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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Whether service of scanned copy of arbitral award by email is valid service of signed copy of award so as to start limitation for filing an application U/S 34 of Arbitration Act?

When scanned signed copy of order dated 07th March, 2018 was received by petitioner by email dated 22nd May, 2018 and scanned signed copy of Addendum to Award dated 17th May, 2018 was received by the petitioner on 17th May, 2018 itself, the same was valid delivery in terms of Section 31(5) of the Arbitration Act. The law has to keep its pace in tandem with the developing technology. When service by email is an accepted mode of service, then sending scanned signed copy of the award/order of the Arbitral Tribunal to the parties would be a valid delivery as envisaged under Section 31(5) of the Arbitration Act. {Para 47}

48. A Division Bench of this Court in the case of Delhi Urban Shelter Improvement Board Vs. Lakhvinder Singh MANU/DE/1290/2017 has held that the expression 'signed copy' in Section 31(5) of the Arbitration Act indicates the legislative intent that a copy authenticated by the Arbitrator is served on each party. It was held that authenticity of correspondence in the technologically advanced times of today does not necessarily pertain to only signatures in writing, and it would be adverse to read the expression 'signed copy' of the award/order in a restrictive manner so as to connote a copy bearing the original signatures of the Arbitrator in his hand writing. Thus, it was held as follows:

"15. The reference to the case of ARK Builders Private Limited (supra) where there was a dispute as to the delivery of a copy of the award by the arbitrator, by the Appellant would be inapplicable since, in the present case, the delivery of the copy of the award is not in contention. The only question is whether the copy of the impugned award, delivered to DUSIB by the arbitrator was a signed copy. 

16. As observed by the Single Judge, the expression 'signed copy' in Section 31(5) clearly indicates the legislative intent that a copy authenticated by the arbitrator is served on each party. The purpose of enacting the said provision is clearly to ensure that the parties receiving the award are in a position to act on the same. Emphasizing on this legislative intent, the Single Judge elaborated on how the authenticity of correspondence in the technologically advanced times of today does not necessarily pertain to only signatures in writing, and it would be adverse to read the expression "signed copy of the award" in a restrictive manner as to connote a copy bearing the original signatures of the arbitrator in his handwriting. 

49. Considering the aforesaid, it is clear that valid delivery of the Addendum to Award dated 17th May, 2018 and order dated 07th March, 2018 took place respectively on 17th May, 2018 and 22nd May, 2018 in terms of Section 31(5) of the Arbitration Act. Thus, the period of limitation for filing of petition under Section 34 of the Arbitration Act in the present case commenced on 22nd May, 2018. Thus, the limitation period for filing the present petition was till 22nd August, 2018.

 IN THE HIGH COURT OF DELHI

O.M.P. (Comm.) 377/2018

Decided On: 23.08.2023

Ministry Of Youth Affairs And Sports, Dept. of Ports, Govt. of India Vs. ERNST and Young Pvt. Ltd. (Now Known As ERNST and Young LLP) and Ors.

Hon'ble Judges/Coram:

Mini Pushkarna, J.

Citation:  MANU/DE/5541/2023.

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Can a party challenge interest awarded by arbitrator U/S 34 of arbitration Act if there is no prohibition for granting an interest in an arbitration agreement?

 The contention that the arbitral award is vitiated as the

Arbitral Tribunal has awarded exorbitant interest is equally

unmerited. The Arbitral Tribunal has awarded interest at the rate of 12%per annum. The same cannot be considered by any stretch of imagination as exorbitant. The Hon’ble Supreme Court in a recent decision in Punjab State Civil Supplies Corporation Limited (PUNSUP) and Anr. v Ganpati Rice Mills: SLP (C) 36655 of 2016, decided on 20.10.2021, has held that the Arbitral Tribunal has wide discretion in awarding interest under Section 31(7)(a) of the A&C Act and the impugned award cannot be interfered with except on the ground as set out in Section 34 of the A&C Act. {Para 20}

21. There is no provision in the Agreement which prohibits

award of interest. Thus, the decision in Jaiprakash Associates

Ltd. Through Its Director v. Tehri Hydero Development

Corporation India Ltd. Through Its Director (supra) is clearly

inapplicable. In that case, the challenge to the arbitral award was

sustained as the contract between the parties prohibited grant of

any interest. Clearly, award of interest contrary to the express

terms of the agreement between the parties would be susceptible

to challenge under Section 34 of the A&C Act. But since there is

no agreement proscribing award of interest, the award of interest cannot be faulted.

