A. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 21 -- Notice for arbitration – Mandate of -- Section 21 is concerned only with determining the commencement of the dispute for the purpose of reckoning limitation -- There is no mandatory prerequisite for issuance of a Section 21 notice prior to the commencement of Arbitration -- Issuance of a Section 21 notice may come to the aid of parties and the arbitrator in determining the limitation for the claim -- Failure to issue a Section 21 notice would not be fatal to a party in Arbitration if the claim is otherwise valid and the disputes arbitrable.

(Para 16)

B. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 21 --– Non-giving of notice for arbitration -- Scope of Arbitral Tribunal's Jurisdiction – Arbitral Tribunal was appointed at the request of the respondent-State to adjudicate on dispute no. (1) alone out of (4) -- By conduct of parties, the entire dispute have been thrown at large before the Arbitral Tribunal – No reason to set aside the award on the basis that the appointment of the Tribunal was only to adjudicate dispute No.1 -- Non-issuance of notice under Section 21 of the A&C Act by the appellant with regard to dispute no. 2 to 4 not fatal – Arbitral Tribunal not exceeded its jurisdiction in deciding the entire dispute.

(Para 14, 16)

Arbitration and Conciliation Act, 1996 (26 of 1996), Section 11(6) (6A), 16 – Appointment of Arbitrator -- Party's capacity to invoke Arbitration and maintainability issues fall within Arbitration tribunal's domain -- Once the High Court was satisfied that an arbitration agreement prima facie existed, an aspect neither seriously disputed nor refutable at this stage, its decision to constitute the AT cannot be faulted -- A detailed scrutiny on the basis of evidence must be left to AT -- Whether first respondent has validly invoked arbitration individually, whether the Consortium continues to exist, whether consent of other Consortium partners was necessary, and whether claims are maintainable after commencement of liquidation, are all matters which may legitimately be raised, contested and determined before the AT under Section 16 --  Entertaining these questions here would amount to conducting a mini trial at the Section 11 stage, contrary to the settled principles of minimal judicial intervention.  

(Para 19)

A. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 11 – Appointment of Arbitrator – Review/ Appeal -- Whether the High Court had jurisdiction to review its earlier order passed under Section 11(6) of the A&C Act, and whether such exercise of power was valid in law – Held, High Court did not have the jurisdiction to reopen or review its earlier order passed under Section 11(6) of the A&C Act -- Once the appointment was made, the court became functus officio and could not sit in judgment over the very issue it had already settled --  The review order cuts against the grain of the Act, undermines the principle of minimal judicial interference, and effectively converts the review into an appeal in disguise -- Such an exercise cannot stand -- Issue is answered in the negative.

(Para11, 11.15)

B. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 11, 16, 29A -- Appointment of Arbitrator – Remedy against -- Once the Section 11 order had attained finality, the only remedies available were to approach Supreme Court under Article 136 or to raise objections u/s 16 before the arbitral tribunal -- Having chosen neither route, and having participated in the arbitral proceedings, including joint applications under Section 29A, they were estopped from reopening the matter through review.

(Para 11.13)

C. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 11 Constitution of India, Article 14 -- Appointment of Arbitrator – Unilateral power with one party -- Remedy -- Where a clause contains an otherwise defective unilateral appointment mechanism, the Court may sever the offending portion and exercise its power u/s 11(6) to appoint an independent arbitrator, thereby giving effect to the parties’ genuine intention to arbitrate -- Refusing to sever such clauses would effectively confer on the dominant party a “nuclear veto”, wholly inconsistent with the pro-arbitration policy of the Act and violative of Article 14 -- Court is empowered under Section 11(6) to cure the defect and appoint an independent arbitrator.

(Para 12.13, 12.16)

D. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 4, 12(5), 29A – Proceed with arbitration without objection – Waiver -- Whether the joint application filed by both parties, seeking extension of the arbitral mandate u/s 29A amounts to an express or implied waiver u/s 4 read with the proviso to Section 12(5) of the Act – Held, a joint application u/s 29A amounts to a valid waiver u/s 4, save in cases of statutory ineligibility u/s 12(5) -- Any contrary view would render Section 4 redundant and distort the legislative design -- Where the disqualification u/s 12(5) is attracted, the language being plain and mandatory, a joint application merely seeking extension, without an informed written waiver, cannot cure ineligibility -- Conversely, where no such disqualification exists, the conduct of the parties, especially in jointly invoking Section 29A, constitutes waiver under Section 4.

(Para 13.11, 13.12)

E. Constitution of India, Article 136, 141 -- Binding precedent -- Doctrine of merger -- Dismissal of SLP – Effect of -- A non-speaking dismissal of an SLP signifies only that the Court, in its discretion under Article 136, has declined to interfere -- It does not amount to approval of the reasoning of the subordinate forum -- Doctrine of merger does not apply to such dismissals – A non-speaking dismissal of an SLP neither endorses the reasoning of the judgment challenged nor transforms it into binding precedent -- At best, such a decision has persuasive value; its only legal effect is to bring finality to the dispute between the parties in that particular case.

(Para 14.1-14.3)

Arbitration and Conciliation Act, 1996 (26 of 1996), Section 11 – Appointment of Arbitrator – Prima-facie existence of arbitration clause -- High Court at the time of reference u/s 11 of the Act is only to see prima facie the existence of an arbitration clause and is not to conduct any mini-trial -- Since neither the arbitration clause nor the terms and conditions of the auction are in dispute, Court deems it fit and proper to allow the present petition and appoint a Sole Arbitrator.

