Judgments and Awards

Bhatia International Vs Bulk Trading S.A.

It was held that foreign awards are those where arbitration takes place in a convention country; awards in arbitration proceedings which take place in a non-convention country are neither considered as foreign awards nor as domestic awards under the Act.

The court also stressed that 'Domestic Awards' include all awards made under Part I of the Act. Awards made in an international commercial arbitration held in a non-convention country will also be considered to be a 'domestic award'.

Precision Engineers and Fabricators Vs Delhi Jal Board

The petitioner filed an arbitration petition for appointment of arbitrator under Section 11 of the Act, during the pendency of which the respondent appointed a sole arbitrator to adjudicate upon the dispute between the parties.

The petitioner diligently pursued the claims before the arbitrator without any objection to his appointment. There were no documents on record to show that the petitioner raised any objection to the appointment of the arbitrator by the respondent. Even after the arbitrator passed an order on 18.5.2005, the petitioner, on 25.5.2005, requested the arbitrator for extension of time to file rejoinder. Under these circumstances, it was held that the petitioner had waived its rights as per Section 4 of the Act.

2003(3) RAJ 335 (Bom)
Union of India Vs MAA Agency

The brief facts of the case are that the petitioner referred 2 claims and the respondent referred 3 claims before the arbitrator. The petitioner did not raise any objection in respect of the 3rd Claim and an award was made under all the 3 claims. The issue arose whether the petitioner was entitled to raise objection in respect of the 3rd claim in a petition for setting aside the award.

It was held that it was open to the petitioner to challenge either the jurisdiction of the arbitral tribunal to adjudicate upon the 3rd claim or to raise the plea that the tribunal was exceeding its scope of authority. However, the petitioner did not raise any such objection and on the contrary, proceeded with a defense to the claim on merits, thereafter which an award was passed. This being the case, it may be deemed that the petitioner had waived its rights under Section 4, to object on the ground that any requirement of the arbitration agreement had not been complied with.

BHEL Vs CN Garg & Ors.

The scope of Section 5 came up for consideration in this case and the court held that the scheme of the new Act has done away with court interference during arbitration proceedings. The new Act deals with situations even when there is a challenge to the constitution of the arbitral tribunal; it is left to the arbitrator to decide the same. If the challenge is unsuccessful, the tribunal may continue the proceedings and pass an award. Such a challenge to the constitution of the tribunal before the court is then deferred and it could be only after the arbitral award is made that the party challenging the arbitrator may make an application for setting aside the award and it can take the ground of constitution of the tribunal while challenging the award.

The court further drew the conclusion that Section 5 was inserted to discourage judicial intervention. It is seen that a party having grievances against an arbitrator on account of bias or prejudice is not without remedy. It only has to wait till the award is made and then it can challenge the award on various grounds under Section 34.

Pappu Rice Mills Vs Punjab State Cooperative Supply and Marketing Federation Ltd.

This case reiterated the point that courts will have no jurisdiction where remedy is provided under the Act. Briefly stating the fact, the plaintiff had filed a petition under Order 39 Rules 1 & 2 r/w Section 151 of CPC for ad interim injunction in spite of the fact that the defendant had already appointed an arbitrator in respect of the dispute and that arbitrator had already issued notice to the parties in the arbitral proceedings pending before him.

It was held that the arbitral tribunal is competent to decide the questions of its own jurisdiction and where it rejects the plea of the objector regarding jurisdiction, the arbitral tribunal would be competent to proceed with the arbitration and to give its award. The aggrieved party is entitled to challenge the same under Section 34. Thus, the remedy being available to the plaintiff, the civil court would not be competent to restrain the arbitrator from proceeding with arbitration, in view of Section 5.

This being the case, the court is justified in refusing to grant ad interim injunction in favour of the plaintiff.

KK Modi Vs KN Modi

This case discussed the attributes which are necessary for considering an agreement as an arbitration agreement. It was held that among the attributes which must be present are:

1. The arbitration agreement must contemplate that the decision of the tribunal will be binding on the parties to the agreement.
2. The jurisdiction of the tribunal to decide the rights of the parties must derive from their consent, 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 the parties will be determined by the agreed tribunal.
4. The tribunal will determine the rights of the parties in an impartial and judicial manner with the tribunal being fair and equal to both sides.
5. The agreement of the parties to refer their disputes to the decision of the tribunal must be intended to be enforceable in law
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.

