Arbitration Award

Q. Whether the appeal from application under Section 34 in present case is maintainable under Section 37 of the Arbitration and Conciliation Act, 1996?

Section 37(1) makes it clear that appeals shall only lie from the orders set out in Sub-clauses (a), (b) and (c) and from no others. The court held that the refusal to set aside an arbitral award must be under Section 34, i.e., after the grounds set out in Section 34 have been applied to the arbitral award in question, and after the Court has turned down such grounds. The order to return the application to the appropriate court in the present case does not amount to an order "refusing to set aside an arbitral award Under Section 34". Thus, the appeal is not maintainable under Section 37.

BGS SGS SOMA JV vs. NHPC Ltd. (10.12.2019 - SC) : MANU/SC/1715/2019

Q. Whether factual errors can be corrected in an arbitration award where the test of "public policy" has been applied and whether re-examination is necessary in this particular dispute?

In the instant case, it was held that when a court is applying the "public policy" test to an arbitration award, it does not act as a court of appeal and consequently factual errors cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. Thus, the court was of the view that an award based on little evidence or on evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on this score. Furthermore, a court does not sit in appeal over the award of an Arbitral Tribunal by reassessing or reappreciating the evidence. It was clarified that an award can be challenged only under the grounds mentioned in Section 34(2) of the Arbitration and Conciliation Act, 1996. The Arbitral Tribunal has examined the facts and held that both the second respondent and the appellant are liable. Lastly, in the absence of any ground under Section 34(2) of the Act, the court held that it is not possible to re-examine the facts.

Pragya Electronics Pvt. Ltd. vs. Cosmo Ferrites Ltd. and Ors. MANU ID - MANU/DE/1150/2021

Q. Whether contrary views taken by the same Arbitral Tribunal in different cases acts as a valid ground to interfere with award?

In the instant case, the High Court of Delhi rejected the Petitioner's contention that the very same Arbitral Tribunal had taken a contrary view in another case and therefore, the impugned award is liable to be set aside. The Court held that said contention is unpersuasive in view of limited scope of examination under Section 34 of the Act and Court has to merely examine whether the Arbitral Award falls foul of the fundamental policy of Indian law or is patently illegal on the face of the record and not to review the decision of the Arbitral Tribunal on merits.

Delhi State Industrial and Infrastructure Development Corporation Ltd. vs. Mapsa Tapes Pvt. Ltd. (08.04.2021 - DELHC) : MANU/DE/0670/2021

Q. Whether the award of interest compounded with quarterly rests falls foul of the fundamental policy of Indian law?

In the instant case, the High Court of Delhi rejected the contention that award of interest at the rate of 12 percent per annum compounded with quarterly rests falls foul of the fundamental policy of Indian law. The Court took note of the fact that there are several Indian legislations that provide for compound interest including the Micro, Small and Medium Development Act, 2006. Further it was observed that in cases, where the contract, common trade practice, or statute contemplates payment of interest on compound basis, the same is required to be paid. Thus, it was held that per se, compound interest cannot be held to be falling foul of the fundamental policy of Indian law.

Steel Authority of India Limited vs. Jaldhi Overseas Pte. Ltd. (31.05.2021 - DELHC) : MANU/DE/1020/2021

Q. Whether Section 9 of the Arbitration and Conciliation Act, 1996 is maintainable to secure the entire awarded amount when the court under Section 34 had granted stay subject to deposit of 75% of awarded amount?

In the instant case, the Court held that there was no infirmity in the order dismissing Section 9 as once the Court seized of the Section 34 proceedings with respect to the Arbitral Award has deemed it fit to grant stay of execution of the Arbitral Award subject to deposit of only 75% and not 100% of the Award Amount. However, if at the same time another Court, in Section 9 proceedings, comes to the conclusion that the entire Award Amount and not only 75% thereof, is required to be secured, the same would result in conflicting orders on the same matter and would not behave well for the principle of comity of different Benches of the same Court. With regards to fraudulent transfer by the Respondent, the Court held that such plea could only be examined in execution proceedings.

