ARBITRATION AND CONCILIATION ACT, 1996

Subject Matter

Relevant Section

Key Issue

Citation Details

Summary Judgment

Competence of arbitral tribunal to rule on its jurisdiction

Section 16

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?

Huawei Telecommunications (India) Co. Pvt. Ltd. and Ors. vs. Wipro Limited (24.01.2022 - DELHC) : MANU/DE/0232/2022

facts: On March 22, 2006, Oil and Natural Gas Corporation Limited (“ONGC”) had awarded a contract to Discovery Enterprises Private Limited (“DEPL”). An amount of INR 63.88 crores was supposedly owing to ONGC as a result of DEPL's contract defaults. Because the contract stipulated that disagreements be resolved by arbitration, ONGC filed an arbitration against DEPL and Jindal Drilling and Industries Limited ("JDIL"), a group entity, to recover INR 63.88 crores in overdue dues. JDIL was aggrieved and filed an application under Section 16 of the Arbitration and Conciliation Act, 1996 ("Act"), requesting removal from the list of parties on the grounds that it was not bound by the arbitration agreement because it was not a signatory to the contract containing it ("Section 16 Application"). Following that, ONGC filed a request for discovery and inspection to buttress its claim that DEPL is JDIL's alter ego/agent.

Held: 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:
(i) The mutual intent of the parties;
(ii) The relationship of a non-signatory to a party which is a signatory to the agreement;
(iii) The commonality of the subject matter;
(iv) The composite nature of the transaction; and
(v) The performance of the contract.

Appointment of an Arbitrator

Section 11

Whether Single Judge erred in concluding that arbitration Clause of MoU, having perished with MoU, owing to novation, invocation of arbitration under MoU was belied. The question arises as to Whether Single Judge erred in concluding that arbitration Clause of MoU, having perished with MoU, owing to novation, invocation of arbitration under MoU was belied.

Sanjiv Prakash vs. Seema Kukreja and Ors. (06.04.2021 - SC) : MANU/SC/0238/2021

Facts: Respondent No.3 formed a private corporation and paid for the entire paid-up capital with his own money. Appellant was approached by a foreign corporation seeking long-term equity investment and collaboration. A Memorandum of Knowledge (MoU) was signed by four members of the Appellant's family. The Appellant's family and the corporation then signed a Shareholders' Agreement. The Appellant's family and the corporation entered into a Share Purchase Agreement (SPA) on the same day. Respondent No.3 decided to transfer his stock to be held jointly between Appellant and himself, and Respondent No.2 did the same to be held jointly between Respondent No.1 and herself, resulting in a dispute between the parties. As a result, the appellant filed a petition before the High Court under Section 11 of the Arbitration and Conciliation Act, 1996.

Held: The Supreme Court of India has considered the limiting scope of Section 11 of the Arbitration and Conciliation Act, 1996, and has concluded that the issue of novation of an agreement cannot be decided by courts in the limited prima facie assessment of whether the parties have entered into an arbitration agreement. Thus, set aside the judgment of the High Court. Appeal disposed of.

Application for setting aside arbitral award

Section 34

Whether the Ld. Single Judge's order refusing to condone the appellant's delay in filing an application under Section 34 of the Arbitration Act would be an appealable order under Section 37(1)(c) of the Arbitration Act.

Chintels India Ltd. vs. Bhayana Builders Pvt. Ltd. (11.02.2021 - SC) : MANU/SC/0070/2021

Facts: In the instance case, the single Judge of the High Court dismissed the application for condonation of delay in an application filed under Section 34 of the Arbitration and Conciliation Act, 1996 to set aside an award and consequently dismissed the application filed under Section 34 of the Arbitration and Conciliation Act itself. The Single judge of High Court held that Sub-section (3) of Section 34 of the said Act, by use of the words but not thereafter, as interpreted in Union of India v. Popular Construction Co. restricts the power otherwise vested in Court to condone the delay beyond thirty days, the same also creates a ground of time bar for refusing to set aside the award and was part of the self-contained code for setting aside of the award; thus, refusal to set aside an award on the ground of the said time bar, would be a refusal within the meaning of Section 37 and appealable under Section 37.

Held: The impugned question of law is answered by stating that an appeal Under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996 would be maintainable against an order refusing to condone delay in filing an application Under Section 34 of the said Act to set aside an award. The impugned judgment of the Division Bench under appeal is set aside. Appeal is accordingly allowed.

ARBITRAL TRIBUNAL

Section 2(d)

Whether the private law bound Arbitral Tribunal can apply public law principles or Article 14 against a public body and whether the commercial arbitrators are entitled to settle a dispute by applying what they conceive is 'fair and reasonable'?

