Bombay HC: Whether third party has locus standi to plead on behalf of the real owner that it is he (real owner), who was to be benefited by the Benami transaction?

 It is, therefore, necessary to understand whether the evidence is sufficient to prove that the appellant was holding property Benami. The appellant's husband is not party to the suit and, therefore, he has not claimed himself to be the real owner of the property. To my mind and in terms of Section 4 of the Benami Transactions Act, the question, whether the property held Benami was for the benefit of real owner, can only be answered when the real owner either files a suit or raises a defence on this count. It is so because the intention behind the Benami transaction is known to the person in whose name the property has been purchased or the person who has purchased the property in the name of other. A third party has no locus to plead on behalf of the real owner that it is he (real owner), who was to be benefited by the Benami transaction, unless third party otherwise proves. {Para 12}

IN THE HIGH COURT OF BOMBAY (NAGPUR BENCH)

Second Appeal No. 616/2007

Decided On: 26.04.2024

Badrunisa Vs. Sabdar Khan and Ors.

Hon'ble Judges/Coram:

Anil L. Pansare, J.

Citation: 2024:BHC-NAG:4870, MANU/MH/2715/2024.

Read full judgment here: Click here.

Print Page

Bombay HC: Whether agreement executed by husband of original owner will be concluded contract and will bind his wife?

 The respondents have placed on record a document Exh.-78, allegedly signed by the plaintiff's husband stating therein that the suit property is agreed to be sold to the respondent No. 1. As such, the husband has denied execution of document and even if the document is presumed to be signed by the appellant's husband, it does not satisfy the ingredients of the concluded contract, at least, not against the appellant and, therefore, the question of granting protection under Section 53-A of the Act does not arise at all. {Para 17}

18. Both the Courts below have thus committed serious error of law in holding that the transaction under question was Benami and secondly that there was valid contract between the appellant and the respondents.

19. Put all together, it cannot be said that agreement dated 07.07.1995 is binding upon the appellant-plaintiff inasmuch as the document is the unilateral document, signed by the appellant's husband. The respondents failed to establish a concluded contract with the plaintiff. The substantial question of law is answered accordingly.

IN THE HIGH COURT OF BOMBAY (NAGPUR BENCH)

Second Appeal No. 616/2007

Decided On: 26.04.2024

Badrunisa Vs. Sabdar Khan and Ors.

Hon'ble Judges/Coram:

Anil L. Pansare, J.

Citation: 2024:BHC-NAG:4870, MANU/MH/2715/2024

Print Page

When the Signature Becomes the Case: Delhi High Court on Proof of Contract, Defective Notarisation and the Limits of Section 34 of Arbitration Act

In arbitration, a claim founded on a disputed contract cannot survive unless the contract itself is first proved. The Delhi High Court’s decision in Galaxy Infra and Engineering Pvt. Ltd. v. Pravin Electricals Pvt. Ltd. reaffirms that principle with clarity and commercial realism.

Introduction

The decision of the Delhi High Court in Galaxy Infra and Engineering Pvt. Ltd. v. Pravin Electricals Pvt. Ltd., decided on 11.03.2026, is an important ruling on contract formation, proof of execution, arbitral jurisdiction and the narrow limits of challenge under Section 34 of the Arbitration and Conciliation Act, 1996. The judgment underscores a basic but often neglected truth of commercial litigation: where the very agreement containing the arbitration clause is not proved to have been executed, the arbitral claim may fail at the threshold itself.

Print Page

If several annexures/attachments of contract are prepared at different points of time, the latter in point of time would normally prevail over the earlier

 Another parallel principle that is equally relevant is that where the contract has several annexures/attachments, prepared at different points of time, unless a contrary intention is apparent, the latter in point of time would normally prevail over the earlier in point of time."{Para 32}

 IN THE HIGH COURT OF BOMBAY

Arbitration Application No. 250 of 2021

Decided On: 14.09.2023

Parekh Plastichem Distributors LLP Vs. Simplex Infrastructure Limited

Hon'ble Judges/Coram:

Firdosh P. Pooniwalla, J.

Citation:  MANU/MH/3701/2023,2023/BHC-OS/9920.

Read full Judgment here: Click here.

