of India, raised an objection that since a technical issue is involved in the present dispute, therefore, the same is required to be considered and adjudicated by a technical person only and not by a retired Judge of the High Court. In support of his objection, reliance was placed on General Condition No. 70 of the Arbitration Clause of Contract which said;

“Arbitration – All disputes, between the parties to the Contract (other than those for which the decision of the Commander Contract or any other person is by the Contract expressed to be final and binding) shall, after written notice by either party to the Contract to the other of them, be referred to the sole arbitration of an [Serving Officer having degree in Engineering or equivalent or having passed final/direct final Examination of sub-Division II of Institution of Surveyor (India) recognised by the Govt. of India.] to be …”

 Rejecting the aforementioned contention, Court acknowledged that the arbitral issue involved between the parties can be adjudicated by a retired judge and must not be awaited for the want of technical expertise.[S.P. Singla Constructions v. Chief Engineer, 2021 SCC OnLine HP 1, decided on 01-01-2021]


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Case BriefsHigh Courts

Himachal Pradesh High Court: L. Narayana Swamy CJ., while exercising its powers under Section 11(6) of the Arbitration and Conciliation Act, 1996, appointed an Arbitrator and further allowed to either determine its own procedure for settling the dispute or run itself as per Section 23 and Section 29A of the Act.

Background

The present petition is moved under Section 11(6) of the Arbitration and Conciliation Act, 1996, by a Company who was awarded the work for widening and strengthening the existing single/inter-mediate lane carriage way with geometric improvement of two-lane carriage way in KM 58/100 to 105/0 of National Highway 70 by the respondents, seeking a direction for appointment of arbitrator for resolving the dispute between the petitioner and the respondents.

Respondents have filed reply in which objection regarding claim being barred by limitation has been taken. Senior counsel for the petitioner relies on the judgment of Supreme Court in, Uttrakhand Porv Sanik Kalyan Nigam v. Northern Coal Field, SLP (C) No. 11476 of 2018, wherein it was categorically stated that, “delay itself is a question of law and facts and has to be decided by the Arbitral Tribunal or the Arbitrator appointed by the Court.”

 Observations

Recognizing the contention forwarded by the counsel for the petitioner and reiterating the Supreme Court finding in the aforementioned case, the Court, in exercise of its powers under Section 11(6) of the Arbitration and Conciliation Act, 1996, appointed A.K. Goel, retired judge of the Himachal Pradesh High Court as the sole Arbitrator and further said, “It shall be open for the learned Arbitrator to determine his own procedure with the consent of the parties. Otherwise, also, entire procedure with regard to fixing of time limit for filing pleadings or passing of Award stands prescribed under Sections 23 and 29A of the Act. Liberty is also reserved to the respondent to raise objections, if any, by way of filing counterclaim before the Arbitrator.”

 Decision

While allowing the present petition, the Court clarified the practice and procedure related to the exercise of Court’s power under Section 11(6) of the Arbitration and Conciliation Act, 1996 and instances which may fall under the direct determination of the Arbitral Tribunal.[Shivalaya Construction (P) Ltd. v. State of H.P., 2020 SCC OnLine HP 2801, decided on 27-11-2020]

Counsel for the Petitioner: Bimal Gupta, Senior Advocate with Kusum Chaudhary, Advocate.

Counsel for the Respondents: Ritta Goswami, Additional Advocate General.


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Legislation UpdatesStatutes/Bills/Ordinances

President promulgates Arbitration and Conciliation (Amendment) Ordinance, 2020

Amendment of Section 36

In Section 36 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the principal Act), in sub-section (3), after the proviso, the following shall be inserted and shall be deemed to have been inserted with effect from 23rd day of October, 2015, namely:—

“Provided further that where the Court is satisfied that a prima facie case is made out,-—

(a) that the arbitration agreement or contract which is the basis of the award; or

(b) the making of the award,

was induced or effected by fraud or corruption, it shall stay the award unconditionally pending disposal of the challenge under section 34 to the award.”.