Board of Control for Cricket in India vs. Deccan Chronicle Holdings Ltd. (16.06.2021 - BOMHC) : MANU/MH/1437/2021

facts: The claimant, Deccan Chronicle Holdings Ltd (hereafter referred to as DCHL), owned and operated a cricketing franchise in the Indian Premier League known as the Deccan Chargers (IPL). An agreement was signed between Deccan Chargers and the BCCI for a period of ten years. However, Board of Control for Cricket in India (hereinafter referred to as BCCI) terminated the franchise in September 2012. The BCCI also alleged that the franchise had breached the BCCI code. The dispute was brought to the Bombay High Court, which selected former Supreme Court Justice C K Thakker as the sole arbitrator. Deccan Chronicle Holding Ltd was granted Rs Rs 4814, 17, 00,000 by the lone arbitrator, plus interest at 10% per annum from the date of the arbitration procedures, to be paid by the Board of Control for Cricket in India (BCCI). BCCI filed a case with the Bombay High Court under section 34 of the Arbitration and Conciliation Act, 1996, to have the awards set aside.

Held: In the instant case, the court held that a writ court may well hold against a public body on a public law principle or by invoking Article 14; but an arbitrator, constrained as he or she is by the contract, has no such power. Consequently, it was ruled that there is absolutely no authority for the proposition that a private-law-bound tribunal has recourse to hold a public body accountable on the principles under Article 14.
Further, the Hon'ble Court held that commercial arbitrators are not entitled to settle a dispute by applying what they conceive is 'fair and reasonable', in the absence of a specific authorization in the arbitration agreement. Section 28(3) of the Arbitration and Conciliation Act, 1996 mandates the arbitral tribunal to take into account the terms of the contract while making and deciding the award. Further, under Section 28(2), the Arbitral Tribunal is required to decide ex aequo et bono or as amiable compositeur only if the parties expressly authorize it to do so. The Arbitrator is bound to implement the contractual clauses and cannot go contrary to them. Thus, commercial arbitrators cannot decide based on their notions of equity and fairness, unless the contract permits it. Lastly, the Hon'ble Court set aside the Rs 4814 crore arbitral award passed by the Arbitral Tribunal, as the Respondent i.e., Deccan Chronicle Holdings Ltd. was in "unquestionable breach of its contractual obligations".

Arbitration agreement

Section 7

Whether an arbitration clause that allows the arbitration proceeding to be abandoned at the will of one party would be valid in law?


Tata Capital Housing Finance Ltd. vs. Shri Chand Construction and Apartment Private Limited and Ors. (24.11.2021 - DELHC) : MANU/DE/3216/2021

facts: Shri Chand Construction and Apartment Pvt. Ltd. ("Respondent") entered into two separate loan agreements with the Appellant in 2017 for INR 23 million and INR 0.8 million loans, respectively. As security, the Respondent deposited original title deeds to an immovable property with the Appellant. In 2018, the Respondent paid off the loan amounts owed under both loan agreements and asked the Appellant to return the property's original title deeds. The Appellant failed to return the Respondent's original title deeds. The Respondent filed a civil suit in court, seeking INR 34 million in damages. However, since the loan agreements included an arbitration clause, the Appellant filed an application under Section 8 of the Act in order to direct the Respondent to pursue its claim through arbitration.

Held: The High Court of Delhi ruled that an arbitration agreement that gives one party unequal power to unilaterally terminate the arbitration proceedings is illegal because it lacks 'mutuality,' which is an essential feature of an arbitration agreement. The court also held that an arbitration agreement that provides for arbitration of one party's claims while also providing for a remedy of court or any other for the other party's claim would be invalid in law because it would result not only in the splitting of the claims and cause of action, but also in a multiplicity of proceedings and conflicting decisions on the same cause of action.

Power to refer parties to arbitration where there is an arbitration agreement.

Section 8

Whether a party can file a writ petition against an order referring the parties to arbitration under Section 8 of the Act?

Arun Srivastava vs. Larsen and Toubro Ltd. (09.11.2021 - DELHC) : MANU/DE/2959/2021

Facts: The respondent issued a Letter of Intent to the petitioner on October 20, 2019, for the supply, installation, and commissioning of electric works. The parties executed and signed a letter of intent. The petitioner claimed that the respondent wrongfully withheld Rs.12,24,181/- in respect of bills raised by the petitioner against the respondent, which resulted in the filing of a recovery suit for Rs.17,26,000/- before the ADJ court on September 22, 2017. In the aforementioned suit, the respondent filed an application under Section 8 of the  Arbitration and Conciliation Act, 1996 requesting that the parties be referred to arbitration in accordance with the arbitration clause contained in the Letter of Intent. On December 22, 2017, the petitioner filed an application under Order 12 Rule 6 of the Code of Civil Procedure (CPC), 1908, seeking a decree based on the respondent's admissions. The impugned order granted the respondent's application filed under Section 8 of the Act. Because the respondent's Section 8 application was granted, the petitioner's application under Order 12 Rule 6 of the CPC was dismissed.