 IN THE HIGH COURT OF DELHI AT NEW DELHI

 O.M.P. (COMM) 432/2019 and IA Nos. 14333/2019,

NATIONAL SEEDS CORPORATION LTD Vs NATIONAL AGRO SEEDS CORPORATION

CORAM:

HON'BLE MR. JUSTICE VIBHU BAKHRU

 Date of Decision: 05.01.2022

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Delhi HC: Arbitral Award Is To Be Executed At A Place Where Judgment Debtor Resides, Carries Business Or Has Assets

 There is no justification for filing an execution petition before the court within whose jurisdiction the arbitral award was passed, and then seek a transfer to the Court which has jurisdiction over the Judgment Debtor or their properties. Irrespective of the place where the award was passed, it is to be executed by a Court within whose jurisdiction the Judgment Debtor resides, carries on business or his property is situated. Since the Judgment Debtor is admittedly residing within the territorial jurisdiction of the courts at Chennai, such courts would certainly have territorial jurisdiction to enforce the arbitral award. Thus, this Court lacks territorial jurisdiction to entertain the present petition. {Para 12}

 IN THE HIGH COURT OF DELHI AT NEW DELHI

 OMP (ENF.) (COMM.) 38/2021, EX.APPL.(OS) 981/2021,

EX.APPL.(OS) 1034/2021 and EX.APPL.(OS) 1367/2021

CONTINENTAL ENGINEERING CORPORATION Vs

SUGESAN TRANSPORT PVT. LTD.

CORAM:

HON'BLE MR. JUSTICE SANJEEV NARULA

Dated:10.01.2022

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Whether it is mandatory to register an arbitration award that provides for the partition of Properties in the future?

On a perusal of the award which is in the form of a resolution, it is clear that there was no right created in any specific item or asset of the joint family properties in any person but the parties resolved to take certain actions in pursuance of a family arrangement. Therefore under Annexure P-10 (Ex. B-13) there was no right created in favour of any party in any specific item of joint family property. The said document which has been styled as an award is, in our view, only a memorandum of understanding/family arrangement to be acted upon in future. Hence, in our considered view, the said document did not create rights in specific properties or assets of the family, in favour of specific persons. Therefore, the same did not require registration under section 17(1)(e) of the Act. The said document was in the nature of a document envisaged under section 17(2)(v) of the Act. For a better understanding of the same it would be useful to refer to section 17(1)(e) and 17(2)(v) as under:

“17. Documents of which registration is compulsory.—(l) The following documents shall be registered, if the property to which they relate is situate in a district in which, and if they have been executed on or after the date on which, Act No. XVI of 1864, or the Indian Registration Act, 1866, or the Indian Registration Act, 1871, or the Indian Registration Act, 1877, or this Act came or comes into force, namely:—

xxxxxxxxx

(b) other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property;

xxxxxxxxx

(2) Nothing in clauses (b) and (c) of sub-section (l) applies to:—

xxxxxxxxx

(v) any document other than the documents specified in sub-section (1A) not itself creating, declaring, assigning, limiting or extinguishing any right, title or interest of the value of one hundred rupees and upwards to or in immovable property, but merely creating a right to obtain another document which will, when executed, create, declare, assign, limit or extinguish any such right, title or interest.”

{Para 28}

29. Having regard to the aforesaid provisions of law it can be safely concluded that the said award was a mere arrangement to divide the properties in future by metes and bounds as distinguished from an actual deed of partition under which there is not only a severance of status but also division of joint family properties by metes and bounds in specific properties. Hence it was exempted from registration under Section 17(2)(v) of the Act. A document of partition which provides for effectuating a division of properties in future would be exempt from registration under section 17(2)(v). The test in such a case is whether the document itself creates an interest in a specific immovable property or merely creates a right to obtain another document of title. If a document does not by itself create a right or interest in immovable property, but merely creates a right to obtain another document, which will, when executed create a right in the person claiming relief, the former document does not require registration and is accordingly admissible in evidence vide Ranjangam Iyer v. Ranjangam Iyer, AIR 1922 PC 266.

30. In the instant case exhibit B-13 award is more in the nature of a memorandum of understanding, a mere agreement of the steps to be taken in future for the division of the properties. Hence, the said document did not require registration under Section 17(1)(b) of the Act as under the said document no creation of rights in any specific joint family property was effected. Hence the second limb of the contention of the appellant is accordingly answered.

31. Thus, in our view the judgment in O.P. No. 7 of 1972 which was a petition filed under Section 17 of the Arbitration Act, 1940 praying to receive the award passed by the arbitrators and to pass a judgment thereon, wherein it was held that the award was not registered as mandated under Section 17(1)(b) of the Act and hence could not be made a rule of the Court, is wholly incorrect. In our view, the award was not a document of title to the property hence it did not require registration. Therefore, the Order dated 22nd August, 1975 passed in O.P. No. 7 of 1972 holding that the award was inadmissible in evidence as it was not registered and hence a decree could not be passed, is incorrect.

