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Herein below are the observations made by Supreme Court The Supreme Court declared the law to this effect in the following terms; 16. That brings us to the question whether an Arbitrator can make an award contrary to the terms of the contract executed between the parties. That question is no longer res integra having been settled by a long line of decisions of this Court. While it is true that the Courts show deference to the findings of fact recorded by the Arbitrators and even opinions, if any, expressed on questions of law referred to them for determination, yet it is equally true that the Arbitrators have no jurisdiction to make an award against the specific terms of the contract executed between the parties. Reference may be made, in this regard, to the decision of this Court in Steel Authority of India Ltd. v. J.C. Budharaja, Government and Mining Contractor, (1999) 8 SCC 122 where this Court observed : “ …….. that it is settled law that the arbitrator derives authority from the contract and if he acts in manifest disregard of the contract, the award given by him would be an arbitrary one; that this deliberate departure from the contract amounts not only to manifest disregard of the authority or misconduct on his part, but it may tantamount to mala fide action…...” …… It is true that interpretation of a particular condition in the agreement would be within the jurisdiction of the arbitrator. However, in cases where there is no question of interpretation of any term of the contract, but of solely reading the same as it is and still the arbitrator ignores it and awards the amount despite the prohibition in the agreement, the award would be arbitrary, capricious and without jurisdiction. Whether the arbitrator has acted beyond the terms of the contract or has travelled beyond his jurisdiction would depend upon facts, which however would be jurisdictional facts, and are required to be gone into by the court. The arbitrator may have jurisdiction to entertain claim and yet he may not have jurisdiction to pass award for particular items in view of the prohibition contained in the contract and, in such cases, it would be a jurisdictional error….” 17. It was further observed: “…..Further, the Arbitration Act does not give any power to the arbitrator to act arbitrarily or capriciously. His existence depends upon the agreement and his function is to act within the limits of the said agreement…..” 18. In W.B. State Warehousing Corporation & Anr. v. Sushil Kumar Kayan & Ors. (2002) 5 SCC 679, again this Court observed: “……. If there is a specific term in the contract or the law which does not permit the parties to raise a point before the arbitrator and if there is a specific bar in the contract to the raising of the point, then the award passed by the arbitrator in respect thereof would be in excess of his jurisdiction….” 19. In Bharat Coking Coal Ltd. v. Annapurna Construction (2003) 8 SCC 154, this Court reiterated the legal position in the following words: “There lies a clear distinction between an error within the jurisdiction and error in excess of jurisdiction. Thus, the role of the arbitrator is to arbitrate within the terms of the contract. He has no power apart from what the parties have given him under the contract. If he has travelled beyond the contract, he would be acting without jurisdiction, whereas if he has remained inside the parameters of the contract, his award cannot be questioned on the ground that it contains an error apparent on the face of the record.” |
2001(3) RAJ 531 (Del)
MM Acqua Technologies Ltd Vs Wig Brothers Builders Ltd
MM Acqua Technologies Ltd Vs Wig Brothers Builders Ltd
This case helps in explaining the definition of a binding agreement between parties. In order to be a binding arbitration agreement between the parties, the same must be in writing and the parties should have specifically agreed to settle their disputes by arbitration. An arbitration agreement cannot be inferred by implication.
It was held that existence of an arbitration agreement in pith and substance confers power upon the Chief Justice or a person or body designated by him to appoint an arbitrator ie. The jurisdiction of the judge emanates from an existing arbitration agreement.
It was held that as there is no arbitration agreement in writing between the petitioner and the respondent, the clauses of the contract between the respondents inter se will not in any way be binding on the petitioner. It was also held that in the event the petitioner is not able to raise any dispute about the obligations which the respondents have entered into amongst themselves, there is no question of any dispute being referred to the arbitrator. Therefore, there being no arbitration agreement between the petitioner and the second respondent, the question of appointing the arbitrator does not arise.
Section 2(1)(b) - Essential ingredients of an arbitration a
2000(1) RAJ 117 (Bom)
Jayant N.Seth Vs Gyaneshwar Apartment Cooperative Housing Society Ltd
Jayant N.Seth Vs Gyaneshwar Apartment Cooperative Housing Society Ltd
The court laid down the essential ingredients of an arbitration agreement as defined in Clause 2(1) (b) read with Section 7 as given below:
i. There should be a valid and binding agreement between the parties.
ii. Such an agreement may be contained as a clause in a contract or in the form of a separate agreement.
iii. Such an agreement is deemed to be in writing if it is contained in a document signed by the parties or in an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement or an exchange of statements of claim and defense in which the existence of the agreement is alleged by one party and not denied by the other. Reference ina contract to a document containing an arbitration clause also constitutes an arbitration agreement, provided the contract is in writing and the reference is such as to make that arbitration clause part of the contract.
