Key Arbitration Judgments (July-December 2023): Supreme Court & High Court Decisions

Introduction: In the second half of 2023, the Indian judiciary made several noteworthy decisions that significantly impact the landscape of arbitration in the country. In this article, we will delve into 30 pivotal judgments by the Supreme Court and High Courts, exploring a diverse range of cases and legal nuances that have shaped and refined the arbitration framework in India.

Supreme Court Decisions:

1. Non-stamping of Arbitration Agreements:
   • Case: In Re: Interplay between Arbitration Agreements and the Indian Stamp Act.
   • Key Point: Unstamped or inadequately stamped arbitration agreements are valid but inadmissible in evidence. The court clarified that insufficiency of stamping does not void the agreement.
2. Binding Non-Signatories:
   • Case: Cox and Kings Ltd v. SAP India Pvt Ltd.
   • Key Point: The “group of companies” doctrine applies, allowing arbitration agreements to bind non-signatories connected through relationships and commercial involvement.
3. Constitutionality of Arbitration Clauses:
   • Case: Lombardi Engineering Ltd v. State of Uttarakhand.
   • Key Point: Arbitration clauses must not be inconsistent with the Constitution, and the court has the authority to assess their compliance with constitutional principles.

High Court Decisions:

4. Composition of Arbitral Tribunal:
   • Case: Sri Ganesh Engineering Works v. Northern Railways.
   • Key Point: An arbitration clause allowing a party to nominate 2/3rd of the arbitral tribunal raises concerns about neutrality and impartiality.
5. Section 8 Application Requirement:
   • Case: Madhu Sudan Sharma v. Omaxe Ltd.
   • Key Point: Raising jurisdiction objections in the written statement fulfills the requirements under Section 8 of the A&C Act.
6. Security on Third-Party Charged Property:
   • Case: Assests Reconstruction Company Ltd v. ATS Infrastructure Limited.
   • Key Point: An arbitral tribunal lacks jurisdiction to establish security on a property with an existing third-party charge.
7. Bank Guarantee under Section 9:
   • Case: Skypower Solar India Pvt Ltd v. Sterling and Wilson International FZE.
   • Key Point: Court discretion in directing a bank guarantee under Section 9 depends on the petitioner’s prima facie case and the risk of hindrance to award realization.

Key Supreme Court Pronouncements:

8. Stamp Duty Exemption for Government Instruments:
   • Case: M/s SVK Infrastructure v. DTTDC.
   • Key Point: No stamp duty is applicable to instruments executed by or for the government.
9. Arbitrator’s Fee Revision:
   • Case: M/s Chennai Metro Rail Limited v. M/s TRanstonnelstroy Afcons JV.
   • Key Point: Unilateral fee revision by an arbitrator does not lead to termination of mandate under Section 12 of the A&C Act.
10. Exclusive Jurisdiction vs. Place of Arbitration:
    • Case: InstaKart Services v. Megastone Logiparks.
    • Key Point: Exclusive jurisdiction does not elevate the place of arbitration to the seat.
11. Relevance of Evidence under Section 27:
    • Case: SAIL v. Uniper Global Commodities.
    • Key Point: Arbitral tribunal must scrutinize the relevance of evidence before allowing an application under Section 27.
12. Extension of Time Limit under Section 29:
    • Case: ATC Telecom Infrastructure v. BSNL.
    • Key Point: Court can extend the time limit for making an award even after the original period expires.
13. Valid Delivery of Award via Email:
    • Case: Ministry of Youth Affairs & Sports v. E&Y Pvt Ltd.
    • Key Point: A scanned copy of the signed award sent through email constitutes valid delivery.
14. Section 34 Jurisdiction: Interest Rate Modification:
    • Case: Anil Kumar Gupta v. MCD.
    • Key Point: Court lacks jurisdiction under Section 34 to reduce the interest rate awarded by the arbitral tribunal.
15. Severability of Arbitral Awards:
    • Case: Hindustan Steelworks Construction v. NOIDA.
    • Key Point: Doctrine of severability applies, allowing the court to set aside a portion of an arbitration award while preserving the rest.
16. Stamp Duty and Arbitral Award:
    • Case: ARG Outlier Media Pvt Ltd v. HT Media Limited.
    • Key Point: Inadequate stamp duty on the arbitration agreement is not a ground to set aside an arbitral award.
17. Forum Shopping in Award Enforcement:
    • Case: Taqa India Power Ventures v. NCC Infrastructure Holdings.
    • Key Point: Forum shopping concerns in substantive civil proceedings do not necessarily apply to enforcement proceedings under Section 36.

Income Tax and IBC Impact on Arbitration:

18. Taxation of Arbitration Awards:
    • Case: Ramona Pinto v. Deputy Commissioner of Income Tax.
    • Key Point: Amount received by a retiring partner as part of an arbitration award for relinquishing stakes is not taxable.
19. Moratorium Impact on Arbitrator Fees:
    • Case: EDAC Engineering v. Industrial Fans.
    • Key Point: Moratorium under Section 14 of IBC does not hinder payment of arbitrator fees for awards issued before the moratorium.

MSMED Act and Arbitration:

20. Medium Enterprise Claim Maintenance:
    • Case: Sterlite Power v. EPC Solutions.
    • Key Point: A ‘medium’ enterprise can pursue a claim before MSEFC if it was ‘micro’ or ‘small’ at the relevant time.
21. Buyer’s Claim in MSEF Council:
    • Case: Uniseven Engineering v. MSEF Council.
    • Key Point: MSEF Council cannot entertain independent claims by buyers; only sellers can initiate claims.
22. Interim Relief before MSEF Council:
    • Case: IOCL v. Union of India.
    • Key Point: The MSMED Act does not preclude seeking interim relief under Section 9 of the A&C Act before approaching the MSEF Council.
23. Writ Petition against MSEF Council Order:
    • Cases: State Project Director v. National Printers; Feedback Infra Pvt Ltd v. MSEF Council.
    • Key Point: MSEF Council orders without due procedure are not award challenges under Section 34; aggrieved parties can seek writ relief directly.