32. In our view, exhibit B-13 did not require registration.

 In the Supreme Court of India

(Before L. Nageswara Rao, B.R. Gavai and B.V. Nagarathna, JJ.)

K. Arumuga Velaiah  Vs P.R. Ramasamy 

Civil Appeal No. 2564 of 2012

Decided on January 27, 2022

Citation: 2022 SCC OnLine SC 95

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Whether a party can challenge jurisdiction of arbitrator during execution of arbitration award?

The contention raised was as follows:

1. As per Section 36 of the Arbitration & Conciliation Act, 1996, an arbitral award is to be executed by the civil court in the same manner as if it were a decree of the Court.

2. Since the award has to be executed as a decree, the executing court would be able to decide certain questions as provided under Section 47 of the Code of Civil Procedure, 1908.

3. Amongst the various questions which an executing court has power to determine it also has power to determine jurisdiction of the Court which passed the Decree (There is legal principle that the executing court shall not go behind the decree, but there are two exceptions to this rule, & the executing courts may deny to execute the decree if (a) decree is passed under fraud (b) the court which passed the decree lacks inherent jurisdiction.

4. As a consequence, the executing Court under Section 47 of the CPC, should have power to decide whether the Arbitrator lacked jurisdiction to pass the award.

The Court, while rejecting the contention, held as follows:

1. The Arbitration & Conciliation Act, 1996 is a special and self contained code in itself, whereas CPC is a general law of procedure, thus in case of conflict, it is the special law which will prevail (Reliance placed on Deep Industries Ltd. v. ONGC, (2020) 15 SCC 706)

2. The ground of lack of jurisdiction has to be taken by a party at the threshold of the proceedings. It cannot be challenged under Section 47 of the CPC (Reliance placed on Gas Authority of India Limited v. Keti Construction (I) Limited & others (2007) 5 SCC 38).

3. If the contention of the Petitioner is accepted, it would defeat the whole purpose of Arbitration of expeditious relief, and lead to opening of pandora’s box even after an award has attained finality.

Madhya Pradesh High Court

Canara Bank vs Bank Of India on 6 January, 2022

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Whether Foreign State can claim sovereign immunity against enforcement of arbitral award arising out of the commercial transaction?

  The prior consent of Central Government is not necessary under Section 86(3) of the Code of Civil Procedure to enforce an arbitral award against a Foreign State. {Para 44}

45. A Foreign State cannot claim a Sovereign Immunity against enforcement of an arbitral award arising out of a commercial transaction.

46. Section 36 of the Arbitration and Conciliation Act treats an arbitral award as a „decree‟ of a Court for the limited purpose of enforcement of an award under the Code of Civil Procedure which cannot be read in a manner which would defeat the very underlying rationale of the Arbitration and Conciliation Act namely, speedy, binding and legally enforceable resolution of disputes between the parties.

47. Section 86 of the Code of Civil Procedure is of limited applicability and the protection thereunder would not apply to cases of implied waiver. An arbitration agreement in a commercial contract between a party and a Foreign State is an implied waiver by the Foreign State so as to preclude it from raising a defense against an enforcement action premised upon the principle of Sovereign Immunity.

48. In a contract arising out of a commercial transaction, such as the transactions which are subject matter of the present petitions, a

Foreign State cannot seek Sovereign Immunity for the purpose of stalling execution of an arbitral award rendered against it. Once a Foreign State opts to wear 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, which is otherwise available to it only when it is acting in its sovereign capacity. It is the purpose and nature of the transaction of the Foreign State which would determine whether the transaction, and the contract governing the same, represents a purely commercial activity or whether the same is a manifestation of an exercise of sovereign authority.

IN THE HIGH COURT OF DELHI AT NEW DELHI

Date of Decision: 18th June, 2021

OMP (ENF) (COMM) 82/2019 & I.A. No. 7023/2019

KLA CONST TECHNOLOGIES PVT. LTD. Vs THE EMBASSY OF ISLAMIC REPUBLIC OF AFGHANISTAN

 CORAM:  MR. JUSTICE J.R. MIDHA

 Dated: JUNE 18, 2021 

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Whether application U/S 34 of Arbitration Act is maintainable to challenge foreign arbitration award?

The Appellant, which was granted special leave, challenges a judgment of the Bombay High Court1. It urges that the impugned judgment is erroneous because it concludes that proceedings Under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter "the Act") can be maintained to challenge a foreign award, defined as one, under that enactment.

Appearing for the Appellant, NV Engineering, Mr. Joydeep Gupta, learned Senior Counsel, urged that the impugned judgment is unsupportable in law because a foreign award cannot be challenged Under Section 34 of the Act. It was urged that the three-judge decision in Bhatia International8 and the subsequent holding in Venture Global9 were both held to be incorrect in the larger, five judges ruling in Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc MANU/SC/0722/2012 : 2012 (9) SCC 552 ("BALCO" hereafter). Learned Counsel submitted that even the caveat in BALCO that a class of foreign awards made prior to its pronouncement cannot aid Jindal's essential argument with respect to maintainability of a challenge Under Section 34 and that such challenge under Part I is untenable.