iv. Parties intend to refer present or future disputes to arbitration
v. The dispute to be referred to an arbitrator is in respect of a defined legal relationship, whether contractual or not.
ii. Such an agreement may be contained as a clause in a contract or in the form of a separate agreement.
iii. Such an agreement is deemed to be in writing if it is contained in a document signed by the parties or in an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement or an exchange of statements of claim and defense in which the existence of the agreement is alleged by one party and not denied by the other. Reference ina contract to a document containing an arbitration clause also constitutes an arbitration agreement, provided the contract is in writing and the reference is such as to make that arbitration clause part of the contract.
iv. Parties intend to refer present or future disputes to arbitration
v. The dispute to be referred to an arbitrator is in respect of a defined legal relationship, whether contractual or not.
Section 2(1)(b) - Definition of 'parties' to a valid arbitration agreement
2001(4) RAJ 660 (Del)
Pyrites, Phosphate and Chemicals Vs Excel Shipping Enterprises
Pyrites, Phosphate and Chemicals Vs Excel Shipping Enterprises
There was an agreement between the parties which was renewed. The original agreement contained an arbitration clause, however, there was no signature by or on behalf of the petitioner company; the signatures belonged to two employees of the petitioner, without there being a resolution in their behalf to sign on behalf of the petitioner company. They had signed as witnesses.
The petitioner urged that since the 2 persons were employees of the petitioner, it could be taken that they signed for and on behalf of the petitioner.
It was held that merely because they were employees of the petitioner would not give them the status to say that they signed for and on behalf of the petitioner. They had not signed on the basis of any resolution of the petitioner so as to permit the court to hold that they had signed on behalf of the petitioner. They had signed as witnesses and their status would remain to be that of a witness, rather than a party. The difference of signing as a witness and signing for and on behalf of the company is like the difference between chalk and cheese.
Section 2(1)(c), 31- Meaning and scope of interim and final award
2001(4) RAJ 209 (Del)
Jindal Financial & Investment Services Vs. Prakash Industries Ltd.
Jindal Financial & Investment Services Vs. Prakash Industries Ltd.
According to Section 2(1)(c), an award includes an interim award and as such will also have to satisfy the same requirements of Section 31, to be treated as an award.
The court held that all orders/decisions passed under the Act do not necessarily fall under the expression 'awards'; it is only a decision/order which satisfies the requirements of section 31 which is an award. All others are orders/decisions in the course of the proceedings deciding peripheral issues or terminating the arbitral proceedings themselves on the ground that the submission does not fall within the arbitral agreement or that there is no arbitral agreement or that there is no dispute required to be decided by the Arbitral Tribunal.
The award, whether interim or final, must mean the final determination of a claim, part of a claim or counter claim by the Arbitral Tribunal, of a submission to that Tribunal. The decision must be supported by reasons in terms of Section 31(3), unless otherwise provided for. However, a final or interim award unsupported by reasons is still an award, but it is challengeable under Section 34.
The award must be signed by arbitrators or a majority of arbitrators and it must result in the Tribunal being rendered functus officio in respect of the subject matter of the award.
Section 2(4) - Scope of protection of this section
2000(1) RAJ 336 (Bom)
Anuptech Equipments Pvt ltd Vs Ganpati Cooperative Housing Society Ltd.
Anuptech Equipments Pvt ltd Vs Ganpati Cooperative Housing Society Ltd.
Rules are usually made by government, unlike statutory Bye-laws which are made by local bodies or associations. Under these circumstances, it was held that the provisions in the statutory contract of the Bombay Stock Exchange regarding the number of arbitrators, which was even, was contrary to Section 10 of the Act. This would not be protected by Section 2(4) as this section only protects inconsistent provisions insofar as the enactment and Rules are concerned and not Bye-laws. The expression 'enactment' has been held to be an Act or Rule and does not include bye-laws.
2002 AIR SC 1432
Bhatia International Vs Bulk Trading S.A.
Bhatia International Vs Bulk Trading S.A.
It was held that foreign awards are those where arbitration takes place in a convention country; awards in arbitration proceedings which take place in a non-convention country are neither considered as foreign awards nor as domestic awards under the Act.
The court also stressed that 'Domestic Awards' include all awards made under Part I of the Act. Awards made in an international commercial arbitration held in a non-convention country will also be considered to be a 'domestic award'.
