Important caselaws on arbitration

Arbitrator is bound to follow principles of natural justice

Arbitration - Award - Sections 18 and 19 of the Arbitration Act, 1996 - Arbitrator rejected claim of Petitioner and passed unilateral award after lapse of over 10 months, without giving opportunity to Petitioner to argue or to counter written arguments and documents - Hence, this Petition - Whether, award passed by Arbitrator without giving opportunity to Petitioner was permissible - Held, provision of Section 18 of Act contemplated that Arbitrator must give equal opportunity to parties - However it was cleared from evidence that Arbitrator recorded in meeting dated 5 December 2008 that arguments of Respondent No. 1 would be taken up on next date of hearing, but failed to fix any meeting of Arbitration proceedings and pass award after lapse of 10 months - Moreover Arbitrator had unilaterally passed award after taking written argument of Respondent N.1 behind back of Petitioner - There was no opportunity given to Petitioner to submit arguments and award was also passed after lapse of 10 months from date of last meeting of Arbitration Proceedings - Further it pointed that Arbitrator in fact never intimated next date of hearing after reply of Respondent No. 1, as well as, rejoinders, arguments of Petitioner - Thus it show that Arbitrator had passed award by making breach of principle of natural justice, fair play and equity as contemplated under Section 19 of Act - Therefore Arbitrator had not given opportunity to Petitioner to submit his case in all respect and award passed against Petitioner, even on merits was contrary to law and illegal - Hence award was passed without giving opportunity to Petitioner was impermissible and thus it was set aside - Petition allowed. 
"Arbitrator must give equal opportunity to parties."

Bombay High Court

Btp Structural (I) Pvt. Ltd vs  Bharat Petroleum Corp. Ltd. on 27 April, 2012

Bench: Anoop V.Mohta

Nature of interim relief which can be granted U/S 9 of arbitration Act

Arbitration - Injunction - Petitioners/ABG sought for an order of injunction restraining 1st Respondent /SCI from invoking and encashing two Bank Guarantees as subsequently extended - Hence, this Application - Held, Petitioners sought an extension of delivery dates - However SCI made it clear that SCI in terms rejected ABG's application for an extended delivery date - There were also disagreements between ABG and ZF Marine in regard to financial matters - SCI was in no way concerned with these - SCI made it clear that it was not agreeable to revised delivery dates proposed by ABG and that any delay in delivery over and contractual delivery dates would be dealt in line with terms and conditions of Ship Building Contract - SCI had consistently maintained that it was not agreeable to any extension(s) of contractual delivery date - ABG had to deliver vessel, and a further grace period of 150 days - ABG sought extensions of this delivery schedule - Extensions were refused and there was contemporaneous documentary evidence of this refusal - SCI could be said to have accepted an alternative vendor or supplier but not an extension or modification of delivery schedule - There were no special equities that arise in ABG's favour - Certainly there could be no equitable estoppel of kind claimed for an estoppel must at very least be unambiguous - Extended or renewed bank guarantees in question were unconditional - There was only a limited class of cases in which such an injunction could be granted, viz., where there was (i) fraud or (ii) irretrievable harm and injury likely to be caused to Applicant and where special equities could be said to arise - There could not be said to be any special equities in favour of ABG - There was no question of any irretrievable harm and injury to ABG either - All ABG's remedies in arbitration including if it succeeds in damages were open to it - Application dismissed

"Only a limited class of cases in which an injunction can be granted, where there is fraud or irretrievable harm and injury likely to be caused to Applicant and where special equities can be said to arise."

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

ARBITRATION PETITION (L) NO. 1922 OF 2013

ABG Shipyard Ltd.

Versus

 The Shipping Corporation of India Ltd.

CORAM: G. S. PATEL, J.

DATED : NOVEMBER 7, 2013.

Citation: 2013(6)ABR1148, 2014(3)ALLMR131, iv(2014)BC33(Bom.), 2014(1)BomCR350, 2014(3)MhLj670

When arbitrator can grant excess compensation?