10. Mr. Gupta relied on BALCO extensively in support of his argument that the foreign awards in this case, having been rendered outside India under the aegis of the ICC cannot be challenged merely because a condition in the underlying contract says that the law governing the agreement, would be Indian law.

135. Thus, the intention of the legislature is clear that the court may refuse to enforce the foreign award on satisfactory proof of any of the grounds mentioned in Section 48(1), by the party resisting the enforcement of the award. The provision sets out the defences open to the party to resist enforcement of a foreign award. The words "set aside or suspended", in Clause (e) of Section 48(1) cannot be interpreted to mean that, by necessary implication, the foreign award sought to be enforced in India can also be challenged on merits in Indian courts. The provision merely recognises that courts of the two nations which are competent to annul or suspend an award. It does not ipso facto confer jurisdiction on such courts for annulment of an award made outside the country. Such jurisdiction has to be specifically provided in the relevant national legislation of the country in which the court concerned is located. So far as India is concerned, the Arbitration Act, 1996 does not confer any such jurisdiction on the Indian courts to annul an international commercial award made outside India. Such provision exists in Section 34, which is placed in Part I. Therefore, the applicability of that provision is limited to the awards made in India. If the arguments of the learned Counsel for the Appellants are accepted, it would entail incorporating the provision contained in Section 34 of the Arbitration Act, 1996, which is placed in Part I of the Arbitration Act, 1996 into Part II of the said Act. This is not permissible as the intention of Parliament was clearly to confine the powers of the Indian courts to set aside an award relating to international commercial arbitrations, which take place in India.

 IN THE SUPREME COURT OF INDIA

Civil Appeal No. 8607 of 2010

Decided On: 26.11.2020

 Noy Vallesina Engineering Spa Vs.  Jindal Drugs Limited and Ors.

Hon'ble Judges/Coram:

Indira Banerjee and S. Ravindra Bhat, JJ.

Author: S. Ravindra Bhat, J.

Citation: MANU/SC/0899/2020

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Whether executing court can give relief to decree-holder beyond the scope of decree or arbitration award?

From the facts of this case, it is clear that the Award passed by the Arbitrator could not be independently executed, as the same was only for fixation of price of land and not for enforcement of the Agreement. The Award was only declaratory of the price of the land. As per the agreement, if the Respondent agreed to the price so fixed, it could then get the sale deed executed in terms of the Agreement dated 01.02.1980 as it had the option of either accepting the price and getting the sale deed executed, or not accepting the price and thus not getting the sale deed executed. This would clearly mean that the Award was merely for the declaration of the price of the land, which would be subject to the agreement and it was not necessary for the Respondent to get the sale deed executed at the price so determined by the Arbitrator. What was thus executable was the agreement, and not the Award. The relief granted by the Court below for execution of the sale deed in terms of the Award, is thus outside the realm of law, as the Award did not contemplate the transfer of land in favour of the Respondent, but only determined the price of land.

31. It is also noteworthy that the application for execution of Award filed on 16.05.1994 before the Additional District Judge-I, Bharatpur did not provide for any provision of law under which the same was filed. Though, in paragraph 2 of the said application, it was mentioned that the Award of the Arbitrator contained a direction for execution of the Award, but in fact there was no such direction issued in the Award, in which the Arbitrator had only fixed the price of the land and nothing more.

32. In our view, once the Respondent had given up its claim of execution of sale deed in terms of the Agreement dated 01.02.1980 by withdrawing the suit for specific performance of the agreement (Civil Suit No. 60 of 1996), which was permitted to be withdrawn unconditionally on 13.02.2006, the Appellant had abandoned its claim for execution of the sale deed. Thus, in our opinion, the Respondent could not be permitted to achieve the goal of execution of sale deed by indirectly claiming for execution of Award, when the direct claim for execution of sale deed of the Agreement dated 01.02.1980 had been abandoned by the Respondent.

33. At the cost of repetition, it may be mentioned that the specific performance could only be of the Agreement dated 01.02.1980 and not of the Award dated 09.06.1985. Even the operative portion of the Award also does not give any direction for execution of the sale deed. It was after the passing of the Award that the Respondent could have fallen back on the agreement for execution of the sale deed, which Respondent did by filing the suit for specific performance, but abandoned such claim by withdrawing the suit unconditionally.

34. The submission of the learned Senior Counsel for the Respondent that substantial justice has been done by the Court by directing execution of the sale deed, is not worthy of acceptance. In a Civil Case, the Courts have to follow the law in letter and spirit, which has not been done in the present case, as in law the sale deed could have been directed to be executed in execution of the Agreement dated 01.02.1980 and not the Award, which was only a declaration, fixing the price of land.