2003(2) RAJ 58 (Del)
Precision Engineers and Fabricators Vs Delhi Jal Board
Precision Engineers and Fabricators Vs Delhi Jal Board
The petitioner filed an arbitration petition for appointment of arbitrator under Section 11 of the Act, during the pendency of which the respondent appointed a sole arbitrator to adjudicate upon the dispute between the parties.
The petitioner diligently pursued the claims before the arbitrator without any objection to his appointment. There were no documents on record to show that the petitioner raised any objection to the appointment of the arbitrator by the respondent. Even after the arbitrator passed an order on 18.5.2005, the petitioner, on 25.5.2005, requested the arbitrator for extension of time to file rejoinder. Under these circumstances, it was held that the petitioner had waived its rights as per Section 4 of the Act.
2003(3) RAJ 335 (Bom)
Union of India Vs MAA Agency
Union of India Vs MAA Agency
The brief facts of the case are that the petitioner referred 2 claims and the respondent referred 3 claims before the arbitrator. The petitioner did not raise any objection in respect of the 3rd Claim and an award was made under all the 3 claims. The issue arose whether the petitioner was entitled to raise objection in respect of the 3rd claim in a petition for setting aside the award.
It was held that it was open to the petitioner to challenge either the jurisdiction of the arbitral tribunal to adjudicate upon the 3rd claim or to raise the plea that the tribunal was exceeding its scope of authority. However, the petitioner did not raise any such objection and on the contrary, proceeded with a defense to the claim on merits, thereafter which an award was passed. This being the case, it may be deemed that the petitioner had waived its rights under Section 4, to object on the ground that any requirement of the arbitration agreement had not been complied with.
2001(57) DRJ 154 (DB)
BHEL Vs CN Garg & Ors.
BHEL Vs CN Garg & Ors.
The scope of Section 5 came up for consideration in this case and the court held that the scheme of the new Act has done away with court interference during arbitration proceedings. The new Act deals with situations even when there is a challenge to the constitution of the arbitral tribunal; it is left to the arbitrator to decide the same. If the challenge is unsuccessful, the tribunal may continue the proceedings and pass an award. Such a challenge to the constitution of the tribunal before the court is then deferred and it could be only after the arbitral award is made that the party challenging the arbitrator may make an application for setting aside the award and it can take the ground of constitution of the tribunal while challenging the award.
The court further drew the conclusion that Section 5 was inserted to discourage judicial intervention. It is seen that a party having grievances against an arbitrator on account of bias or prejudice is not without remedy. It only has to wait till the award is made and then it can challenge the award on various grounds under Section 34.
2000 AIR (P&H) 276
Pappu Rice Mills Vs Punjab State Cooperative Supply and Marketing Federation Ltd.
Pappu Rice Mills Vs Punjab State Cooperative Supply and Marketing Federation Ltd.
This case reiterated the point that courts will have no jurisdiction where remedy is provided under the Act. Briefly stating the fact, the plaintiff had filed a petition under Order 39 Rules 1 & 2 r/w Section 151 of CPC for ad interim injunction in spite of the fact that the defendant had already appointed an arbitrator in respect of the dispute and that arbitrator had already issued notice to the parties in the arbitral proceedings pending before him.
It was held that the arbitral tribunal is competent to decide the questions of its own jurisdiction and where it rejects the plea of the objector regarding jurisdiction, the arbitral tribunal would be competent to proceed with the arbitration and to give its award. The aggrieved party is entitled to challenge the same under Section 34. Thus, the remedy being available to the plaintiff, the civil court would not be competent to restrain the arbitrator from proceeding with arbitration, in view of Section 5.
This being the case, the court is justified in refusing to grant ad interim injunction in favour of the plaintiff.
1998 AIR SC 1297
KK Modi Vs KN Modi
KK Modi Vs KN Modi
This case discussed the attributes which are necessary for considering an agreement as an arbitration agreement. It was held that among the attributes which must be present are:
- The arbitration agreement must contemplate that the decision of the tribunal will be binding on the parties to the agreement.
- The jurisdiction of the tribunal to decide the rights of the parties must derive from their consent, or from an order of the Court or from a statute, the terms of which make it clear that the process is to be arbitration.
- The agreement must contemplate that substantive rights of the parties will be determined by the agreed tribunal.
- The tribunal will determine the rights of the parties in an impartial and judicial manner with the tribunal being fair and equal to both sides.
- The agreement of the parties to refer their disputes to the decision of the tribunal must be intended to be enforceable in law
- The agreement must contemplate that the tribunal will make a decision upon a dispute which is already formulated at the time when a reference is made to the tribunal.
