1. TDM Infrastructure Pvt. Ltd vs. UE Development Pvt. Ltd.

[2008 (2) ARBLR439

(SC)]
Facts
The two parties were companies registered under India laws. The directors and shareholders of
TDM were residents of Malaysia. The arbitration clause provided for New Delhi as the venue and
the law was A&C Act 1940.
TDM filed an application under S. 11 for appointment of an arbitrator arguing that the central
management of the company was in Malaysia, hence, as per S. 2(1)(f)(iii), it would be an ICA and
the SC had jurisdiction.
UED argued that both companies were Indian so SC had no jurisdiction. The relevant HC would
have.
Issue
Whether the arbitration is an ICA?
Judgment
A company’s nationality is decided based on the laws of the country where it is incorporated.
When both companies are Indian, then arb between them is domestic regardless of central
management or seat being outside India.
S. 2(1)(f)(iii) is applicable only when S. 2(1)(f)(ii) is not.
S. 28 gives parties the power to choose laws of another country in an ICA. But, laws of India are
compulsorily applicable to Indian parties, hence, they cannot derogate from India law. Allowing
them to derogate would be against public policy.

2. Sasan Power Limited v. North American Coal Corporation India Private Limited
(CIVIL APPEAL NO. 8299 OF 2016)
Facts
One party was Indian (appellant) and the other American. They entered into an agreement for
mine and development operations. Governing law was chosen as UK, and place as London. The
American company created a fully owned Indian subsidiary (the respondent) and an assignment
agreement was entered into between the three parties whereby the American company sought to
assign its rights and liabilities to the respondent. Subsequently, disputes arose between the parties
and arbitration was sought to be initiated.
Sasan argued that Indian parties are not permitted to derogate from India law.
Issue
Whether two Indian parties can choose a foreign seat?
Judgment
The Court stated that though the American Co. had assigned its rights to the respondent, it was not
fully discharged of its liabilities since the assignment agreement allowed Sasan to enforce
obligations against it. In the arbitration, there will be adjudication on rights and obligations of the
American Co. as well. Hence, it is a dispute between three parties, with a foreign element –
namely the rights of the American Co. Hence, the parties can choose their own governing law
since it is an ICA. S. 45 application is granted.
Hence, the question whether two Indian parties can choose a foreign seat does not arise.

APPLICABILITY OF THE AMENDMENT ACT

Section 26 – Amendment Act not to apply to arbitral proceedings commenced before the
commencement of Act, unless parties otherwise agree. Only to apply to arbitral proceedings
commenced on or after the date of commencement of the Act.

A plain reading of Section 26 suggests that while it ‘saves’ all arbitrations commenced before
October 23, 2015, the applicability of the Amending Act to fresh applications/pending court
proceedings in relation to arbitrations commenced before October 23, 2015 is not clear.

3. Tufan Chatterjee v. Rangan Dhar (AIR 2016 Cal 213)

Facts
The two parties had entered into a contract and once disputes arose, the appellant filed a S. 9
application for injunction against transferring assets which was granted by the District judge. After
this order, the arbitral tribunal was constituted. After the Amendment Act came into force, the
respondent sought dismissal of the S. 9 application since the amended S. 9(3) does not permit
courts to grant interim measures after constitution of the tribunal. This argument was accepted.
Appellant argued that according to S. 26, Amendment Act would not be applicable to proceedings
commenced before it. Here, S. 9 application was filed much before the Amendment Act.
Respondent argued that the expression “arbitral proceedings” in S. 26 would not include
proceedings before a court. So the Amendment Act would apply to all court proceedings. Hence,
the S. 9 application is a court proceeding which was filed before the arbitration commenced.
Therefore, Court cannot grant it.
Issue
Whether the Amendment Act applies to pending and fresh suits filed after the Amendment Act
came into force in relation to arbitrations that commenced before the Amendment Act?
Judgment
Accepted arguments of respondent. Amendment Act will apply to all court proceedings in relation
to arbitrations commenced before the Amendment Act. Hence, Court barred from giving interim
relief under S. 9

4. Mahanagar Telephone Nigam Ltd. Vs SRV Telecom Pvt. Ltd. (MANU/MH/0622/2016)

Court proceedings are not covered in the term 'arbitral proceedings' under Section 26; therefore,
all arbitration-related court proceedings which were pending when the act came into force will be
governed by the new act. Read with Commercial Courts Act

5. Orissa Concrete and Allied Industries Ltd. Vs Union of India (MANU/DE/1330/2016)

Facts
After disputes arose between the parties, Petitioner sent notice to appoint arbitrator on 5 Feb,
2016, and had filed for interim measures on 6th October, 2015. On no response after thirty days,
Petitioner filed a petition under S. 11 for appointment of arbitrator on 18th March, 2016.
Judgment
The Court applied the provisions of the Amendment Act, and stated that the respondent cannot be
allowed to appoint its employee as an arbitrator (that was provided in the agreement) since after
the amendment of S. 12, the arbitral tribunal cannot comprise a retired officer etc.
By not following the procedure for appointment laid down in the agreement, the respondent has
waived its right to have an arbitrator of their choice. Hence, petitioner is entitled to the
appointment of an independent and impartial arbitrator.
ARBITRABILITY

6. Union of India v Raunaq Constructions (2009) 17 SCC 323 – p. 31

Facts
Contractor demanded arbitration as per agreement on five matters. Appellants agreed to include
only one claim for arbitration. Contractor filed application under S. 20 for appointment of
arbitrator with mandate of all five matters. District judge referred three matters since other two
had been excluded from the purview of arbitration due to the general conditions of contract
On appeal, the HC held that DJ should have referred all five claims. It held that at the stage of
reference, the civil court only has jurisdiction over a very limited issue of deciding whether there
is an arbitration agreement or not and whether the difference arose out of the agreement. After
that, the court need not look into other questions such as deciding arbitrability of the matters.
Issue
Whether court’s can go into question of arbitrability?
Judgment
Appeal allowed. Under S. 20, Courts can examine whether the difference sought to be referred is
arbitrable under the terms of the agreement or not.

7. Booz Allen and Hamilton v SBI Home Finance, (2011) 5 SCC 532
Issue
Whether mortgage suits are arbitrable?
Judgment
Nature and scope of issues arising in a section 11 application for appointment of arbitrators is far
narrower than of those arising in a section 8 application. In a section 11 application, the issue of
'arbitrability' is left for decision by the tribunal, whereas the Court must decide the same in a
section 8 application.
Arbitrability has three facets:
(i) whether the disputes are capable of settlement through arbitration or do they fall within the
domain of courts
(ii) whether the disputes are covered by the arbitration agreement
(iii) whether the parties have referred the disputes to arbitration
Generally, all disputes related to rights in personam are arbitrable and those related to rights in
rem are unsuited for arbitration. Although the Act does not contain a list of subjects that are not
arbitrable, S. 34 and 48 allow courts to set aside awards if subject matter is not arbitrable.
A suit for sale, foreclosure, or redemption of mortgaged property should only be decided by the
Courts since it is a suit for enforcement of a right in rem.
An agreement to sell or agreement to mortgage does not involve transfer of right in rem, and
hence claims for specific performance of those agreements are arbitrable.

8. Radhakrishnan Vs. Maestro Engineers & Ors (2010) 1 SCC 72 – p. 34

Facts
R wanted to quit partnership on apprehension of fraud and asked for return of investment. M
denied they owe R anything and proceeded to file an injunction against R from disrupting the
business. R then filed an application under S. 8 for reference to arbitration.
Issue
Whether issues of fraud and misappropriation are arbitrable?
Judgment
Relying on Abdul Kadir v. Madhav Oak, the Court held that for the furtherance of justice,
complicated matters involving questions relating to fraud must be dealt with a court and not an
arbitrator since it involves elaborate production of evidence.