Explanation.— For the removal of doubts, it is hereby clarified that the above proviso shall apply to all court cases arising out of or in relation to arbitral proceedings, irrespective of whether the arbitral or court proceedings were commenced prior to or after the commencement of the Arbitration and Conciliation (Amendment) Act, 2015.

Substitution of new Section for Section 43J

For section 43J of the principal Act, the following section shall be substituted, namely:-—

Norms for accreditation of arbitrators

“43J. The qualifications, experience and norms for accreditation of arbitrators shall be such as may be specified by the regulations.”

Omission of Eighth Schedule

The Eighth Schedule to the principal Act shall be omitted.

Read the Ordinance here: ORDINANCE


Ministry of Law and Justice

[Dt. 04-11-2020]

Case BriefsHigh Courts

Allahabad High Court: In a case revolving around the appointment of the arbitrator, Sangeeta Chandra, J., disposed of the application in respondent’s favour.

Counsel for the respondent, Puneet Chandra expressed his wish of not filing a response as the respondent party has no objection if this Court appoints an arbitrator. It is further submitted that the counsel has spoken with Justice Anil Kumar (Retd.) who has agreed to act as an arbitrator.

Counsel for the applicant, Gantavya Chandra argues that in an earlier arbitration application between the same parties which was disposed in February 2020, Justice Anurag Kumar (Retd.) was appointed as the arbitrator. He is currently dealing with a similar dispute, having considerable experience in the field and he is acquainted with all the facts which would make it easier for the applicant to be heard before him. This in turn will result in expeditious disposal of the case.

The respondent’s counsel retorted to this by referring to Schedule V Rule 24 of the Arbitration and Conciliation Act, 1986. He further submits that if the arbitrator is currently serving or has served within the past three years as an arbitrator in another arbitration on a related issue involving between the parties or a dispute between the parties, then it might raise justified doubts as to his independence and impartiality. He also refers to Section 12(1)(a) of the Act, 1996.

Further, counsel for the applicant refers to the explanation 1 of Section 12(1)(a)(b), which says that the grounds stated in 5th Schedule shall only serve as a guide in determining whether the circumstances exist which can give rise to a justified doubt as to the independence or impartiality of an arbitrator. He also has contended that Schedule-V does not talk of grounds of ineligibility of the Arbitrator but talks of ground which might raise justifiable doubts as to the independence and impartiality. He has further submitted that in all cases, Rule 24 would not be a complete bar. He relies on the judgment of the Supreme Court in HRD Corpn. v. GAIL (India) Ltd., (2018) 12 SCC 471.

After careful consideration of the facts, circumstance and arguments this Court observed that the Arbitration and Conciliation Act, 1996 has been framed with the avowed object of expeditious disposal of the disputes arising out between the parties under an agreement which has an arbitration clause in it and in case, the opposite party herein wish to challenge any finding of the proposed Arbitrator of the applicant, namely, Justice Anurag Kumar (Retd.), they may raise valid ground of Rule 24 of the Schedule-V even on the termination of the Arbitration and the passing of the Arbitral Award.

In view of the above, the Court disposed the application with the direction that Justice Anil Kumar (Retd.) be appointed as the arbitrator.[Trading Engineers International Ltd. v. U.P. Power Transmission Corporation Ltd., 2020 SCC OnLine All 1272, decided on 22-10-2020]


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Case BriefsHigh Courts

Uttaranchal High Court: Manoj K. Tiwari, J. decided the Appeal filed against the order of the District Judge in an Arbitration case.

The facts giving rise to the instant appeal are that, the appellant raised an objection under Section 34 of the Arbitration and Conciliation Act, 1996, which was duly rejected by the District Judge hence, the appeal is filed under Section 37 of the said Act.

The factual matrix of the case was that the appellant contracted with the respondent (contractor) for the construction of a pump house building. The tenure specified for the said construction was for 11 months, but due to some delay the in handing over the construction site to the said respondent; subsequently, the construction had to be stopped due to various reasons. But consequently, the work was allegedly completed.