35. This Court, while considering the question of execution of a decree which only declared the rights of the decree holder and nothing more, has in the case of State of M.P. v. Mangilal Sharma MANU/SC/0953/1998 : (1998) 2 SCC 510 held as follows:

6. A declaratory decree merely declares the right of the decree-holder vis-à-vis the judgment-debtor and does not in terms direct the judgment-debtor to do or refrain from doing any particular act or thing. Since in the present case decree does not direct reinstatement or payment of arrears of salary the executing court could not issue any process for the purpose as that would be going outside or beyond the decree. The Respondent as a decree-holder was free to seek his remedy for arrears of salary in the suit for declaration. The executing court has no jurisdiction to direct payment of salary or grant any other consequential relief which does not flow directly and necessarily from the declaratory decree...........

It is thus clear that execution of an award can be only to the extent what has been awarded/decreed and not beyond the same. In the present case, the Arbitrator in its Award had only declared the price of land and nothing more. Thus, the question of execution of a sale deed of the land at the price so declared by the Arbitrator in its Award, could not be directed.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 2376 of 2020 

Decided On: 24.04.2020

Firm Rajasthan Udyog and Ors. Vs.  Hindustan Engineering & Industries Ltd.

Hon'ble Judges/Coram:

U.U. Lalit and Vineet Saran, JJ.

Citation: MANU/SC/0401/2020, (2020) 6 SCC 660

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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 Arbitration award remains enforceable if one of arbitrator withdraws after the conclusion of the argument?

 It is for this reason that the Legislature appears to have provided in Section 31(2) of the 1996 Act that where the Arbitral Tribunal comprises more than one Arbitrator, the signatures of the majority of all members of the Arbitral Tribunal would be sufficient for framing an Award, so long as reasons are given for any omitted signature. In other words, while Subsection (1) of Section 31 provides that the Arbitral Award should be in writing and should bear signatures of all members of Arbitral Tribunal, Subsection (2) of the very same Section envisages a situation where majority of the Arbitral Tribunal signs the award and the remaining member(s) chooses not to sign the same. The only caveat entered in Subsection (2) of Section 31 is that the majority members comprising the Arbitral Tribunal should give reasons for omission of the signature(s) of the remaining member(s).

In the High Court of Delhi at New Delhi

(Before Rajiv Shakdher, J.)

CIMMCO Ltd. v.Union of India 

 O.M.P. (COMM) 297/2016

Decided on March 15, 2019, 

Citation: 2019 SCC OnLine Del 7655 : (2019) 261 DLT (CN 4) 4

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Supreme Court: Government is not entitled to get unconditional stay to execution of arbitration award

 It may be true that the Code of Civil Procedure provides for a differential treatment to the Government in certain cases, but the same may not be so applicable while considering a case against the Government under the Arbitration Act. For instance, Section 80 of Code of Civil Procedure provides for a notice of two months to be given before any suit is instituted against the Government. Further, it is also provides that no ex-parte injunction order can be passed against the Government. Whereas on the other hand, under the Arbitration Act no such special provision has been made with regard to arbitration by or against the Government. There is no requirement under the Arbitration Act for a notice of two months to be given to the Government before invoking arbitration proceeding against the Government. Further, Sections 9 and 17 of the Arbitration Act also provide for grant of ex-parte interim orders against the Government.

26. Section 36 of the Arbitration Act also does not provide for any special treatment to the Government while dealing with grant of stay in an application under proceedings of Section 34 of the Arbitration Act. Keeping the aforesaid in consideration and also the provisions of Section 18 providing for equal treatment of parties, it would, in our view, make it clear that there is no exceptional treatment to be given to the Government while considering the application for stay Under Section 36 filed by the Government in proceedings Under Section 34 of the Arbitration Act.

27. Although we are of the firm view that the archaic Rule 8A of Order XXVII Code of Civil Procedure has no application or reference in the present times, we may only add that even if it is assumed that the provisions of Order XXVII Rule 8A of Code of Civil Procedure are to be applied, the same would only exempt the Government from furnishing security, whereas Under Order XLI Rule 5 of Code of Civil Procedure, the Court has the power to direct for full or part deposit and/or to furnish security of the decretal amount. Rule 8A only provides exemption from furnishing security, which would not restrict the Court from directing deposit of the awarded amount and part thereof.

28. For the foregoing reasons, we are of the opinion that the impugned order passed by the Calcutta High Court granting unconditional stay of the arbitration award dated 21.01.2010, cannot be sustained in the eye of law.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 5432 of 2019 

Decided On: 12.07.2019

 Pam Developments Private Ltd. Vs. State of West Bengal

Hon'ble Judges/Coram:

Rohinton Fali Nariman and Vineet Saran, JJ.

