25 Important Judgments on Arbitration by Indian Courts (Jan-June 2024)

Over the past few months, the Indian arbitration landscape has witnessed significant developments. This article covers twenty-five important decisions which have provided much-needed clarity and guidance on critical aspects of arbitration.  

Whether a policy circular amounts to an arbitration agreement if it contemplates further consent of the parties?

1. Dhansar Engineering Company Pvt Ltd v. Eastern Coalfields Ltd, [Judgment dated April 18, 2024, in RVWO No. 38 of 2023]

The Calcutta High Court held that a policy circular issued by a parent company contemplating arbitration would not amount to an arbitration agreement if it required fresh consent of the contractor to refer the dispute to arbitration. Further emphasizing that for existing contracts, the circular required consent of the contractor for reference to arbitration, the Court held that it cannot be construed to be an arbitration agreement as it would require a fresh arbitration agreement to be executed between the parties prior to the reference of the dispute to arbitration.

Whether an arbitration clause would be void for uncertainties if it provides for multiple seats of arbitration?

2. Vedanta Limited v. Shreeji Shipping [Judgment dated February 8, 2024, in ARB.P. 342 of 2023]

The Delhi High Court ruled that an arbitration agreement specifying multiple seats of arbitration, thus providing a choice to the parties, is not void under Section 29 of the Indian Contract Act, 1872 for ambiguity or uncertainty. It clarified that once the arbitration seat is determined, the courts of that seat have exclusive jurisdiction over the arbitral proceedings.

The Court, citing the Supreme Court's decision in Indus Mobile Distribution (P) Ltd. v. Datawind Innovations (P) Ltd. [(2017) 7 SCC 678], held that designating the arbitration seat is equivalent to an exclusive jurisdiction clause.

Whether reference to the Arbitration Act of 1940 would make an arbitration clause illegal and unenforceable?

3. M/s. ICDS Ltd v. Sri Bhaskaran Pillai [Judgment dated February 9, 2024, in M.F.A. 6319 of 2014 (AA)]

The Karnataka High Court ruled that arbitral proceedings started under the 1940 Act before the 1996 Act can continue under the old Act unless parties agree otherwise. It also held that arbitration agreements made after the 1996 Act, even if they mistakenly reference the 1940 Act, remain valid and are governed by the 1996 Act.

Whether a party can insist on fulfilment of pre-arbitral steps after terminating the contract?

4. Mr. Gajendra Mishra v. Pokhrama Foundation [Judgment dated January 10, 2024, in ARB.P. 969 of 2023]

The Delhi High Court ruled that once a party terminates an agreement without first attempting pre-arbitration conciliation as outlined in the agreement, it cannot later demand adherence to those conciliation steps. It emphasized that termination of the agreement effectively ends any obligation to engage in pre-arbitral conciliation with the Project Manager. Therefore, the Court held that once an agreement is terminated, the designated authority for resolution or conciliation ceases to have jurisdiction, making further conciliation attempts futile.

Whether filing an application under Order 7 Rule 11 of CPC on ground of availability of arbitration clause is sufficient compliance of Section 8 of Arbitration and Conciliation Act?

5. M/s Naolin Infrastructure Private Ltd. v. M/s Kalpana Industries [Judgment dated February 2, 2024, in Arb. App. 162 of 2023]

 The Telangana High Court noted that an application under Section 8(1) of the Arbitration Act informs the court of an existing arbitration agreement. Referring to Sundaram Finance Ltd. v. Abdul Samad [AIR 2018 SC 965], it held that a Section 8 application should shift the court's focus to whether its jurisdiction is ousted. The Court emphasized on following special statutes over general law to prevent delays and complications in dispute resolution. The High Court held that filing an application under Order VII Rule 11 of CPC satisfied Section 8(1) of the Arbitration Act, thereby notifying the court of the arbitration agreement.

Whether a party can appoint 2/3rd of the arbitral tribunal?

6. Apex Buldsys Limited v. IRCON International Ltd [Judgment dated March 15, 2024 in Arb. P. 373 of 2023]

The Delhi High Court ruled that limiting the panel for arbitrator appointment to just three names would undermine the principle of broad representation. Additionally, allowing one party to appoint two-thirds of the tribunal members would contravene principles of neutrality and balance.

Whether a panel consisting of 23 names can be considered broad based if it consists mostly of retired employees of the government?

7. Techno Compact Builders v. Railtel Corporation of India Limited [Judgment dated March 22, 2024 in Arb. P. 1230 of 2023]

The Delhi High Court emphasized that an arbitration panel should not only be large in size but also diverse in composition, with arbitrators from varied backgrounds. It asserted that a lack of diversity in the panel would necessitate the court, under Section 11, to establish an independent and unbiased arbitral tribunal.

Whether service of notice of arbitration on WhatsApp number and email address constitutes a valid delivery?