Held: The Delhi High Court ruled that a petition under Article 227 could not be filed in response to an order referring the parties to arbitration under Section 8. The court observed that there is no provision in the act for appealing an order allowing a Section 8 application; thus, the legislative intent is clear in terms of the court referring the parties to arbitration and raising all issues related to the existence and validity of the arbitration agreement before the tribunal.

Arbitral Awards

Section 34: It provides for setting aside of an arbitral award by making an application to the Court, on the grounds stated therein.

Issue to be decided in this case was of jurisdiction?

Emkay Global Financial Services Ltd. vs. Girdhar Sondhi (20.08.2018- SC): MANU/SC/0875/2018

Facts: In this case a dispute arose between a registered broker with the National Stock Exchange and its client involving certain transactions. The client had initiated arbitration proceeding against the broker wherein the claim was rejected by an award given by the nominated sole arbitrator. The Respondent then filed an application under Section 34 of the Act, before the District Court, Delhi. By a judgment, the Additional District Judge referred to the exclusive jurisdiction clause contained in the agreement, and stated that he would have no jurisdiction to proceed further in the matter and, therefore, rejected the Section 34 application filed in Delhi. However, on appeal, the Delhi High Court held that the issue of jurisdiction in the present case was a question of fact and parties were not allowed to lead evidence on it. Accordingly, the High Court directed District Court to decide this question (in relation to existence of territorial jurisdiction of Delhi Courts) after framing a specific issue and permitting parties to lead evidence on it.

Held: The court held the moment a seat is determined it would vest the 'seat' curts wit exclusive jurisdiction i.e. if the seat is Mumbai, it would vest in Mumbai Courts with jurisdiction owing to the agreement. Secondly, it was held that the Section 34 proceedings are summary proceedings and framing of issues was not an integral process of the proceeding under Section 34.

Arbitral Awards

Section 34: It provides for setting aside of an arbitral award by making an application to the Court, on the grounds stated therein.

Whether under Section 34(3) of Arbitration Act which states that an application for setting aside arbitral award may not be made after three months have elapsed from the date on which the party making the application had received the arbitral award?

Anilkumar Jinabhai Patel (D) thr. L.Rs. vs. Pravinchandra Jinabhai Patel and Ors. (27.03.2018 - SC): MANU/SC/0295/2018

Facts: The subject matter of arbitration in the case involved division of property between appellant and respondent and accordingly arbitration award was passed whereby certain properties were given to the Appellant and Respondent whereas some other assets were kept undivided with equal rights and interest thereon of both groups. Appellant had filed an arbitration petition under Section 34 of the Act challenging the award and contended that they learnt about the arbitral award only on certain date when they were served with the notice of execution petition filed by Respondent.

Hence, the issue in the case pertained to Section 34(3) of Arbitration Act which states that an application for setting aside arbitral award may not be made after three months have elapsed from the date on which the party making the application had received the arbitral award.

Held: It was held that with respect to the issue of limitation for filing application under Section 34 of the Act for setting aside the arbitral award, the period of limitation would commence only after a valid delivery of an arbitral award takes place under Section 31(5) of the Act. The Court dismissed the appeal on the ground that Anilkumar Patel, accepted the copy of the award on behalf of the entire family in his capacity as the Head of the family and hence the validity of such an award cannot be challenged by the family members on the ground of not having received a copy of the award.

International Arbitration

No Relevant Section

Whether there is a bar to a foreign lawyer for conducting arbitration in India?

Bar Council of India vs. A.K. Balaji and Ors. (13.03.2018 - SC): MANU/SC/0239/2018

Facts: This appeal was filed against the order wherein the directions were issued to restrict foreign law firms/lawyers to practice in India.

Held: There is absolutely no bar to a foreign lawyer for conducting arbitrations in India. If the matter is governed by an international commercial arbitration agreement, conduct of proceedings may fall with the provisions of the Arbitration Act. Even in such cases, Code of Conduct, if any, applicable to the legal profession in India had to be followed.

Interim measures by court

Section 9: Interim measures etc. by Court

Whether the Indian Court can provide interim measures where the seat of arbitration is outside India?