Other important factors include whether the agreement contemplates that that tribunal will receive evidence from both sides and give the parties opportunity to put forth their issues and hear their contentions; whether the wording of the agreement is consistent with the view that the process was intended to be an arbitration; and whether the agreement requires the tribunal to decide the dispute according to law.
The courts have laid emphasis on (i) existence of disputes as against intention to avoid future disputes; (ii) the tribunal or forum so chosen is intended to act judicially after taking into account relevant evidence and submissions made by parties before it; (iii) the decision is intended to bind parties; (iv) nomenclature used by parties need not be conclusive.
Section 7 & 19 - Existence of arbitration agreement
2003(2) RAJ 152 (Bom)
Skanska Cementation India Ltd Vs.Bajranglal Agarwal
Skanska Cementation India Ltd Vs.Bajranglal Agarwal
According to the facts, a purchase order was placed by the petitioners on the respondents. The delivery challan contained a term that disputes if any should be referred to Bharat Chamber of Commerce for arbitration. There was also an arbitration clause in invoices sent by the respondent which were accepted by the petitioner and money was paid under those invoices without protest.
It was held that the purchase order by itself would not be a contract between the parties' it is only on accepting the terms of the order when a contract comes into being. Clause I of the purchase order does provide that execution of this order shall be deemed to be acceptance of the conditions stated therein. Clause 11 of the purchase order provided that the respondents could indicate to the petitioner conditions they found unacceptable.
By the terms contained in the delivery challan, the petitioner is deemed to have been informed that the condition that their decision was final was not acceptable to the respondent and that the dispute, if any, should be referred to arbitration. The respondents also sent invoices under which there was an arbitral clause, which was accepted by the petitioner. Therefore it was concluded that the contract between the parties clearly contemplated a provision for arbitration.
1999(3) RAJ 73
Mohan Singh Vs. HP state Forest Corporation
Mohan Singh Vs. HP state Forest Corporation
This case discussed the effect of the failure to use the words 'arbitrator' or 'reference' in an agreement. It was held that it is not necessary to constitute an arbitration agreement that the words 'arbitrator' or 'reference' or similar expressions should actually be used in the agreement. The agreement should, in substance, amount to an arbitration agreement and the intention of the parties at the time of execution of the agreement would be the deciding factor.
The court further elaborated that it is not always that when 2 persons agreed to be bound by a decision of their own choice that would constitute an arbitration agreement. In order to determine the real nature of the agreement, it is necessary to ascertain the intention of the parties at the time of entering the agreement. For this specific purpose, consideration must be given not only to the exact words of the agreement but also to the position, knowledge and skill of the person who whom the matter is referred for decision.
On the other hand, if the intention of the parties appears to be not to settle the differences after they have arisen but to prevent differences from arising, that would not be arbitration. It is the intention of the parties which is to be gathered from the working of the clause and in certain cases, even if the word 'arbitrator' is missing, it has to be inferred in between the lines used by the parties.
2000(1) RAJ 320 (Bom)
Divya Shivlaks Impex Vs. Shantilal Jamnadas Textiles (P) Ltd
Divya Shivlaks Impex Vs. Shantilal Jamnadas Textiles (P) Ltd
The issue was whether a printed condition on the invoice amounted to an arbitration agreement. The respondents contended that after the details of particulars of the goods supplied, quality, price etc, there is a printed note on the lower portion of the invoice which states: 'This sale is subject to the sale. Disputes and Arbitration Rules of Mumbai Piece Goods Merchants Mahajan'. The respondents contended that this amounts to an agreement to refer the dispute to the Mahajan.
The court held that the printed clause was not intelligible and this clause does not state that the sale was subject to the arbitration rules of the Mumbai Piece Goods Merchants Mahajan. It is difficult to appreciate the exact meaning of the printed words. On a plain reading, in the absence of any other material to explain the said printed clause, it cannot be concluded that the printed clause amounts to an arbitration agreement.
2002(3) RAJ 403 (Bom)
Motilal Vs Kedarmal Jainarayan Bharadiya
Motilal Vs Kedarmal Jainarayan Bharadiya
The dispute involved partition and separate possession of a family property and the matter was in progress towards drawing of a final decree of partition. The document in issue did not contemplate adjudication upon issues by the nominated person. The nominated persons were not obliged to invite the parties to put forth their submissions and adjudicate thereupon; they were merely put in the shoes of conflicting parties to effect partition and were empowered to take any appropriate decision they felt to be just and fair.
The court held that the document did not meet the requirement of Section 7(1) 'agreement by the parties to submit to the arbitration all or certain disputes which have arisen'. In fact, the parties had agreed that they would not raise any dispute before the nominated person and submit to their judgment or suggestion. Therefore the document is not an arbitration agreement.