Citation: AIR 2019 SC 3937,(2019) 8 SCC 112

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Supreme Court set aside Arbitration award on ground that arbitrator has represented one of party in another case

If the above provision is kept in view, though technically as on 27.02.2004 when the storage receipt was drawn out and the Arbitration Clause came into existence there was no circumstance for disclosure of the present nature, it is seen that he has immediately thereafter, on 29.03.2004 filed the vakalat for one of the parties. Thus, as on 03.06.2006 when the claim was lodged before the learned Arbitrator both the events of, he being appointed as an Arbitrator and also as a counsel in another case had existed, which was well within the knowledge of Sri. S.T. Madnani and in that circumstance, it was the appropriate stage when he ought to have disclosed the same and refrained from entertaining the claim. If in that background, the decision in the case of V.K. Dewan and Co. v. Delhi Jal Board and Ors. (2010) 15 SCC 717 relied upon by the Appellants is kept in view, it was in the fairness of things that Sri S.T. Madnani should not have acted as an Arbitrator.

9. In the ultimate analysis since we are not adverting to the merits of the claim and in that regard since, we have not adverted to the finding recorded by the learned Arbitrator on the merits of claim we would not venture to examine with regard to the ultimate conclusion on the claim as to whether it is justified or not. However, in the above background, what is to be seen is that there has been a reasonable basis for the Appellants to make a claim that in the present circumstance the learned Arbitrator would not be fair to them even if not biased. It could no doubt be only a perception of the Appellants herein. Be it so, no room should be given for even such a feeling more particularly when in the matter of arbitration the very basis is that the parties get the opportunity of nominating a judge of their choice in whom they have trust and faith unlike in a normal course of litigation where they do not have such choice.

10. That apart when one is required to judge the case of another, justice should not only be done, but it should also seem to be done is the bottom line. Hence in that background, if the present circumstance is taken not, there was reasonable basis for the Appellants to put forth such contention which resulted in the situation wherein they had not participated in the arbitration proceedings. If nothing else, atleast propriety demanded that the learned Arbitrator should have recused in the present facts; but he has failed to do so. In that view, such an award passed by the learned Arbitrator was not sustainable and the learned District Judge was justified in entertaining the petition Under Section 34 of the Act, 1996 to set aside the award. In that view, we are of the opinion that the learned Judge of the High Court of Judicature at Bombay was not justified in allowing the appeal filed Under Section 37(1)(b) of the Act, 1996.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 6960 of 2011

Decided On: 24.07.2019

Vinod Bhaiyalal Jain Vs.  Wadhwani Parmeshwari Cold Storage Pvt. Ltd. and Ors.

Hon'ble Judges/Coram:

R. Banumathi and A.S. Bopanna, JJ.

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Whether Arbitration award can be enforced against non signatory to arbitration agreement?

The present case relates to a post award situation. The enforcement of the arbitral award has been sought against the Appellant on the basis that it claims under KCP and is bound by the award. Section 35 of the Arbitration and Conciliation Act 1996 postulates that an arbitral award "shall be final and binding on the parties and persons claiming under them respectively". The expression 'claiming under', in its ordinary meaning, directs attention to the source of the right. The expression includes cases of devolution and assignment of interest (Advanced Law Lexicon by P. Ramanatha Aiyar15 ). The expression "persons claiming under them" in Section 35 widens the net of those whom the arbitral award binds. It does so by reaching out not only to the parties but to those who claim under them, as well. The expression "persons claiming under them" is a legislative recognition of the doctrine that besides the parties, an arbitral award binds every person whose capacity or position is derived from and is the same as a party to the proceedings. Having derived its capacity from a party and being in the same position as a party to the proceedings binds a person who claims under it. The issue in every such a case is whether the person against whom the arbitral award is sought to be enforced is one who claims under a party to the agreement.

22. The submission which was urged on behalf of the Appellant, proceeds on the basis that since the Appellant was not impleaded as a party to the arbitral proceedings, proceedings for the enforcement of the award will not lie against it. This line of submissions clearly misses the central facet of Section 35, which is that a person who claims under a party is bound by the award. The fact that the Appellant was not a party to the arbitral proceedings will not conclude the question as to whether the award can be enforced against it on the ground that it claims under a party. Essentially, the Court is called upon to consider whether the test embodied in Section 35 is fulfilled in the present case, so as to bind the Appellant.

IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 10025-10026 of 2017

Decided On: 24.04.2018

Cheran Properties Limited  Vs.  Kasturi and Sons Limited and Ors.

Hon'ble Judges/Coram:

Dipak Misra, C.J.I., A.M. Khanwilkar and Dr. D.Y. Chandrachud, JJ.

