Indowind Energy Ltd. Vs. Wescare (I) Ltd. & Subuthi Finance Ltd.........................................

Kerala State Electricity Board and Anr. Vs. Kurien E. Kalathil and Anr...................................4

Magic Eye Developers Pvt Ltd v Green Edge Infra Pvt Ltd......................................................6

N.N. Global Mercantile (Pvt) Limited v Indo Unique Flame - In Re: Interplay between
arbitration agreements under the Arbitration and Conciliation Act 1996 and the Indian
Stamp Act 1899’.........................................................................................................................8

Gemini Bay v Integrated Sales.................................................................................................11

Messer Griesheim GmbH (now Air Liquide Deutschland GmbH) (“Appellant”) v. Goyal MG
Gases Pvt. Ltd. (“Respondent”)...............................................................................................12

Zostel Hospitality Private Ltd. v. Oravel Stays Private Ltd & Anr..........................................14

Amazon.com Investment Holdings LLC v Future Retail Limited & Ors................................16

PASL Wind Solutions Private Ltd. v. GE Power Conversion India Private Ltd......................18

Pravin Electricals Pvt. Ltd. v. Galaxy Infra and Engineering Pvt. Ltd....................................20

Srei Infrastructure Finance Ltd. vs. Tuff Drilling Private Ltd.................................................22

M/s Emkay Global Financial Services Ltd. v. Girdhar Sondhi................................................24

The Government of Haryana PWD Haryana (B and R) Branch (“State/Appellant”) v. M/s.

G.F. Toll Road Pvt. Ltd. & Ors................................................................................................25

Union of India v Hardy Exploration and Production (India) Inc. (HEPI)...............................27

Rajasthan Small Industries Corporation Limited v. M/s Ganesh Containers Movers Syndicate
..................................................................................................................................................28

Rashid Raza vs. Sadaf Akhtar,.................................................................................................30

BGS SGS SOMA JV v. NHPC Ltd..........................................................................................32

Ashwani Minda v. U shin.........................................................................................................33

Government of India v Vedanta Limited..................................................................................35

Indowind Energy Ltd. Vs. Wescare (I) Ltd. & Subuthi Finance Ltd.
J. Raveendran and J. KS Radhakrishnan

Facts:

 On 24th February 2006, an agreement of sale was made between two parties, W
(Respondent 1) and S (Respondent 2).
 The agreement mentioned S and its nominee as the "buyer" and as the "promoters of
I".
 Disputes occurred between W on one side, and S and I on the other, regarding the
agreement.
 W filed a petition under Section 11(6) of the Act, asking for a sole arbitrator to resolve
the disputes related to the agreement.
 I argued that it was not part of the agreement, did not approve or act on it, and that
there was no arbitration agreement between W and I.

Timeline:

 Section 11(6) petition was filed before Madras HC. Madras HC rejected I’s argument
on the following grounds:
o The agreement contemplated Indowind purchasing assets of W from S.
o I was promoter of S and both had common directors, including the director
who executed the Arbitration agreement.
 This decision is appealed before the SC vide an SLP.

Issue before the SC:

 Whether an arbitration clause found in a document (agreement) between two parties,

could be considered as a binding arbitration agreement on a person who is not a
signatory to the agreement?
whether arbitration clause contained in an arbitration agreement is binding on a
‘third party’ which has not signed the agreement in question.
 Whether a company could be said to be a party to a contract containing an arbitration
agreement, even though it did not sign the agreement containing an arbitration clause,
with reference to its subsequent conduct?

Relevant Law:
  Provisions relied on: Section 2(h) and 7 of the Arbitration & Conciliation Act
 Relied on Yogi Agarwal v Inspiration Clothes & U to state that an arbitration
agreement under section 7 must satisfy the following 2 conditions:
o It should be between the parties to the dispute
o It should relate to or be applicable to the dispute
 Party to an arbitration agreement is defined in section 2(h).

Arguments by parties:

 W argued that the agreement was entered to with S as the promoter of I. Moreover, I
was a nominee of S. This meant that I was to be bound by the arbitration clause.
 It was reasoned on the other side that S and I are independent companies. Existence of
common directors, and them signing agreements for one company cannot make the
other liable. Since the director only signed on behalf of S and not I, it shows that they
did not intend to make W party to the agreement.

Findings:

 Scope of examination under section 11(6) is restricted to the existence of an

arbitration agreement between the parties. [relied on SBP& Co v Patel Engineering
Ltd]. SC observed that the HC cannot decide whether an entity is “prima facie” party
to an arbitration agreement. It must pass a final decision on whether they are party.
Consequently, Madras HC’s decision was set aside,
 There was also no subsequent conduct by I to indicate that it accepted being party to
the arbitration agreement.
 It was observed that I was not party to the arbitration agreement, because it was not a
signatory, and neither did its subsequent conduct indicate their intention to be bound
by the arbitration agreement.

