In recent years, various Indian courts have delivered decisions that have aimed to reduce the scope of intrusion in the arbitral process and make India an arbitration-friendly jurisdiction. The year 2021 was no exception to the trend of promoting arbitration as we witnessed some significant judgments being delivered on the law of arbitration. We cover twenty-five such judgments in this edition of the Indian Arbitration Yearly Roundup 2021.

1. Bhaven Construction through Authorised Signatory Premjibhai K. Shah v. Executive Engineer Sardar Sarovar Narmada Nigam Ltd. and Anr.

Citation: 2021 SCC OnLine SC 8

Decided on: 6 January 2021

Discretionary powers under Article 226 of the Constitution of India are not to be invoked to interfere with the arbitral process under the Arbitration and Conciliation Act, 1996 under ordinary circumstances.

Brief Facts

The first respondent entered into a contract with the appellant to manufacture and supply bricks (Agreement). As some disputes emerged amongst the parties, the appellant invoked the arbitration clause and sought the appointment of the sole arbitrator. By way of an application under Section 16 of the Arbitration Act, the first respondent objected to the appellant's request for an arbitrator's appointment. The first respondent argued that the dispute was not amenable to the Arbitration Act and that the arbitration was time-barred. Regardless of the objections raised by the first respondent, the sole arbitrator was appointed. The arbitrator rejected the first respondent's application under Section 16 of the Arbitration Act by upholding the arbitral tribunal's jurisdiction to adjudicate the instant dispute.

Aggrieved by the sole arbitrator's order, the first respondent preferred a writ petition before the High Court of Gujarat (High Court) under Article 226 of the Constitution. The Single Judge dismissed the writ petition. Aggrieved by the Single Judge's decision, the first respondent preferred a writ appeal which was allowed by the Division Bench. Subsequently, the appellant challenged the decision of the Division Bench of the High Court in the present proceedings. The appellant contended that the Division Bench of the High Court erred in interfering with the Single Judge's order. The fact that the first respondent also challenged the final award under Section 34 of the Arbitration Act showed that the first respondent was trying to bypass the framework laid in the enactment. Hence, the present case.

Held

At the outset, the Hon'ble Supreme Court stated that the Arbitration Act is a code in itself having definite legal consequences. One such consequence is embodied in the non-obstante clause in Section 5 of the Arbitration Act to reduce excessive judicial interference. The language in Section 5 expressly states that no judicial authority shall intervene in the arbitral process except where the law provides for it.

In the present matter, the Hon'ble Supreme Court held that the appellant had acted following the procedure laid down under the Agreement to appoint the sole arbitrator. The first respondent then challenged the sole arbitrator's jurisdiction in terms of Section 16(2) of the Arbitration Act. Thereafter, the first respondent challenged the arbitrator's order under Section 16(2) of the Arbitration Act through a petition under Article 226 of the Constitution of India. It was observed that in the usual course, the Arbitration Act provides for a mechanism of the challenge under Section 34. The Hon'ble Supreme Court opined that the use of the term "only" under Section 34 served the twin purposes of making the Arbitration Act a complete code and laying down the procedure for challenging arbitral awards.

The Hon'ble Supreme Court noted in Nivedita Sharma v. Cellular Operators Association of India1 that the hierarchy of India's legal framework mandates that a legislative enactment cannot curtail a constitutional right. However, it was also held that when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation. Therefore, the Hon'ble Supreme Court held that it is prudent for a Judge not to exercise discretion to allow judicial interference beyond the procedure established under the Arbitration Act. The powers under Articles 226 and 227 of the Constitution need to be exercised in exceptional rarity, where one party is left remediless under the statute or an evident 'bad faith' shown by one of the other parties.

The Hon'ble Supreme Court placed reliance upon the decision in Deep Industries Ltd. v. Oil and Natural Gas Corporation Ltd.2 to hold that the High Court would be extremely circumspect in interfering with the arbitral process. The writ jurisdiction would be invoked only in exceptional circumstances which leave the aggrieved party without a statutory remedy. The Hon'ble Supreme Court further held that Section 16 of the Arbitration Act sets a mandate that the issue of jurisdiction must be dealt with first by the tribunal in recognition of the kompetenz-kompetenz principle. Once the Section 16 application is dismissed, the arbitral tribunal's jurisdiction can be challenged only after the final award is passed under Section 34 of the Arbitration Act. In view of the above reasoning, the Hon'ble Supreme Court opined that the High Court erred in utilising its discretionary power available under Article 226 and 227 of the Constitution.

2. N.N Global Mercantile Pvt. Ltd. v. Indo Unique Flame Ltd. & Ors.

Supreme Court of India

Citation: 2021 SCC OnLine SC 13

Decided on: 11 January 2021

The non-payment of the stamp duty on a commercial contract will not invalidate the arbitration agreement.

Brief Facts

The first respondent, Indo Unique Flame Ltd. (Indo), was awarded a work order dated 18 September 2015 (Work Order I) for the beneficiation/ washing of coal by Karnataka Power Corporation Ltd. (KPCL). In pursuance of Work Order I, Indo furnished bank guarantees (BG I) for INR 29.29 Crores favouring KPCL through the second respondent, i.e., the State Bank of India (SBI). Thereafter, Indo entered into a subcontract (Work Order II) on 28 September 2015 with the appellant N.N. Global Mercantile Pvt. Ltd. (N.N. Global) for the transportation and handling of the coal. In terms of Work Order II, N.N. Global furnished a bank guarantee (BG II) for INR 3.36 Crores on 30 September 2015 favouring SBI. Disputes emerged amongst the parties in Work Order I, which led to the invocation of the BG I by KPCL on 6 December 2017. Accordingly, BG II issued by N.N. Global in favour of SBI came to be invoked by Indo.

Aggrieved by the invocation of the BG II, N.N. Global filed a suit before the Commercial Court, Nagpur (Commercial Court) against Indo and SBI (Respondents). N.N. Global prayed for a declaration to the effect that Indo was not entitled to encash the BG II since Work Order II was never acted upon. N.N. Global contended that BG II's invocation was not in terms of the Work Order II providing a conditional guarantee linked to the work's performance. Since Indo never allotted any work under Work Order II, N.N Global claimed that no loss was suffered by Indo, which would have justified the BG II's invocation. By way of an interim order, the Commercial Court directed the status quo to be maintained regarding BG II's encashment furnished by N.N. Global in favour of SBI.

In response, Indo filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) seeking reference of the dispute to arbitration. The Commercial Court refused to allow Indo's application holding that the arbitration clause in Work Order II was not broad enough to encompass BG II, which was an independent contract in itself. Indo filed a writ petition before the Bombay High Court (High Court) to set aside the Commercial Court's order. The High Court held that since both parties admitted to the existence of an arbitration agreement between them, the application filed by Indo under Section 8 of the Arbitration Act was maintainable. Aggrieved by the impugned judgment of the High Court, N.N. Global approached the Hon'ble Supreme Court in the present matter. N.N. Global before the Hon'ble Supreme Court argued that the parties could not be referred to arbitration since the Work Order II was unstamped and therefore it did not have any evidentiary value and could not be acted upon. Indo, in its counter, argued that non-payment of stamp duty was a curable defect and, therefore, the application under Section 8 of the Arbitration Act should be allowed.

Held

In the instant matter, the Hon'ble Supreme Court outlined, amongst other things, the moot proposition that whether the non-payment of stamp duty on a commercial contract would invalidate the arbitration agreement contained therein. Commenting upon the validity of an arbitration agreement in an unstamped agreement, the Hon'ble Supreme Court highlighted the arbitration agreement's severable nature from the underlying contract. It was held that when parties entered into a commercial contract containing an arbitration clause, they essentially entered into two separate agreements viz. firstly, the substantive contract and secondly, the agreement to arbitrate. The Hon'ble Supreme Court held that the arbitration agreement's autonomy came out of the twin concepts of severability of an arbitration agreement and the kompetenz-kompetenz principle. The doctrine of separability3 or severability connotes that the invalidity of the underlying substantive contract would have no consequence upon the arbitration agreement's validity except where the arbitration agreement itself is directly impeached. The kompetenz-kompetenz principle4 implied that the arbitral tribunal has the sole competence to rule on its jurisdiction, including any objections and questions upon the arbitration agreement's existence and validity.

On the argument about the Work Order II being unstamped, the Hon'ble Supreme Court looked into the statutory scheme of the Maharashtra Stamp Act, 1958 (Stamp Act). It was held that the Stamp Act was a fiscal measure that was enacted to secure the revenue of the State in certain classes of instruments. The Hon'ble Supreme Court observed that the non-payment of stamp duty under the Stamp Act would make the substantive contract inadmissible as evidence. However, such a defect was curable and would no longer exist if the stamp duty was paid. Given the distinct nature of an arbitration agreement and the substantive contract, and since no stamp duty was prescribed for an arbitration agreement in the Stamp Act, the Hon'ble Supreme Court concluded that there would be no legal impediment to the enforceability of the arbitration agreement in the instant matter. While rendering these findings, the Hon'ble Supreme Court overruled the decision in SMS Tea Estates Pvt. Ltd. v. Chandmari Tea Co. Pvt. Ltd.5 Hence, the present dispute was held to be arbitrable.

3. Haryana Space Application Centre (HARSAC) and Anr. v. Pan India Consultants Pvt. Ltd. and Anr.

Supreme Court of India

Citation: 2021 3 SCC 103

Decided on: 20 January 2021

Section 12(5) of the Arbitration and Conciliation Act, 1996, dealing with the ineligibility of appointment of an arbitrator, is a mandatory and non-derogable provision.

Brief Facts

In the present matter, the first appellant (HARSAC) had awarded a contract to the respondent (Pan India) and three other vendors for works specified in the allotment letter dated 28 February 2011 related to the modernisation of land records. In pursuance of the allotment letter, Service Level Agreements (SLA) were executed amongst the parties on 29 March 2011. HARSAC contended that Pan India failed to complete the works assigned and was causing delays in the entire project. Even after two extensions being granted, Pan India failed to complete the work. Consequently, HARSAC invoked the Performance Bank Guarantees (PBG) issued by Pan India on 18 March 2014. Pan India challenged this action before the High Court of Delhi (High Court). The High Court directed HARSAC to not encash the PBG before the resolution of the disputes amongst the parties. In compliance with the directions, HARSAC invoked the arbitration clause contained in the SLA and appointed the Principal Secretary to the Government of Haryana as nominee arbitrator. On 14 September 2016, the arbitral tribunal stood constituted, and the proceedings were initiated. On 7 January 2019, HARSAC raised concerns over the fact that the arbitration proceedings were pending for more than one and half years since the date of the first hearing on 7 November 2016. The arbitral tribunal extended the timeline for the arbitral proceedings twice by six months. Since the arbitral proceedings were not completed within the statutory period of one year or the extended timeline of another six months, HARSAC contended that the mandate of the tribunal stood terminated.

Pan India filed an application under Section 29A(4) of the Arbitration and Conciliation Act, 1996 (Arbitration Act) before the Additional District Judge, Chandigarh (District Judge), wherein it was stated that the arbitral award was ready to be pronounced and the entire fee had been paid to the tribunal. HARSAC opposed the application and submitted that the application under Section 29A(4) must be dismissed for the lack of sufficient cause for granting an extension. The District Judge granted an extension of three months to the tribunal to conclude the proceedings. HARSAC then filed a revision petition before the High Court for setting aside the order passed by the District Judge whereby an extension of time had been granted for passing the arbitral award. In light of the pandemic, the High Court granted an extension of four months to enable the parties to conclude their argument within three months and a period of one month reserved for the tribunal to pass the arbitral award. Aggrieved by the said order of the High Court, HARSAC preferred a special leave petition before the Hon'ble Supreme Court.

Held

The Hon'ble Supreme Court at the outset was of the view that the appointment of the Principal Secretary, Government of Haryana as the nominee arbitrator of the appellant, which was a nodal agency of the Government of Haryana, would be invalid under Section 12(5) of the Arbitration Act read with the Seventh Schedule. It was observed that Section 12(5) of the Arbitration Act provided that notwithstanding any prior agreement to the contrary, any person whose relationship with the parties falls within any of the categories specified in the Seventh Schedule shall be ineligible to be appointed as an arbitrator. The Hon'ble Supreme Court held that Section 12(5) read with the Seventh Schedule was a mandatory and non-derogable provision of the Arbitration Act.

In the facts of the present case, it was held that the Principal Secretary to the Government would be ineligible to be appointed as an arbitrator since he would have a controlling influence on the HARSAC being a nodal agency of the State. The Counsel for both parties during the course of hearing consented to the substitution of the existing tribunal by appointing a sole arbitrator to complete the arbitral proceedings. The Hon'ble Supreme Court then appointed a substitute arbitrator, who would conduct the proceedings in continuation from the stage arrived at and pass the arbitral award within six months from the date of receipt of the order.

4. Chintels India Ltd. v. Bhayana Builders Pvt. Ltd.

Supreme Court of India

Citation: 2021 SCC OnLine SC 80

Decided on: 11 February 2021

An appeal under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996 would be maintainable against an order refusing to condone the delay in filing an application under Section 34 to set aside an award.