Avon Healthcare Private Limited vs. Trade International and Ors. (19.04.2021 - DELHC) : MANU/DE/0776/2021

Q. Whether the award converting claim for damages under Section 73 of the Contract Act into a claim for liquidated damages under Section 74 of the Contract Act in the absence of any pleadings legally valid?

In the instant case, the Division Bench of High Court of Bombay upheld the judgment of the Ld. Single Judge setting aside the award u/s 34 holding that since the view of the learned arbitrator was not a possible view, Ld. single Judge was right in setting aside such interpretation of contract which disclosed patent illegality and impossible view and which overlooked the crucial and vital part of evidence. In the present case, neither there was any provision for payment of any liquidated damages nor it was fixed as a genuine pre-estimate damages by both the parties and thus was required to be pleaded and proved by the claimant that the said amount claimed by him was in the nature of liquidated damages was a genuine pre- estimate of damage fixed by both the parties and such loss was suffered by him. Lastly, the Court held that arbitrator has converted the claim for damages under Section 73 of the Contract Act into the claim for liquidated damages under Section 74 of the Contract Act without any pleading on the part of the claimant or otherwise which is patently Illegal.

Ratnam Sudesh Iyer vs. Jackie Kakubhai Shroff (20.04.2021 - BOMHC) : MANU/MH/1202/2021

Q. Whether an "award" delivered by an Emergency Arbitrator under the Arbitration Rules of the Singapore International Arbitration Centre ["SIAC Rules"] can be said to be an order Under Section 17(1) of the Arbitration and Conciliation Act, 1996?

Arbitration Act gives full party autonomy to have a dispute decided in accordance with institutional Rules, which can include Emergency Arbitrators delivering interim orders, described as "awards" and such orders are referable to and are made under Section 17(1) of the Arbitration Act. So this question has been answered affirmatively. NV Investment Holdings LLC vs. Future Retail Limited and Ors. (06.08.2021 - SC) : MANU/SC/0510/2021

Q. In partition matters, does the non-registration of an arbitral award render it invalid?

The test in such a case is whether the document itself creates an interest in a specific immovable property or merely creates a right to obtain another document of title. If a document does not by itself create a right or interest in immovable property, but merely creates a right to obtain another document, which will, when executed create a right in the person claiming relief, the former document does not require registration and is accordingly admissible in evidence.

In the instant case, it is clear that there was no right created in any specific item or asset of the joint family properties in any person but the parties resolved to take certain actions in pursuance of a family arrangement. The award is more in the nature of a memorandum of understanding, a mere agreement of the steps to be taken in future for the division of the properties. Hence, the said document did not require registration.

K. Arumuga Velaiah vs. P.R. Ramasamy and Ors. (27.01.2022 - SC) : MANU/SC/0097/2022

Q. If a comulsorily registrable document is not registered, what is the validity of the arbitration agreement contained in it?

Relying on SMS Tea Estates (P) Ltd. v. Chandmari Tea Co. Private Ltd. MANU/SC/0836/2011, the Court observed that an arbitration agreement does not require registration under the Registration Act. Even if it is found as one of the clauses in a contract or instrument, it is an independent agreement to refer the disputes to arbitration, which is independent of the main contract or instrument. Therefore having regard to the proviso to Section 49 of the Registration Act read with Section 16(1)(a) of the Arbitration and Conciliation Act, 1996Act, an arbitration agreement in an unregistered but compulsorily registerable document can be acted upon and enforced for the purpose of dispute resolution by arbitration.

Korukonda Chalapathi Rao and Ors. vs. Korukonda Annapurna Sampath Kumar (01.10.2021 - SC) : MANU/SC/0757/2021

Q. Can any order of the Arbitral Tribunal be challenged under Article 226 or 227 of the Constitution?

An order passed by the Arbitral Tribunal during Arbitration proceedings cannot be challenged either under Article 226 or 227 of the Constitution of India, unless a remedy is provided, under Section 34 of the Act. The parties have to wait till the award is passed and then challenge the same.