Analysis:

 This was in line with other legal precedents where ‘parties’ to an arbitration
agreement have been interpreted strictly.
 U.K has a wider scope by expanding the definition of ‘parties’ to include any
person claiming under or through a party to the agreement.
 Cases which upheld Indowind – Chloro Control and Ameet Lalchand v. Rishab
Enterprises
Kerala State Electricity Board and Anr. Vs. Kurien E. Kalathil and Anr
J. Bhanumathi and J. Gogoi

Facts:

 In 1981, the State Board entered into an agreement with a Contractor for the
construction of a dam in Kerala. After work began, the Kerala government revised the
minimum wages in 1983, leading the Contractor to claim additional labor costs and
compensation for extra work done. The dispute led to prolonged litigation before the
Kerala HC.
 With the consent of the counsel for both parties, and without existence of an
arbitration agreement or written instructions provided by the parties, the High Court
referred the parties to arbitration.
 An arbitral award was passed in favour of the Contractor, prompting the State Board
to appeal the High Court's decision before the Supreme Court.
 The Court, in exercise of its powers under Article 136 of the Constitution of India,
chose to reappreciate all facts and materials on record considering that public money
was involved and that the findings of the High Court would otherwise result in
excessive hardship to the State Board

Issues:

 Whether the HC was right in referring the parties to arbitration on the oral consent
given by the counsel without written instruction from the party?

Relevant Law:

 Arbitration is a creature of contract between the parties.

 Section 7 sets a jurisdictional precondition to arbitration, which is that the parties
should seek a reference to arbitration.
 Afcons Infrastructure Ltd. V Cherian Varkey Construction Co Pvt Ltd – even if
there is no pre-existing arbitration agreement, parties to a suit can choose arbitration
from list of ADR processes provided under section 89 CPC.
 For a dispute to be referred to arbitration under section 89 of the CPC, the same can
be done only when parties agree for settlement of dispute through arbitration.

Findings:
  Referring the parties to arbitration has serious consequences, taking them away from
accessing civil courts. [Under section 1 ACA, the arbitral tribunal shall not be bound
by CPC and evidence act]
 Courts can only refer parties to arbitration with written consent of parties through
joint memo/application. [Section 89 CPC]
 When there was no arbitration agreement between the parties, without a joint
application by parties, the HC erred in referring the parties to arbitration.

Analysis:

 Upholds party autonomy – a fundamental of arbitration law

 Court has given teeth to Section 7 of the Arbitration Act, requiring that an arbitration
agreement must be in writing in order to be valid
 This also substantiates requirements of Section 89 where parties are required to file
the arbitration agreement in court while seeking reference to arbitration
Magic Eye Developers Pvt Ltd v Green Edge Infra Pvt Ltd.
2020 – Delhi HC – J. Mukesh Gupta

2023 – SC – J. CT Ravikumar and J. MR Shah

Facts:

 The Plaintiff and Defendant No. 1 entered into a business relationship through a
Shareholders Agreement (SHA), Share Purchase Agreement (SPA), and Memorandum
of Understanding (MOU) for launching a real estate project.
 The Plaintiff advanced INR 8,00,00,000 to Defendant No. 1, of which INR
5,20,00,000 was given as a short-term loan to Mr. S.K. Hooda, the erstwhile
managing director of Defendant No. 1.
 Defendant No. 1 breached its contractual obligations, leading to delays in the project.
The Plaintiff filed a commercial suit in the Delhi High Court seeking recovery of the
loan, along with damages for breach of contract, loss of reputation, and loss of
business opportunity.
 The Plaintiff alleged that Defendant No. 1 was a sham company used by Mr. S.K.
Hooda and his family, along with other front companies (Defendants Nos. 2 and 3), to
launder and siphon money, and that Mr. S.K. Hooda was involved in multiple criminal
investigations.
 Defendant No. 1 filed an application under Section 8 of the Arbitration and
Conciliation Act, seeking to refer the disputes to arbitration as per the SHA, SPA, and
MOU, claiming that the agreements are interconnected and cover the subject matter of
the suit.
 Defendant Nos. 2 and 3 filed written statements and objected to being impleaded in
the commercial suit.

Issue:

 Whether Defendant Nos. 2 & 3 can be joined to arbitration despite being non-
signatories to the arbitration agreement(s)?
 Whether twin claims – of recovery of loan and damages – can be settled through
Arbitration?

Findings:
On Issue 1:

 Referred to chloro Controls India (P) Ltd. Vs. Severn Trent Water Purification Inc –
Group of companies’ doctrine
 a non-signatory or third party could be subjected to arbitration without their prior
consent, but in exceptional cases. In such cases, they must fulfill three criteria:
o Direct relationship to the signatory of the arbitration agreement
o Direct commonality of subject matter
o Agreement between the parties being a composite transaction
 The Court held that from the intent of the parties as noticed from the various
agreements, as also the averments in the plaint and the arguments, it was evident that
not only would Defendant No.1 but also the Defendant Nos. 2 and 3 were amenable to
arbitration. The Court accordingly referred all parties to arbitration.