The court held that the document did not meet the requirement of Section 7(1) 'agreement by the parties to submit to the arbitration all or certain disputes which have arisen'. In fact, the parties had agreed that they would not raise any dispute before the nominated person and submit to their judgment or suggestion. Therefore the document is not an arbitration agreement.
The court further elucidated that arbitration is an alternate dispute resolution system of quasi judicial nature and if no judicial function are attributed to the nominated persons, the document cannot be said to be an arbitration agreement.
003(4) RAJ 176 (Bom)
Viraj Holdings, Mumnai Vs. Motilal Oswal Securities Pvt Ltd
Viraj Holdings, Mumnai Vs. Motilal Oswal Securities Pvt Ltd
This case considered the effect of a contract note signed only by the registered broker or trader. The issue was whether this could be said to contain an arbitration agreement in writing if not signed by both parties.
Contract notes are framed under a special law; in view of Regulation 3.5 of National Stock Exchange, framed under the Securities Contracts (Regulation) Act, 1956, which clearly provides for the manner in which contract notes are to be executed and state that they will be subject to the rules, bye laws and regulations of the NSE. The law governing the execution of such contract notes itself provides for a mode of execution of such notes and that is by the signature of a registered stockbroker. The legislative competence to enact a provision prescribing a specific mode of execution of contract is not questioned. Thus, on a harmonious construction of the provisions of the Arbitration Act and the regulations framed under the Securities Contracts (Regulation) Act, 1956, both enacted by the Parliament, it is held that the contract note executed under regulation 3.5 signed by only the broker and containing a stipulation that the contract would be subject to rules and bye laws , which in turn provide for arbitration can constitute a valid arbitration agreement even though it is signed by a trade member.
2001(4) RAJ 12 (Cal)
PT Tirtamas Comexindo Vs. Delhi International Ltd.
PT Tirtamas Comexindo Vs. Delhi International Ltd.
The question that arose in this case was whether a fax message confirming the agreement can in law amount to an arbitration agreement. The court also discussed the underlying requirements of an arbitration agreement.
It was held that an arbitration agreement shall be in writing and may be made by exchange of letters, telex messages and other means of telecommunications which shall provide the record of such agreement. In this case, the respondent could not satisfy the court on any evidence that the fax message had been sent and received by the other party and the court was compelled to conclude that the fax message containing the arbitration clause was in fact not sent by the respondent.
The court, however, stated that there cannot be any inflexible or strict formula as to how an agreement would legally be construed as per the provisions of Section 7. The agreement may be made by several means including fax messages in writing, but it should be confirmed by any other mode of telecommunications.
1999(2) RAJ 314 (Bom)
Premlaxmi and Co Vs Trafalgar House Construction India Ltd.
Premlaxmi and Co Vs Trafalgar House Construction India Ltd.
The facts surrounding the case is that there was a reference in a contract to a document containing an arbitration clause and the question whether it can be treated as part of the contract was answered in the positive. It was held that the reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause a part of the contract.
Section 8 - Power to refer parties to arbitration where there is an arbitration agreement
2001(4) RAJ 574 (Mad)
Wankanner Jain Social Welfare Society Vs. Jugal Kishore Sapani
Wankanner Jain Social Welfare Society Vs. Jugal Kishore Sapani
The respondent had filed a suit for interim injunction. The petitioner, after receiving the notice, entered appearance and filed counter and argued the matter. Thereafter the petitioner moved an application under Section 8.
The court held that filing of the counter by the petitioner was clearly the first statement on the substance of the dispute and an application, after submitting the first statement on the substance of the dispute, was not maintainable. It was further held that filing of the counter by the petitioner points to the petitioner subjecting itself to the jurisdiction of the Civil Court and accordingly, dismissal of the application under Section 8 is in accordance with law.
2002(2) RAJ 313 (Del)
Trans World Finance & Real Estate Co Pvt Ltd Vs. Union of India
Trans World Finance & Real Estate Co Pvt Ltd Vs. Union of India
This case considered the effect and scope of a dispute arising out of an invalid lease deed. The counsel for the petitioner urged that lease deed was unstamped and unregistered and therefore the arbitration agreement contained therein did not constitute a valid arbitration agreement.
The court held that it was a well established proposition of law that even if the said agreement entered into between the parties could not be treated as a valid lease agreement for lack of registration, it could certainly be looked into for the collateral purpose. Existence of an arbitration agreement or otherwise is one such purpose for which such an agreement can be looked into and relied upon.