Print Page

Written, stamped or typed additions in the contract when inconsistent with the printed terms, would normally prevail over the printed terms"

  That leaves me to consider one more argument advanced by the Applicant. It is the case of the Applicant that the purchase orders contained an Annexure, in which against the title "Other Terms", it is stated that jurisdiction would be subject to Mumbai High Court. It is the submission of the Applicant that, because of this Clause, this Court would have jurisdiction under Section 11 of the Act to appoint an Arbitrator. In the context of this submission, the Applicant has referred to a judgment of the Hon'ble Supreme Court in the case of M. K. Abraham & Co. (Supra) and in particular to Paragraph No. 10 thereof, which reads as under:-

"10. If a contract consists of a printed form with cyclostyled amendments, typed additions and deletions and handwritten corrections, an endeavour shall be made to give effect to all the provisions. However, in the event of apparent or irreconcilable inconsistency, the following rules of construction will normally apply :

(i) The cyclostyled amendments will prevail over the printed terms;

(ii) The type-written additions will prevail over the printed terms and cyclostyled amendments;

(iii) Hand written corrections will prevail over the printed terms, cyclostyled amendments and typed written additions.

The above rules have evolved from the well known maxim of construction that "written, stamped or typed additions, when inconsistent with the printed terms, would normally prevail over the printed terms" and proceeds on the assumption that the printed form contained the original terms, and changes thereto were incorporated by the cyclostyled amendments, followed by changes by type-written additions and lastly the hand written additions. The logical explanation for such assumption is this: The printed form contains standardized terms to suit all contracts and situations. It is not drafted with reference to the special features of a specific contract. When such a standard form is used with reference to a specific contract, it becomes necessary to modify the standard/general terms by making additions/alterations/deletions, to provide for the special features of that contract. This is done either by way of an attachment of an annexure to the standard printed form, incorporating the changes, or by carrying out the required additions/alterations/deletions in the standard form itself. Such additions/alterations/deletions are done by typing/stamping/hand. We may refer to the following oft-quoted enunciation of the legal position by Lord Ellenborough in Robertson v. French MANU/ENRP/0600/1803 : [1803-13] All ER Rep.350 with reference to printed form of contract with hand- written additions :

....... that the words super added in writing are entitled, nevertheless, if there should be any reasonable doubt on the sense and meaning of the whole, to have a greater effect attributed to them than to the printed words, inasmuch as the written words are the immediate language and terms selected by the parties themselves for the expression of their meaning and the printed words are a general formula adapted equally to their case and that of all other contracting parties on similar occasions and subjects".

Another parallel principle that is equally relevant is that where the contract has several annexures/attachments, prepared at different points of time, unless a contrary intention is apparent, the latter in point of time would normally prevail over the earlier in point of time."{Para 32}

 IN THE HIGH COURT OF BOMBAY

Arbitration Application No. 250 of 2021

Decided On: 14.09.2023

Parekh Plastichem Distributors LLP Vs. Simplex Infrastructure Limited

Hon'ble Judges/Coram:

Firdosh P. Pooniwalla, J.

Citation:  MANU/MH/3701/2023,2023/BHC-OS/9920.

Read full Judgment here: Click here.

Print Page

Whether the court can infer that there was contract on the basis of exchange of Emails?

 I agree with the Plaintiff's Counsel submission relying on the case of Jyotsna Valia (supra) that a written contract need not always be a contract signed by both parties and may consist of correspondence exchanged between the parties without signature. In the present case the authenticity or veracity or truth of its contents of the emails exchanged between the parties are not in dispute. Thus the contentions of the Defendant with regard to no agreement between the parties to extend time upto 31st March 2020 is repelled as misconceived.{Para 30}

 IN THE HIGH COURT OF BOMBAY

Interim Application No. 655 of 2023 in Commercial Summary Suit No. 75 of 2021 and Summons for Judgment No. 65 of 2021 in Commercial Summary Suit No. 75 of 2021

Decided On: 20.09.2023

Play Games 24X7 Pvt. Ltd. Vs. Loran Leasing And Infotech Pvt. Ltd.

Hon'ble Judges/Coram:

Kamal Khata, J.

Citation: MANU/MH/3838/2023.

Read full Judgment here: Click here.

Print Page

Whether act of State of not deciding application of other party to contract within reasonable time amounts violation of article 14 of constitution?