On Issue 2:

The Plaintiff contended that in addition to recovery of the loan, the Plaintiff had also claimed
damages for which there was no arbitration agreement between the parties. The Plaintiff
relied on the decision in Sukanya Holdings Pvt. Ltd. vs. Jayesh H. Pandya and stated that
since the reliefs claimed under the suit could not be bifurcated, the parties could not be
referred to arbitration. The Court rejected the argument and held that the claim for damages
was based on the failure of Defendant No.1 to perform its contractual obligations under the
various agreements. This was an arbitrable dispute duly governed by arbitration clauses under
the various agreements. As such, the two reliefs were not required to be bifurcated and could
be decided by arbitration
N.N. Global Mercantile (Pvt) Limited v Indo Unique Flame - In Re: Interplay between
arbitration agreements under the Arbitration and Conciliation Act 1996 and the Indian
Stamp Act 1899’
7 judges bench settled the law

Judgement Held
SMS Tea Estates Pvt Unstamped Arbitration Agreement is enforceable
Ltd v Chandmari
Tea Co
Garware Wall Ropes Unstamped Arbitration Agreement is not enforceable
Limited v. Coastal
Marine
Constructions &
Engineering Limited
N.N. Global Unstamped Arbitration Agreement is enforceable
Mercantile Private
Limited v. Indo
Unique Flame Ltd.
And Others [NN
Global 1]
NN Global 2 (5 Unstamped Arbitration Agreement is not enforceable
judge)
NN Global 3 (7 Unstamped Arbitration Agreement is enforceable
Judge)

Issue:

1. Whether unstamped agreements containing arbitration agreements make the

arbitration agreements unenforceable
2. Whether unstamped arbitration agreements are admissible as evidence in court?

Relevant law:

 Difference between enforceability and inadmissibility-

 o While an agreement that is void is unenforceable, an agreement that cannot be
produced as evidence, is inadmissible.
 Section 35 of Stamp Act – inadequately stamped or unstamped instrument is
inadmissible. [not unenforceable] This can be rectified by paying fee.

Findings

 Defect in arbitration agreement does not render it void ab initio unless the defect is so
fundamental that it negates the intention of parties
 Since non-payment of stamp duty is a curable defect, it cannot render unstamped
arbitration agreement void ab initio.
 Also applied the doctrine of severability – Validity of arbitration agreement is
independent of the validity of the substantive contract.
 Principle of Kompetenz-Kompetenz
o Section 16 allows an arbitral tribunal to rule on its own jurisdiction including
on issues of the validity of the arbitration agreement
o Under Section 34 of the Arbitration Act, courts may review the decision of an
arbitral tribunal on jurisdiction only at the stage of challenge of the final
award. Hence, as per the principle of kompetenz-kompetenz as provided in the
Arbitration Act, the arbitral tribunal is vested with the jurisdiction to determine
all preliminary issues affecting its jurisdiction, including the issue of
sufficiency of stamping
 The principle of negative kompetenz-kompetenz prohibits courts from interfering in
disputes where parties have mutually consented to arbitration.
o Section 5 arb act – enshrines principles of minimum judicial intervention and
party autonomy
 These principles lead to the answer that tribunals can decide the sufficiency of
stamping at first instance, and courts need not interfere
 Additionally, it was observed that Arbitration Act is the special law, and will have
primacy over stamp act and contract act
 The objects of the statutes are different as well
o Arbitration Act – dispute resolution with minimal judicial intervention
o Stamp Act – revenue generation for state

Finally:
 Unstamped arb act is enforceable, but not admissible
 It is not void ab initio/void due to lack of stamping
 Inadequate or unstamped instruments are curable defects
Gemini Bay v Integrated Sales
Messer Griesheim GmbH (now Air Liquide Deutschland GmbH) (“Appellant”) v. Goyal
MG Gases Pvt. Ltd. (“Respondent”)
Facts:

 Appellant had been awarded a money decree from a foreign court. The amount in the
money decree was 5.8 Million Dollars.
 Since the amount exceeded 20 lakh (as of 2006), it fell within the pecuniary
jurisdiction of the Delhi High Court. The appellant filed a petition for execution of the
decree under section 44A CPC there
 Respondent objected, stating that, the Delhi High Court lacked jurisdiction. It was the
Respondent’s case that Section 44A (1) of the CPC refers to “District Court”;
therefore, only the district court(s) in Delhi would have jurisdiction over the execution
petition and not the Delhi High Court.

Issues:

 Whether the Delhi HC can exercise jurisdiction

Findings:

 District court, under the CPC, refers to the local limits of the jurisdiction of a
principal civil Court of original jurisdiction
 This includes the local limits of the ordinary original civil jurisdiction of a HC
 Usually, principal civil courts of original jurisdiction are District courts, but in some
places, it is also HC – and when, in such cases, there can be possibility of split
jurisdiction, the HC in its ordinary original civil jurisdiction is competent to exercise
power for execution of decree, including money decree of the foreign court of a
reciprocating jurisdiction
 Rationale: It would be impossible to allow any other district court to execute foreign
decree when such court is bound by certain pecuniary jurisdiction limits. High court,
which is also in the district and has ordinary original civil jurisdiction becomes the
appropriate forum- it will simply be construed as a Court holding ordinary
original civil jurisdiction in terms of its pecuniary limits

Analysis
 This judgment settles the law on the exercise of original jurisdiction of a High Court
for execution of a foreign decree
 is in line with the findings of the High Court in a catena of cases. The Delhi High
Court has itself confirmed on multiple occasions that it would be considered the
principal civil court of original jurisdiction with respect to any suit whose value falls
within its pecuniary jurisdiction, and not the district courts in Delhi
 Further, statutes such as the Commercial Courts Act 2015 and Arbitration and
Conciliation Act 1996 also carve out specific provisions for High Courts having
original jurisdiction
 With this judgment, the Supreme Court has also prevented a situation where foreign
awards are executed by High Courts having original civil jurisdiction, while foreign
decrees are not.
Zostel Hospitality Private Ltd. v. Oravel Stays Private Ltd & Anr
Facts:

 Zostel + Orios (its investor) entered into a contract with Oravel Stays (Oyo) whrein
Zostel agreed to transfer its hotel business to Oyo + Orios, in return for which, Oyo
was to transfer Zostel “identified assets” including 7% of OYO’s shareholding
 A term sheet was executed for this, stating that upon closing, Zostel’s shareholder
would be entitled to acquire shares in OYO and that upon completion of post-closing,
the Zostel founders would be entitled to a 1-Million-dollar pay-out
 Zostel started working on its obligations, and when it was time to finalize definitive
agreements, oyo started delaying
 Due to OYO’s default, Zostel initiated arbitration proceedings
 Arbitral award noted that Zostel was entitled to specific performance of OYO’s
obligations under the Term Sheet and execution of definitive agreements
 Consequently, Given that OYO was in the process of filing for an IPO, Zostel filed a
petition under Section 9 of the Act seeking a restraint on the IPO, to prevent problems
with execution of the arbitral award

DHC:

 primarily relied on two rulings:

o Dirk India Pvt Ltd v. Maharashtra State Power Generation Co. Ltd. In
relation to scope of interim protection under section 9 at post-award stage
o Mayawanti v Kaushalya Devi in relation to the requirement of consensus ad
idem as a necessary condition for specific performance of the contract.
 Scope of section 9 at post award stage
o if the petition is filed at the post-award stage, it only serves to protect the
“fruits” of the arbitral award.
o analysed what “fruits” can be derived from the Arbitral Award in question and
observed that the Arbitral Award provided Zostel with a mere entitlement to
specific performance of OYO’s obligations under the Term Sheet
o the Arbitral Award did not direct OYO to immediately hand over the
properties it was to transfer to Zostel on the closing of the Term Sheet, but
merely directed Zostel to take steps towards making OYO fulfil its obligations
as per the Term Sheet.
 Consensus ad-idem
o if the terms of an agreement are uncertain, and the parties are not at ad idem,
the contract does not exist in the first place, and consequently, there can be no
scope for claiming the remedy of specific performance.
o In the present case, the terms of definitive agreements were not agreed upon –
clearly, there was no consensus ad idem
Amazon.com Investment Holdings LLC v Future Retail Limited & Ors
Facts:

 Amazon initiated arbitration against Future Coupons Pvt Ltd and Future Retails Ltd
under SIAC Arbitration rules pursuant to the FCPL SHA. The seat was New Delhi.
 An emergency award was rendered on October 25, 2020. Since FRL and FCPL did
not comply with the emergency award, Amazon initiated proceedings in the Delhi
High Court to enforce the emergency award.
 A Single Judge of the Delhi High Court recognized the emergency award and passed
orders to enforce the emergency award. However, the Division Bench of the Delhi
High Court granted stay on the operation of the order
 This was appealed to the SC

Issues:

 Whether an emergency arbitrator’s award is contemplated under the A&C Act, and
whether an emergency arbitrator’s award is an order under Section 17 of the A&C
Act.
 Whether an appeal against an order enforcing an emergency arbitrator’s order under
Section 17(2) is maintainable under Order 43, Rule 1(r) of the Civil Procedure Code

Findings on issue 1:

 the emergency award is not a nullity, and is enforceable under Section 17 of the A&C
Act
 Parties have autonomy to choose emergency arbitration
o By virtue of Section 2(6), Section 2(8), and Section 19(2) of the A&C Act,
parties can (a) agree to authorize an arbitral institution to determine issues that
arise between the parties, (b) agree to include any arbitration rules in their
arbitration agreement, and (c) agree on the procedure to be followed by an
arbitral tribunal in conducting its proceedings.
o Through this, parties can choose for emergency arbitration
 Arbitral tribunal includes emergency arbitrator
o the Court held that when Section 17(1) is concerned, the “arbitral tribunal”
would, when institutional rules apply, include an Emergency Arbitrator, the
 context of Section 17 “otherwise requiring” – the context being interim
measures that are ordered by arbitrators
 The 246th Law Commission Report had suggested that the definition of ‘arbitral
tribunal’ be amended to include an emergency arbitrator.
 Since a remedy under Section 17 is available to a party ‘during the arbitral
proceedings’, the powers of a tribunal in granting such a remedy would include
powers exercisable by an emergency arbitrator soon after arbitral proceedings
commence.
 The Supreme Court further noted that the provision of an emergency award furthers
multiple objectives, including, decongesting the court system and giving parties
urgent interim relief in cases which deserve such relief.

Findings on issue 2:

 Section 37 is a complete code so far as appeals from orders and awards made under
the A&C Act are concerned -no need to look at CPC
 The Supreme Court pointed out that Section 37(2)(b) provides the scope of appeal
against, inter alia, an order granting (or refusing to grant) interim measures under
Section 17(1). There is no scope of appeal, however, against a court order under
Section 17(2) enforcing (or refusing to enforce) an interim measure.
 an appeal under Section 37 of the A&C Act cannot be maintainable against an order
of enforcement of an emergency arbitrator’s order made under Section 17(2).