(Para 6)

A. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 11, 21 -- Unilateral appointment of Arbitrator – Permissibility of -- Appointment of the 2nd Respondent as an Arbitrator is unilateral in nature, which is not permissible -- If the other party were not to respond to the request favourably, it was for party to approach this Court u/s 11 of the Act, seeking the appointment of any Arbitrator by High Court and not to appoint an Arbitrator by itself and proceed with the matter -- Orders passed by an arbitrator not properly appointed are nonest.

(Para 9)

B. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 11, 21 – Appointment of Arbitrator – Notice suggesting name of Arbitrator – Non-consent to – Effect of -- A person who is the named Arbitrator in a notice issued u/s 21 of the Arbitration and Conciliation Act, 1996 cannot enter reference and pass orders without the other person consenting thereto, or without an order of appointment of Arbitrator by institution or a Court u/s 11 of the Arbitration and Conciliation Act, 1996.

(Para 10.10)

C. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 11,  21 – Constitution of India, Article 226, 227 -- Appointment of Arbitrator without consent – Possession of hypothecated vehicle -- Misusing the arbitration mechanism – Writ jurisdiction -- Respondent appointed a private person as an Arbitrator without the consent of the other party – Respondent indulged itself in misuse of the Act, obtained so-called order from a unilaterally appointed Arbitrator for repossession of a vehicle using police help -- Actions on part of respondent by involving the jurisdictional police, abusing the process of law, misusing the arbitral mechanism would entitle High Court to exercise its powers under Article 226 and 227 of the Constitution of India to render effective justice to the Petitioners who have been deprived of their rights, by the above misuse on part of respondents -- If a Constitutional Court does not come to the rescue of the Petitioners, that would amount to denial of justice to the Petitioners, which cannot be countenanced under any law – Held, Writ Petition is maintainable.

Director General of Police directed to appoint a suitable officer not below the rank of Superintendent of Police to conduct an enquiry into the manner in which the above proceedings were held and submit a report within a period of six weeks -- If there are any other similar complaints received necessary enquiry in regard thereto would also have to be held.

(Para 10.9, 12.2, 12.3)

Arbitration and Conciliation Act, 1996 (26 of 1996), Section 11 – Appointment of Arbitrator -- Bisecting the claim – Arbitrable and non-arbitrable – Permissibility of -- Held, High Court fell in error in bisecting the claim of the appellant into two parts, one arbitrable and the other not arbitrable, when it found arbitration agreement to be there for settlement of disputes between the parties -- The correct course for the High Court was to leave it open to the party to raise the issue of non-arbitrability of certain claims before the arbitral tribunal, which, if raised, could be considered and decided by it –  Parties are, at liberty to take the plea of non-arbitrability of certain claims before the arbitral tribunal.

(Para 12, 13)

A. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 8 -- Jurisdiction of Arbitration – Fraud – Criminal wrong doing – Statutory violation – Ground of -- Allegations of fraud or criminal wrongdoing or of statutory violation would not detract from the jurisdiction of the arbitral tribunal to resolve a dispute arising out of a civil or contractual relationship on the basis of the jurisdiction conferred by the arbitration agreement.

(Para 15)

B. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 8 -- generalia specialibus non derogant -- Once an application in due compliance with Section 8 of the Act of 1996 is filed, the approach of the civil court should be not to see whether the court has jurisdiction -- It should be to see whether its jurisdiction has been ousted -- The general law should yield to the special law -- Once there is an arbitration agreement between the parties, a judicial authority before whom an action is brought covering the subject-matter of the arbitration agreement is under a positive obligation to refer parties to arbitration by enforcing the terms of the contract.

(Para 16, 17)

A. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 34, 37 -- Modification in award – Power of -- Court has a limited power under Sections 34 and 37 of the 1996 Act to modify the arbitral award -- This limited power may be exercised under the following circumstances:

I. when the award is severable, by severing the “invalid” portion from the “valid” portion of the award.

II. by correcting any clerical, computational or typographical errors which appear erroneous on the face of the record.

III. post award interest may be modified in some circumstances.

IV. Article 142 of the Constitution applies, albeit, the power must be exercised with great care and caution and within the limits of the constitutional power.

(Para 85)

(Reference answered with majority opinion 4:1)

B. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 31 – Code of Civil Procedure, 1908 (V of 1908), Order 23 -- Arbitration award -- Post award settlement -- Parties are entitled to enter into an agreement or settlement even after an award is pronounced -- Such a settlement should be in accordance with the provisions of Order XXIII of the Code -- The law of the land does not bar the parties from entering into a post award or post decree settlement -- Only legal requirement is that such settlement must be verifiable and in accordance with law i.e., the settlement is not a result of undue influence, force, fraud, coercion, etc.

(Para 80)

Arbitration and Conciliation Act, 1996 (26 of 1996), Section 31, 34, 37 – Arbitration award – Scope of interference -- If two views are possible, there is no scope for the court to re-appraise the evidence and to take the view other than the one taken by the arbitrator -- View taken by the arbitral tribunal is ordinarily to be accepted and allowed to prevail – Scope of interference in arbitral matters is only confined to the extent envisaged u/s 34 of the Act – Court exercising powers u/s 34 has perforce to limit its jurisdiction within the four corners of Section 34 -- It cannot travel beyond Section 34 -- Proceedings u/s 34 are summary in nature and not like a full-fledged civil suit or a civil appeal -- Award as such cannot be touched unless it is contrary to the substantive provisions of law or Section 34 of the 1996 Act or the terms of the agreement -- Arbitral autonomy must be respected and judicial interference should remain minimal otherwise it will defeat the very object of the 1996 Act.

