Delhi HC: Award Is Time-Barred U/S 34(3) Of Arbitration Act Due To Petitioner's Failure To Confirm Award Receipt On Affidavit

 In this case, there is a specific instruction for the Administrative Assistant to the Tribunal to serve a copy of the award. Other than the self- serving statements made across the bar that the copy of the award was not received on 23.08.2017 the Petitioner has not shown any document as to whether it has received the award. The contention of the learned Counsel for the Petitioner that the Tribunal has to show as to when did it served the copy of the award on the Petitioner cannot be accepted. In the absence of any positive affirmation on affidavit from the Petitioner as to when was the award received, this Court cannot accept the mere ipse dixit of the Petitioner that as soon as the award was received it was filed by the Petitioner. {Para 24}

IN THE HIGH COURT OF DELHI

O.M.P. (COMM) 49/2018, I.A. 1565/2018, I.A. 4650/2018, I.A. 4659/2018 and I.A. 9614/2018

Decided On: 12.12.2024

Indure Pvt. Ltd. Vs. Aneja Construction (India) Ltd.

Hon'ble Judges/Coram:

Subramonium Prasad, J.

Citation: MANU/DE/9015/2024.

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Enforcement of Foreign Arbitral Awards: The Landmark Judgment in Gemini Bay Transcription Pvt. Ltd. vs. Integrated Sales Service Ltd.

  In a significant ruling on August 10, 2021, the Supreme Court of India addressed the complex issues surrounding the enforcement of foreign arbitral awards against non-signatories in the case of Gemini Bay Transcription Pvt. Ltd. vs. Integrated Sales Service Ltd. This judgment clarifies the legal framework for recognizing and enforcing foreign arbitral awards in India, particularly under the Arbitration and Conciliation Act, 1996.

 Background of the Case

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Supreme Court: Six pre-requisites for an arbitral award to be recognized as a foreign award under Section 44 of the Act

The Supreme Court of India has identified six pre-requisites for a foreign award to be recognized and enforceable under Section 44 of the Arbitration and Conciliation Act, 1996. These prerequisites are:

1. Arbitral Award on Differences: The award must be an arbitral award concerning differences arising out of legal relationships between parties.

   

2.Nature of Differences : The differences can arise from contractual obligations or non-contractual situations, such as torts.

3. Commercial Relationship: The legal relationship involved must be considered "commercial" under Indian law.

4. Date of Award: The award must have been made on or after October 11, 1960.

5.New York Convention Award: The award must qualify as a New York Convention award, meaning it should arise from an agreement in writing that falls under the New York Convention's jurisdiction.

6.Territorial Application: The award must be made in a territory that is a signatory to the New York Convention. 

These criteria establish the framework for recognizing and enforcing foreign arbitral awards in India, providing clarity on the conditions necessary for such enforcement.

 IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 8343-8344 of 2018 and 8345-8346 of 2018

Decided On: 10.08.2021

Gemini Bay Transcription Pvt. Ltd. Vs. Integrated Sales Service Ltd. and Ors.

Hon'ble Judges/Coram:

Rohinton Fali Nariman and B.R. Gavai, JJ.

Author: Rohinton Fali Nariman, J.

Citation:  MANU/SC/0517/2021, AIR 2021 SUPREME COURT 3836, AIRONLINE 2021 SC 481

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How to ascertain limitation in case of suo-moto correction of arbitration award?

In the present case, the arbitral tribunal in terms of powers given under sub-section (3) of Section 33 of the Act had on its own initiative made corrections in the award dated 18.04.2018, vide the award dated 05.05.2018. The suo-moto corrections in terms of sub-section (3) of Section 33 of the Act can be made within a period of 30 days from the date of arbitral award.

In our opinion, looking at the purpose and object behind Section 34 (3) of the Act, which is to enable the parties to study, examine and understand the award, thereupon, if the party chooses and is advised, draft and file objections within the time specified, the starting point for the limitation in case of suomoto correction of the award, would be the date on which the correction was made and the corrected award is received by the party. Once the arbitral award has been amended or corrected, it is the corrected award which has to be challenged and not the original award. The original award stands modified, and the corrected award must be challenged by filing objections.

This interpretation would be in terms and accord with the reasoning which has been interpreted in the “M/S Ved Prakash Mithal and Sons Vs. Union of India” (supra).

In the present case, the objections/application for setting aside the arbitral award were filed on 03.08.2018, which is within a period of ninety days from the date of the

1 For short, “Act”.

corrected award. Hence, the High Court was right in holding that the objections were filed within the limitation period. Even otherwise, the Court has the power to condone the delay for further period of thirty days. Application for condonation of delay can be filed at anytime till the proceedings are pending. Of course, exercise of discretion and whether or not the delay should be condoned is a different matter.

IN THE SUPREME COURT OF INDIA

  Special Leave to Appeal (C) No(s). 23676/2022; 

M/S USS ALLIANCE Vs THE STATE OF UTTAR PRADESH & ORS.

Coram: SANJIV KHANNA; J., M.M. SUNDRESH; J.

Dated: 06-01-2023 

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Can the court remit an award to the arbitrator in the absence of findings on contentious issues?