Since dispute arose between the parties regarding payment for the work done by the respondent, therefore, the matter was referred for arbitration in terms of the contract executed between the parties. The Arbitrator passed an award where he partially allowed the claims made by the respondent. Therefore aggrieved by the award of the Arbitrator the respondent filed an appeal on the ground that misconduct was caused by the Arbitrator.

Eventually, the District Judge rejected the said application filed under Section 34 of the Act. The only ground raised in the instant Appeal was that learned Arbitrator overlooked the condition contained in Clause 11(C) of the contract, while passing the award. The said Clause (C) was that “no claim in respect of the compensation, howsoever arising as a result of the extension granted shall be admitted.”

Counsel for the appellant Virndra Kapurwan, submitted that the Arbitrator erred in allowing the claim made by the respondent, without appreciating the real controversy involved in the matter. He further submitted that the District Judge erred in rejecting the challenge thrown by the appellant by making an application under Section 34 of the Act.

The Court found that the Arbitrator had considered the alleged clause and then passed the award. A perusal of the award revealed that Arbitrator had held that appellant was equally responsible for the delay in completion of work. It was further held that the appellant could not the shelter behind the Clause for a long delay.

The Court observed that the District Judge had rightly held that the ground was not available under Section 34 of the Act of 1996. “Misconduct by the Arbitrator was no more a ground of challenge to an arbitration award.”

The Court relied on the judgment of Navodaya Mass Entertainment v. J.M. Combines, (2015) 5 SCC 698, where the Supreme Court had held that “Once the Arbitrator has applied his mind to the matter before him, the Court cannot reappraise the matter as if it were an appeal and even if two views are possible, the view taken by the Arbitrator would prevail.”

In view of the aforesaid legal position, the Court held that the learned District Judge was justified in holding that he cannot go into the question of the reasonableness of the reasons given by Arbitrator. Learned District Judge has rightly held that an award given by the Arbitrator cannot be challenged on the ground of misconduct on the part of the Arbitrator. Hence, the appeal was dismissed.[Union of India v. Allied Traders, 2019 SCC OnLine Utt 671, decided on 03-07-2019]

Case BriefsHigh Courts

Himachal Pradesh High Court: The instant petition was related to Section 29-A of Arbitration and Conciliation Act, 1996 entertained by Jyotsna Rewal Dua, J. where the petitioner sought an extension of time.

Factual matrix of the case was that when the dispute arose between the parties the matter was referred to a sole arbitrator who was Superintending Engineer. The Tribunal was unable to conclude the proceedings within the stipulated time of one year. Therefore the period of the passing of award was delayed by six months, but the extension was not fruitful as the period expired and yet the case was undecided. It was further suggested by the Arbitrator to apply to a Competent Authority for further extension of time.

Hence both the parties requested the Authority for extension of time for a further period of six months. The Authority further directed the parties to take steps in accordance with the amended provisions of the Act, 1996.

Anil Jaiswal and Rameeta Rahi, counsels for the respondents submitted a letter dated 10-07-2019, addressed to the respondents by the Executive Engineer, to the effect that their office had no objection in case the mandate of learned Arbitrator if was extended by six months.

The Court observed that, Section 29-A (4) and (5) which provided that, if the award was not made within the period specified or within the extended period, the mandate of the arbitrator was to be terminated unless the Court, either prior to or after the expiry of the period so specified, extended the said period. It was further observed that the proceedings were at a final stage, hence, the Court allowed the petition. The parties, through learned counsel representing them, were directed to co-operate in the arbitral proceedings and not to seek unnecessary adjournments before the Arbitrator and an endeavor was made to complete the arbitral proceedings well before the time granted.[Devki Nand Thakur v. State of H.P., 2019 SCC OnLine HP 988, decided on 12-07-2019]

Case BriefsHigh Courts

Bombay High Court: C.V. Bhadang, J. allowed an appeal filed against the decision of the District Judge whereby he had dismissed appellant’s petition under Section 34 of the Arbitration and Conciliation Act, 1996.