 In Mansaram v. S.P. Pathak and Ors. MANU/SC/0363/1983 : (1984) 1 SCC 125 this Court has observed that when a power exists to effectuate a purpose it must be exercised within a reasonable time. It has been observed that this is all too well-settled principle to require buttressing precedent. Nonetheless, the Court refers to State of Gujarat v. Patel Raghav Natha MANU/SC/0406/1969 : (1969) 2 SCC 187 wherein the period of one year was found to be too long for the Commissioner to exercise revisional jurisdiction Under Section 211 of the Bombay Land Revenue Code. The principle of reasonable time as mentioned herein was followed recently by a Two-Judge Bench in Securities and Exchange Board of India v. Sunil Krishna Khaitan and Ors. MANU/SC/0846/2022 : (2023) 2 SCC 643. {Para 35}

36. Keeping in view the above-stated well established principles that State action irrespective of being in the contractual realm must abide by Article 14, and that a) after passage of a considerable period of time, in July, 2004 the reduction to 10000 KVA was agreed to and a new agreement to that effect was entered into; b) irrespective of the amount of reduction in KVA sought other applications were considered within a reasonable period of time; c) no reason has been put forth for keeping such application pending; d) that the Appellant duly and repeatedly followed up with the authorities to effectuate such reduction; and e) the Appellant has been unjustifiably asked to furnish costs for unutilized electricity which, in any case should not have extended beyond the period of six months (considering 'reasonable period' to consider an application, to be so), for a period much larger thereto, rendering such action unquestionably unreasonable and arbitrary.

IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 7224-7226 of 2009

Decided On: 06.07.2023

The Madras Aluminium Co. Ltd. Vs. The Tamil Nadu Electricity Board and Ors.

Hon'ble Judges/Coram:

B.R. Gavai, Sanjay Karol and Aravind Kumar, JJ.

Author: Sanjay Karol, J.

Citation: 2023/INSC/607, MANU/SC/0743/2023.

Print Page

Whether the government can claim liquidated damages from other party while extending time for completion of project contrary to terms of contract?

5.2 In the communication granting extension of time with levy

of penalty, penalty is levied by the State Government

invoking Clause 3.5.5(v) of the OPWD Code. However, it is

required to be noted that Clause 3.5.5(v) of the OPWD

Code shall be applicable in a case where the contract is

terminated. It permits the appropriate authority/State to

terminate the contract with penalty when the progress of

work is not as per the conditions of contract. Here, it is not

a case of termination of the contract. Therefore, Clause

3.5.5(v) of the OPWD Code which has been invoked in the

communication granting extension of time but with levy of

penalty shall not be applicable at all.

5.3 So far as the reliance placed upon Clause 3.5.30 of the

OPWD Code by learned counsel appearing on behalf of the

State is concerned, even under the said clause, there is no

provision for imposition of penalty while granting extension

of time. Clause 3.5.30 only provides that while

communicating to the contractor of extension of time, he

must be informed that extension is granted without

prejudice to State Government’s right to levy compensation

under relevant clause of the contract. If the relevant clause

of the contract is seen and/or considered, there is no

condition stipulated in the contract that while granting the

extension of time, there may be levy of penalty. The

relevant clause with respect to the extension of time is

Clause-4, which has been reproduced hereinabove. Neither

the contract nor the OPWD code provides for imposition of

penalty while extending the contract. Therefore, levy of

penalty while granting extension of time is wholly without

authority of the law and is illegal. The same has been

rightly set aside by the High Court.

5.4 Even otherwise, it is required to be noted that before the

levy of penalty of a particular percentage, while granting

extension of time, no opportunity of being heard has been

given to the contractor as to why the penalty may not be

imposed while granting extension of time and at what rate.

In a given case, the State Government might be justified in

imposing the penalty while granting the extension.

However, the contractor must be put to notice that

extension of time can be granted on imposition of

reasonable penalty. However, without putting the

contractor to notice, unilaterally, the State is not justified

in levying the penalty while granting extension of time.

6. In view of the above and for the reasons stated above, the

High Court has rightly set aside the penalty levied while

granting extension of time. 

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 4934 OF 2022

The State of Odisha & Ors. Vs Radheshyam Agrawal 

Author: M.R. SHAH, J.

Dated: MARCH 24, 2023.

Print Page

Must the court entertaining a compromise petition examine whether the compromise was void or voidable under the Indian Contract Act?

