Latest News
India Arbitration Review: 2023 Aug - Nov
Government of NCT of Delhi v. R.S Sharma Contractors Pvt, O.M.P (COMM) 130/ 2023: I.A. 6584/ 2023: 16 August, 2023
Background
A discord surfaced between R.S Sharma Contractors and the Delhi government over final payments for a bridge construction project. The contractor alleged project delays were the government's fault, seeking compensation for increased costs. The government refuted responsibility, attributing delays and work quality issues to the contractor. Arbitration ensued, resulting in an award partially favouring the contractor, which the government challenged under Section 34 of the Arbitration and Conciliation Act, 1996, in the Delhi High Court.
Relevant Laws:
Relevant statutes included Section 34 of the Arbitration and Conciliation Act, 1996, outlining grounds for setting aside arbitral awards, and Section 73 of the Contract Act, enabling compensation claims for contract breaches.
Ruling:
The High Court affirmed the delay's attribution to the petitioner. It emphasized that even in the absence of a contract provision for price escalation, a party could claim it as damages if the other party caused delays. The judgment criticized the government's lack of evidence to counter the contractor's claims, dismissing vague allegations. It clarified that the case didn't warrant intervention under Section 34, as it didn't violate Indian public policy.
Significance:
The ruling underscores minimal judicial interference in arbitral awards, especially when based on contract interpretation and evidence assessment. It reiterates the importance of adhering to contractual terms and highlights the consequences of contractual breaches and delays.
Zakir Hussain v. Sunshine Agrisystem Pvt Ltd, O.M.P. (COMM) 249/ 2023
Background:
The petitioner, a cold storage operator, engaged in an 'agreement for cold storage' with Sunshine Agrisystem involving carrots. Disputes arose over storage conditions, maintenance, and premature disposal of carrots, leading to arbitration. The tribunal's denial of the petitioner's additional evidence prompted the court to assess whether the arbitrator misapplied the law and misinterpreted the contract if Sunshine's payment denial based on reciprocal promises was justified, and if the denial of additional evidence caused a miscarriage of justice.
Relevant Laws:
Key legal provisions included Section 34 of the Arbitration and Conciliation Act, 1996, defining grounds for setting aside arbitral awards, and sections of the Indian Contract Act, 1872, particularly Section 43 defining independent contracts, Section 54 outlining breach conditions, and Section 148 defining the obligations of a bailee.
Ruling:
The court determined the arbitrator's misapplication of legal provisions and contract misinterpretation. It found Sunshine's refusal to pay storage charges unjustified, emphasizing the agreement's lack of dependency on carrot conditions. The denial of relevant evidence significantly impacted the petitioner, leading to the arbitral award's setting aside. The court exposed Sunshine's fabricated show-cause notice as an attempt to mislead the arbitrator.
Significance:
This case highlights the necessity of adhering to legal principles and accurate contract interpretation in arbitration. It emphasizes the right to a fair hearing and discourages fabrication of evidence in legal proceedings, promoting transparency and honesty in arbitration.
M/s SVK Infrastructures v. Delhi Tourism and Transportation Development Corporation Ltd, Arb. Pet. No. 668/ 2023: 12 October, 2023
Background:
M/s SVK Infrastructures, a successor to M/s Satya Narain, sought arbitration against Delhi Tourism and Transportation Development Corporation Ltd. (DTTDC) over disputes arising from a work order. DTTDC opposed the petition, citing the unstamped work order's invalidity, prematurity in not approaching the Dispute Resolution Committee (DRC), and the successor firm lacking the right to invoke the arbitration clause.
Relevant Laws:
Crucial legal provisions included Proviso (1) to Section 3 of the Indian Stamp Act, 1899, exempting government instruments from stamp duty, and sections of the Arbitration and Conciliation Act, 1996, particularly Section 11 empowering courts to appoint arbitrators and Section 7 outlining situations invalidating arbitration agreements.
Ruling:
The court relied on the exemption clause in the Indian Stamp Act, recognizing M/s SVK Infrastructures as a legal successor entitled to invoke the arbitration clause. It dismissed the need to approach the DRC before arbitration, emphasizing the importance of clarity in contracts. The court granted the petition, appointing an arbitrator.
Significance:
This decision clarifies stamp duty exemptions for government instruments in arbitration involving government entities. It affirms successor firms' rights to inherit contractual obligations, promoting transparency in contractual dispute resolution mechanisms.
IOCL v. Arcelor Mittal Nippon Steel India Limited, W.P.(C) No. 14742/ 2023: 10 October, 2023
Background:
IOCL claimed dues from AMNS related to a contract during ESIL's CIRP process. IOCL sought arbitration, arguing its claim's exclusion from the Resolution Plan. AMNS countered, asserting claim extinguishment with Resolution Plan approval.
Relevant Laws:
Relevant sections of the Insolvency and Bankruptcy Code (IBC), including Section 3(1)(i), Section 12(1), and Section 30(2)(e), were central. Additionally, the Arbitration and Conciliation Act, 1996, Section 7 was considered.
Ruling:
The court emphasized Resolution Plan approval's finality, extinguishing all claims. It dismissed IOCL's plea for an arbitrator, reinforcing the Resolution Plan's binding effects.
Significance:
This judgment solidifies Resolution Plan binding effects, promoting efficiency and certainty in the CIRP process. It guides companies and creditors in CIRP proceedings, discouraging the pursuit of claims outside the plan.
Taqa India Power Ventures Private Limited & Ors. vs. NCC Infrastructure Holdings Limited, O.M.P.(EFA)(COMM.) 1/ 2028: 09 November, 2023
Background:
Taqa and NCC, parties to a Securities Purchase Agreement with an SIAC arbitration clause, clashed over enforcing an SIAC arbitral award. Jurisdiction, public policy concerns, and a set-off claim were pivotal.
Relevant Laws:
Key legal instruments were the Arbitration and Conciliation Act, of 1996, and the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (NYC).
Ruling:
The court affirmed jurisdiction under the Arbitration and Conciliation Act and NYC, finding no violation of Indian public policy. It rejected NCC's set-off claim, segregating it from enforcement proceedings.
Significance:
This case clarifies Indian courts' jurisdiction in enforcing foreign arbitral awards and sets a high bar for public policy challenges. It distinguishes enforcement proceedings from set-off claims, providing future guidance.
- parties can claim damages for delays caused by the other contracting party, even without a contractual provision.
- In Zakir Hussain v. Sunshine Agrisystem, the court stressed precise legal application in arbitration, highlighting the arbitrator's misapplication of legal provisions.
- M/s SVK Infrastructures v. Delhi Tourism clarified arbitration involving government entities, exempting government instruments from stamp duty and affirming successor firms' rights.
