Whether court should exercise appellate jurisdiction over arbitration award?

Arbitration - Arbitral award - Validity of - Sections 34 and 37 of Arbitration and Conciliation Act, 1996 - Present appeal filed under Section 37 of Act for challenging order whereby, appeal preferred by Appellant under Section 34 of Act for setting aside of arbitral award was dismissed - Whether arbitral award was valid - Held, power to intervene in arbitral award must only be exercised charily,within framework of Act - It would be neither appropriate nor consonant for Court to lend assistance to dissatisfied party by exercising appellate function over arbitral awards, save to extent statutorily permitted - Cleared from fact that contention of counsel for Appellant did not constitute challenge to arbitral award on grounds permitted under Act - It was not case of Appellant that arbitral award was vitiated - Therefore, arbitral award was valid - Appeal dismissed.
Of the finality of arbitral awards, there is no doubt under our arbitration law. The Supreme Court as far back as in Union of India Vs. A.L. Rallia Ram AIR 1963 SC 1685 held that:-

"An award being a decision of an arbitrator whether a lawyer or a layman chosen by the parties, and entrusted with power to decide a dispute submitted to him is ordinarily not liable to be challenged on the ground that it is erroneous. In order to make arbitration effective and the awards enforceable, machinery is devised for lending the assistance of the ordinary Courts. The Courts are also entrusted with power to modify or correct the award on the ground of imperfect form or clerical errors, or decision on questions not referred, which are severable from those referred........The Court may also set aside an award on the ground of corruption or misconduct of the arbitrator, or that a party has been guilty of fraudulent concealment or wilful deception. But the Court cannot interfere with the award if otherwise proper on the ground that the decision appears to it to be erroneous. The award of the arbitrator is ordinarily final and conclusive, unless a contrary intention is disclosed by the agreement. The award is the decision of a domestic tribunal chosen by the parties, and the civil courts which are entrusted with the power to facilitate arbitration and to effectuate the awards, cannot exercise appellate powers over the decision. Wrong or right the decision is binding, if it be reached fairly after giving adequate opportunity to the parties to place their grievances in the manner provided in the arbitration agreement."

Delhi High Court

Delhi Development Authority vs M/S Bhardwaj Brothers on 1 August, 2014

Author: Rajiv Sahai Endlaw

Citation: AIR2014Delhi147, 2014(3)ARBLR333(Delhi), 213(2014)DLT675, 2014(144)DRJ471

Whether S 5 of limitation Act is applicable to arbitration proceeding?

In the said judgment, the Apex Court, therefore, has concluded that
an application could be filed under Section 34 of the Act of 1996 within
three months, which was extendable, on showing sufficient cause for a
period of thirty days, but not thereafter. It has also laid down the law that
when the special statute prescribes certain period of limitation, as well as
an extension up to a specific time limit, then the period of limitation
provided as such must prevail and to that extent the provisions of the Act of
1963 shall stand excluded.
It was, therefore, ruled that the applicability of Section 5 of the Act
of 1963 would stand excluded by virtue of Section 29(2) thereof. It is,
however, observed that the application of Section 4 of the Act of 1963
would not be excluded, since it pertains to exclusion of time of
proceedings, bonafide, in a Court without jurisdiction. In the instant case,
it is not the case of the respondents that they had approached a wrong
forum and had thus wasted time.
IN THE HIGH COURT OF JUDICATURE OF BOMBAY
BENCH AT AURANGABAD
WRIT PETITION NO. 300 OF 2014
Mahindra & Mahindra Financial
Services Ltd.
Versus
Manik Vitthal Kawle,

CORAM : RAVINDRA V. GHUGE, J.
Dated : September 25, 2014

When dispute can not be referred to arbitration?

Arbitration - Adjudication of dispute - Referring thereto Section 8 of Arbitration and Conciliation Act, 1996 - Present application filed for referring to adjudicate dispute between parties under development agreement in respect of properties to arbitration under provisions of Act - Whether dispute could be referred to arbitration - Held, on record that development Agreement was between Respondent and other person - Arbitration agreement contained in development agreement was also between Respondent and other person, to which Applicant was not party - Applicant failed to prove that there were multiple and multi-party agreements having provision for arbitration therein, between Applicant, Respondent and other person - Therefore, dispute could not be referred to arbitration due to lack of agreement between parties - Application dismissed.