Brief Facts

In the instant matter, the Ld. Single Judge of the High Court of Delhi (High Court) dismissed an application for the condonation of delay filed under Section 34 of the Arbitration and Conciliation Act, 1996 (Arbitration Act). While dismissing the application for condonation of delay, the High Court held that sub-section 3 of Section 34 using the words "but not thereafter" restricts the power to condone delay beyond a period of 30 (thirty) days. To arrive at this conclusion, the High Court relied upon the decision in Union of India v. Popular Construction Co.6 Therefore, the High Court held that the instant case was time-barred and refused to condone the delay while setting aside the application under Section 34 of the Arbitration Act. The High Court then held that the order refusing to condone delay was not appealable under Section 37 of the Arbitration Act. Therefore, the aggrieved party in the instant matter had no remedy but to approach the Hon'ble Supreme Court of India under Article 136 of the Constitution of India. Accordingly, the High Court granted a certificate under Article 133 read with 134A of the Constitution of India to the appellant (Chintels).

Held

The moot question that was outlined was for consideration was 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.

The Hon'ble Supreme Court observed that a reading of Section 34(1) would make it clear that an application made to set aside an award has to be in accordance with both sub-sections (2) and (3). This would mean that such application would not only have to be within the limitation period prescribed by sub-section (3) but would then have to set out grounds mentioned under sub-sections (2) and/ or (2A) for setting aside such award. What followed from this is that the application itself must be within time, and if not within a period of three months, must be accompanied with an application for condonation of delay within a further condonable period of 30 (thirty) days.7

Commenting upon Section 37(1)(c) of the Arbitration Act, it was held that the expression "setting aside or refusing to set aside an arbitral award" does not stand by itself; it has to be read with the expression that follows – "under Section 34". The use of the words Section 34 in Section 37(1)(c) indicates that an appeal is not limited to Section 34(2) but encompasses all grounds under Section 34. Therefore, a literal reading of the provision shows that a refusal to set aside the arbitral award as the delay has not been condoned under sub-section (3) of Section 34 would undoubtedly fall within Section 37(1)(c). Consequently, the Hon'ble Supreme Court answered the moot question by stating that an appeal under Section 37(1)(c) of the Arbitration Act would be maintainable against an order refusing to condone the delay in filing an application under Section 34 of the Arbitration Act to set aside an award. The appeal was accordingly allowed.

5. Dakshin Haryana Bijli Vitran Nigam Ltd. v. Navigant Technologies Pvt. Ltd.

Supreme Court of India

Citation: 2021 SCC OnLine SC 157

Decided on: 2 March 2021

Limitation period for filing a petition under Section 34 of the Arbitration and Conciliation Act, 1996 commences from the date of receipt of the signed copy of the arbitral award by the parties.

Brief Facts

In the present matter, disputes between Dakshin Haryana Bijli Vitran Nigam Ltd. (Appellant) and Navigant Technologies Pvt. Ltd. (Respondent) were referred to an arbitral tribunal upon the termination of a Service Level Agreement (SLA) dated 2 May 2012. The arbitral tribunal by a majority award allowed the claims of the Respondent, while the third arbitrator dissenting with the majority passed a minority award. On 27 April 2018, the parties were intimated of the majority award and informed that the minority award would be rendered separately. They were provided with a draft copy of the majority award to identify any computational, clerical or typographical errors that would be taken up on 12 May 2018.

On 12 May 2018, the parties were provided with a copy of the dissenting award passed by the third arbitrator. The matter was then listed on 19 May 2018 with instructions to the parties to identify any computational, clerical and typographical errors in the minority opinion in the interim. Since no such errors were brought to the notice of the arbitral tribunal, the parties were provided with signed copies of the final award on 19 May 2018, and the proceedings stood terminated.

Aggrieved by the award, the Appellant filed its objections under Section 34 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) before the Civil Court, Hisar (Civil Court) on 10 September 2018, submitting that objections were preferred within the three months plus the 30 (thirty) day additional period prescribed under Section 34 (3) of the Arbitration Act, calculated from 12 May 2018, the date of receipt of the award. The said petition came to be dismissed by the Civil Court for being filed beyond the prescribed limitation period, holding that the majority award had been made available to the parties on 27 April 2018. Aggrieved by the dismissal, the Appellant preferred an appeal under Section 37 of the Act, which was also dismissed by the High Court of Punjab and Haryana (High Court) vide order dated 11 December 2019. The Appellant assailed the order of the High Court before the Hon'ble Supreme Court by way of a special leave petition. Hence, the present matter.

Held

The Hon'ble Supreme Court held that the Arbitration Act recognised only one award, which may be unanimous or split in a majority award and dissenting opinion. The Hon'ble Supreme Court observed that only the majority award is capable of being enforced as an arbitral award. On the contrary, the view of the dissenting arbitrator is merely an opinion, however, the aggrieved party is at liberty to draw support from the dissenting opinion.

The Hon'ble Supreme Court recognised the prerequisite under Section 31 (2) of the Arbitration Act for an award to be signed by members of the arbitral tribunal. An award made in writing becomes final only upon it being authenticated by way of signatures of members of the arbitral tribunal who made it. It was observed that the use of the word "shall" made this condition a mandatory prerequisite, which could not be dispensed with. The Hon'ble Supreme Court also stated that a conjoint reading of Section 31 (1) and sub-section (4) suggested that the Arbitration Act envisaged only a single date upon which the arbitral award is passed. That is, the date on which the signed arbitral award is made available to the parties under Section 31 (5), requiring the arbitral tribunal to provide a signed copy of the award to the parties.

Thus, the Hon'ble Supreme Court held that the date for computation of limitation is the date of delivery of a signed copy of the award. It was further clarified that a dissenting opinion must also be delivered on the same date as the majority award since the arbitral tribunal becomes functus officio thereafter. Accordingly, the Hon'ble Supreme Court held the Section 34 petition filed by the Appellant to be within the period of limitation prescribed under the Arbitration Act.

6. Amway India Enterprises Pvt. Ltd. v. Ravindranath Rao Sindhia and Anr.

Supreme Court of India

Citation: 2021 SCC OnLine SC 171

Decided on: 4 March 2021

A sole proprietorship will fall under the scope of international commercial arbitration under Section 2(1)(f)(i) of the Arbitration and Conciliation Act, 1996 if the proprietor is a habitual foreign resident.

Brief Facts

The respondents in the present case were involved in the distribution and marketing of the appellant's products from 1998. Disputes emerged amongst the parties concerning the operations of the appellant. The respondents attempted to amicably resolve the disputes through mutual discussions from April to December 2019. On failing to have the disputes resolved, the respondents invoked the arbitration clause contained in the terms and conditions of the Amway Direct Seller Application Form (Application Form) on 28 July 2020. Eventually, the respondents approached the High Court of Delhi (High Court) for the appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 (Arbitration Act). The appellant opposed the petition filed under Section 11(6) before the High Court, contending that the same was not maintainable given that the present matter constituted international commercial arbitration under Section 2(1)(f)(i) of the Arbitration Act. The appellant contended that the respondents were habitual residents of the United States of America. The High Court turned down the appellant's objection holding that central management and control of the respondents' distributorship was in India. Consequently, the High Court appointed an arbitrator under Section 11(6) of the Arbitration Act. Aggrieved by the decision, the appellant challenged the decision of appointment of a sole arbitrator before the Hon'ble Supreme Court of India.

Held

The Hon'ble Supreme Court held that the argument that there is no international flavour to the transaction between the parties had no legs to stand on. An analysis of Section 2(1)(f) of the Arbitration Act would show that in any transaction if at least one of the parties is a foreign national, or habitually resident in, any country other than India; or by a body corporate which is incorporated in any country other than India; or by the government of a foreign country, the arbitration becomes an international commercial arbitration notwithstanding the fact that the individual, body corporate, or government of a foreign country referred to in Section 2(1)(f) carry on business in India through a business office in India. This being the case, it was clear that the Delhi High Court had no jurisdiction to appoint an arbitrator in this case's facts. Hence, the appeal was allowed.

7. Bharat Sanchar Nigam Ltd. (BSNL) and Anr. v. Nortel Networks India Pvt. Ltd.

Supreme Court of India

Citation: 2021 SCC OnLine SC 207

Decided on: 10 March 2021

The period of limitation qua filing an application under Section 11 of the Arbitration and Conciliation Act, 1996 is governed by Article 137 of the Limitation Act, 1963.

Brief Facts

In the instant matter, the respondent Nortel Networks India Pvt. Ltd. (Nortel) was awarded a purchase order (Purchase Order) for works related to mobile networks by the appellant, Bharat Sanchar Nigam Limited (BSNL). Post completion of work by Nortel, BSNL deducted an amount of INR 99,70,93,031 towards liquidated damages and other levies. Nortel raised a claim for payment of the amount deducted, which BSNL rejected. After over five years, Nortel invoked the arbitration clause in a letter dated 29 April 2020 and sought an arbitrator's appointment. BSNL rejected the invocation of arbitration, holding the same to be time-barred, under Section 43 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) since Nortel's claims were rejected on 04 August 2014.

Aggrieved by BSNL's response, Nortel filed an application under Section 11 of the Arbitration Act before the High Court of Kerala (High Court). The High Court referred the parties to arbitration through an order dated 13 October 2020. BSNL preferred a review petition against the said order, which came to be dismissed by the High Court on 14 January 2021. Aggrieved by the decision of the High Court, BSNL approached the Hon'ble Supreme Court in the present matter.

Held

At the outset, the Hon'ble Supreme Court outlined two issues for consideration. Firstly, what is the period of limitation for filing an application under Section 11 of the Arbitration Act? Secondly, whether the court can refuse to make reference under Section 11 when a party's claims are time-barred.

The Hon'ble Supreme Court referred to multiple decisions8 which held that in the absence of a specific provision prescribing the limitation period, the residual provision under Article 137 of the Limitation Act, 1963 (Limitation Act) would apply. Thus, the limitation for filing an application under Section 11 was held to be three years from the date of refusal to make the appointment of an arbitrator or on expiry of 30 (thirty) days from the issuance of the notice invoking arbitration as contemplated under Section 21 of the Arbitration Act, whichever is earlier. However, the Hon'ble Supreme Court left a cautionary note that the period of limitation for filing a petition seeking an arbitrator's appointment could not be confused or conflated with the period of limitation applicable to claims made in the underlying contract. The period of limitation applicable to the respective claims sought to be referred to arbitration would be guided solely by the Articles of the Limitation Act, applicable in this regard, as recognised in earlier judgment>9.

Commenting on the second issue, the Hon'ble Supreme Court held that it was only in a very limited category of cases, where there was not even a vestige of doubt that the claim is ex-facie time-barred or the dispute is non-arbitrable that the court may decline a reference. However, even if there is the slightest doubt, the rule is to refer the disputes to arbitration.

In the present case, the Hon'ble Supreme Court noted that the notice invoking arbitration was issued five and a half years after the rejection of the claims. Consequently, the notice invoking arbitration was held to be ex facie time-barred, and the disputes between the parties were not referred to arbitration in the facts of this case.

8.Government of Maharashtra v. Borse Brothers Engineers & Contractors Pvt. Ltd.

Supreme Court of India

Citation: 2021 SCC OnLine SC 233

Decided on: 19 March 2021

The period of limitation for appeals under Section 37 of the Arbitration and Conciliation Act, 1996 governed by Section 13(1) of the Commercial Courts Act, 2015 shall be 60 (sixty) days. A delay beyond such a period would be condoned only by way of an exception and not by way of a rule.

Brief Facts

Three similar appeals arrived at the Hon'ble Supreme Court wherein the substantial question of law that arose was whether the judgment in N.V. International v. State of Assam10 laid the law correctly. In Civil Appeal arising out of SLP (C) No. 665 of 2021, the High Court of Bombay, vide its judgment dated 17 December 2020, dismissed the appeal filed by the Government of Maharashtra. The High Court of Bombay refused to condone the delay in filing the appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) beyond 120 (one hundred and twenty) days. In all appeals tagged before the Hon'ble Supreme Court, the issue concerns the period of limitation to file an appeal under Section 37 of the Arbitration Act, challenging a decision under rendered Section 34 of the Arbitration Act.

Held

The Hon'ble Supreme Court clarified that the Commercial Courts Act, 2015 (Commercial Courts Act), by virtue of its provisions setting forth a specified value for application, would apply upon appeals under Section 37 of the Arbitration Act only when the specified value was more than three lakh rupees. In such cases where an appeal under Section 37 of the Arbitration Act was guided by Section 13 of the Commercial Courts Act, the limitation period would be 60 (sixty) days.

On the other hand, where the Commercial Courts Act did not cover the appeal under Section 37 of the Arbitration Act due to the specified value being less than three lakhs, the provisions under Article 116 and 117 of the Limitation Act, 1963 (Limitation Act) would apply. Under the Limitation Act, under Article 116 if an appeal was made to the High Court from an order of a subordinate court, the period of limitation was set at 90 (ninety) days from the date of passing of the order by the subordinate court. Similarly, under Article 117 of the Limitation Act, if an appeal was made from an order of the High Court to the same court or a court other than the High Court, the period of limitation would be of 30 (thirty) days.

On the aspect of condoning the delay, the Hon'ble Supreme Court held that in all of the afore-mentioned appeals, a short delay could be condoned by way of exception and not by way of rule. A court may only grant such a short period as it would deem fit given that the party acted in a bona fide manner and bearing in mind that the opposite party may have acquired equity and justice that may now be lost by the first party's inaction and negligence.

