NOTABLE JUDGEMENTS - AUGUST 2024
ARBITRATION LAW
I. Case Title: Union of India Vs M/s Parishudh Machines Pvt. Ltd.
Citation: 2024 SCC OnLine Del 5536
Court: Delhi High Court
Decided on: 12.08.2024
Brief Facts:
The case involves an appeal by the Ministry of Railways under Section 37(1)(b) of the Arbitration and Conciliation Act, 1996, challenging a Commercial Court judgment that dismissed their petition under Section 34 seeking to set aside an Arbitral Award. The dispute arose from a contract for the supply of a CNC Twin Spindle Chucker machine awarded to Parishudh by the Railways. Due to delays, the Railways terminated the contract, and the dispute was referred to arbitration. The Arbitral Tribunal ruled in favor of Parishudh, awarding them 70% of the machine's cost with interest, rejecting the Railways' contentions of bias and lack of evidence.
Issues:
- Whether the Arbitral Tribunal was biased in favor of Parishudh.
- Whether the Arbitral Tribunal's award of 70% of the machine's cost was justified despite the machine not being completed or inspected.
Judgment:
The Delhi High Court upheld the Arbitral Award, dismissing the Railways' appeal. The court observed that the Arbitral Tribunal is the master of evidence and its findings based on reasonable interpretation should not be interfered with by courts under Sections 34 and 37 of the Arbitration Act. The court rejected allegations of bias, noting that the acceptance of additional documents during the arbitration was reasonable. The court also found that delays in the contract were attributable to the Railways, justifying the Tribunal's decision not to impose liquidated damages on Parishudh. The appeal and all pending applications were dismissed. [Click Here]
II. Case Title: Pam Developments Private Limited v. State of West Bengal & Anr.
Citation: 2024 SCC OnLine SC 2247
Court: Supreme Court
Decided on: 23.08.2024
Brief Facts:
The State of West Bengal awarded a contract to Pam Developments Pvt. Ltd. for widening and strengthening the Egra Bajkul road, with an 18-month deadline starting from December 23, 2010. The project was delayed by five months and completed on November 9, 2012. Pam Developments submitted a bill and additional claims due to the delays, which were denied by the State, leading to arbitration. The Arbitrator awarded Pam Developments Rs. 1,37,25,252 with interest. The State challenged this award under Section 34 of the Arbitration and Conciliation Act, 1996, leading to various judicial decisions that were ultimately brought before the Supreme Court.
Issues:
- Claim No. 3: Whether the Arbitrator erred in awarding Rs. 5,80,500 for losses due to idle labour and machinery despite the contract expressly prohibiting such claims.
- Claim No. 4: Whether the Arbitrator correctly awarded interest on delayed payments of running account bills.
- Claim No. 6: Whether the Arbitrator's award of interest, including pre-reference interest, was valid under the contract.
Judgment:
- Claim No. 3: The Supreme Court upheld the Calcutta High Court's decision to set aside the Arbitrator's award for idle labour and machinery costs, noting that the contract explicitly prohibited such claims. The Arbitrator failed to consider the relevant contractual provisions, and the High Court correctly examined the contract, which the Arbitrator should have done.
- Claim No. 4: The Supreme Court restored the Arbitrator's award for interest on delayed payments, holding that the High Court's conclusion that bills were paid promptly was not a sufficient ground for interference. The Supreme Court found no perversity in the Arbitrator's reasoning.
- Claim No. 6: The Supreme Court reinstated the Arbitrator's award of interest, including pre-reference interest, as the contract did not explicitly prohibit it. The High Court had modified the interest award, but the Supreme Court found that the Arbitrator's decision was within his authority under Section 31(7) of the Arbitration and Conciliation Act. [Click Here]
III. Case Title: Kamlu vs Collector Land Acquisition
Case Number: Arbitration Case No.599 of 2023
Court: High Court of Himachal Pradesh
Decided on: 24.08.2024
Brief Facts:
Kamlu, the Petitioner, filed an application under Section 151 of the Code of Civil Procedure (CPC) seeking an extension of time to comply with an order in an ongoing arbitration case. Previously, the High Court had granted an extension of six months for the arbitrator to conclude the proceedings, but the Petitioner's counsel failed to communicate the order to the arbitrator, resulting in the expiration of the originally granted time. Consequently, the Petitioner sought a further extension through the current application.
Issues:
- Maintainability of the Application under Section 151 CPC: Whether an application under Section 151 CPC is maintainable when a specific provision, Section 29A(4) of the Arbitration and Conciliation Act, 1996, exists for extending the time of arbitration proceedings.
- Impact of Incorrect Citation: Whether the application should be dismissed solely because it cited Section 151 CPC instead of Section 29A(4) of the Arbitration Act.
Judgment:
- Maintainability: The Himachal Pradesh High Court held that an application under Section 151 of the CPC is not maintainable when a specific provision, such as Section 29A(4) of the Arbitration Act, is available for extending the time of arbitration proceedings. The court cited the Supreme Court's decision in My Palace Mutually Aided Coop. Society v. B. Mahesh (2022 SCC OnLine SC 1063) to support this view, emphasizing that Section 151 CPC can only be invoked in the absence of an alternative remedy under existing legal provisions.
- Incorrect Citation: The Court, however, ruled that the application should not be dismissed solely because it incorrectly cited Section 151 CPC instead of Section 29A(4) of the Arbitration Act. The High Court referenced the Supreme Court's decision in Pruthvirajsinh Nodhubha Jadeja v. Jayeshkumar Chhakaddas Shah (2019) 9 SCC 533, which held that an application should not be invalidated due to a wrong statutory citation if the court has the power to grant the requested relief. The Court also considered Vijay Kumar Nagpal v. Parveen Kumar Nagpal (2022) 1 HCC (Del) 25, which reinforced this principle.
Observations: The High Court noted that there was negligence on the part of the Petitioner's counsel for not promptly communicating the order to the arbitrator, but it held that the Petitioner should not be penalized for this oversight. The Court referred to its earlier decision in Rajinder Kumar v. National Highways Authority of India (2024 (1) HimLR 583), which emphasized that procedural lapses should not deprive a landowner of their legal remedies. The Court reiterated the Petitioner's constitutional right under Article 300A of the Constitution of India to protect their property and receive adequate compensation. [Click Here]
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Originally published 06 September 2024
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