 

When the amending Act introduced a proviso along with an explanation to Rule 3 of Order 23 saying that where it is alleged by one party and denied by the other that an adjustment or satisfaction has been arrived at, "the Court shall decide the question", the Court before which a petition of compromise is filed and which has recorded such compromise, has to decide the question whether an adjustment or satisfaction had been arrived at on basis of any lawful agreement. To make the enquiry in respect of validity of the agreement or the compromise more comprehensive, the explanation to the proviso says that an agreement or compromise "which is void or voidable under the Indian Contract Act..." shall not be deemed to be lawful within the meaning of the said Rule. In view of the proviso read with the explanation, a Court which had entertained the petition of compromise has to examine whether the compromise was void or voidable under the Indian Contract Act. Even Rule 1(m) of Order 43 has been deleted under which an appeal was maintainable against an order recording a compromise. As such a party challenging a compromise can file a petition under proviso to Rule 3 of Order 23, or an appeal Under Section 96(1) of the Code, in which he can now question the validity of the compromise in view of Rule 1-A of Order 43 of the Code.

 {Para 13}

IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 2913-2915 of 2018

Prasanta Kumar Sahoo and Ors.  Vs.  Charulata Sahu and Ors.

Hon'ble Judges/Coram:

A.S. Bopanna and J.B. Pardiwala, JJ.

Author: J.B. Pardiwala, J.

Decided On: 29.03.2023

Citation: MANU/SC/0326/2023.

Read full Judgment here: Click here

Print Page

Is a prenuptial agreement between husband and wife not to have a child after marriage a valid contract?

  Under the Hindu religion, the marriage had assumed the

sacred character of sacrament. The personal thought of marriage

was a prime necessity for that alone could enable a person to

discharge properly his religious and secular obligation. To make it

say it otherwise, the marriage is necessarily a basis of social

organisation and the foundation of important legal rights and

obligation. The importance and imperative character of the

institution of marriage needs no comment and in Hindu Law

marriage is a Sanskar. Therefore, presumed contract as has

been stated by the appellant/husband that the second marriage

was performed on the condition that they would not have a child

from the second marriage cannot be a barrier as a valid sacred

promise, if not performed, will assume the character of cruelty.

Under the Hindu law, marriage is not a contract. Therefore, the

alleged promise as projected by the husband that they would not

have a child from the second marriage cannot be given a priority

over the sacrament or sanskar to have family. The alleged

promise also cannot be pressed into motion against the human

conduct if a lady after the marriage expects to have her own child. The role narrated by husband of contract of not to have child even after marriage is bound to be somnolent. A birth die is cast by nature. To deprive a woman from motherhood as a pre-condition for marriage cannot be given a priority. The type of condition set forth by husband only adds gloomy atmosphere to a married life as against a cheer by a child. Therefore, a demand to have child by wife from husband cannot be constituted a cruelty. {Para 11}

HIGH COURT OF CHHATTISGARH, BILASPUR

First Appeal (M) No. 138 of 2018

 P. Venkat Rao P. Ramarao, Vs Smt. P. Padmavati P. Venkat Rao, 

Coram: 

Hon'ble Justice Shri Goutam Bhaduri

Hon'ble Justice Shri N.K. Chandravanshi

Author:  Goutam Bhaduri, J

Dated: 09.3.2023

Print Page

Delhi HC: Arbitrator Can Declare Terms Of Contract Null, Even If No Declaration Is Sought By The Party In Its Pleadings

  It further held that because the rate of interest was left blank in Clause 60.8 (b) in the Appendix to the Bid to which a reference was made in the said clause. It was held to be uncertain and ineffective and therefore void under Section 29 of the Indian Contract Act.  {Para 24}

25. In the case of Oriental Structural Engineers Private Limited Vs. State of Kerala (2021) 6 SCC 150, manner of interpretation of Clause 60.8 of COPA, which is the subject matter of the present Award, came up for consideration. The plea of the rate of interest being left blank was specifically considered and the contention of the respondent was that not specifying the rate of interest and leaving it blank in the Appendix document amounted to a waiver and no interest was payable on any amount. Rejecting this plea, it was held that once there was a clause for levy of interest, merely because the rate of interest was not specified it would not amount to waiver but the Arbitrator, exercising his discretion, could award the interest at any reasonable rate. In the said case, the learned Arbitrator granted simple interest @ 8 % which was upheld by the Apex court.

26. The Arbitral Tribunal interpreted the terms of the contract and while rejecting the claim of the petitioner for compound Interest, it gave various reasons in which the clause providing for interest was also considered and held to be defunct, null and void being incomplete and vague. The objections of the Appellant that there being no pleading seeking clause 60.8 (b) to be declared null and void, the Ld. Arbitrator has made out a 3rd case in itself, is totally not tenable as it was within the domain of the Arbitrator to interpret the terms of the contract. The Tribunal exercised its discretion on the rate of interest to be granted, in absence of an agreement to this effect. The MajorityAward has given a well reasoned Award while granting simple interest.