8. Lease Plan India Pvt Ltd v. Rudraksh Pharma Distributor [Judgment dated April 10, 2024 in ARB. P. 1273 of 2023]

The Delhi High Court held that service of petition delivered via WhatsApp number and email address specified in the agreement between the parties would constitute valid service of the petition. The Court found that the service was completed through virtual mode as evinced from the affidavit filed by the petitioners. Further, it observed that a speed post was also sent to the address mentioned in the agreement between the parties and concluded that the respondents had been duly served the same.

Whether the appointing party can challenge an arbitration award on grounds of unilateral appointment of the arbitrator?

9. Telecommunication Consultants India Ltd v. Shivaa Trading [Judgment dated April 9, 2024, in O.M.P. (COMM) 311 of 2022]

The Delhi High Court reiterated that an award passed by a unilaterally appointed arbitrator can be challenged on grounds of invalidity of such appointment due to consequent lack of inherent jurisdiction and proceedings, even by the party who made such an appointment. The Court placed reliance on the position taken by the apex court in Bharat Broadband Network Ltd. v. United Telecom Limited [Civil Appeal No. 3972 of 2019] and further ruled that mere participation in the arbitral proceedings cannot amount to an ‘express waiver’ of the right to object envisaged under Section 12(5) of the Arbitration and Conciliation Act.

Since any decision taken by a unilaterally appointed arbitrator is void ab initio, the Court held that the appointing party also has the right to challenge a defect of jurisdiction at any stage as the defect concerns the power of the tribunal to decide the dispute. 

Whether provisions of Section 12(5) read with the Seventh Schedule to the Arbitration and Conciliation Act also apply to institutional arbitrations?

10. Era International v. Aditya Birla Global Trading India Pvt. Ltd [Judgment dated February 26, 2024, in Comm. Arb. P. (L) 27638 of 2023]

The Bombay High Court held that the rules of an arbitral institution cannot override the provisions of the Arbitration and Conciliation Act and affirmed that the provisions of Section 12(5) of the Act are applicable to institutional arbitrations as well. It found that a court’s authority to decide on the termination of an arbitrator's mandate remains uncontested even if a controversy arises pertaining to the grounds mentioned in Section 14(1)(a).

Further, the Court asserted that merely because the challenge to the arbitrator's appointment has been dismissed by the arbitral institution in accordance with its rules, it cannot preclude the jurisdiction of the Court under Section 14 of the Arbitration and Conciliation Act on grounds falling under the 7th Schedule.

Whether a fresh notice is needed for re-commencing arbitration after first award is set aside?

11. Kirloskar Pneumatic Company v. Kataria Sales Corporation [Judgment dated March 21, 2024, in Comm. Arb. P. No. 16 of 2023]

The Bombay High Court ruled that a fresh invocation under Section 21 was not required for the purposes of re-commencing arbitration once the first award was set aside under Section 34 of the Arbitration and Conciliation While rejecting the respondent’s argument that notice under Section 21 was necessary, the Court reasoned that the arbitration mechanism was already triggered and that the proceedings had commenced, and hence there was no need for a new notice.

In this case, the Court observed that since the petitioner sought the appointment of a competent arbitrator, the dispute between the parties remained the same. Hence in a situation where there was an absence of invocation of a new arbitration, the Court ruled that there would be no requirement of a fresh invocation notice as the opposite party would already be aware of the existence of the dispute.

Whether the landowner can seek appointment of an expert to determine the true value of acquired land?

12. M/s Punarnava Ayurveda Hospital Pvt Ltd v. The Arbitrator [Judgment dated May 25, 2024 in NH-66, WP(C) 6947 of 2024]

The Kerala High Court ruled that an arbitrator cannot dismiss a landowner's application under Section 26 for an expert commissioner's appointment by disregarding their arguments and relying majorly on the Competent Authority for Land Acquisition (“CALA”) report. The Court drew an inference of there being similarities between the fact-finding authority under Section 3G (5) of the NHAI Act and the role of an arbitrator under the Arbitration and Conciliation Act.

It referred to a Coordinate Bench decision in Unnikrishnan v. Arbitrator (District Collector) Collectorate, Thrissur [2023 (4) KHC 521], and affirmed that parties must be given the opportunity to present evidence before the arbitrator and such an arbitrator should not be influenced by the report of the expert commission which is merely a piece of evidence. The Court concluded by ruling that a landowner dissatisfied with property categorization by CALA can request an expert commissioner's appointment to ascertain the property's actual value.

Whether the Court exercising power under Section 27 of the Arbitration and Conciliation Act can examine relevancy and admissibility of evidence?