(Para 23, 24)

Arbitration and Conciliation Act, 1996 (26 of 1996), Section 11, 21 – Notice for arbitration – Impleadment of parties to whom notice not issued – Power of Arbitration Tribunal – Summary of Conclusions:

I. A notice invoking arbitration under Section 21 of the ACA is mandatory as it fixes the date of commencement of arbitration, which is essential for determining limitation periods and the applicable law, and it is a prerequisite to filing an application under Section 11. However, merely because such a notice was not issued to certain persons who are parties to the arbitration agreement does not denude the arbitral tribunal of its jurisdiction to implead them as parties during the arbitral proceedings.

II. The purpose of an application under Section 11 is for the court to appoint an arbitrator, so as to enable dispute resolution through arbitration when the appointment procedure in the agreement fails. The court only undertakes a limited and prima facie examination into the existence of the arbitration agreement and its parties at this stage. Hence, merely because a court does not refer a certain party to arbitration in its order does not denude the jurisdiction of the arbitral tribunal from impleading them during the arbitral proceedings as the referral court’s view does not finally determine this issue.

III. The relevant consideration to determine whether a person can be made a party before the arbitral tribunal is if such a person is a party to the arbitration agreement. The arbitral tribunal must determine this jurisdictional issue in an application under Section 16 by examining whether a non-signatory is a party to the arbitration agreement as per Section 7 of the ACA.

IV. In the facts of the present appeal, respondent nos. 2 and 3 are parties to the arbitration agreement in Clause 40 of the LLP Agreement despite being non-signatories. Their conduct is in accordance with and in pursuance of the terms of the LLP Agreement, and hence, they can be made parties to the arbitral proceedings.

(Para 40)

A. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 34(3) – Objection u/s 34 of Arbitration Act -- Limitation of three calendar months as opposed to 90 days -- Statutory language of Section 34(3) clearly stipulates the limitation period as “three months”, as opposed to the condonable period as “thirty days” -- This difference in language unambiguously demonstrates the legislative intent that the limitation period is 3 calendar months as opposed to 90 days -- Argument that 3 months must be read as 90 days in the context of Section 34(3), rejected.

(Para 13, 14)

B. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 34 -- Limitation Act, 1963 (36 of 1963), Section 4, 12  -- Objection u/s 34 of Arbitration Act – Limitation -- Exclusion of days -- Respondent received a signed copy of the award on 09.04.2022, this date must be excluded and the 3-month limitation period must be reckoned from 10.04.2022 -- This expires on 09.07.2022, which happened to be a second Saturday when the court was not working -- Hence, the benefit of Section 4 of the Limitation Act will inure to the benefit of the respondent -- Respondent’s application u/s 34, which was filed on 11.07.2022, i.e., the next working day of the court, must be considered as being filed within the limitation period.

(Para 13, 14)

Arbitration and Conciliation Act, 1996 (26 of 1996), Section 29A -- Time limit for arbitral award – Extension of – Delay in completion of proceedings beyond 18 months – Effect of -- Once the Learned Arbitrator permitted the parties to participate in arbitral proceedings beyond the permissible period of 18 months then, the Impugned Order passed by Arbitrator that he cannot proceed because his mandate stood terminated and the arbitral proceedings were kept in abeyance, certainly amounts to prejudicing the petitioner due to an act of Arbitrator herein which defeats the principle of “Actus Curiae Neminem Gravabit” – Impugned order set aside, arbitration proceedings restored.

(Para 8, 9)

A. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 31 -- Arbitration award – Legal heirs – Right and liability -- The term ‘partners’ extends to and would include their legal heirs, representatives, assigns or legatees, etc. -- Persons claiming under the rights of a deceased person are the representatives of the deceased party, and therefore, both the parties to the agreement and their legal heirs are entitled to enforce an arbitral award and are bound by it.

(Para 10)

B. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 7, 40 – Arbitration agreement – Death of party – Effect of -- Existence of an arbitration agreement is not affected by the death of a party to the arbitration agreement.

(Para 10)

Arbitration and Conciliation Act, 1996 (26 of 1996), Section 34, 37 – Arbitration award – Interference in – When it comes to scope of an appeal under Section 37 of the 1996 Act, jurisdiction of the appellate court in examining an order passed under Section 34, either setting aside or refusing to set aside an arbitral award, is all the more circumscribed -- A great deal of restraint is required to be shown while examining the validity of an arbitral award when such an award has been upheld, wholly or substantially, under Section 34 of the 1996 Act – Frequent interference with arbitral awards would defeat the very purpose of the 1996 Act -- High Court was not at all justified in setting aside the arbitral award exercising extremely limited jurisdiction u/s 37 of the 1996 Act by merely using expressions like ‘opposed to the public policy of India’, ‘patent illegality’ and ‘shocking the conscience of the court’ – Judgment and order passed by High Court set aside and the arbitral award restored.

(Para 39-43)

A. Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006), Section 18 – Arbitration and Conciliation Act, 1996 (26 of 1996), Section 34, 80 – Order/ Award of Micro and Smal enterprises Facilitation (MSEFC) – Challenge to – Alternative remedy of arbitration – Writ jurisdiction :

Following questions referred to a larger Bench of five Judges, namely:

(i) Whether the ratio in M/s India Glycols Limited (2023 SCC OnLine SC 1852) that a writ petition could never be entertained against any order/award of the MSEFC, completely bars or prohibits maintainability of the writ petition before the High Court?