9. Swiss Timing Limited vs. Organising Committee, Commonwealth Games (2014)

6.  SCC  677 – p. 34
Judgment
Overruled the position in N. Radhakrishnan.
Having provided for resolution of disputes through arbitration, parties cannot avoid this without
satisfying the court that it will be just and in the interest of all the parties not to proceed with
arbitration.
S. 5 of Act provides that Court will not intervene in arbitration process except in accordance with
Part I. Function of courts is only to support the process.
Contention of main contract being void is not a bar to arbitration and the same can also be referred
to the tribunal for determination. An arbitration clause is independent of the main agreement as
per S. 16. So the argument that since the contract was obtained based on fraud, and hence it should
be treated as void was not accepted.

10. World Sport Group (Mauritius) Ltd. v. MSM Satellite (Singapore) Pte. Ltd. , (2014) 11
SCC – p. 35
Judgment
Allegations of fraud are arbitrable. The only bar to refer parties to foreign seated arbitrations are
contained in S. 45 which are cases where the arbitration agreement is either (i) null and void, (ii)
inoperative, (iii) incapable of being performed. Scrutiny of courts limited to these three
considerations.
For (i) – since the arbitration agreement is independent of the main contract, is the main contract is
void, it would not affect the validity of the arbitration agreement. Court will have to examine the
validity of the arbitration agreement.
For (ii) – inoperative means situations where the arbitration agreement has ceased to have effect
such as where parties may have by conduct or otherwise revoked the arbitration agreement
For (iii) -  ‘incapable of being performed’ covers situations where the arbitration cannot be
effectively set into motion and covers the practical aspects of the prospective arbitration.

APPLICABILITY OF PART – I

S. 1(2) of the UNCITRAL Model Law provides that the provisions of the law will apply only if
the place of arbitration is in the territory of the State (territoriality principle). However, S. 2(2) of
the A&C Act only says that Part – I applies if the place of arbitration is India. It omits the word
only. Hence, questions arose as to whether Part – I would apply to arbitrations seated outside
India.

11. Bhatia International v. Bulk Trading (2002) 4 SCC 105

Issue
Whether Indian courts can grant interim relief under S. 9 to an arbitration that is to be held in Paris
according to ICC Rules
Judgment
The UNCITRAL Model Law uses the word only. Since that has been omitted in S. 2, it means that
the legislature is emphasizing that Part – I is compulsorily applicable to arbitrations in India,
including ICAs, but not providing that it is not applicable to those outside India. However, parties
to an ICA outside India can exclude the applicability of Part – I through an agreement either
express or implied.

12. Videocon Industries vs. U.O.I, (2011) 6 SCC

Judgment (2 judge bench)
Parties had expressly excluded the application of Part I since the seat of arbitration was chosen as
Kuala Lampur as well as the governing law was chosen as the English laws. Therefore, interim
reliefs could not be granted by the Indian courts.

13. Dozco India vs. Doosan Infracore, (2011) 6 SCC 179

Judgment
Parties had excluded the application of Part – I since chosen Korean law to govern the contract
and the seat of arbitration was Korea. The Court distinguished the judgments on Indtel case and
Citation case stating that the parties had not chosen the seat of arbitration in those cases and hence
failed to designate the law applicable to the conduct of arbitration proceedings.

14. Yograj Infrastructure Ltd. vs. Ssang Yong Engineering and Construction Co. Ltd.
(2011) 9 SCC 735)
Judgment
The parties had clearly stated that arbitration proceedings were to be held in Singapore as per the
SIAC Rules. The Court looked into the rules and found that Rule 32 stated that if the parties
choose Singapore as the seat and the SIAC Rules, then the law governing the arbitration would be
that of Singapore. Hence, application of Part – I is impliedly excluded.

15. Bharat Aluminum and Co. vs. Kaiser Aluminium and Co., (2012) 9 SCC 552
Judgment (five judges)
A plain reading of S. 2(2) shows that Part – I is only applicable to arbitrations, whether domestic
or ICA, in India. The omission of the word only does not indicate that Part – I applies to
arbitrations outside. The legislature has given recognition to the territorial principle.
The provisions of the Act are seat-centric. Emphasises the distinction between seat and venue and
stated that only when the agreement provides for India as its seat will Part – I be applicable.
Choice of another country as seat implies acceptance of the law of that country for the arbitration
proceedings. So even if Indian law is chosen by the parties to govern the arbitration, if the seat is
outside, jurisdiction of the Indian courts will be barred and the Indian Act will apply only to the
extent that it is consistent with the laws of that country.

16. Reliance Industries Ltd. v. Union of India, (2014) 7 SCC 603

Facts
RIL had entered into two production sharing contracts with Govt. of India. Seat was chosen as
London, substantive law governing the PSCs would be Indian law, and English law would govern
the arbitration clauses. Disputes arose regarding payment of royalties and RIL initiated arbitration.
Preliminary issue with respect to arbitrability was raised which the tribunal declared to be
arbitrable in a partial award. This was challenged by the government stating HC could overturn
the award since BALCO did not apply. Further, since the claim was for refund of public monies, it
must be heard by statutory bodies. HC agreed and set aside the award.
Issue
Whether parties had excluded application of Part – I?
Judgment
Three sets of laws may apply to an arbitration – (i) proper law of contract, (ii) proper law of
arbitration agreement, (iii) proper law of conduct of arbitration. All three can be different in one
arbitration. Law of contract does not determine law of arbitration agreement. Here, parties had
consciously provided that juridical seat of arbitration would be London and the law governing
arbitration would be English, hence Part – I has been impliedly excluded by the parties and hence
S. 34 would not apply.
Dismissed the claim that the claims should go to a statutory tribunal established to deal with
petroleum matters. The claims arose form a commercial contract. Merely because tribunal has held
the dispute to be arbitrable does not mean that claims have been accepted and an award adverse to
public policy of India has been passed. Cannot set aside arbitration agreement on the ground that
the award, when made, might violate public policy.

17. Eitzen Bulk A/S vs Ashapura Minechem Ltd. (CIVIL APPEAL No. 5136 OF 2016)
Facts
E and A (indian) entered into a charter party agreement for shipment of bauxite which contained
an arbitration clause having London as seat of arbitration and English law applicable to arbitration.
Disputes having arisen, matter was referred to a sole arbitrator which was held in London as per
Enlish law. Tribunal passed an award stating A was liable to pay a sum of money to E. A then
filed a petition under S. 34 challenging the award in Gujarat where the HC allowed the S. 34
application. E also proceeded to enforce the award in Bombay HC on the basis that Part I has not
application to a foreign award. Bom HC allowed this petition. The appeal went to the SC against
the Guj HC order.
Issue
Whether Part I is excluded when the arbitration is not held in India and is governed by a foreign
law?
Judgment
Since the arbitration clause clearly stipulates that the dispute shall be settled in London and
English law would apply to the arbitration, the intention of the parties is manifestly clear to
exclude the applicability of Part I and thus, the conduct of the arbitration as well as any objections
relating thereto including the award shall be governed by English law. Two factors exclude the
operation of Part I - first, the seat of arbitration which is in London and second, the clause that
English law would apply.
Referred to the Reliance case to hold that seat of arbitration is important to determine proper law
of arbitration agreement. Went on to hold further that mere choosing of seat attracts the law
applicable to that location and hence, no need to specify which law would apply to arbitration
proceedings.
Dismissed S. 34 application of the Guj HC and upheld judgment of Bom HC.
Requirements of Valid Arb. Agreement

1. Wellinton Assosiates v. Kirit Mehetha [ (2004) 4 SCC 272]

Facts
Agreement contained two clauses for dispute resolution – first – with respect to disputes arising
out of the agreement, Courts in Bombay would have jurisdiction to try and determine the suit and
parties submit themselves to its exclusive jurisdiction. Second – Any disputes arising may be
referred to arbitration in pursuance of the A&C Act.
Issues
Whether valid arb agreement?
Whether courts can decide existence of a valid arbitration agreement?
Judgment
Held, clause was not valid since the expression to consent to arbitration was not unequivocal and
unambiguous. S. 7 does not cover a case where the parties agree that they “may” go to a suit or
that they “may” go to arbitration.
Questions as to existence of the arbitration agreement can be decided by the arbitrator under S. 16
as per the kompetenz-kompetenz principle. However, S. 16 does not take away the power of the
courts to determine this question as well. In cases where the validity of the arb clause is in
question from the beginning, then it will be absurd to refer the issue to the arbitrator. In such
cases, courts can decide this question.
Since no valid arb agreement, no reference can be made to arbitral tribunal.