The appellant had filed the said petition under Section 34 against the award of the Arbitrator made in the subject arbitration proceedings between the appellant and the respondent. The Arbitrator had rejected the counter claim filed by the appellant. The District Magistrate refused to consider some of the aspects challenged by the appellant on the ground that those were only findings of facts recorded by the Arbitrator and in the result dismissed his petition. Aggrieved thereby, the appellant filed the present appeal under Section 37.

S.D. Padiyar, Advocate representing for the appellant contended that the findings recorded by the Arbitrator were perverse and liable to set aside. Per contra, A.D. Bhobe, representing the respondent supported the impugned decision.

Relying on Mahendra Kumar v. State of M.P., (1987) 3 SCC 265, the High Court observed that Order 8 Rule 6-A CPC does not bar the filing of the counter claim by the defendants after filing of the written statement and the counter claim can be filed after delivery of defence provided that the cause of action for the same has accrued prior to such delivery of defence. Therefore, the Court held that it could not be disputed that the cause of action for the counter claim by the appellant seeking compensation in respect of the LPG cylinders and the pressure regulators which were found missing had arisen prior to the delivery of defence and, thus, on this ground, the counter claim could not have been dismissed.

Regarding the issue of consideration of finding of facts, the Judge relied on Associates Builders v. DDA, (2015) 3 SCC 49, observed: “I am conscious of the legal position that a finding of fact properly recorded by the Arbitrator is not open to challenge in the limited supervisory role attributed to the Court under Section 34 of the Act and much less in a further appeal under Section 37 of the Act. However, if the finding recorded is patently illegal and perverse where the Arbitrator has refused to acknowledge the material on record, the same, in my considered view, would be open to challenge as held by the Supreme Court in the case of Associate Builders.”

In the present case, it was found that one of the issues, the Arbitrator failed to take note of the documents produced even though he had acted upon the same in the earlier part of the award. Relying further on Mc Dermott International Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181 for the proposition that the Court in the exercise of the jurisdiction under Section 34 cannot substitute or modify the award, the High Court quashed the award passed by the arbitrator while allowing the appeal. [Bharat Petroleum Corporation Ltd. v. Anuradha Ajit Malgaonkar, 2019 SCC OnLine Bom 1244, decided on 04-07-2019]

Case BriefsHigh Courts

Orissa High Court: Biswanath Rath, J. dismissed an arbitration appeal filed under Section 37(1) of the Arbitration and Conciliation Act, 1996.

The appellant in his appeal, challenged the judgment of the District Judge, Sambalpur in Arbitration Petition No. 2 of 2004 dated 27-11-2006 where the District Judge while dismissing the Arbitration Petition confirmed the award passed by the learned Arbitrator involving Arbitration Case No. 2 of 2001

Learned counsel for the appellant, S. Mohanty, restricted his submission to the extent that for the receipt of the payment on the final bill without protest and having no claim any further involving the contract, whether the Arbitrator, as well as the District Judge, arrived in right conclusion involving the award and judgment therein? In filing the written note of argument, the learned counsel extended his claim to the interest part also.

The Court upheld the Arbitrator’s findings that the appellant has got the work executed through the claimant unnecessarily delayed the payment of final bill and that sole object behind the same was to ensure that in future the claimant would not make any claim against the respondent as in course of the execution of the work, the respondent had committed breach of contract and caused undue harassment to the claimant. In the contract, there was no provision for obtaining any such no claim undertaking from the contractor before payment of the final bill.

Relying on Asian Techs Ltd. v. Union of India, (2009) 10 SCC 354, the Court found that the final protest was received by the respondent under protest and therefore, the contract was not concluded. In view thereof, the Court found no scope for interfering on this aspect particularly exercising power under Section 37 of the Act.

On the issue of payment of interest, the Court relied upon Jiprakash Associates Ltd. (Jal) v. Tehri Hydro Development Corporation India Ltd., 2019 SCC Online SC 143 and Sree Kamatchi Amman Constructions v. Divisional Railway Manager (Works), (2010) 8 SCC 767 and held that unless and until there was an agreement, a party was not entitled to pre and pendente lite interest.