 IN THE HIGH COURT OF DELHI AT NEW DELHI

Pronounced on: 13th March, 2023

 OMP (COMM.) 283/ 2021

M/S. MODI CONSTRUCTION COMPANY Vs M/S IRCON INTERNATIONAL LIMITED

CORAM:

 MS. JUSTICE NEENA BANSAL KRISHNA

Citation: 2023/DHC/001790

Print Page

How to determine the court's jurisdiction when an agreement contains both arbitration and recourse to court clauses for dispute settlement?

The law related to the jurisdiction of the court in the matters pertaining to arbitration is no longer res integra. It has been held in various pronouncements that all the matters arising out of an agreement/contract would be decided by the court in whose jurisdiction the seat of arbitration is decided.

 17. In the case of Shree Bhowani Cotton Mills vs Union Textile Traders, MANU/WB/0114/1966, the Calcutta High Court has held as under:

"4. the other contention on behalf of the petitioner was that it appeared from a clause of the agreement that the Courts at Calcutta would have jurisdiction, that it was open to the parties to come to a Court of law and therefore the agreement as to arbitration was vague. Settlement of dispute through the medium of arbitration and through recourse to Court of law are two different aspects. It may be that the parties envisaged disputes which are not covered by the arbitration clause and in such a case the parties might have recourse to a Court of law. That is why the parties stipulated that the Courts at Calcutta would have jurisdiction. I am unable to find any inconsistency between the provisions or to hold that there is any vagueness or uncertainty or that the clause providing for resort to Courts of law in Calcutta nullifies the arbitration agreement. Further, counsel, for the respondent rightly contended that in a document of this nature if there was any inconsistency the earlier clause would prevail unlike in a Will where the later clause would prevail. I make it quite clear that I do not hold that there is any inconsistency....."

18. Thus, in light of the detailed discussions above, this court is inclined to hold that clause 18.2 shall have a prevailing effect over the latter clause 18.3 of the agreement dated 26th August 2013 with respect to the mode of dispute resolution. It is further observed that parties have agreed for the arbitration proceedings to take place in New Delhi which can be construed as the "seat" of the arbitration and therefore, this court has the jurisdiction to entertain the present petition.

IN THE HIGH COURT OF DELHI

Arb. P. 1102/2022 and O.M.P. (I) (Comm.) 328/2022

Decided On: 18.01.2023

Sunil Kumar Chandra Vs. Spire Techpark Pvt. Ltd.

Hon'ble Judges/Coram:

Chandra Dhari Singh, J.

Citation: MANU/DE/0337/2023

Print Page

Whether a party to a contract is entitled to question the amount of consideration after signing the contract?

 In the present case, the Appellant and Respondent No. 1 had entered into an agreement on 22.05.2012. This agreement categorically stated that Respondent No. 1 would pay a sum of Rs. 1,00,000 per hectare towards irrigation restoration charge. Therefore, the Respondent No. 1 is not justified in challenging the levy of Rs. 1,00,000 when it itself had agreed to the same. In fact, on the same day, Respondent No. 1 had also issued an undertaking that it would pay the stipulated sum within a specific period of time. We may note here that right from the very beginning i.e., in the sanction order, the demand notice and in all its letters, the Appellant had stipulated a sum of Rs. 1,00,000 per hectare as irrigation restoration charges. All these communications get subsumed in the agreement dated 22.05.2012. Therefore, we are of the view that signing the agreement and issuing an undertaking would estop Respondent No. 1 from challenging the levy of Rs. 1,00,000 as irrigation restoration charges. {Para 17}

 IN THE SUPREME COURT OF INDIA

Civil Appeal No. 8550 of 2022 

 The Chief Engineer, Water Resources Department and Ors. Vs.

 Rattan India Power Limited and Ors.

Hon'ble Judges/Coram:

S. Ravindra Bhat and Pamidighantam Sri Narasimha, JJ.

Author: Pamidighantam Sri Narasimha, J.

Decided On: 13.01.2023

Citation: MANU/SC/0024/2023

Print Page

Whether domestic violence case can be settled in mediation?

