- Uttarakhand Purv Sainik Kalyan Nigam Ltd. Vs. Northern Coal Field Ltd.1
Relying on the doctrine of kompetenz – kompetenz enshrined in Section 16 of the Arbitration & Conciliation Act, 1996 (Arbitration Act) and the legislative intent to restrict judicial intervention at pre-reference stage, the Supreme Court held that the issue of limitation would be decided by an arbitrator.
It also reaffirmed that the legislative intent of the Arbitration Act is party autonomy and minimal judicial interference in the arbitration process. It observed that the regime of the Arbitration Act outlines that once an arbitrator has been appointed, all objections and issues are to be decided by the arbitrator.
The Supreme Court observed that the issue of limitation is a jurisdictional issue which should be decided by the arbitrator in terms of Section 16 of the Arbitration Act and not before the High Court at the pre-reference stage under Section 11 of the Arbitration Act. The Supreme Court observed that once the arbitration agreement is not in dispute, all issue including jurisdictional issues are to be decided by the arbitrator.
- Hindustan Construction Company Limited & Anr. Vs. Union of India & Ors.2
A three (3) member bench of the Hon'ble Supreme Court comprising of Hon'ble Mr. Justice R.F. Nariman, Hon'ble Mr. Justice Surya Kant and Hon'ble Mr. Justice V. Ramasubramanium (Bench) has struck down Section 873 of the Arbitration & Conciliation Act, 1996 (Arbitration Act) as being "manifestly arbitrary" in terms of Article 14 of the Constitution of India.
The Bench observed that Section 87 of the Arbitration Act is against the intent of the Arbitration and Conciliation (Amendment) Act, 2015 (2015 Amendment) and further nullifies the ratio laid down in the recent judgment of Board of Control for Cricket in India Vs. Kochi Cricket Pvt. Ltd.4, wherein it was observed that the intent and purport of Section 87 is contrary to the overall scheme of the Arbitration Act and the 2015 Amendment.
Accordingly, Section 26 of the 2015 Amendment was revived by the Supreme Court and the decision rendered in Board of Control for Cricket in India Vs. Kochi Cricket Pvt. Ltd. continues to apply as the guiding principle for determining the applicability of the 2015 Amendment.
- The Oriental Insurance Co. Ltd. and Ors. Vs. Dicitex Furnishing Ltd.5
The Supreme Court held that an arbitration clause can be invoked by an aggrieved party pursuant to execution of no objection certificates or discharge vouchers.
The Supreme Court while upholding the concept of economic duress dealt in the case of Associated Construction Vs. Pawanhans Helicopters Ltd6 and National Insurance Co. Ltd. Vs. Boghara Polyfab Pvt. Ltd.7 observed that a court which is required to ensure that an arbitrable dispute exists, has to be prima facie convinced about the genuineness or credibility of the plea of coercion; it cannot be too particular about the nature of the plea, which necessarily has to be made and established in the substantive proceeding. If the court were to take a contrary approach and minutely examine the plea and judge its credibility or reasonableness, there would be a danger of its denying a forum to the applicant altogether, because rejection of the application would render the finding (about the finality of the discharge and its effect as satisfaction) final, thus, precluding the applicant of its right event to approach a civil court.
- Rashid Raza Vs. Sadaf Akhtar8
A three (3) member bench of the Hon'ble Supreme Court comprising of Hon'ble Mr. Justice Rohinton Fali Nariman, Hon'ble Mr. Justice R. Subhash Reddy and Hon'ble Mr. Justice Surya Kant (Bench) held that mere "simple allegations" of fraud will not vitiate the effect of arbitration agreement.
The Bench, while relying on the earlier judgment of A. Ayyasamy v. A. Paramasivam and Others9 scrutinized the facts of the instant case on the following two tests:
1) does this plea permeate the entire contract and above all, the agreement of arbitration, rendering it void, or;
2) whether the allegations of fraud touch upon the internal affairs of the parties inter se having no implication in the public domain.
The Bench also clarified that the principle of law laid down in A. Ayyasamy v. A. Paramasivam and Others is captured in paragraph 25 of the said judgment.
- Tulsi Narayan Garg Vs. The M.P. Road Development Authority, Bhopal and Ors.10
The three (3) member bench of Hon'ble Mr. Justice N.V. Ramana, Hon'ble Ms. Justice Indira Banerjee and Hon'ble Mr. Justice Ajay Rastogi (Bench) has reaffirmed the position of law laid down in State of Karnataka v. Shree Rameshwara Rice Mills Thirthahalli11 which stated that a party to an agreement cannot be an arbiter in his own cause.
The Bench observed that if the demand raised by a state authority has been challenged by the contractor and the same is pending adjudication, then initiation of recovery proceedings against the contractor by the concerned state authority at this stage is not justified and cannot be considered as legally sustainable in law.