9. Indus Biotech Pvt. Ltd. v. Kotak India Venture (Offshore) Fund

Supreme Court of India

Citation: 2021 SCC OnLine SC 268

Decided on: 26 March 2021

On admission of a Section 7 application under the Insolvency and Bankruptcy Code, 2016 any application under Section 8 of the Arbitration and Conciliation Act, 1996 made thereafter to refer parties to arbitration will not be maintainable.

Brief Facts

The instant matter involves an arbitration petition filed by Indus Biotech Pvt. Ltd. (Indus) under Section 11(3) read with Sections 11(4)a and 11(12)(a) of the Arbitration and Conciliation Act, 1996 (Arbitration Act) seeking the appointment of an arbitrator to adjudicate upon the disputes that have arisen between the petitioner and the respondents. The petition seeking constitution of the arbitral tribunal emanate from the Share Subscription Agreement (SSA) and Shareholder's Agreements (S.A.), and other supplemental agreements. Through the said agreements, the respondents subscribed to equity shares and Optionally Convertible Redeemable Preference Shares (OCRPS) in the company, i.e., Indus. In the process of business, a decision was taken by the petitioner to make a Qualified Initial Public Offering (QIPO). According to the petitioner company, the dispute in question concerns the appropriate formula to be adopted to arrive at the actual percentage of the paid-up share capital, which would be converted into equity shares and the refund, if any, thereafter. The respondents contend that on redemption of the OCRPS, a sum of INR 367,08,56,503 became due and payable. It is contended that the debt has not been paid by the petitioner giving rise to a cause of action for the respondents to invoke jurisdiction of the National Company Law Tribunal (NCLT). Accordingly, the second respondent filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) for initiation of the Corporate Insolvency Resolution Process (CIRP). In the proceedings before the NCLT, the petitioner filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) seeking a direction to refer the parties to arbitration for the reasons indicated therein. The NCLT allowed the application filed by the petitioner under Section 8 of the Arbitration Act. Consequently, the petition filed by the second respondent was dismissed. The second respondent claiming to be aggrieved by the said order passed by the NCLT approached the Hon'ble Court in the connected SLP.

Held

The Hon'ble Supreme Court referred to the recent decision in the Vidya Drolia and Others v. Durga Trading Corporation11 to determine whether the subject matter in the present case was arbitrable or not. In view of the exhaustive analysis made in Vidya Drolia, the Hon'ble Supreme Court held that a dispute would be non-arbitrable when a proceeding is in rem, and the IBC proceeding is to be considered in rem only after it is admitted. It was noted that in the present case, however, the application under Section 7 of the IBC was not admitted. Hence, the moot question was whether an application filed under Section 7 of the IBC before it is admitted could be referred to arbitration given the plea to refer parties to arbitration made under Section 8 of the Arbitration Act.

The Hon'ble Supreme Court observed that the position of law that the IBC shall override all other laws as provided under Section 238 of the IBC was well-established. In that view, even if the corporate debtor preferred an application under Section 8 of the Arbitration Act, the NCLT must advert to contentions put forth on the application filed under Section 7 of IBC, examine the material placed before it by the financial creditor and determine whether there is default or not. If the irresistible conclusion by the NCLT is that there is default and the debt is payable, reference to arbitration shall not be made despite the existence of an arbitration agreement amongst the parties.

Hence, the Hon'ble Supreme Court, while summing up the procedure, clarified that in any proceeding which is pending before the NCLT under Section 7 of IBC, if such petition is admitted upon the NCLT recording the satisfaction with regard to the default and the debt being due from the corporate debtor, any application under Section 8 of the Arbitration Act made thereafter will not be maintainable.

Therefore, in the facts of the present case, the Hon'ble Supreme Court concluded that the conclusion reached by the NCLT is justified, and Indus' application for the constitution of the arbitral tribunal was allowed.

10. Shapoorji Pallonji and Co. Pvt. Ltd. v. Rattan India Power Ltd. & Anr.

High Court of Delhi

Citation: 2021 SCC OnLine Del 2875

Decided on: 19 March 2021 (available in April 2021)

A non-signatory third party can be compelled to arbitrate if the courts deem it to be a necessary and a proper party for the arbitration.

The 'group of companies' doctrine could be invoked to bind the non-signatory affiliate of a parent company if there was (i) a direct relationship with the signatory to the arbitration agreement; (ii) commonality of the subject matter; and (iii) a composite transaction between the parties at dispute.

Brief Facts: Shapoorji Pallonji and Co. Pvt. Ltd. (Petitioner) filed a petition under Section 11 of the Arbitration and Conciliation Act, 1996 (Arbitration Act), praying for the appointment of an arbitrator. The first respondent, previously known as India Bulls Power Ltd. (India Bulls), invited bids to execute some civil, structural works and a boiler turbine package (BTG Works). The second respondent (Elena) is a wholly-owned subsidiary of Indiabulls.

Petitioner's bid was accepted for the BTG Works. The Letter of Award (LoA) for the BTG Works was signed on behalf of Elena, but the letterhead carried the name of Indiabulls. Petitioner and Elena also entered into a Contract for the BTG Works (BTG Contract). Sometime later, disputes arose in respect of the execution of the works amongst the parties. Accordingly, the Petitioner issued a notice invoking arbitration. Indiabulls responded to the notice by stating that none of the contracts for the BTG Works were entered into by Indiabulls. Therefore, there was no arbitration agreement existing between the Petitioner and Indiabulls. Hence, the moot question before the High Court of Delhi (High Court) was whether Indiabulls could be compelled to arbitrate regarding the disputes that had arisen with the Petitioner.

Held: The High Court referred to multiple decisions12 to elaborately discuss upon the joinder of non-signatories to arbitral proceedings. The decision in Cheran Properties Ltd. v. Kasturi & Sons Ltd.13was referred to reiterate that the adjudicatory trends indicated that in certain situations, an arbitration agreement between two or more parties could operate to bind other parties as well. Similarly, a reference was made to the decision in Gvozdenovic v. United Air Lines Inc.14 , wherein it was held that where a party conducted itself as if it were a party to a commercial contract by playing a substantial role in (i) negotiations or (ii) performance, it may be held to have impliedly consented to be bound by the arbitration agreement. The High Court then explained the 'group of companies' doctrine wherein it referred to the decision in Mahanagar Telephone Nigam Ltd. v. Canara Bank.15 In Mahanagar Telephone, the Hon'ble Supreme Court held that the group of companies doctrine could be invoked to bind the non-signatory affiliate of a parent company if there was (i) a direct relationship with the signatory to the arbitration agreement; (ii) commonality of the subject-matter; and (iii) a composite transaction between the parties. A composite transaction is referred to a transaction that is interlinked in nature.

On the factual front, it was observed that there was no dispute that Indiabulls had fully participated in the formation of the BTG Contract. It was Indiabulls who invited offers for the BTG Works. Moreover, Elena was a wholly-owned subsidiary of Indiabulls. The High Court ruled that by way of the group of companies doctrine, it was well settled that the corporate veil could be pierced in the circumstances such as the present case. The petition was thus allowed by the High Court.

11.Inox Renewables Ltd. v. Jayesh Electricals Ltd.

Supreme Court of India

Case Number: Civil Appeal No. 1556 of 2021 (Arising out of SLP (C) No. 29161 of 2019)

Decided on: 13 April 2021

The parties at dispute are empowered to mutually decide upon the change in seat of the arbitration.

Brief Facts: A purchase order dated 28 January 2012 was entered into between M/s Gujrat Fluorochemicals Ltd. (GFL) and Jayesh Electricals Ltd. (Respondent) for the manufacture and supply of power transformers at wind farms (Agreement). The arbitration clause under the Agreement provided for the venue of the arbitration to be at Jaipur. Sometime later, a slump sale of the entire business of GFL took place in favour of the M/s Inox Renewables Ltd. (Appellant) by way of a business transfer agreement (BTA) dated 30 March 2012. The arbitration clause of the BTA, to which the Respondent was not a party, designated Vadodara as the seat of the arbitration, vesting the courts at Vadodara with exclusive jurisdiction qua disputes arising out of the BTA. Disputes arose amongst the parties, and the Respondent filed an application under Section 11 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) seeking appointment of an arbitration under the Agreement. The High Court of Gujrat (High Court) admitted the application filed by the Respondent and appointed the sole arbitrator. The arbitrator passed an arbitral award dated 28 July 2018 in favour of the Respondent.

The Appellant challenged the award under Section 34 of the Arbitration Act, before the Commercial Court of Ahmedabad (Commercial Court) which was resisted by the Respondent. The Respondent relied upon the BTA which provided that the courts at Vadodara alone would have exclusive jurisdiction. The Commercial Court accepted the contentions of the Respondent. Consequently, the Appellant filed a special civil application before the High Court challenging the order of the Commercial Court. The High Court observed that even assuming that Ahmedabad would have jurisdiction, the Agreement's arbitration clause vested exclusive jurisdiction in the courts at Rajasthan. Despite this finding, the High Court found no error in the Commercial Court's decision and dismissed the special civil application. The matter eventually reached the Hon'ble Supreme Court.

Held: Hon'ble Supreme Court at the outset took note of the arbitrator's finding that the parties had shifted the venue of the arbitration from Jaipur to Ahmedabad by mutual agreement. The BTA was not signed between the Appellant and the Respondent making it irrelevant in the facts of the present case. Further, the Hon'ble Supreme Court held that it was not possible to accede to the Respondent's argument that the venue of the arbitration could have been shifted only through an agreement in writing.

Placing reliance on the judgment in the BGS SGS SOMA JV16 case, it was held that the moment the seat is chosen as Ahmedabad, it was akin to an exclusive jurisdiction clause, thereby vesting the courts at Ahmedabad with exclusive jurisdiction to deal with matters relating to the arbitration. Thus, the Hon'ble Supreme Court concluded that the courts at Rajasthan were no longer vested with jurisdiction. The impugned judgment was consequently set aside, and the parties were referred to the courts at Ahmedabad for the resolution of the Section 34 petition.

12. PASL Wind Solutions Pvt. Ltd. v. GE Power Conversion India Pvt. Ltd.

Supreme Court of India

Citation: 2021 SCC OnLine SC 331

Decided on: 20 April 2021

Two Indian parties can agree to arbitrate at a foreign seat.

Brief Facts: In 2010, the appellant issued three purchase orders to the respondent for the supply of converters. Disputes arose between the parties concerning the expiry of the warranty on the said converters. To resolve their disputes, the parties entered into a settlement agreement (Agreement) dated 23 December 2014. Under the Agreement, the respondent agreed to provide certain modules with warranties for the operation of the converters. In addition, the Agreement contained a dispute resolution clause that provided for the resolution of disputes through arbitration seated at Zurich, Switzerland.

Disputes continued to break out amongst the parties pursuant to the Agreement. Consequently, the appellant proceeded to initiate the arbitration by the International Chamber of Commerce (ICC). The respondent filed a preliminary application challenging the arbitrator's jurisdiction on the ground that two Indian parties could not have chosen a foreign seat of arbitration. The sole arbitrator, persuaded by multiple authorities17, dismissed the respondent's preliminary application holding that two Indian parties could arbitrate outside India. After the passing of the final award, the respondent initiated enforcement proceedings under Sections 47 and 49 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) before the High Court of Gujarat. After rounds of litigation, the matter reached the Hon'ble Supreme Court, where the moot question was whether two Indian parties could elect a foreign seat.

Held: The Hon'ble Supreme Court returned its findings segmented under multiple heads briefly summarized as below.

  1. On the seat of the arbitration

At the outset, the Hon'ble Supreme Court noted that the dispute resolution clause under the Agreement stated that the arbitration was to be held in Zurich, Switzerland. Accordingly, reliance was placed on the decision rendered in a circumstantially similar case in Mankastu Impex (P) Ltd. v. Airvisual Limited18 to hold that Zurich was the juridical seat of arbitration between the parties.

  1. On Part I and Part II of the Arbitration Act being mutually exclusive

The Hon'ble Supreme Court held that Part I and Part II of the Arbitration Act were mutually exclusive of each other. The decision in Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc.19 was referred to hold that the definitions contained in Sections 2(1)(a) to 2(1)(h) were limited to Part I of the Arbitration Act. Thus, the definition of 'international commercial arbitration' contained under Section 2(1)(f) could not be used to interpret provisions concerning enforcement of awards under Part II of the Arbitration Act. Moreover, Section 2(2) states explicitly that Part I applies only where the place of arbitration was in India. With regard to the proviso to Section 2(2), the Hon'ble Supreme Court held that it was a well-settled principle that a proviso cannot travel beyond the main enacting provision.20

  1. On whether the impugned award in the instant matter was a foreign award under Section 44 of the Arbitration Act

The Hon'ble Supreme Court held that the following four ingredients are essential for an award to be designated as a foreign award under Section 44 of the Arbitration Act:

  1. The dispute must be considered to be a commercial dispute under the law in force in India.
  2. The award must be made in pursuance of an agreement in writing for arbitration.
  3. There must be a dispute that arises between "persons" (without regard to their nationality, residence, or domicile).
  4. The arbitration must conclude in a country that is a signatory to the New York Convention.

In the facts of the instant matter, the Hon'ble Supreme Court held that all of the ingredients mentioned above were fulfilled. Therefore, the impugned award was a foreign award in terms of Section 44 of the Arbitration Act.