2003 (2) RAJ 483 (Del)
AK Jaju Vs Avni Kumar
AK Jaju Vs Avni Kumar
There were 2 agreements of which the 2nd one did not contain an arbitration agreement but was alleged to be in continuation of the first agreement. The plaintiff argued that the 2nd agreement was executed in supersession of the first one and thus no reference of dispute could be made to an arbitral tribunal.
The court held that the hand written endorsement at the top of the agreement implied that the same was in continuation to the earlier agreement and was to be treated as part and parcel of the earlier agreement. The 2nd agreement was necessitated to modify certain terms and conditions in the first agreement and not to override it.
Section 8 & 11 - Application before District Judge not maintainable
2003(4) RAJ 336 (Kar)
NEPC-MICON Ltd Vs Perfect Engineering (Mysore) Works
NEPC-MICON Ltd Vs Perfect Engineering (Mysore) Works
The party had made an application under Section 8 for a direction to appoint an arbitration in terms of the arbitration clause, before the Principal District Judge. The issue that arose was whether the court can entertain such a prayer and it was held no.
The court stated that it is of utmost importance to note that under the scheme of the 1996 Act, an application simplicitor for referring the matter to an arbitrator is entertainable only by the concerned Chief Justice of the High Court or any person or institution designated by him, as has been specifically contemplated under Section 11. In the court's opinion, the lower court had erred in assuming jurisdiction under Section 8 for entertaining the application.
2000 AIR (SC) 1886
P. Anand Gajapathi Raju Vs. PVG Raju
P. Anand Gajapathi Raju Vs. PVG Raju
In the instant case, during the pendency of the appeal before Supreme Court, all the parties entered into an arbitration agreement and agreed to refer their dispute to a retired Supreme Court Judge as sole arbitrator. The agreement was in the form of an application and had been signed by all the parties.
It was held that the agreement need not already be in existence; the phrase 'which is the subject of an arbitration agreement' does not necessarily require that the agreement must already be in existence before the action is brought in the Court- the phrase also connotes an arbitration agreement being brought into existence while the action is pending.
The court further stated that the arbitration agreement satisfied the requirements of section 7 and that the language of section 8 is peremptory. It is therefore obligatory for the court to refer the parties to arbitration in terms of their agreement. An application under section 8 merely brings to the court's notice that the subject matter of the action before it is the subject matter of an arbitration agreement.
, 2(e) - Injunction petition cannot be decided after reference to arbitrator
2003(1) RAJ 91
Jagdish Raj & Brothers Vs Jagdish Raj
Jagdish Raj & Brothers Vs Jagdish Raj
The petitioners had filed a suit for declaration praying for relief of permanent injunction and in the said suit they filed an application for ad interim injunction under Order 39 CPC. In the said suit, the respondents moved an application for referring the matter in dispute to arbitration as there was an arbitration agreement between the parties.
It was held that it is obligatory for the court to refer the matter to the arbitrator in terms of the arbitration agreement. Once an application is made by the opposite party in a civil suit for referring the matter to arbitration in terms of the arbitration agreement, then the court has to refer the matter to the arbitrator and the court is required to do nothing further ie. The court thereafter cannot decide the application under Order 39 CPC. Under the new Act, an arbitrator to whom the matter is referred, can pass appropriate interim orders to preserve property.
2002(3) RAJ 624 (Del)
Sunil Kumar Vs AAKAR
Sunil Kumar Vs AAKAR
This case considered the issue of limitation for petition for appointment of arbitrator. The right to invoke the arbitration clause accrued to the petitioner in 1996 who filed this instant petition in 2000. In view of the given facts and circumstances, it was held that the right to file the application arose on the date when the petitioner intimated to the resoindent that he was no longer interested in the partnership and sought dissolution and not from the date of the notice given 3 years later. Therefore the petition is barred by time and dismissed.
The court further elucidated that the right to invoke the arbitration clause accrues to a party the moment differences or disputes arise and are brought to each other's notice. No party can be allowed to sleep over or continue for years as in the present case where the petitioner had waited for 3 years to invoke the clause. It is not the date on which the notice is sent for invoking the arbitration clause which is relevant but the moment differences arise and are brought to each other's notice.
2001(1) RAJ 406 (Del)
Sunair Hotels Ltd Vs Union of India
Sunair Hotels Ltd Vs Union of India
The issue was whether a formal application was necessary under section 8(1) and it was held in the affirmative.
The court held that section 8(1) specifically speaks about the party applying to the Judicial Authority for referring the parties to arbitration. Section 8(2) states that the application will not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof. In view of the clear provisions of Section8, it cannot be said that a formal application is not required.
