Arbitration And Conciliation Act: 20 Recent SC Judgments about:reader?url=https://www.livelaw.in/top-stories/recent-sc-judgments...

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Arbitration And Conciliation Act: 20

Recent SC Judgments
Ashok Kini
12-15 minutes

Former Employee Not Disqualified From Acting As An

Arbitrator, Even After 2015 Amendment

The Government of Haryana, PWD Haryana (B and R) Branch

V. M/s. G.F. Toll Road Pvt. Ltd. & Ors.

The Supreme Court held that the Arbitration and Conciliation Act,
1996, does not disqualify a former employee from acting as an
arbitrator, provided that there are no justifiable doubts as to his
independence and impartiality. The bench of Justice Abhay
Manohar Sapre and Justice Indu Malhotra observed that, even after
2015 amendment, the position remains the same, as Entry 1 to 5th
Schedule of the Act does not include "past/former employees."

Mere Delay In Passing The Award By Itself Cannot Be The

Ground To Appoint Another Arbitrator

Rajasthan Small Industries Corporation Limited V. M/S Ganesh

Containers Movers Syndicate

In this case, it was observed that mere neglect of an arbitrator to

act or delay in passing the award by itself cannot be the ground to
appoint another arbitrator in deviation from the terms agreed to by

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the parties.The bench comprising of Justice R. Banumathi and

Justice Indira Banerjee held thus while considering appeal against
Rajasthan High Court order appointing a retired District Judge as
the sole arbitrator to resolve the dispute between the parties, by
allowing application under Section 11 and Section 15 of the
Arbitration and Conciliation Act, 1996, filed by contractor.

Arbitral Tribunal Cannot Award Interest If Agreement

Expressly Bars Its Payment

Jaiprakash Associates Ltd. V. Tehri Hydro

Developmentcorporation India Ltd.

It was reiterated that arbitrator cannot award interest on award if

the agreement expressly prohibits grant of interest. The bench of
Justices A K Sikri, Abdul Nazeer and M R Shah dismissed an
appeal to uphold a judgment of Delhi High Court, which had set
aside an arbitration award to the extent it granted interest
overlooking the prohibition in the agreement.

Independent Assessment Of Merits Of Award Cannot Be Made

In An Arbitration Appeal

MMTC Ltd. V. M/S Vedanta Ltd.

The Supreme Court observed that, a court while considering an

appeal under Section 37 of the Arbitration and Conciliation Act,
cannot undertake an independent assessment of the merits of the
award.The bench comprising Justice Mohan M. Shantanagoudar
and Justice Vineet Saran observed that, in such appeals, the court
must only ascertain that the exercise of power by the Court under
Section 34 has not exceeded the scope of the provision.

Maintainability Of Execution Case To Be Considered Along

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With Issue Of Enforceability Of Foreign Award

LMJ International Ltd. V. Sleepwell Industries Co. Ltd.

The Apex Court observed that piecemeal consideration of the issue

of maintainability of the execution case concerning the foreign
awards, in the first place; and then the issue of enforceability
thereof, is not envisaged under the scheme of Section 48 of the
Arbitration and Conciliation Act, 1996. The bench comprising
Justice AM Khanwilkar and Justice Ajay Rastogi observed that the
Court is expected to consider both these aspects viz.
maintainability and enforceability, simultaneously at the threshold.

Pre-Deposit Clauses To Invoke Arbitration Makes Arbitral

Process Ineffective And Expensive

M/S ICOMM Tele LTD. V.Punjab State Water Supply & Sewerage
Board & Anr.

In this case, the Court observed that pre-deposit clauses to invoke

arbitration would render the arbitral process ineffective and
expensive.The bench comprising Justice Rohinton Fali Nariman
and Justice Vineet Saran struck down such a clause in a notice
inviting tender by Punjab State Water Supply & Sewerage Board.

Court Can Appoint Independent Arbitrator Only After

Resorting To The Procedure In Arbitration Agreement

Union Of India V. Parmar Construction Company

The Supreme Court observed that the High Court, while dealing
with an application under Section 11(6) of the Arbitration and
Conciliation Act, seeking appointment of an 'independent Arbitrator',
should first resort to the mechanism in appointment of an arbitrator
as per the terms of contract as agreed by the parties.