  1. On whether a foreign award could be refused to be enforced since it was made between two Indian parties

Reliance was placed on Atlas Export Industries v. Kotak & Co.21 where the Hon'ble Apex Court, in context of the pari materia provisions of the Foreign Awards Act, 1961 held that the enforcement of a foreign award could not be refused merely because it was made between two Indian parties. The Hon'ble Supreme Court then approved of the findings in Sasan Power Limited v. North American Coal Corporation (India) Pvt. Ltd.22 , which held that two Indian companies/parties were permitted in law to arbitrate at a seat out of India.

In light of the above findings, the Hon'ble Supreme Court held that two Indian parties could engage in arbitrations seated at a foreign country.

13. ADM International Sarl v. Sunraja Oil Industries Pvt. Ltd.

High Court of Madras

Citation: Application Nos. 5723 to 5730 of 2019, O.A. Nos. 644, 645 of 2019 in C.S. Nos. 406 and 407 of 201

Decided on: 22 April 2021

The courts can grant an anti-arbitration injunction only when the arbitration agreement is (i) null and void, (ii) inoperative or (iii) is incapable of being performed.

Brief Facts: Two parties, namely, Sunraja Oil Pvt. Ltd. (Sunraja) and Gem Edible Oil Pvt. Ltd. (Gem), had entered into contracts for the purchase of Crude Sunflower Oil (CSFO) of edible grade from ADM International Sarl (ADM), a company based in Switzerland. However, disputes emerged amongst the parties regarding the contracts for the sale of CSFO. Accordingly, Sunraja and Gem filed two separate suits against ADM, which was arrayed as the first defendant in each suit, while the second defendant was the Federation of Oil Seeds and Fats Association (FOSFA).

The suits were filed for a declaration that the arbitration proceedings instituted by ADM against Sunraja and Gem, respectively, before FOSFA – an arbitral institution were void and against the public policy. The suits also prayed for a declaration that the contracts entered into between the plaintiff (i.e., Sunraja or Gem, as the case may be) and ADM are null and void. A permanent injunction to restrain ADM from initiating or continuing any arbitration proceeding was also sought by the plaintiffs apart from damages to the tune of INR 1,00,01,000 (One crore and one thousand).

The plaintiffs submitted that only a handful of companies sold CSFO, out of which they were constrained to procure CSFO only from ADM. The plaintiffs further submitted that as per the terms of the contracts, the buyer of the CSFO was entitled to exclusivity in the sense that the vessel transporting the CSFO could only carry cargo meant for the respective plaintiff and not other buyers. However, according to the plaintiffs, this condition of exclusivity was repeatedly breached by ADM. In addition, the plaintiffs alleged that there were various quality-related issues that they were facing concerning the CSFO bought.

As per the contracts, the seller could terminate the contracts while a corresponding right was not vested in the buyer. Resultantly, even though there were significant quality issues and repeated breaches of the exclusivity condition, the plaintiff in each case was constrained to continue procuring the CSFO from ADM. Thus, the plaintiffs alleged that the contracts were unconscionable since they were discriminatory against the buyer. The plaintiffs also alleged that the arbitration clause was void and could not be enforced since FOSFA was an organisation fully controlled by the prominent sellers of oilseeds, including ADM, and the rules of FOSFA did not permit a party to be represented by advocates.

In each suit, the respective plaintiff had filed an application for an interim injunction to restrain ADM and FOSFA from proceeding with the arbitration proceedings. By separate orders, an order of injunction was granted restraining FOSFA, which was extended until 14 November 2019. In such circumstances, as a countermeasure, ADM filed applications in each suit to vacate the interim injunction and refer the dispute for arbitration. The present matter deals with the applications filed by ADM.

Held: The High Court of Madras (High Court) at the outset examined the preamble of the FOSFA Rules of Arbitration and Appeal. The High Court observed that three aspects were evident from the preamble. Firstly, the parties had agreed to resolve disputes through arbitration. Secondly, the parties agreed that the arbitration would be governed by the Arbitration Act 1996 (English Arbitration Act). Lastly, the juridical seat had been designated as England in terms of the English Arbitration Act. The High Court also noted that the governing law clause stated that the contracts would be construed in accordance with the English law.

Further, a clause concerning "domicile" read that the contract shall be deemed to have been made in England and therefore governed in all respects by English law. Based on the provisions mentioned above, the High Court held that the disputes emerging out of the contracts would fall within the jurisdiction of the arbitral tribunal and thereafter, any challenge would lie before the English courts. The only exception being the interim measures to secure the claim or counterclaim as the case may be.

However, the High Court noted that the respective plaintiffs sought complete anti-arbitration injunctions. Therefore, the moot question in the instant matter was whether a case was made out to grant an anti-arbitration injunction. The High Court referred to the case in Modi Entertainment to reiterate that an anti-suit injunction would not be granted to forbear the exercise of jurisdiction by the forum chosen by the parties. Likewise, a reference was made to the decision in McDonald's India Pvt. Ltd. v. Vikram Bakshi and Ors.23 wherein a division bench of the Delhi High Court held that the principal considerations for anti-arbitration injunction would be those underpinning Section 45 of the Arbitration and Conciliation Act, 1996 (Indian Arbitration Act).24 In other words, an anti-arbitration injunction could be granted based on whether there is a proper arbitration agreement and whether such agreement is null and void, inoperative or incapable of being performed.

As regards the contention that the contract was unconscionable because it permits termination by the seller but not by the buyer, the High Court held that such contention was untenable given the incorporation of the FOSFA Form 54 in executed contracts which allowed termination by both parties.

On the respective plaintiffs' contention that the arbitral institution was biased, the High Court held that the test of "justifiable doubts of bias" as laid in the case of Laker Airways Inc v. FLS Aerospace Ltd.25 was a valid test. However, a higher threshold must be satisfied for an anti-arbitration injunction because the plaintiff should justify the departure from the contractual dispute resolution mechanism. The High Court held that there were several arbitral institutions spread across the world which would represent the interest of a specific trade. The rationale for establishing such arbitral institutions is that the domain expertise is necessary to adjudicate such disputes and trade practices effectively. The High Court concluded that, in the present case, unless it was ex facie evident that the contractual remedy is unconscionable and illusionary, there was no basis to interfere with the contractual dispute resolution process.

Based on the aforementioned findings, the High Court found no reason to continue the anti-arbitration injunction. Consequently, the order of interim injunction granted in the instant matter was vacated.

14. Sirpur Paper Mills Limited v. I.K. Merchants Pvt. Ltd.

High Court of Calcutta

Citation: 2021 SCC OnLine Cal 1601

Decided on: 7 May 2021

An award holder cannot seek the enforcement of an arbitral award post the announcement of a moratorium under the Insolvency and Bankruptcy Code, 2016.

Brief Facts: The present case deals with an application for setting aside an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) passed in proceedings held between I.K. Merchants Pvt. Ltd. (Respondent) and Sirpur Paper Mills Limited (Petitioner). During the pendency of the proceedings, corporate insolvency resolution proceedings (CIRP) were initiated against the Petitioner and subsequently, a moratorium was also brought into effect under Section 14 of the Insolvency and Bankruptcy Code, 2016 (IBC). The Petitioner being the award debtor, contended that the proceedings under Section 34 of the Arbitration Act had become infructuous. The rationale given by the Petitioner was that a resolution plan was approved for the insolvency resolution of the Petitioner under the IBC. Thus, the award holder's claim was frustrated by the approval of the resolution plan under Section 31 of the IBC.

Held: The High Court noted that the moot question was whether the claim of an award-holder can be frustrated upon the approval of a resolution plan under Section 31 of the IBC. The High Court referred to two relevant decisions26 of the Hon'ble Supreme Court wherein it was held that once a resolution plan is approved, a creditor could not initiate proceedings for recovery of claims which were not a part of such resolution plan. The High Court observed that a successful resolution applicant who takes over the business of the corporate debtor starts the business on a 'fresh slate'. It was then reiterated the law laid in Edelweiss, where it was held that an approved resolution plan would be binding on the corporate debtor, its employees and other stakeholders by virtue of Section 31 of the IBC.

Keeping the various stages of IBC in mind, the High Court noted that the Respondent had sufficient opportunities to approach the NCLT for appropriate relief. Hence, the Respondent was under an obligation to take active steps under the IBC, instead of waiting for the adjudication of the application under Section 34 of the Arbitration Act. The High Court found that firstly, the Respondent was free to enforce the award against the Petitioner, especially in the absence of an application for stay under the amended provision of Section 36 of the Arbitration Act. Secondly, the Respondent could have pursued its claim before a forum contemplated under the IBC. The High Court thus concluded that the claim of the award holder had extinguished upon approval of the resolution plan under Section 31 of the IBC.

15. KLA Const. Technologies Pvt. Ltd. and Ors. v. The Embassy of Islamic Republic of Afghanistan and Ors.

High Court of Delhi

Citation: 2021 SCC OnLine Del 3424

Decided on: 18 June 2021

The prior consent of the Central Government is not necessary under Section 86(3) of the Code of Civil Procedure to enforce an arbitral award against a foreign State.

A foreign State cannot claim sovereign immunity against the enforcement of an arbitral award arising out of a commercial transaction.

Brief Facts: The instant matter pertains to two enforcement petitions wherein the petitioners seek the enforcement of arbitral awards against the respondent foreign States. In the first petition, OMP (ENF) (COMM) 82/2019, the petitioner seeks the enforcement of an arbitral award dated 26 November 2018 against the Embassy of the Islamic Republic of Afghanistan. Whereas, in the second petition, OMP (EFA) (COMM) 11/2016, the petitioner seeks to enforce an arbitral award dated 25 October 2015 against the Ministry of Education, Federal Democratic Republic of Ethiopia.

In both the cases above, the respondents did not participate in the arbitration proceedings, leading to the passing of the ex-parte arbitral awards. The two moot questions that arose in these petitions are:

  1. Whether the prior consent of the Central Government is necessary under Section 86(3) of the Code of Civil Procedure to enforce an arbitral award against a foreign State?
  2. Whether a foreign State can claim sovereign immunity against the enforcement of an arbitral award arising out of a commercial transaction?

Held: The High Court referred to the decision in Bharat Aluminium Company v. Kaiser Aluminium Technical Services Ltd.,27 where the Hon'ble Supreme Court held that the legal fiction created under Section 36 of the Arbitration Act was for the limited purpose of enforcing an arbitral award as a decree. The fiction was not intended to make an arbitral award a decree for all purposes under all statutes. It was emphasised that legal fiction ought not to be extended beyond its legitimate field.

The High Court then referred to the case in Uttam Singh Duggal & Co. Pvt. Ltd. v. United States of America, Agency of International Development28. In Uttam Singh, the maintainability of a petition under Section 20 of the Arbitration Act, 1940 was brought into question. It was contended that the respondent being a foreign State, was immune from the jurisdiction of the Indian courts. The High Court rejected the contention by holding that no sovereign or public act was involved in a transaction. Additionally, the High Court held that a petition under Section 20 of the Arbitration Act, 1940 was not a suit under Section 86 of the Code of the Civil Procedure.

The High Court then referred to the case of Union of India v. U.P. State Bridge Corporation Ltd.29 to stress upon the three main principles of the Arbitration Act namely (i) speedy, inexpensive and fair trial by an impartial tribunal, (ii) party autonomy, and (iii) minimum court intervention.

On examining multiple other decisions30, the High Court summarised its findings as follows:

  1. The prior consent of the Central Government is not necessary under Section 86(3) of the Code of Civil Procedure to enforce an arbitral award against a foreign State. A foreign State cannot claim sovereign immunity against the enforcement of an arbitral award arising out of a commercial transaction.
  2. Section 36 of the Arbitration Act treats an arbitral award as a decree of the court for the limited purpose of enforcement of an award under the Code of Civil Procedure which cannot be read in a manner that would defeat the very underlying rationale of the Arbitration Act, i.e., speedy, binding and legally enforceable resolution of disputes between parties.
  3. An arbitration agreement is an implied waiver of the foreign State to preclude it from raising a defence against the enforcement of the principle of sovereign immunity. Once the foreign State wears the hat of a commercial entity, it would be bound by the rules of the commercial legal ecosystem and cannot be permitted to seek any immunity otherwise available to it in sovereign capacity.
  4. If foreign States were allowed to halt the enforcement of arbitral awards, which is the ultimate fruit of the arbitration, then the very edifice of International Commercial Arbitration would collapse.

In conclusion, the High Court held that both the petitions in the instant matter were maintainable. The respondents were directed to deposit the respective award amounts with the Registrar of the court within four weeks. If the respondents failed to deposit the amount, the petitioners were at liberty to seek attachment of the respondents' assets.

16. PSA Sical Terminals Pvt. Ltd. v. Board of Trustees of V.O. Chidambranar Port Tuticorin and Ors.

Hon'ble Supreme Court of India

Citation: 2021 SCC OnLine SC 508

Decision dated: 28 July 2021

An arbitral award rendered in ignorance of vital evidence or based on no evidence is perverse and bound to be set aside on account of patent illegality.

An arbitrator is bound to arbitrate within the four walls of contract. An arbitral award rewriting the contractual terms is bound to be set aside for lack of jurisdiction of the arbitrator.