Citation: (2018) 16 SCC 413

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Whether court can undertake independent assessment of merits of arbitration award in arbitration appeal?

 Before proceeding further, we find it necessary to briefly revisit the existing position of law with respect to the scope of interference with an arbitral award in India, though we do not wish to burden this judgment by discussing the principles regarding the same in detail. Such interference may be undertaken in terms of Section 34 or Section 37 of the Arbitration and Conciliation Act, 1996 (for short, "the 1996 Act"). While the former deals with challenges to an arbitral award itself, the latter, inter alia, deals with appeals against an order made Under Section 34 setting aside or refusing to set aside an arbitral award.

11. As far as Section 34 is concerned, the position is well-settled by now that the Court does not sit in appeal over the arbitral award and may interfere on merits on the limited ground provided Under Section 34(2)(b)(ii), i.e. if the award is against the public policy of India. As per the legal position clarified through decisions of this Court prior to the amendments to the 1996 Act in 2015, a violation of Indian public policy, in turn, includes a violation of the fundamental policy of Indian law, a violation of the interest of India, conflict with justice or morality, and the existence of patent illegality in the arbitral award. Additionally, the concept of the "fundamental policy of Indian law" would cover compliance with statutes and judicial precedents, adopting a judicial approach, compliance with the principles of natural justice, and Wednesbury reasonableness. Furthermore, "patent illegality" itself has been held to mean contravention of the substantive law of India, contravention of the 1996 Act, and contravention of the terms of the contract.

It is only if one of these conditions is met that the Court may interfere with an arbitral award in terms of Section 34(2)(b) (ii), but such interference does not entail a review of the merits of the dispute, and is limited to situations where the findings of the arbitrator are arbitrary, capricious or perverse, or when the conscience of the Court is shocked, or when the illegality is not trivial but goes to the root of the matter. An arbitral award may not be interfered with if the view taken by the arbitrator is a possible view based on facts. (See Associate Builders v. DDA, MANU/SC/1076/2014 : (2015) 3 SCC 49). Also see ONGC Ltd. v. Saw Pipes Ltd., MANU/SC/0314/2003 : (2003) 5 SCC 705; Hindustan Zinc Ltd. v. Friends Coal Carbonisation, MANU/SC/8095/2006 : (2006) 4 SCC 445; and McDermott International v. Burn Standard Co. Ltd., MANU/SC/8177/2006 : (2006) 11 SCC 181).

It is relevant to note that after the 2015 amendments to Section 34, the above position stands somewhat modified. Pursuant to the insertion of Explanation 1 to Section 34(2), the scope of contravention of Indian public policy has been modified to the extent that it now means fraud or corruption in the making of the award, violation of Section 75 or Section 81 of the Act, contravention of the fundamental policy of Indian law, and conflict with the most basic notions of justice or morality. Additionally, Sub-section (2A) has been inserted in Section 34, which provides that in case of domestic arbitrations, violation of Indian public policy also includes patent illegality appearing on the face of the award. The proviso to the same states that an award shall not be set aside merely on the ground of an erroneous application of the law or by re-appreciation of evidence.

12. As far as interference with an order made Under Section 34, as per Section 37, is concerned, it cannot be disputed that such interference Under Section 37 cannot travel beyond the restrictions laid down Under Section 34. In other words, the Court cannot undertake an independent assessment of the merits of the award, and must only ascertain that the exercise of power by the Court Under Section 34 has not exceeded the scope of the provision. Thus, it is evident that in case an arbitral award has been confirmed by the Court Under Section 34 and by the Court in an appeal Under Section 37, this Court must be extremely cautious and slow to disturb such concurrent findings.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 1862 of 2014

Decided On: 18.02.2019

 MMTC Ltd. Vs. Vedanta Ltd.

Hon'ble Judges/Coram:

Mohan M. Shantanagoudar and Vineet Saran, JJ.

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Whether arbitration can be initiated again if arbitration award is set aside?

A plain reading of the aforesaid passage also clearly indicates that once an award has been set aside, the parties would be free to begin the arbitration once again. Thus, in my view, the contention that GE Shipping could not initiate the arbitration after the decision of this Court under Section 34 of the Act, cannot be accepted. Mr. Ganguli sought to suggest that the observation made by Supreme Court in Mcdermott International Inc. (supra) was a “stray observation” and was not determinative of the issue at hand. This contention is also unacceptable. First and foremost, the observations of the Supreme Court are relevant to the decision rendered by it; secondly, in Puri Construction Pvt. Ltd. (supra) a division bench of this Court followed the principles laid down by the Supreme Court in Mcdermott International Inc. (supra) while interpreting the provisions of section 34 of the Act.

DELHI HIGH COURT

(Before Vibhu Bakhru, J.)

Steel Authority of India Limited. v. Indian Council of Arbitration & Anr.

