Act/Law wise: Judgment of Supreme Court of India


Arbitration and Conciliation Act, 1996
Section/Order/Article/Rule/Regulation Head Note
Section 11 & 12

Appointing of Arbitration–
It is a cardinal principle of the Arbitration and Conciliation Act that the parties are free to decide the number of arbitrators, provided, it is an odd number, as well as the procedure for appointing them. However, if the parties are not able to agree on the said procedure, or constitute the Arbitral Tribunal to their mutual satisfaction, either of the party has an option to route to an appropriate remedy under Section 11 of the Act, which provides detailed machinery for appointment of Arbitrator through judicial intervention. Justice Amitava Roy, a former Judge of this Court, is appointed as the sole Arbitrator to adjudicate the disputes between the parties on such fees he may fix. Nevertheless to say, the said appointment is subject to the necessary disclosure being made under Section 12 of the Act and the Arbitrator not being ineligible under Section 12(5) of the Act. The petitions as well as interlocutory application, if any, are disposed of accordingly. .....IBI Consultancy India Private Limited =VS= DSC Ltd., (Civil), 2018 (2) [5 LM (SC) 41] ....View Full Judgment

Section-11 (5) read with Section 11 (9)

An arbitration agreement exists between the parties–
When an arbitration agreement exists between the parties, the present petition under Section 11 (5) read with Section 11 (9) of the Arbitration and Conciliation Act, 1996, shall have to be allowed with appropriate directions. .....ETOILE CREATIONS =VS= SARL DANSET DECO (Civil), 2016-[1 LM (SC) 628] ....View Full Judgment

Section 31(5) & Section 34(3)

As rightly observed by the High Court, Anilkumar Patel has gone to the extent of even disputing his signature in the award dated 07.07.1996 by drafting choreographed petition. Having accepted the award through Anilkumar Patel, being the head of the family, appellant Nos. 1(a) to 1(d) and respondent No.10 cannot turn round and contend that they had not received the copy of the award. The High Court rightly held that "....Receiving the copy by Anilkumar on behalf of himself and respondent nos. 2 to 6, under an acknowledgment, is in terms of compliance of Section 31(5) of the Act and Section 34(3) thereof....." and that the application filed under Section 34 of the Act by Anilkumar Patel and appellant Nos. 1(a) to 1(d) and respondent No.10 was barred by limitation. We do not find any good ground to interfere with the impugned judgment. .....Anilkumar Jinabhai Patel =VS= Pravinchandra Jinabhai Patel, (Civil), 2018 (1) [4 LM (SC) 7] ....View Full Judgment

Section 34 read with section 5

Award of Arbitrator– Legislature restricted the role of courts in case where matter is subject to the arbitration–
It is a settled law that the process of interpretation is based on the objective view of a reasonable person, given the context in which the contracting parties made their agreement. On a perusal of the said two paragraphs of the impugned judgment, we fail to understand that on what parameters the High Court has interpreted Clause 19 in light of Clause 25 of the Contract. Both the clauses stand on different footing. Clause 19 deals, inter alia, with the matter of wages whereas Clause 25 deals with the matter of Octroi Sales Tax and other Duties. Such interpretation adopted by the High Court is against the cardinal principle of law which says that the terms of the contract shall be construed by the courts after having regard to the intention of the parties. Courts ought not to take any hypothetical view as it may cause prejudice to either of the parties. We are of the considered view that the High Court erred in law. Accordingly, we are inclined to allow these appeals and set aside the decision of the courts below as also the Award. Parties to bear their own cost. .....Union of India =VS= M/s. Varindera Constructions Ltd., (Civil), 2018 (2) [5 LM (SC) 37] ....View Full Judgment

Section 34

Arbitrator– The appointment of Sri S.T. Madnani, Advocate as an Arbitrator was disputed and it was contended that the said Advocate being the counsel for the respondent No. 1 and its partners in other cases cannot act as an Arbitrator in respect of the disputes to which the respondent No. 1 is a party.
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.
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.
(i) the judgment dated 30 and 31 of August, 2007 passed by the High Court of Judicature at Bombay, Nagpur Bench in First Appeal No.187 of 2007 is set aside;
(ii) consequently, the judgment dated 06.11.2006 passed by the Principal District Judge Nagpur in MCA No.538/2006 setting aside the award dated 08.08.2006 is restored;
(iii) the parties are reserved the liberty of availing their remedy of arbitration in accordance with law and all contentions on merits relating to the claim/counter claim are left open.
(iv) The appeal is allowed with no order as to costs. …Vinod Bhaiyalal Jain=VS=Wadhwani Parmeshwari Cold Storage Pvt. Ltd., (Civil), 2020 (1) [8 LM (SC) 5] ....View Full Judgment