Brief Facts: In 1997, PSA Sical Terminals Pvt. Ltd. (Appellant) emerged as the successful bidder for a global tender issued by the first respondent (First Respondent). The parties entered into a license agreement (License Agreement) for the development, operations, and maintenance of seventh berth at V.O. Chidambranar Port at Tuticorin. The Appellant in October 1999 proposed the tariff inclusive of royalty as an element of cost which was approved by the Tariff Authority of Major Ports (Authority). In 2003, the Ministry of Shipping vide a notification (Notification) clarified that the royalty payment shall not be factored into costs for fixation of tariffs by the Authority and the same shall be stipulated in subsequent bid documents. In 2005, the Authority notified revised guidelines wherein the royalty was removed as an element of cost in fixing tariffs. However, in cases where the bidding process was finalised prior to the date of Notification, the tariff computation would continue to take royalty into account to prevent losses to the operator. This condition was subject to a maximum of the amount quoted by the next lowest bidder.

Disputes arose amongst the parties pertaining to the tariff fixation under the License Agreement. The Appellant contended that substantial changes were made in law which affected the commercial viability of the project. Article 14 of the License Agreement allowed Appellant to seek necessary amendments on account of substantial change in law. Accordingly, the Appellant sought the amendment of the License Agreement under Article 14 of the License Agreement to incorporate a revenue sharing method and incidental charges within the tariff system. In the interim timeline, a series of litigation ensued amongst the parties. Eventually in 2012, the Appellant invoked the arbitration clause under the License Agreement. Appellant filed its statement of claim in the arbitral proceedings. The Authority filed its counter statement. The arbitral tribunal vide an award dated 14 February 2014 held in favour of the Appellant and directed the conversion of the relevant provisions of the License Agreement from royalty model to revenue sharing model. The award came to be challenged by the First Respondent. After rounds of litigation, the matter reached the Hon'ble Supreme Court where the Appellant challenged the decision of the Madras High Court to allow the First Respondent's appeal against the arbitral award.

Held: The Hon'ble Supreme Court reiterated that a court under Section 34 of the Arbitration and Conciliation Act (Arbitration Act) is not empowered to act as an appellate court to review the matter and reappreciate the evidence.31 The interference with arbitral awards was only warranted when any of the limited grounds under Section 34 applied to the matter. An arbitral award that is perverse in its findings can be set aside on grounds of patent illegality. The test for perversity includes any of the following conditions32:

  1. A finding based on no evidence;
  2. The arbitral tribunal takes in account something irrelevant to arrive at its decision; or
  3. The arbitral tribunal ignores vital evidence in arriving at its decision.

The Apex Court held that the arbitrator's findings were based on no evidence and were also in ignorance of vital evidence. The arbitral tribunal had operated on the premise that there existed for a law/ policy providing for royalty to be accounted as cost for tariff fixation. In fact, the Hon'ble Supreme Court noted that there was no such policy in existence when the bid was being finalized. Hence, the Appellant could not have pleaded a change in law.

The Apex Court opined that the arbitral tribunal had with its decision, thrust upon the parties a new term which they never agreed to originally. Therefore, the award amounted to creation of a new contract for the disputing parties. The Hon'ble Supreme Court held that an arbitrator was bound to act within the four walls of the contractual terms. If an arbitrator acted beyond the terms of the contract, he would be acting without jurisdiction. Accordingly, the Apex Court held that the impugned award fell within the realm of patent illegality and had been rightly set aside by the Madras High Court. Accordingly, the appeals were dismissed.

17. com NV Investment Holding LLC v. Future Retail Ltd. and Ors.

Hon'ble Supreme Court

Citation: 2021 SCC OnLine SC 145

Decision dated: 06 August 2021

Emergency arbitral awards are orders under Section 17(1) of the Arbitration and Conciliation Act, 1996.

No appeal would lie under the Arbitration and Conciliation Act, 1996 against an order made under Section 17(2) for enforcement of an emergency arbitrator's award.

Brief Facts: The present matter concerns proceedings which were initiated by the appellant (Amazon) before the High Court of Delhi (High Court) under Section 17(2) of the Arbitration and Conciliation Act, 1996 (Arbitration Act) to enforce the award/ order rendered under an emergency arbitration conducted as per the Rules of the Singapore International Arbitration Centre Rules (SIAC). The Order was passed against the Respondents (Biyani Group).

In this matter, Amazon had agreed to invest INR 14.31 billion in a Biyani Group company. The basic understanding was that Amazon's investment in retail assets of the Biyani Group company could not be transferred without Amazon's consent. Further, Biyani Group was expressly prohibited from dealing with Mukesh Dhirubhai Ambani Group (Reliance Group). Disputes arose amongst the parties as Biyani Group entered into a transaction (Disputed Transaction) with Reliance Group which envisaged amalgamation and disposal of the Biyani Group company in which Amazon had invested INR 14.31 billion. Aggrieved by the Disputed Transaction, Amazon initiated arbitration proceedings and filed an application for emergency interim relief under the SIAC Rules. The emergency arbitrator upon hearing both parties rendered an award injuncting the Biyani Group and the Reliance Group from continuing with the Disputed Transaction.

Amazon filed an application under Section 17(2) of the Arbitration Act for enforcement of the emergency arbitral award before the learned Single Judge of the High Court. The learned Single Judge passed a detailed judgment holding that an emergency arbitrator's award is an order under Section 17(1) of the Arbitration Act. After a series of litigation, the matter reached the Hon'ble Supreme Court. The moot propositions culled out in the instant matter were as follows:

  1. Firstly, whether an "award" delivered by an emergency arbitrator under the SIAC Rules could be said to be an order under Section 17(1) of the Arbitration Act?
  2. Secondly, whether an order passed under Section 17(2) of the Arbitration Act for enforcement of the award of an emergency arbitrator by Single Judge of the High Court was appealable?

Held: At the outset, the Hon'ble Supreme Court referred to provisions of the Arbitration Act33 to observe that an arbitral proceeding could be administered by a permanent arbitral institution. The Hon'ble Supreme Court then referred to a number of judgments34 which highlighted the importance of party autonomy as being one of the pillars of arbitration in the Arbitration Act. It was concluded that by agreeing to the SIAC Rules the parties in the instant matter had not bypassed any mandatory provision of the Arbitration Act.

The Apex Court then clarified that arbitration under the Arbitration Act meant any arbitration whether or not administered by a permanent arbitral institution. This, when read with Sections 2(6) and 2(8) of the Arbitration Act made it clear that an emergency arbitrator would also be included within the ambit of an "arbitral tribunal" as defined under Section 2(1)(d) of the Arbitration Act. The Hon'ble Supreme Court opined that an emergency arbitral order is an order which furthers the very object to decongest the court system. Given the fact that emergency arbitral order is exactly like an order of any other arbitral tribunal, the Hon'ble Supreme Court concluded that the same would be covered by Section 17(1) and be enforceable in India.

The Hon'ble Supreme Court held that there could be no doubt that the legal fiction created under Section 17(2) of the Arbitration Act for enforcement of interim orders was created only for the limited purpose of enforcement as a decree of the court. To extend this fiction to encompass appeals from such orders was to go beyond the clear intention of the legislature. Thus, the Hon'ble Supreme Court concluded that there lies no appeal against an order of enforcement made under Section 17(2) of the Arbitration Act.

18. Gemini Bay Transcription Pvt. Ltd. v. Integrated Sales Service Ltd. and Anr.

Hon'ble Supreme Court

Citation: 2021 SCC OnLine SC 572

Decision dated: 10 August 2021

Foreign arbitral awards can bind non-signatories to an arbitration agreement and can be enforced against them.

On 18 September 2000, Integrated Sale Services Ltd. (Integrated), a Hong Kong company and DMC Management Consultants Ltd. (DMC) entered into a Representation Agreement (RA). As per the RA, Integrated was to assist DMC with the sale of its goods and services to prospective customers, against a specified amount of commission in consideration. The RA was amended over time and signed by one Mr. Arun Dev Upadhyaya (Appellant) for DMC and one Mr. Terry Peteete for Integrated. The RA contained an arbitration clause providing for laws of State of Delaware, USA to govern the terms of the RA.

Disputes arose amongst the parties as a result of which a notice of arbitration was sent by Integrated to the Appellant in June 2009. A statement of claim was also filed before the arbitrator naming the Appellant, DMC, DMC Global, Gemini Bay Consulting (GBC), and Gemini Bay Transcription Private Ltd. (GBT) as respondents in the arbitration. It was alleged that the Appellant and his family controlled the activities of DMC, DMC Global, GBC, and GBT to divert funds away from Integrated to deprive it of its commission. Integrated stated that it brought two high value customers for DMC for which it was supposed to receive a commission of 20% (twenty percent) of the gross revenue generated. However, DMC terminated its contracts with the customers only to have new contracts executed subsequently with GBC. This according to Integrated was a strategic move to circumvent the liability to pay commission. Thus, Integrated claimed that the Appellant used GBC as an alter ego of DMC to unlawfully divert profits. Accordingly, Integrated claimed damages on multiple counts.

In March 2010, the arbitrator passed his final award wherein it was held that the timing and coordination of efforts between the DMC and GBC could not simply be a coincidence. Thus, the Arbitrator granted, amongst other things, an award of $ 6,948,100 (United States Dollars six million nine hundred forty-eight thousand and one hundred) to be jointly paid up by DMC, DMC Global, the Appellant, GBC, and GBT. To enforce the arbitral award, Integrated approached the High Court of Bombay (High Court). The matter went through a series of litigation and reached the Hon'ble Supreme Court. The Appellant before the Apex Court challenged the decision of the Division Bench of the High Court which held that the enforcement of impugned award could not be resisted under Section 48 of the Arbitration and Conciliation Act, 1996 (Arbitration Act).

Findings of the Hon'ble Supreme Court

  1. Ingredients of a foreign award under Section 44 of the Arbitration Act.

The Hon'ble Supreme Court held that a reading of Section 44 of the Arbitration Act, 1996 would show that there are six ingredients to a foreign award. Firstly, it must be an arbitral award rendered on differences between persons arising out of legal relationships. Secondly, these differences may be in contract or outside of contract, for example, in tort. Thirdly, the legal relationship of parties ought to be considered "commercial" under the law in India. Fourthly, the award must be made on or after the 11th day of October, 1960. Fifthly, the award must be a New York Convention award. Lastly, it must be made in one of such territories which the Central Government by notification declares to be territories to which the New York Convention applies. The Hon'ble Supreme Court held that all requirements posed under Section 44(1) were procedural in nature, the object of which was to satisfy that an award was indeed a foreign award.

  1. On non-signatory affected by the doctrine of alter ego

The Apex Court observed that GBT's arguments that a non-signatory affected by the doctrine of alter ego could only be roped in on evidence being adduced before the enforcing court was disingenuous to say the least. Section 47(1)(c) being procedural in nature did not go to the extent of requiring substantive evidence to "prove" that a non-signatory to an arbitration agreement can be bound by a foreign award. In fact, Section 47(1)(c) only spoke of evidence as may be necessary to prove that an award is a foreign award. 

  1. On pro-enforcement bias under Section 48 of the Arbitration Act

The Hon'ble Supreme Court held that foreign awards rendered under the New Convention were to be enforced as speedily as possible. The same logic applied to Section 48 of the Arbitration Act. Unless a party was able to show that its case comes clearly within Section 48(1) or 48(2), the foreign award must be enforced. Also, the Apex Court relied on the decision in Ssangyong Engg. & Construction Co. Ltd. v. NHAI.35 to clarify that the grounds contained in Sections 48(1)(a) to (e) must not be construed expansively, but narrowly. The Apex Court held that the Appellants were, in the guise of applying under Section 48(1)(a), trying to undertake a review on the merits.

  1. Conclusion

The Hon'ble Supreme Court held that there could be no doubt whatsoever that as a result of machinations of the Appellant and the other companies as found by the arbitral tribunal, Integrated was deprived of commission legitimately due to it under the RA. This being so, there could be no doubt that an actual loss had occasioned on Integrated. In any case, the Apex Court held that the damages awarded by the arbitrator in the facts of the instant matter could not even remotely be said to shock the conscience of the Apex Court to clutch the basic notion of justice ground under Section 48(2) Explanation (1)(iii). Accordingly, the appeals were dismissed.

19. Arcelor Mittal Nippon Steel (India) Ltd. v. Essar Bulk Terminal Ltd.

Hon'ble Supreme Court

Citation: 2021 SCC OnLine SC 797

Decision dated: 7 September 2021

The court would not take up an application under Section 9 for consideration unless the remedy provided under Section 17 of the Arbitration and Conciliation Act, 1996 were rendered inefficacious.

The bar under Section 9(3) of the Arbitration and Conciliation Act, 1996 would not operate when the court had already taken up a Section 9 application prior to the constitution of the arbitral tribunal.

Brief Facts: In the instant matter, the appellant and the respondent entered into an agreement for cargo handling at Hazira Port (Cargo Handling Agreement). The said Cargo Handling Agreement provided that all disputes would be settled under the provisions of the Arbitration Act by a mutually appointed sole arbitrator. Disputes arose amongst the parties as a result of which the appellant invoked the arbitration clause in November 2020. The appellant claimed that the respondent did not respond to the notice of arbitration.

Accordingly, the appellant approached the High Court of Gujrat at Ahmedabad (High Court) under Section 11 of the Arbitration Act for appointment of an arbitral tribunal. In December 2020, the respondent replied to the notice of arbitration, contending that the disputes amongst the parties were not arbitrable. In January 2021, the appellant filed an application under Section 9 of the Arbitration Act in the Commercial Court at Surat. Similarly, in March 2021, the respondent filed an application under Section 9 of the Arbitration Act before the Commercial Court.