2. Smita Construction v. Euro Alloys Ltd. (2001)7 SCC 728,

Facts: D proposed a contract for the sale of aluminum rods to P. Despite several requests and
reminders, P neither signed nor returned the contract, which contained an arbitration clause. P did,
however, open several irrevocable letters of credit, and shipments were made in performance of
the contract. A subsequent dispute led to an arbitral award in favour of D. D obtained an order
from the Bombay High Court for enforcement of the award, with interest, under the 1961 Foreign
Awards (Recognition & Enforcement Act) ("1961 Act"), which implemented the NYC. P
appealed, arguing that (1) enforcement violated Section 2(a) of the 1961 act and Article II (1)-(2)
of the NYC because the agreement containing the arbitration clause was not signed by both
parties, and none of the parties' other written exchanges contained an agreement to arbitrate, and
(2) it would be contrary to the public policy of India to enforce the award, in violation of Section
7(1)(b)(ii) of the 1961 Act (which directly incorporates Article V(2)(b) NYC).

Issue: Whether an unsigned contract can be enforced in such a situation?

Judgment: Yes. It held that P’s conduct, particularly the acts of opening the letters of credit in
reliance on the contract and invoking the contract’s force majeure clause, demonstrated its
acknowledgement and acceptance of the terms of the written contract. Therefore, it would be
illogical to let Smita escape its obligations under the contract simply because it failed to sign. The
Court also found that because the arbitrator’s conclusions were plausible, enforcing the award
would not be contrary to the public policy of India.

3. K.K. Modi v. K.N. Modi, (1998) 3 SCC 573

Facts: a ‘reference to an expert' for decision, contained in an MOU recording a family settlement.

Held: Is it an arbitration agreement.

Essential features of an arbitration agreement (which is different from a reference to an expert).

1. The arbitration agreement must contemplate that the decision of the tribunal will be binding on
the parties to the agreement
2. that the jurisdiction of the tribunal to decide the rights of parties must be derived either from the
consent of the parties or from an order of the Court or from a statute, the terms of which make it
clear that the process is to be an arbitration,
3. the agreement must contemplate that substantive rights of parties will be determined by the
agreed tribunal,
4. that the tribunal will determine the rights of the parties in an impartial and judicial manner with
the tribunal owing an equal obligation of fairness towards both sides,
5. that the agreement of the parties to refer their disputes to the decision of the tribunal must be
intended to be enforceable in law and lastly,
6. the agreement must contemplate that the tribunal will make a decision upon a dispute which is
already formulated at the time when a reference is made to the tribunal.

4. Bihar State Mineral Development Corporation v. Encon Builders [2003] 7 SCC 418
Fact: Contractual clause that any dispute arising out of the agreement shall be referred to the
Managing Director of the Corporation and his decision shall be final and binding on both the
parties.
Issue: Whether such an arbitration clause is valid?
Judgment: Tribunal must impartial. Here, arbitrator’s actions were in question- he can’t be a
judge in his own cause. Actual bias leads to an automatic disqualification- here, actual bias during
execution of the agreement, can’t claim consensus ad idem. An order that lacks inherent
jurisdiction would be a nullity and, thus, the procedural law of waiver or estoppel would not apply

Sukanya Holdings Pvt. Ltd. v. Jayesh H. Pandya (2003) 5 SCC 531

Fact: Parties were partners of construction firm. D filed for dissolution of firm, and on the same
day P filed for s. 8 reference. D contested reference arguing that the reliefs were claimed against
non-contracting parties also. P argued that those portions involving only the contracting parties
ought to be severed and referred for arb.
Issue: If reference is claimed seeking reliefs against external parties, is the court obliged to
bifurcate the CoA and refer parts involving the contracting parties for arb?
Judgment: No. Per s. 8 “in a matter which is the subject matter of an arbitration agreement"- the
entire subject matter must be covered by the arb agreement. No procedure for bifurcation,
contributes to delay.

Chloro Controls (I) P. Ltd. v. Severn Trent Water Purification (2013)1 SCC.641
Fact: Complex. Basically, lots of parties and subsidiaries. There was one major contract and
several incidental ones. A non-signatory to the arb agreement was trying to get the matter referred
u/ 45- “at the request of one of the parties or any person claiming through or under him”. Concept
of ‘composite transaction’- Mother/principal agreement with a number of ancillary or incidental
agreements.
Issue: Whether non-signatory can approach court u/45.
Judgment:
 If in composite transaction, different fora are specified by diff agreements, parties can
choose.
 The expression ‘person claiming through or under’ in 45 means and includes multiple and
multi-party agreements and hence even non-signatories to some of the agreements can pray and be
referred to arbitration. Literal and liberal (pro-arb) interpretation of 45. Further obligation arises
out of ‘shall’ in 45.
 A non-signatories CoA may be directly related to the contract and may be ``claiming
through or under'' one of the signatories- to be determined on the facts of each case – Heavy onus
lies on a party to show that, in fact and in law, it is claiming through or under the signatory party
as contemplated under S. 45. Factors-
o Direct relationship to the party signatory to the arbitration agreement;
o Direct commonality of the subject matter;
o Agreement between parties being a composite transaction;
o Transaction should be of composite nature where performance of principal agreement may
not be feasible without the aid, execution and performance of the supplementary or ancillary
agreements, for achieving the common object and collectively having bearing on the dispute; and
o Whether a composite reference of such parties would serve the ends of justice
 Art II NYC- `arbitration agreement be in writing'' to be construed liberally -

Magma Leasing; Finance v. Potluri Madhavilata, (2009) 10 SCC 57

Fact: P entered into an agreement with D for the purchase of a motor vehicle. D defaulted on the
payment resulting in MAGMA seizing the motor vehicle. Consequently, P sent a notice to the
defaulters informing them that the Agreement had been terminated.
D filed a suit to recover the possession. In response P filed a s. 8 application. D challenged the
reference on the grounds that P had terminated the Agreement so the arb agreement did not
survive.
Issue: Whether an arbitration clause can survive upon the termination of the main contract?
Judgment: Yes. Arbitration clause is a consensual written submission. If a difference arises
between the parties over whether there has been a breach by one side or the other, or whether
circumstances have arisen which have discharged one or both parties from further performance,
such differences should be regarded as having arisen 'in respect of', 'with regard to' or 'under' the
contract, and thus should be referred to arbitration. Per 16 (1) opined that an arbitration clause can
survive upon the termination of the main contract

Shakti Bhog Foods Ltd. v. Kola Shipping Ltd (2009) 2 SCC 134
Fact: Parties entered into a charter party agreement. After disputes, the matter was referred for
arbitration. Award was passed without submissions by P. P raised issue of bias of arbitrator. D
argued that there was no arb agreement.
Issue: Whether there was an arb agreement? Whether the arbitrator was biased?
Judgment: Per s. 7, the existence of an arbitration agreement can be inferred from a document
signed by the parties or correspondence, which provides a record of the agreement.
The failure of arbitrator to disclose material facts gives rise to justifiable doubts as to his
independence on a collective reading of Section 12(3), 13(5) and 34(2)(b)(ii) of the Act and is
required to be set aside on this ground.