Considering the whole scheme of the Act, the option available to the party to subject himself to the jurisdiction of the Judicial Authority without resorting to arbitration, the stipulation of time when the application for reference should be filed and the specific condition that the application should be accompanied by the original arbitration agreement or a duly certified copy thereof, there is no doubt that the application under section 8(1) is a formal application.
2002(3) RAJ 310 (Del)
Management Committee of Montfort Sr Sec School Vs Vijay Kumar
Management Committee of Montfort Sr Sec School Vs Vijay Kumar
The issue that came up for consideration was whether the Delhi School Tribunal set up under section 8(3) of the Delhi School Education Act was a 'judicial authority' within the meaning of section 8(1).
It was held that as such, when an authority other than a court in the ordinary sense, is in discharge of the duties which are expected to be acted out fairly and honestly or the authority exercises some of the powers akin to the powers of a civil court, it may not be a court in its strictest sense but it would essentially fall within the definition of a judicial authority. It is bound by law to act on the facts and circumstances as determined upon the enquiry in which a person who is to be affected is given full opportunity to place his case.
1998(2) RAJ 141 (Cal)
ITC Classic Finance Ltd Vs. Grapco Mining & Co.
ITC Classic Finance Ltd Vs. Grapco Mining & Co.
The issue came up as the present application had annexed with it, Xerox copies of the lease agreement which also formed part of the plaint filed in the suit. The said lease agreements were relied upon by both the parties and it was not disputed that the said Xerox copies were indeed true copies of the original documents. It was held that the Xerox copies of the said lease agreement containing the arbitration clause were in sufficient compliance with Section 8(2) of the Act.
2000(3) RAJ 511 (P&H)
Punjab State Cooperative Supply and Marketing Federation Ltd Vs. Shiv Rice and General Mills
Punjab State Cooperative Supply and Marketing Federation Ltd Vs. Shiv Rice and General Mills
The question that arose before the court was about the permissibility of reference of disputes to an arbitrator during the pendency of a suit in the Civil Court.
It was held that the courts cannot restrain the arbitrator from proceeding in arbitration or restrain the defendants from proceeding with arbitration before the arbitrator.
The plea regarding jurisdiction of the arbitrator could be raised before the arbitrator and if the arbitrator did not agree to the plea and an award was passed against the plaintiff, then the plaintiff was competent to challenge the same u/s 34 of the 1996 Act and the Court was competent to set aside the award if it dealt with a dispute not contemplated by or not falling within the terms of the arbitration clause.
Section 8(3) contemplates a situation where the matter may be pending before the Court and still the arbitration may be commenced or continued and an arbitral award made. The aggrieved party may challenge the award u/s 34 of the 1996 Act.
2005 (1) RAJ 225 (Raj)
Air Conditioning Corporation Ltd, Calcutta Vs. Rajasthan Agriculture University, Bikaner
Air Conditioning Corporation Ltd, Calcutta Vs. Rajasthan Agriculture University, Bikaner
According to the facts, a dispute arose between the parties which was referred to arbitration in 1999. While the proceedings were going on, the petitioner filed an application u/s 17 for interim measures which was allowed by the arbitrator in 2002. The Respondent appealed before the District Judge Bikaner u/s 37 and the order was set aside. Aggrieved by this decision, the petitioner filed the revision petition which was allowed.
The petitioner, in 2004, had filed another application u/s 151 CPC stating that since the arbitrator had passed the final award in 2003, which was published in 2004, the respondent should be directed to pay according to the terms of the award.
It was held that there is no dispute that if any final order is passed in the proceedings before any forum, the life of the interim order comes to an end with the passing of the final order in that proceeding. In the present case, the arbitrator had passed an interim award in 2002, which was set aside by the District Judge. However, with the passing of the award in 2003, the life of the interim order dt. 2002 passed away and therefore, this revision petition has become infructuous.
It was further held that this Court cannot given any directions for execution of terms of the final award because it will be the domain of the Executing Court before whom the execution petition for executing the award is filed.
AIR 1999 (SC) 565
Sundaram Finance Ltd Vs NEPC India Ltd
Sundaram Finance Ltd Vs NEPC India Ltd
This case discussed the similarity between Section 9 of the 1996 Act and Article 9 of UNCITRAL Model Law which states that "It is not incompatible with an arbitration agreement for a party to request, before or during arbitral proceedings, from a court an interim measure of protection and for a court to grant such measure"
Article 9 seeks to clarify that merely because a party to an arbitration agreement requests the court for an interim measure "before or during arbitration proceedings", such recourse would not be regarded as being incompatible with an arbitration agreement. Arbitration may commence and continue notwithstanding a party having approached the court for interim protection.