(ii) If the bar/prohibition is not absolute, when and under what circumstances will the principle/restriction of adequate alternative remedy not apply?

(iii) Whether the members of MSEFC who undertake conciliation proceedings, upon failure, can themselves act as arbitrators of the arbitral tribunal in terms of Section 18 of the MSMED Act read with Section 80 of the A&C Act?

The first and second question will subsume the question of when and in what situation a writ petition can be entertained against an order/award passed by MSEFC acting as an arbitral tribunal or conciliator.

(Para 2, 19)

B. Constitution of India, Article 226 – Writ jurisdiction – Alternative remedy -- Existence of the statutory remedy does not affect the jurisdiction of the High Court to issue a writ -- The writ jurisdiction being discretionary by policy, the writ courts generally insist that the parties adhere to alternative statutory remedies, as this reinforces the rule of law -- However, in exceptional cases, writ jurisdiction can still be exercised as a power to access the court for justice and relief.

(Para 15)

Arbitration and Conciliation Act, 1996 (26 of 1996), Section 34 – Limitation Act, 1963 (36 of 1963), Section 4-24 -- General Clauses Act, 1897 (10 of 1897), Section 10 -- Objection to arbitration award – Limitation – Extended period – Exclusion of holiday – Permissibility of :

(i) There is no wholesale exclusion of Sections 4 to 24 of the Limitation Act when calculating the limitation period under Section 34(3) of the ACA.

(ii) Section 4 of the Limitation Act applies to Section 34(3) of the ACA only to the extent when the 3-month period expires on a court holiday. It does not aid the applicant when the 30-day condonable period expires on a court holiday.

(iii) In view of the applicability of Section 4 of the Limitation Act to Section 34 proceedings, Section 10 of the GCA does not apply and will not benefit the applicant when the 30-day condonable period expires on a court holiday.

(Para 1.1)

Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006), Section 8, 18 – Arbitration u/s 18 of MSME Act, 2006 -- MSME Registration – Requirement of -- Section 18 is not restrictive and is a remedy for the resolution of disputes, and as such, it is kept open-ended to enable ‘any party’ to refer the dispute to seek redressal -- Submission rejected that ‘any party to a dispute’ is confined to a ‘supplier’ who has filed a memorandum under Section 8 of the Act – However, for clarity and legal certainty, matter referred to a bench of three Judges for an authoritative pronouncement.

(Para 1.2)

A. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 7, 11 – Appointment of Arbitrator – Arbitration agreement -- An arbitration agreement is sine qua non for arbitration proceedings.

(Para 20)

B. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 7, 11, 34 – Code of Civil Procedure, 1908 (V of 1908), Section 47 -- Ex-parte arbitration award – Setting aside of -- Objections filed by the appellants under Section 34 of the A&C Act were dismissed by the trial court on the ground that they were barred by limitation and had been filed beyond the condonable period -- Authenticity of the agreement cannot be established as it is not available on the record of the Municipal Board -- State Government has denied the existence of any such agreement – No evidence to show the existence of the arbitration agreement, except a piece of paper, which is not even a certified copy or an authenticated copy of the official records -- Arbitration, which is quasi-judicial, requires a standard of behaviour of arbitrators, which is impartial and independent, no less stringent than that demanded of judges – Both the Awards shall be treated as null and void and non-enforceable in law – Section 47 of the Code of Civil Procedure, 1908, permits a party at the stage of execution to object to the decree, both on the grounds of fraud, as well as lack of subject matter jurisdiction – Appeals allowed, ex-parte awards set aside.

(Para 20-25)

Arbitration and Conciliation Act, 1996 (26 of 1996), Section 31(7) --  Limitation Act, 1963 (36 of 1963), Section 14 – Arbitration award – Interest upon delayed period -- Delay attributed to claimant -- Time spent in wrong Forum – Ends of justice would be met if the appellant-insurance company is directed to pay interest as directed by the Arbitral Tribunal @ 12% per annum with effect from 06^th March, 2010 as it was on this date that the Arbitral Tribunal held the claims to be within time after excluding the time spent by the respondent-claimant in pursuing its remedy before the N.C.D.R.C. u/s 14 of the Limitation Act.

(Para 1-4)

Arbitration and Conciliation Act, 1996 (26 of 1996), Section 11, 16, 34, 37 -- Jurisdiction of Arbitrator – Objection to -- After submitting to the jurisdiction of the sole Arbitrator, the respondent could not have belatedly objected to the jurisdiction of the sole Arbitrator.

(Para 14, 15)

Arbitration Act, 1940 (10 of 1940), Section 14(2), 17 -- Limitation Act, 1963 (36 of 1963), Article 119(b) – Arbitration award -- Limitation for filing objections – Starting date -- The trigger for the limitation to start running is the date of service of notice of the filing of the award –  Word ‘notice’ is that the parties merely reach a state of awareness about the award and plan their next steps accordingly, and not the imposition of another procedural step -- Date of receiving a copy of the award is not the requirement of Section 14(2), but merely awareness that it is available to the parties -- This holding signifies that the parties have to take steps to scrutinise the award themselves -- Any contrary interpretation will give a licence to the award-debtor to delay the arbitration by insisting on procedural nuances despite of being aware that an award exists and that its contents are accessible to it.

(Para 14-18)

A. Compensation to contractor -- Once, the employer was held to be responsible for not providing hinderance free site to the contractor for execution of work, the award of loss or profit @ 13% of the amount of balance work cannot be said to be unreasonable.