The learned counsel for the petitioner next contended

that the default clause in Ext.P2 does not contemplate the

recovery of `25,00,000/- promised to be paid, but instead

contemplates the continuance of the proceedings. The counsel

further submitted that since the petitioner herein has expressed

his inability to comply with the settlement, the default clause

would come into operation and in such a case, the court cannot

make an order based on the settlement and can make an order

only after sufficient enquiry is carried out. Without conducting

any enquiry, the court below went wrong in ordering the

petitioner to pay a sum of `25,00,000/-, argued the counsel. I

cannot subscribe to the said argument. Once a settlement has

been arrived at between the parties in a lis, that concludes the

dispute resolved in the settlement and the parties are bound by

it. Based on the settlement arrived at the mediation, the parties

cannot be directed to invoke the original jurisdiction of the court

to ensure that the compromise is worked out. Such a procedure

would be against the spirit of the mediation process itself. In

Salkia Businessmens' Association (supra), the Apex Court has

held that viewing breach of the terms of the compromise as a

matter of mere contract between the parties and disregarding it

has a disastrous effect on rule of law. As stated already, the

Magistrate exercising jurisdiction under the DV Act has the power to refer the matter before it to mediation, record the compromise and pass an order in terms of the settlement. The order so passed in respect of the matters that fall within Sections 18 to 22 of the DV Act can be enforced in accordance with the law. As far as the settlement that falls outside the ambit of Sections 18 to 22 is concerned, the parties are bound to follow the terms of the settlement. {Para 13}

 IN THE HIGH COURT OF KERALA AT ERNAKULAM

OP(CRL.) NO. 390 OF 2020

MATHEW DANIEL Vs  LEENA MATHEW, 

PRESENT

 DR. JUSTICE KAUSER EDAPPAGATH

Dated: 16th day of August, 2022

Print Page

WHEN DOES A MEMORANDUM OF UNDERSTANDING (MOU) MERGE WITH A CONTRACT?

  The very fact that the State admits to having executed the MoU with UHL on 10th February, 1992 and the said MoU has been mentioned as “Appendix A” in the second recital of the Implementation Agreement, as reproduced above, itself demolishes the plea taken by the State that the Arbitral Tribunal and the Appellate Court have erred in returning a finding that the MoU dated 10th February, 1992 did not merge into the Implementation Agreement dated 22nd August, 1997. The aforesaid view is reinforced on a reading of the definition of the word “Agreement” as used in Clause 2.2 of the Implementation Agreement which clearly states that the word “Agreement” wherever used in the Implementation Agreement, shall include all its appendices and annexures. The MoU having been described by the parties as Appendix A to the Implementation Agreement, would have to be treated as having merged with the Implementation Agreement for all effects and purposes. In the light of the aforesaid recitals and clauses of the Implementation Agreement, this Court endorses the findings returned in para 47 of the impugned judgment, wherein it has been held that a plain reading of the second recital read with Clause 2.2 of the Implementation Agreement suggested that the MoU has merged with the Implementation Agreement and, therefore, the disputes that were referable to arbitration under the Implementation Agreement in terms of Clause 20, were to include disputes arising under the MoU, even though the latter document did contain a separate arbitration clause. {Para 10}

12. This Court is in agreement with the Appellate Court that Clause 1 of the Implementation Agreement could not have been read in isolation and when read in conjunction with the second recital and Clause 2.2 of the Implementation Agreement, it is apparent that the MoU was made a part and parcel of the Implementation Agreement. In view of the above, the view taken by the learned Sole Arbitrator that the MoU forms a part of the Implementation Agreement, as has been upheld by the Appellate Court, does not deserve any interference. All the points of dispute between the parties regarding performance of the contractual obligations including claims for damages and expenses incurred by UHL either arising from the MoU dated 10th February, 1992, or under the Implementation Agreement dated 22nd August, 1997, were referable to arbitration in accordance with Clause 20 forming a part of the Implementation Agreement.

In the Supreme Court of India

(Before N.V. Ramana, C.J. and A.S. Bopanna and Hima Kohli, JJ.)

Civil Appeal No. 10341 of 2011

UHL Power Company Ltd. Vs State of Himachal Pradesh 

Decided on January 7, 2022

Citation: 2022 SCC OnLine SC 19,

Print Page

Whether Breach Of Contract U/S 74 of The Contact Act is Applicable At Pre-Formation of contract Stage?

The writ petitioner has approached this Court aggrieved by the action of the second respondent in forfeiting the bid security which was submitted by it in the course of a process for award of contract initiated by that respondent. The challenge essentially is to the communication of 18 March 2019 & 28 May 2019 pursuant to which the second respondent apprised the petitioner of its decision to forfeit the bid security which had been submitted.