When it is the specific case of the Respondent that there is no finding at all, on point No. 1 viz. "whether the contract was illegally and abruptly terminated by the Respondent?", remission Under Section 34(4) of the Act, is not permissible. In our view, Section 34(4) of the Act, can be resorted to record reasons on the finding already given in the award or to fill up the gaps in the reasoning of the award. There is a difference between 'finding' and 'reasons' as pointed out by the learned Senior Counsel appearing for the Respondent in the judgment in the case of Income Tax Officer, A Ward, Sitapur v. Murlidhar Bhagwan Das MANU/SC/0097/1964 : AIR 1965 SC 342. It is clear from the aforesaid judgment that 'finding is a decision on an issue'. Further, in the judgment in the case of J. Ashoka v. University of Agricultural Sciences and Ors. MANU/SC/1613/2016 : (2017) 2 SCC 609, this Court has held that 'reasons are the links between the materials on which certain conclusions are based and the actual conclusions'. In absence of any finding on point No. 1, as pleaded by the Respondent and further, it is their case that relevant material produced before the Arbitrator to prove 'accord and satisfaction' between the parties, is not considered, and the same amounts to patent illegality, such aspects are to be considered by the Court itself. It cannot be said that it is a case where additional reasons are to be given or gaps in the reasoning, in absence of a finding on point No. 1 viz. "whether the contract was illegally and abruptly terminated by the Respondent?"

21. Further, Section 34(4) of the Act itself makes it clear that it is the discretion vested with the Court for remitting the matter to Arbitral Tribunal to give an opportunity to resume the proceedings or not. The words "where it is appropriate" itself indicate that it is the discretion to be exercised by the Court, to remit the matter when requested by a party. When application is filed Under Section 34(4) of the Act, the same is to be considered keeping in mind the grounds raised in the application Under Section 34(1) of the Act by the party, who has questioned the award of the Arbitral Tribunal and the grounds raised in the application filed Under Section 34(4) of the Act and the reply thereto. Merely because an application is filed Under Section 34(4) of the Act by a party, it is not always obligatory on the part of the Court to remit the matter to Arbitral Tribunal. The discretionary power conferred Under Section 34(4) of the Act, is to be exercised where there is inadequate reasoning or to fill up the gaps in the reasoning, in support of the findings which are already recorded in the award. Under guise of additional reasons and filling up the gaps in the reasoning, no award can be remitted to the Arbitrator, where there are no findings on the contentious issues in the award. If there are no findings on the contentious issues in the award or if any findings are recorded ignoring the material evidence on record, the same are acceptable grounds for setting aside the award itself. Under guise of either additional reasons or filling up the gaps in the reasoning, the power conferred on the Court cannot be relegated to the Arbitrator. In absence of any finding on contentious issue, no amount of reasons can cure the defect in the award. A harmonious reading of Section 31, 34(1), 34(2A) and 34(4) of the Arbitration and Conciliation Act, 1996, make it clear that in appropriate cases, on the request made by a party, Court can give an opportunity to the arbitrator to resume the arbitral proceedings for giving reasons or to fill up the gaps in the reasoning in support of a finding, which is already rendered in the award. But at the same time, when it prima facie appears that there is a patent illegality in the award itself, by not recording a finding on a contentious issue, in such cases, Court may not accede to the request of a party for giving an opportunity to the Arbitral Tribunal to resume the arbitral proceedings. Further, as rightly contended by the learned Counsel appearing for the Respondent, that on the plea of 'accord and satisfaction' on further consideration of evidence, which is ignored earlier, even if the arbitral tribunal wants to consciously hold that there was 'accord and satisfaction' between the parties, it cannot do so by altering the award itself, which he has already passed.

 IN THE SUPREME COURT OF INDIA

Civil Appeal No. 7 of 2022 

Decided On: 03.01.2022

I-Pay Clearing Services Private Limited Vs.  ICICI Bank Limited

Hon'ble Judges/Coram:

R. Subhash Reddy and Hrishikesh Roy, JJ.

Author: R. Subhash Reddy, J.

Citation: MANU/SC/0005/2022

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Whether the order of the arbitrator refusing to entertain a counterclaim is the interim award?

 Section 34 of the 1996 Act allows recourse to a Court against any "arbitral award". "Arbitral award" is defined in Section 2(1)(c) as including an interim award. {Para 9}

10. "Interim award" is, however, not defined in the 1996 Act. Section 31(6) of the 1996 Act, however, empowers an Arbitral Tribunal to make an interim award on any matter with respect to which it may make a final arbitral award. Section 31(6) of the 1996 Act reads thus:

"The arbitral tribunal may, at any time during the arbitral proceedings, make an interim arbitral award on any matter with respect to which it may make a final arbitral award."

11. Inasmuch as an interim award is also an "arbitral award" as defined in Section 2(c), an interim award would be susceptible to challenge under Section 34 of the 1996 Act. This fact was noticed by the Supreme Court in Indian Farmers Fertilizer Cooperative Ltd. v. Bhadra Products MANU/SC/0026/2018 : (2018) 2 SCC 534 (IFFCO, hereinafter). The issue before the Supreme Court, in that case, was whether an order rejecting a claim on the ground of limitation, could be treated as "interim award", so as to make the order amenable to challenge under Section 34 of the 1996 Act. The Supreme Court, in IFCO MANU/SC/0026/2018 : (2018) 2 SCC 534, while noticing that the 1996 Act does not define "interim award", proceeded to opine as under:

"7. As can be seen from Section 2(c) and Section 31(6), except for stating that an arbitral award includes an interim award, the Act is silent and does not define what an interim award is. We are, therefore, left with Section 31(6) which delineates the scope of interim arbitral awards and states that the arbitral tribunal may make an interim arbitral award on any matter with respect to which it may make a final arbitral award."