Unissi (India) Pvt. Ltd. v Post Graduate Institute of Medical Education and Research
(Supreme Court)
Facts: Tender containing arbitration clause was floated by the respondent. After the appellant’s
offer was accepted by the respondent, the purchase orders were placed. The equipment was
delivered and accepted by the respondent. Respondent demanded execution of the agreement. The
appellant duly signed the agreement and sent it to the respondent, but the respondent never signed.
There a dispute regarding payment and the respondent argued that no valid arbitration agreement
was executed between the parties. It was thus argued that there no need to appoint an arbitrator.
Issue: Did a valid arbitration agreement exist?
Held: Yes. Although, no formal agreement was executed, the Court held that the arbitration clause
was valid. The court held that for a contract to be in writing under Section 7 of the Act, the
arbitration clause needs to be given in a document which is part of the transaction. This would
lead to the arbitration clause being part of the contract. It was pointed that the tender containing
the arbitration clause was accepted by the appellant and acted upon.
Direction given to appoint an Arbitrator.

Great Offshore Ltd. v. Iranian Offshore Engineering & Construction Company

Facts: Series of mutual exchanges of faxes and letters. GOL contended that a faxed copy of the
Charter Party Agreement (CPA) with its signature was provided to it by IOE on 12 October,
whereas IOE alleged that the document was forged.
In the meanwhile, IOE, in an email dated 14 September had stated that the CPA was ready and
had even agreed to deliver it to GOL. However, in a subsequent letter on 23 September, it put in
certain specific demands as a pre-condition to its signing the CPA. GOL contended that the pre-
conditions were not acceptable. And in any event, it alleged that IOE had given its approval to the
CPA through the 14 September email. Consequently, it requested IOE to dispatch the signed CPA
as soon as possible and honour its commitments. IOE, in response, strongly denied any concluded
contract between the parties and contended that the matter had not progressed beyond the
negotiation stage.
Issues: Did a valid arbitration agreement exist?
Held: Yes. Court opined that the CPA appeared prima facie valid and since it was validly signed,
IOE was bound. Reliance was placed on Section 7(3) and 7(4) while concluding that there was no
requirement of the document containing the contract to be original i.e. it can be a copy of the
original.
Under 7(4)(b), fax comes within the purview of ‘other means of telecommunication’ and signature
of the parties is sufficient attestation of an agreement on record. 

Trimex International FZE Ltd. v. Vedanta Aluminium Ltd.

Facts: Trimex approached the SC for constitution of the arbitral tribunal. Vedanta objected. Series
of emails. Formal agreement contained an arbitration clause. Terms of the formal agreement was
never agreed upon. Still at the negotiation state.
Issue: Is there a valid arbitration clause?
Held: There was no valid arbitration agreement between the parties w.r.t the formal agreement
since the clause was not finally agreed upon. Hence the court, rightly, found that the arbitration
was to be conducted not in terms of the arbitration clause found in the Formal Agreement but in
terms of the agreement reached between the parties by email.

Powertech World Wide Limited vs Delvin International

Facts: Purchase contract had an arbitration clause. A dispute arose and series of letters and legal
notices were exchanged.
Issue: Valid arbitration agreement.
Held: There was consensus ad idem between parties to amicably settle their disputes or settle
through arbitration in India or UAE. The correspondence between parties indicated that the
petitioner had invoked arbitration and the respondent, not denying the existence of the arbitration
clause invoked, had in fact referred to appointment of arbitrator. This is an additional factor.

Fiza Developers & Inter-Trade (P) Ltd. v. Amci (I) (P) Ltd
Held: Issues need not be framed for applications under Section 34 of the Act. This is because the
grounds for setting aside the award are specific and the burden of proof is on the applicant.
Under Karnataka Rules, application under Section 34 has to be dealt as suit under the CPC
however, no automatic import of all provisions of CPC. Only applicable to the extent necessary or
appropriate by the court.

M.V. Baltic v. State Trading Corp. (2001) 7 SCC 474

Facts: P was chartered on the basis of a Charter containing an arbitration clause that provided for
arbitration in London. Five Bills of Lading, held and endorsed by the D were issued and each
incorporated the Charter’s arbitration clause. Following a dispute, D filed suit in the High Court at
Calcutta, and the P requested a stay and reference u/s. 45 (which incorporates Article II(3) NYC).
The judge denied P’s request, holding that the arbitration clause from the Charter did not apply to
disputes arising from the Bills of Lading. P appealed
Issue : Whether the Bills of Lading fully incorporated the clause and therefore the parties were
bound to arbitrate the dispute.
Judgment : The arbitration clause applied to suits arising under the Bills of Lading, so HC should
have granted the request to stay the suit and refer the dispute. Despite minor linguistic
discrepancies in the text of the Bills of Lading, the parties clearly intended the arbitration clause to
be incorporated. Because incorporation would not yield absurd or unworkable results, the Court
deemed itself bound by the intention of the parties.

Groupe Chimique Tuisen SA v. Southern Petrochemicals Industries Crop. Ltd

Facts: Intimation by the appellant to the respondent that the dispute having arisen between them is
to be settled by arbitration and upon failure of the respondent to comply with conditions,
proceedings will be initiated.
Issue: Whether the respondent has lost its right to appoint its nominee to the Arbitral Tribunal in
view of its failure to comply with the demand of the petitioner u/ Sn. 11(4) to appoint the
arbitrator within the time period specified?
Judgment: In such a situation, the Court can appoint an Arbitral Tribunal in accordance with Sn.
11(4).
Visa International vs. Continental Resources, (2009) 2 SCC 55
Facts: Complicated and irrelevant. P approached the court asking for appointment of arbitrator u/
11(5), 11(9). D argued that invalid arbitration clause.
Issue: Whether the following amounts to an arbitration clause? "any dispute arising out of this
agreement and which cannot be settled amicably shall be finally settled in accordance with the
Arbitration and Conciliation Act, 1996”
Judgment: Agreement doesn’t have to be in any format. Must clearly ascertain intention to
arbitrate. Intention can be shown through correspondence between parties- here, at no time had D
refuted the agreement in letters between the parties. Can’t take advantage of inartistic drafting.
NOTE: Elements of valid arb agreement-
1. The parties have been properly identified;
2. There is a clear reference to arbitration in accordance with the provisions of Arbitration and
Conciliation Act, 1996;
3. The disputes that had arisen between the parties, which could not be amicably settled, are to be
referred to arbitration;
4. The seat of the arbitration is to be in terms of Section 20 (1) and 20(2). The arbitral tribunal in
the absence of any agreement between the parties is entitled to determine the place of arbitration;
5. The substance of the dispute is to be determined in accordance with the provisions of Sections
19,23,24,25,26,27 and other provisions of the Arbitration and Conciliation Act, 199

SMS Tea Estate vs. Chadmari Tea Estate, 2011 (4) ARBLR 265 (SC)
Fact: D leased P certain land- lease deed contained arbitration clause. Prior to execution of lease
deed, D had offered to sell P the land, so P started improving the land. When P refused to go for
arb, D filed claim for appointment of arb u/ s. 11. Here, deed wasn’t registered, and not sure if
stamped.
Issue: i) Whether an arbitration agreement contained in an unregistered (but compulsorily
registrable) instrument is valid and enforceable?
(ii) Whether an arbitration agreement in an unregistered instrument which is not duly stamped, is
valid and enforceable?
(iii) Whether there is an arbitration agreement between the Appellant and Respondent and whether
an Arbitrator should be appointed?
Judgment: The arbitration clause doesn’t require registration, so it is valid. But, the lease deed,
not being stamped, can’t be relied upon as evidence. So, sent back to check whether duly stamped.
If so, arbitrator can be appointed, but can’t rely on lease deed as evidence since compulsory
registration requirement wasn’t followed.