Bharat Aluminium Company vs. Kaiser Aluminium Technical Services Inc. (28.01.2016 - SC): MANU/SC/0090/2016

Facts: The appellant and respondent executed an agreement in relation to supply of equipment , modernisation and up-gradation of the production facilities of the appellant. Certain dispute arose between the parties leading to arbitration proceedings. The question arose in this case was whether the Indian Court can provide interim measures where the seat of arbitration is outside India.

Held: Section 9 is limited in its application to arbitration which takes place in India, however after the amendment of 2015, the provisions apply to International Commercial Arbitration even if the place of arbitration is outside India.

Enforcement of foreign awards

Section 48: This section provides for conditions for enforcement of foreign awards.

Enforceability of Foreign Awards was under consideration?

Shri Lal Mahal Ltd. vs. Progetto Grano Spa (03.07.2013 - SC): MANU/SC/0655/2013

Facts: Enforceability of Foreign Awards was under consideration.

Held: Supreme Court held and made a distiction between public policy when used in the context of enforcement of domestic awards & foreign awards, by holding that in the latter a more restricted meaning was applicable. The enforcement of a foreign award can be refused only if such enforcement is found to be contrary to (1) fundamental policy of Indian law; or (2) the interests of India; or (3) justice or morality. The objections raised by the Appellant do not fall in any of these categories and, therefore, the foreign awards cannot be held to be contrary to public policy of India as contemplated Under Section 48(2)(b).

Appointment of an Arbitrator

Section 11(6): This section deals with failure to perform any function entrusted or any procedure agreed upon by the parties

Nature of power under Section 11(6)?

S.B.P. and Co. vs. Patel Engineering Ltd. and Ors. (26.10.2005 - SC): MANU/SC/1787/2005

Facts: Section 12(2) of the act provides full freedom to the parties to agree upon a procedure for the appointment of the arbitrator. Usually, the parties provide for the appointment of a named arbitrator, or in the case of an institutional arbitration, a designee institution. Ii few of such procedure for appointment of the arbitrators, it is left for future agreement between the parties.In situations, where the parties are not able to agree on the procedure, or the arbitrators are unable to agree upon the third arbitrator, or the designee institution is unable to perform its functions related to the procedure of appointment of the arbitral tribunal, Section 11(6) of the Act provides for such appointment by giving a default power to Chief justice to decide. The issue in this case was regarding the nature of such power.

Held: The Supreme Court clarified and explaind that the function of Supreme Court or High Court is judicial, quasi-judicial & not purely administrative.

Arbitral Awards

Section 34: It provides for setting aside of an arbitral award by making an application to the Court, on the grounds stated therein.

The scope and ambit of court's jurisdiction where award passed by arbitral award is challenged under Section 34 of the Act?

Oil & Natural Gas Corporation Ltd. vs. SAW Pipes Ltd. (17.04.2003- SC) : MANU/SC/0314/2003

Facts: The point of controversy in this case was the scope and ambit of court's jurisdiction where award passed by arbitral award is challenged under Section 34 of the Act.

Held: Supreme Court held that the award could be set aside when the applying party provided proof that it was under some incapacity; or the arbitration agreement was not valid; or the award dealt with a dispute contemplated by the terms of the arbitration clause; or the applying party was not properly notified of the appointment of the arbitrator. Additionally, the composition of the Tribunal has to be in accordance with the agreement of the parties for a court to set aside the award.

Further it was held that the expression public policy as found under Section 48 would not bring within its fold the grounds of patent illegality. Hence, the enforcement of the award could not be refused on the grounds of it being against the substantive laws & terms of contract

Appointment of an Arbitrator

Section 11(6): This section deals with failure to perform any function entrusted or any procedure agreed upon by the parties

Whether in a case falling under Section 11(6), the opposite party cannot appoint an arbitrator after expiry of 30 days from the date of demand?

Datar Switchgears Ltd. vs. Tata Finance Ltd. and Ors. (18.10.2000 - SC): MANU/SC/0651/2000

Facts: The appellant had entered into a lease agreement with the respondent in respect of certain machineries. A dispute arose between the parties and the respondent sent a notice to the appellant invoking the arbitratio clause. The respondent appointed a sole Arbitrator as per the arbitration clause of the Lease Agreement and the Arbitrator in turn issued a notice to the appellant asking them to make their appearance before him . Thereafter, the appellant filed application before Hon'ble the Chief Justice of Bombay and prayed for appointment of another Arbitrator and the respondent opposed this application. This petition was rejected by the Chief Justice holding that as the Arbitrator had already been appointed by the first respondent, the Lessor, the petition was not maintainable. The question was whether in a case falling under Section 11(6), the opposite party cannot appoint an arbitrator after expiry of 30 days from the date of demand.