 40. In the light of the foregoing discussion, we are of the considered opinion that the appellant did not commit any breach of the term(s) and condition(s) of the notice inviting bids and on the other hand, it was the respondents who committed breaches. In these circumstances, the State had no right to forfeit the security amount and instead it should have been returned when demanded by the appellant.”

 Where, however, forfeiture takes place under the terms and conditions of a public auction before agreement is reached, Section 74 would have no application.”

 IN THE HIGH COURT OF DELHI AT NEW DELHI

Judgment pronounced on: 31 March 2022 

 W.P.(C) 8779/2019, 

CM APPLs. 36308/2019 & 44738/2019

 THE INDIAN HOTELS COMPANY LTD. Vs  UNION OF INDIA AND ORS.

CORAM:  MR. JUSTICE YASHWANT VARMA 

Print Page

Whether one party can withhold performance bank guarantee if it has acknowledged due performance of contract?

  In view of the above, the Arbitral Tribunal had rightly directed

refund of the amount recovered by BSNL from invocation of the

Performance Bank Guarantee in question. There is no principle in law whereby BSNL could be permitted to retain the Performance Security after it had acknowledged due performance of the Contract. {Para 19}

IN THE HIGH COURT OF DELHI AT NEW DELHI

 Judgment delivered on: 28.03.2022

 O.M.P. (COMM) 431/2019 & I.A. 14326/2019

BHARAT SANCHAR NIGAM LIMITED  Vs TERACOM LIMITED 

CORAM

HON’BLE MR JUSTICE VIBHU BAKHRU

Print Page

When will a clause in an agreement not amount to an arbitration clause?

 Clause 11 of the Master Service Agreement dated 29th July 2021 between the parties reads as under:-

“11.Jurisdiction, Arbitration & Dispute Resolution

This Agreement and any dispute or claim relating to it, its enforceability or its termination shall be governed and interpreted according to the laws of India Subject to this Clause 11, the Courts at Delhi, shall have exclusive jurisdiction over any

disputes under this Agreement”. {Para 3}

 18. In the light of the aforesaid decisions relied upon by the parties, it appears to me that clause 11 contained in the work order dated 10.12.2013 does not tantamount to an arbitration agreement. The said clause merely uses “arbitration” in the heading of clause 11. However, the main body of the said clause completely contra-indicates the existence of any arbitration agreement since it provides that disputes, if any, arising out of the agreement “shall be subject to the exclusive jurisdiction of the courts in city of Delhi”

21. In Jagdish Chander (supra), the Supreme Court has observed that mere use of the word, “arbitration” or “arbitrator” in a clause will not make it an arbitration agreement, if it requires or contemplates a further or fresh consent of the parties for reference to arbitration. Pertinently, in the present case, the main body of the clause does not even contemplate that the parties may agree to arbitration in future”.

6. In view of the decisions referred above, it is clear that mere use of the word ‘Arbitration’ in the heading in the Clause 11 of the Agreement between the parties in the present proceedings would not lead to the inference that there exists an agreement between the parties seeking resolution of disputes through arbitration.

IN THE HIGH COURT OF DELHI AT NEW DELHI

ARB.P. 325/2022;

FOOMILL PVT. LTD. Vs AFFLE (INDIA) LTD.

CORAM: HON'BLE MS. JUSTICE MUKTA GUPTA

Dated:  March 25, 2022

Print Page

When should a party prove loss or damages for breach of contract if there was a contract for grant of liquidated damages?

 Mr. Raheja's contention that HPCL was not required to either plead or prove any loss is difficult to accept. In Kailash Nath Associates v. Delhi Development Authority (supra), the Supreme Court had referred to Section 74 of the Indian Contract Act, 1872 and had held as under:—

“43. On a conspectus of the above authorities, the law on compensation for breach of contract under Section 74 can be stated to be as follows:

43.1. Where a sum is named in a contract as a liquidated amount payable by way of damages, the party complaining of a breach can receive as reasonable compensation such liquidated amount only if it is a genuine pre-estimate of damages fixed by both parties and found to be such by the court. In other cases, where a sum is named in a contract as a liquidated amount payable by way of damages, only reasonable compensation can be awarded not exceeding the amount so stated. Similarly, in cases where the amount fixed is in the nature of penalty, only reasonable compensation can be awarded not exceeding the penalty so stated. In both cases, the liquidated amount or penalty is the upper limit beyond which the court cannot grant reasonable compensation.