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One of the issue in a batch of appeals was whether it was

permissible for the High Court under Section 11(6) of the Arbitration
and Conciliation Act, 1996 (prior to the Amendment Act, 2015) to
appoint third party or an independent Arbitrator when the parties
have mutually agreed for the procedure vis-à-vis the authority to
appoint the designated arbitrator.

Court Can't Appoint Arbitrator When The Contract Containing

Arbitration Clause Is Insufficiently Stamped

Garware Wall Ropes Ltd vs. Coastal Marine Constructions &

Engineering Ltd.

The Supreme Court held that it would be necessary for the Court
before considering and passing final orders on an application under
Section 11(6) of the Act to await the adjudication by the stamp
authorities, in a case where the document objected to, is not
adequately stamped.

The bench comprising Justice Rohinton Fali Nariman and Justice

Vineet Saran observed that the law laid down in SMS Tea Estates
(P) Ltd. v. Chandmari Tea Co. (P) Ltd. still applies, even after
introduction of Section 11(6A), by way of the Arbitration and
Conciliation (Amendment) Act, 2015.

Person Ineligible To Be Arbitrator Under Sec.12(5) Of

Arbitration Act Cannot Appoint Another Arbitrator

Bharat Broadband Network Limited V. United Telecoms Limited

The Supreme Court held that the appointment of arbitrator by a

person who himself is ineligible to be an arbitrator as per Section
12(5) of the Arbitration and Conciliation Act 1996 is void ab
initio.The bench of Justices R F Nariman and Vineet Saran followed

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the 2017 decision in TRF Ltd. v Energy Engineering Projects Ltd

(2017) 8 SCC 377 (TRF Ltd)., which had held that an ineligible
person cannot appoint arbitrator.

Sec.34 Arbitration Act- Unilateral Addition To Contract By

Arbitral Tribunal Violates Most Basic Notions Of Justice

Ssangyong Engineering & Construction Co. Ltd. V. National

Highways Authorityof India (NHAI)

Holding that "a unilateral addition or alteration of a contract can

never be foisted upon an unwilling party", the Supreme Court set
aside an arbitral award on the grounds of it being in conflict with
"most basic notions of justice" and thereby conflicting with "public
policy of India" as per Section 34(2)(b)(ii)(iii) of the Arbitration and
Conciliation Act 1996.

In addition to that, the Court held that the award was also liable to
be set aside under Section 34(2)(a)(iii) on the finding that the party
was rendered "unable to present his case".

Termination Of Arbitration Proceedings U/s 32 Of Arbitration

And Conciliation Act Cannot Be Recalled

Sai Babu vs. Clariya Steels Pvt. Ltd.

The Supreme Court observed that the termination of Arbitration

proceedings by the Arbitrator under Section 32(2) (c) of the
Arbitration and Conciliation Act cannot be recalled.

In this case, the sole arbitrator terminated proceedings under

Section 32(2) (c) i.e. on the ground that the continuation of the
proceedings become unnecessary or impossible. Later, he allowed
an application by one of the parties seeking recall of the order
terminating the proceedings. The Karnataka High Court dismissed

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the challenged against this 'recall' by the Arbitrator.

A Court Deciding 'Section 34' Petition Has No Jurisdiction To

Remand The Matter To Arbitrator For Fresh Decision

Radha Chemicals V. Union Of India

The Supreme Court reiterated that the court while deciding a

petition under Section 34 of the Arbitration and Conciliation Act has
no jurisdiction to remand the matter to the arbitrator for a fresh
decision.The bench comprising Justice Rohinton Fali Nariman and
Justice Navin Sinha set aside a Calcutta High Court order that
remanded the matter to the arbitrator in order to decide the point of
limitation afresh. The division bench of the high court had affirmed
the single bench order of remand.

'Association' Referred To In Section 2(1)(f)(iii) Of The

Arbitration And Conciliation Act Would Include A Consortium
Of Companies, One Of Which Is A Foreign Company

M/S Larsen And Toubro Limited Scomi Engineering Bhd V.