The Commercial Court heard both the applications filed by the appellant and the respondent under Section 9(1) of the Arbitration Act and reserved the same for orders in June 2021. In July 2021, the application filed by the appellant under Section 11(6) of the Arbitration Act was disposed of by appointment of a three-member arbitral tribunal (Arbitral Tribunal). Consequently, in July 2021, the appellant filed an application before the Commercial Court praying for reference of both the Section 9 applications filed by the appellant and the respondent respectively to the Arbitral Tribunal.

On 16 July 2021, the Commercial Court dismissed the appellant's application. However, the appellant was granted 10 (ten) days to challenge the order of the Commercial Court. The appellant filed an application in the High Court under Article 227 of the Constitution of India challenging the order of the Commercial Court. On 17 August 2021, the High Court dismissed the application filed by the appellant, holding that the Commercial Court had the power to consider whether the remedy under Section 17 was inefficacious and pass orders under Section 9 of the Arbitration Act. Aggrieved by the decision of the High Court, the appellant approached the Hon'ble Supreme Court by way of a special leave petition.

The moot propositions before the Hon'ble Supreme Court were as follows:

  1. Whether a court has the power to entertain an application under Section 9(1) of the Arbitration Act once the arbitral tribunal had been constituted, and if so, what is the true meaning and purport of the expression "entertain" in Section 9(3) of the Arbitration Act?
  2. Whether the court is obliged to examine the efficacy of the remedy under Section 17 before passing an order under Section 9(1) of the Arbitration Act, once an arbitral tribunal is constituted?

Held: Upon hearing the parties, the Hon'ble Supreme Court observed that in this case there was no material on record to show that there were any lapses or laches on the part of the respondent, which delayed the constitution of the Arbitral Tribunal. The allegation that the respondent had disabled itself from availing the remedy under Section 17 remained unsubstantiated. Moreover, mere delay in agreeing upon an arbitrator did not dis-entitle a party from relief under Section 9 of the Arbitration Act.

The Apex Court then referred to several cases to hold that even after the constitution of an arbitral tribunal, the court was not denuded of the power to grant interim relief under Section 9(1) of the Arbitration Act.36 The Apex Court clarified that once an arbitral tribunal is constituted, the court cannot take up an application under Section 9 for consideration, unless the remedy under Section 17 is inefficacious. However, once an application is taken up for consideration and the court has applied its mind, the court can certainly proceed to adjudicate the application. The Apex Court accepted the respondent's submission that the intent behind Section 9(3) was not to turn the clock back and require a matter already reserved for orders to be considered in entirety by the arbitral tribunal under Section 17 of the Arbitration Act. Even after an arbitral tribunal is constituted, there could be myriads of reasons why the arbitral tribunal may not provide an efficacious alternative to Section 9(1).

The Hon'ble Supreme Court reiterated that applications for interim relief are inherently applications that must be disposed of urgently. Unless applications for interim measures are decided expeditiously, irreparable injury or prejudice may be caused to the party seeking interim relief. Therefore, the Apex Court concluded that it could never have been the legislative intent that even after an application under Section 9 is finally heard, relief would have to be declined, and the parties are remitted to their remedy under Section 17. Accordingly, the appeal was allowed only to the extent of clarifying that it shall not be necessary for the Commercial Court to consider the efficacy of relief under Section 17 since the Commercial Court had already entertained the application under Section 9.

20. Delhi Airport Metro Express Pvt. Ltd. v. Delhi Metro Rail Corporation Ltd.

Hon'ble Supreme Court

Citation: 2021 SCC OnLine SC 695

Decision dated: 09 September 2021

Section 34 of the Arbitration and Conciliation Act, 1996 is not an appellate provision.

Courts acting under Section 34 are not empowered to reappreciate evidence to find faults in the arbitral award.

Brief Facts: The Delhi Metro Rail Corporation Ltd. (DMRC), proposed the implementation of the Airport Metro Express Line project (AMEL) which was to be developed by engaging a concessionaire. A bid of consortium comprising of Reliance Energy Limited (renamed as Reliance Infrastructure Limited) and M/s Construcciones y Auxiliar de Ferrocarriles, S.A. namely Delhi Airport Metro Express Pvt. Ltd. (DAMEPL) was accepted by DMRC for engaging in a public private partnership for development of AMEL.

DAMEPL and DMRC entered into an agreement (Concession Agreement) dated 21 August 2008 for development of the AMEL. It was agreed amongst the parties that all civil works, land acquisition, and other clearances from the Government would be handled by DMRC while supply, installation, testing, and commissioning of various systems were to be handled by DAMEPL. The commercial operation date was achieved on 23 February 2011. On 22 March 2012, DAMEPL requested DMRC to conduct a joint inspection of viaduct and its bearing before expiry of defect liability period of civil contractors.

Disputes arose amongst the parties in relation to certain design and quality issues in the project construction. DAMEPL stopped operations of the line on 8 June 2012. A notice was issued by DAMEPL on 9 June 2012 requiring DMRC to cure the defects in DMRC's works within the prescribed period of 90 days. Thereafter, a number of meetings were conducted between the parties. Ultimately, DAMEPL terminated the Concession Agreement on 8 October 2012 as the defects were not cured by DMRC resulting in default under the Concession Agreement. Aggrieved by DAMEPL's termination of the Concession Agreement, DMRC invoked arbitration under the Concession Agreement. The matter proceeded to arbitration where the main issue concerned the validity of the termination notice dated 8 October 2012. DMRC claimed that the termination notice issued by DAMEPL was illegal as DMRC had allegedly taken steps to honor its commitments under the Concession Agreement. DMRC sought a direction from the arbitral tribunal to DAMEPL to take over operations of the AMEL or to grant in alternative, inter alia, compensation of INR 31.73 billion with interest of 18% per annum. DAMEPL justified the termination of Concession Agreement stating that DMRC did not cure the defects and sought an amount of INR 34.7 billion as termination payment along with interest and other amounts in its counter claim.

The arbitral tribunal found that there were as many as 1551 cracks in 367 girders, i.e., 72% of the girders under the AMEL were affected by cracks. The arbitral tribunal held that such defects adversely impacted the integrity of the structure and held DMRC to be in breach of Concession Agreement. The arbitral tribunal further held that DMRC did not take any effective steps to cure the defects. Accordingly, the termination notice issued by DAMEPL was held to be valid and DAMEPL was awarded a total of INR 27.8233 billion payment in termination payment.

DMRC filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) for setting aside the award of the arbitral tribunal dated 11 May 2017. The Single Judge of the Delhi High Court dismissed the Section 34 petition observing that no grounds for interference had been made out by DMRC. DMRC then filed an appeal under Section 37 of the Arbitration Act read with Section 13 of the Commercial Courts Act, 2015. The Division Bench reversed the judgment of the Single Judge and allowed the appeal filed by DMRC. The award passed by the arbitral tribunal was partly set aside. The judgment of the Division Bench was then challenged by both the parties in the present appeals before the Hon'ble Supreme Court of India.

Held: The arbitral tribunal at the outset, delineated the contours of the court's powers to review arbitral awards. The Apex Court observed that in respect of Part I of the Arbitration Act, Section 5 imposed a bar on intervention by a judicial authority except when provided for statutorily. An application for setting aside an arbitral award could only be made within the four walls of the grounds mentioned under Section 34 of the Arbitration Act. The Hon'ble Supreme Court relied upon a catena of judgments to hold that the courts under Section 34 of the Arbitration Act must refrain from appreciating or re-appreciating matters of fact as well as law.37 The Hon'ble Supreme Court then referred to the decision in Ssangyong Engineering and Construction Company Limited v. National Highways Authority of India (NHAI)38 to stress upon the restraint to be shown by courts while examining validity of arbitral awards. The Apex Court observed that there was a disturbing tendency of courts setting aside arbitral awards, after dissecting and reassessing factual aspects of the case to come to a conclusion that the award needs intervention. It was emphasized that such an approach would lead to corrosion of the object of the Arbitration Act.

Commenting upon patent illegality, the Hon'ble Supreme court held that not every error of law committed by arbitral tribunal would fall within the expression 'patent illegality'. The Apex Court also observed that it was not open for courts to re-appreciate evidence to conclude that an award suffered from patent illegality as the courts did not sit in an appeal against an arbitral award. The Apex Court found no fault in the findings of the arbitral tribunal. Accordingly, DAMEPL's appeal was allowed and the judgment of the division bench was set aside.

21. Laxmi Continental Construction Co. v. State of U.P. and Anr.

Hon'ble Supreme Court of India

Citation: 2021 SCC OnLine SC 750

Decision dated: 20 September 2021

The mandate of a sole arbitrator who was appointed by designation cannot be terminated solely on ground of their retirement.

Brief Facts: A contract for certain works was entered into between the appellant and the respondents vide an agreement dated 6 February 1988 (Agreement). During the contract work, various disputes arose amongst the parties. The Agreement in its arbitration clause provided that the disputes shall be resolved by the government officers of the rank of superintending engineer or higher, who were not connected with the work under the Agreement. Accordingly, a sole arbitrator was appointed who was the Chief Engineer at the relevant point in time. The claimant filed its claim while the respondents filed their objections to claimant's claim before the sole arbitrator.

During the intervening period, the sole arbitrator retired from the post of Chief Engineer on 30 November 1995. In the arbitral proceedings, the time for making and publishing the award was getting extended from time to time by the respondents. The respondents on 9 August 1996 were refused further extension of arbitration particularly when the arbitration was about to close and the same could not be completed on account of respondent's lapses, default, and frequent requests seeking adjournments. The appellant eventually filed an arbitration suit under Section 28 of the Arbitration Act, 1940 (Arbitration Act) praying for extension of time for making the award and for hearing and conducting the arbitration. The respondents took their objections that the sole arbitrator had retired from his services as a department official during the conduct of the arbitration proceedings. The respondents accordingly filed a miscellaneous suit with a prayer for declaring the reference sent to the sole arbitrator as inoperative and illegal. Both the suits were heard together by the Ld. Civil Judge (Senior Division), Roorkee. By a common order dated 11 December 1997, the Ld. Civil Judge extended the period of arbitration for 30 days and directed the sole arbitrator to decide the matter within the extended timeline.

The sole arbitrator declared the award on 8 January 1998 and ordered the respondents to pay a total sum of INR 1,097,024 (Rupees one million ninety-seven thousand and twenty-four) with interest from 1 October 1990 to 7 January 1998. The respondents filed their objections under Section 30, and 33 of the Arbitration Act. The matter eventually reached the Hon'ble Supreme Court after a series of litigation. Before the Hon'ble Supreme Court, the original claimant preferred an appeal challenging the setting aside of the award by the High Court of Uttaranchal.

Held: The moot questions before the Hon'ble Supreme Court were as follows:

  1. Whether the mandate of a department officer acting as an arbitrator comes to an end on his retirement?
  2. Whether continuance of the arbitral proceedings by the arbitrator post his retirement could be said to be a misconduct of a sole arbitrator?

Upon examining the arbitration clause in the Agreement, the Apex Court held that the only qualification for appointment as a sole arbitrator was that he should be the officer of the rank of the superintending engineer or higher. Once such an officer was appointed as the sole arbitrator, he continued to be an arbitrator until the proceedings were completed unless he incurred any disqualification under the provisions of the Arbitration Act.

The Apex Court relied on a similarly situated case in Himalayan Construction Co. v. Executive Engineer Irrigation Division, J&K and Anr.39 where it had overruled the objection that the sole arbitrator appointed by designation could not continue arbitral proceedings and pass an award upon his retirement. The Hon'ble Supreme Court then turned to the arbitration clause in the Agreement. The Apex Court observed that it could not be said that the mandate of the sole arbitrator would come to an end upon his retirement. Moreover, the Apex Court took note that the respondents had raised the very same objections before the Ld. Civil Judge. The Ld. Civil Judge had overruled such an objection and granted one month's extension to the sole arbitrator to complete the proceedings. The said order of the Ld. Civil Judge had attained finality. Therefore, it was not open for the respondents to again raise the same objection.

The Apex Court then referred to the respondents' allegations that the sole arbitrator had misconducted himself by continuing the arbitral proceedings post his retirement. The Hon'ble Supreme Court noted that the sole arbitrator passed an arbitral award within the extended period of time granted by Ld. Civil Judge. Therefore, it could not be said that he had misconducted himself. In view of the above, the Hon'ble Supreme Court passed an order quashing and setting aside the impugned judgment of the High Court. Accordingly, the instant appeal was allowed.

22. State of Chhattisgarh and Anr. v. M/s Sal Udyog Pvt. Ltd.

Hon'ble Supreme Court of India

Citation: 2021 SCC OnLine SC 1027

Decision dated: 8 November 2021

The ground of 'patent illegality' for setting aside an arbitral award is equally applicable to an appealable order under Section 37 as it is to a petition under Section 34 of the Arbitration and Conciliation Act, 1996 (Arbitration Act).

Brief Facts: In 1979, the State of Madhya Pradesh entered into an agreement with the respondent company for supply of 10,000 tonnes of Sal seeds per annum for a period of 12 years (Agreement). In 1987, faced with a loss of revenue, the Government of Madhya Pradesh (State Government) decided to annul all its agreements relating to forest produce and enacted a legislation (Act). However, the said Act was notified only a decade later on 1 January 1997. In absence of any notification under the said enactment, the Agreement between the State of Madhya Pradesh and the respondent was renewed on 30 April 1992 and was valid until 29 April 2004. Under the renewed Agreement, the State of Madhya Pradesh agreed to supply 10,000 tonnes of Sal seeds to the respondent. When the Act was finally notified in 1996, the State of Madhya Pradesh terminated the renewed Agreement on 21 December 1998. Aggrieved by the termination, the respondent issued a notice dated 6 December 1999 invoking arbitration. Through an arbitral award dated 17 February 2005, the claim of the respondent was allowed and a sum of INR 7,43,46,772/- (Rupees seven crores forty-three lakhs forty-six thousand seven hundred seventy-two only) was awarded in its favour which included interest at the rate of 18 per cent per annum up to February, 2005 along with future interest at the rate of 18 per cent per annum payable with effect from 1 March 2005.