Section 9 - Power of the Court to grant interim measures 2004(1) Arb. LR 396 (SC)
National Aluminum Co Ltd Vs. Gerald Metals SA
National Aluminum Co Ltd Vs. Gerald Metals SA
A pending dispute between the parties was being settled through arbitration, during which Gerald Metals SA (Gerald) moved the trial court under section 9(d) of the 1996 Act and obtained an interim order from the trial court in face of opposition by National Aluminum Company Limited (NALCO)
Appeal was filed by NALCO against the above order. The Court rejected the appeal but made some modifications to the order of the trial court. NALCO appealed to Supreme Court (SC) and SC preferred not to go into questions of fact and law raised in the appeal and decided the matter on grounds of equity and balance of convenience because the matter was yet to be decided by the arbitrators. It was observed that if Gerald is not permitted to lift the goods in question it is likely to be put to great hardship and on the other hand if NALCO is not permitted to collect the fair price of its goods it will be deprived of the monetary value of the goods. SC also declared that the order was not any opinion on the legal arguments raised nor on the factual issues except to the extent of the interim arrangement made.
2004(1) Arb.L.R. 141(SC)
Ashok Traders and Anr.. Vs. Gurumukh Das Saluja and Ors
Ashok Traders and Anr.. Vs. Gurumukh Das Saluja and Ors
The issue before the Supreme Court was whether the right conferred by Section 9 of the 1996 Act arose from contract. In brief, there was a dispute among a partnership engaged in liquor trade. When one of the partners filed a suit it was held not maintainable under Section 69(3) of Indian Partnership Act, 1963 as his name did not appear in the register of firms as a partner. There was an arbitration clause in the partnership deed and an application was filed under section 9 of the 1996 Act which was contested on various grounds, the plea of non-maintainability prevailed with the Additional District Judge. However the High Court held that applicability of section 69(3) of Indian Partnership Act, 1963 is not attracted to an application under section 9 of 1996 Act.
When the matter finally came up before Supreme Court it was held that under 1996 Act the arbitration clause is independent and separable from the partnership deed. The only qualification is that a person invoking section 9 should be a 'party' to an arbitration agreement, as the relief being sought under section 9 of 1996 Act is neither in a suit nor a right arising from the contract. The court under section 9 is only formulating interim measures so as to protect the right, under adjudication before the Arbitral Tribunal, from being frustrated. It was held that section 69 of the Partnership Act has no bearing on the right of a party to an arbitration clause to file an application under Section 9 of the 1996 Act.
2004(3) R.A.J. 430 (Bom)
Ispat Industries Ltd Vs m.v. Thor Orchid decided on 4.3.2004
Ispat Industries Ltd Vs m.v. Thor Orchid decided on 4.3.2004
This case, apart from other issues, discusses the scope of judicial intervention under S.5 as well as the remedy available under S.9 for grant of interim relief by the court.
To briefly sum up the case, the plaintiff was an Indian company dealing in iron ore and the defendant was the foreign flag vessel of Thailand, owned and controlled by Thor Orchids Shipping Co Ltd. In December 2003, the plaintiff entered into a Charter party with the defendant for carriage of iron ore. Subsequently, a dispute arose and the plaintiff claimed that the matter be referred to LMA Arbitration in England, however, approached this court for interim relief since the vessel was within the admiralty jurisdiction of this court when the suit was instituted.
The plaintiff prayed for and was granted the relief that the defendant vessel be arrested , detained and sold and the proceeds thereof be applied to satisfy the plaintiff's claims. The plaintiff felt that International commercial arbitration would come under S.45 and therefore S.5 of Part I of the Act would not apply and oust this court's jurisdiction.
The defendant applied for and obtained vacation of the order, after which it applied for dismissal of the suit, contending that the present suit for relief is not maintainable since the charter party was entered into in Mumbai and the arbitration was international commercial arbitration, the only remedy that could be availed was under S.9 of the Act (Interim measures by Court).
In reviewing the case, the Supreme Court's decision in Bhatia International Vs Bulk Trading SA & Anr: JT 2002 (3) SC 150 was considered where it was held that merely because S.9 is found in Part I and sub section (2) states that this part shall apply where the place of arbitration is India, S.9's applicability is not excluded where the place of arbitration is outside India. However, the question whether the remedy of instituting a case is ousted merely because the remedy under S.9 is available was not discussed in this case.
On the other hand, the division bench held that where remedy under s.9 was available, S.5 ousts the jurisdiction of the court to entertain the suit. It was finally held that since the charter party was entered into in Bombay, this court will have the jurisdiction to grant relief under S.9 and by virtue of S.5, a suit for the same relief claimed by the plaintiff in another application would get ousted. Accordingly the defendant's motion was granted.