Bombay High Court

M/S. Aurora Properties And ... vs Bombay Slum Redevelopment ... on 30 September, 2014

Bench: S.J. Kathawalla

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

It would thus be seen that appointment of an arbitrator is founded upon the agreement between the parties. Once on his appointment either by consensus or by an order of the court, the parties put forth their claim and participate in the proceedings, the parties acquiesce to the appointment of 3 arbitrator and the award made thereon binds the parties. The party who has suffered, the award is precluded from questioning the power and jurisdiction of the arbitrator to make the award. The reason being that the parties have by contract consented to the forum to adjudicate their dispute and to give a decision, by a non-speaking or speaking award in terms of the agreement. This principle is inapplicable to the jurisdiction of the arbitrator to unilaterally enlarge his own power to arbitrate any of the disputes. It is seen that by express agreement between the parties, arbitrability of the claim, for refund of the hire charges was referred to arbitration and T. Raja Ram came to be appointed as arbitrator and entered upon that reference. But when claim was made, he enlarged the dispute unilaterally without there being any agreement by the appellant. In fact they objected to the enlargement of the scope of the arbitration. Since arbitrator went on adjudicating the disputes, they were left with no option but to participate in the proceedings as the claims were pressed for and parties submitted to the jurisdiction of the arbitrator. Therefore, it did not amount to acquiescence. The jurisdiction of the arbitrator is founded upon the agreement between the parties. To the extent of the agreement, the parties are bound by the decision of the arbitrator. But the arbitrator cannot enlarge the scope of his arbitration and make in a non-speaking award, a lump sum amount of, all claims, after enlarging his jurisdiction on non-accepted or objected claims. In Champsey Bhara Company case [supra] Lord Dunedin, speaking for the Privy Council had held that "the question of whether an arbitrator acts within his jurisdiction is, of course, for the Court to decide but whether the arbitrator acts within his jurisdiction or not depends solely upon the clause of the reference. It is, therefore, for the Court to decide.... whether the dispute which has arisen is a dispute covered by Clause 13 of the Articles". In Gobardhan Das v. Lachmi Ram and Ors. MANU/SC/0171/1954 : AIR 1954 SC 689 , this Court held that so long as the arbitrator acts within the scope of his authority there is no doubt that the decision must be accepted as valid and binding on the parties.

Supreme Court of India

Union Of India vs M/S. G.S. Atwal & Co.(Asansole) on 22 February, 1996

Equivalent citations: 1996 SCC (3) 568, JT 1996 (2) 607

Bench: Ramaswamy, K

Can the validity of a decree passed on a compromise be challenged in a separate suit?

The following passage from the decision
of Pushpa Devi (supra) case is, in this regard, apposite:
“17. ..Therefore, the only remedy available to a party
to a consent decree to avoid such consent decree, is
to approach the court which recorded the
compromise and made a decree in terms of it, and
establish that there was no compromise. In that
event, the court which recorded the compromise will
itself consider and decide the question as to whether
there was a valid compromise or not. This is so
because a consent decree is nothing but contract
between parties superimposed with the seal of
approval of the court. The validity of a consent
decree depends wholly on the validity of the
agreement or compromise on which it is made. The
second defendant, who challenged the consent
compromise decree was fully aware of this position
as she filed an application for setting aside the
consent decree on 21-8-2001 by alleging that there
was no valid compromise in accordance with law.
Significantly, none of the other defendants
challenged the consent decree. For reasons best
known to herself, the second defendant within a few
days thereafter (that is on 27-8-2001) filed an appeal
and chose not to pursue the application filed before
the court which passed the consent decree. Such an
appeal by the second defendant was not
maintainable, having regard to the express bar
contained in Section 96(3) of the Code.”
We may also refer to the decision of this Court in
Banwari Lal v. Chando Devi (1993) 1 SCC 581 where
also this Court had observed:
“As such a party challenging a compromise can file a
petition under proviso to Rule 3 of Order XXIII, or an
appeal under S. 96(1) of the Code, in which he can
now question the validity of the compromise in view
of Rule 1-A of Order 13 of the Code.”
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 10416-10417
OF 2014
(Arising out of S.L.P. (C) Nos. 13942-13943 of 2012)
R. Rajanna
...Appellant
Versus
S.R. Venkataswamy & Ors.
Dated;November 20, 2014

Whether Chief Justice or his designate is competent to decide if claim sought to be resolved by arbitration is stale or dead or is long time barred ?

