Judgments and Awards

1999(4) RAJ 365 (Del)

Union of India Vs East Coast Boat Builders & Engineers Ltd

This case explored the effect of the Model Law and Rules. It was decided that it cannot be said that each and every provision of the said Model Law and Rules forms part of the Act even though the preamble of the Act says that it is expedient to make laws respecting Arbitration and conciliation taking into account the UNCITRAL Model law and Rules. Those Model law and Rules were taken into account while drafting and enacting the Act but whatever has been enacted is the law on arbitration enforceable in India.

Had there been a lacunae in the provisions of the Indian Arbitration Act on the point at issue or if it contained such provisions which is capable of 2 or more different interpretations , then of course the internal aid to the preamble to the Act could be taken for interpreting such provision and then the relevant provisions of the said Model Law and Rules could be read so as to interpret that provision because while enacting the Indian Act, the said Model Law and Rules were taken into account.

2001(2) RAJ 1 (SC)

Fuerst Day Lawson Ltd Vs Jindal Exports Ltd.

This case clarified that an ordinance operates in the field it occupies, with the same effect and force as an Act.

The first Ordinance came into force on 25.1.1996 and the Act came into force on 22.8.1996. It was held that the Act came into force in continuation of the first Ordinance and this makes the position clear that although the Act came into force on 22.8.1996, for all practical and legal purposes, it shall be deemed to have been effective from 25.1.1996, particularly when the provisions of the Ordinance and the Act are similar and there is nothing in the Act to the contrary so as to make the Ordinance ineffective as to either its coming into force on 25.1.1996 or its continuation upto 22.8.1996.

2001(3) RAJ 531 (Del)

MM Acqua Technologies Ltd Vs Wig Brothers Builders Ltd

This case helps in explaining the definition of a binding agreement between parties. In order to be a binding arbitration agreement between the parties, the same must be in writing and the parties should have specifically agreed to settle their disputes by arbitration. An arbitration agreement cannot be inferred by implication.

It was held that existence of an arbitration agreement in pith and substance confers power upon the Chief Justice or a person or body designated by him to appoint an arbitrator ie. The jurisdiction of the judge emanates from an existing arbitration agreement.

It was held that as there is no arbitration agreement in writing between the petitioner and the respondent, the clauses of the contract between the respondents inter se will not in any way be binding on the petitioner. It was also held that in the event the petitioner is not able to raise any dispute about the obligations which the respondents have entered into amongst themselves, there is no question of any dispute being referred to the arbitrator. Therefore, there being no arbitration agreement between the petitioner and the second respondent, the question of appointing the arbitrator does not arise.

2000(1) RAJ 117 (Bom)

Jayant N.Seth Vs Gyaneshwar Apartment Cooperative Housing Society Ltd

The court laid down the essential ingredients of an arbitration agreement as defined in Clause 2(1) (b) read with Section 7 as given below:

  1. There should be a valid and binding agreement between the parties.
  2. Such an agreement may be contained as a clause in a contract or in the form of a separate agreement.
  3. Such an agreement is deemed to be in writing if it is contained in a document signed by the parties or in an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement or an exchange of statements of claim and defense in which the existence of the agreement is alleged by one party and not denied by the other. Reference ina contract to a document containing an arbitration clause also constitutes an arbitration agreement, provided the contract is in writing and the reference is such as to make that arbitration clause part of the contract.
  4. Parties intend to refer present or future disputes to arbitration
  5. The dispute to be referred to an arbitrator is in respect of a defined legal relationship, whether contractual or not.

2001(4) RAJ 660 (Del)

Pyrites, Phosphate and Chemicals Vs Excel Shipping Enterprises

There was an agreement between the parties which was renewed. The original agreement contained an arbitration clause, however, there was no signature by or on behalf of the petitioner company; the signatures belonged to two employees of the petitioner, without there being a resolution in their behalf to sign on behalf of the petitioner company. They had signed as witnesses.

The petitioner urged that since the 2 persons were employees of the petitioner, it could be taken that they signed for and on behalf of the petitioner.

It was held that merely because they were employees of the petitioner would not give them the status to say that they signed for and on behalf of the petitioner. They had not signed on the basis of any resolution of the petitioner so as to permit the court to hold that they had signed on behalf of the petitioner. They had signed as witnesses and their status would remain to be that of a witness, rather than a party. The difference of signing as a witness and signing for and on behalf of the company is like the difference between chalk and cheese.

2001(4) RAJ 209 (Del)

Jindal Financial & Investment Services Vs. Prakash Industries Ltd.

According to Section 2(1)(c), an award includes an interim award and as such will also have to satisfy the same requirements of Section 31, to be treated as an award.

The court held that all orders/decisions passed under the Act do not necessarily fall under the expression 'awards'; it is only a decision/order which satisfies the requirements of section 31 which is an award. All others are orders/decisions in the course of the proceedings deciding peripheral issues or terminating the arbitral proceedings themselves on the ground that the submission does not fall within the arbitral agreement or that there is no arbitral agreement or that there is no dispute required to be decided by the Arbitral Tribunal.

The award, whether interim or final, must mean the final determination of a claim, part of a claim or counter claim by the Arbitral Tribunal, of a submission to that Tribunal. The decision must be supported by reasons in terms of Section 31(3), unless otherwise provided for. However, a final or interim award unsupported by reasons is still an award, but it is challengeable under Section 34.