Reliance was placed on S.B.P. and Co. vs. Patel Engineering Ltd. and Ors. MANU/SC/1787/2005 wherein the Supreme Court has stipulated that the object of minimizing judicial intervention while the matter is in the process of being arbitrated upon, will certainly be defeated if the High Court could be approached under Article 227 or under Article 226 of the Constitution against every order made by the arbitral tribunal. Therefore, it is necessary to indicate that once the arbitration has commenced in the arbitral tribunal, parties have to wait until the award is pronounced unless, of course, a right of appeal is available to them under Section 37 of the Act even at an earlier stage.

Bhajarang Cranes vs. Shiram Transport Finance Company Ltd. (02.02.2022 - APHC) : MANU/AP/0214/2022

Q. Does the scope of Section 9 of Arbitration and Conciliation Act, 1996 extend to enforcement of award?

The true object and intention behind Section 9 of the Act is to provide for interim or provisional measures to a party before or during or any time after making an award which are protective in nature. The orders contemplated under Section 9 inter-alia pertain to preservation, interim custody or sale of goods which are the subject matter of the arbitration agreement, securing the amount in dispute in the arbitration, detention, preservation or inspection of any property or thing which is the subject matter of the arbitration, interim injunction or appointment of a Receiver or such other interim measures of protection which may appear to be just and convenient.

The relief which the petitioner seeks in the instant case is for withdrawal of the amount deposited by the respondent upon furnishing appropriate security by the petitioner. The scope of Section 9 of the Act cannot be extended to enforcement of the award or granting the fruits of the award to the award holder as an interim measure. The order sought for by the petitioner goes beyond the realm of securing the petitioner and shifts to encashment of the security or equitably dealing with the same. This is not permissible even on the broadest interpretation of Section 9 of the Act.

Satyen Construction vs. State of West Bengal and Ors. (08.04.2022 - CALHC) : MANU/WB/0513/2022

Section 9 is not intended to provide a choice to a litigant, as to whether to approach the Court under Section 9 or to the Arbitral Tribunal under Section 17. Quintessentially, the appropriate remedy, for seeking interlocutory protection, in the event of a default in adherence to the terms of the contract by one or the other party, amenable to resolution by arbitration, is Section 17. Section 9 is merely intended to provide interim protection to the parties, where it is necessary for the Court to grant such protection in order that the arbitral proceedings are not frustrated, or the award that may come to be rendered therein being reduced to a paper decree. It may be invoked at a pre-arbitral stage, during the arbitration proceedings, or after the arbitral proceedings have ended but before the arbitral award is enforced.

Hindustan Cleanenergy Ltd. Vs. Maif Investments India 2 Pte. Ltd. and Ors. : MANU/DE/0274/2022

Q. Whether the "sum" awarded under Section 31(7)(a) of the Arbitration and Conciliation Act, 1996 would include the interest pendente lite or not?

If Section 31(7)(a) of the 1996 Act is given a plain and literal meaning, the legislative intent would be clear that the discretion with regard to grant of interest would be available to the Arbitral Tribunal only when there is no agreement to the contrary between the parties. The phrase "unless otherwise agreed by the parties" clearly emphasizes that when the parties have agreed with regard to any of the aspects covered under Clause (a) of Sub-section (7) of Section 31 of the 1996 Act, the Arbitral Tribunal would cease to have any discretion with regard to the aspects mentioned in the said provision. Only in the absence of such an agreement, the Arbitral Tribunal would have discretion to exercise its powers under Section 31(7)(a) of the 1996 Act. The discretion is wide enough. It may grant or may not grant interest. It may grant interest for the entire period or any part thereof. It may also grant interest on the whole or any part of the money.

Delhi Airport Metro Express Private Limited vs. Delhi Metro Rail Corporation (05.05.2022 - SC) : MANU/SC/0591/2022