N T P C v. The Singer Company, AIR 1993 SC 998

Issue
What is the proper law governing the arbitration agreement in an ICA?
Judgment
In an ICA, parties have the liberty to choose, expressly or by necessary implication, the proper or
substantive law and the procedural law. In absence of express choice, presumption the laws of the
country where the arbitration is to be held would be proper law. Court’s will have to ascertain
intention of party applying the test of reasonable man. When the proper law has been chosen, then
the laws of that country will also govern the arbitration agreement in the absence of any intention
to the contrary.
If no laws have been chose either for the contract as a whole or the arbitration agreement, then
presumption that parties intend to choose the laws of the country in which arbitration is to be held.
True intention to be gathered by applying “sound ideas of business, convenience and sense to
language of the contract” to determine the jurisdiction which has the “real and closest connection”
with the transaction.
Mere choice of place for conduct of arbitration, in the absence of any other connection with that
place, will not be sufficient to apply laws of that country.
Here parties had chosen Indian law to govern contract, so that was held to be applicable to the
arbitration agreement as well.

Citation Infowares Ltd. vs. Equinox Corp

Facts: The parties had opted to be choose as the governing law of the contract as Californian Law,
but had failed to determine the place of arbitration. Upon the failure to appoint a sole arbitrator, an
application was made under Sn. 11(5) to the CJI.
Issue: Whether Chief Justice of India had jurisdiction to entertain an application for appointment
in an agreement wherein the parties had agreed that Californian law would be the governing law
of the contract?
Judgment: The presumption of implicit exclusion of Part I would arise only where the arbitration
is agreed to be held outside India. Nexus with India was found with regard to the obligations,
place of operation, etc. The Court further held that, in respect of agreements governed by the laws
of another country where the seat is not specified in the agreement itself, the provisions of Part I,
including Section 11, will be available to the parties.

Sumitomo Corp v. CDC Financial Services

Facts: Appellant had entered into a JV Agreement with the respondents which had an arbitration
clause. The Respondents filed a petition before the Company Law Board, Principal Branch, New
Delhi, seeking redressal under Sections 397, 398 and 402 of the Companies Act, 1956. The
appellant filed an application seeking reference to arbitration under Section 45, or Section 8 of the
Arbitration and Conciliation Act. On the Company Law Board’s refusal to do so, the appellant
filed an appeal under Section 50 of the Arbitration and Conciliation Act in the High Court of
Delhi.
Issue: In case of a conflict, would Section 10(1)(a) of CA 1956 take precedence over Section 50 of
the Arbitration Act?
Judgment: The court to redress the appeal should be the one which is specifically authorised to
hear such an appeal, not a civil court which would have civil jurisdiction, had the case been
brought first to the same. Therefore, appeal to CLB u/Sn. 10 of the CA would have precedence
over appeal to High Court u/ Sn. 50(1)(a)of the Arbitration Act.

Judicial intervention

Morgan Securities And Credit Pvt. ... vs Modi Rubber Ltd.

Issue: whether the provisions of the Arbitration and Conciliation Act, 1996 would prevail over the
provisions of the Sick Industrial Companies (Special Provisions) Act, 1985.
Held: Provisions of SICA have been made to achieve a higher goal and thus would be applicable
despite Section 5 of the 1996 Act. Thus, BIFR can pass an order under Section 22(3) of SICA
suspending the operation of any award. If the award is not held outside the purview of SICA, it
might be difficult to frame a scheme.

Skypack Couriers Ltd. v. Tata Chemicals Ltd. (2000) 5 SCC 294

Facts: National Consumer Disputes Redressal Commissions under the Consumer protection Act
are quasi- judicial bodies. The commission used to make orders for consensual adjudication (not
being arbitration) without parties consent. This was challenged. Per CPA, the Commission has the
powers of a Court.

Issue: Whether the Commission can refer the matter to arbitration not within the provisions of the
Act?

Judgment: No. Court can’t abdicate it’s duties and merely authenticate 3rd party adjudications.

P Anand Gajapathi Raju Vs. PVG Raju, AIR 2000 SC 1886 – parties entered into arb agr
during pendency of appeal – whether can refer to arb during pendency?
For courts to exercise power under S. 8, (i) must have arbitration agreement, (ii) party brings
action in court against other, (iii) subject matter of action same as that of arb agreement, (iv) other
party moves court for reference to arb. before submitting first statement on substance of dispute. –
if these satisfied, courts mandated to refer
However, even after submissions of statement if parties want to arbitrate, then no bar on referring.
“which is the subject of an arbitration agreement” – does not mean arb agr to be in existence when
suit filed in court.
Construe S. 8 in light of S. 5 minimal interference.

Sukanya Holdings Pvt. Ltd. v. Jayesh H. Pandya (2003) 5 SCC 531 – refer to previous
To interpret S. 8, S. 5 is not required. If parties do not take appropriate steps as under S. 8(1) and
(2), civil court jurisdiction to decide the decide dispute is not ousted. Hence, no reference to be
made if (i) parties have not filed for reference to arb (ii) in pending suits, applications not filed
before submitting first statement (iii) application not accompanied with original arb agr.

Shin-Etsu Chemical Co. Ltd. v. Aksh Optifibre Ltd., (2005) 7 SCC 234
Reference to arb under S. 45 – Court to take only prima facie view as to existence of arbitration
agreement based on following reasons:
1. Recognized competence-competence to hold that even if court makes reference by overruling
objection as to invalidity of arb agr, tribunal can still try the issue and render a final award
2. Award can be challenged u/s 48(1)(a) anyway – hence, at pre-reference stage, should expedite
process by making prima facie view only
3. If observation under S. 45 final and binding, will render S. 48(1)(a) otiose since parties will not
be able to challenge award at the stage on grounds of res judicata.
4. Court in jurisdiction where arbitration happens will have to deal with binding effect of finding
made by Indian court if not prima facie
5. Deciding whether arb act is null etc will involve examination of foreign law (here Japan) –
costly and time consuming
Ashok Traders v. Gurumukh Das Saluja (2004) 3 SCC 15
Facts: Application under Section 9 filed by a partner of a firm whose name was not shown as a
partner in the Register of Firms.

Issue: Is the application maintainable?

Held: Such an application is neither a suit nor a proceeding arising in a suit nor a proceeding to
enforce a right arising from a contract, Hence, its maintainability prima facie is not affected by the
bar under Section 69 of the Partnership Act, 1932.