(Para 17)

B. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 34, 37 – Arbitration award – Interference in – Scope of -- Record reveals that the parties have been afforded fullest opportunity to represent their respective cases by the Arbitrator -- The impugned award contains detailed reasons based on analyses of the material on record -- Scope of interference with arbitral award in proceedings u/s 34 of the Act is limited -- Patent illegality should emerge on the face of the award itself -- It is impermissible for the court to sit in appeal or review over the findings recorded by the arbitral tribunal.

(Para 11-18)

A. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 2(1)(e), 11(6), 20, 31, 42 – Appointment of Arbitrator – Jurisdiction – Cause of action -- Definition of ‘Court’ -- High Court does not fall within definition of Court as defined under Section 2 (1) (e) of 1996 Act -- High Court gets jurisdiction u/s 11(6) where principal Civil Court of original jurisdiction has jurisdiction to decide the questions forming the subject matter of arbitration, had the same been the subject matter of suit -- Cause of action has arisen within jurisdiction of principal Civil Court at Karnal (Haryana) --  Contention of respondent that as per arbitration agreement, Mumbai Court has exclusive jurisdiction – Held, Court at Karnal (Haryana) as well as Mumbai has jurisdiction in term of Section 2(1)(e) read with Section 20 of 1996 Act -- As Civil Court at Karnal (Haryana) has jurisdiction to entertain dispute in question, Punjab and Haryana High Court has jurisdiction to entertain application under Section 11 (6) of 1996 Act.

(Para 11-22)

B. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 11(6), 20, 31, 42 -- Appointment of Arbitrator – Place of Arbitration -- High Court at Chandigarh makes appointment of an Arbitrator -- Both the parties are having their offices at Delhi -- Arbitrator, after his appointment by High Court, may fix place of arbitration at New Delhi because said place may be convenient to both the parties -- In this situation, despite appointment of arbitrator by Punjab and Haryana High Court, the place of arbitration would be ‘New Delhi’.

(Para 13)

A. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 11(6) – Arbitration – Deposit of amount as pre-condition – Legality of -- A clause which seeks deposit of a part of the claimed amount to avail of the remedy of arbitration is one which would be illegal and unlawful as it is barring a legal remedy from being invoked without deposit of money -- No remedy can be subjected to payment of money, unless authorised by law -- Such a clause in a contract lacks legitimacy and would not be enforceable.

(Para 76)

B. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 11(6) --  Constitution of India, Article 19, 21 -- Employment agreement -- Lock-in period of three years -- Covenants in employment contracts -- Lawful and reasonable covenants which are operative during the term of employment are valid and enforceable -- Such covenants are not in violation of the fundamental rights as provided in the Constitution of India -- Reasonable lock-in periods in employment contracts that apply during the term of employment are valid in law and do not violate Fundamental Rights as enshrined in the Constitution of India -- Disputes relating to lock-in periods that apply during the subsistence of employment contracts, are arbitrable in terms of the Act, 1996.

(Para 78)

Arbitration and Conciliation Act, 1996 (26 of 1996), Section 34 -- Limitation Act, 1963 (36 of 1963), Section 5 -- Arbitration award – Challenge to – Applicability of Section 5 of Limitation Act -- Section 5 of the Limitation Act has no application to challenging an arbitral award u/s 34 of the Act – It can be made within three months and the period can only be extended for a further period of thirty days -- The use of the words “but not thereafter” in the proviso to Section 34 makes it clear that extension cannot be beyond thirty days.

(Para 4)

Arbitration and Conciliation Act, 1996 (26 of 1996), Section 29A -- National Highways Act, 1956 (48 of 1956), Section 3G – Lapse of time for arbitration award – Extension of time -- Section 3G of the National Highways Act is pending adjudication before the learned Arbitrator -- Period of 12 months in terms of Section 29A(1) of the Arbitration Act, 1996 stands elapsed -- Period specified u/s 29A(3) of the Act is also over, hence, the ld. Arbitrator has closed the proceedings in view of termination of his mandate – Time extended for six months for passing the award by taking recourse of Section 29A(4).

(Para 2-4)

A. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 12(5) – Appointment of Arbitrator – Waiver to object ineligibility -- A party can waive its right to object to the ineligibility of an Arbitrator but the same is subject to two conditions -- First, that the waiver is required to be by and done by an express agreement in writing; and second, that such agreement is entered into after the disputes have arisen -- Unless both the aforesaid conditions are satisfied, there can be no waiver of the ineligibility of an arbitrator.

(Para 7)

B. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 12(5) – Appointment of Arbitrator – Waiver to object ineligibility -- Failure, if any, on the part of the respondent to object to the unilateral appointment of the sole arbitrator, cannot be construed as waiver of his right under Section 12(5) of the A&C Act.

(Para 9)

C. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 12(5) – Award by Arbitrator -- Ineligibility of Arbitrator – Effect of --  Award rendered by an arbitrator who is ineligible to be appointed as such cannot be enforced -- A person who is ineligible to act an Arbitrator, lacks the inherent jurisdiction to render an Arbitral Award -- It is trite law that a decision, by any authority, which lacks inherent jurisdiction to make such a decision, cannot be considered as valid -- Impugned award cannot be enforced.

(Para 10-14)

Arbitration and Conciliation Act, 1996 (26 of 1996), Section 34 -- Limitation Act, 1963 (36 of 1963), Section 5 – Objections against award of Arbitration -- Condonation of delay – Whether provisions of Section 5 of the Limitation Act, 1963 are applicable to objections filed under the Act of 1996 – Held, application u/s 5 of the Limitation Act, is ousted by proviso to Sub-section 3 of Section 34 of the Act, 1996.