13. Steel Authority of India Ltd v. Uniper Global Commodities [Judgment dated December 1, 2023, in O.M.P. (E) (COMM.) 22 of 2023]

The Delhi High Court emphasized that determining the relevancy or materiality of evidence is not within its purview, as the powers under Section 27 are non-adjudicatory. It held that such adjudication is the role of the Arbitral Tribunal. The Court distinguished between Section 19(4) and Section 27 of the Arbitration Act, noting that Section 27 assists the Court in taking evidence, while the Court's role is to ensure compliance with its competence and rules on evidence.

Whether an application under Section 29A is maintainable after the delivery of the award?

14. National Skill Development Corporation v. Best First Step Education Pvt. Ltd. [Judgment in O.M.P.(MISC.) (COMM.) 608 of 2023]

The Delhi High Court ruled that a petition under Section 29A becomes non-maintainable if filed after the award is delivered and proceedings for setting aside have commenced. Further, the Court distinguished the matter at hand from the Harkirat Singh Sodhi case where the award was rendered during the pendency of the Section 29A petition, and the mandate was extended until the award date, whereas in the present matter, the petition was filed after the expiry of the learned arbitrator's mandate. Hence the Court affirmed the maintainability of a Section 29A petition even after the expiration of the mandate by referring to the precedent laid down in ATC Telecom Infrastructure (P) Ltd. v. BSNL [O.M.P. (MISC.) (COMM.) 466 of 2023].

15. RKEC Projects Limited v. The Cochin Port Trust [Judgment in IA. 1 of 2023 and AR. 53 of 2019]

The Kerala High Court affirmed its authority to intervene and extend the time limit even after the issuance of the award. The High Court held that the termination of the arbitrator's mandate does not strip the court of its authority to consider applications for extension under Section 29A (3) and (4) as these Sections allow for the submission of an application for time extension either before or after the expiration of the stipulated time frame.

Since termination is contingent upon the Court's power to extend the mandate, the High Court ruled that it has jurisdiction to extend the time for passing the award even after its issuance, provided that, there exists sufficient grounds for such an extension.

Whether the court can extend the mandate of the arbitrator if the application seeking extension is moved after the expiry of the mandate?

16. Power Mech Projects Ltd v. Doosan Power Systems India Pvt. Ltd. [Judgment Dated May 7, 2024, in O.M.P. (MISC.) 6 of 2024]

The Delhi High Court held that it retains full authority to extend the mandate of the Arbitral Tribunal under Section 29A (4), even after the expiration of the initially specified period. The Court essentially diverged from the decision laid down by the Calcutta High Court in the case of Rohan Builders v. Berger Paint India Ltd [2023 SCC OnLine Cal 2645] which necessitated the filing of a petition under Section 29A (4) before the expiration of a tribunal's mandate. Furthermore, while referencing Section 29A (4), the Court highlighted how the phraseology connotes extension both "prior to or after expiry of the period so specified."

Whether the court can recall or modify its order passed under Section 33 of the Arbitration and Conciliation Act?

17. National Highways Authority of India v. Musafir [Judgment dated May 6, 2024, in Appeal under Section 34 of the Arbitration and Conciliation Act No. 41 of 2021]

The Allahabad High Court ruled that the sole arbitrator erred in passing the awards as the statutory provisions do not empower the Arbitral Tribunal to review or modify its award and consequently deemed the orders void ab initio and a warrant annulled as the tribunal was not empowered to do such an act. It emphasized that Section 33 delineates that a tribunal may correct any errors within a designated timeframe, entertain requests for interpretation, or consider requests for an additional award concerning claims omitted from the initial arbitral award.

Further, the Court stated that the kompetenz-kompetenz principle emphasises an obligation to determine the tribunal’s jurisdiction within the established legal limitations. Hence, without special statutory provisions to the contrary, the tribunal's jurisdiction over the subject ends upon the issuance of an award under the doctrine of functus officio.

Whether non-mentioning of prayer in a Section 34 petition is a curable defect?

18. Union of India v. M/s Panacea Biotec Limited [Judgment dated December 19, 2024 in FAO(OS) (COMM) 81 of 2020]

The Delhi High Court ruled that non-mentioning of prayer makes a petition under Section 34 of the Arbitration and Conciliation Act invalid. It emphasized that without asking to overturn the disputed award, such petitions are merely empty claims without any actual relief. The Court asserted that without a clear request, the court cannot understand what the party wants based on their statements alone, making the petition not acceptable and effectively null. The Court highlighted that allowing delays in re-filing petitions beyond the set time would lead to prolonged arbitration processes, defeating the purpose of arbitration itself.

Whether the issue of bias of an arbitrator can be raised under Section 34 if no challenge was made during arbitral proceedings?