8. The language of Section 31(6) is advisedly wide in nature. A reading of the said sub-section makes it clear that the jurisdiction to make an interim arbitral award is left to the good sense of the Arbitral Tribunal, and that it extends to "any matter" with respect to which it may make a final arbitral award. The expression "matter" is wide in nature, and subsumes issues at which the parties are in dispute. It is clear, therefore, that any point of dispute between the parties which has to be answered by the arbitral tribunal can be the subject matter of an interim arbitral award. However, it is important to add a note of caution. In an appropriate case, the issue of more than one award may be necessitated on the facts of that case. However, by dealing with the matter in a piecemeal fashion, what must be borne in mind is that the resolution of the dispute as a whole will be delayed and parties will be put to additional expense. The arbitral tribunal should, therefore, consider whether there is any real advantage in delivering interim awards or in proceeding with the matter as a whole and delivering one final award, bearing in mind the avoidance of delay and additional expense. Ultimately, a fair means for resolution of all disputes should be uppermost in the mind of the arbitral tribunal.

12. In my view, the import of the afore-extracted passages from the judgment of the Supreme Court in IFFCO MANU/SC/0026/2018 : (2018) 2 SCC 534 is clear and categorical. Any matter, on which an Arbitral Tribunal may make a final award, can also be subject of an interim award made by it. If, therefore, the decision of the Arbitral Tribunal brings a quietus to an issue before the Arbitral Tribunal, and is an order which the Arbitral Tribunal is empowered to pass at the final stage, it would constitute an "interim award" within the meaning of Section 31(6) and, consequently, within the meaning of Section 34 of the 1996 Act.

A decision that the counter-claim is not maintainable and is, therefore, liable to be rejected, is a decision which an Arbitral Tribunal can certainly take at the final stage of the proceedings, especially in view of the power conferred on the Arbitral Tribunal, by Section 16 of the 1996 Act, to rule on its own jurisdiction especially in view of the power conferred on the Arbitral Tribunal by Section 16 of the 1996 Act, to rule on its own jurisdiction. Being, therefore, in the nature of a decision which could be taken at the final stage of the proceedings, i.e. in the final award which the Arbitral Tribunal would pass, such a decision, when taken at an interlocutory stage, would, in my view, certainly constitute an "interim award" within the meaning of the 1996 Act, in view of the law laid down in IFFCO MANU/SC/0026/2018 : (2018) 2 SCC 534.

IN THE HIGH COURT OF DELHI

O.M.P. (COMM) 224/2021 and I.A. 9860/2021

 National Highways Authority of India Vs.  Abhijeet Angul Sambalpur Toll Road Limited

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Whether Court Can Appoint An Arbitrator During The Pendency Of An Appeal Against An Award, Set Aside On Reasons Other Than Merit?

 In the present case it is not in dispute the award was not

passed on merits of the rival claims and therefore the decision in

Associated Constructions (supra) will come to the assistance of the applicant. The basis of the application is the fact that the award having been set aside and the Award not being on merits,

principles of Res Judicata cannot be attracted. It is also contended that under Order 41 Rule 5 of the Code of Civil Procedure, merely filing an appeal will not operate stay of further proceedings.

There is no prohibition against a new tribunal being appointed or the applicant being restrained in any manner from prosecuting this application. {Para 15}

 IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

IN ITS COMMERCIAL DIVISION

COMMERCIAL ARBITRATION APPLICATION NO.414 OF 2019

Wadhwa Group Holdlings Private Limited Vs Homi Pheroze Ghandy & Anr.

CORAM : A. K. MENON, J.

DATED : 7TH MARCH, 2022.

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Whether the court can execute a void arbitral award if parties had participated in the arbitration proceeding?

 Prima facie, if the award is void ab initio on the ground of ineligibility of an arbitrator, the participation of any party in the arbitral proceedings may not be sufficient to infuse life to the arbitral proceedings.

IN THE HIGH COURT OF DELHI AT NEW DELHI

 CORAM: HON'BLE MR. JUSTICE VIBHU BAKHRU

 O.M.P. (COMM) 16/2020 & I.A. 438/2020 & I.A. 440/2020; 

RUIA EXPORTS & ANR. Vs MONEYWISE FINANCIAL SERVICES PVT.LTD & ORS.

Dated: 23.03.2022 

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Should the court set aside an arbitral award if the arbitral tribunal has failed to consider relevant rival contentions?