Analysis

 SC recognized the validity of an emergency award passed in an India-seated

arbitration under Section 17
 The judgment provides significant boost to emergency arbitration provisions in
institutional rules. Parties are expected to readily resort to institutional arbitration to
avail benefits of emergency arbitration.
PASL Wind Solutions Private Ltd. v. GE Power Conversion India Private Ltd.

Facts:

 A settlement agreement was executed between the Indian parties which provided for
arbitration in accordance with the International Chamber of Commerce (ICC)
Arbitration Rules with Zurich as the seat of arbitration.
 Dispute arose between the parties. Approached arbitral institution. e Respondent
challenged the jurisdiction of the tribunal on the ground that two Indian parties cannot
choose a foreign seat of arbitration. Appellant opposed the Respondent’s objection on
the ground that Indian law did not bar Indian parties from electing a foreign seat of
arbitration
 Award was passed in favour of respondent. Respondent approached Guj HC for
enforcement of award
 Here, Appellant argued that choice of foreign seat by two Indian parties is against
public policy of India (lol)

Issues:

 Whether it is international arbitration

 Whether two Indian Parties can choose foreign seated arbitration

Findings on issue 1:

 the context of the term ‘International Commercial Arbitration’ as used in Part I, i.e.,
section 2(1)(f)) of the Arbitration Act is different from Part II i.e., section 44. Under
section 2(1)(f), the definition of the expression ‘International Commercial Arbitration’
is party-centric wherein at least one of the parties to the arbitration agreement should
be a person who is a national of or habitually resident in any country other than India.
However, the term ‘International Commercial Arbitration’ under section 44 signifies a
place-centric approach. Thus, if an arbitration is convened between any two parties in
a territory outside India, the New York Convention would apply, and the arbitration
will get classified as an ‘International Commercial Arbitration

Findings on issue 2
  freedom of contract had to be balanced with a clear and undeniable harm to the
public, and that there was no public harm in permitting two Indian parties from
getting their disputes arbitrated at a neutral forum outside India.
 nothing stands in the way of party autonomy in designating a seat of arbitration
outside India even when both parties happen to be Indian nationals

Analysis

 it accords recognition to the principle of party autonomy

 puts to rest several conflicting decisions of High Courts as well as the Supreme Court
on the issue
o Sasan Power Ltd v North American Coal Corpn (MP HC) relying on Atlas
case of SC - Indian parties are free to choose a foreign seat of arbitration.
o Addhar Mercantile Private Ltd v Shree Jagdamba Agrico Exports Pvt Ltd
(Bom HC) relying on TMD Infrastructures case of SC - two Indian parties
could not agree on a foreign seat of arbitration
o The Supreme Court, in the present case, held that reliance could not be placed
on TDM Infrastructure because the judgment was rendered under section 11 of
the Arbitration Act and did not have binding force. Additionally, the Supreme
Court relied upon Atlas, affirming that Atlas is a binding precedent.
Pravin Electricals Pvt. Ltd. v. Galaxy Infra and Engineering Pvt. Ltd.
Sections 8 and 11 of the Act are complementary in nature. The former is paramount to the
initiation of arbitration proceedings. Section 11 plays an equally important role as it
facilitates the parties’ appointment of arbitrators.

The Law Commission of India, in its 246th Report, reasoned that both provisions existed to
prevent unwilling parties from trying to derail arbitral proceedings by either commencing
judicial proceedings or by refusing to appoint an arbitrator. The standard in both, Section 8
and 11, is that of existence of arbitration agreement.

Anomaly: parties have the right to appeal orders that have refused to refer them to arbitration
under Section 8. However, there is no provision that entitles a party to appeal against an order
refusing the appointment of an arbitrator under Section 11 of the Act. If both provisions have
the same purpose and both have the same test, why is one appealable and the other not? when
two provisions share a common purpose and prescribe identical roles to the relevant judicial
authority in their application, allowing parties to appeal against orders under only one
provision is anomalous and, in a sense, arbitrary.

In this case, the SC recognized this anomaly and recommended that Parliament look into the
two provisions concerned and consider amending Section 37 to include appeals against orders
made under Section 11.

Facts:

 The appeal before the Supreme Court arose from a Delhi High Court (“High Court”)
order on appointment of an Arbitrator under Section 11(6) of the Act to adjudicate
disputes between the parties regarding payment obligations. The High Court, relying
on the documentation placed on record, concluded that an arbitration agreement
existed and referred the parties to arbitration for adjudication of the dispute. The High
Court appointed a Sole Arbitrator.
 This appointment was appealed via an SLP (As cannot appeal under section 37
Arbitration Act)
 Question before the SC: Whether the arbitration agreement was even valid?