19. Allied-Dynamic JV v. Ircon International Ltd [Judgment dated January 10, 2024, in O.M.P. (COMM) 451 of 2016]

The Delhi High Court ruled that if a party did not raise objections regarding the bias of the arbitrator during the arbitral proceedings, they cannot later challenge the arbitral award on those grounds’ under Section 34 of the Arbitration and Conciliation Act. It emphasized that participating in the arbitration without contesting the tribunal's jurisdiction due to bias precludes subsequent challenges to the award on those grounds.

Whether a party can challenge an award after receiving amount payable under it?

20. M/s K.S. Jain Builders v. Indian Railway Welfare Organisation [Judgment dated January 25, 2024, in O.M.P. (COMM) 456 of 2022]

The Delhi High Court ruled that a party accepting payment under an arbitral award cannot later contest the award regarding denied claims, citing Sporty Solutionz v. Badminton Association of India [LAWS (DLH) 2020 2 81]. Accepting payments under the award prevents subsequent challenges, and a party cannot repudiate unfavorable parts after receiving payment.

Additionally, the Court stated that misapplying contract terms does not qualify as patent illegality. The threshold for patent illegality is high, requiring an egregious and fundamental error beyond mere legal or contractual misapplication.

Whether reduction of interest rate amounts to modification of arbitral award?

21. Sushil Kumar Mishra v. State of U.P. [Judgment dated January 19, 2024 in Appeal under Section 37 of Arbitration of Conciliation Act 874 of 2023]

The Allahabad High Court ruled that a District Judge under Section 34 of the Arbitration and Conciliation Act, 1996, cannot modify an arbitration award. It stated that while parts of an award can be severed and set aside, this is only permissible if the severance does not affect the remainder of the award. Reduction is nothing but a modification of the original arbitral award and accordingly is illegal.

Whether an award can be challenged on the ground that the arbitrator refuses to take certain documents on record at the fag end of the proceedings?

22. M/s Fortuna Skill Management Pvt Ltd v. M/s Jaina Marketing and Associates [Judgment dated March 20, 2024, in O.M.P. (COMM) 511 of 2023]

The Delhi High Court ruled that while applications for additional evidence can be accepted even at the last moment, this should only occur if the evidence could not have been presented earlier or if there were valid reasons for its delayed submission. The Court affirmed that the tribunal's decision to reject the application was justified, as granting it would have unnecessarily prolonged the proceedings, contradicting the principles of efficiency and promptness in arbitration.

Whether the decision of the arbitral tribunal on the impleadment of a party can constitute an interim award?

23. NHAI v. M/s IRB Ahmedabad Vadodra Super Express Tollways, [Judgment dated March 2, 2024 in O.M.P. (COMM) 455 of 2022]

The Delhi High Court, referring to the decision of the Coordinate Bench in NHAI v. Lucknow Sitapur Expressway [2022/DHC/005696], ruled that the order of the tribunal to decline to implead a party in the proceedings did not amount to an "Interim Award," which is subject to direct challenges under Section 34 of the Act while the arbitral proceeding is ongoing.

The Court emphasized that only when an order touches upon the merits of the claims or conclusively decides on a dispute between the parties can it qualify as an interim award, reasoning that an application praying for impleadment of a third party could not dovetail into the final award. Further, the Court reassured that the petitioner would not be deprived of the remedy available under a Concession Agreement despite a particular party not being impleaded.

Whether evidence taken on record, behind the back of a party, provides a ground for the award based on the same to be set aside under Section 34?

24. M/s Geojit Financial Services Ltd v. Mrs. Nalani Rajkumar, [Judgment Dated March 21, 2024, in Original Side Appeal (CAD) 51 of 2021]

The Madras High Court, upholding the decision of the Single Bench, concluded that an arbitration award based on evidence taken on record after the completion of arguments and behind the back of a party would be liable to be set aside under Section 34 of the Arbitration and Conciliation Act. It reasoned that such a situation deprives a party of the valuable opportunity to dispute the document/ evidence in question. Rejecting the argument that the defect was curable due to an opportunity granted before the Appellate Tribunal, the Court reiterated that the defect was non-curable.

Whether the counterclaims can be enforced under Section 36 if the part favouring the judgment debtor is set aside?

25. M/s NHPC Ltd v. M/s Jaiprakash Associates Ltd [Judgment dated February 14, 2024, in OMP (ENF.) (COMM.) 184 of 2023]

The Delhi High Court allowed counterclaims to be enforced by the tribunal under Section 36 of the Act even if the portion of the award granting larger sums to the judgment-debtor is set aside. It reiterated that since partial setting aside of the award is permissible, the award regarding the counterclaims remains valid and enforceable even when the award for claims is set aside.

Further, the Court after scrutinizing the provisions of the Arbitration and Conciliation Act and the Code of Civil Procedure, 1908, ruled that as long as the part of an award which is proposed to be annulled is independent and stands unattached to the other part, the partial setting aside would be valid and justified.

About the author: Tariq Khan is the Registrar of the International Arbitration and Mediation Centre.