Q. Whether a contract which is intended for advancement of trade shall be regarded as being in restraint of trade?
In the instant case, it was held that a negative covenant is enforceable in law and is not contrary to Section 27 of the Contract Act. The court upheld the grant of ad-interim measure u/s 9 enforcing the negative covenant in the agreement between the parties subject to final outcome of principal proceedings and dismissed the appeal against the same. Further, the Court accepted the contention of the Respondent (Original Petitioner) that as the Respondent had shared with the Appellant various sensitive and confidential documents and information including the list of their customers, the negative covenant in the contract would not be a restraint of trade u/s 27 of Indian Contract Act and could be enforced. Lastly, it was held that a contract which is intended for advancement of trade shall not be regarded as being in restraint of trade. The Court has to decide as a matter of law whether the contract has or not in restraint of trade and whether, if so, it is reasonable.
Arnav Enterprises vs. IOSIS Spa and Wellness Private Limited (20.04.2021 - BOMHC) : MANU/MH/1060/2021
Q. Whether the Registrar can pass an interim order while exercising powers under Section 84 of the Multi States Cooperative Societies Act, 2002?
In the instant case, the Court held that while Section 84 empowers the Registrar to refer certain disputes to arbitration, the same Section also provides that the provisions of Arbitration and Conciliation Act, 1996 shall apply to arbitration under the MSCS Act. It was further held that under the A & C Act, the powers to grant interim orders or protection are either available with the Court under Section 9 of the Act or with the Arbitrator under Section 17 of the Act and it is clear that no powers are vested with the Registrar to pass any interim orders while exercising its powers under Section 84 of the MSCS Act to refer the disputes to Arbitration. Thus, considering the facts of the case and the legal precedents, the court set aside the direction issued by the Registrar in the impugned order and held that the registrar can only exercise only such powers that are statutorily conferred on them.
National Federation of Fishermen Co-operative Ltd. vs. Union of India and Ors. (21.05.2021 - DELHC) : MANU/DE/0942/2021
Q. Whether change of place of arbitration requires a written agreement, unless so stipulated in the Arbitration Agreement?
In the instant case, the Supreme Court held that an order of the Arbitrator recording change of venue from the one provided in agreement constitutes change of place of arbitration and does not require a written agreement by the parties unless the agreement stipulates the same. The Court held that in the present case shifting of venue is really a shifting of the venue/place of arbitration with reference to Section 20(1), and not with reference to Section 20(3). The Court held that once venue changes, the courts at the new venue would have exclusive jurisdiction even though the clause in agreement provided jurisdiction of the courts at the original venue.
Inox Renewables Ltd. vs. Jayesh Electricals Ltd. (13.04.2021 - SC) : MANU/SC/0285/2021
Q. Whether the claim of overheads is distinct from claim of loss of profits in the arbitral proceedings?
In the instant case, the Court held that the Arbitral Tribunal could have proceeded to reject or allow the claim to the extent it considered reasonable but it could not direct that it be calculated on the basis of accounts for the year, which were neither produced nor relied upon by parties. The Court further set aside the award rejecting the claim for overheads on the ground that it stood covered by loss of profits. The Court held that claim of overheads was over and above the claim for loss of profits and the decision of the Arbitral Tribunal that such overheads had been absorbed in profits is patently erroneous on the face of the record.
Delhi Metro Rail Corporation Ltd. vs. N.S. Publicity (i) Pvt. Ltd. (13.04.2021 - DELHC) : MANU/DE/0821/2021
Q. Whether an Arbitrator can accept electronic evidence without an affidavit u/s 65 B of Indian Evidence Act?
In the instant case, the High Court of Delhi rejected the Petitioner's contention that the Arbitrator could not have accepted electronic evidence in the form of email evidence without an affidavit under Section 65B of the Indian Evidence Act, 1872. The court did so because of two reasons, first, in terms of Section 1 of the Indian Evidence Act 1872, the said Act is not applicable to proceedings before the arbitrator and second, no such objection was taken on behalf of the petitioners at the appropriate stage, that is, before the Arbitrator.
Megha Enterprises and Ors. vs. Haldiram Snacks Pvt. Ltd. (15.04.2021 - DELHC) : MANU/DE/0791/2021
Q. Whether Section 34(4) of the Arbitration and Conciliation Act, 1996 can be resorted to enable the arbitrator to cure certain curable defects?
In the instant case, the Court held that if it was proved that contract was procured by fraud, specific performance of the said contract could not be granted notwithstanding that the same was not one of the reasons stated in the letter of termination. The Court rejected the contention of the Respondent that in absence of reasons on the aforesaid issue of fraud, the present proceedings are required to be adjourned to enable the parties to resume arbitration. The Court held that it is not a case where reasons for the conclusion are sketchy and require clarification but rather is a case where the Arbitral Tribunal has not decided one of the principal disputes between the parties and this defect cannot be cured by adjourning the present proceedings to enable the Arbitral Tribunal to issue any clarification/reasons. The Court set aside the award giving liberty to the Respondent to refer the disputes to arbitration and further clarified that the scope of Section 34(4) of the A & C Act is limited and it can be resorted to enable the arbitrator to cure certain curable defects.
Airports Authority of India vs. Bentwood Seating System (p) Ltd. (27.05.2021 - DELHC) : MANU/DE/0997/2021
Q. Are Principals of Natural Justice, Code of Civil Procedure, 1908 or the Indian Evidence Act, 1872 applicable to Arbitration Proceedings?