 However, the issue is not limited to interpretation of Clause 18.1 of the Concession Agreement, solely on which the impugned award, essentially, rests. The interpretation of Clause 18.4 of the Concession Agreement is also vital to the controversy in the present case. The petitioner had relied on Clause 18.4 of the Concession Agreement and had contended that in terms of the said clause, any additional civil works were specifically excluded from the purview of Article XVIII of the Concession Agreement. Undisputedly, construction of additional lanes and toll booths entailed civil works and Clause 18.4 of the Concession Agreement expressly provided that “maintenance shall not include the extension of any existing pavement, bridges, structures and other civil works unless part of the project”. Clause 18.4 of the Concession Agreement, thus, clarified that extension of any structure or other civil works would not be included as part of maintenance. The written submissions filed by the petitioner before the Arbitral Tribunal indicates that the petitioner had canvassed the said clause and specifically clarified that the construction of additional lanes over and above as specified under the Concession Agreement, is excluded from the scope of maintenance. A plain reading of the impugned award indicates that the Arbitral Tribunal had not considered Clause 18.4 of the Concession Agreement while interpreting the question whether construction of the additional lanes fall within the scope of Operation and Maintenance obligations of the petitioner. {Para 49}

50. Mr. Chandra had submitted that Clause 18.4 of the Concession Agreement would not exclude construction of additional lanes as Clause 18.1 of the Concession Agreement has an overriding effect to include the same within the scope of the project. This contention is not persuasive. However, more importantly, it is clear that the Arbitral Tribunal has not considered this contention even though it was urged before the Arbitral Tribunal. Undeniably, Clause 18.1 of the Concession Agreement could not have been interpreted in isolation. It was also required to be examined in the context of the other clauses of the Concession Agreement - including Clause 18.4 of Concession Agreement, Clause 2.1 of the Concession Agreement, which defined the scope of the contract and Clause 2 of Schedule C of the Concession Agreement, which described the specifications of a toll plaza, were also required to be interpreted.

51. In view of the above, there is merit in the petitioner's contention that since one of the principal contentions advanced by the petitioner regarding interpretation of Article XVIII of the Concession Agreement has not been considered and the impugned award rests substantially on the interpretation of a sub-clause of Article XVIII of the Concession Agreement; the award must be construed to be unreasoned.

52. Section 31(3) of the A&C Act requires that an arbitral award must state reasons upon which it has been based. The said requirement must be read in a meaningful manner. In an adversarial system of litigation, the reasons for a decision must necessarily take into account the relevant rival contentions. Thus, the question whether construction of additional lanes and toll booths fall within the scope of the Concession Agreement was required to be addressed in the light of the contentions advanced by both parties. However, the Arbitral Tribunal has completely ignored the petitioner's contention regarding the interpretation of Clause 18.4 of the Concession Agreement.

53. Justice (Retired) Devinder Gupta has, in his opinion, considered all the relevant clauses of the Concession Agreement including Clause 18.4 of the Concession Agreement and concluded that the scope of work under the Concession Agreement did not include construction of additional lanes at the toll plazas. This Court concurs with the said view.

54. In the aforesaid context, this Court is of the view that the impugned award is contrary to the expressed terms of the contract as it ignores Clause 18.4 of the Concession Agreement, which expressly provides that extension of pavements or ‘other civil works’ would not be included as a part of maintenance unless such construction is a part of the project. There is no clause in the Concession Agreement, which specified construction of additional toll lanes as a part of the project.

55. In view of the above, the impugned award is set aside. The petitioner is at liberty to seek a reference of the disputes to arbitration.

In the High Court of Delhi at New Delhi

(Before Vibhu Bakhru, J.)

GVK Jaipur Expressway Private Limited  Vs National Highway Authority of India 

O.M.P. (COMM) 377/2020

Decided on October 29, 2021

Citation: 2021 SCC OnLine Del 4851

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Whether arbitrator should grant interest pendente lite contrary to agreement between the parties?

Having regard to the above, we are of the view that the High Court was justified in rejecting the claim of the appellant seeking pendente lite interest on the award amount. {Para 18}

19. This takes us to the next question as to whether Clause 17 of the Contract is ultra vires in terms of Section 28 of the Indian Contract Act, 1872. According to Section 28, a contract is void to the extent it restricts absolutely a party from enforcing his rights by usual proceedings in ordinary courts or if it limits the time within which he may enforce his rights. Exception I to this section contains a rule that a contract by which two or more persons agree that any dispute which has arisen or which may arise between them in respect of any subject or class of subjects shall be referred to arbitration is not illegal. The question, therefore, is whether the contracts barring payment of interest extinguish the rights of the parties. Exception 1 to Section 28 reads as under :
“Exception 1: Saving of contract to refer to arbitration dispute that may arise. – This section shall not render illegal a contract, by which two or more persons agree that any dispute which may arise between them in respect of any subject or class of subjects shall be referred to arbitration, and that only the amount awarded in such arbitration shall be recoverable in respect of the dispute so referred.”

20. Exception I to Section 28 saves contracts where the right to move the Court for appropriate relief is restricted but where the parties have agreed to resolve their dispute through arbitration. Thus, a lawful agreement to refer the matter to arbitration can be made a condition precedent before going to courts and it does not violate Section 28. No cause of action then accrues until the Arbitrator has made the award and the only amount awarded in such arbitration is recoverable in respect of the dispute so referred. Section 31(7)(a) of the 1996 Act which allows parties to waive any claim to interest including pendente lite and the power of the Arbitrator to grant interest is subject to the agreement of the parties.

