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In this episode of Podcast Bites by IndiaLaw LLP, host Ayush Shukla discusses the Bombay High Court’s judgment in Nayara Energy Limited v. M/s Mahendra Sales Services.
The judgment examines an important issue in commercial arbitration: whether an arbitral tribunal can restore a terminated dealership or franchise arrangement after holding the termination to be illegal.
The Bombay High Court clarified that arbitral tribunals must operate within the terms of the contract and applicable law. In private commercial contracts, requirements such as prior notice or hearing cannot be imported unless the contract itself provides for them. The Court also reiterated that determinable contracts, such as dealership, franchise, distribution or similar commercial arrangements, cannot ordinarily be specifically enforced, and the appropriate remedy for wrongful termination is usually damages.
This episode explains the facts of the dispute, the limits of arbitral powers, the relevance of the Specific Relief Act, the importance of proving damages through pleadings and evidence, and why courts may interfere with arbitral awards under Section 34 of the Arbitration and Conciliation Act, 1996 where the award ignores the contract or suffers from patent illegality.
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