Section 19 of the Arbitration and Conciliation Act, 1996 states that while the arbitral tribunal is not bound by the Code of Civil Procedure, 1908 or the Indian Evidence Act, 1872, in the absence of any agreement between the parties as to the procedure to be followed, the arbitral tribunal may conduct the proceedings in the manner it considers appropriate. Section 18 mandates that both parties shall be treated with equality and each party shall be given a full opportunity to present his case. Sections 24 and 25 and newly enacted Section 29A of the Act, emphasise on quick and prompt adjudications.
In the instant case, the Respondent was deprived of a fair opportunity of hearing. The Respondent had also moved an application for waiver of costs, which was rejected and the arbitrator proceeded ex parte. As the evidence of the Respondent by the way of affidavit was not taken on record, their contentions and evidence were not considered and thus debilitated the Respondent from stating their case. Given the aforesaid factual position, there was violation of principles of natural justice and lack of full opportunity as envisaged by Section 18 of the Act, thereby, impeding a fair and just decision. Consequently, the award suffers and is liable to be set aside in terms of Clause (iii) to Section 34(2)(a) as well as Clause (ii) to Section 34(2)(b) of the Act.
Narinder Singh and Sons vs. Union of India (UOI) (18.11.2021 - SC) : MANU/SC/1089/2021
Q. Can there be an implied waiver of applicability of S.12(5) of Arbitration and Conciliation Act, 1996?
The Supreme Court has clearly held that there can be no question of any implied waiver by conduct of the applicability of Section 12(5) and that the proviso could apply only where there was an express agreement by both parties in writing agreeing to waive the applicability of Section 12(5). Short of such express agreement in writing, the conduct of the parties, irrespective of how unequivocally it may imply consent to arbitration by the concerned arbitrator, cannot suffice as waiver of the applicability of Section 12(5) within the meaning of the proviso thereto.
HLL Lifecare Limited vs. Employees State Insurance Corporation (07.03.2022 - DELHC) : MANU/DE/0821/2022
Q. Whether an arbitration Clause found in a document (agreement) between two parties, could be considered binding on a person who is not a signatory to the agreement?
Interpreting the expressions "through or under" in Section 45 of Arbitration And Conciliation Act, 1996 the Court held that though an arbitration normally would take place between parties to the arbitration agreement, it could take place between a signatory to an arbitration agreement and a third party as well. Though the scope of the arbitration agreement is limited to parties who have entered into it and those who claim under or through them, courts under the English law have developed the group of companies doctrine. In substance, the doctrine postulates that an arbitration agreement which has been entered into by a company within a group of companies, can bind its non-signatory affiliates or sister concerns if the circumstances demonstrate a mutual intention of the parties to bind both the signatory and affiliated, non-signatory parties.
In deciding whether a company within a group of companies which is not a signatory to arbitration agreement would nonetheless be bound by it, the law considers the following factors:
- The mutual intent of the parties;
- The relationship of a non-signatory to a party which is a signatory to the agreement;
- The commonality of the subject matter;
- The composite nature of the transaction; and
- The performance of the contract.
Oil and Natural Gas Corporation Ltd. vs. Discovery Enterprises Pvt. Ltd. and Ors. (27.04.2022 - SC) : MANU/SC/0554/2022
Referring to the decision in Mahanagar Telephone Nigam ltd. v. Canara Bank & Ors: MANU/SC/1057/2019, the Court observed that a non-signatory can be bound by an arbitration agreement on the basis of the "group of companies" doctrine, where the conduct of the parties evidences a clear intention of the parties to bind both the signatory as well as the non signatory parties. Courts and tribunals have invoked this doctrine to join a non-signatory member of the group, if they are satisfied that the non-signatory company was by reference to the common intention of the parties, a necessary party to the contract.
Ashav Advisory LLP vs. Patanjali Ayurveda Limited and Ors. (31.01.2022 - DELHC) : MANU/DE/0338/2022
Q. When can the parties obtain an order of reference to Arbitration under Section 21 of Arbitration and Conciliation Act, 1996?
The first condition for invoking Section 21 is that the parties to the suit must agree that any matter of difference between them shall be referred to arbitration. Entire subject matter of the suit may not be referred to arbitration. Parties may agree to only refer a part or portion of the dispute to arbitration. In the context of Section 21, there must be a joining or meeting of minds between the parties to go for arbitration in respect of a subject matter in a pending suit.
The Court further opined that Arbitration is an alternative to the court adjudication process by a private forum chosen by the parties. Normally reference can be made or even directed to the arbitrator only if a preexisting arbitration agreement subsists between the parties. In the absence of a preexisting arbitration agreement, the court has no power, authority or jurisdiction to refer unwilling parties to arbitration.
M.P. Rajya Tilhan Utpadak Sahakari Sangh Maryadit, Pachama, District Sehore and Ors. vs. Modi Transport Service (11.05.2022 - SC) : MANU/SC/0625/2022
Q. What is the effect of Exclusive Jurisdiction clause on the clause specifying seat of arbitration?
Ordinarily, a court having jurisdiction over the seat of arbitration, fixed by contract, would be competent to exercise jurisdiction under Sections 9, 11 and 34 of the Arbitration and Conciliation Act, 1996. However, where the exclusive jurisdiction clause confers exclusive jurisdiction in respect of arbitral proceedings on a court located elsewhere, the Section 11 petition would have to be filed in the High Court having jurisdiction over that place.
Hunch Circle Private Limited vs. Futuretimes Technology India Pvt. Ltd. (02.02.2022 - DELHC) : MANU/DE/0376/2022