In view of the above, the Court found no scope for interfering in the aspect pertaining to payment of interest and dismissed the arbitration appeal.[Mahanadi Coal Fields Ltd. v. Kishorilal Loomba and Sons, 2019 SCC OnLine Ori 188, decided on 13-05-2019]

Case BriefsHigh Courts

Bombay High Court: S.C. Gupte, J. while setting aside an arbitral award for patent illegality, observed that “any forum, which adjudicates upon the rights and liabilities of the parties based on a contract, is enjoined upon to determine those rights and liabilities in accordance with the contractual terms, be it a court or an arbitral forum.”

The respondents were the borrowers of the Madhavpura Mercantile Coop. Bank Ltd. whose accounts were declared as non-performing assets (NPAs) for committing default in repayment of loans. To expedite the recoveries, the Bank formulated Compromise Scheme of Settlement (CSS-2013). As per the CSS, the NPA date in case of respondents was expressly stated to be 31-3-2001 and it was expressly stipulated that no conditional proposal for settlement or proposal disputing the NPA date would be accepted. The respondents accepted CSS unconditionally. Later, the respondents raised a dispute about the NPA date and therefore disputed their liability under the CSS. The matter went to arbitration and the Arbitral Tribunal accepted the respondents’ case on the applicable NPA date and made an award in their favour. Aggrieved thereby, the Bank filed the present petition.

The High Court was of the view that the arbitrator exceeded his jurisdiction by reformulating the contract between the parties contained in the CSS. It was noted that CSS-2013 was not a statutory scheme and nothing prevented the petitioner from naming any particular date as the NPA date, 31-3-2001 was treated as NPA date on the basis of statutory auditor’s report. It was made clear in CSS-2013 that the scheme could not be accepted conditionally. It was for the individual debtor to accept or reject the scheme. The respondents accepted it unconditionally which brought about a concluded contract substituting the original contract of loan between the parties. The Court said: “The arbitrator, who was to adjudicate the rights and liabilities of the parties, was expected to determine such rights and liabilities under such contract, namely, CSS2013. It was not open to him to question CSS-2013 or relieve any debtor from his obligations under it on some notion of equity or sympathy.” 

It was also observed: “The consensus between the parties to refer their dispute to arbitration merely implies that the parties are agreeable to have the dispute adjudicated by an arbitral forum as opposed to a court of law. The rights and liabilities, which are to be thereby determined, are the rights and liabilities arising under the contract. Such consensus does not in any way impinge upon these rights and liabilities.”

It was held that the impugned award, thus, deserved to be quashed, both on the grounds of patent illegality, since the declaration in it was in the face of a contract as well as for the reason of the arbitrator having taken an impossible view, or a view which no fair or judiciously mined person  would take. [Madhavpura Mercantile Coop Bank Ltd. v. Rasiklal D. Thakkar, Commercial Arbitration Petition No. 179 of 2016, decided on 25-03-2019]

Case BriefsHigh Courts

Rajasthan High Court: A Bench of Arun Bhansali, J. terminated the mandate of an arbitrator by stating that if an arbitrator creates a doubt in the mind of a party regarding prejudice against it and qua the impartial conduct of proceedings before the arbitral tribunal it renders him de jure/de facto incapable to perform his functions effectively.

The petitioner through his counsel Ankit Sareen has alleged that the arbitrator appointed has charged a fee which was beyond the fee prescribed under the Schedule IV attached to Arbitration Act along with the 2017 notification of High Court. Also even during the pendency of the writ petition before the High court, the arbitrator continued with the proceedings in the Commercial Court. Thus he has prayed before this court the mandate of the arbitrator be terminated under Section 14(1)(a) of the Arbitration Act.