Findings:
 the issue of existence of an arbitration agreement would involve the examination of
documentary evidence and witness testimony. Since the proceedings under Section 11
of the Act are summary in nature, questions on the existence of an arbitration
agreement cannot be examined solely from a factual perspective.
 The Supreme Court set aside the order of the High Court to the extent it found the
existence of an arbitration agreement between the parties. However, the Supreme
Court upheld the appointment of the arbitrator by the High Court. The Supreme Court
left the question of existence of the arbitration agreement to be determined by the
arbitrator as a preliminary issue. Further, it directed that the arbitrator would go ahead
with the merits of the case only if it was found that an arbitration agreement exists
between the parties.
 Pro-arbitration approach
Srei Infrastructure Finance Ltd. vs. Tuff Drilling Private Ltd
Facts:

 Upon initiation of arbitration proceedings, specifically on first preliminary meeting

with the arbitrator, it was decided that Tuff was to file the statement of claims on
November 19, 2011.
 Tuff failed to submit it within time. The date was extended till December 9.
 The Claimant failed again in making its submission. On December 12, 2011, the
tribunal terminated the proceedings in view of Section 25(a)
 On January 20, 2012, the Claimant filed an application stating reasons for delay in
detail, praying for condonation of delay in filing the SOC and recall of the order of
termination. Tribunal rejected the Claimant’s application on the ground that it had
become functus officio and consequently could not recall its order of termination.
 Aggrieved by the Tribunal’s order, the Claimant filed a revision application under Art.
227 of the Constitution before the Calcutta High Court. The High Court held that
tribunal has power to recall its own order. The High Court set aside the order of the
arbitral tribunal and remitted the matter back to the arbitral tribunal to decide the
Claimant’s application on merits.
 Claimant, aggrieved by this order of Calcutta HC, has approached the SC

Issue:

 Whether arbitral tribunal, which has terminated the proceeding under Section 25(a)
due to non-filing of claim by claimant, has jurisdiction to consider the application for
recall of the order terminating the proceedings on sufficient cause being shown by the
claimant?
 Whether HC, under article 227, has jurisdiction to decide on orders passed by the
arbitral tribunal under Section 25(a) terminating the proceeding?

Findings on Issue 1:

 upheld the decision of the Calcutta High Court

 Under section 25, the words “where without a sufficient cause, the claimant fails to
communicate their statement of claims” imposes a duty on the tribunal to ask the
claimant to satisfy the tribunal that there was no sufficient cause
  the Scheme of Section 25 of the Act clearly indicates that on sufficient cause being
shown, the statement of claim can be permitted to be filed even after the time as fixed
by Section 23(1) has expired.

Findings on Issue 2:

 Only remedy is a writ thus, HC has jurisdiction under 227

M/s Emkay Global Financial Services Ltd. v. Girdhar Sondhi
The Government of Haryana PWD Haryana (B and R) Branch (“State/Appellant”) v.
M/s. G.F. Toll Road Pvt. Ltd. & Ors
Facts:

 M/s. G. F. Toll Road Pvt. Ltd. was awarded a works contract. The dispute resolution
clause therein inter alia provided that “There shall be a Board of three arbitrators of
whom each party shall select one and the third arbitrator shall be appointed in
accordance with the Rules of Arbitration of the Indian Council of Arbitration”.
 Respondent appointed a retired Engineer-in-Chief as their nominee arbitrator. The
State also appointed a retired Engineer-in-Chief as its nominee arbitrator.
 The Indian Council of arbitration raised an objection to the arbitrator appointed by the
State on the grounds that he was a retired employee of the State and that therefore
there may be justifiable doubts with respect to his integrity and impartiality.
 The State refuted this by stating that there could not be any justifiable doubts since
their nominee arbitrator had retired over 10 years ago.
 The State requested a period of 30 days to choose a substitute arbitrator as its
nominee. However, the ICA went ahead and appointed the substitute arbitrator as well
as the presiding arbitrator.
 When the state approached the district and high courts, their challenge was dismissed,
citing that the State could raise this issue under Section 16 of the Act.
 This was thus, appealed to the SC

Issues:

 Was ICA correct in appointing an arbitrator and presiding arbitrator without giving
reasonable opportunity to appoint a substitute?
 Can former employee be appointed as arbitrator?

Findings:

 Procedure agreed upon by the parties for the appointment of the original arbitrator is
equally applicable to the appointment of a substitute arbitrator. Since in the present
case, the Agreement expressly provided that each party shall nominate one arbitrator,
and the presiding arbitrator would be appointed under the ICA rules, the Court found
that ICA’s appointment of a substitute arbitrator in place of the one appointed by the
 State was wholly unjustified and contrary to ICA Rules itself, especially since the
State had requested 30 days to appoint a substitute.
 The 1996 Act does not disqualify a former employee from acting as an arbitrator,
provided that there are no justifiable doubts as to his independence and impartiality.
The fact that the arbitrator was in the employment of the State over 10 years ago,
would make the allegation of bias untenable. The Court noted that the ICA had only
made a bald assertion that the State’s nominee arbitrator would not be independent
and impartial and that mere allegations of bias are not a ground for removal of an
arbitrator.
 In entry 1 of the 5th schedule to the Act [which contains grounds to determine whether
circumstances exist which could give rise to justifiable doubts as to the independence
or impartiality of an arbitrator], it reads “Arbitrator is an employee, consultant or has
any other past business”
 Use of ‘is an,’ in present tense, indicates that person is only disqualified if they are
currently an employee. It does not extend to past employees.
 Moreover, the words "other" used in “any other” indicates a relationship other than an
employee, consultant or an advisor and therefore held that the word “other” cannot be
used to widen the scope of the entry to include past/ former employees.
Union of India v Hardy Exploration and Production (India) Inc. (HEPI)
Facts:

 HEPI and UOI entered into a production sharing contract. Dispute arose and
subsequently matter was referred to arbitration.
 In the arbitration agreement, it was mentioned as follows:
o This contract shall be governed and interpreted in accordance with the laws
of India.
o Arbitration proceedings shall be conducted in accordance with the
UNCITRAL Model Law on International Commercial Arbitration of 1985
o The venue of conciliation or arbitration proceedings pursuant to this Article
unless the parties otherwise agree, shall be Kuala Lumpur
 The seat of arbitration was not mentioned.
 The award was made and signed in Singapore.
 UOI challenged this award under section 34 of the act [which deals with setting aside
of the domestic awards]. HELP challenged this application stating that the section 34
challenge was not maintainable as this was a foreign award.
 Single and divisions benches of Delhi HC agreed w HEPI. UOI appealed to SC.