21. It is pertinent to note that interest payments are governed in general by the Interest Act, 1978 in addition to the specific statutes that govern an impugned matter. Section 2 (a) of the Interest Act defines a “Court” which includes both a Tribunal and an Arbitrator. In turn, Section 3 allows a “Court” to grant interest at prevailing interest rates in various cases. The provisions of Section 3 (3) of the Interest Act, 1978 explicitly allows the parties to waive their claim to an interest by virtue of an agreement. Section 3(3)(a)(ii) states that the Interest Act will not apply to situations where the payment of interest is “barred by virtue of an express agreement”.

22. Thus, when there is an express statutory permission for the parties to contract out of receiving interest and they have done so without any vitiation of free consent, it is not open for the Arbitrator to grant pendent lite interest. We are of the considered opinion that Clause 17 of the contract is not ultra vires in terms of Section 28 of the Indian Contract Act, 1872.

                      Supreme Court

JUSTICE S. ABDUL NAZEER JUSTICE KRISHNA MURARI

GARG BUILDERS Vs. BHARAT HEAVY ELECTRICALS LIMITED

CIVIL APPEAL NO. 6216 OF 2021

4th October 2021

Author: S. ABDUL NAZEER, J.

Citation: 2021 ALL SCR 2191

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Whether the court can accept Immovable Property As Security For the Stay Of enforcement of an arbitral award?

On a conjoint reading of the above provisions it is clear that the

intention of the framers of the law, which is relevant for consideration in the present case, was to refrain from a strict requirement that security to be furnished for stay of a decree would only be in monetary terms. The intent of the

provision relating to stay of a money decree is that the applicant who seeks stay of a decree must furnish some sort of effective cushion for the decree-holder to fall back on in the event the challenge to the decree fails. In other words, the

purpose is to secure the decree-holder in a manner which would be conducive to the decree-holder enjoying the fruits of the decree in the long run. The other significant issue which is found in all the above provisions namely, Order XLI,

Order XXI of the CPC and Section 36(3) of the 1996 Act is the clear discretion given to a Court for deciding the conditions which may be imposed. The words used in Order XLI are “. . . as the Court may think fit” which is repeated in Order

XXI Rule 26 and Rule 29 as “. . . as it thinks fit”. The principles enshrined in the provisions relating to stay of a money decree must be imported to the proviso to Section 36(3) of the 1996 Act. The language of Section 36(3) imparts an equal

amount of discretion to the Court namely “. . . subject to such conditions as it may deem fit, grant stay of operation of such award . . .”. The only stated requirement is that the Court must indicate its reasons in writing for granting an order of stay

of the award in question.

Having regard to the relevant statutory provisions which may be

understood as guidelines in the proviso to Section 36(3), this Court is of the view that there is no statutory fetter on a Court to be hemmed in by requiring cash security, bank guarantees and the like.

IN THE HIGH COURT AT CALCUTTA

Ordinary Original Civil Jurisdiction

ORIGINAL SIDE

AP/82/2021

IA No.GA/1/2021

NITU SHAW  Vs  BHARAT HITECH (CEMENTS) PRIVATE LIMITED

BEFORE :

The Hon’ble JUSTICE MOUSHUMI BHATTACHARYA

Date : 19th March, 2021

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Supreme Court: Award passed in domestic Arbitration after 2015 Amendment can be set aside on ground of patent illegality

Pursuant to the recommendations of the Law Commission, the 1996 Act was amended by Act 3 of 2016, which came into force w.e.f. 23.10.2015. The ground of "patent illegality" for setting aside a domestic award has been given statutory force in Section 34(2A) of the 1996 Act. The ground of "patent illegality" cannot be invoked in international commercial arbitrations seated in India. Even in the case of a foreign award under the New York Convention, the ground of "patent illegality" cannot be raised as a ground to resist enforcement, since this ground is absent in Section 48 of the 1996 Act. The newly inserted Sub-section (2A) in Section 34, reads as follows:

(2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award:

Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.

20. In Ssangyong Engineering and Construction Company Limited19, this Court was considering a challenge to an award passed in an international commercial arbitration, between the Appellant - company a foreign entity registered under the laws of Korea, and the Respondent, a Government of India undertaking. In paragraph (19) of the judgment, this Court noted that the expansive interpretation given to "public policy of India" in the Saw Pipes (supra) and Western Geco International Limited20 cases, which had been done away with, and a new ground of "patent illegality" was introduced which would apply to applications Under Section 34 made on or after 23.10.2015. In paragraphs (36) and (37) of the judgment, this Court held that insofar as domestic awards are concerned, the additional ground of patent illegality was now available Under Sub-section (2A) to Section 34. However, re- appreciation of evidence was not permitted under the ground of "patent illegality" appearing on the face of the award.

21. In paragraphs (39) and (40) of Ssangyong Engineering (supra), the Court reiterated paragraphs (42.2) and (42.3) of Associate Builders (supra) wherein, it was held that the construction of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator construes a contract in a manner which no fair minded or reasonable person would take i.e. if the view taken by the arbitrator is not even a possible view to take. In paragraphs (39) and (40), the Supreme Court held as under:

39. To elucidate, para 42.1 of Associate Builders v. Delhi Development Authority MANU/SC/1076/2014 : (2015) 3 SCC 49, namely, a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an arbitral award. Para 42.2 of Associate Builders v. Delhi Development Authority MANU/SC/1076/2014 : (2015) 3 SCC 49, however, would remain, for if an arbitrator gives no reasons for an award and contravenes Section 31(3) of the 1996 Act, that would certainly amount to a patent illegality on the face of the award.

