Dispute Resolution & Arbitration Monthly Update | October 2021 - Arbitration & Dispute Resolution

Arcelor Mittal Nippon Steel India Ltd v. Essar Bulk Terminal Ltd

Civil Appeal No. 5700 of 2021 arising out of Special Leave Petition (Civil) No.13129 of 2021

Background facts

A Cargo Handling Agreement was executed between Arcelor Mittal Nippon Steel India Ltd (Appellant) and Essar Bulk Terminal Ltd (Respondent). Article 15 of the said Cargo Handling Agreement provided that all disputes arising out of this agreement were to be settled in Courts, in accordance with the provisions of the Arbitration and Conciliation Act, 1996 (Act) and be referred to a sole Arbitrator appointed mutually by the parties.
Due to a fall-out between the parties, the Appellant invoked the arbitration clause by a notice of arbitration dated November 22, 2020. Since there was no response from the Respondent, an application under Section 11 of the Arbitration and Conciliation Act, 1996 (the Act) was filed by the Appellant in the High Court of Gujarat (HC). A delayed response to the notice of Arbitration was generated by the Respondent wherein it was strongly contended that the disputes raised therein were not arbitrable.
On or about January 15, 2021, the Appellant filed an application being Commercial Civil Miscellaneous Application No.2 of 2021 under Section 9 of the Act in the Commercial Court and the 12th Additional District Judge, District & Sessions Court at Surat. On March 16, 2021, the Respondent also filed an application being in the Commercial Court under Section 9 of the Act.
The Commercial Court and 12th Additional District Judge, District & Sessions Court at Surat, heard both the applications filed by the Appellant and the Respondent respectively, under Section 9(1) of the Act and reserved the same for orders on June 7, 2021.
Appointed on July 09, 2021, three retired judges of the HC formed Arbitral Tribunal to adjudicate upon the disputes between the parties.
The Appellant and Respondent filed applications under Section 9(1) of the Act which were heard by Commercial Court and 12th Additional District Judge, District & Sessions Court at Surat and the same were reserved for orders on June 07, 2021.
Subsequently, on July 16, 2021, the Appellant filed an interim application in the Commercial Court praying for reference of both the pending applications under Section 9(1) of the Act to the learned Arbitration Tribunal.
On dismissal of the interim application on July 16, 2021, the Appellant filed an application in the HC under Article 227 of the Constitution of India challenging the order of the Commercial Court. The HC while dismissing the application on August 17, 2021, held that the Commercial Court has the power to consider whether the remedy under Section 17 of the Act is inefficacious and pass necessary orders under Section 9 of the said Act (Impugned Order).
Aggrieved by the impugned Order, the Appellant challenged the same before the Supreme Court.

Issues at hand?

Whether the Court has the power to entertain an application under Section 9(1) of the Act, once an Arbitral Tribunal has been constituted and if so, what is the true meaning and purport of the expression 'entertain' in Section 9(3) of the Act?
Whether the Court is obliged to examine the efficacy of the remedy under Section 17, before passing an order under Section 9(1) of the Act once an Arbitral Tribunal is constituted?

Decision of the Court

SC elucidated that the power vested in the Arbitral Tribunal to grant interim relief is the same power conferred on the Court and the remedy under Section 17 is as fruitful as the remedy under Section 9(1) of the Act. The SC referred to the decision of Energo Engineering Projects Ltd. v TRF Limited¹ wherein the Delhi High Court passed an interim order under Section 9 of the Act after exercising its discretion that the remedy of interim relief under Section 17 would be inefficacious.
The SC considered the judgement of the Division Bench of Delhi High Court in Benara Bearings & Pistons Ltd v Mahle Engine Components India Pvt Ltd² wherein it was clarified that Section 9(3) does not operate as an ouster clause insofar as the Courts powers are concerned and therefore, the constitution of the Arbitral Tribunal by itself does not snatch away the power from the Court to deal with an application under Section 9(1) of the Act.
The SC enunciated the principles laid down in Srei Equipment Finance Ltd (Sefl) v Ray Infra Services Private Ltd & Anr³ wherein the Calcutta High Court held that a Court is not to entertain an application under Section 9(1) of the Act, once the Arbitral Tribunal has been constituted, unless the Court finds that a situation exists, which leaves the remedy provided under Section 17 inefficacious.
About deciphering the meaning of the word 'entertain' in section 9(3) of the Act, the SC leant on Lakshmi Rattan Engineering Works Ltd v Asst. Commissioner Sales Tax, Kanpur and Anr⁴ and Kundan Lal v Jagan Nath Sharma⁵ and concluded that 'entertain' means to consider the issues raised by application of mind. In this context, the SC highlighted that the bar of Section 9(3) would not operate, once an application has been entertained i.e., taken up for consideration, as in the instant case, where hearing has been concluded and judgment has been reserved
The SC without mincing words expressed that when an application has already been taken up for consideration and is in the action of consideration or has already been considered, to deliberate at this stage the question of examining whether remedy under Section 17 is efficacious or not would not arise. Thereafter, the SC stated that Section 9(1) enables the parties to an arbitration agreement to approach the appropriate Court for interim measures before the commencement of arbitral proceedings, during arbitral proceedings or at any time after the making of an arbitral award but before it is enforced and in accordance with Section 36 of the Arbitration Act.
In the light of the above, the SC answered both the issues in affirmative and held that the High Court has rightly directed the Commercial Court to proceed to complete the adjudication. Lastly, the SC advanced that it shall not be necessary for the Commercial Court to consider the efficacy of relief under Section 17, since the application under Section 9 has already been entertained and considered by the Commercial Court.