(Para 1, 5, 6)

Arbitration and Conciliation Act, 1996 (26 of 1996), Section 34 -- Interpretation of contract – Scope of objection u/s 34 of Arbitration Act -- As far as the construction of the terms of a contract is concerned, it is for the Arbitral Tribunal to adjudicate upon -- If, after considering the material on record, the Arbitral Tribunal takes a particular view on the interpretation of the contract, the Court u/s 34 does not sit in appeal over the findings of the arbitrator.

(Para 13)

Arbitration and Conciliation Act, 1996 (26 of 1996), Section 8 -- Agreement with arbitration clause – Subsequent final Settlement and MOU – Status of -- Where there is a subsequent Settlement Agreement, a valid contract can be extinguished -- Text of the Settlement Agreement is clear to the effect that this is a final settlement and MoU, with respect to the disputes and claims -- Arbitration clause in the original agreement would not be enforceable as this is a full and final settlement with respect to the contract and will be treated as a foreclosed document.

(Para 33)

A. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 9, 17, 36 – Code of Civil Procedure, 1908 (V of 1908), Order 39 Rule 2A -- Implementation of injunction order – Constitution of Arbitration Tribunal -- Petitioners seek an implementation of an order already passed by the Court when the Arbitral Tribunal had not yet been constituted – Commercial Court never lost jurisdiction to implement its own order by virtue of the powers conferred on it under Section 9(1)(ii)(e) -- Measures under Order XXXIX Rule 2A of the CPC for contempt of its orders, penal measures can be taken even after constitution of the Arbitral Tribunal.

(Para 25-29)

B. Code of Civil Procedure, 1908 (V of 1908), Order 39 Rule 2A – Violation of order of Court – Order XXXIX Rule 2A is not the only remedy for violation of an injunction order -- Implementation of an injunction order, if necessary even by reversal of the acts taken in violation of the same, can be sought from the same court which granted the injunction in the first place.

(Para 30)

A. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 34 – Arbitration award – Objections -- While dealing with a petition u/s 34 of the 1996 Act, the Court concerned does not sit in appeal over the arbitral award and may interfere on merits on the limited grounds provided in Section 34 (2)(b)(ii) of the 1996 Act, i.e. if the award is against the public policy of the India -- Interference in an arbitral award would not entail a review of the merits of the dispute and would be limited to situations, where the findings of the Arbitrator are arbitrary or perverse or when the conscience of the Court is shocked, or when the illegality is not trivial but goes to the root of the matter -- An arbitral award, however, may not be interfered with, if the view taken by the arbitrator is a possible view based on facts.

(Para 7)

B. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 34 – Arbitration award – No written response to claim -- Appellants did not submit any written response to the claim submitted by the respondent-HAFED and only made oral submissions – Arbitrator awarded the claim of recovery of Rs.26.01 lakh and accepted the claim in toto -- Arbitrator did not commit any illegality in doing so, especially, once the claim was not opposed in any manner and further, the respondent was able to prove its case through evidence of its District Manager.

(Para 9)

A. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 8(2) – Arbitration clause in agreement -- Notarised copy of original agreement – Certified copy -- Petitioner/defendant filed the certified copy of the original agreement duly attested by the Notary Public which in terms of the law cannot be said to be a not duly certified copy of the original agreement as required under the provision of the Act -- Mandatory requirement under the Act had been complied with.

(Para 12, 24)

B. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 8 -- Arbitration clause in agreement – Suit for declaration, injunction and consequential reliefs – Temporary injunction – Civil court has no jurisdiction to entertain the suit filed by the plaintiff -- Refusal by Court to refer dispute on ground that the said clause applies only to dispute connected with agreement is not proper -- On fulfilment of the conditions of Section 8, no option is left to the court and the court has to refer the parties to arbitration -- When it prima facie satisfies that the arbitration clause is valid and has the effect of mutual consent of the parties to the contract the court is bound to refer the parties to arbitration on satisfying all other ingredients mandated u/s 8 of the Arbitration and Conciliation Act.

(Para 13-22)

C. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 8 – Arbitration clause – Refer to arbitration -- Following conditions must be satisfied:

(a) that there exists an arbitration agreement;

(b) that action has been brought to the court by one party to the arbitration agreement against the other party;

(c) that the subject-matter of the suit is same as the subject-matter of the arbitration agreement;

(d) that the other party before he submits his first statement of the substance of the dispute, moves the court for referring the parties to arbitration; and

(e) that along with the application the other party tenders the original arbitration agreement or duly certified copy thereof.

(Para 17)

Arbitration and Conciliation Act, 1996 (26 of 1996), Section 34, 37 – Arbitration appeal – Stay -- Substantive appeal pending against an order made on a petition u/s 34 of the Arbitration Act -- It will be appropriate if the interim stay continued till the disposal of the appeal -- If the appeal is not heard within a period of one year, it will be open for the respondent to make a fresh application in the pending appeal for withdrawal of the amount on appropriate terms and conditions.

(Para 3-5)

A. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 46, 48, 49 -- Enforcement of foreign arbitration award – Bias -- Courts must endeavor to adopt international best practices instead of domestic standards, while determining bias -- It is only in exceptional circumstances that enforcement should be refused on the ground of bias -- Refusal of enforcement of foreign award should only be in a rare case where non-adherence to International Standards is clearly demonstrable.

(Para 26, 42)

B. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 46, 48, 49 -- Arbitral appointments – Challenge to -- Bonafide challenges to arbitral appointments have to be made in a timely fashion and should not be used strategically to delay the enforcement process.