Sundaram Finance Ltd. v. NEPC India Ltd. (1999) 2 SCC 479

Facts
Parties had a hire-purchase agreement which contained an arb clause. Resp. made default in
payments so App. filed a S. 9 application for appointment of a commissioner to take custody of
the HPA. TC granted this. On appeal, Resp. argued that since no arbitral proceedings had
commenced, S. 9 application is not maintainable. HC allowed.
Issues
Whether interim measures can be awarded before arbitral proceedings commence and before
appointment of arbitrator?
Judgment
1996 Act should be read with UNCITRAL Model Law A literal construction of S. 9 shows that
Courts can pass orders before arbitral proceedings as well (“before or during the arbitral
proceedings”)
If a party has not sent a notice to the other party under S. 21, before passing an interim award, the
Court must satisfy itself that a valid arb agreement exists between the parties and the applicant
intends to take the dispute to arb. Merely because no notice has been served under S. 21 does not
bar court’s power under S. 9. Court may make conditional orders under S. 9 to ensure parties
comment arb proceedings.
HCs should form rules, by exercising power under S. 82, as to procedure to be followed under S.
9.

Konkan Railway

SBP v Patel engineering

Issue: What is the nature of function of the CJ or his designate under Section 11 of the Act?

Held:
 The power exercised by the Chief Justice of the High Court or the Chief Justice of India
under S. 11(6) of the Act is not an administrative power but a judicial power.
 This power can be designated to another judge of the High Court or Supreme Court.
Cannot be designated to a district court judge.
 An order appointing an arbitrator by a Chief Justice is a judicial order and consequently, if
a party raises an objection regarding the validity of the arbitration agreement, the Chief Justice is
also required to determine the existence and validity of the arbitration agreement. The finding of
the Chief Justice regarding the existence and validity of the arbitration agreement will be binding
on the arbitral tribunal, negating the power conferred on the arbitral tribunal to determine the
validity of the arbitration agreement under Section 16 of the Act.
 The CJ or the designate can seek opinion of an institution for nomination of an arbitrator
qualified in terms of Section 11(8).
 Since it is a judicial order, appeal will lie against the order of CJ of a HC only under
Article 136 of the Constitution of India to the Supreme Court. No appeal against the order of the
CJI or the SC judge designated by him.
 In a case where an arbitral tribunal has been constituted by the parties without having
recourse to S. 11(6) of the Act, the arbitral tribunal will have the jurisdiction to decide all matters
as contemplated by S. 16 of the Act.
 Once the matter reaches the arbitral tribunal or the sole arbitrator, the High Court would
not interfere with orders passed by the arbitrator or the arbitral tribunal during the course of the
arbitration proceedings and the parties could approach the court only in terms of Section 37 of the
Act or in terms of S. 34 of the Act.
 the position as adopted in this judgment will govern even pending applications under
Section 11(6) of the Act.

Arbitrators

N.B.C.C. Ltd. v. J.G. Engineering Pvt. Ltd

Held:  Mandate of an arbitrator terminates with efflux of time where no extension of time is
possible under the agreement. 
Court can use its inherent power to fix a time-limit for concluding the arbitration proceeding, in
the absence of any such provision in the Act, on the application by any party. If the agreement
contains a provision for extension, then court cannot use its inherent power in the absence of their
consent. If time limit fixed by the court is extended by the parties in accordance to the arbitration
clause, but was not further extended and the arbitrator without any concrete reasons, failed to
conclude his proceedings, his mandate will be termination u/s 14(1)(a).

Denel (Proprietary) Ltd. v. Bharat Electronics Ltd.

Fact: Arbitration clause nominated the Managing Director of the Respondent company (a GoI
Enterprise) as the sole arbitrator. Petitioner sought appointment u/Sn.11.
Issue: Can an employee of one of the parties to the arbitration be appointed as an arbitrator.
Judgment: The appointment of an employee as an arbitrator cannot solely raise presumption of
bias, unless such person is the controlling authority in the subject matter. (However, due to
peculiarity of the facts, a person other than the Managing Director was to be appointed as the sole
arbitrator.)

Indian Oil Corporation Ltd. and Ors. v. Raja Transport Pvt. Ltd.
Facts: Appellant wanted to appoint its Director or an officer to act as an arbitrator. Respondent
alleged that this would be prejudicial to his interest.
Issue: Is the assumption that an employee of one of the parties appointed as an arbitrator will be
partial, valid?
Held:  The parties to an arbitration agreement could appoint an employee of one of the parties as
an arbitrator, which ipso facto is not a ground to raise a presumption of bias or lack of
independence on the part of the chosen arbitrator.
Further, it was held that court has discretion to refuse appointment of such employee of one party
as the arbitrator to their dispute, if there exists a reasonable apprehension about his impartiality or
independence.

Olympus Superstructures Pvt. Ltd. vs. Meena Vijay Khetan

Facts: Three main agreements regarding sale of flats each having an arbitration clauses. Three
separate (Interior Design) agreements also having arbitration clauses. There was some dispute
which was referred to arbitration under the main agreements. The Arbitrator passed awards
granting relief of specific performance in respect of the three main Agreements and also in respect
of the three Interior Design Agreements.
Issues: When questions regarding jurisdiction of Arbitrator and scope of reference to Arbitrator
are not raised under Section 16 of the Act of 1996, whether they can be raised subsequently at the
stage of challenge to the award under Section 34 of the Act of 1996.
Whether disputes relating to specific performance of contract can be referred to arbitration.
Held:
If the parties before the arbitrator had any objection to the Arbitrator’s jurisdiction the same
should have been raised before the Arbitrator as provided in Sub-Sections (2) and (3) of Section
16 of the Act of 1996.
Arbitration clause of the main agreements permits reference to arbitration to issues under the main
agreements and disputes which are connected to the main agreements. Since, Interior Design
agreements were connected, the main arbitration clause would cover disputes arising out of the
main agreements as well as Interior Design Agreements. (If there is a situation where there are no
disputes arising from the main agreement but there are disputes arising from the Interior Design
Agreement, only then the arbitration clause 5 of the Interior Design Agreement comes into play).
No prohibition under Specific Relief Act, 1963 that issues relating to specific performance of
contract relating to immovable property cannot be referred to arbitration. Open to the parties.

National Agricultural Coop. Marketing Federation Ltd. v. Gains trading Ltd. (2007) 5 SCC 692
Facts: Agreement between the parties specified that upon failure of negotiation mechanism
between the parties, the matter would be referred to arbitration in Hong Kong, in accordance with
the Arbitration Act, 1996.
Issue: Whether Sn. 11 (appointment of arbitrators) will apply to a foreign seated arbitration?
Whether arbitration clause comes to an end with the abrogation of the contract?
Judgment: Reliance on Bhatia for application of Part I to foreign seated arbitration due to omission
of the term ‘only’ in Sn. 2(2), subject to express exclusion by the parties.
Further, arbitration clause is to be treated as a separate agreement which is unaffected with the
extinguishment of rights/ abrogation of the parent contract/ agreement.

NTPC vs. Siemens

Facts: Contract- disputes- Respondent resisted the counterclaims on the ground that they were not
arbitrable since they had been waived, discharged etc. Plea of jurisdiction not taken.
Issue: Whether arbitral tribunal could hear counterclaims raised by the respondent under Section
16?
Held: No question of jurisdiction involved. Hence, the appellant, cannot raise the question of
jurisdiction and bring its case under Section 16(2) and 16(3) so as to enable it to approach the
High Court directly under Section 37(2).

Recourse against an award

Union of India v. Popular Construction Co

Issue: whether the provisions of Section 5 of the Limitation Act, 1963 are applicable to an
application challenging an award, under Section 34 of the Arbitration and Conciliation Act, 1996 
Held: Section 5 of the Limitation Act is not applicable to proceedings under Section 34 for setting
aside arbitral award. “But not thereafter” under Section 34(3) amounts to an express exclusion
within the meaning of Section 29(2) of the Limitation Act.