Learned Counsel for the petitioner has submitted that the question as to whether the claim is within time or is barred by limitation is a matter which ought to be left for decision of the Arbitral Tribunal. In support he has placed reliance upon the decision of Hon'ble the Supreme Court in the case of M/s. Group Chimique Tunisien Sa v. M/s. Southern Petrochemicals Industries Corpn. Ltd. MANU/SC/8192/2006 : AIR 2006 SC 2422 : 2006 (43) AIC 57 (SC) In this case, His Lordship of Hon'ble the Supreme Court in view of sections 16 and 17 of the Act held that the question of limitation in the event of any acknowledgement made by other side is to be examined by the Arbitral Tribunal.

13. It is undoubtedly open for the Arbitral Tribunal to decide the issue of limitation on the basis of evidence adduced but when on the admitted pleadings before this Court, the claim is patently stale and is barred by limitation, there is no purpose in referring the dispute to arbitration and leaving the said issue to be decided by the Arbitral Tribunal.

14. The observations of the Apex Court in S.B.P. and Company v. Patel Engineering Limited and another MANU/SC/1787/2005 : (2005) 8 SCC 618 as explained and clarified in Indian Oil Corporation Limited v. S.P.S. Engineering Limited MANU/SC/0122/2011 : (2011) 3 SCC 507 makes it clear that the Chief Justice or his designate is competent to decide if the claim sought to be resolved by arbitration is stale or dead or is long time barred though it is not imperative upon him to enter into the said exercise. It can be left to be decided by the Arbitral Tribunal if it appears to be slightly overtime. However, where the claim is evidently and patently dead or long time barred and does not involve entry into disputed questions of fact or evidence, the Court may refuse it to refer to arbitration. Thus, it is only in case where there is a genuine dispute regarding limitation and the claim is slightly beyond time that the matter should be left to be adjudicated by the Arbitral Tribunal but not where the claim is apparently barred by limitation as per the pleadings of the parties.

Case :- ARBITRATION AND CONCILI. APPL.U/S11(4) No. - 30 of 2013
Applicant :- M/S Sureka International
Opposite Party :- Union Of India And 3 Others Order Date :- 15.4.2014
Hon'ble Pankaj Mithal,J.

Citation: 2014(6)ADJ15, 2014 (105) ALR 61, 2014 5 AWC5106All, 2014 124 RD426

Whether court can pass interim orders even though arbitration proceeding is not commenced?

When a party applies under Section 9 of the 1996 Act it is implicit that it accepts that there is a final and binding arbitration agreement in existence. It is also implicit that a dispute must have arisen which is referable to the arbitral tribunal. Section 9 further contemplates arbitration proceedings taking place between the parties. Mr. Subramaniam is, there-fore, right in submitting that when an application under Section 9 is filed before the commencement of the arbitral proceedings there has to be manifest intention on the part of the applicant to take recourse to the arbitral proceedings if, at the time when the application under Section 9 is filed, the proceedings have not commenced under Section 21 of the 1996 Act. In order to give full effect to the words "before or during arbitral proceedings" occurring in Section 9 it would not be necessary that a notice invoking the arbitration clause must be issued to the opposite party before an application under Section 9 can be filed. The issuance of a notice may, in a given case, be sufficient to establish the manifest intention to have the dispute referred to arbitral tribunal, but a situation may so demand that a party may choose to apply under Section 9 for an interim measure even before issuing a notice contemplated by Section 21 of the said Act. If an application is so made the Court will first have to be satisfied that there exists a valid arbitration agreement and the applicant intends to take the dispute to arbitration. Once it is so satisfied the Court will have the jurisdiction to pass orders under Section 9 giving such interim protection as the facts and circumstances warrant. While passing such an order and in order to ensure that effective steps are taken to commence the arbitral proceedings, the Court while exercising jurisdiction under Section 9 can pass conditional order to put the applicant to such terms as it may deem fit with a view to see that effective steps are taken by the applicant for commencing the arbitral proceedings. What is apparent, however, is that the Court is not debarred from dealing with an application under Section 9 merely because no notice has been issued under Section 21 of the 1996 Act.

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Friday 21 November 2014

Summary of Important caselaws on arbitration