(Para 29)

C. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 46, 48, 49 -- Enforcement of foreign arbitration award – Bias -- Award-debtors failed to substantiate their allegation of bias, conflict of interest or the failure by the Presiding Arbitrator to render disclosure to the parties, as an objection to the enforcement of the award – Also failed to meet the high threshold for refusal of enforcement of a foreign award under Section 48 of the Indian Arbitration Act -- Accordingly, the decision given by the High Court for enforcement/ execution of the foreign award stands approved – Appeal dismissed.

 (Para 43)

Arbitration and Conciliation Act, 1996 (26 of 1996), Section 11 – Limitation Act, 1963 (36 of 1963), Article 55 – Appointment of Arbitrator -- Time barred claim -- Petitioner waited for more than 12 years for the respondent to construct building -- It would be an unnatural construction of Section 11 of the 1996 Act or so-called time-barred claims where a party with a bona fide and a genuine claim is left in the lurch on the defence of the claim being barred by limitation in spite of the parties being in constant communication with each other for settlement of the claims -- Article 55 to the Schedule of The Limitation Act contemplates continuing breach of a contract -- Respondent withholding the money without due compliance of the MoU and failing to return the money to the petitioner for several years on one pretext or the other cannot argue the point of limitation particularly after having nominated its Arbitrator.

(Para 10)

Arbitration and Conciliation Act, 1996 (26 of 1996), Section 11, 16 – Appointment of Arbitrator – Scope of -- In exercise of powers u/s 11(4)(6) of the Act of 1996 the Court has only to prima-facie examine the case of the parties to arrive at a prima-facie satisfaction that the parties before the High Court (i) have approached the correct Court for getting an arbitrator appointed, (ii) the arbitration clause subsist between the parties and the disputes are covered by the said clause -- Impact of Section 62 of the Contract Act, tripartite agreement and whether the disputes relate to construction stage and or the effect of Section 12 of the NHAI Act, 1988 can be considered by the Tribunal appropriately in terms of Section 16 of the Act of 1996 -- Once the satisfaction is formed, the Court is required to relegate to the parties to Tribunal.

(Para 16, 17)

Arbitration and Conciliation Act, 1996 (26 of 1996), Section 11 – Appointment of Arbitrator – Respondent proceeded against ex parte -- Agreement specifically provided for resolution of dispute by way of arbitration -- A dispute having arisen, the petitioner invoked notice and served a notice but to no avail -- Keeping in view the specific provision for resolution of disputes by arbitration in the agreement and the respondent not having chosen to contest the petition, the petition allowed – Sole Arbitrator appointed.

(Para 2-5)

A. Code of Civil Procedure, 1908 (V of 1908), Order 5 Rule 15 – Service of summons -- Respondent is stated to have been served physically through a member of his family -- Respondent stands duly served -- None has appeared on behalf of the respondent, the respondent is proceeded against ex parte.

(Para 5, 6)

B. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 11(6) -- Appointment of arbitrator -- Landlord-tenant dispute – Lease deed would show that the parties had specifically agreed for resolution of the disputes through arbitration -- Notice to the respondent had specifically been called upon for initiation of arbitration proceedings, but to no avail – Such disputes can be adjudicated by way of arbitration – District and Sessions Judge (Retd.) appointed as the sole Arbitrator.

(Para 6-10)

Arbitration and Conciliation Act, 1996 (26 of 1996), Section 34 – Arbitration award – Modification in award – Permissibility of --  Dispute amongst the contracting parties is to be referred to an Arbitrator but the question as regards payment of penal interest @ 21% per annum is to be taken by Managing Director, MARKFED whose decision shall be final – Arbitrator exceeded the jurisdiction by the decision regarding imposition of interest @ 21% per annum, which the Arbitrator could not have touched – Learned District Judge while adjudicating upon a petition u/s 34 of the Arbitration and Conciliation Act 1996 does not have any power to modify the award of the Arbitrator -- Award set aside.

(Para 8)

A. Multi State Co-operative Societies Act, 2002 (39 of 2002), Section 85(1)(a) -- Recovery of any sum -- Reference to Arbitrator -- Appellant was not only a member but also a shareholder of the respondent no.1 bank -- Appellant had purchased shares of the respondent no. 1 -- That being so, for the purposes of recovery of money with interest payable by the appellant to the respondent no. 1, the limitation period for referral of dispute to arbitration would be governed by Section 85(1)(a) of the Act and not by the provisions of the Limitation Act -- Since the appellant is alive and has not ceased to be a member of the respondent no. 1 bank, limitation period for referral of dispute did not even commence and therefore, the referral to arbitration was not bad in law.

(Para 13)

B. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 34 -- Objection u/s 34 of Arbitration Act, 1996 -- Scope of objections under Section 34 of the Act is quite limited and is not similar to the scope of appellate jurisdiction.

(Para 14)

A. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 11(6) – Limitation Act, 1963 (36 of 1963), Article 137 -- Appointment of Arbitrator -- Limitation -- Cause of action -- If an infringement of a right happens at a particular time, the whole cause of action will be said to have arisen then and there -- In such a case, it is not open to a party to sit tight and not to file an application for settlement of dispute of his right, which had been infringed, within the time provided by the Limitation Act, and, allow his right to be extinguished by lapse of time, and thereafter, to wait for another cause of action and then file an application u/s 11 of the Act 1996 -- In such a case, such an application would mean an application for revival of a right, which had long been extinguished under the Act 1963 and is, therefore, dead for all purposes -- Such proceedings would not be maintainable and would obviously be met by the plea of limitation under Article 137 of the Act 1963.