W.P.(C) 3013/2013

Decided on November 16, 2015

Citation:2015 SCC OnLine Del 13394 : (2015) 225 DLT 348

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When court should set aside award passed by arbitrator even if he has taken plausible view?

Once we interpret the formula in the manner indicated above, the necessary consequences would be to hold that the Arbitral Tribunal(s) did not decide the cases with the correct application of the formula and further that the claim for price adjustment in respect of bitumen laid by the contractors was not correct. Therefore, it can be held that the Award(s) are contrary to the contractual terms. At the same time, this outcome poses a dilemma inasmuch as in these cases, the Arbitral Tribunal has taken a particular view and when this was a plausible view, keeping in mind the parameters of judicial review of the Court in exercise of powers Under Section 34 of the Act, normally the Court would not interfere with such Awards. However, as already indicated above, such a situation has arisen because of conflicting Awards given by the Arbitral Tribunals themselves, which has provoked this Court to take a final view in the matter, necessitated by the aforesaid reason. If one takes into consideration the theory that one applies the principle mechanically i.e. that a plausible view is not to be interfered with, then it may lead to very anomalous situation. In such an eventuality, view taken by a particular Arbitral Tribunal in favour of the Contractor would be upheld as plausible view. Likewise, the Court will have to uphold the view taken by a particular Arbitral Tribunal in favour of NHAI as well, as a plausible view. Therefore, the purpose is to avoid such a situation which cannot be permitted as it would result in upholding both kinds of arbitral awards interpreting the same clause, whether they go in favour of the employer or they go in favour of the contractor. When the exercise is done keeping in view these considerations and outcome thereof is not determined, interest of justice would also demand that this result has to be applied to the pending cases, which have not attained finality. Therefore, in these peculiar circumstances, we hold that the principle of issue estoppel will apply only in those cases where matters have attained finality and no judicial proceedings are pending. In all those cases, including the present one, where awards are challenged on this particular aspect, this judgment will govern the outcome.

IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 458, 459 and 460 of 2018

Decided On: 23.02.2018

 National Highway Authority of India Vs. Progressive MVR (JV)

Hon'ble Judges/Coram:

A.K. Sikri and Ashok Bhushan, JJ.

Citation: (2018) 14 SCC 688

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Whether court should appoint substitute arbitrator if there is delay in passing of arbitration award?

 It is true that there was some delay in passing the award.
However, between 2011 and 2013, the respondent has not filed any
application to expedite the proceedings and for passing of the
award. The respondent has neither filed the Request Case for
passing of the award at an early date nor filed the petition under
Section 14 of the Act for termination of the mandate of the arbitrator
that the arbitrator has ‘failed to act without undue delay’.
31. 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 the parties. We may usefully
refer to RUSSELL ON ARBITRATION, 20th Edition which reads as
under:-
“Mere neglect of an arbitrator to act, as distinct from refusal or
incapacity, does not of itself give the court power to appoint another
arbitrator in his place. It does, however, give the court power to
remove him, whereupon there is a power to replace him.”*
*[RUSSELL ON ARBITRATION, 20th Edition, Pg. 136 quoted in Law relating to
Arbitration and Conciliation, 9th Edition, by Dr. P.C. Markanda at Pg. 620]
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 1039 OF 2019

RAJASTHAN SMALL INDUSTRIES
CORPORATION LIMITED  Vs  M/S GANESH CONTAINERS MOVERS SYNDICATE 

R. BANUMATHI, J.
Dated:January 23, 2019.

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Whether application for enforcement of foreign arbitral award can be dismissed if necessary documents were not filed along with application?

 It is relevant to note that there would be no prejudice
caused to the party objecting to the enforcement of the
Award by the non-filing of the arbitration agreement at the
time of the application for enforcement. In addition, the
requirement of filing a copy of the arbitration agreement
under the Model Law which was categorized as a formal
requirement was dispensed with. Section 48 which refers
to the grounds on which the enforcement of a foreign
award may be refused does not include the non-filing of the
documents mentioned in Section 47. An application for
enforcement of the foreign award can be rejected only on
the grounds specified in Section 48. This would also lend
support to the view that the requirement to produce
documents mentioned in Section 47 at the time of
application was not intended to be mandatory.
21. Reading the word “shall” in Section 47 of the Act as
“may” would only mean that a party applying for

enforcement of the award need not necessarily produce
before the Court a document mentioned therein “at the
time of the application”. We make it clear that the said
interpretation of the word “shall” as “may” is restricted
only to the initial stage of the filing of the application and
not thereafter.
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No .4834 of 2007

P.E.C. LIMITED Vs AUSTBULK SHIPPING SDN BHD

L. NAGESWARA RAO, J.
Dated:NOVEMBER 14, 2018.
Citation: 2019(4) MHLJ 518

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