40. The change made in Section 28(3) by the Amendment Act really follows what is stated in paras 42.3 to 45 in Associate Builders v. Delhi Development Authority MANU/SC/1076/2014 : (2015) 3 SCC 49, namely, that the construction of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator construes the contract in a manner that no fair-minded or reasonable person would; in short, that the arbitrator's view is not even a possible view to take. Also, if the arbitrator wanders outside the contract and deals with matters not allotted to him, he commits an error of jurisdiction. This ground of challenge will now fall within the new ground added Under Section 34(2-A).

(emphasis supplied)

22. The present case arises out of a domestic award between two Indian entities. The ground of patent illegality is a ground available under the statute for setting aside a domestic award, if the decision of the arbitrator is found to be perverse, or, so irrational that no reasonable person would have arrived at the same; or, the construction of the contract is such that no fair or reasonable person would take; or, that the view of the arbitrator is not even a possible view.

23. In the present case, the High Court has referred to the judgment in Associated Builders (supra) at length in paragraph (42) of its judgment dated 26.02.2019 and arrived at the correct conclusion that an arbitral award can be set aside Under Section 34 if it is patently illegal or perverse. This finding of the High Court is in conformity with paragraph (40) of the judgment of this Court in Ssangyong Engineering (supra).

IN THE SUPREME COURT OF INDIA

Special Leave Petition (C) Nos. 3584-85 of 2020

Decided On: 22.05.2020

Patel Engineering Ltd. Vs.  North Eastern Electric Power Corporation Ltd.

Hon'ble Judges/Coram:

R. Banumathi, Indu Malhotra and Aniruddha Bose, JJ.

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Whether execution application can be dismissed on ground that Arbitration award is not registered?

 Dismissal of the execution proceedings seeking to execute an award passed by an Arbitrator on the ground that said award was unregistered is the subject matter of challenge in the present writ petition.

As per the provisions of Section 17(1)(b) of the said Act, it is clear that in any testamentary document purporting to create or declare any right, title or interest in any immovable property exceeding value of Rs. 100/- is compulsory registrable. The decisions relied upon by the learned counsel for the respondent nos. 1 and 2 support the aforesaid proposition. On reading of the entire award, it becomes clear that ownership rights in favour of the parties has been created with regard to some of the properties and they have been called upon to relinquish their rights with regard to other properties. It is therefore evident that since the right, title and interest was being created in immovable property exceeding the value of Rs. 100/-, the award was required to be duly registered. In absence of such registration, the award cannot be executed. Reference in this regard can be made to the decision in Sita Ram Bhama Vs. Ramvatar Bhama, MANU/SC/0284/2018 : (2018)15 Supreme Court Cases 130.

The decisions relied upon by the learned counsel for the petitioners do not lay down that even if any right, title and interest is created in immovable property exceeding the value of Rs. 100/-, registration of such documents is not necessary. The aspect of pre-existing rights is also not very relevant especially when both the parties are required to relinquish their rights in favour of the other party with regard to some properties.

7. It is thus found that the Executing Court was legally correct in coming to the conclusion that as the award that was sought to be executed was not registered, the execution proceedings were not tenable. I therefore do not find any reason to interfere with the said order. By observing that it is open for the petitioner to have the award registered and thereafter take such steps as are permissible in law to execute the award, 

IN THE HIGH COURT OF BOMBAY (NAGPUR BENCH)

Writ Petition No. 4571/2016

Decided On: 10.06.2019

Ramchandra Vs. Kiran and Ors.

Hon'ble Judges/Coram:

A.S. Chandurkar, J.

Citation: 2020(1) MHLJ 84 SC

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Whether service of arbitral award on wife of partner of partnership firm is proper service?

It is the admitted position that the signed arbitral awards were forwarded by the arbitrator to the appropriate address of a partner of the appellant firm. The Single Bench noticed that the agreements had been executed by such partner of the firm and the signature of such partner appeared on all pages of the agreement. Once a postal article addressed to a partner of a firm is received at such appropriate address and acknowledged to be received on behalf of the addressee, by his wife no less, service would be deemed to have been appropriately effected on the addressee. Of course, it is open to the addressee to demonstrate otherwise; but the burden is on the addressee. The mere allegation that despite service being effected in such manner, the postal article was not received by the addressee, would not do. It does not appear to be the addressee's case that the wife deliberately suppressed the receipt of such postal article from the relevant partner or there were some other circumstances which prevented the wife from making over the postal article to the relevant partner. In the absence of a very high case and which is established by cogent evidence, in such a scenario, the delivery of the postal article at the appropriate postal address of the addressee would amount to service of the postal article on the addressee. It is, thus, evident that Section 31(5) of the Act was complied with in either case upon the signed copy of the arbitral awards being delivered at the address of the relevant partner.

IN THE HIGH COURT OF CALCUTTA

APO No. 247 of 2018, 

Decided On: 04.10.2018

 Manohar Lal & Co. Vs. Axis Bank Ltd.

Hon'ble Judges/Coram:

Sanjib Banerjee and Abhijit Gangopadhyay, JJ.