Other important factors include whether the agreement contemplates that that tribunal will receive evidence from both sides and give the parties opportunity to put forth their issues and hear their contentions; whether the wording of the agreement is consistent with the view that the process was intended to be an arbitration; and whether the agreement requires the tribunal to decide the dispute according to law.

The courts have laid emphasis on (i) existence of disputes as against intention to avoid future disputes; (ii) the tribunal or forum so chosen is intended to act judicially after taking into account relevant evidence and submissions made by parties before it; (iii) the decision is intended to bind parties; (iv) nomenclature used by parties need not be conclusive.

Skanska Cementation India Ltd Vs.Bajranglal Agarwal

According to the facts, a purchase order was placed by the petitioners on the respondents. The delivery challan contained a term that disputes if any should be referred to Bharat Chamber of Commerce for arbitration. There was also an arbitration clause in invoices sent by the respondent which were accepted by the petitioner and money was paid under those invoices without protest.

It was held that the purchase order by itself would not be a contract between the parties' it is only on accepting the terms of the order when a contract comes into being. Clause I of the purchase order does provide that execution of this order shall be deemed to be acceptance of the conditions stated therein. Clause 11 of the purchase order provided that the respondents could indicate to the petitioner conditions they found unacceptable.

By the terms contained in the delivery challan, the petitioner is deemed to have been informed that the condition that their decision was final was not acceptable to the respondent and that the dispute, if any, should be referred to arbitration. The respondents also sent invoices under which there was an arbitral clause, which was accepted by the petitioner. Therefore it was concluded that the contract between the parties clearly contemplated a provision for arbitration.

Mohan Singh Vs. HP state Forest Corporation

This case discussed the effect of the failure to use the words 'arbitrator' or 'reference' in an agreement. It was held that it is not necessary to constitute an arbitration agreement that the words 'arbitrator' or 'reference' or similar expressions should actually be used in the agreement. The agreement should, in substance, amount to an arbitration agreement and the intention of the parties at the time of execution of the agreement would be the deciding factor.

The court further elaborated that it is not always that when 2 persons agreed to be bound by a decision of their own choice that would constitute an arbitration agreement. In order to determine the real nature of the agreement, it is necessary to ascertain the intention of the parties at the time of entering the agreement. For this specific purpose, consideration must be given not only to the exact words of the agreement but also to the position, knowledge and skill of the person who whom the matter is referred for decision.

On the other hand, if the intention of the parties appears to be not to settle the differences after they have arisen but to prevent differences from arising, that would not be arbitration. It is the intention of the parties which is to be gathered from the working of the clause and in certain cases, even if the word 'arbitrator' is missing, it has to be inferred in between the lines used by the parties.

Divya Shivlaks Impex Vs. Shantilal Jamnadas Textiles (P) Ltd

The issue was whether a printed condition on the invoice amounted to an arbitration agreement. The respondents contended that after the details of particulars of the goods supplied, quality, price etc, there is a printed note on the lower portion of the invoice which states: 'This sale is subject to the sale. Disputes and Arbitration Rules of Mumbai Piece Goods Merchants Mahajan'. The respondents contended that this amounts to an agreement to refer the dispute to the Mahajan.

The court held that the printed clause was not intelligible and this clause does not state that the sale was subject to the arbitration rules of the Mumbai Piece Goods Merchants Mahajan. It is difficult to appreciate the exact meaning of the printed words. On a plain reading, in the absence of any other material to explain the said printed clause, it cannot be concluded that the printed clause amounts to an arbitration agreement.

Motilal Vs Kedarmal Jainarayan Bharadiya

The dispute involved partition and separate possession of a family property and the matter was in progress towards drawing of a final decree of partition. The document in issue did not contemplate adjudication upon issues by the nominated person. The nominated persons were not obliged to invite the parties to put forth their submissions and adjudicate thereupon; they were merely put in the shoes of conflicting parties to effect partition and were empowered to take any appropriate decision they felt to be just and fair.

The court held that the document did not meet the requirement of Section 7(1) 'agreement by the parties to submit to the arbitration all or certain disputes which have arisen'. In fact, the parties had agreed that they would not raise any dispute before the nominated person and submit to their judgment or suggestion. Therefore the document is not an arbitration agreement.

The court further elucidated that arbitration is an alternate dispute resolution system of quasi judicial nature and if no judicial function are attributed to the nominated persons, the document cannot be said to be an arbitration agreement.