Findings:

 the arbitration clause has to be read in a holistic manner so as to determine the

jurisdiction of the Court
 The Supreme Court held that the parties had not chosen the seat of arbitration and the
arbitral tribunal had also not determined the seat of arbitration. It further held that the
choice of Kuala Lumpur as the venue of arbitration did not imply that Kuala Lumpur
had become the seat of arbitration. According to the Supreme Court, the venue could
not by itself assume the status of the seat; instead, a venue could become the seat only
if “something else is added to it as a concomitant”. The Supreme Court therefore held
that Indian courts had jurisdiction to hear a challenge to the award.
 Indian arbitration act + UNCITRAL Model law - The parties are free to agree on the
place of arbitration. Failing such agreement, the place of arbitration shall be
determined by the arbitral tribunal having regard to the circumstances of the case,
including the convenience of the parties
Rajasthan Small Industries Corporation Limited v. M/s Ganesh Containers Movers
Syndicate
Facts:

 RSICL and Ganesh Containers Movers Syndicate entered into a contract in 2000 for
cargo transportation and handling, which included an arbitration clause.
 the arbitration was to be referred to a sole arbitrator which could either be Managing
Director of RSICL himself or his nominee.
 One Mr. I. C. Shrivastava, IAS (Retd.) was appointed as the sole arbitrator in
February 2005. However, due to slow progress of the arbitration, Mr. Shrivastava was
removed in 2009 and Chairman-cum-Managing Director (“CMD”) of RSICL was
subsequently appointed as arbitrator by consent of both parties (Initially the contractor
protested but subsequently consented).
 The arbitration process faced challenges, including lost records and the need to
reconstruct chronological events, leading to delays and no award being passed by
August 2011.
 In 2013, the Contractor sent legal notices claiming settlement amounts, which RSICL
denied. In 2015, the Contractor filed for appointment of an independent arbitrator in
the High Court.
 While the High Court proceedings were ongoing, the existing arbitral tribunal passed
an award in January 2016. In April 2016, the High Court appointed a new arbitrator,
an order which RSICL then challenged in the Supreme Court.

Findings:

 Supreme Court held that when parties consciously chose to refer their disputes to
Managing Director himself or his nominee and having participated in the arbitral
proceedings for some time, the Contractor could not turn around and seek for
appointment of an independent arbitrator.
 Chairman cum MD was not ineligible to act as the arbitrator. In 2015, the Arbitration
Act was amended and among other things, Section 12(5) and Seventh Schedule was
inserted. Section 12(5) read with Seventh Schedule prohibits employees of one of the
parties from being an arbitrator. The Contractor argued that by virtue of Section 12(5),
CMD had become ineligible to act as arbitrator.
 However, in the present case the arbitration proceedings were commenced in 2009.
Application for appointment of the arbitrator was also filed prior to 2015. Therefore,
the Court held that the amended Arbitration Act would not be applicable. It opined
that amended Arbitration Act cannot have retrospective operation unless the parties
agreed.
 The Contractor argued that the arbitrator failed to conclude the proceedings even after
four years and therefore, appointment of substitute arbitrator was justified. In this
case, It was apparent that arbitration papers were incomplete and accordingly,
chronological events needed to be ascertained and records had to be reconstructed.
Owing to this, the Award could not be passed till 2013. The Contractor also never
filed any application to expedite the proceedings nor did it file an application under
Section 14 of the Arbitration Act for terminating the mandate of the arbitrator because
of failing to act without undue delay.
 Supreme Court held that mere neglect of an arbitrator to act or delay in passing the
award by itself cannot be the ground to appoint another arbitrator disregarding the
terms of arbitration agreement.
 Thus, even appointment of substitute arbitrator has to be done in accordance with the
original agreement. In view of the above, the Supreme Court held that High Court was
not right in appointing an independent arbitrator without giving due regard to the
terms of the Contract.
 The arbitrator hastily passed the Award after the proceedings in High Court were
commenced. Hence, in order to do complete justice, the Supreme Court set aside the
Award in exercise of its powers under Article 142 of the Constitution.
Rashid Raza vs. Sadaf Akhtar,
Facts:

 Partnership deed between Appellant and Respondent. An FIR was lodged by the
Respondent alleging siphoning of funds and other business improprieties by the
Appellant. On the other hand, the Appellant filed an arbitration petition
 Before the High Court, the Respondent argued that the matter pertains to a serious
case of fraud which is not fit to be decided in arbitration.
 Without commenting on the merits of the dispute, and relying on the principles laid
down by the Supreme Court in Ayyaswamy, the High Court held that the dispute
included serious allegations of fraud of a complicated nature which are not fit to be
decided in arbitration proceedings.
 Aggrieved by the High Court’s ruling, the Appellant approached the Supreme Court
by way of a special leave petition.