Citation: AIR 2019 Cal 84

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Whether jurisdiction of arbitrator can be challenged after passing of arbitral award?

 However, since it is stated that proceedings are pending before the Arbitrator in pursuance of the impugned order, the same will stand transferred to the State Tribunal and the State Tribunal may proceed further taking into account the proceedings which have already been taken. Learned Counsel for the Respondent(s) pointed out that in view of Section 16(2), the objection to the jurisdiction could not be raised after statement of defence was filed. This contention cannot be accepted in view of the fact that the SLP was filed prior to the filing of statement of defence wherein this objection was raised.

21. We do not express any opinion on the applicability of the State Act where award has already been made. In such cases if no objection to the jurisdiction of the arbitration was taken at relevant stage, the award may not be annulled only on that ground.

IN THE SUPREME COURT OF INDIA

C.A. No. 974 of 2012,

Decided On: 08.03.2018

Madhya Pradesh Rural Road Development Authority Vs. L.G. Chaudhary Engineers and Contractors

Hon'ble Judges/Coram:
A.K. Goel, Rohinton Fali Nariman and U.U. Lalit, JJ.

Citation: (2018) 10 SCC 826

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Whether limitation for filing application U/S 34 of Arbitration Act will commence even if copy of arbitral award is not served on some of parties personally?

 Award dated 07.07.1996 was received by Anilkumar Patel for himself and on behalf of his family members. In interim MOU dated 29.06.1996, Anilkumar Patel signed for self and as a power of attorney holder for his wife and his all sons and daughter-in-law. Challenging the award dated 07.07.1996, Anilkumar Patel and his family members have filed a single petition Under Section 34 of the Act. Likewise they have also filed a single petition for amending the arbitration petition No. 202 of 2005. Anilkumar Patel, being the head of his family, was a person directly connected with and involved in the proceeding and was also in control of the proceeding. Being head of the family, Anilkumar Patel would have been the best person to understand and appreciate the arbitral award and take a decision as to whether an application Under Section 34 of the Act was required to be filed or not. In such facts and circumstances, in our considered view, service of arbitral award on Anilkumar Patel amounts to service on the other Appellant Nos. 1(a) to 1(d) and Respondent No. 10 and they cannot plead non-compliance of Section 31(5) of the Act.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 3313 of 2018 

Decided On: 27.03.2018

Anilkumar Jinabhai Patel Vs.  Pravinchandra Jinabhai Patel and Ors.

Hon'ble Judges/Coram:

R.K. Agrawal and R. Banumathi, JJ.

Citation: (2018) 15 SCC 178

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Whether court can grant interim relief as per S 9 of arbitration Act even after passing of arbitral award?

 The question, that arises for adjudication before us is, as to whether the proceedings initiated Under Section 9 of the Act, (whilst the arbitral proceedings were pending) survive, after the arbitral proceedings come to a closure. Insofar as the instant aspect of the matter is concerned, the answer thereto has to emanate from Section 9 of the Act. The above provision is extracted hereunder:

9. Interim measures, etc. by Court.--(1) A party may, before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section 36, apply to a court--

(i) for the appointment of a guardian for a minor or a person of unsound mind for the purposes of arbitral proceedings; or

(ii) for an interim measure of protection in respect of any of the following matters, namely:--

(a) the preservation, interim custody or sale of any goods which are the subject-matter of the arbitration agreement;

(b) securing the amount in dispute in the arbitration;

(c) the detention, preservation or inspection of any property or thing which is the subject-matter of the dispute in arbitration, or as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorising any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence;

(d) interim injunction or the appointment of a receiver;

(e) such other interim measure of protection as may appear to the court to be just and convenient, and the Court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceedings before it.

(2) Where, before the commencement of the arbitral proceedings, a Court passes an order for any interim measure of protection under Sub-section (1), the arbitral proceedings shall be commenced within a period of ninety days from the date of such order or within such further time as the Court may determine.

(3) Once the arbitral tribunal has been constituted, the Court shall not entertain an application under Sub-section (1), unless the Court finds/that circumstances exist which may not render the remedy provided Under Section 17 efficacious.

A perusal of the above provision reveals, that interim measures can be allowed in favour of a party (who moves an application Under Section 9 of the Act), either before the commencement of the arbitration proceedings, or during the pendency of the arbitral proceedings, and even after the making of the arbitral award "... but before it is enforced in accordance with section 36...". It is therefore apparent, that an interim arrangement, can be made Under Section 9 of the Act, not only before and during the pendency of the arbitral proceedings, but also after the arbitral award has been pronounced.

7. As to whether the orders passed by the different Courts, which culminated in the two orders, extracted hereinabove, dated 13.12.2013 and 14.03.2014, would continue even after the passing of the arbitral award, in our considered view, would depend on the nature of the prayer made by the Appellant, when the application Under Section 9 was filed, before the concerned Court. 

IN THE SUPREME COURT OF INDIA

C.A. No. 679 of 2017 

Decided On: 19.01.2017

Ultratech Cement Limited Vs.  Rajasthan Rajya Vidyut Utpadan Nigam Limited

Hon'ble Judges/Coram:

J.S. Khehar, C.J.I. and Dr. D.Y. Chandrachud, J.

Citation: (2018) 15 SCC 678

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Whether court can suo motu remand case to arbitral tribunal after setting aside arbitral award?