The appellant, aggrieved by the arbitral award, filed a petition under Section 34 of the Arbitration Act before the District Judge, Raipur. Through an order dated 14 March 2006, the learned District Judge declined to interfere with the award except for modifying the same to the extent of the interest awarded in favour of the respondent and making it payable from the date of the arbitration notice, i.e., 6 December 1999, instead of, from the date of the Agreement, till 31 December, 1999. The appellant assailed the order dated 14 March 2006 by preferring an appeal under Section 37 of the Arbitration Act. The respondent also filed a cross-appeal being aggrieved by the modification of the award and reduction of the period of interest awarded in its favour.

On 30 April 2010, the Hon'ble Supreme Court granted leave to the parties on the limited issue of disallowance of supervision charges to the tune of INR 1.49 crores (INR 14.9 million) under the award which as per the appellant was liable to be borne by the respondent. Accordingly, the Apex Court held that no other issues would be examined in the instant appeal.

Held: The Hon'ble Supreme Court referred to what would constitute patent illegality for an arbitral award to be set aside. Upon referring to a catena of decisions[40, the Apex Court held that not every error of law committed by the arbitral tribunal would fall within the expression of patent illegality. Likewise, erroneous application of mind could not be categorized as patent illegality. In addition, contravention of law not linked to public policy or public interest is beyond the scope of the expression 'patent illegality'.

The Hon'ble Supreme Court noted that in the instant case, the moot question was whether any interference was called for in the award on the ground that the arbitral tribunal and the High Court ignored the binding terms of the contract. In the renewed Agreement, the expenses incurred towards supply of Sal seeds by the State Government were to include supervision charges. It was noted that the appellant had taken this plea in the petition filed under Section 37 of the Arbitration Act and the same was left unanswered by the High Court.

On a conspectus of the factual matrix, the Apex Court observed that the appellant did raise an objection before the arbitral tribunal on the claim of respondent seeking deduction of supervision charges. The said objection was turned down by the arbitral tribunal by giving a complete go by to the terms of the Agreement. Further, it was not denied that the supervision charges were being paid by the respondent without any demur right from the date when the parties had entered into the Agreement. Thus, the Hon'ble Supreme Court opined that the patent illegality was manifest on the face of the arbitral award since the express terms and conditions of the Agreement governing the parties were ignored completely.

The Apex Court rejected the plea taken by the respondent against the appellant on the ground that it did not raise such an objection in the grounds spelt out in the Section 34 petition and was, therefore, estopped from taking the same in the appeal preferred under Section 37. The Apex Court observed that once the appellant had taken a ground in the Section 37 petition which was also noted in the impugned judgment, the High Court acting under Section 37 ought to have interfered by resorting to Section 34(2A) of the Arbitration Act. As per the Apex Court, Section 34(2A) is a provision which would be equally available under Section 37 as it is to a petition filed under Section 34 of the Arbitration Act.

The Hon'ble Supreme Court was therefore of the view that failure on the part of the arbitral tribunal to decide in accordance with the terms of the contract would attract the patent illegality ground. The said patent illegality was not only apparent on the face of the award, but went to the very root of the matter and deserved interference. Accordingly, the appeal was partially allowed and the impugned award on deduction of supervision charges was quashed and set aside.

23. Godrej Properties Ltd. v. Goldbricks Infrastructure Pvt. Ltd.

High Court of Bombay

Citation: 2021 SCC OnLine Bom 3448

Decision dated: 13 October 2021

An ex-parte ad-interim order cannot be passed by an arbitral tribunal without providing sufficient notice, and subsequently hearing the parties concerned.

Brief facts: By an order dated 22 January 2021, the High Court by consent of the parties, appointed the sole arbitrator to adjudicate the disputes amongst them. Thereafter, the parties filed their respective applications under Section 17 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) praying for interim reliefs. The arbitrator reserved the Section 17 applications for orders which were awaited at the time of hearing the present matter.

On 7 October 2021, the respondent copied appellant in an email which was sent to the arbitrator. The respondent in its email had enclosed another application under Section 17 and stated that it was compelled to move a second application for the reasons set out in the application. The arbitrator, on 8 October 2021, considered respondent's second application under Section 17 and without even hearing the parties passed an ex-parte ad-interim order. Being aggrieved by the ex-parte ad-interim order passed by the arbitrator, the appellant filed an appeal under Section 37 of the Arbitration Act.

Held: The High Court noted that the moot question in the instant case was whether in the facts of the case, it was appropriate for the arbitral tribunal to grant an ex-parte ad-interim order on respondent's Section 17 application?

At the outset, the High Court discussed the scheme of the Arbitration Act for conducting arbitral proceedings. The High Court referred to Section 18 of the Arbitration Act which embodied the fundamental requirement that the parties shall be treated equally and each party 'shall be' given a full opportunity to present its case. Similarly, Section 19(2) recognized the principle of party autonomy and the role of the parties in setting out the procedure to be followed by arbitral tribunal in conducting the proceedings. Lastly, the High Court referred to Section 24(2) of the Arbitration Act which amongst other things, mandates that the parties 'shall be' given sufficient advance notice of 'any hearing'. Based on the above provisions, the High Court observed that the parties ought to be treated fairly at all stages of the arbitral proceedings and an adequate opportunity must be accorded to them to present their case.

Therefore, the High Court concluded that it would be unknown to law and quite peculiar for an arbitral tribunal to pass an ex-parte ad-interim order without even hearing the party making the application, much less the party contesting the same. The High Court clarified that the arbitral tribunal would not be permitted on grounds of procedural fairness to pass an ex-parte order on a Section 17 application even if were of the firm opinion that some urgent orders were required to be passed. Accordingly, the impugned order was set aside and the respondent was at liberty to move the arbitral tribunal on its second Section 17 application, with proper notice to the appellant.

24. Garg Builders v. Bharat Heavy Electricals

Supreme Court of India

Citation: 2021 SCC OnLine SC 855

Decision dated: 4 October 2021

An arbitrator under the Arbitration and Conciliation Act, 1996 (Arbitration Act) is not empowered to award pendente lite interest when the parties have agreed to not have any interests awarded in their contract.

Brief facts: The respondent had floated a tender for construction of boundary wall at its premises in Bawana, Delhi (Project). The appellant submitted its bid for the Project which was accepted by the respondent. The parties entered into a contract in 2009 which, inter alia, contained the interest barring clause. The clause provided that no interest shall be payable by the respondent on, inter alia, any moneys due to the contractor. Disputes arose amongst the parties with respect to the aforesaid contract and subsequently the appellant filed a petition under Section 11 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) before the High Court of Delhi (High Court). The High Court appointed the sole arbitrator to adjudicate upon the disputes. The appellant in the claim petition, apart from claiming various amounts, claimed pre-reference, pendente lite and future interest at the rate of 24% (twenty four percent) per annum on the value of the award. The arbitrator upon hearing both parties concluded that there is no prohibition in the contract on payment of interest for pre-reference period, pendente lite and future period. Therefore, the arbitrator awarded pendente lite and future interest at the rate of 10% (ten percent) per annum to the appellant on the award amount from the date of filing the claim petition to the date of realization of the award amount.

Aggrieved by the award rendered by the arbitrator, the respondent challenged the award under Section 34 of the Arbitration Act before the High Court on various grounds, inter alia, on the ground that the arbitrator being a creature of the arbitration agreement travelled beyond the terms of the contract in awarding pendente lite interest on the award amount as the same was expressly barred in terms of the contract. Accordingly, the High Court held that the arbitrator fell in error in allowing pendente lite interest. Later, the Division Bench of the High Court upheld the judgment of the Single Judge in the impugned order and the matter reached the Hon'ble Supreme Court.

Held

The Hon'ble Supreme Court, at the outset, observed that the law relating to the award of pendente lite interest by the arbitrator under the Arbitration Act was no longer res integra. The provisions of the Arbitration Act gave paramount importance to the contract entered into between the parties and categorically restricted the power of an arbitrator to award pre-reference and pendente lite interest when the parties themselves have agreed to the contrary. The Apex Court held that it was clear from Section 31(7) of the Arbitration Act that if the contract prohibits pre-reference and pendente lite interest, the arbitrator cannot award interest for the said period. In the present case, the interest barring clause was very clear and categorical. It used the expression "any moneys due to the contract" by the employer which includes the amounts awarded by the arbitrator.

The Hon'ble Supreme Court referred to its decision in Sayeed Ahmed and Company v. State of Uttar Pradesh & Ors.41 which held that a provision was made under Section 31(7)(a) of the Arbitration Act in relation to the power of an arbitrator to award interest. If the contract barred payment of interest, the arbitrator was not empowered to award any interest. The Apex Court also referred to a set of similar rulings to hold that the arbitrator cannot award interest between the date on which the cause of action arose to the date of award if the parties agreed in the contract to not have any interests awarded.42

The Apex Court observed that the decision in Raveechee and Company (supra) relied upon by the appellant was under the erstwhile Arbitration Act, 1940 and had no application to the facts of the present case. Having regard to the above findings, the Hon'ble Supreme Court was of the view that the High Court was justified in rejecting the claim of the appellant seeking pendente lite interest on the award amount.

On whether the contract was ultra vires of Section 28 of the Contract Act, it was held that Exception I to Section 28 contained a rule which exempted agreements to refer all disputes to arbitration. The Apex Court observed that in view of the exception contained in Section 28 of the Contract Act, a lawful agreement was signed amongst the parties to refer their disputes to arbitration. Further, as per Section 31(7)(a) of the Arbitration Act, the parties were empowered to waive a claim to pendente lite interest. Section 2(a) of the Interest Act which defines "Court" covers within its ambit both an arbitral tribunal and an arbitrator. Further, Section 3(3) of the Interest Act specifically provides that the Interest Act will not apply to situations where the payment of interest is barred by virtue of an express agreement.

Thus, in view of the express statutory permission for the parties to contract out of receiving interest, and the parties having agreed to exercise this option with free consent, it was not open for the arbitrator to grant pendente lite interest. Hence, the interest barring clause was held not to be ultra vires of Section 28 of the Contract Act. In result, the Apex Court held that the appeal failed and accordingly dismissed the matter.

25. DLF Home Developers Ltd. v. Rajapura Homes Pvt. Ltd. and Anr.

Supreme Court of India

Citation: 2021 SCC OnLine SC 781

Decision dated: 22 September 2021

Courts acting under Section 11 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) are not expected to act mechanically merely to deliver a dispute at the doors of an arbitrator. On the contrary, the courts are obliged to apply their mind to the core preliminary issues, albeit, within the framework of Section 11 of the Arbitration Act. Such a review, is not intended to usurp the jurisdiction of the arbitral tribunal, but is rather aimed at streamlining the process of arbitration. Resultantly, even when an arbitration agreement exists, the courts can decline a prayer for reference under Section 11 if the dispute was not correlated to the arbitration agreement.

Brief facts: The petitioner DLF Home Developers Ltd. (DHDL) filed two arbitration petitions under Section 11(6) of the Arbitration Act for appointment of sole arbitrator to adjudicate differences that had arisen out of two construction management Agreements (Construction Management Agreements).

In 2007-2008, DHDL and Ridgewood Holdings Ltd. (Ridgewood) invested in a joint venture wherein Ridgewood invested in four special purpose vehicles, including Rajapura Homes Pvt. Ltd. (Rajapura) (first respondent in Arbitration Petition No. 17 of 2020) and Begur OMR Homes Pvt. Ltd. (Begur) (first respondent in Arbitration Petition No. 16 of 2020). Rajapura was engaged for construction, operation, and maintenance of certain properties in Bangalore, Karnataka (Rajapura Projects). Similarly, Begur was engaged for certain properties located in Tamil Nadu, and Karnataka (Southern Homes Projects).

In 2008, Ridgewood transferred its stake in joint ventures to its affiliate, Resimmo PCC (Second Respondent) which is a company incorporated in Mauritius. Subsequently, in 2015, it was agreed that the Second Respondent was to acquire sole ownership and control of Rajapura and Begur. Accordingly, to give effect to change in ownership of Rajapura and Begur, DHDL signed two share purchase agreements, one for Rajapura (Rajapura SPA) and one for Begur (Southern Homes SPA) respectively. The primary purpose of the share purchase agreements was to transfer shares from DHDL to Second Respondent. The share purchase agreements contained identical arbitration clauses providing for arbitration seated in Singapore in accordance with Singapore International Arbitration Centre Rules (SIAC Rules).