Findings:

 Relying on Ayyasamy, a simple allegation of fraud may not be a ground to nullify the
effect of an arbitration agreement. However, when serious allegations of fraud are
involved, the Supreme Court held that courts can dismiss an application to refer a
dispute to arbitration under Section 8 of the Act.
 Serious allegations of fraud would involve:
o Allegations which would make a virtual case of criminal offence;
o Allegations of fraud so complicated that it becomes essential that such
complex issues can be decided only by civil court on the appreciation of the
voluminous evidence that needs to be produced;
o Serious allegations of forgery/fabrication of documents in support of the plea
of fraud;
o Where fraud is alleged against the arbitration provision itself or is of such a
nature that permeates the entire contract, including the agreement to arbitrate
 In Ayyasamy, the Supreme Court had further held that in the scenario where there are
simple allegations of fraud touching upon the internal affairs of the parties inter
se without any implication in the public domain, the arbitration clause need not be
avoided and the parties can be relegated to arbitration.
 Applying the aforementioned tests to the facts of the present case, the Supreme Court
held that:
o There is no allegation of fraud which vitiates the Partnership Deed as a whole,
including the arbitration clause:
o The allegations pertain to the affairs of partnership and siphoning of funds,
which do not pertain to matters in the public domain.
 The Supreme Court held that the allegations are arbitrable as they fall within the
ambit of ‘simple allegations’. It set aside the judgment of the High Court and
proceeded to appoint an arbitrator under Section 11 of the Act to resolve the disputes
between the parties.
BGS SGS SOMA JV v. NHPC Ltd.
Ashwani Minda v. U shin
Facts:

 A dispute arose out of a joint venture agreement between an Indian party and a
Japanese party. The dispute resolution clause under the joint venture agreement
provided:

 The Indian party commenced arbitration proceedings seated in Japan and applied for
interim relief through an emergency arbitration under the rules of the Japan
Commercial Arbitration Association (JCAA). However, the emergency arbitrator
declined to grant the relief. Thereafter, the Indian party approached the Delhi High
Court praying for the same interim relief.

Issue:

 Can Parties claim relief in India in foreign seated arbitrations?

Findings:

 BALCO Judgement - non-availability of interim reliefs in India, in aid of foreign

seated arbitration
 Post this judgement, proviso to section 2(2) of the Act was inserted by the Arbitration
and Conciliation (Amendment) Act, 2015 (the Amendment Act), to cover the gap in
law

 Thus, parties can approach Indian courts for interim relief under section 9 even if
foreign seated arbitrations, subject to an agreement to the contrary
 In this case, the dispute was to be arbitrated upon by JCAA - JCAA Rules provide a
detailed mechanism for seeking interim and emergency measures and was known to
the parties when entering into the Agreement.
 This shows that parties had entered into an agreement to the contrary, and chosen the
JCAA rules to govern their arbitration
Analysis

 Even though the overall approach of the court is welcome, the finding that parties had
impliedly excluded ACA 1996, s 9. raises certain questions. The judgment states that
the arbitration clause evinces an intention to exclude ‘ACA 1996, Pt 1’.
 In this case, the arbitration clause provided for a Japan seated arbitration under the
JCAA Rules in the event the arbitration was initiated by the Indian party. The
selection of a foreign seat itself cannot imply an exclusion of section 9. If that were
the case, then it would conflict with the proviso to ACA 1996, s 2(2), which was
inserted by the Amendment Act for the very purpose of making the ACA 1996, s 9
applicable to foreign seated arbitrations. Additionally, merely choosing of institutional
rules for administering the arbitration also per se on its own cannot imply that the
parties intended to exclude ACA 1996, s 9.
Government of India v Vedanta Limited
Facts:

Issue: What is the period of limitations for enforcement of a foreign award?

Findings:

Supreme Court noted that Section 43 of the Limitation Act, 1963 states that it shall apply to
arbitrations, as it applied to proceedings in court. It then noted that Limitation Act does not
contain any specific provision for enforcement of foreign award. It then took into account
Article 136 (which provides a limitation period of 12 years for execution of a decree) and
Article 137 (which is a residuary provision providing a limitation period of 3 years). The
Supreme Court relied on its judgment in Bank of Baroda v. Kotak Mahindra Bank where it
had observed that Article 136 of the Limitation Act is not applicable to foreign decrees. The
Supreme Court then noted that a legal fiction created in law is only for a specific purpose that
it is created. Accordingly, under Section 49 of the Arbitration Act,11 a foreign award is
deemed to be a decree of ‘that court’ for the limited purpose of enforcement and otherwise it
is not a decree of an Indian court. Accordingly, for the purposes of the Limitation Act, the
application for enforcement of the foreign award would be governed by the residuary
provision i.e. Article 137. Hence, the limitation period is three years from when the right to
apply accrue

Analysis:
The Court has finally put to rest the ambiguity in computing the period of limitation for filing
enforcement proceedings, which was long pending to be resolved because of conflicting
decisions of High Courts. Importantly, the decision would not prejudice those who did not act
within the three-year period as the Supreme Court has granted liberty to seek condonation of
delay in filing application for the enforcement of the award and has expounded that the
ambiguity on the issue of limitation period is sufficient ground to condone delays.