Mumbai Metropolitan Region Development Authority

The Supreme Court held that an 'association' referred to in Section

2(1)(f)(iii) of the Arbitration and Conciliation Act, 1996, would
include a consortium consisting of two or more bodies corporate, at
least one of whom is a body corporate incorporated in a country
other than India.

Unsigned Arbitration Agreement Not Invalid In All Cases

Caravel Shipping Services Pvt. Ltd. Vs. Premier Sea Foods

Exim Pvt. Ltd.

The Supreme Court held that the only prerequisite for an arbitration
agreement is that it should be in writing and it cannot be said that in

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all cases, an arbitration agreement needs to be signed. The bench

comprising Justice Rohinton Fali Nariman and Justice Navin Sinha
observed that the plaintiff has itself relied upon the Bill of Lading as
part of its cause of action in his suit against defendants.

Application for Enforcement of Foreign Award Shall Not Be

Dismissed Merely For Non-Production of Requisite Documents
'At The Time Of Application'

P.E.C. Limited vs. Austbulk Shipping SDN BHD

The Supreme Court held that, at the initial stage of filing of an

application for enforcement of a foreign award, non-compliance of
the production of the documents mentioned in Section 47 of the
Arbitration and Conciliation Act shall not entail in dismissal of the
application for enforcement of an award.

Any Challenge To Arbitrator Appointed Should Be Raised

Before The Arbitrator Himself In First Instance

Sp Singla Constructions Pvt. Ltd. V.State Of Himachal Pradesh

And Another

The Supreme Court reiterated that any challenge to the arbitrator

appointed should be raised before the arbitrator himself under
Section 13 of the Arbitration and Conciliation Act 1996, in the first
instance and thereafter under Section 34 of the Act.

The bench comprising Justice R. Banumathi and Justice Indira

Banerjee was considering high court order that held that the
appointment of arbitrator could not be challenged by way of an
application under Section 11(6) of the Act.

'Administrative Difficulties' Not A Valid Reason To Condone

Delay In Filing Application To Set Aside Arbitral Award

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M/S Simplex Infrastructure Ltd V. Union Of India

The Supreme Court held that administrative difficulties would not be

a valid reason to condone a delay above and beyond the statutory
prescribed period under Section 34 of the Arbitration and
Conciliation Act, 1996 to file an application to set aside arbitration
award.

No Appointment Of Arbitrator If There Is Violation Of

Conditionality Clause In Arbitration Agreement

United India Insurance Co. Ltd. vs. Hyundai Engineering and

Construction Co. Ltd.

While setting aside a Madras High Court judgment appointing an

arbitrator ignoring the conditionality clause in an arbitration
agreement, the Supreme Court observed that, even after the 2015
amendment insertion of sub-section 6A in Section 11 of the
Arbitration and Conciliation Act, the arbitration clause has to be
interpreted strictly considering the conditionality clause.

Prior Notice To Other Party Before Filing Application To Set

Aside Arbitral Award Not Mandatory

The State Of Bihar & Ors. V. Bihar Rajya Bhumi Vikas Bank
Samiti

Disapproving view adopted by many High courts in the matter of

interpretation of Section 34(5) the Arbitration and Conciliation Act,
the Supreme Court held that the requirement (under Section 34(5))
of prior notice to the other party before filing an application to set
aside an arbitral award is a directory.

Limitation Period For Application For Setting Aside Arbitration

Award Begins From The Date Of Signed Copy Of The Award

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Delivered To The Party Making It

Anilkumar Jinabhai Patel (D) v Pravinchandra Jinabhai Patel

The Supreme Court reiterated that the limitation period prescribed

under Section 34(3) of the Arbitration and Conciliation Act would
commence only from the date of the signed copy of the award
delivered to the party making the application for setting it aside.

The bench of Justice RK Agrawal and Justice R Banumathi made

this observation while referring to State of Maharashtra and Ors v
Ark Builders Pvt Ltd, wherein it was held that the expression
"...party making that application had received the arbitral award..."
cannot be read in isolation and it must be understood that Section
31(5) of the Act requires a signed copy of the award to be delivered
to each party.

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