On the aspect of remand of the proceedings as ordered by the learned Principal District Judge, it is found that said direction is contrary to the provisions of Section 34(4) of the said Act as well as the law as laid down in Kinnari Mullik and another (supra). It has been held in the aforesaid decision that the limited discretion available to the Court under Section 34(4) of the said Act can be exercised only if a written application is made by a party to the arbitration proceedings before passing of the award. Said power cannot be exercised suo-motu by the Court after the award has been set aside. By the impugned order, the award has been set aside and the proceedings have been remanded to the Arbitrator for fresh adjudication. Such course is not permissible in view of the aforesaid law as laid down. That direction issued by the learned Principal District Judge to that effect is thus liable to be set aside.

IN THE HIGH COURT OF BOMBAY (NAGPUR BENCH)

Arbitration Appeal No. 3 of 2017

Decided On: 07.09.2018

 Chandrashekar Vs. Yogi Construction and Ors.

Hon'ble Judges/Coram:

A.S. Chandurkar, J.

Citation: 2019(1) MHLJ 628

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Whether Arbitrator can entertain application U/S 17 of Arbitration Act once arbitral award is put into execution?

 Indisputably, the impugned order has been passed by the arbitral tribunal in an application under Section 17 of the Act of 1996 filed by the respondent herein. A bare reading of Section 17 of the Act of 1996 makes it clear that an arbitral tribunal can pass any order under the said section till the award by it in the arbitral proceeding is not put into execution before the Court. Once the arbitral award is put into execution by any party before a court, the arbitral tribunal ceases to have any jurisdiction to entertain any application under Section 17 of the Act of 1996 or to pass any order in exercise of power under the said section. In the present case, although the learned advocate representing the present appellants before the arbitral tribunal could not produce copy of the execution application being EC No. 281 of 2017 filed before this Court and a copy of the said application was also not served upon the respondent till that date but a positive statement was made on behalf of the petitioner before the arbitral tribunal about the filing of the said application. The records produced before this Court also substantiate the statement made by the present appellants about the filing of the said execution application on November 10, 2017. The arbitral tribunal, however, instead of adjourning the hearing of the application filed by the respondent and without directing the present appellants to produce a copy of the execution application, passed the impugned order on November 11, 2017. After perusal of the case status report obtained by the appellants from the website of this Court, a copy whereof was made over to the learned Counsel appearing for the respondent, there is no dispute that, in fact, the execution case being EC No. 281 of 2017 was filed in the Original Side of this Court on November 10, 2017. Even otherwise also, the present respondent is contesting EC No. 281 of 2017 before a learned Single Judge of this Court and it is not his case that the said execution application was not filed before the Court on November 10, 2017. In these facts, I find that the appellants are justified in their contention that the arbitral tribunal committed a patent illegality in entertaining the application filed by the respondent under Section 17 of the Act of 1996 and passed the impugned order without ascertaining that the submission made on behalf of the present appellants about the filing of the execution application to be incorrect. When the execution application, EC No. 281 of 2017 had already been filed by the appellants before this Court, the entirety of the impugned order passed by the arbitral tribunal is nothing but an order without jurisdiction and a nullity. 

IN THE HIGH COURT OF CALCUTTA

GA 4030/2017 and APO 568/2017

Decided On: 04.05.2018

Jagat Singh Chopra  Vs.  Raj Singh Chopra

Hon'ble Judges/Coram:

Ashis Kumar Chakraborty, J.

Citation: AIR 2018(NOC) 855 Cal

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Whether arbitrator can grant penal rate of interest affecting right of award debtor to challenge said award?

 In the present case, the arbitral tribunal has adopted a dual rate of Interest in the Award. The Award directs payment of Interest @ 9% for 120 days post award; if the amount awarded is not paid within 120 days', the rate of Interest is scaled up to 15% on the sum awarded.

The dual rate of Interest awarded seems to be unjustified. The award of a much higher rate of Interest after 120 days' is arbitrary, since the Award-debtor is entitled to challenge the award within a maximum period of 120 days' as provided by Section Achieving Coherence Through Purpose, Indian Journal of Arbitration Law, Volume 7, Issue 1 (July 2018) 34(3) of the 1996 Act6. If the award-debtor is made liable to pay a higher rate of Interest after 120 days, it would foreclose or seriously affect his statutory right to challenge the Award by filing objections Under Section 34 of the said Act.

9. The imposition of a high rate of interest @ 15% post-120 days is exorbitant, from an economic standpoint, and has no co-relation with the prevailing contemporary international rates of Interest. The Award-debtor cannot be subjected to a penal rate of interest, either during the period when he is entitled to exercise the statutory right to challenge the Award, before a Court of law, or later. Furthermore, the arbitral tribunal has not given any reason for imposing a 15% rate of Interest post 120-days.

10. The Petitioner in his Written Submissions submitted a chart which shows that the Interest component of the Award amounts to almost 50% of the sum awarded. The grant of 15% Interest is excessive and contrary to the principle of proportionality and reasonableness.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 10394 of 2018 (Arising out of SLP (Civil) No. 25819 of 2018)

Decided On: 11.10.2018

Vedanta Ltd. Vs. Shenzen Shandong Nuclear Power Construction Co. Ltd.

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