The award must be signed by arbitrators or a majority of arbitrators and it must result in the Tribunal being rendered functus officio in respect of the subject matter of the award.

2003(2) RAJ 433 (AP)

Ankati Satyamaiah Vs. Sallangula Lalaiah

The facts of the case are that the parties resided at Miryalaguda, Hyderabad and Nalgonda who referred the matter to arbitrators at Hyderabad and the award was passed in Hyderabad. An execution petition for enforcement of award was filed by the petitioner before the senior civil judge at Miryalaguda, who returned the petition for want of jurisdiction, to be presented before the appropriate court.

It was held that the definition of the word 'court' in the expression 'Principal civil court of original jurisdiction' in Section 2(1) (e) in conjunction with the meaning given in Section 2(4) of CPC and Section 3(17) of the General Clauses Act, indicates that it implies the Court of District Judge ie. 'Principal civil court of original jurisdiction' in a district. Also, the definition expressly excludes any other civil court of a grade inferior to such courts.

Therefore, in this case, the suit should have been filed before the Principal civil court of original jurisdiction either at Nalgonda or at Hyderabad.

2005(1) RAJ 506 (SC)

Union of India Vs Tecco Trichy Engineers & Contractors Decided on 16.3.2005

The Southern Railway entered into a contract with the Respondent and the contract was signed by the then Chief Project Manager, presently the Chief Engineer (CE). When disputes arose, in exercise of the power conferred by the arbitration clause in the contract, the General Manager (GM), Southern Railway, appointed an arbitrator as well as the presiding arbitrator. The tribunal so constituted gave its award, a copy of which was delivered on 12.3.2001 in the GM's office and receipt of the same was acknowledged by someone in the office. The CE received the award copy on 19.3.2001.

On 10.7.2001, the CE applied for setting aside the award and an application for condonation of delay of 27 days was filed under S.34(3), based on the assumption that the award was received on 19.3.2001. The Respondent contested this application saying that the award was delivered on 12.3.2001 and the High Court agreed with the Respondent.

It was held that according to Section 31(5), 'after the arbitral award is made, a signed copy shall be delivered to each party'. Section 2(1)(h) defines a "party" as meaning 'a party to an arbitration agreement'. The court examined the meaning assigned to the term "party" in the context of the State or a Government Department, esp. a large organization like the Railways.

It is well known that the Ministry of Railways has a very large area of operation covering several divisions with different division heads and departments with their own department heads. The GM, at the apex position, holds responsibility for strategic decisions, organizational policies, administrative instructions etc. The day to day management and operations of different departments rest with different department heads, who are directly connection with their department's functioning and is alone expected to know the progress of the matter pending before the arbitral tribunal.

Thus, in a large organization like the Railways, "party" as referred to in Section 2(1)(h) r/w Section 34(3) has to be construed to be a person directly connected and involved in the proceedings and who is in control of the proceedings before the arbitrator.

The delivery of an arbitral award, to be effective, has to be 'received' by the party and this delivery by the tribunal and receipt by the party sets in motion several periods of limitation, therefore it is an important stage in the arbitral proceedings.

The court held that in the present case, the CE had signed the agreement on behalf of the Railways. In the arbitral proceedings, he represented the organization and notices were served on him. Even the award clearly mentioned that the Railways is represented by DY. CE/Gauge Conversion, Chennai. The subject matter of arbitration related to the department of the CE. Therefore, the High Court had erred in its decision and the Claimant's application for setting aside the award is allowed.

2002 AIR SC 1432

Bhatia International Vs Bulk Trading S.A.

In this case it was held that the legislature provided that the provisions of Part I would apply to arbitrations which take place in India but did not provide that the provisions of Part I will not apply to arbitrations taking place out of India. The wording of Section 2(2) suggests that the intention of the Legislature was to make provisions of Part I compulsorily applicable to an arbitration, including an international commercial arbitration, which takes place in India. Parties cannot, by agreement, override or exclude the non derogable provisions of Part I in such arbitrations.

By omitting to provide that Part I will not apply to international commercial arbitrations outside India, the effect would be that Part I would also apply to international commercial arbitrations outside India. But by not specifically providing that the provisions of Part I apply to international commercial arbitrations outside India, the intention of the Legislature appears to be to ally parties to provide by agreement that Part I or any provision therein will not apply. Such as agreement may be express or implied.

1999(1) RAJ 385 (Del)

Kitechnology NV Vs Unicor GMBH Plastmaschinen

Both the parties to the agreement were foreigners and the agreement specifically agreed that the agreement was to be governed by German laws, the dispute was to be resolved by arbitration and the seat of arbitration was to be at Frankfurt.

It was held that this Act applies in cases where one or more parties is a foreigner but the place of arbitration is India. According to the arbitration agreement of the parties, the German court has exclusive and competent jurisdiction with respect to the dispute.

It follows that where the parties to the agreement were foreigners and the place of arbitration was not in India and a foreign law was applicable, then provisions of Part I of this Act are not applicable. In view of Section 2(2), this is not international commercial arbitration to which Part I will apply. Therefore an application under Section 9 is not maintainable.

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