- National Highways Authority of India v. Sayedabad Tea Estate12
The Supreme Court held that an application under Section 11 of the Arbitration & Conciliation Act, 1996 (Arbitration Act) shall not be maintainable on account of the provision laid down in Section 3G(5) of the National Highways Act, 1956 (NH Act), which provides for appointment of arbitrator by central government.
The Supreme Court observed that the usage of the term 'subject to' in Section 3G(5) of the NH Act clearly indicates that the provisions of the NH Act will have an overriding effect vis-à-vis the Arbitration Act in relation to land compensation matters arising under the NH Act.
It held that in view of the power being vested exclusively with the central government to appoint an arbitrator under Section 3G(5) of the NH Act, being a special enactment, the application filed under Section 11(6) of the Arbitration Act for appointment of an arbitrator was not maintainable and the provisions of the Arbitration Act could not be invoked for the purpose.
- Brahmani River Pellets Limited Vs. Kamachi Industries Limited13
The Supreme Court, while relying on Swastik Gases (P) Ltd. Vs. Indian Oil Corporation Ltd.14 observed that non-use of words like 'exclusive jurisdiction', 'only', 'exclusive', 'alone' is not decisive and does not make any material difference.
It observed that when the contract specifies the jurisdiction of the court at a particular place, only such court will have the jurisdiction to deal with the matter and the parties intended to exclude all other courts.
The Supreme Court held that in the instant case, the parties had agreed for Bhubaneshwar as the 'venue' for arbitration proceedings. Thus, the intention of the parties was to exclude jurisdiction of all other courts. Accordingly, the Supreme Court held that the High Court of Madras had no jurisdiction to entertain jurisdiction under Section 11(6) of the Arbitration & Conciliation Act, 1996.
- Mahanagar Telephone Nigam Limited Vs. Canara Bank & Ors15
The Supreme Court, while invoking the doctrine of "Group Companies" permitted a non-signatory to an arbitration agreement to participate in the arbitration proceedings.
The Supreme Court observed that a non-signatory may be bound by an arbitration agreement where the parent or holding company, or a member of the group of companies is a signatory to the arbitration agreement and the non-signatory entity on the group has been engaged in the negotiation or performance of the commercial contract, or made statements indicating its intention to be bound by the contract, the non-signatory will also be bound and benefitted by the relevant contracts.
In the instant case, the Supreme Court observed that there was enough factual background to suggest that the parties intended to bind the non-signatory party to the arbitration proceedings.
- Vinod Bhaiyalal Jain Vs. Wadhwani Parmeshwari Cold Storage Pvt. Ltd.16
The Supreme Court, while dealing with the challenge against the arbitrator on the grounds of potential perceived bias, held that there should be no room for even a perception of bias against the arbitrator.
The aggrieved party had raised an objection on the independence of the arbitrator, on the ground that the arbitrator had acted as counsel for one of the parties in the dispute. This fact was also brought to the notice of the arbitrator on multiple occasions. The Supreme Court observed that the aggrieved party had a reasonable bias against the arbitrator and its ability to render independent and impartial award and therefore the award should be set aside.
- M/s Icomm Tele Ltc. Vs. Punjab State Water Supply & Sewage Board17
The two-member bench of Hon'ble Mr. Justice Rohinton Fali Nariman and Hon'ble Mr. Justice Vineet Saran (Bench) has struck down a clause which required a 10% pre-deposit of the claim amount prior to invoking arbitration proceedings.
The Bench observed that the clause requiring 10% pre-deposit is arbitrary and has no nexus with filing of frivolous claims, since the clause applies to all type of claims. It observed that a 10% deposit had to be made prior to determining if the claim is frivolous or otherwise.
The Bench was of the view that deterring a party to an arbitration by a pre-deposit requirement of 10% would discourage the arbitration process and would be contrary to the object of de-clogging the court system.
1 Order dated 27 November 2019 in Special Leave Petition (C) No. 11476 of 2018.
2 Judgment dated 27 November 2019 in Writ Petition (Civil) No. 1074 of 2019.
3 Introduced by the Arbitration & Conciliation (Amendment) Act, 2019.
4 AIR 2018 SC 1549.
5 Judgment dated 13 November 2019 in Civil Appeal No. 8550 of 2019.
6 (2008) 16 SCC 128.
7 AIR 2009 SC 170.
8 Judgment dated 04 September 2019 in Civil Appeal No. 7005 of 2019.
9 (2016) 10 SCC 386.
10 Order dated 30 August 2019 in Civil Appeal Nos. 6726 – 6729 of 2019.
11 1987 (2) SCC 160.
12 Judgment dated 27 August 2019 in Civil Appeal No. 6958-5959 of 2009.
13 Judgment dated 08 August 2019 in Civil Appeal No. 5850 of 2019.
14 (2013) 9 SCC 32.
15 Judgment dated 08 August 2019 in Civil Appeal No. 6202-6205 of 2019.
16 Judgment dated 24 July 2019 in Civil Appeal No. 6960 of 2011.
17 Judgment dated 11 March 2019 in Civil Appeal No. 2713 of 2019.
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