The point to be considered was as to when the services of the arbitrator stands terminated which was then answered by the court by stating that he can be terminated when he becomes de jure or de facto unable to perform his functions. In this case, apart from charging an illegal fee, the arbitrator conducted the proceedings ex-parte order and posted the matter for final arguments despite the pendency of the writ petition. Accordingly, it suffices to hold the arbitrator guilty for his alleged acts and thus his mandate stood terminated under Section 14(1)(a) of the Act and the petitioner was allowed to appoint a substitute arbitrator.[Doshion (P) Ltd. v. Hindustan Zinc Ltd., 2019 SCC OnLine Raj 6, Order dated 03-01-2019]

Case BriefsHigh Courts

Delhi High Court: A Division Bench comprising of A.K. Chawla and S. Ravindra Bhat, JJ. ruled that Single Judge of the High Court could not have justly interfered with the arbitral award passed by the tribunal which was primarily based on findings of fact.

The appellant was aggrieved by the judgment of the Single Judge who upheld the objections of the respondent under Section 34 of the Arbitration and Conciliation Act, 1996 against the arbitral tribunal’s award.

The parties entered into a contract for construction work. The work was to be executed by the appellant as per the terms of the work order. Dispute arose between the parties regarding the payments relating to the contract. On an application moved by the appellant under Section 11, the Court appointed an arbitrator. The arbitration agreement itself was earlier disputed by the respondent but the arbitrator, as well as the Single Judge, consistently ruled in favour of its existence. The arbitrator in his award, party allowed a claim of the appellant. The award was challenged by the respondent by filing objections under Section 34. The Single Judge allowed the objections ad set aside the award. Aggrieved thereby, the appellant preferred the present appeal under Section 37.

Raghvendra M. Bajaj, Advocate led contentions on behalf of the appellant and relied on a series of e-mails and letters exchanged between the parties to support its claim. The respondent was represented by Amit Mahajan, Advocate. It is pertinent to note that the tribunal gave its award after perusing such correspondence; while the Single Judge assumed that only the written contract entered into between the parties was to be considered.

The High Court referred to Associate Builders v. DDA, (2015) 3 SCC 49, wherein the Supreme Court cautioned that under Section 34, the courts should not set aside arbitral award merely because they do not agree with interpretation of the agreement given by the arbitrator, rather it has to be shown that tribunal’s findings were based on no evidence or irrelevant evidence or was perverse. In the present case, the findings of the tribunal were pursuant to a process of reasoning and discussion and analysis of evidence and documents presented before it. It was observed that in such case, the scope of interference under Section 34 was minimal. The court held that the Single Judge could not have justly interfered with the award. Consequently, the appeal was allowed and the impugned judgment was set aside. [Wishwa Mittar Bajaj and Sons v. Shipra Estate Ltd. and Jaikishan Estates Developers (P) Ltd., 2018 SCC OnLine Del 12918, dated 14-12-2018]

Case BriefsHigh Courts

Jharkhand High Court: An arbitration appeal was filed before a Single Judge Bench comprising of Shree Chandrashekhar, J., under Section 37(1)(b) of Arbitration and Conciliation Act, 1996.

Facts of the case were that claimant, a construction company, was allotted the construction work of open channel and tunnel under Konar Irrigation Project and for the same, an agreement was executed. The construction work was to be completed in 3 years where time was the essence of the contract. Claimant had conveyed the problem faced by them in construction but the response of the Water Resources Department for the same took a long time. Claimant approached the Superintending Engineer, Tenughat Dam Circle to enter into arbitration and entering the same, arbitration took place and an award favouring claimant was passed.

The award was challenged by the Department by a petition under Sections 12, 13, 16 and 34 of the Act before the High Court. Impugned order’s legality was in question on the ground that the claims of claimant were barred under the limitation law. Claimant contended that Arbitrator answered the issue of limitation which is a question of fact against the Department and therefore it was not open to re-examination under Section 34 of the Act.  Court viewed that it would be wrong to completely immune finding in arbitration from judicial scrutiny in a proceeding under Section 34 or Section 37 as the same cannot be done if an error on the face of award is found.

