Arbitrability Of Dispute

Q. Whether the questions regarding arbitrability of the dispute are to be exclusively decided by the arbitral tribunal under Section 11 the Arbitration and Conciliation Act, 1996?

In the present case, the court found that the Respondent had not specifically denied their liability or disputed the same. At this stage the Court is only to see the existence of the arbitration agreement, which is not denied, and the objection of the Respondent should be left for the adjudication of the arbitral tribunal. Further, it issettled that the Court is not to enter into a mini or roving trial and take an elaborate view so as to usurp the jurisdiction of the arbitral tribunal on the issue, as the parties have opted for an alternate dispute resolution mechanism. The court held that the issue has to be looked into by an arbitrator and that the objections of the Respondent can certainly be examined under Section 16 of the Arbitration and Conciliation Act, 1996, thus making the dispute arbitrable.

Geo Chem Laboratories Pvt. Ltd. vs. United India Insurance Co. Ltd. (24.05.2021 - DELHC) : MANU/DE/1019/2021

Q. Whether landlord-tenant disputes governed by provisions of Transfer of Property Act, 1882, arbitrable?

A three judge-bench doubts the legal ratio expressed in Himangni Enterprises v. Kamaljeet Singh Ahluwalia MANU/SC/1307/2017 : (2017) 10 SCC 706 that landlord-tenant disputes governed by the provisions of the Transfer of Property Act, 1882, are not arbitrable as this would be contrary to public policy.

Overruling this ratio, the court held that Landlord-tenant disputes governed by the Transfer of Property Act are arbitrable as they are not actions in rem but pertain to subordinate rights in personam that arise from rights in rem. Such actions normally would not affect third-party rights or have erga omnes affect or require centralized adjudication. An award passed deciding landlord-tenant disputes can be executed and enforced like a decree of the civil court. Landlord-tenant disputes do not relate to inalienable and sovereign functions of the State. The provisions of the Transfer of Property Act do not expressly or by necessary implication bar arbitration. Transfer of Property Act, like all other Acts, has a public purpose, that is, to regulate landlord-tenant relationships and the arbitrator would be bound by the provisions, including provisions which enure and protect the tenants.

Q. Whether consumer disputes are non-arbitrable?

Citing a precedent Booz Allen and Hamilton Inc. v. SBI Home Finance Limited, the Supreme Court has held that the remedy provided under the consumer protection act is in addition to the provisions of any other law for the time being in force. Thus, if an individual chooses to file a complaint in the first instance before the competent consumer forum, then such individual cannot be denied relief by invoking Section 8 of Arbitration Act.

Emaar MGF Land Limited vs. Aftab Singh (10.12.2018 - SC) : MANU/SC/1458/2018

Q. Whether an arbitration reference is maintainable after admission of Insolvency Resolution petition under Section 7 of Insolvency and Bankruptcy, 2016?

In the instant case, the appellant filed a petition under Section 7 of Insolvency and Bankruptcy Code, 2016 before the NCLT seeking appointment of Resolution Professional. In the said proceedings, NCLT allowed the respondent's miscellaneous application under Section 8 of the Arbitration Act seeking direction to refer the parties to arbitration and dismissed the petition under Section 7 of Insolvency and Bankruptcy Code, 2016.

The apex court observed that if a petition is admitted by the Adjudicating authority under Section 7 of Insolvency and Bankruptcy Code upon satisfaction with regard to default and debt being due from the corporate debtor, then any application seeking reference to arbitration under Section 8 of the Arbitration and Conciliation Act will not be maintainable thereafter

Indus Biotech Private Limited vs. Kotak India Venture (Offshore) Fund and Ors. (26.03.2021 - SC) : MANU/SC/0231/2021

Q. Is the existence of an arbitration clause giving rise to civil liability, enough to stop criminal proceedings?

The mere existence of an arbitration clause or facts giving rise to a civil liability to claim damages cannot be a ground to quash the FIR when the facts of the case also constitute offences punishable under the I.T. Act and under the IPC.

The Apex Court in the case of Trisuns Chemical Industry v. Rajesh Agarwal MANU/SC/0581/1999 held that criminal prosecution cannot be thwarted merely because civil proceedings are also maintainable. The existence of arbitration clause in the contract for supply of goods is not sufficient for quashing the complaint in a case registered under Sections 415 and 420 of Indian Penal Code. It is held that arbitrator is not competent to adjudge an offence. The same proposition is also laid down by the Apex Court in the case of S.W. Palanitkar v. State of Bihar MANU/SC/0672/2001.

V. Narendra Babu and Ors. vs. The State of A.P. and Ors. (31.01.2022 - APHC) : MANU/AP/0140/2022

Q. If a party accepts the amount offered to it, does the dispute between them become non-arbitrable?

In the instant case, the appellant claimed that they were economically coerced into accepting the amount. They had informed the opposite party multiple times about their inability to pay their Income Tax dues, the pressure from banks, etc. In such a situation they had no other option but to accept the amount offered and deal with their financial crisis.

The Court recognized the fact that an aggrieved party can be the victim of economic coercion which results in its signing a document which discharges the other party of its obligations. Relying on the judgments of Associated Construction v. Pawanhans Helicopters Ltd. MANU/SC/7630/2008 : (2008) 16 SCC 128 and National Insurance Co. Ltd. v. Boghara Polyfab Pvt. Ltd. MANU/SC/4056/2008 the Court upheld the concept of Economic Duress. It held that an application at the stage of appointment of Arbitrator, cannot be conclusive of the pleas or contentions that the claimant or the concerned party can take, in the arbitral proceedings. At this stage, therefore, the court-which is required to ensure that an arbitrable dispute exists, has to be prima facie convinced about the genuineness or credibility of the plea of coercion; it cannot be too particular about the nature of the plea, which necessarily has to be made and established in the substantive proceeding.

The Oriental Insurance Co. Ltd. and Ors. vs. Dicitex Furnishing Ltd. (13.11.2019 - SC)

Q. Does a dispute become non-arbitrable due to the fact that the parties did not resort to mediation first as provided for in the agreement?

The Court observed that it is necessary to bear in mind that mediation is a voluntary process. The parties must engage voluntarily. If circumstances exists where mediation is perceived to be not feasible - as is asserted by the petitioners in the case at hand - the precondition to attempt resolution through mediation cannot obstruct or impede reference of disputes to arbitration. In the present case, there is material to indicate that a mediation before the Facilitator is not feasible.

Vijay Kumar Munjal and Ors. vs. Pawan Munjal and Ors. (17.02.2022 - DELHC) : MANU/DE/0541/2022