Our view

The SC's decision that the bar under Section 9(3) operates only when the application under Section 9(1) had not been entertained till the constitution of the Arbitral Tribunal clears all the hurdles faced by parties who seek interim reliefs under Section 9(1) of the Act when the Arbitral Tribunal has already been appointed. The key takeaway from this decision is that the interpretation of Section 9(3) does not exclude the jurisdiction of the Courts to grant interim relief once the Arbitral Tribunal is constituted. The SC has made several noteworthy observations regarding the discretion which is to be compulsorily exercised in examining if the remedy under Section 17 of the Act is futile or not while considering a Section 9(1) application.

P v. A & Ors

Suit No. 142 of 2021 before the High Court of Judicature at Bombay

Background facts

The Bombay High Court (HC) addressed a range of issues revolving around the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH Act) and Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Rules, 2013 (POSH Rules).

Issue at hand?

Whether there shall be any minimum standards or guidelines which can be set by the HC for cases related to sexual harassment at workplace under the POSH Act and POSH Rules, 2013?

Decision of the Court

At the outset, the HC observed that it was imperative to protect the identities of the parties in the proceedings under POSH Act and noted that there were no established guidelines so far towards anonymity. Therefore, the HC decided to establish guidelines as a minimum requirement for setting out a working protocol for future orders, hearings, and case file management.
The HC issued guidelines under different subgroups as follows:
- Orders: The HC issued directions that the parties names in order sheets should not be mentioned and it can be 'A v B', 'Y v Z' and so on. In the body of the order, the parties should not be referred by their real name; rather, they will be referred as Plaintiff and Defendant. Any Personally Identifiable Information (PII) such as telephone numbers, email ids, and addresses will not be mentioned in body of the order. Moreover, the orders or judgments will be pronounced privately i.e., in chambers or in camera, which will not be allowed to be uploaded.
- Filing protocols: While filing any application, affidavit or pleading, the Registry will not be permitted to retain any PII document, and it is only at the time of verification that the Registry can ask for the identity documents for identifying the Deponent. The Registry is also prohibited from entering PII of any of the parties or witnesses in Case Information Statement. Additionally, the parties are required to use anonymous titles in further affidavits which are filed in the proceedings.
- Access: The HC directed that the Registry shall only permit the Advocate-on-Record having a valid and current vakalatnama for inspection or copies of any filing or order. All records are required to be sealed, including fresh filings, and can only be given to any person by the order of the Court. Further, third-party solution providers cannot digitalize the record without the order of the Court and prior directions for permitting the same are required to be sought from the Court. The HC clarified that the witness depositions will not be uploaded under any circumstances.
- Hearings: The HC directed that the hearings under POSH Act would be conducted only in private i.e., in-camera or in Chambers and the parties must attend it physically as conducting online or hybrid hearings is prohibited. During the hearing, only the Advocates, litigants, the Court Associate, and the stenographer are allowed to attend hearings and all the other support staff such as peons and clerks are required to leave the Court.
- Directions to Certified Copy Department: The HC instructed the Certified Copy Department not to raise any objections pertaining to the difference in the long or short title of the case and the order in question. The HC also directed the parties to work using an authenticated, ordinary or digitally signed copy of every order to the extent possible.
- Public access: The HC stated that order of the Court is necessary for releasing any order into the public domain, and it can be released only when it is in fully anonymized version.
- Breach: The HC reiterated the absolute prohibition on publishing PII and stated that it will also be applicable in instances where the information about the parties has been obtained by using the contents of a judgment or order to discover information already in the public domain. Further, the HC directed all persons, including the media, to ensure strict compliance relating to anonymity, failing which it shall lead to a contempt of Court.
- Media disclosure forbidden: The HC issued directions to parties, advocates, and witnesses to restrain them from disclosing the contents of the order or judgment and filing to media or publishing such content in any mode including social media. Specific leave is required from the Court for disclosing the same. Additionally, witnesses are required to sign a statement of non-disclosure and confidentiality. The HC clarified that these guidelines bind all concerned persons, and failure to abide by these conditions shall also be considered as a contempt of Court.
- Recording prohibited: The HC prohibited recording of the proceedings in any form and violation of the same will attract punishment for contempt of Court.
- Industrial/Labor Court proceedings: The HC directed that these abovementioned guidelines shall be strictly followed by the Industrial/Labor Court and a copy of this order shall be sent to the president of the Industrial/Labor Court for compliance.
The HC disposed of the matter by observing that the Order sets out general guidelines and does not address the merits. It is permitted to be uploaded and these are only initial guidelines, which shall necessarily be subject to modification as needed.

Our view

The HC's Order issuing guidelines on POSH Act and POSH Rules is a landmark step as it is the first to observe the actual procedural aspects of matters arising out of sexual harassment at workplace. The Order will protect the identities of the parties from disclosure in proceedings under the Act. While the present Order is a welcome step, the legislature may take the guidelines into consideration and ensure strict compliance of the procedure by virtue of notification or amendment to the Act.

Click here to continue reading . . .

Footnotes

1. 2016 SCC OnLine Del 6560

2. 2017 SCC OnLine Del 7226

3. (2016) SCC OnLine Cal 6765

4. AIR 1968 SC 488

5. AIR 1962 All 54

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.