High Court was of the view that the finding by Arbitrator of the claims not barred by limitation was an error apparent on the face of the award. Therefore, the arbitration appeal partly succeeded and impugned order to the extent where claims of claimant were allowed was declared time-barred claims and was set aside. [State of Jharkhand v. Sutlej Construction Limited,2018 SCC OnLine Jhar 1474, dated 12-10-2018]

Case BriefsHigh Courts

Karnataka High Court: A Single judge bench comprising of Dinesh Maheshwari, J. while hearing a petition praying for the appointment of an arbitrator, ruled that if an agreement between parties provides for arbitration and a dispute arises therefrom then it must be settled through arbitration.

The petitioner company, involved in exporting of fruit products, approached the respondent to process mangoes for export purpose. On respondent’s assurance that it possessed the necessary machinery and expertise to process mangoes, an agreement was executed between the parties. However, respondent delayed in the process of unloading mangoes. Since the season was drawing to a close and there was a loss in business due to the delays caused by respondent, the petitioner gave it a concession for procuring mangoes on its own and a further concession for processing the rejections into mango pulp. But still the respondent did not take steps to procure mangoes and also failed to meet the quantity and quality of the finished product.

Despite these lapses, the respondent raised an invoice which the petitioner refused to clear. In turn, the petitioner sent it a legal notice demanding payment for loss caused due to respondent’s failure to meet its contractual obligations. Since respondent did not revert to the said notice, petitioner invoked arbitration clause of the agreement nominating an arbitrator and called upon respondent to do the same. Respondent’s failure to even nominate an arbitrator, constrained the petitioner to file the instant petition.

The limited aspect for the court’s consideration was whether there existed an arbitration agreement between the parties. On perusal of the agreement executed between parties, the court noted that clause 5 of the said agreement provided that in case of disputes between parties not being settled amicably, the same would be settled in arbitration.

It was held if a dispute between the parties cannot be resolved amicably and there is the failure to appoint an arbitrator, then in such a case, it is just and proper that an independent arbitrator be appointed to adjudicate upon and decide such dispute. Accordingly, the petition was disposed of by appointing a retired judge as an arbitrator.[Pellagic Food Ingredients (P) Ltd. v. Oceanic Edibles International Limited, Civil Miscellaneous Petition No. 300 of 2016, decided on 09-10-2018]

Case BriefsHigh Courts

Jammu & Kashmir High Court: A Division Bench comprising of Sindhu Sharma, Dhiraj Singh Thakur, JJ., allowed an LPA filed against the order of the writ court whereby the court had remanded the matter back to the arbitrator/additional registrar, co-operative societies and directed him to conduct the arbitration as per the provisions of Arbitration and Conciliation Act after formulating proper issues.

The main issue that arose before the Court was whether the High Court had erred in passing the impugned order.

The Court observed that from a bare perusal of the award passed by the arbitrator, it can be concluded that it was a non-speaking order which did not specify about the liability of the respondent. The Court further observed that since the Cooperative Societies Act, 1989 is a self-sufficient law which provides for the procedure of conducting the arbitration. Lastly, the Court observed that there is no mandate on the part of the arbitrator to frame issues before adjudicating a dispute, however, he may do so for the sake of crystallizing the dispute.

The Court held that the order of the writ court should be modified to the extent that it directs the arbitration proceedings to be conducted under the Arbitration and Conciliation Act. The Court held that the arbitrator may conduct the proceedings under the Cooperative Societies Act, 1989. Resultantly, the Court partly allowed the appeal. [Citizens Co-operative Bank Ltd. v. Krishan Lal Choudhary,2018 SCC OnLine J&K 747, order dated 22-10-2018]

Case BriefsHigh Courts

Delhi High Court: A Single Judge Bench comprising of Pratibha M. Singh, J., allowed a petition filed by the Food Corporation of India challenging the award passed by the Arbitrator whereby its claim was dismissed by a cryptic award.