Held: Appointment of arbitrator after expiry of 30 days was held to be valid and the court stated that in cases arising under Section 11(6), if the opposite party has not made an appointment within 30 days of demand, the right to make appointment is not forfeited but continues, but an appointment has to be made before the former files application under Section 11 seeking appointment of an arbitrator. Only then the right of the opposite party ceases.

Referring parties to arbitration where an arbitration agreement is there

Section 8: Power to refer parties to arbitration where there is an arbitration agreement

Whether during pendency of an appeal a court can refer the parties to arbitration or whether the court can stay the Judicial Proceedings and refer the parties to arbitration?

P. Anand Gajapathi Raju and Ors. vs. P.V.G. Raju (Died) and Ors. (28.03.2000 - SC): MANU/SC/0281/2000

Facts: Issue in this case was whether during pendency of an appeal a court can refer the parties to arbitration or whether the court can stay the Judicial Proceedings and refer the parties to arbitration.

Held: The arbitration agreement is valid unser Section 7 of the new act and reference under Section 8 during the pendency of an appeal can be made to arbitration.

Referring parties to arbitration where an arbitration agreement is there

Section 8: Power to refer parties to arbitration where there is an arbitration agreement

Whether an arbitrator would have jurisdiction to winding up company?

Haryana Telecom Ltd. vs. Sterlite Industries (India) Ltd. (13.07.1999 - SC): MANU/SC/0401/1999

Facts: In this case party A filed a winding up petition before High Court and Party B moved an application to refer the matter to arbitration as there was an arbitration agreement. Issue in this case whether an arbitrator would have jurisdiction to winding up company.

Held: An arbitrator not withstanding any agreements between the parties would have no jurisdiction to entertain a matter which is non-arbitrable

Arbitration agreements

Section 7: Arbitration agreement

Whether the mentioned clause was an arbitration clause or not?

K.K. Modi vs. K.N. Modi and Ors. (04.02.1998 - SC) : MANU/SC/0092/1998

Facts: Modi Family owned various public limited companies. They also owned various assets. Differences arose between the parties and respondent invoked the arbitration clause. The issue in this case was whether this clause was an arbitration clause or not.

Held: It was held that it was not an arbitration clause. Supreme Court observed that while there are no conclusive tests, one can follow a set of guidelines in deciding the terms of the agreement i.e. whether they have agreed to solve disputes through arbitration or whether the agreement is to refer an issue to an expert.

Appointment of Certain Number of Arbitrators

Section 10: Parties can appoint as many number of arbitrators, but the selection should be in odd numbers. Even a sole arbitrator can be appointed

Section 11: Appointment of Arbitrators

Whether an agreement is invalidated due to appointment of even number of arbitrators?

M.M.T.C. Limited vs. Sterlite Industries (India) Ltd. (18.11.1996 - SC): MANU/SC/1298/1996

Facts: The respondent in this case claimed that it has not received certain due amount from the appellant and hence the arbitration clause was invoked. as per the agreement the respondent appointed their arbitrator but the appelant claimed that arbitration cannot be resorted. While the proceeding commenced, New Act came into force. The first issue which arose was whether the case will proceed according to old act or new act. and second issue was whether an agreement is invalidated due to appointment of even number of arbitrators.

Held: It was held that the proceeding will commence according to new act. For the second issue the court held that If the parti93es provide for appointment of even number arbitrators that does not mean that the agreement becomes invalid. Under Section 11(3), the two arbitrators should then appoint the third arbitrator who shall act as a presiding arbitrator.

Interpretation of arbitral award

Section 33: This section provides that within 30 days or time on which parties agrees, from the time award was given- Parties can request for correction or error to the arbitral tribunal

Whether an arbitrator can unilaterally enlarge his own power to arbitrate any of disputes?

Union of India (UOI) vs. G.S. Atwal and Co. (Asansole) (22.02.1996 - SC) : MANU/SC/1130/1996

Facts: The respondent and the appellant had enetered into an agreement for excavation of feeder canal. A dispute arose between them and arbitration clause was invoked. The question which arose in this case was whether an arbitrator can unilaterally enlarge his own power to arbitrate any of disputes?

Held: It was held that the arbitrator cannot enlarge the scope of of the arbitrabiity and it is for the court to decide the claim in dispute or any clause or any things related therof. Further the court held "mere acceptance or acquiescence to the jurisdiction of the arbitrator for adjudication of the dispute as to the extent of the arbitration agreement or arbitrability of the dispute does not disentitle the appellant to have the remedy under Section 33 through the court."