State of Goa v. Praveen Enterprises

Facts: Praveen Ent. invoked arbitration u/s 11 and State of Goa filed counterclaims. Praveen Ent.
argued that the counterclaims were not raised by State of Goa by way of objection to S. 11 and
were beyond the scope of the reference of disputes to arbitration.
Issue: Whether the respondent in an arbitration proceedings is precluded from making a counter-
claim?
Held: In an arbitration where the tribunal has been constituted by the court, under Section 11, the
Chief Justice or the designate is not required to draw up the list of disputes and refer them to
arbitration.
Where the arbitration agreement provides for referring all disputes between the parties to
arbitration, the arbitrator will have jurisdiction to entertain all disputes, even though any such
dispute was not raised at a stage earlier to the stage of filing pleadings before the arbitrator.
An exception had been carved out to the normal rule that the date of filing of the counter-claim in
an arbitration proceeding would be the date of its institution for the purposes of computation of
limitation.

State of Goa v. Western Builders

Issue: applicability of Section 14 of Limitation Act, 1963 in The Arbitration and Conciliation Act,
1996.
Held: Section 34 of the Act lays down the grounds on which award can be set aside & period
within which it can be set aside. Therefore, it is a complete code in itself and the operation
of Section 14 & Section 5 of Limitation Act stands excluded. 

ONGC Ltd. v. Saw Pipes Ltd. (2003) 5 SCC 705

Issue
Grounds on which a court can set aside award under S. 34(2)?
Whether the arbitral award was contrary to public policy? Scope of “public policy”?
Judgment
An award contrary to
(i) substantive provisions of law,
(ii) the provisions of the A&C Act, or
(iii) against the terms of the contract
would be patently illegal and could be set aside under S. 34(2)(a)(v).
“Public policy” should be given a wide meaning so that patently illegal awards can be set aside
whose operation would promote injustice. So can set aside award if contrary to (first three
criterion were laid down in Renusagar v. General Electric):
(i) fundamental policy of Indian law
(ii) interest of India
(iii) justice or morality
(iv) patently illegal
(v) so unfair and unreasonable that it shocks conscience of court
Illegalities of trivial nature can be ignored. Here, award was passed in opposition to clause in arb
agreement so set aside.

Centrotrade Minerals and Metal Inc. vs. Hindustan Copper Ltd. (2006) 11 SCC 245
Facts: P (American) was to supply D (Indian) with copper concentrate. Per arb. clause-
Arbitration in India as per the rules of the Indian Council of Arbitration; if either party is
dissatisfied, then a second arbitration in London as per the rules of the ICC. P approached indian
arb-NIL award. Then P approached ICC for 2nd arb- got award in its favour. D asked that it be
made void, P asked for enforcement. Reached SC in appeal. D argued that not enforceable u/ 48
Issue: Can there be a two-tier agreement, first domestic and the second in the nature of an appeal,
conducted abroad? Can the ICC award over-rule an award passed by the Indian arbitrator? Is the
ICC award a "foreign award" under the Indian law?
Judgment: 2 differing judgments by Div. Bench.
Sarkar- A challenge to the domestic award can be made only before a national court designated by
the Act itself and on the grounds specified in Section 34 of the Act. So the validity of a domestic
award can’t be questioned before any other forum including the forum chosen by the parties. (but
would have been valid u/1940/1961 acts). Contracting out is against public policy. Can’t have
single dispute leading to both domestic and foreign award.
Chatterjee- 2-tier arbitration is permissible since no ban. Use of ‘only’ in 34 can’t constrain
consensual action. Not against public policy, since not in contravention of any statute. Was acting
as an appellate forum, not a 2nd arb. It is a foreign award which should be enforced.
Note: Detailed differences b/w 1940 Act and 1996 Act

Swan Gold Mining Ltd. v. Hindustan Copper Ltd.

Issue: Challenge to the award by filing petition under Section 34 on grounds that one of party
refused to honor one of the agreed terms pertaining to reimbursement of tax liabilities and
secondly that it was against the public policy in India.
Held: Under Section 34(2) an arbitral award may be set aside only if one of the conditions is
satisfied i.e. only if it is erroneous or patently illegal or in contravention of the provisions of the
Act.
When parties have arrived at a concluded contract and acted on the basis of those terms and
conditions of the contract then substituting new terms in the contract by the Arbitrator or by the
Court would be erroneous or illegal. However, this has not happened in the present case and there
is no patent illegality in the Award passed by the Arbitrator, which needs interference
under Section 34 of the Act.
Public policy challenge also failed since the parties had themselves entered into the contract and
they cannot later say that it is against public policy.
ONGC v. Western Geco International Ltd.
Facts: Respondent was to deliver to the appellant, machinery with upgraded parts which required
license. Arbitral tribunal was to determine whether liquidated damages could be deducted from the
payment. Appeal was first made to HC and then SC
Issue: Whether the Court can interfere with the order of a Tribunal u/ Sn. 34, as if the issue was in
appeal to the same?
Judgment: Every decision of a court should be guided by a judicial approach which is unbiased
and should be in accordance with PNJ (audi alteram partem + application of mind to facts). If the
order of a Tribunal has an error apparent which would result in a miscarriage of justice (public
policy), it can be challenged, altered or modified.

Associate Builders v. DDA

Facts: Delay in completion of work. DDA moved an application before Delhi HC under Section
34 to set aside the award.
Issue: What is the extent to which the court can replace the Arbitrator’s conclusion?
Held: Grounds for interfering with the arbitral award are limited to those mentioned in Section 34
of the Act like patent illegality or against public policy.
Public policy test is when the award is contrary to

1. The fundamental policy of Indian law:

a) disregarding orders of superior courts;
b) arbitrary approach;
c) against principles of natural justice;
d) decision of arbitrators so perverse and irrational in so far as no reasonable person would come
to the same conclusion.
2. The interest of India- something which deals with India in world community and its
relations with foreign nations.
3. Justice or morality-
a) with regard to justice, the award should not be such that it shocks the conscience of the
court;
b) with regard to morality, there can be no universal standard however, Supreme Court
observed that both the English and the Indian courts have restricted the scope of morality to
“sexual immorality” only;
c) With respect to an arbitration, it would be a valid ground when the contract is not illegal
but against the mores of the day, however, held that this would only apply when it shocks the
conscience of the court.
When a court is applying the “public policy” test to an arbitration award, it does not act as a court
of appeal and consequently “errors of fact” cannot be corrected unless the arbitrators approach is
arbitrary or capricious.
Patent Illegality would include:
a) fraud or corruption;
b) contravention of substantive law, which goes to the root of the matter;
c) error of law by the arbitrator;
d) contravention of the Act itself;
e) where the arbitrator fails to consider the terms of the contract and usages of the trade as
required under Section 28(3) of the Act; and
f) if arbitrator does not give reasons for his decision.

Enforcement

R.M. Investment Trading v. Boeing Co

Issue
Meaning of the word “commercial” under S. 2 of the Foreign Awards (Recognition and
Enforcement) Act (equivalent in S. 44 of 1996 Act)
Judgment
The term “commercial” should be given a wide meaning so as to cover matters arising from all
relationships of commercial nature, whether contractual or not. Instances of commercial nature –
trade transaction for supply or exchange of goods, distribution agreement, commercial
representation, consulting, construction, licensing, financing, investing, etc.
Act is designed to facilitate international trade and promotion of speedy settlement of disputes,
hence must construe liberally.

Phulchand Exports Ltd. v. OOO Patriot

Facts: Delay in the delivery of goods. Dispute arose between buyers and sellers with regard to
damages/ compensation to be made. The appeal made to the HC resulted in the enforcement of the
award. The award was again challenged in a Division Bench on the ground of public policy
(petition was dismissed).
Issue: Whether court can intervene w.r.t an award at the stage of enforcement u/Sn. 48?
Judgment: Reliance placed on ONGC v. Saw Pipes for the liberal construction of the definition of
public policy. This interpretation should also be extended to a foreign award u/Sn. 48, thereby
allowing court intervention at the stage of enforcement.