43.2. Reasonable compensation will be fixed on well-known principles that are applicable to the law of contract, which are to be found inter alia in Section 73 of the Contract Act.

43.3. Since Section 74 awards reasonable compensation for damage or loss caused by a breach of contract, damage or loss caused is a sine qua non for the applicability of the section.

43.4. The section applies whether a person is a plaintiff or a defendant in a suit.

43.5. The sum spoken of may already be paid or be payable in future.

43.6. The expression “whether or not actual damage or loss is proved to have been caused thereby” means that where it is possible to prove actual damage or loss, such proof is not dispensed with. It is only in cases where damage or loss is difficult or impossible to prove that the liquidated amount named in the contract, if a genuine pre-estimate of damage or loss, can be awarded.

43.7. Section 74 will apply to cases of forfeiture of earnest money under a contract. Where, however, forfeiture takes place under the terms and conditions of a public auction before agreement is reached, Section 74 would have no application.”  {Para 52}

53. HPCL had neither pleaded that it was not feasible to establish the loss nor had led any material to establish that it had suffered loss on account of non-supply of ethanol by DSM. There is also no pleading to the effect that ethanol was otherwise not readily available or available at a price higher than as agreed between DSM and HPCL. DSM's contention that HPCL had failed to establish any loss was contested on an erroneous premise that HPCL was not required to establish the same.

54. In the given circumstances, this Court is of the view that the award of Rs. 88,14,785/- in favour of HPCL, is not sustainable.

In the High Court of Delhi at New Delhi

(Before Vibhu Bakhru, J.)

O.M.P. (COMM) 164/2020 and I.A. No. 2870/2015

Hindustan Petroleum Corporation Ltd.  Vs Dhampur Sugar Mills Ltd.

O.M.P. (COMM) 164/2020, I.A. No. 2870/2015 and O.M.P. (COMM) 190/2020

Decided on January 6, 2022

Citation: 2022 SCC OnLine Del 42

Print Page

Whether arbitrator can grant post award compound interest without there being an express clause under the contract?

In UHL POWER COMPANY LIMITED vs. State of Himachal Pradesh SupremeCourtofIndia , three judge bench, decided on 07.01.2022), the Arbitrator had awarded compound interest in favour of UHL @ 9% per annum till the date of claim and in the event the awarded amount was not realized within a period of six months from the date of making the award, future interest was awarded @ 18% per annum on the principal claim with interest.

The question was whether the tribunal could have awarded compound interest on claims without there being an express clause under the contract.

Here the Division Bench had held that compound interest can be awarded only if there is a specific contract, or authority under a statute, for compounding of interest and that there is no general discretion vested arbitrators to award compound interest, either pre-award or post award period. (Relying on Haryana v. S.L. Arora and Co. MANU/SC/0131/2010 : (2010) 3 SCC 690)

The Court, while setting aside the judgment of the High Court, and upholding the award held as follows:

1. It has already been held by the SC that SL Arora has been wrongly decided. The Arbitral Tribunal, as per Section 31(7)(b) has power to grant interest on the “sum” awarded, and the “sum” awarded can include the interest component for the pre-reference and pendent-lite period. (Reliance placed on Hyder Consulting (UK) Ltd. v. Governor, State of Orissa through Chief Engineer (2015) 2 SCC 189)

2. The single judge committed a gross error in re-appreciating the findings returned by the Arbitral Tribunal and taking an entirely different view with respect to interpretation of contract terms, as it was not open for the Court to do so under Section 34 of the Arbitration & Conciliation Act, 1996, by virtually acting as Court of appeal. 

3. When it comes to scope of an Appeal under Section 37, the jurisdiction of Appellate Court is all the more circumscribed. 

4. It is also settled law that where two views are possible, the Court cannot interfere in the plausible view taken by the arbitrator supported by reasoning. (Reliance placed on Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd., (2019) 20 SCC 1)

In the Supreme Court of India

(Before N.V. Ramana, C.J. and A.S. Bopanna and Hima Kohli, JJ.)

Civil Appeal No. 10341 of 2011

UHL Power Company Ltd. Vs State of Himachal Pradesh 

Civil Appeal No. 10341 of 2011 and Civil Appeal No. 10342 of 2011

Decided on January 7, 2022

Citation: 2022 SCC OnLine SC 19

Print Page