Civil - Payment of compensation - Whether Appellant would be entitled to claim damages for compensation - Held, it was held that arbitrator had acted within jurisdiction in allowing some of claims on account of escalation of costs which was referable to execution of work during extended period - Contract contains specific prohibition of nature envisaged in clause 17(iii) as in present case, general principle would have to give way to specific prohibition contained in contract - Appeal dismissed.
It was in the absence of a specific prohibition against the award of price escalation that the Supreme Court observed that ordinarily, the parties would be bound by the terms agreed upon in the contract, but in the event one of them is unable to fulfill its obligations under the contract which has a direct bearing on the work to be executed by the other party, the Arbitrator is vested with the authority to compensate the second party for the extra costs incurred by him as a result of the failure of the first party to live up to its obligations. In these circumstances, it was held that the arbitrator had acted within jurisdiction in allowing some of the claims on account of the escalation of costs which was referable to the execution of work during the extended period. Where, however, the contract contains a specific prohibition of the nature envisaged in clause 17(iii) as in this case, the general principle would have to give way to the specific prohibition contained in the contract.

Bombay High Court

M/S.Bombay Railways Engineering ... vs General Manager on 10 July, 2013

Bench: Dr. D.Y. Chandrachud, S.C. Gupte

 Citation: 2014(4)MhLj103Bom

Whether court can stay suit as per S 8 of Arbitration Act?

 The Apex Court in Sukanya Holdings (P) Ltd. has therefore laid down the prerequisites for invocation of Section 8 of the said Act. In the instant case, admittedly the Respondent Nos. 1 and 3 are not parties to the Joint Venture Agreement. The Respondent No. 3 cannot be said to be a party who has been deliberately arrayed so as to frustrate any arbitration agreement as in fact in the present case the Development Agreement does not contain any arbitration clause. The subject matter of the Suit is also different than the subject matter of the proceeding before the Arbitrator which involves the breaches of the Joint Venture Agreement. The word "matter" in Section 8 indicates that the entire subject matter of the Suit should be the subject matter of the agreement. However, in the instant case, the Suit in question is founded on the Development Agreement and the breaches thereof have no connection with the Joint Venture Agreement. It is required to be noted that there is no provision for splitting the cause or the parties for referring the subject matter of the Suit to the Arbitrator. The Trial Court has totally glossed over the aforesaid aspects and entertained the application under Sections 8 and 21. The jurisdiction under Section 8 cannot be invoked by a long drawn out process. The Trial Court therefore has in a way exercised jurisdiction not vested in it under Section 8 by staying the Suit. If the provisions of Section 8 are applicable, the only jurisdiction the Trial Court can exercise is to refer the parties to arbitration but cannot stay the Suit.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

CIVIL APPELLATE JURISDICTION

WRIT PETITION NO.7872 of 2013

M/s Eagle AgroFarm

Private Limited )

Versus

 M/s. Eagle Soraj Townships Private Ltd. )

CORAM :R.

M.SAVANT, J .

JUDGMENT PRONOUNCED ON: 24 th DECEMBER 2013

Citation: 2014(1)ABR728, 2014(4)ALLMR317, 2014(2)BomCR684, 2014(5)MhLj330

Whether court should refer dispute to arbitration even though condition precedent is not complied?

Civil - Rejection of application - Present petitions filed for challenging order by which, application for referring dispute of execution of agreement for arbitration, was rejected - Whether Court below was justified in rejecting application when, deposit of amount in escrow account was condition precedent to arbitration agreement - Held, on reading of agreement apparent that for deposit of entire tax dues in escrow account, Respondent would not have agreed either for issuance of no-objection certificate or for reference of dispute to arbitration - Courts below was justified in stating that deposit of amount in account was condition precedent to arbitration agreement - Mere writing on paper with signature of parties by itself could not mean existence of agreement - Courts below held that application for reference to arbitration was nothing but attempt to protract hearing of appeals - Nothing produced on record showed that appeals remained pending on account of procedural delay - Petitions dismissed.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

CIVIL APPELLATE JURISDICTION

WRIT PETITION NO. 2587 OF 2014

NRC Limited

: V E R S U S :

 Kalyan Dombivli Municipal

CORAM :- SMT. R.P. SONDURBALDOTA, J.

4TH AUGUST, 2014.

 Citation: 2014(6)ALLMR318, 2014(5)BomCR32, 2014(5)MhLj564