Shri Lal Mahal Ltd v. Progetto Grano Spa

Facts: Enforcement sought for an arbitral award passed by a foreign institutional arbitral board.
HC refused to review questions of fact for enforcement proceedings. Appeal to SC.
Issue: Whether court could intervene on grounds of public policy at the enforcement proceedings?
Judgment: An award, at the stage of enforcement being final and binding, cannot be challenged
under the patent illegality test and therefore, there should not be any review of facts and merits at
this stage.
Phulchand was overruled and the threefold definition of public policy, as in Renusagar, was
upheld.

Fueriest Day Lawsen v. Jindal Exports Ltd

Held: Exhaustive nature of appeals provided under S. 50. Power and jurisdiction of High Court
under Letters Patent is ousted by Act. The Act is a self-contained code for adjudication of all
matters arising out of arbitration. A self-contained code carries with it a negative import that only
such acts as are mentioned therein are permissible to be done and acts or things not mentioned
therein are not permissible to be done. Where a special Act sets out a self-contained code
applicability of general law procedure would be impliedly excluded. Thus, a letters patent appeal
is excluded. No letters patent appeal will lie against an order which is not appealable under S. 50.

Negotiation, Mediation, Conciliation

Haresh Dayaram Thakur v. State of Maharashtra

Facts: Conciliator held some discussions with the parties to the conciliation and forwarded a
settlement agreement for enforcement without the due signatures of the parties.
Issue: Whether such a settlement agreement can be confirmed by the court?
Judgment: The procedure provided under Part III of the Arbitration and Conciliation Act is to be
followed in such a proceeding. Unlike in arbitration, a conciliator is to guide the parties w.r.t the
dispute, terms of settlement, draft a settlement agreement and get the signatures of the parties
before enforcement of the same.

Moti Ram v. Ashok Kumar (Civil Appeal No. 1095 Of 2008)

Mediator had filed a report on the proceedings of the mediation. 

Court held that mediation proceedings are confidential in nature. If mediation is successful, the
mediator must only send the agreement between the parties signed by them to the court without
mentioning what happened during the proceedings. If the mediation fails, the mediator must only
mention that it failed. Beyond this, nothing should be mentioned.

Mysore Cements Ltd. v. Svedala Barmac Ltd.

Facts: Letter of Comfort, for the drafting and furnishing of which the procedure followed was
drastically similar to that u/ Sn. 73, was sought to be enforced as an arbitral award u/ Sn. 74 such
that it is an arbitral award u/ Sn. 30 and can be enforced u/Sn. 36.
Issue: Whether Letter of Comfort signed by both parties, furnished on the same day as the
settlement is enforceable like an arbitration award u/ Sn. 74?
Judgment: The letter of credit and the memorandum of conciliation proceedings were neither
made in accordance with the procedure laid down in Sn. 73 nor approved by the court with a seal
of approval. For these documents to be enforced as an arbitral award, due legal prerequisites as
provided statutorily, are to be complied with.

Court-Annexed ADR and Lok Adalats

Salem Bar Association v. Union of India (2003) 1 SCC 49 – nobody has done
Facts: Amendments made to CPC were challenged to be ultra vires the Constitution. (Section 89
was introduced through one such amendment).

Held: Not ultra vires. If conciliation, mediation or judicial settlement through Lok Adalat not
successful then matter will go to trial. If parties choose arbitration the Arb Act will be applicable-
case outside judicial system. Committee constituted for formulation of modalities regarding
Section 89. 
Afcons Infrastructure v. Cherian Varkey Constructions Pvt. Ltd.
Issue: What is the procedure to be followed for implementing Section 89 of the CPC?
Judgment: Courts to deviate from the usual meaning of the ‘mediation’ and ‘judicial settlement’
u/ Sn. 89. The procedure to be followed is that after the pleadings and the associated denials/
admissions are made and before the issues are framed, the Courts may opt for Section 89 (r/w
Rule 1-A of Section 10). Next, the court is to consider and record the nature of the dispute and
then present the five options for ADR such that the parties can mutually agree on one. Consent of
both parties is required for arbitration. If this is rejected then court is to refer the parties to an ADR
mechanism which does not require consent (mediation, Lok Adalats, etc.) But a court is not
required to determine the terms of settlements- to only provide a summary of disputes.

PT Thomas v. Thomas
Facts: Dispute between parties to a partition of property. Parties were referred to a Lok Adalat
wherein an order for the sale of the scheduled property from one party to the other was mandated.
HC set aside the order and looked into the merits of the case.
Issue: Whether HC was right in ignoring the order of the Lok Adalat?
Judgment: U/ Sn. 21 of the Legal Services Authority Act, the order of a Lok Adalat is final and
binding. Since the award is passed with the consent of both the parties, there can be no appeal or
review (also enumerated in Sn. 96 of CPC). The right of appeal will be under the Legal Services
Authority Act, but no appeal lies against a consent decree u/ CPC.

State of Pubjab v. Jalour Singh

Facts: During pendency for appeal against the quantum of compensation for a motor vehicle
accident, parties were referred to a Lok Adalat. The order of a Lok Adalat was passed in the
absence of one of the parties with only their counsel being in attendance.
Issue: Will such an order be tenable?
Judgment: Lok Adalats are conciliatory in function such that the settlement is arrived at with
through correspondence with the parties. It cannot ‘hear’ parties and orders passed in this manner
will be void.

P. Moideen Sevamandir v. A.M. Kutty Hassan

Facts: Parties, during the pendency of the second appeal in their dispute, were referred to a Lok
Adalat which gave certain orders for directing the filing of a settlement memo. No such memo was
submitted by the parties and subsequently, the matter went back to the Court. Petition for
restoration of appeal was dismissed by the HC on account of the behaviour of the parties at the
Lok Adalat.
Issue: What kind of orders can a Lok Adalat pass?
Judgment: Lok Adalats are to either make an award incorporating the terms of settlement as
agreed upon by the parties or return the record to the court with a failure report. Lok Adalats are
not to pass hybrid orders providing directions for settlement but are to pass an award with the
settlement itself.
Further, a court cannot be biased by the conduct of a party/ parties at a Lok Adalat (an ADR
forum). Parties can therefore file a compromise petition in the Court.

Inter Globe Aviation Ltd. v. N. Satchidanand

Facts: Dispute with regard to consumer services.
Issue: Jurisdiction of Permanent Lok Adalat
Judgment: Permanent Lok Adalats established u/ Sn. 22(B)(1) of the Legal Services Authority Act
initially have jurisdiction over certain public utility functions and have conciliatory powers. Only
if the parties fail at arriving at a suitable settlement, these adalats take on an adjudicatory power
(Con-Arb). However, a Lok Adalat u/ Sn. 19 of the Legal Services Authority Act, has only
conciliatory powers.

Bar Council of India v. Union of India

Issue: Constitutionality of certain aspects of Lok Adalats questioned.
Judgment:
 Permanent Lok Adalats (PLA) are ADR mechanisms and jurisdiction of the same w.r.t
public utility services is constitutional; no individual has the right to be governed only by courts
 Appeal however can be made u/ Art 226, 227
 Con-Arb nature for expediency especially given the importance of public utility services
 Although exempted from the applicability of CPC, Evidence Act, etc., these are governed
by a sense of justice and equity
 Appointment of non judicial officers is constitutional; it sidesteps legal technicalities from
gaining prime focus.