The matter arose out of an agreement between the petitioner and the respondent whereby the respondent had agreed to store, mill and supply certain quantity of paddy to the petitioner. Due to default on the part of the respondent in the performance of terms of agreement, the petitioner incurred a huge loss. Consequently, in pursuance of the arbitration clause as contained in the agreement, the petitioner moved for arbitration. However, even after more than 30 hearings of the matter before the arbitrator, the respondent did not appear even once. Hence, the arbitrator, vide the award impugned, dismissed the claim of the petitioner observing that since the respondent did not appear, nothing remained to be adjudicated. Aggrieved thereby, the instant petition was filed.

The High Court, on perusal of the award impugned, held that it was unsustainable. It was noted that the petitioner had deposited, before the arbitrator, detailed accounts of dealings which formed the basis of its claim. The Court was of the view that the reasoning given by the arbitrator for dismissal was quite cryptic. Detailedaffidavit was filed by the petitioner, however, none of the facts were considered by the arbitrator. The Court observed that without giving any findings on the claim of the petitioner, the arbitration could not have been terminated. Non-appearance of a party-respondent cannot result in dismissal of claims. Such a course of action defies basic logic. A claimant cannot be punished for non-appearance of the respondent. An arbitrator has a duty to decide claims in accordance with law. Therefore, the petition was allowed and the award impugned set aside. [FCI, Ludhiana v. Gupta Rice & General Mills, Ludhiana,2018 SCC OnLine Del 11961, decided on 13-09-2018]

Case BriefsSupreme Court

Supreme Court: A Bench comprising of A.M. Sapre and S. Abdul Nazeer, JJ. disposed of an appeal filed against the judgment of the Bombay High Court whereby the petition of the appellant was dismissed.

The appellant was a Government of India undertaking controlled by the Ministry of Chemicals and Fertilizers. A dispute arose between the appellant and the Maharashtra Housing and Area Development Authority in relation to the disposal of 263.57 acres of land owned by the appellant in Pimpri, Pune. The appellant, in order to resolve the dispute, filed a writ petition before the High Court which was dismissed. Aggrieved thereby, the appellant preferred the instant appeal.

The Supreme Court referred to ONGC v. CCE, 1995 Supp (4) SCC 541 and ONGC v. City and Industrial Development Corpn. (Maharashtra) Ltd., (2007) 7 SCC 39 and observed that Order 27 Rule 5 CPC casts a duty on the Court to ensure that such disputes should be resolved amicably. Also, the parties had submitted that they were willing for the matter to be referred to arbitration. Accordingly, the Court appointed Justice R.V. Raveendran (former Judge, Supreme Court) as the sole Arbitrator for settling the dispute between the parties. The appeal was disposed of in the terms above. [Hindustan Antibiotics Ltd. v. MHADA, 2018 SCC OnLine SC 1732, decided on 04-10-2018]

Case BriefsHigh Courts

Calcutta High Court: A Single Judge Bench comprising of Ashis Kumar Chakraborty. J. decided an arbitration petition, wherein the arbitrator was appointed by the Court in light of disagreement between the parties on appointment of the arbitrator.

The parties entered into a Contract for certain works. Clause 10.1 of the General Conditions of Agreement provided that any dispute arising under and out of the said contract was to be decided by arbitration process conducted by the arbitrator appointed by mutual consent of both the parties. Eventually a dispute arose between the parties under the Contract. The petitioner suggested that the matter be decided by SCOPE, Delhi. However, the respondent refused the suggestion. Therefore, the application under Section 11(6) of the Arbitration and Conciliation Act, 1996 was filed before the Court for appointing the arbitrator.

The Court perused the agreement and found that there was no dispute as to the fact that there was an arbitration clause in the contract in terms of Clause 10.1 of the General Conditions of Contract. The Court held that in view of the insertion of sub-section (6A) of Section 11, an application under Section 11(6) has to succeed if there is no dispute among the parties as to the existence of an arbitration clause. Accordingly, the petition was allowed and retired Justice Tapan Kumar Dutt was appointed as the sole arbitrator to decide upon the matter. [F. Harley and Co. (P) Ltd. v. SAIL, 2018 SCC OnLine Cal 2054, dated 07.05.2018]