(Para 58)

B. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 11(6) – Limitation Act, 1963 (36 of 1963), Article 137 -- Appointment of Arbitrator – Limitation -- Cause of action – Extension of limitation -- Disputes arose between the parties in relation to the wrongful encashment of bank guarantee vide letter dated 16.02.2016 and for wrongful imposition of liquidated damages -- Respondent on 26.09.2016, deducted the amount towards recovery of the liquidated damages -- Requisite amount was credited into the Government account -- This was the end of the matter -- To say that even thereafter, the petitioner kept negotiating with the respondent in anticipation of some amicable settlement would not save the period of limitation -- When the bank guarantee came to be encashed in the year 2016 and the requisite amount stood transferred to the Government account that was the end of the matter -- This “Breaking Point” should be treated as the date at which the cause of action arose for the purpose of limitation.

(Para 59-62)

C. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 11(6) – Limitation Act, 1963 (36 of 1963), Article 137 -- Appointment of Arbitrator – Limitation -- Cause of action – Negotiation will not postpone cause of action -- Negotiations may continue even for a period of ten years or twenty years after the cause of action had arisen -- Mere negotiations will not postpone the “cause of action” for the purpose of limitation -- The Legislature has prescribed a limit of three years for the enforcement of a claim and this statutory time period cannot be defeated on the ground that the parties were negotiating.

(Para 63)

Arbitration and Conciliation Act, 1996 (26 of 1996), Section 34, 36(2) – Arbitration award – Objection – Stay of award -- Petitioners were granted stay subject to deposit of 100% awarded amount in the form of an FDR in the name of the court -- Contention that no condition should have been imposed as the objections u/s 34 of the Act are pending lacks merit -- Pendency of objections in itself shall not operate as stay – No exceptional case made out for interference – Revision dismissed.

(Para 1, 8, 9)

Arbitration and Conciliation Act, 1996 (26 of 1996), Section 11(6)(6A) – Jurisdiction of referral Court – Existence and validity of Arbitration agreement – Post-Arbitration and Conciliation Amendment Act, 2015, the jurisdiction of the court under Section 11(6) of the Act is limited to examining whether an arbitration agreement exists between the parties,  “nothing more, nothing less” -- Thus, as per the Section 11(6A) of the Act, it is the duty cast upon the referral court to consider the dispute/issue with respect to the existence of an arbitration agreement -- Matter remitted back to the High Court/ referral court to decide the respective arbitration petitions afresh and to decide the issue conclusively and finally with respect to the existence and validity of the arbitration agreement.

(Para 5.2-8)

Arbitration and Conciliation Act, 1996 (26 of 1996), Section 34, 36 -- Objection to arbitration award – Stay of execution of arbitration award -- Pendency of objections under Section 34 of the Act does not result in automatic stay.

(Para 8)

Arbitration and Conciliation Act, 1996 (26 of 1996), Section 31(5), 34 -- Arbitration award – Limitation to file objections --  Ex-parte award on 13.6.2008, objections filed on 2.6.2009 – Objections dismissed as time barred – Limitation to file objections starts from the date of receipt of the award -- Impugned order passed without recording a finding that signed copy of the award was delivered to the appellant – Order set aside, matter remitted back to decide objections afresh.

(Para 2-7)

Arbitration and Conciliation Act, 1996 (26 of 1996), Section 31(5), 34, 37 – Ex parte award -- Objections were dismissed as time barred – Section 31(5) of the Act provides that the Arbitrator is obliged to supply the signed copy of the arbitral award to each of the parties -- Nothing on record to prove that the signed copy of the arbitral award was supplied to the appellant – Appeal allowed, impugned order set aside, the matter remitted back for deciding the objections on merits.

(Para 2-7)

Arbitration and Conciliation Act, 1996 (26 of 1996), Section 8 – Arbitration clause – Tripartite agreement – Subsequent purchaser – Except the principal agreement, none of the other agreements contained any arbitration clause -- Later transactions involved other parties too like the tripartite agreement -- Other deeds of conveyance involve the appellant and the other defendants – In the frame of the suit and various other reliefs claimed, involving subsequent purchasers too and the allegations of fraud, the dispute cannot be said to be arbitrable at all – Reference to arbitration u/s 8 cannot be granted.

(Para 17, 18)

Arbitration and Conciliation Act, 1996 (26 of 1996), Section 8 -- Specific Relief Act, 1963 (47 of 1963), Section 31 -- Arbitration clause in agreement – Cancellation of agreement -- Reference to arbitration -- It is impossible to hold that an action instituted u/s 31 of the Specific Relief for cancellation of an instrument is an action in rem – Ld. Trial Judge was justified in passing an order u/s 8 of the Arbitration Act by directing that the dispute be referred to the arbitration. Deccan Paper Mills’ case (2021) 4 SCC 786 = (2020) Law Today Live Doc. Id. 15259 relied.

(Para 8)

A. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 34 -- Objection to arbitration award – Modification of award – Remand of matter – Permissibility of -- Under Section 34 of 1996 Act the award cannot be modified and the matter can be remanded only with consent of both the parties.

(Para 10)

B. Arbitration and Conciliation Act, 1996 (26 of 1996), Section 34 -- Objection to arbitration award – Setting aside of award – Alternative remedy -- Contention that the parties have no remedy after setting aside of award to raise grievances against the compensation determined is misconceived -- Setting aside of award on the ground of jurisdiction shall not debar the parties from availing the remedies in accordance with law.

(Para 10)