Sections 34 and 37

The Majority Award, the Appellant had been directed to pay certain amounts to the Respondent under their agreement dated 14.12.1993–
The view taken in the Majority Award, as confirmed by the High Court in the exercise of its powers under Sections 34 and 37 of the 1996 Act, is a possible view based upon a reasonable construction of the terms of the agreement dated 14.12.1993 between the Appellant and the Respondent and consideration of the material on record. We are also of the opinion that the dispute was covered under the agreement between the Appellant and the Respondent dated 14.12.1993, and as such the dispute is governed by the arbitration clause under the said agreement. Thus, we find no reason to disturb the Majority Award on the ground that the subject matter of the dispute was not arbitrable. ...MMTC Ltd. =VS= M/S Vedanta Ltd., (Civil), 2019 (1) [6 LM (SC) 51] ....View Full Judgment

The arbitration clause in the main contract states that the disputes which are to be referred to the committee of three arbitrators under Clause 67.3 are disputes in regard to which the decision of the Engineer (“Engineer” refers to person appointed by the State of Kerala to act as Engineer for the purpose of the contract between the PW Department and the respondent) has not become final and binding pursuant to Clause 67.1 or disputes in regard to which amicable settlement has not been reached between the State of Kerala and the respondent within the period stated in Clause 67.2. Obviously neither Clause 67.1 nor 67.2 will apply as the question of “Engineer” issuing any decision in a dispute between the contractor and the sub-contractor, or any negotiations being held with the Engineer in regard to the disputes between the contractor and the subcontractor does not arise. The position would have been quite different if the arbitration clause had used the words “all disputes arising between the parties” or “all disputes arising under this contract”. Secondly, the arbitration clause contemplates a committee of three arbitrators, one each to be appointed by the State of Kerala and the respondent and the third (Chairman) to be nominated by the Director General, Road Development, Ministry of Surface Transport, Roads Wing, Government of India. There is no question of such nomination in the case of a dispute between the contractor and the sub-contractor.” .....M/S. Elite Engineering & Construction (Hyd.) Pvt. Ltd.=VS=M/S. Techtrans Construction, (Civil), 2018 (1) [4 LM (SC) 66] ....View Full Judgment

Appointed as the Arbitrator–
The purchase order was issued by the Appellant in which it was categorically mentioned that the supply would be as per the terms mentioned therein and in the attached standard terms and conditions. The Respondent by his letter dated 15.12.2012 confirmed its acceptance of the terms and conditions mentioned in the purchase order except delivery period. The dispute arose after the delivery of the goods. No doubt, there is nothing forthcoming from the pleadings or the submissions made by the parties that the standard form attached to the purchase order is of a trade association or a professional body. However, the Respondent was aware of the standard terms and conditions which were attached to the purchase order. The purchase order is a single contract and general reference to the standard form even if it is not by a trade association or a professional body is sufficient for incorporation of the arbitration clause. The appeal is allowed and the judgment of the High Court is set aside. Justice Sushil Harkauli is appointed as the Arbitrator to adjudicate the dispute between the parties. .....M/S. Inox Wind Ltd. =VS= M/S Thermocables Ltd., (Civil), 2018 (1) [4 LM (SC) 73] ....View Full Judgment

6th Schedule

The appointment of an Arbitrator as per Clause 11.12 of the 2007 Scheme–
In the instant case, the learned Single Judge in the impugned Order has erroneously taken the view that an arbitration clause would not stand incorporated in the individual sale orders entered into by the Respondent No.2 – Coal Company and the Appellant. The individual sale orders emanate out of the 2007 Scheme. The sale orders specifically state that they would be governed by the guidelines, circulars, office orders, notices, instructions, relevant law etc. issued from time to time by Coal India Limited or Bharat Coking Coal Limited etc. As a consequence, the arbitration clause (i.e. Clause 11.12) in the 2007 Scheme would stand incorporated in the sale orders issued thereunder. Clause 7 in the sale orders falls under the ‘single contract case’ where the arbitration clause is contained in a standard form document i.e. the 2007 Scheme, to which there is a reference in the individual sale orders issued by Respondent No. 2 – the Coal Company. The arbitration clause in the 2007 Scheme clearly states that : “All disputes arising out of this scheme or in relation thereto in any form whatsoever shall be dealt exclusively by way of arbitration in terms of the Arbitration and Conciliation Act, 1996.” The view taken by the learned Single Judge is erroneous, and is hereby setaside. The appeal is allowed.
The parties consensually agreed to appoint Mr. Justice Pranab Kumar Chattopadhyay as Sole Arbitrator to adjudicate the disputes which have arisen between the Appellant and Respondent No. 2, under the 2007 Scheme. The appointment of Mr. Justice Chattopadhyay will be subject to the disclosure and declaration made, as per the Sixth Schedule to the Arbitration and Conciliation Act, 1996. ...Giriraj Garg =VS= Coal India Ltd., (Civil), 2019 (1) [6 LM (SC) 43] ....View Full Judgment