The share purchase agreements provided that the parties were to execute a construction management agreement as a condition precedent for closing the transactions. Thus, in terms of the enabling provisions contained in the Rajapura SPA and the Southern Homes SPA, the parties signed DLF-Rajapura Homes Construction Management Services Agreement (RCMA), and DLF-Southern Homes Construction Management Services Agreement (SCMA) respectively. Under the RCMA, DHDL was required to provide, inter alia, construction management services to Rajapura for completion of Rajapura Projects. Likewise, under the SCMA, DHDL had to provide similar services to Begur for completion of the Southern Homes Projects. As a consideration for the construction management services provided by DHDL, it was entitled to a fee. For having the fee paid to it, DHDL was required to submit a written notice of completion to Rajapura and Begur. Upon acceptance of the notice of completion by Rajapura and Begur, Second Respondent was obligated to invest a sum of INR 750 million in Begur of which DHDL would be an indirect beneficiary. RCMA and SCMA contained identical arbitration clauses which provided for arbitration seated in New Delhi under the Arbitration Act.

DHDL issued competition notices as envisaged under the RCMA and SCMA to Rajapura and Begur respectively. The competition notices came to be rejected by Rajapura and Begur on account of various reasons such as delay in completion of projects, lack of necessary documents. DHDL invoked arbitration under the RCMA and SCMA and sought appointment of a sole arbitrator to decide disputes arising out of both, RCMA and SCMA. DHDL contended that the rejection of notice of completion issued to Rajapura and Begur was an attempt of avoiding the Second Respondent's obligation to invest INR 750 million in Begur as contemplated by the parties. Rajapura, Begur, and the Second Respondent (together referred to as Respondents) refused to appoint a sole arbitrator. The Respondents argued that the disputes related to construction obligations under the share purchase agreements and not under RCMA or SCMA.

Aggrieved by the refusal of the Respondents to appoint an arbitrator, DHDL preferred two separate petitions under Section 11(6) read with Section 11(12) of the Arbitration Act before the Hon'ble Supreme Court for the appointment of a sole arbitrator.

Held: The Hon'ble Supreme Court, at the outset, observed that post the 2015 amendment, the scope of interference of the Apex Court at the stage of referring matters to arbitration was substantially restricted. The jurisdiction of the Hon'ble Supreme Court under Section 11 was primarily to find out whether there exists a written agreement amongst the parties for resolution of the disputes through arbitration and whether the aggrieved party made out a prima facie arbitration case.

However, it was clarified that the limited jurisdiction under Section 11(6), did not denude the Apex Court of its judicial function to look beyond the bare existence of an arbitration clause. The Hon'ble Supreme Court referred to the decision in Vidya Drolia and Others v. Durga Trading Corporation43 to state that the Apex Court was empowered to conduct a 'prima facie review' under Section 11(6) to weed out any frivolous or vexatious claims and prevent wastage of public and private resources. To put it differently, it was held that the Hon'ble Supreme Court or a High Court, as the case may be, was not expected to act mechanically merely to deliver a purported dispute raised by an applicant at the doors of the arbitrator. Even in existence of an arbitration agreement, the courts would not be prevented from declining a prayer for reference if the dispute in question did not correlate to the arbitration agreement.

Based on the above legal position, the Hon'ble Supreme Court turned to the facts of the case. It was held that the share purchase agreements and the Construction Management Agreements had to be read in harmony and reconciled with each other so as to avoid any head on collision. It was observed that whether or not DHDL had complied with the condition's precedent under the share purchase agreement and became eligible to the contractual fee was purely a question of fact left to be determined by the arbitral tribunal.

The Hon'ble Supreme Court observed that the nature of arbitration clauses contained in the share purchase agreements and the Construction Management Agreements was substantially different with neither overriding the other. The Apex Court then considered the argument of the Respondents that the disputes must be arbitrated under the share purchase agreements. It was held that even if Respondent's argument was accepted at face value, the result would be that any dispute relating to DHDL's construction obligation would be referred to arbitration under the share purchase agreements rendering the dispute resolution clauses under the Construction Management Agreements otiose.

The Apex Court noted that there was nothing on record to suggest that the Respondents were aggrieved by non-compliance, deviation, or breach of promise to sell it shares by DHDL. On the contrary, it was accepted by the parties that the sale of shares stood completed. Thus, when neither party pleaded an infringement of the core provisions of the share purchase agreements, the Apex Court observed that it was difficult to agree that the dispute fell within the ambit of the said agreements.

Thus, the Hon'ble Supreme Court concluded that the dispute could be adjudicated in arbitral proceedings under the RCMA and the SCMA. However, the arbitrator was at liberty to wind up proceedings under the Construction Management Agreements if, on appreciation of facts, it was found that the disputes stemmed from the share purchase agreements.

On whether the arbitral proceedings should be consolidated or not, the Apex Court highlighted the fact that RCMA and SCMA were two distinct agreements. Accordingly, it was held that it would not be appropriate to consolidate the proceedings. The matter of consolidation of proceedings was left to the wisdom of the arbitrator. Accordingly, the arbitration petitions were allowed and a sole arbitrator was appointed.

Footnotes

1 Nivedita Sharma v. Cellular Operators Association of India, (2011) 14 SCC 337.

2 Deep Industries Ltd. v. Oil and Natural Gas Corporation Ltd., 2019 SCC OnLine SC 1602.

3 Heyman v. Darwins Ltd., 1942 AC 356; Bremer Vulkan Schiffbau und Maschinefabrik v. South India Shipping Corporation, 1981 AC 909; Harbour Assurance v. Kansa General International Insurance, 1992 1 Llyod's L.Rep. 81; Lesotho Highlands Development Authority v. Impregilo Spa and Ors., 2005 UKHL 43; Gosset v. Caparelli Cass. Civ. Lere (Dalloz, 1963), 545; Fili Shipping Co. Ltd. and Ors. v. Premium Nafta Products Ltd. and Ors., 2007 UKHL 40.

4 Uttarakhand Purv Sainik Kalyan Nigam Ltd. v. Northern Coal Field Ltd., 2020 2 SCC 455.

5 SMS Tea Estates Pvt. Ltd. v. Chandmari Tea Co. Pvt. Ltd., (2011) 14 SCC 66.

6 Union of India v. Popular Construction Co., (2001) 8 SCC 470

7 State of Himachal Pradesh v. Himachal Techno Engineers and Anr., (2010) 12 SCC 210.

8 Consolidated Engineering v. Principal Secretary, Irrigation, 2008 7 SCC 169; Leaf Biotech v. Municipal Corporation Nashik, 2010 6 Mah LJ 316; Deepdharshan Builders Pvt. Ltd. v. Saroj, 2019 1 AIR Bom R 249; Prasar Bharti v. Maa Communication, 2010 115 DRJ 438 DB; Golden Chariot v. Mukesh Panika, 2018 SCC OnLine Del 10050; Geo Miller & Co. Pvt. Ltd. v. Chairman, Rajasthan Vidyut Utpadan Nigam Ltd., 2020 14 SCC 643.

9 C. Budhraja v. Chairman, Orissa Mining Corporation Ltd., 2008 2 SCC 444.

10 N.V. International v. State of Assam, (2020) 2 SCC 109.

11 Vidya Drolia and Others Vs. Durga Trading Corporation, 2021 2 SCC 1.

12 Dow Chemical v. Isover-Saint-Gobain, 1984 Rev Arb 137; Chloro Controls (India) (P) Ltd. v. Severn Trent Water Purification Inc., 2013 1 SCC 641; SEI Adhavan Power (P) Ltd. v. Jinneng Clean Energy Technology Ltd., 2018 SCC OnLine Mad 13299; Ameet Lalchand Shah v. Rishabh Enterprises, 2018 15 SCC 678.

13 Cheran Properties Ltd. v. Kasturi & Sons Ltd., 2018 16 SCC.

14 Gvozdenovic v. United Air Lines Inc., 933 F.2d 1100, 1105 (2d. Cir. 1991).

15 Mahanagar Telephone Nigam Ltd. v. Canara Bank, 2020 12 SCC 767.

16 BGS SGS Soma JV v. NHPC Ltd., 2019 SCC Online SC 1585.

17 Reliance Industries Ltd v. Union of India, 2014 7 SCC 603; Sasan Power Limited v. North American Coal Corporation India Private Limited, 2016 10 SCC 813; Atlas Export Industries v. Kotak & Company, 1999 7 SCC 61; GMR Energy Ltd. v. Doosan Power Systems India Pvt. Ltd., 2017 6 ArbLR 447 Delhi.

18 Mankastu Impex (P) Ltd. v. Airvisual Ltd., 2020 5 SCC 399.

19 Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc., 2012 9 SCC 552.

20 Union of India v. Dileep Kumar Singh, 2015 4 SCC 421; DMRC v. Tarun Pal Singh, 2018 14 SCC 161; Kandla Export Corpn. v. OCI Corpn., 2018 14 SCC 715; Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax, Calicut, 2021 SCC OnLine SC 16.

21 Atlas Export Industries v. Kotak & Co., 1999 7 SCC 61.

22 Sasan Power Limited v. North American Coal Corporation (India) Pvt. Ltd., 2015 SCC OnLine MP 7417.

23 McDonalds India Pvt. Ltd. v. Vikram Bakshi and Ors., 2016 SCC Online Delhi 3949.

24 The decision in McDonalds India Pvt. Ltd. v. Vikram Bakshi and Ors. referred to principles analogous to those found in sections 8 and 45, as the case may be.

25 Laker Airways Inc v. FLS Aerospace Ltd., (1992) 2 Lloyd's Report 45.

26 Essar Steel India Limited v. Satish Kumar Gupta, 2020 8 SCC 531; Ghanshyam Mishra and Sons Private Limited v. Edelweiss Asset Reconstruction Company Ltd., 2021 SCC OnLine SC 313.

27 Bharat Aluminium Company v. Kaiser Aluminium Technical Services Ltd., (2012) 9 SCC 552.

28 Uttam Singh Duggal & Co. Pvt. Ltd. v. United States of America, Agency of International Development, ILR 1982 2 Del. 273.

29 Union of India v. U.P. State Bridge Corporation Ltd., 2015 2 SCC 52.

30 Satyawati v. Rajinder Singh, 2013 9 SCC 491; Ethiopian Airlines v. Ganesh Narain Saboo, 2011 8 SCC 539; Syrian Arab Republic v. A.K. Jajodia, ILR 2004 2 Delhi 704; Rahimtoola v. Nizam of Hyderabad, 1957 3 WLR 884; Trendtex Trading Corporation v. Central Bank of Nigeria, 1977 2 WLR 356; Birch Shipping Corp. v. The Embassy of the United Republic of Tanzania, 507 F. Supp. 311, 1981 A.M.C. 2666.

31 MMTC Ltd. v. Vedanta Ltd., 2019 4 SCC 163; and Ssangyong Engg. & Construction Co. Ltd. v. NHAI, 2019 15 SCC 131.

32 Associate Builders v. DDA, 2015 3 SCC 49; and Excise and Taxation Officer-cum-Assessing Authority v. Gopi Nath and Sons, 1992 Supp 2 SCC 312.

33 Sections 2(6), 2(8), and 19(2) of the Arbitration Act.

34 Antrix Corporation Ltd. v. Devas Multimedia Pvt. Ltd., (2014) 11 SCC 560; Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc., (2016) 4 SCC 126; Centrotrade Minerals & Metal Inc. v. Hindustan Copper Ltd., (2017) 2 SCC 228; and PASL Wind Solutions Pvt. Ltd. v. GE Power Conversion India Pvt. Ltd., 2021 SCC OnLine SC 331.

35 Ssangyong Engg. & Construction Co. Ltd. v. NHAI, 2019 15 SCC 131.

36 Energo Engineering Projects Limited v. TRF Ltd., 2016 SCC Online Del 6560; Benara Bearings and Pistons Limited v. Mahle Engine Components India Private Limited, (2017) SCC Online Del 7226; M. Ashraf v. Kasim V.K., (2018) SCC Online Ker 4913; Srei Equipment Finance Limited (Sefl) v. Ray Infra Services Private Limited & Anr., (2016) SCC Online Cal 6765; Avantha Holdings Limited v. Vistra ITCL India Limited, (2020) SCC Online Del 1717.

37 Uttarakhand Purv Sainik Kalyan Nigam Limited. v. Northern Coal Field Limited, 2020 2 SCC 455; Bhaven Construction Through Authorised Signatory Premjibhai K. Shah v. Executive Engineer Sardar Sarovar Narmada Nigam Ltd. and Another, 2021 SCC OnLine SC 8; and Rashtriya Ispat Nigam Limited v. Dewan Chand Ram Saran, 2019 15 SCC 131.

38 Ssangyong Engineering and Construction Company Limited v. National Highways Authority of India (NHAI), 2019 14 SCC 131.

39 Himalayan Construction Co. v. Executive Engineer Irrigation Division, J&K and Anr., (2001) 9 SCC 359.

40 Associate Builders v. Delhi Development Authority, 2015 3 SCC 49; Ssangyong Engineering and Construction Company Limited v. National Highways Authority of India (NHAI), 2019 15 SCC 131; Delhi Airport Metro Express Pvt. Ltd. v. Delhi Metro Rail Corporation Ltd., 2021 SCC Online SC 695.

41 Sayeed Ahmed and Company v. State of Uttar Pradesh & Ors., 2009 12 SCC 26.

42 Sree Kamatchi Amman Constructions v. Divisional Railway Manager (Works), Palghat & Ors., 2010 8 SCC 767; Bharat Heavy Electricals Ltd. v. Globe Hi-Fabs Ltd., 2015 5 SCC 718; and Sri Chittaranjan Maity v. Union of India, 2017 9 SCC 611.

43 Vidya Drolia and Others v. Durga Trading Corporation, 2021 2 SCC 1.

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